#Project Management Summary Notes For PMP Exam - A Quick Refreshing Guide For PMP Exam Based On PMBOK 6th Edition

Six Edition
1
Project Management Concepts
Ready Reckoner
A Quick Refreshing Guide for PMP

Exam Based on PMBOK 6th Edition
By SN Panigrahi
Essepee Business Solutions
SN Panigrahi, Essenpee Business Solutions, India 2

Understanding
Fundamentals Of Project Management

PMP® Eligibility Criteria
A Secondary Diploma (high
A Four Year University Degree OR school or the global equivalent)
At least three years of

At least five years of project
project management
management experience
+ experience (within last 8 + (within last 8 years), with
years) with 4,500 hours
7,500 hours leading and
leading and directing project
directing project tasks
tasks
+ 35 hours of formal Project + 35 hours of formal Project

Management Education Management Education
•Please read the pmphandbook.pdf from the http://www.pmi.org

site for details SN Panigrahi, Essenpee Business4Solutions,
India
How to Apply for Exam What is the cost of the
 Apply via www.pmi.org PMP exam?
 Your application may be randomly selected PMI® Membership Non PMI
Membership
for audit
USD 139 – Annual
 Audits delay authorization by at least 2 Membership ($129+$10 Onetime -
Fee Application Fee)
weeks
Multiple
 Items audited Membership Benefits -
Benefits including
 Degree PMBoK®
guide.
 Experience
 PM Training PMI Exam USD 405 USD 555
Fee
Receive authorization code from PMI® (valid for Total Payment 139+405 = 544 555
12 months) PMI Re-Exam USD 275 USD 375
Fee
 Book an exam appointment at a test
center – www.prometric.com/pmi
SN Panigrahi, Essenpee Business Solutions, India
5
You can now take the PMP Certification
exam online from home or office, 24/7.
Administered on a secure platform using proven exam delivery technology, the
online exam is exactly the same as the version administered at a test center: the
same quality, the same questions, and there’s even a live proctor.
The only difference? You can take it in your pajamas.
With 24/7 testing options to accommodate your schedule, you can take the
exam day or night. All you need is a:
 computer with a webcam
 reliable internet connection
 quiet space where you can spend a few uninterrupted hours
There’s nothing standing between you and the PMP. You’ve put in the work. Now
see it pay off.
For More Details Visit
https://www.pmi.org/certifications/types/project-management-pmp/exam-
prep/online
Exam Pattern & Format
 By default CBT(Computer Based Test) is available at Prometric test centers for Exam takers.
 For those who stay farther than 200 KM’s away from CBT test centers could request for PBT (Paper Based Test)
format of examination.
 Exam Duration is 4 Hours for total of 200 Objective Type Questions with 4 options and only 1 correct answer and
No Negative Marking
 Out of 200 Questions, 175 are for Final Marking and 25 Questions will be “Pre-test Questions” which are included
to assess if these questions can be included in the “master set” subsequently
 It is not possible to Differentiate Scoring & Non-scoring Questions.
 Exact Passing Score is Not Made Public
 Expect 90% Randomized Scenario Based Questions & 10% Straightforward Questions.
 Results are Immediate to showcase overall Pass / Fail based on 5 Process Group Grades:
Above Target : Performance Exceeds the Min. Required
Target :
Below Target and
Needs Improvement.
SN Panigrahi, Essenpee Business Solutions,

7
India
What is Project & Project Management
Project
Project is a temporary endeavor to achieve defined objectives by creating a unique
product, service, result or outcome with a definite start and end date.
It is - Performed by people - Constrained by limited resources - Planned, executed and controlled
A Project may be a set of interrelated tasks to be executed over a fixed period and within
certain cost, time and other limitations.
Project Management
Set of knowledge, skills, best practices, tools and techniques that have significant impact
on project objectives and successful project outcome

Temporary Endeavour
Time Scale : Clearly Specified Start & End Times
Not an On-Going Effort & Repetitive in Nature
Unique
Unique Product or Service or Result or Outcome
Outcome
New & Different from the Previous
Progressive Elaboration
Initially Plans are made on Broad basis, and Details are done
Don’t confuse it with changes. In progressive elaboration, there is no
as the project progressing change in requirement, its only requirement detailing.
Projects Drive Change - Achieve Beneficial Change

Projects Enable Business Value Creation
Performs Definable Tasks (Scope)
Time, Cost, Quality, Resource & Risk Constraints
Involve an Element of Risk
Approved Budget
9
Project Characteristics
 Has a Lifecycle (phases)
 Unique Set of Activities (do not involve repetitive processes)
Characteristics  Has a Defined Timescale (specific start and end date)
 Specific Objectives - Deliverables - Defined End Result

Project
 Performs Definable Tasks (Scope)
 Scope, Time, Cost, Quality, Resource & Risk Constraints
 Approved Budget
 Involve an Element of Risk
 Achieve Beneficial Change

India
10
Competing Project Constraints
The three most significant project constraints -- schedule, cost and scope -- are sometimes known as the triple
constraint or the project management triangle. Additionally Three more Constraints are Added : Quality, Risk
& Resources.
and What can be Done Six Project Constraints
wh co
e
What can go Wrong
Co
er be d th
e
at st?
Required to do the
Resources
m
l
Who and what is

De tp hou
sh
s
?
Ti
ou
Ou n s
t
ed
li v ut
about it
Risk
ld
e
wh
Work
Quality
it
By
How Close the
Outcome meets
the Customer
Requirements?
Scope
If any one of these factors changes, What work to be
then at least one of the other factors done & Expected?
also will change.
Corporate Top Level Strategies
Related Projects, Programs, Decision Making,
Prioritization,
Portfolio Or Sub-portfolios, and Review,
un-related Operations Realignment, and
Reprioritization of a firm’s projects.
Focuses on interdependencies
Program
Only Projects between projects to determine
optimal approach for managing them
Related - Managing groups of projects in a
coordinated way
Focus on to achieve the project

Project
Only Activities objectives : Project Completion as
Related Scope within Budget & Timelines
Example of a Project – Construction of a Residential building

Example of a Program – Construction of a housing complex with several buildings
Example of a Portfolio – All the Residential & Commercial Projects of the Company &
also its Maintenance SN Panigrahi, Essenpee Business Solutions,
India
12
Organizational Project Management (OPM)
Aligns with organizational strategies by
Portfolio selecting the right programs or projects,
Management
prioritizing the work, providing resources etc
Strategies with
Organizational
Organizational
Aligning Harmonizes its projects and program
Project Program components and controls interdependencies.
Management Management Focusses on Optimal Approach for Managing
(OPM)
them
OPM3® develops and implements plans to achieve

is a maturity model - it defines Project
excellence and the steps to get specific scope driven by objectives of the
Management
there. program or portfolio
OPM3® is the model for making
OPM capable in your organization.
Six Edition
14
Fundamental Processes of Project Management
Create the Project
Get a Project Charter Scope Statement; Create
Identify Stakeholders; Develop a Project
Authorizing Start of a the WBS with the project
Engage & Manage them Management Plan
Project team; Create the Activity
List from the WBS
Identify & Sequence the Estimate Project

Activities; Budget:
Estimate Activity Costs- Set the Quality Assign the Needed
Estimate the Time
Aggregate to Work Parameters & Criteria Resources
Durations
packages, Control A/C &
Define Schedule then overall Project
Identify Outsourcing Execution of Work;

Identify, Classify /
Establish Activities; Controlling &
Categorize & Quantify
Communication Plan for Type & Method of Monitoring all the
Risks- Plan Risk
channels Contracts; Source Selection Activities- Reporting
Responses & Award of Contracts

Key Points in Project Set-up and Definition
 Create Project Management Plan (PMP)
 Be clear of scope and objectives
 Establish clear statement of what is to be done
(WBS)
 Establish Risks to be Managed
 Establish Costs and Durations
 Establish Resources Required

Master Document for Project
 Master Document for Project
 Defines the following:-
 Purpose/background/approach
 Project Objectives, Scope, Deliverables -Constraints/assumptions
 Stakeholders (Internal & External)
 Work to be done (WBS)
 Project Organisation and Resources (OBS)
 Budget/cost-benefit assessment - Project Costings (CBS)
 Project Schedule
 Procurement/Contract Strategy
 Risk Management
 Quality management
 Change Management
 Tools and techniques to be used
 Standards
 Work plan
 Team contact directory
 Approval sign-off form

Project Statement
Project Charter
of Work
a. Business need, a. Project purpose or justification (fits
strategic plan business needs, strategic plan) Project Statement
of Work
b. Product scope b. Project objectives, product
description characteristics
c. High-level requirements
d. Project assumptions, constraints,
high-level descriptions, boundaries Business Case
Project
e. Project success criteria Charter
f. High-level risks
g. Summary schedule, budget
h. Stakeholder list
i. Project approval requirements and Agreements
approval authority
j. Project manager assigned to project

Responsible for Accomplishing Project Objectives and managing
stakeholders‟Expectations
PM Competencies Works to Balance the Competing Constraints on the project with

the resources available
The project manager must define the project, reduce it to a set of

manageable tasks, obtain appropriate resources and build a team
to perform the work.
The project manager must set the final goal for the project and
motivate his/her team to complete the project on time.
The project manager must inform all Concerned stakeholders of

progress on a regular basis.
The project manager must assess and monitor risks to the project
and mitigate them.
No project ever goes exactly as planned, so project managers must learn

to adapt to and manage change.
SN Panigrahi, Essenpee Business Solutions, India SN Panigrahi
19
Project Life Cycle
A project life cycle is the phases that a project passes through from its start to its completion. It
provides the basic framework for managing the project. PMBOK® ed 6
Within a project lifecycle, there is typically at least one phase related to developing the product,
service or result; also known as a development life cycle, of which there are several types:
Predictive When scope, time, and cost are defined within the early phases of the project. Any
changes must then be carefully managed through Change Control Mechanism. Also
Life Cycle known as waterfall life cycles
Iterative Scope is determined at an early point of the life cycle but time and cost estimates are revisited
as the understanding of the product develops. Iterations develop the product through a series
Life Cycle of repeated lifecycles, while increments successively add to the functionality
The deliverable is produced through a series of iterations that successively add functionality
Incremental within a predetermined time frame. The deliverable contains the necessary and sufficient
Life Cycle capability to be considered complete only after the final iteration
Adaptive Adaptive – either agile, incremental, or iterative in nature, the detailed scope is defined and
approved before the start of an iteration. This is also called agile or change-driven life cycles
Life Cycle
Project and Development Life Cycles – Different types
Hybrid (Combination of Predictive (Waterfall) and Adaptive): Elements of the project that have fixed requirements
follow predictive approach, elements that are ‘Progressively Elaborated’ follow an adaptive (iterative) approach
21
Characteristics of Project Lifecycle
 The generic life cycle structure
commonly exhibits the
following characteristics:
 At the start, cost and staffing
levels are low and reach a
peak when the work is in
progress. It again starts to drop
rapidly as the project begins to
halt.
 The typical cost and staffing
curve does not apply to all
projects. Considerable
expenses are required to
secure essential resources early SN Panigrahi, Essenpee Business Solutions, India 22
Characteristics of Project Lifecycle
 Stakeholder influence, Risk and
uncertainty are at their peak at the
beginning of the project. These factors
drop over the lifecycle of the project as
decisions are reached, and deliverables
are accepted.
 The ability to affect the final product of
the project without impacting the cost
drastically is highest at the start of the
project and decreases as the project
advances towards completion.
 The cost of making new changes and
rectifying errors are initially low and
increases as the project approaches
completion. SN Panigrahi, Essenpee Business Solutions, India
23
SN Panigrahi, Essenpee Business Solutions, India 6th
24
Progressive Elaboration
Progressive elaboration allows a project management team to define work and manage it to a greater
level of detail as the project evolves. Plan keep on changing and we get better clarity as we build on the
various plans.
Planning is an iterative process. Often times, it’s difficult to do detailed planning of a project in the
beginning. As the project evolves, and more specific and accurate details are available, the planning
gets more detailed. With each successive iteration of the planning process, the project plan becomes
more elaborate and complete. This approach to planning is known as Progressive Elaboration.
According to the PMBOK® Guide, 6th Edition:
Progressive elaboration involves continuously improving and detailing a plan as more

detailed and specific information and more accurate estimates become available.
Progressive elaboration allows a project management team to define work and manage it to
a greater level of detail as the project evolves.
Two forms of Progressive Elaboration

The PMBOK® Guide, 6th Edition mentions two forms of Progressive Elaboration - Rolling Wave
Planning and Prototypes.

Rolling Wave Planning
Rolling wave planning is a project management technique that involves progressive elaboration to add
detail to the Work Breakdown Structure (WBS) on an ongoing basis. At the beginning of the project, near
term deliverables are decomposed into individual components (work packages) and defined at the greatest
level of detail. Deliverables and schedule activities that will take place several reporting periods in the future
are more broadly defined.
For example, Phases 1-2 might be broken down fully in the WBS. Phases 3-6 might be outlined only
to the level of subprojects. Then, while schedule activities for phase 1 are underway, the detailed
planning for phase 3 would commence. As phase 2 is put in motion, planning for phase 4 would start
and so forth.
In this way, rolling wave planning permits work activities to move forward on current and near term
deliverables while planning is still ongoing for future work packages. This type of project management
approach is particularly useful when the availability of information needed to plan future work packages in
detail is predicated on the successful completion of previous project phases. This technique may also help
shorten time to completion in 2 ways:
 By making it possible for productive activities to begin without waiting for every detail of the
project work to be determined in advance
 By eliminating downtime for additional planning in the middle of a project since planning is
done continuously
Project management that is undertaken using rolling wave planning must have a well-defined project scope
from the outset. Otherwise, as planning is elaborated scope creep is likely to occur.
PMI Project Management Framework
10
5
Knowledge
Process Groups
Areas
Total
49
Processes
The Inputs, Tools, Techniques and Outputs (ITTOs) of each
Process is laid out
5 Project Management Process Groups
As Per PMBOK –
6th Edition INITIATING Decide Why
Develop Project Charter this Project
with Defined Objectives
Get It Processes - 2 What & How

CLOSING
PLANNING
Complete Formalities,
Develop Detailed Project Plan
Contract Closure,
Archive Documents
Processes - 1 Processes - 24
Track &
Check Do it as
MONITORING & Planned
EXECUTING
CONTROLLING
Directing and Managing
Measuring & Taking Corrective
Project Execution
Measures
Processes - 12 SN Panigrahi Processes - 10 28
Throughout the lifecycle of the
project, a set of processes such as
initiation, planning, execution and
closing and overall monitoring &
controlling and Closing have to be
followed.
Though the project management

processes are presented as discrete
elements, they are seldom either
discrete or onetime events; they are
6th
overlapping activities that occur
throughout the project with well-defined
interfaces.
If the project is divided into phases, the

Process Groups interact within each
phase. In multi-phase projects,
processes are repeated within each
phase until the criteria for phase
completion have been satisfied

As Per PMBOK – No. of
6th Edition Project Knowledge Areas Processes
• Combine, Unify and Coordinate the various project management activities within the five
Integration Mgt process groups.
7
Scope • Ensure the project includes all the work required, and only the work required, to complete the
6
Mgt project successfully
Schedule • Manage the Timely Completion of the Project 6

Mgt
Cost • Plan, Estimate, Fund, Manage, and Control costs so the project can be completed within the
4
Mgt approved budget
Quality • Incorporating the organization’s quality policy regarding planning, managing and controlling
3
Mgt project and product quality requirements in order to meet stakeholders’ expectations.
Resource • Identify, acquire, and manage the resources needed for the successfully completion of the
6
Mgt project.
Communications • Required to ensure the planning, creation, distribution, control and monitoring of project
3
Mgt information's
SN Panigrahi
Risk • Planning risk management, the identification, analysis, and monitoring of risks on a project,
7
Mgt and the implementation of risk responses.
Procurement • Necessary to purchase or acquire products, services, or results needed from outside the
3
Mgt project team.
• Required to identify stakeholders, to analyze their expectations and impact on the project,
Stakeholder and to develop management strategies for effectively engaging stakeholders in decisions that 4
Mgt affect the project.
Total
SN Panigrahi, No. Business
Essenpee of Processes
Solutions, India 49 30
Project Management Process Group and Knowledge Area Mapping
Knowledge Areas Initiating Process Planning Process Group Executing Process Group Monitoring & Controlling Closing Process Group
Group Process Group
3.Direct and Manage 5.Monitor and Control
4. Project Integration 4.1 Develop Project 4.2 Develop Project Project Work 4.7 Close Project or
Project Work
Management Charter Management Plan 6.Perform Integrated Phase
4.Manage Project
Knowledge Change Control
1. Plan Scope Management
5. Project Scope Management 2. Collect Requirements 5. Validate Scope
3. Define Scope 6. Control Scope
4. Create WBS
1. Plan Schedule Management
6. Project Schedule 2. Define Activities
3. Sequence Activities 6.6 Control Schedule
Management
4. Estimate Activity Durations
5. Develop Schedule
7. Project Cost Management 1. Plan Cost Management
2. Estimate Costs 7.4 Control Costs
3. Determine Budget
8. Project Quality Management 8.1 Plan Quality Management 8.2 8.3 Control Quality
9. Project Resource 1. Plan Resource Management 3. Acquire Resources 9.6 Control Resources
Management 2. Estimate Activity Resources 4. Develop Team
5. Manage Team
10. Project Communications 10.1 Plan Communications
Management Management 10.2 Manage Communications 10.3 Monitor Communications
1.Plan Risk
Management
11. Project Risk Management 2.Identify Risks 11.6 Implement Risk Responses 11.7 Monitor Risks
3.Perform Qualitative
Risk Analysis
4.Perform Quantitative
Risk Analysis
5.Plan Risk Responses
12. Project Procurement
Management 12.1 Plan Procurement
Management 12.2 Conduct Procurements 12.3 Control Procurements
13. Project Stakeholder 13.1 Identify 13.2 Plan Stakeholder 13.3 Manage Stakeholder 13.4 Monitor Stakeholder
Management Stakeholders Management Engagement Engagement
Systems Approach to Project Management
PMBOK® describes the fundamentals of project A Project can be viewed as a Total System which
management in terms of processes. Each Transforms Input into Output, and has a
Project Management Activity is Accomplished Feedback Mechanism to assure that the output
as a Process. A process has some Inputs. A Set
meets the goals and objectives set for the project.
of Tools and Techniques are then applied on
these inputs. As a Result some outputs are System - a set of things working together as parts of
produced. These outputs may further become a mechanism or an interconnecting network.
inputs to some other processes.
Input Process Output

• All that is Required to Tools & Techniques • What is Produced out of this
Process – Project Objectives
Carryout a Process • ….. Which are Applied on the Inputs.
This is where Project Manager’s
Skills are Put to Use
Feedback SN Panigrahi, Essenpee Business Solutions, India 33

• Refer to both internal & external environmental factors that surround or
influence a project’s success
• As an input in almost all project management process
• May enhance or constrain project management options
Enterprise Environmental Factors

Internal to Organization External to Organization
 Organizational culture, structure, and  Marketplace conditions
processes  Political, Social and Culture Influences and
 Infrastructure Issues
 Geographic distribution of facilities and resources  Legal Restrictions / Govt. Regulations
 Resource Availability
 Commercial Databases
 Employee Capability
 Government or Industry standards
 Information Technology Software (PMIS)
 Academic Research
Organizational Process Assets (OPA)
Includes plans, policies, processes, Guidelines, SOPs and knowledge bases specific to and
used by performing organization.
Organizational Process Assets (OPA)

Processes & Procedures Corporate Knowledge Base
 Organizational Standard Processes such as  Process measurement databases
Standards, Policies, Procedures  Project files from previous projects
 Standardized Guidelines, Work Instruction,  Historical Information & lesson learned
SOPs, Proposal Evaluation Criteria, and knowledge bases
Performance Measurement Criteria  Risk Register
 Templates  Stakeholder Register
 Financial Control Procedures  Issue and defect management databases
 Procedures for Prioritizing, approving, and  Configuration management knowledge
issuing work authorization, etc. bases
Configuration management specialists identify and document configuration requirements,
 Financial control
Databases, changes, record and report
etc.
changes, and audit the products to verify conformance to requirements.
This contains the change history: different versions and baselines for the company standards and policies and for the
archived project documents. SN Panigrahi, Essenpee Business Solutions, India 35
Project Management Information System (PMIS)
A project management information system (PMIS)
is how information needed to run a project is
organized. It collects and uses project information
through one or more software applications. What
these programs do is help project managers to plan,
execute and close their project. It’s a way to
organize that flood of information, so you don’t
drown in data.
The Project Management Book of

Knowledge (PMBOK) states that a PMIS is “an
information system consisting of the tools and
techniques used to gather, integrate, and
disseminate the outputs of project management
processes. It is used to support all aspects of the
project from initiating through closing and can
include both manual and automated systems.”

5 Project Management Process Groups

Initiating Process Group
Phase Activities
Initiating A set of processes performed to define a new project or a new phase of an existing
Process Group project by obtaining authorization to start the project or phase; Initial Scope is
defined, Financial Resources are committed; Stakeholders are identified, Project
boundaries are defined. Aligned project purposes with stakeholders’ expectations.
Key documents created: Project Charter and Stakeholder Register.
Develop Project Charter
Two Processes
Identify Stakeholders
38
Initiating Domain Process Group Tasks
1.Perform Project Assessment based upon available information, lessons learned from
previous projects, and meetings with relevant stakeholders, in order to support the
evaluation of the feasibility of new products or services within the given assumptions
and/or constraints.
2.Identify Key Deliverables based on the business requirements, in order to manage

customer expectations and direct the achievement of project goals.
3.Identify Stakeholders & Perform Stakeholder Analysis using appropriate tools and
techniques, in order to align expectations and gain support for the project.
4.Identify High Level Risks, Assumptions, and Constraints based on the current
environment, organizational factors, historical data and expert judgment, in order to
propose an implementation strategy.

5.Participate in the development of the Project Charter by compiling and
analyzing gathered information, in order to ensure project stakeholders are
in agreement on its elements.
6.Conduct Benefit Analysis with stakeholders (including sponsor,
customer, subject matter experts), in order to validate project alignment with
organizational strategy and expected business value.
7.Obtain Project Charter Approval from the sponsor, in order to formalize
the authority assigned to the project manager and gain commitment and
acceptance for the project.
8.Inform Stakeholders of the Approved Project Charter, in order to

ensure common understanding of the key deliverables, milestones, and their
roles and responsibilities.

Project Charter @ a Glance
Business
Why What
Case & What is Problem or
Why are we doing Objectives Problem / Opportunity for which
this project? Performance
Opportunity Project is Initiated?
Justification Measurement Statement & & What is Scope?
Criteria Broad Scope
What When
What are the Primary When is the project
Risks involved in the going to start and
Project? Primary Project Major Mile end?
Risks Charter Stones
Who What
Who all are involved What is the project
from the start of the Budget?
Project? Assumptions Broad
& Constraints Budget
Key
Signed off Stakeholders Formally
by the Project Authorizes the
Sponsor / Initiator Project Manager to
with Date SN Panigrahi, Essenpee Business Solutions, India Start the Project
41
Major Elements of Project Charter
The Six Sigma Project Charter – Elements :
 The Business Case, which sets out why a project is important to an organization – the
Business Case
Need; Why Taken up – Justification; If Taken up what will be the Outcome & if Not Taken
up What will be the Consequences. Problem Statement
 The Problem Statement / Opportunity Statement, which defines an issue and how it is
affecting the organization – Covers : What is the Problem (CTQ – Current) – Since When
the Problem Existing – Where is the Problem – How did you Come to Know – What is the Goal Statement
Impact
 The Goal Statement, which should be in line with the problem you seek to solve, and Scope Statement
which should be SMART – Specific, Measurable, Attainable, Relevant and Time-bound.
 The Scope Statement, which defines the limits of the project and shows both what should
Project Milestones
be included and what should be excluded.
 The Project Milestones, outlining the key activities that need to be completed and the
projected dates of completion. Project Budget
 The Project Budget, provides broad estimate of all costs that are likely to be incurred
 A list of the Team Members that will be working on the project, which will depend on the Team Members
problem that needs solving and project scope.
 Sign-Off with Date – Project Sponsor must Sign-off with Date in-order to Formally Lunch Sign-Off with Date
the Project
SN Panigrahi
Project Charter
Formally Authorizes the Project Manager to Start the Project
Includes the business case Explaining why the Project is Necessary & Project
Objectives
Define the High-Level Requirements, Project description and Boundaries –
Assumptions – Broad Scope & Major Milestones
Includes Pre Approved Financial Resources - High-Level Budget
Includes Key Stakeholders – Project Team
Includes Issues & Preliminary Risk Register
Signed off by the Project Sponsor / Initiator with Name, Designation & Date
•The project charter is NOT a Contract

•Project Management Office (PMO) can provide expert judgement on how to structure the project charter
SN Panigrahi, Essenpee Business Solutions, 43
India
Planning Process Group
Phase Activities
Planning Process A project management plan is a document that Guides Execution of the project. This is
Group essential in that it becomes an overriding governance document for the entire project. Those
processes required to establish the scope of the project, refine the objectives, and define the course
Twenty-Four of action required to attain the objectives that the project was undertaken to achieve.
discrete processes
are involved in It creates your Roadmap, your Path to Success. A significant concept in Planning is that the team
planning. is able to think the whole project through in advance. So they not only create a variety of plans but
also consider all the things that might go wrong (risks) and how they might respond to them.
The purpose of the project planning phase is to:

Establish Business Requirements
Establish Cost, Schedule, List of Deliverables, and Delivery Dates
Establish Resources Plans
Obtain Management Approval and Proceed to the Next Phase
Further we create baselines for scope, schedule and cost against which we can then (in Monitoring
and Controlling) track our progress. And we continue to plan for how we will manage and engage the
all-important stakeholders throughout the project life cycle.
Key documents created: Project Management Plan, Schedule, Risk Register

Planning Process Group
Phase Activities
Planning Process The basic processes of project planning are:
Group
Scope Planning – specifying the in-scope requirements for the project to facilitate
Twenty-Four creating the work breakdown structure
discrete processes
Preparation of the work breakdown structure – spelling out the breakdown of the
are involved in
planning. project into tasks and sub-tasks
Project Schedule Development – listing the entire schedule of the activities and
detailing their sequence of implementation
Resource Planning – indicating who will do what work, at which time, and if any special
skills are needed to accomplish the project tasks
Budget Planning – specifying the budgeted cost to be incurred at the completion of the
project
Procurement Planning – focusing on vendors outside your company and subcontracting
Risk Management – planning for possible risks and considering optional contingency
plans and mitigation strategies
Quality Planning – assessing quality criteria to be used for the project
Communication Planning – designing the communication strategy with all project
stakeholders

The Project Management Plan (PMP), according to the Guide to the Project Management Body of
Knowledge (PMBOK®), is a formal, approved document used to guide both project execution and
project control.
The primary uses of the PMP are to document planning assumptions and decisions, facilitate communication
among stakeholders, and document approved scope, cost, and schedule baselines.
By showing the major products, milestones, activities and resources required on the project, it is also a
statement of how and when a project's objectives are to be achieved.
The project manager creates the PMP following input from the project team and key stakeholders. The plan
should be agreed on and approved by at least the project team and its key stakeholders.
The PMP is mandatory for all projects. While it is a project-level document, it should be updated as
necessary, including for each increment.

Project Planning
Components of Project Management Plan
So what does
a project
management plan Comprehensive
include? Scope management plan
Schedule management plan
Unique Cost management plan
Quality management plan
Process management plan
Staffing management plan
Project
management Communication management plan
Unambiguous plan Risk management plan Procurement
Management Plan
Baselines of cost, quality and schedule
Risk Register
Always Resource Calendar
Curren
Project Milestones
t Authoritative
4.2 Develop Project Management plan

5.1 Plan Scope Management
5.2 Collect requirements
5.3 Define Scope
5.4 Create WBS
6.1 Plan Schedule Management
6.2 Define Activities
6.3 Sequence Activites
6.4 Estimate Activity Durations
6.5 Develop Schedule (*Check resource availability before Publish)
7.1 Plan Cost Management
7.2 Estimate Cost
7.3 Determine Budget
8.1 Plan Quality Management
9.1 Plan Resource Management
9.2 Estimate Activity Resources
10.1 Plan Communication Management
11.1 Plan Risk Management
11.2 Identify Risks
11.3 Perform Qualitative Analysis
11.4 Perform Quantitative Analysis
11.5 Plan Risk Responses
12.1 Plan Procurement Management
13.2 Plan Stakeholder Engagement
Planning Domain Process Group Tasks
1.Review and Assess Detailed Project Requirements, Constraints, and
Assumptions with stakeholders based on the project charter, lessons learned,
and by using requirement gathering techniques, in order to Establish Detailed
Project Deliverables.
2.Develop a Scope Management Plan, based on the approved project scope

and using scope management techniques, in order to define, maintain, and
manage the scope of the project.
3.Develop the Project Schedule based on the approved project deliverables

and milestones, scope, and resource management plans, in order to manage
timely completion of the project.
4.Develop the Cost Management Plan based on the project scope, schedule,
resources, approved project charter and other information, using estimating
techniques, in order to manage project costs.

5. Develop the Resource Management Plan by defining the roles and
responsibilities of the project team members, in order to create a project organizational
structure and provide guidance regarding how resources will be assigned and
managed.
6.Develop the Communications Management Plan based on the project

organization structure and stakeholder requirements, in order to define and manage
the flow of project information.
7.Develop the Procurement Management Plan based on the project scope, budget,
and schedule, in order to ensure that the required project resources will be available.
8.Develop the Quality Management Plan and define the quality standards for the
project and its products, based on the project scope, risks, and requirements, in order
to prevent the occurrence of defects and control the cost of quality.
9.Develop Change Management Plan by defining how changes will be addressed

and controlled, in order to track & manage change.

10.Develop the Risk Management Plan by identifying, analysing, and prioritizing
project risks, and defining risk response strategies, in order to manage uncertainty
and opportunity throughout the project life cycle.
11.Present the Project Management Plan to the relevant stakeholders according

to applicable policies and procedures, in order to obtain approval to proceed with
project execution.
12.Conduct Kick-off Meeting, communicating the start of the project, key

milestones, and other relevant information, in order to inform and engage
stakeholders and gain commitment.
13.Develop the Stakeholder Management plan by analysing needs, interests, and

potential impact, in order to effectively manage stakeholders’ expectations and
engage them in project decisions.

Milestone
A project milestone is a task of zero duration that shows Significant Achievement along a
project timeline.
The milestones should represent a clear sequence of events that incrementally build up until

your project is complete. ... They have zero duration because they symbolize an achievement, or a point
of time in a project.
Project Milestones are the most visible Indicators of Project Progress.
Milestones typically Mark Critical Decision Points, the completion of major project tasks and the ends
of various project phases.
Deliverable -
Deliverable -1 Deliverable -2 Deliverable -3
4
Milestone -1 Milestone -2 Milestone -3

Time Lines
Total Project Schedule

Deliverable
A deliverable is a Quantifiable tangible or intangible good or service produced as a result of a
project or part of a project that is intended to be delivered to a customer (either internal or
external).
A deliverable could be a Product, a Part, a Report, a Document, a Software Product, a Server

upgrade or any other building block of an overall project.
A work breakdown structure is based on these Deliverables.
Tangible
Quantifiable To be To a
Deliverable or
Results Delivered Customer
Intangible

Project Phase / Phase Gate
• A project phase is a “collection of logically related project activities that
culminates in the completion of one or more deliverables” PMBOK®
Guide 20 These phases are often identified by the work to be
completed within them (e.g. concept, design, build, or test)
• A phase gate is a review that is held at the end of a phase. It is

undertaken to establish that the project has both completed the
activities within the phase and to ensure the project remains justified
from a business/strategic point of view. Phase gates may also be known
as phase reviews, stage gates, go/no go decision points, or kill points\
• Kill point
It is the point in time during the execution phase of the project
where the stakeholders or the sponsor review the progress
and decide on whether to continue or kill the project.
Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, PMI Inc., 2017, Page 20
Client
SOW Activity
Sequencing
Activity
Definition
Work Activity Schedule
Breakdown Duration
Development
Estimate
Project Planning
Structure
Resource
Planning
Cost
Estimating
Resource
Pool Work
Packages
Baselines
Baseline is the value or condition against which all future measurements will be
compared. The baseline is a point of reference. In project management commonly
Baseline referred baselines are – schedule baseline, cost baseline, scope baseline and quality
baseline.
Performance Performance Measurement Baseline - The combination of all three baselines -

Baseline schedule baseline, cost baseline and scope baseline.
It is the approved version of a scope statement, Work Breakdown Structure (WBS)

Scope Baseline and its associated WBS dictionary.
It is the approved version of a schedule model with baseline start dates and baseline
Schedule Baseline finish dates..
Cost / Budget It is the approved version of the time-phased project budget, excluding any
Baseline management reserves.
It is the approved version of performing an analysis / study to identify perceived quality

problems; and to establish a baseline from which quality improvement objectives can
Quality Baseline -
be established and improvements can be measured.
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Executing Process Group
Phase Activities
Executing Process Those processes performed to complete the work defined in the project management plan to satisfy
Group the project specifications.
Naturally, the next thing to do after Planning is to execute, to do the work. But what's important here
is that we now have a project management plan to which we can execute. It helps keep us on track.
Here is where the Project Team Starts Doing the Work of Creating the Deliverables while the
project manager coordinates those resources.
Since the project team is so important to successful execution, one must assume that Developing the
Team is important to that cause. So there is an assumption that the project manager will not only
acquire and manage the team, but also cultivate it by Performing Team-Building Exercises.
Likewise, the PM is not only Managing Communications but also Managing the Stakeholder
Engagement, Ensuring Project and Product Quality and – Involve in Procurement - Supporting
the Effort to Contract with a Vendor.
It is in this area of Executing that most of the budget will be spent and the deliverable of the
project will be produced. And it is likely here where we will begin to see stakeholder change
requests. While the project team can implement approved changes, only the change control
board can approve or reject these changes.
Key documents created: Project Progress Updates.
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Executing Domain Process Group Tasks
1.Acquire and Manage Project Resources by following the human resource and procurement management
plans, in order to meet project requirements.
2.Manage Task Execution based on the project management plan by leading and developing the project team,
in order to achieve project deliverables.
3.Implement the Quality Management Plan using the appropriate tools and techniques, in order to ensure
that work is performed in accordance with required quality standards.
4.Implement Approved Changes and corrective actions by following the change management plan, in order to
meet project requirements.
5.Implement Approved Actions by following the risk management plan, in order to minimize the impact of
the risks and take advantage of opportunities on the project.
6.Manage the Flow of Information by following the communications plan, in order to keep stakeholders
engaged and informed.
7.Maintain Stakeholder Relationships by following the stakeholder management plan, in order to receive
continued support and manage expectations.

Monitoring and Controlling Process Group
Phase Activities
Monitoring and Processes that Ensures the Project Stays on Track. Those processes required to track,
Controlling review, and regulate the progress and performance of the project; identify any areas in
Process Group which changes to the plan are required; and initiate the corresponding changes.
While the other process groups occur sequentially, Monitoring and Controlling hover over the
whole project and so, happen throughout the project and are not linear.
Some examples of areas one might control are scope, cost, and schedule. These all have
variations in regards to which tools and techniques you would use to control them. Variances
are found against baselines which were defined in planning. Since we're tracking our
progress against these baselines, Changes Requirements are invariably occurs. Only the
change control board can approve these changes.
Only constant vigilance, tracking and reporting will keep the project focused towards meeting
its objectives.
Key documents created: Updates – Change Requests.
The Monitoring and Controlling Process Group presents a detailed set of skills and knowledge directly
applicable toward implementing the decisions needed to sustain the most active part of the project. While
moving forward with a project, a top project manager continuously reviews progress and makes necessary
adjustments to increase workflow effectiveness.
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Monitoring & Controlling Domain Process Group Tasks
Monitor and Control Project Work
Keeping stakeholders up to date on progress and team performance through reports and on-going
documentation contributes to project success. Regularly assessing progress related to scope, benchmark
goals, timeline, and budget helps to ensure that there are no unpleasant surprises as the project unfolds.
Perform Integrated Change Control

Even well-planned projects are going to require a change from time to time. The larger the project the more
change there usually is. Keeping track of change in light of the timeline and budgetary considerations is an
important task that must be addressed. Ongoing documentation and follow-up related to change orders and
related costs is an essential part of any project manager’s job.
Verify Scope
As the project progresses through each phase, it is important to secure the documentation related to
completed portions of the project. Re-visiting another process groups to be sure that objectives have been
met reflecting any changes is part of the follow-through needed as the project continues toward completion.

Cont……
Control Scope
If there have been adjustments to the budget, timeline, or the desired end-product, it is important to re-visit
the documentation related to the scope and mitigate any unresolved challenges. Maintaining effective
communication with stakeholders and related constituents will keep everyone updated and engaged in the
project’s success.
Control Schedule
Every project has a schedule baseline. As the project progresses adjustments are often necessary to address
unforeseen circumstances. Monitoring the project properly can decrease the chances that schedule issues
become major setbacks.
Control Costs
Many factors will affect cost throughout the project timeline. Keeping track of any changes in the budget is
important so that communication around the control of costs is clear and accurate.

Cont……
Perform Quality Control

Quantifying and reporting quality control issues are necessary – and ongoing – to support the accuracy and
responsiveness of the project. Based on findings from monitoring, process adjustments can be made.
Report Performance
Collecting and reporting performance data is important to complete proper forecasting with regard to
timeline and phasing. Keeping stakeholders aware of team progress toward benchmark goals supports
positive project relations.
Monitor and Control Risks
Tracking risk, responding to documented risk, and evaluating response to risk is all a part of ensuring the
project progresses effectively through each phase of the timeline.
Administer Procurements
Team needs will change throughout the project, additional items may be required while other items and
services may not be needed at all. Keeping track of all paperwork that documents any changes in contracts
is vital to delivering the project within budget, or as close as possible.

Closing Process Group
Phase Activities
Closing Process Those processes performed to finalize all activities across all Process Groups to
Group formally close the project or phase
From its name, it should be pretty obvious what happens here. Not only do you formally
close the project but you also Get Sign-off and Acceptance from the Customer. While
this should be self-evident, too often projects just fizzle out. People stop coming to the
meetings and everyone just shows up at the next one.
Best practice dictates that the rigor applied to the rest of the project should be applied here
as well. The project manager should formally close the project by archiving records,
holding a lessons learned session, making final payments, closing contracts and
celebrating and releasing the team.
And the lessons learned along with other historical information should be centrally
archived to be used as input to future projects to prevent reinventing the wheel.
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Closing Domain Process Group Tasks
1.Obtain Final Acceptance of the Project Deliverables from relevant stakeholders, in
order to confirm that project scope and deliverables were achieved.
2.Transfer the Ownership of Deliverables to the assigned stakeholders in accordance
with the project plan, in order to facilitate project closure.
3.Obtain Financial, Legal, and Administrative Closure using generally accepted practices
and policies, in order to communicate formal project closure and ensure transfer of
liability.
4.Prepare and Share The Final Project Report according to the communications
management plan, in order to document and convey project performance and assist in
project evaluation.

Closing Domain Process Group Tasks
Cont…..
5. Collate Lessons Learned that were documented throughout the project and conduct
a comprehensive project review, in order to update the organization’s knowledge base.
6.Archive Project Documents and materials using generally accepted practices, in order
to comply with statutory requirements and for potential use in future projects and
audits.
7.Obtain Feedback from Relevant Stakeholders, using appropriate tools and

techniques and based on the stakeholder management plan, in order to evaluate their
satisfaction.
8. Celebrate Project Success

Project or Phase Closure
At project or phase closure, the following may occur:

 Obtain Acceptance by the customer or sponsor,
 Conduct Post-Project or Phase-end Review,
 Record Impacts of Tailoring to any process,
 Document Lessons Learned,
 Apply appropriate updates to Organizational Process Assets,
 Archive all relevant Project Documents in the Project Management
Information System (PMIS) to be used as Historical Data, and
 Close out Procurements.
 Perform team member’s assessments and Release Project Resources

Project Knowledge Areas

Project Management Process Group and Knowledge Area Mapping
Initiating Process Monitoring & Controlling
Knowledge Areas Planning Process Group Executing Process Group Closing Process Group
Group Process Group
4.5 Monitor and Control
4.3 Direct and Manage
4. Project Integration 4.1 Develop Project 4.2 Develop Project Management Project Work 4.7 Close Project or
Project Work
Management Charter Plan 4.6 Perform Integrated Phase
4.4 Manage Project
Change Control
Knowledge
5.1 Plan Scope Management
5. Project Scope 5.2 Collect Requirements 5.5 Validate Scope
Management 5.3 Define Scope 5.6 Control Scope
5.4 Create WBS
6.1 Plan Schedule Management
6. Project Schedule 6.2 Define Activities
6.3 Sequence Activities 6.6 Control Schedule
Management
6.4 Estimate Activity Durations
6.5 Develop Schedule
7.1 Plan Cost Management
7. Project Cost 7.4 Control Costs
7.2 Estimate Costs
Management
7.3 Determine Budget
8. Project Quality
8.1 Plan Quality Management 8.2 Manage Quality 8.3 Control Quality
Management
9.3 Acquire Resources
9. Project Resource 9.1 Plan Resource Management 9.6 Control Resources
9.4 Develop Team
Management 9.2 Estimate Activity Resources
9.5 Manage Team
10. Project
10.1 Plan Communications
Communications 10.2 Manage Communications 10.3 Monitor Communications
Management
Management
11.1 Plan Risk Management
11.2 Identify Risks
11. Project Risk 11.3 Perform Qualitative Risk 11.6 Implement Risk Responses
Analysis 11.7 Monitor Risks
Management
11.4 Perform Quantitative Risk
Analysis
11.5 Plan Risk Responses
12. Project Procurement
Management 12.1 Plan Procurement Management
12.2 Conduct Procurements 12.3 Control Procurements
13. Project Stakeholder 13.1 Identify 13.2 Plan Stakeholder Management 13.3 Manage Stakeholder 13.4 Monitor Stakeholder
Management Stakeholders Engagement Engagement
Project Integration Management
Seven (7) Processes in the five (5) Process groups
Planning Execution Monitoring &

Initiation Closure
Process Process Controlling
Process Process
Group Group Process
Group Group
Group
Direct & Monitor &

Manage Control Project
Project Work Work
Close
Develop Develop Project Project or
Project Charter Mgt. Plan
Perform Phase
Manage Project Integrated

Knowledge Area: Integration Management
There are 7 Integration Management processes:
1.Develop Project Charter
•Develop a document called Project Charter to formally authorize the project and
start using organizational resources by Project Manager
2.Develop Project Management Plan

•Develop a plan which will include all subsidiary management plans and integrated
baselines
3.Direct and Manage Project Work

•Directing and Managing the planned work along with implementing the approved
changes

4. Manage Project Knowledge
Manage Project Knowledge is about using existing knowledge within the
organization to achieve the project’s objectives and then using new knowledge
gained on the project to contribute to the organization”s body of knowledge.
5.Monitor and Control Project Work

Monitoring and Controlling of project work during execution of project while status
reports circulated, corrective & preventive actions implemented
6.Perform Integrated Change Control

•Integrating the approved changes and keeping the project focused to deliver end
project objectives
7.Close Project or Phase

•Formally closing all project/phase related activities

Project Selection Methods
Non Numerical Models Numeric Models Project Selection Criteria:
Sacred Cow
Comparative Constrained  Highest NPV Wins!
Approach Optimization Approach
Operating  Highest IRR Wins!
Benefit Cost Ratio Linear programming
Necessity
Murder board Payback Period  Highest ROI Wins!

Integer programming
Competitive  Lowest Payback Period Wins!
Net Present Value
Necessity Dynamic
programming Note :
Internal Rate of Payback Period Method is a Very
There are generally two Return Multi-objective Rough Method. In case Payback
categories of Return on Programming
Period & NPV / IRR given Select as
selection methods: Investment
per NPV / IRR.
•Non numerical Model Scoring Model
Both NPV & IRR Given Select as
•Numerical Model Economic Value per IRR
Add

Numeric (Financial) Models
Benefit Cost Ratio
Payback Period
Present Value (PV)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Profitability Index (PI)
Return on Investment (RoI)
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Purpose of Project Management Plan (PMP)
Who will be
Involved
How it will be
Measured &
How it is to be Reported & How
Achieved information will
be
Communicated
Provide a
Purpose of Used as a
Comprehensive
Reference for
Baseline of what Project
any Decision &
has to be Management for Clarification of
achieved by the Plan (PMP) unclear areas
project
Used as a Reference throughout the project to ensure that the

management of the project is carried out consistently and in line
with policy and procedures
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8 Steps of Change Management Process
Eliminate Root Cause of Changes
Integrated
Identify the Change
Change
Control Evaluate the Impacts
Submit the Change Request
Perform Integrated Change Control

Assess the change; Explore Various Options; Approve or Reject the Change;
Record the Change in the Change Control System (CCS)
Adjust the project management plan, project documents, and baselines
Manage Stakeholders’ Expectations by Communicating
Manage the Project to the Revised Project Management Plan and

Project Documents
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Common Terminologies
A project charter establishes a partnership between the performing

organization and the requesting organization (or customer, in the case of
Project Charter
external projects). The approved project charter formally initiates the
project.
Business Case Documentation to justify the project investment. Cost benefits Analysis
Know the following two categories of project selection methods and their subsets for the
exam:
1.Benefit measurement method (comparative approach)
1. Murder Board – a panel of people who try to shoot down a new project idea
2. Peer Review
3. Scoring Models
4. Economic models – the following are economic models for selecting a project:
Project Selection
1. Present value; 2. Net present value; 3. IRR; 4. Payback period
5. Benefit-cost ratio
2.Constrained optimization methods (mathematical approach)
1. Linear programming
2. Integer programming
3. Dynamic programming
4. Multi-objective programming
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You need to know the following about project charter for the exam:
•The project charter formally recognizes/authorizes the existence of the
project, or established the project. This means that a project does not exist without a
project charter
•It gives the project manager authority to spend money and commit corporate
Project Charter
resources.
•In most project situations, the project team does not report to the project manager in
the corporate structure
•The project charter provides the high-level requirements for the project
•It links the project to the ongoing work of the organization

Develop Project Takes results from other planning outputs to create a consistent document to guide both
Management Plan execution and control of project. Documents planning assumptions, decisions regarding alternatives
What to Do & chosen, facilitates communications, define key management reviews. Baseline for progress
How to Do measurement and control.
Management plans are the strategy for managing the project and the processes in each knowledge
area. To reiterate to make sure we are all on the same page, a management plan covers how you will:
• Define
Management Plan
• Plan
• Manage
• Control
A project management plan is an integration function – it integrates all the knowledge area
management plans into cohesive whole. This plan also includes the baselines for the project. A project
management plan is a series of plans and baselines, rather than just a schedule. The project
management plan includes:
•The project management process that will be used on the project

Project Management
•The management plans for scope, schedule, cost, quality, HR, communications, risk, and
Plan
procurements
• Scope, schedule, and cost baselines
• Requirements management plan
• Change management plan
• Configuration management plan
• Process improvement plan

The project management plan contains scope, schedule, and cost baselines, against
which the project manager will need to report project performance. These baselines are
created during planning. Together these baselines are called the Performance
Performance Measurement
Measurement Baseline
Baseline
•Scope baseline
•Schedule baseline
•Cost baseline

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Requirements A requirements management plan describes how requirements will be identified,
management plan managed, and controlled
The change management plan describes how changes will be managed and controlled and
may include:
•Change control procedures
•The approval levels for authorizing changes
•The creation of a change control board to approve changes
Change Management
•A plan outlining how changes will be managed and controlled
Plan
•Who should attend meetings regarding changes
•The organizational tools to use to track and control changes
There is a change management plan for the project as a whole. There are also change
management plans for each knowledge area, which are described in the individual
management plans.
Change Control A panel of stakeholders who are responsible for reviewing and
Board deciding which changes should be made to a project.

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Straight line depreciation – the same amount of depreciation is taken each year
Depreciation Accelerated depreciation – product depreciates faster at the beginning. There are two types:
double declining balance and sum of years digits.
Description of the products or services being supplied along with the business need, product
Project SOW scope description and strategic plan. External projects: SOW received from the customer.
Internal projects: SOW provided by the sponsor or initiator of the project.
Enterprise
Consider culture and structure, resources availability, project management systems available,
Environmental
stakeholder risk tolerances, and marketplace conditions.
Factors
Lessons learned from previous projects, organization processes and procedures and
Organizational
corporate knowledge base containing historical data, issue and defect management database,
Process Assets
financial information, etc.

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As part of planning, the project manager identifies existing processes to
Process use on the project and may create some of their own. Planning in efforts to
improvement improve these processes is required part of project management, because
plan good processes help the team complete work faster, cheaper, and with
higher quality
The purpose of the configuration management plan is to make sure everyone knows what
Configuration version of the scope, schedule, and other components of the project management plan
Management Plan are the Latest and Relevant. The configuration management plan defines how you will
manage changes to the deliverables and the resulting documentation.
This is the integration part of the executing process group. In Direct and
Manage Project Execution, the project manager integrates all the executing
Direct and
processes into one coordinated effort to accomplish the project
manage project
management plan and product the deliverables. In addition, it involves
execution
requesting changes and completing the work accompanying approved
change requests.

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Project Scope Management
Project Scope Management is process that concerned with ensuring the inclusion in the project all the
work required and only the work required to complete the project successfully.
Initiation Planning Execution Monitoring &

Controlling Closing
Process Process Process Process
Process
Group Group Group Group
Group
Plan Scope Validate

Management Scope
Collect
Requirements
Define Scope Control

Scope
Create
WBS
Scope Management
There are 6 Scope Management processes:
1.Plan Scope Management
•Establishing the Project Scope in the Scope management plan
document
2.Collect Requirements
•Collecting the requirements from stakeholder groups ensuring those
requirements are managed (monitor, Control) till end of the project
3.Define Scope
•Defining the detailed Project scope in the Scope Statement

Scope Management
Cont…..
4.Create WBS ( Work Breakdown Structure)

•Establishing and breaking down the scope into manageable components
in structured manner
5.Validate Scope
•Once the work is accomplished it needs to be validated against the
requirements
6.Control Scope
•Monitoring and Controlling the project scope across the project duration
w.r.t Scope Baseline
Project scope is the work required to output a project’s deliverable. It is detailed set of
Scope deliverables or features of a project
A project milestone is a task of zero duration that shows Significant Achievement

Milestone along a project timeline.
scope statement is concisely, clearly, and accurately outlined works to be performed

Scope Statement in the project & define the boundaries of the project. It is an output of Define Scope
Process.
WBS (Work Break Down Structure) shows the hierarchy of discrete work packages
WBS derived after Decomposition of Scope of Project. It must contain 100% of the work.
The WBS Dictionary describes each component of the WBS with milestones,
WBS Dictionary deliverables, activities, scope, and sometimes dates, resources, costs, quality.
The Scope Baseline is the approved version of a scope statement, work breakdown

Scope Baseline structure (WBS), and its associated WBS dictionary.
Scope creep refers to uncontrolled changes in scope. This can be because of

Scope Creep interference from the customer or a misunderstanding by the project management team.
Gold Platting Gold plating refers to adding the extra features that were not part of the product scope.
TEMPLATE: BROAD SCOPE DEFINITION
In Scope Out of Scope Assumptions Constraints
(Exclusions)
(These are items that you (These are items that you (Knowledge about the (Known restrictions. These
are definitely are not project that is taken as could include
going to deliver / manage) responsible for – the being true or correct for any restrictions in
assumption is that the purposes of project start/finish date, time,
someone else will do planning. Assumptions are deliverable or milestone
them. Exclusions are circumstances and dates, budget
things that don’t form part events that need to occur limitations, resourcing
of your project, for the project to be limits, vendor
but influence on whether successful, but are outside restraints, etc.,
or not you can the total control of
successfully achieve your the project team)
objective.)

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Work Breakdown Structure - Definition
“A Work Breakdown Structure (WBS) is a hierarchical (from

general to specific) tree structure of deliverables and tasks
that need to be performed to complete a project.”
 The Work Breakdown Structure is the foundation for

effective project planning, costing and management.
 It is the most important aspect in setting-up a Project
 It is the foundation on which everything else builds

Project Planning – WBS
 Lowest Level of WBS is the Work Package (WP)
 WP can be clearly defined allowing package to be costed,
scheduled and resourced
 WP contains a list of Tasks to be Performed that form the
basis for the Schedule
 WP allows assignment of responsibilities (Work Package
Manger, WPM)

Project Planning – WBS
 WBS allows hierarchical build-up of costs and schedule
 Cost and Schedule can be reported at any level of the
WBS
 WBS facilitates strong management during project
execution (Cost and Schedule control)
 WBS can be used for many other things - Document
Management, Risk Management etc.

WBS - Example
GAS-STEAM COMBINED
POWER PLANT
level 0
MAIN FUNCTIONS OF PLANT

level 1 GAS – 1.0 STEAM – 2.0 INTERFACES – 3.0
(Control Accounts)
level 2 Major Planning Packages

TURBINE – 1.1 GENERATOR- COMPRESSION STATION –
1.2 1.3
level 3
COMPRESSORS-1.3.1 GAS TREATMENT-1.3.2 ENCLOSURE-1.3.3
Planning Packages
level 4
COMPRESSOR 1 COMPRESSOR 2 FOUNDATIONS
1.3.1.1 1.3.1.2 1.3.1.3
level 5
DESIGN PROCUREMENT INSTALLATION
1.3.1.2.1 1.3.1.2.2 1.3.1.2.3 WORK PACKAGES

Work Breakdown Structure (WBS)
Sequences of Work in Common Facility Centre (CFC) Construction
Level 0
Common Facility Centre (CFC)
Broad
Project
Bidding &
Conceptualization Procuremen Constructio
Design Contractin Closure Level 1
of Project t n
2.0 g 4.0
6.0 Control Account
1.0 5.0
3.0
Marking Ground
Foundatio Column Construction M & E Works
Drawing of Levellin Roofing Miscellaneous Level 2
n Casting of Walls Major Planning
5.1 Layout g 5.4 5.7 Works
5.2 5.5 5.6 5.8 Packages
5.3
Compacting Footing Footing

PCC Shuttering Level 3
the Ground Reinforcement Concrete Work Packages
5.4,2 5.4.3 5.4.4
5.4.1 5.4.5
100 Percent Rule India
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WBS Dictionary
The WBS Dictionary describes each component of the WBS with milestones, deliverables, activities,
scope, and sometimes dates, resources, costs, quality.

What does Scope Baseline Consists?
WBS
Project
Scope
Statement
Output of Associated
Create WBS WBS
Dictionary
Process
Scope Base Line

Verified Deliverables Vs Accepted Deliverable
** Verified Deliverables - have been completed and checked for correctness by the
Quality Control process.
** Accepted Deliverables - have been accepted through the Validate Scope process.
So, Verified Deliverables is output of Quality Control & a Verified Deliverable is

an input to the Validate Scope process, while an Accepted Deliverable, where formal
sign-off is obtained, is the key output of the Validate Scope process.
Input Process Output

Deliverables Quality Control Verified Deliverables
checked for correctness
Input
Process Output
Verified
Validate Scope Accepted Deliverable
Deliverables
formal sign-off is obtained
Project Schedule Management
Knowledge Area that includes the processes required to accomplish timely completion of the
project.
Initiation Planning Execution Monitoring & Close
Process Process Process Controlling Process
Group Group Group Process Group
Group
Plan Schedule
Management
Define Control
Activities Schedule
Sequence
Activities
Estimate Activity
Duration
Develop
Schedule SN Panigrahi, Essenpee Business Solutions, India98
Knowledge Area: Schedule Management
There are 6 Schedule Management processes:
1.Plan Schedule Management : Establishing Project Schedule in Schedule Management
Plan Document which will be used across project to control timelines as project evolves
and changes occur.
2.Define Activities : Breaking down the larger chunks of scope into actionable small
activities using the WBS by defining project activities
3.Sequence Activities : Establishing the relationships between the defined project
activities to ensure the sequence of activities are done in rightful manner

Knowledge Area: Schedule Management
Cont….
4.Estimate Activity Durations : How long will it take to ensure the estimated
resources perform the activity assigned
5.Develop Schedule : Based on all the available information from defined activities to
sequence activities to estimate resource & durations will aid to arrive at develop
schedule
6.Control Schedule : Monitoring and Controlling the project schedule across the
project duration w.r.t schedule baseline and achieve the project objectives

PERT (Project Evaluation and Review Technique) is a project management
technique, used to manage uncertain activities of a project. PERT is a method of
PERT analyzing the tasks involved in completing a given project, especially the time needed
to complete each task, and to identify the minimum time needed to complete the total
project.
CPM is a statistical technique of project management that manages well defined

activities of a project.
critical path is the longest possible continuous pathway taken from the initial event to
CPM the terminal event. It determines the total calendar time required for the project; and,
therefore, any time delays along the critical path will delay the reaching of the
terminal event by at least the same amount..

Float or Slack is a measure of the excess time and resources available to complete a
task.
Total Float or Slack is the amount of time that a project task can be delayed
without causing a delay to the whole project (total float).
Float = Late Start (LS) – Early Start (ES)
Or
Float = Late Finish (LF) – Early Finish (EF)
Float or Slack
Free Float is the amount of time that a project task can be delayed without causing a
delay in any subsequent tasks.
Free Float = (ES of Successors) – (EF of Activity in Question)
Positive slack would indicate ahead of schedule; negative slack would

indicate behind schedule; and zero slack would indicate on schedule.

An activity that has total float equal to zero. An activity with zero float is not necessarily
Critical Activity on the critical path since its path may not be the longest.
Lead is an acceleration of the successor activity and can be used only on finish-to-
start activity relationships. It is overlap between tasks that have a dependency.
Lead Time Lead time refers to Period the A
successor activity will start FS – 2 Days
2 Days
before the previous activity finished.
B
Lag is a delay in the successor activity and can be found on all activity relationship
types.
Lag Time A FS + 14 Days

14 Days
B

1. You are the Project Manager on a merger and acquisition project. Activity A (3 days)
and activity B (4 days) can start immediately. Activity C (2 days) can start after A
and B are complete. Activity D (5 days) can begin after activity B is complete.
Activity E (6 days) can begin after activity B is complete. Activity F (4 days) can
begin after activities C and D are complete. Activity G (5 days) can begin after
activities D and E are complete. Activity H (4 days) can begin after activities F and
G are complete. What is the slack of Activity D?
A. Two days
B. One day
C. Four days
D. Not enough information

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Path Duration Activity Slag
A 13
A-C-F-H 13
B 0 Critical Path
B-C-F-H 14 C 5
B-D-F-H D 1
17
E 0 Critical Path
B-D-G-H 18 F 2
B-E-G-H 19 Critical Path G 0 Critical Path
H 0 Critical Path
0 3 3 4 2 6
A C
0 0 6 6 9 9 5 11 9 4 13
Start F
0 0 0 4 4 4 5 9 11 2 15 15 4 19 0 0
B D H Finish
0 0 4 5 10 10 5 15 15 0 19 0
1 0
G
4 6 10 10 0 15
E
4 0 10
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Estimate Activity Duration
Bottom up estimating is the project management technique of estimating individual

tasks and then combining them into an overall project estimate.
Bottom up
Often the individual project team members who will be performing the task provide the
Estimating estimates, because they are in a better position to estimate a task that they will be
working on.
The Top-down Estimate method is also a analogous method. It is used to

Top-down determine Rough Order of Magnitude (ROM) estimates in the initiation phase of the
Estimate project. The method uses the actual durations, effort or costs from previous projects
as a basis for estimating the effort or costs for the current project.

Estimate Activity Duration
Expert judgment can be used by using historical information to give duration estimates
Expert Judgment from similar projects. It can also be used to reconcile different estimating methods.
Based on previous activity (historic data) from similar activity or project with similar
nature (a form of expert judgment) - used when little is known on very similar scope
Analogous
- works well when project is small – rough estimation – generally less costly and
Estimating less time consuming, but less accurate. Analogous is a TOP DOWN estimating
method.
It is an estimation technique which utilizes the statistical relationship that exists

between a series of historical data and a particular delineated list of other variables.
Examples : square footage in a contraction project, the number of lines or code that
Parametric exist in a software application, and other similar variables.
Estimating This information is them implemented for the purposes of calculating and
demonstrating an estimate for the entity of activity parameters.
Parametric is More Accurate. Bottom up is Accurate (When Parametric was not
given)
Three-Point Estimates
Estimation distribution type Expected Duration (TE)

1 Triangular distribution TE = (TO+TM+TP) / 3
The triangular distribution is

simply the average or mean of
the three separate estimates
2 Beta distribution (PERT TE = (TO+4TM+TP) / 6

technique)
The beta distribution, based
on PERT, assumes a great
deal of confidence that the
most likely estimate TM is
accurate. It is a weighted
average method.

Estimates to Confidence Levels
Convert the Project Estimates to Confidence Levels
The Three-point Estimate (E) and the Standard Deviation (SD) thus calculated are used to convert the project
estimates to “Confidence Levels”.
The standard deviation allows us to determine the percentage probability of the confidence level of the
given estimate.
σ = (Tp - TO ) / 6 The conversion is based on Confidence Level−
 If n=1 then Probability is 68.27%
Range of Estimate  If n= 1.645 then Probability is 90%
E ± (n * σ)  If n=3 then Probability is 99.73%
The above means, that adding a margin of 1 sigma we get a 68.25% of the confidence level of the
estimate, while adding a buffer of 2 sigmas, we should be able to tell in 95.46% confidence that the project
will be finished in the given time. It may be easily noticed, that that the most optimal solution seems a
buffer of 2 sigmas, as lower numbers are giving a low level of confidence, whereas higher - a significant
increase of the safety margins with a rather little increased confidence.

1σ 68.2689% of the values will lie
between MEAN-1SD and
MEAN+1SD
2σ 95. 4499% of the values will

lie between MEAN-2SD and
MEAN+2SD

MEAN+3SD

MEAN+6SD

Moon Travels are planning on implementing a travel booking system. In the past they were using a
completely manual system, which caused errors and delays for their customers. The project manager
is confident that the implementation will be completed in 6 weeks, with best Effort it can be completed
in 4 weeks, and the worst case scenario might take it to 11 weeks. What must be the three point
estimate in range for this travel booking system implementation with confidence level of 95%?
A: 6.5 weeks
B: 4.83 – 7.67 weeks
C: 4.167 – 8.833
D: None of the Above.
Ans: C
TO = 4 (Best Effort) Range of Estimate
Tp = 11 (Worst Case) TE ± (n * σ)
TM = 6 (Confident) With 95% Confidence Level N = 2
TE = (TO+4TM+TP) / 6 = 6.5 σ = (Tp - TO ) / 6 = 1.1667
Estimate with Confidence of 95% = TE ± (n * σ) = 4.167 – 8.833

Resource Leveling & Resource Smoothing
When we are developing the schedule, we sequence the activities and then we assign resources and
estimate duration. Now, while we are performing all these activities, our focus is generally to sequence
activities based on their dependencies (mandatory or discretionary). After this, we may end up
developing a schedule where some of the resources are over allocated. When we apply resource
leveling, we apply resource constraints (like we do not have more than 45 hours in a week) to our
schedule, applying this resource constraint may result in change of project schedule dependencies and
it may result in change in project duration. In the image above when we applied 45 hours constraint to 7
week project, then it became 9 week project schedule.
After applying resource leveling you have a resource

constrained schedule, but you may still have the
desired level of allocation in your project plan to
keep things well managed. Let’s say your desired
level of allocation per week is 38 hours, now by
doing Resource Smoothing you try to adjust
activities in such a way that you achieve this desired
level of resource allocation. You may not be able to
do it for all the weeks since you do not think of
changing the project duration while applying this
smoothing, so you do it only wherever slack is
available.

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Schedule Compression
•Fast Tracking : activities are done in parallel (mainly critical path activities) or
Fast Tracking allowed overlapping of activities to shorten the project duration. Fast tracking, look at
discretionary dependencies Fast tracking may result in Rework and Increases
Risk.
•Crashing : shorten the activities by Adding Resources to critical path activities to

Crashing decrease their duration, may result in team burnout. Crashing always may not bring
out a viable alternative but may Increase the Risk and / or Cost.
•Schedule Compression may also can be achieved through Reducing Scope and / or cutting Quality, however not
accepted to compromise on scope and quality unless change request is accepted
Project Cost Management
Project Cost Management includes:
• The processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs
• So that the project can be completed within the approved budget.
Initiation Planning Execution Monitoring & Closing

Group Group Group Process Group Group
Plan Cost
Management
Estimate Control
Costs Costs
Determine
Budget

Knowledge Area: Cost Management
There are 4 Cost Management processes:
1.Plan Cost Management
•Establishing Project Policies, procedures and the controls to ensure the project costs are
managed well.
2.Estimate Costs
•Identifying the costs associated with the resource needs in order to accomplish the
project activities
3.Determine Budgets
•Once the cost estimates are available a planned budget is authorized as the Cost Baseline
to maintain a reference for the project
4.Control Costs
•Process of managing the project activities to control costs with reference to the Cost
baseline
Determine Budget – Budget Components
Project Management
budget reserve
Cost baseline Control
accounts Contingency reserve
Work package cost estimates Activity
contingency reserve
Total Amount Activity cost

estimates
Project budget component
1. Work Package Cost Estimate = Activity Cost Estimates + Activity Contingency Reserve
2. Control Accounts = Cost Baseline = Work Package Cost Estimate + Contingency Reserve
3. Project Budget = Cost Baseline + Management Reserve
SN Panigrahi SN Panigrahi, Essenpee Business Solutions, India 116

Cost Baseline, Expenditures, and Funding Requirements
A project is often funded

in incremental amounts
and may not be evenly
distributed. The funding
requirements specify
when project funding will
be required. The total
funds required, or project
budget, is the amount
included in the cost
baseline plus any
management reserves.

Essential Elements of Earned Value Management
Planned Value Approved Budget (Cost) for activities scheduled to be performed during
a given period. Cost and Schedule baseline refers to the physical work
(PV) scheduled and the approved budget to accomplish the scheduled work.
Earned Value Quantification of the “Worth / Value” of the work done to date.
(EV) EV tells you, in physical terms, what the project has accomplished or
Worth or Value of Work Completed as on given Point of Time.
Actual Cost Actual Cost Incurred or Spent on the project as on given Point of
(AC) Time
Budget At
The Budgeted Amount for the Total Work / Complete Project
Completion (BAC)

118
Budget at Completion
(BAC)
The Total Budget for the Project - Baseline EVM Method
Planned Value (PV) How much worth of work was Scheduled (Planned) to Date
Earned Value (EV) How much worth of Work was Completed to Date % Work Completed * BAC
Actual Cost (AC) The Amount of Money Spent so far
Scheduled Variance (SV) The difference between the cost of work performed and the SV = EV - PV
cost of work scheduled
Cost Variance (CV) The difference of the actual cost and the expected cost. CV = EV - AC
Schedule Performance Ratio between EV and PV, to reflect whether the project work SPI = EV / PV
Index (SPI) is ahead of / on / behind schedule in relative terms If a project has a Schedule Performance Index (SPI) of 0.90, this means that:90%
of the work planned to date has been completed
Cost Performance Index Ratio between EV and AC, to reflect whether the project work CPI = EV / AC
(CPI) is under / on / over budget in relative terms Cost Performance Index (CPI) of 0.90, this means, 111% (1/CPI) of the budget
planned to date has been spent
Estimate at Completion The estimated total amount of money needed to be put into 1. EAC = BAC/CPI - If You will continue in the same Rate of Spending.
(EAC) the project based on the information available as today 2. EAC = AC + (BAC – EV) - If the remaining work is expected to be
(Revised Estimation) completed (Future work) at the planned rate
3. EAC = AC + (BAC – EV)/(CPI*SPI) – If both CPI & SPI influence remaining
work.
4. EAC = AC + Bottom up Estimate to Complete
if initial cost estimate was fundamentally flawed,
Estimate to Completion How much more do we need to put into the project to ETC = EAC - AC
(ETC) complete Balance Work.
SN Panigrahi,
Variance at Completion The difference between the Estimated total cost and the VAC = BAC – EAC
(VAC) original budget
To Complete The efficiency needed to finish the project on budget, it is the TCPI = Remaining Work / Remaining Funds
Performance Index ratio between budgeted cost of work remaining and money = (BAC- EV) / (BAC – AC) – As per Original Budget
(TCPI) remaining = (BAC- EV) / (EAC – AC) – As per Re-Estimate
119
Basic Understanding of Terms
Budget At Completion (BAC) – Say 100
A B C D E
Review
Earned Value (EV) - 50
Actual
As per Planning
Planned Value (PV) - 60
EV = 50
PV = 60
AC = 70
BAC = 100

120
DATA BAC AC EV PV
Variance VAC CV SV
Indices TCPI CPI SPI
Forecasts EAC ETC

121
Project Review Questions EVM Performance Measures
How are we Doing Schedule-wise? Schedule Analysis & Forecasting
 Are we as per Schedule / Behind or Ahead of Schedule?  Schedule Variance (SV)
 How Efficiently are we using Time?  Schedule Performance Index
 When we are Likely to Finish Work?  Time Estimate at Completion (EACt)
How are we Doing Cost-wise? Cost Analysis & Forecasting

 Are we as per Budget / Over or Under Budget?  Cost Variance (CV)
 How Efficiently are we using our Resources?  Cost Performance Index (CPI)
 How Effectively must we use our Remaining Resources?  To Complete Performance Index (TCPI)
 What is the Project Likely to Cost?  Estimate at Completion (EAC)
 Will we be under or Over Budget?  Variance at Completion(VAC)
 What will the Remaining Work Cost?  Estimate to Complete (ETC)

A B C D E
Estimate at Completion (EAC)

Assumption : Future Assumption : past Assumption : past Assumption : initial cost
EV = 50 Performance will be same as performance deviated from performance deviated from estimate was fundamentally
the past performance in terms budget estimate; however, both budget estimate (over flawed, and needs to re-
PV = 60 of Cost. from now onwards the budget) and schedule (behind calculate the new cost
AC = 70 You will continue in the remaining work is expected schedule), current variances estimate for the remaining
to be completed (Future are thought to be typical of work for the project.
BAC = 100 same Rate of work) at the planned rate future. ie both CPI & SPI
Spending. influence remaining work.
EAC = BAC/CPI EAC EAC = AC + (BAC – EAC = AC + Bottom up

= AC + (BAC – EV) EV)/(CPI*SPI) Estimate to Complete
= 100 / 0.71 = 140.84 = 70 + (100-50) = 120 70 + (100-50) / 0.71*0.83
= 154.85
A B C D E
Estimate to Complete (ETC)

Assumption : work is proceeding as per Assumption : initial cost estimate was
plan fundamentally flawed
EV = 50
PV = 60 ETC = EAC – AC ETC = Re-estimate
AC = 70 Assumption Assumption Assumption
BAC = 100 -1 -2 -3
=140.84 – =120 - 70 =154.85 –

70 = 70.84 = 50 70 =
84.85

With reference to the diagrams below, it can be inferred that the project is currently
A. ahead of schedule and under A. ahead of schedule and A. ahead of schedule and under
budget under budget budget
B. ahead of schedule and over B. ahead of schedule and B. ahead of schedule and over
budget over budget budget
C. behind schedule and under C. behind schedule and C. behind schedule and under
budget under budget budget
D. behind schedule and over D. behind schedule and over D. behind schedule and over
budget budget budget
Ans : Solution: D Solution: B
Solution: C
As of today, AC > EV = over As of today, AC > EV = over
As of today, AC < EV =
budget and EV < PV = budget and EV > PV = ahead
under budget and EV < PV =
behind schedule, so the of schedule, so the project is
behind schedule, so the project
project is both “behind “ahead of schedule and over
is “behind schedule and under
schedule and over budget”. budget”.
budget”. SN Panigrahi, Essenpee Business Solutions, India 125
1. Variance at Completion (VAC) - is a comparison of the original budget at completion (BAC)
and the revised forecast (EAC).
VAC = BAC – EAC
A negative VAC (<0) is an indicator that the project may exceed the BAC – project cannot
be completed with the approved budget - may require either an additional funding
allocation or the elimination of some of the project scope.
A positive VAC (>0) indicates the project will be completed in less than the budget - not
utilize the allocated budget – budget funds remain excess.

1. To Complete Performance Index (TCPI) - defined as the ratio of work remaining to be accomplished and
the amount of unspent or remaining funds.
TCPI = (Remaining Work)/(Remaining Funds)
TCPIBAC = (BAC – EV) / (BAC – AC) - If the project is under budget
TCPIEAC = (BAC – EV) / (EAC – AC) - If the project is over budget

TCPI < 1 : indicates that to accomplish efficiency can be less than the efficiency at which the
work that has been completed -project is in good shape
TCPI > 1 : need to perform with better cost performance efficiency than the efficiency at
which the work that has been completed – project is not in good shape
TCPI = 1 : project may continue to work with same cost performance efficiency as in the past -
Project is OK

Types of Cost
Direct costs are those directly linked to doing the work of the project. For example, this
Direct cost could include hiring specialised contractors, buying software licences or commissioning
your new building.
These costs are not specifically linked to your project but are the cost of doing business
Indirect cost overall. Examples are heating, lighting, office space rental (unless your project gets its
own offices hired specially), stocking the communal coffee machine and so on.
Fixed costs are everything that is a one-off charge. These fees are not linked to how
long your project goes on for. So if you need to pay for one-time advertising to secure a
Fixed costs
specialist software engineer, or you are paying for a day of Agile consultancy to help
you start the project up the best way, those are fixed costs
These are the opposite of fixed costs - charges that change with the length of your
Variable cost project. It's more expensive to pay staff salaries over a 12 month project than a 6 month
one. Machine hire over 8 weeks is more than for 3 weeks. You get the picture.
These are costs that have already been incurred. They could be made up of any of the
Sunk cost types of cost above but the point is that they have happened. The money has gone.
These costs are often forgotten in business cases, but they are essential to know about.
"Sunk cost is a loss which should not play any part in determining the future of the project."
Unfortunately, project sponsors and other senior executives (and even project managers) often value
completion over usefulness and it does take courage to suggest to your sponsor that you stop a project
that has already seen significant investment SN Panigrahi, Essenpee Business Solutions, India 129
Opportunity Cost
Opportunity Cost is the loss of potential future return from
the best alternative project when a choice is required for several mutually
exclusive projects.
It can also be defined as “the opportunity (potential return) that will NOT be realized for the second best project
not selected”. Since there are limited resources such as human, time, money, etc., we cannot work on infinite
number of projects at the same time. Opportunity cost is a concept to help you judge which project(s) to take and
which project(s) NOT to take based on the relative potential returns of the project(s).
For example:
• Project A has a potential return of $25,000
• Project B has a potential return of $20,000
• Project C has a potential return of $10,000
The opportunity cost for selecting Project A for completion over Project B and C will be $20,000 (the
“potential loss” of not completing the second best project).

Some terminologies you need to know ..
Purchase Value
•The initial cost to purchase the resources (or equipment)
Salvage Value
•The scrap value of the resources (or equipment) at the end of the project
•Sunk costs: cost that has already been incurred and thus cannot be recovered or reversed
irrespective to future events. (should not be considered when deciding whether to continue on a
project or not).
Depreciation
•Large assets purchased by the company lose value over time (Purchase Value –
Salvage Value)
 Straight Line Depreciation
 The same amount of depreciation is provided for every year, so a car with a price tag of
$10,000 and a useful life of 10 years, is depreciated by $1000 per year.
 Accelerated Depreciation
 The asset depreciates faster than the straight line depreciation, so a car with a price
tag of $10,000 depreciates $3000 the first year, $1500 next year, $1000 the third year
and so on…. (also called as Double-Declining or Sum of Year Digits)
India
131
A new state-of-the-art computer for your project costs $10K. You expect for it to last
for four years and to sell it for $1K for parts. How much should you book in
depreciation each year for the computer? Assume you are using straight-line
depreciation.
A. $1250
B. $2000
C. $2250
D. $2500
Ans :
C. $2250 – (Asset Cost – Scrap Value) / Useful Life = ($10K – $1K) / 4 = $2250 per year.

Project Quality Management
This is the process of determining quality policies, objectives, and responsibilities within the projects.
The processes for incorporating the organization’s quality policy regarding planning, managing, and controlling project
and product quality requirements in order to meet stakeholder objectives.

Group
Plan Quality Manage Control

Management Quality Quality
133
Project
Quality
Management
Quality Manage Control

Planning Quality Quality
Prevention Inspection
Criteria Driven
Driven Driven
Manage Quality is about
Quality planning is the Quality Control is about
utilizing all the elements
stage used to identify the ensuring that the products
defined in quality
quality criteria that are and services of the project
planning that are needed
relevant to the project and comply with relevant
to meet the customer’s
to plan how to satisfy quality standards and
requirements.
them. about eliminating the
It is a continuous process
causes of unsatisfactory
improvement.
It lays out the roles and performance.
responsibilities, resources, It involves managing the
procedures, and processes It is the ongoing quality
quality of the project
to be utilized for quality management and review
deliverables. It refers to
control and quality of the process of doing the
the actual testing of
assurance. work of the project during
product components and
its life cycle
the entire product before SN Panigrahi, Essenpee Business Solutions,
and during delivery. 134
India
Quality Grade
Quality is Conformance to the Grade is a Categorization of the
Requirements. product based on its
Quality is referred to Functions. Characteristics.
There is a big difference between the quality and grade. A product can be a high grade (high-end)
or a low grade (low-end), it is perfectly acceptable and there is no problem with it as long as it
fulfills its stated requirements.
On the other hand, a low-quality product is never acceptable and it is always a problem. Every
product must be of high quality regardless of its grade. A low-quality product is never desired.
Example : A camera with lots of functions is high grade and a camera which takes bad pictures is
low quality.
It may not be a problem if a suitable low-grade product (one with a limited number of features) is of high
quality (no obvious defects). In this example, the product would be appropriate for its general purpose of
use (Functionality)
The project manager and the project management team are responsible for managing the
trade-offs associated with delivering the required levels of both quality and grade
Low Grade is not a problem – low quality isSNaPanigrahi,
problem Essenpee Business Solutions,
India
135
Precision & Accuracy
1. Precision - Consistency in value of repeated measurements having fine cluster and little scatter.
A Measure of exactness - degree of cluster - process will repeat the same value
Precision is Consistency in value of repeated measurements having fine cluster and little scatter
Precision => Repeated Value

Accuracy - is a correctness of how close is measured value to true value.
Accuracy => True Value,

Precision is measured by standard deviation in a chart - how far from mean, not how far from a true value.
Precise measurements are not necessarily Accurate measurements and Accurate measurements are not necessarily
Precise measurements. Project management team should determine the appropriate levels of accuracy and precision for use in the
quality management plan

India
136
Knowledge Area: Quality Management
There are 3 Quality Management processes, namely:
1.Plan Quality Management

•Planning Project Policies, Processes, Procedures which will enable and ensure the
Project deliverables are in compliance with the quality requirements.
2.Perform Quality Assurance

•Performing Quality Audits to ensure the right set of Policies, Processes, Procedures
are used to deliver the desired quality and grade of deliverables with defined
precision and accuracy. Quality Control Measurements can be applied to achieve
the same.
3.Control Quality
•Process of managing the project quality in the defined tolerance levels, control
limits and ranges during the project execution.

Key contributions from Quality Gurus:
Guru Contribution
Deming -14 steps to Total Quality Management
- 7 deadly sins and diseases,
- the theory of variance,
- PDCA (Plan, Do, Check & Act) cycle
Dr. Joseph Juran - Wrote Quality control hand book, called ‘Bible of quality’
- Habit of quality, Quality Triology (Quality Planning, Quality Control,
Quality Improvement).
- Define ‘quality’ as ‘Fitness of use’
- Categorised the cost of the quality
Philip Crosby - 14 steps for quality improvement
- Concept of ‘ Zero defects’
- Written book ‘ Quality is free’
Massaki Imai - Kaizen
Ishikawa - Cause and effect diagram
SN Panigrahi
- Quality circle
Taguchi - Loss Function
Feigenbaum - Quality defines by the customers

William Shewart - PDSA (Plan, Do, Study & Act) , Statistical Control Chart
138
Preventing Poor Quality Pays
Prevention Costs
Benefit
Appraisal Costs
$ Repair Costs
Prevention Costs
Appraisal Costs
Failure Costs
 Internal Repair Costs
 External
Failure Costs
Before Quality After Quality

Cost Alignment Cost Alignment
SN Panigrahi SN Panigrahi, Essenpee Business Solutions, India 140

Seven Quality Tools
1. Cause-and-Effect Cause-and-Effect Diagram (also called Ishikawa or fishbone chart): Identifies many possible
Diagram causes for an effect or problem and sorts ideas into useful categories.
Check Sheet: A structured, prepared form for collecting and analyzing data; a generic tool that
2. Check Sheet
can be adapted for a wide variety of purposes.
Control Charts: The control chart is a graph used to study how a process changes
over time. Data are plotted in time order. A control chart always has a central line for
3. Control Charts
the average, an upper line for the upper control limit, and a lower line for the
lower control limit..
Histogram: The most commonly used graph for showing frequency distributions, or how often
4. Histogram each different value in a set of data occurs.
Pareto Chart: As a quality control tool, the Pareto chart operates according to the 80-20 rule. This
rule assumes that in any process, 80% of a process’s or system’s problems are caused by 20% of
5. Pareto chart major factors, often referred to as the “vital few.” The remaining 20% of problems are caused by
80% of minor factors.
Scatter Diagram: Graphs pairs of numerical data, one variable on each axis, to look for a
6. Scatter Diagram correlation between two variables wherein the values for each pair of a variable is
plotted on a graph in the form of dots
Stratification: A technique that separates data gathered from a variety of sources so that patterns
7. Stratification can be seen with different colours (some lists replace “stratification” with “flowchart” or “run
chart”).. SN Panigrahi, Essenpee Business Solutions, India 141
Rule of Seven is used to filter out the random variation in a production process. shows the ‘trends’ that are caused
by the ‘assignable causes’ or non-random causes that required investigation and possible corrective action to be
taken.
Rule of Seven pattern:

seven points above mean value;
seven points below mean value;
seven points or all increasing ; or
seven points all decreasing
the patterns are indicators of non-random problems which can be symptom of process out of control.

Project Resource Management
Project resource management includes the processes that organize, manage and lead the project team
and, physical resource.
These processes help ensure the availability of the right resources at the right time and place to the project manager and
the project team

Group
Acquire
Plan Resources
Resource
Management
Develop Control
Estimate Team Resources
Activity
Resource Manage
Team
144
Knowledge Area: Resource Management
Objectives
•Understand the different Human Resource Management Processes
•Their Inputs, Tools and Techniques, Outputs

 Resource Management includes the processes to ensure the required
resources are planned, acquired, evolved and managed to deliver the
project deliverables inline with the objectives.
 Ensuring the resources(project staff) are included in the early
engagement of the project would increase their project commitment.
 Project Management team is responsible for all leadership activities such
as Initiating, Planning, Executing, Monitoring, Controlling and Closing.

There are 4 HR Management processes, namely:
Plan Resource Management

Identification of the HR Personnel required to be on the project, Engaging them on the project and finally release them
once their role has ended in project
Estimate Activity Resources
Estimate Activity Resources is the process ofestimating the type and quantities of material, humanresources, equipment,
or supplies required to perform each activity.
Acquire Resources
Confirmation of required resource availability for the project to be executed
Develop Team
Ensuring the project staff are capable to deliver the project by up-skilling the
staff, training, coaching and ensuring the effective communication and motivation across the project staff to achieve the
project objectives.
Manage Team
Continuous engagement of the staff to ensure the team understands their importance to the project, how their work has
impact on the project by providing them continuous feedback, resolve any conflicts and recognize/reward accordingly to
keep the upbeat in the team.
Control Resources
This process ensures the availability of planned physical resources, monitoring them against the plan, and taking
corrective actions when required

5 Motivational Theories That A Project Manager Must
Know About
1. Maslow’s Hierarchy Is a motivational theory comprising a five-tier model of human needs, often depicted as hierarchical levels within a
of Needs pyramid. From the bottom of the hierarchy upwards, the needs are: physiological, safety, love and belonging, esteem,
and self-actualization.
2. McGregor’s Theory The Theory X and Theory Y are the theories of motivation given by Douglas McGregor in 1960’s. Theory X Type
X and Theory Y Managers assume that employees are lazy, unmotivated, and will do anything to avoid working, therefore needs Closed
Supervision. Theory Y Type Managers assume that employees are Self Motivated - happy to work and will take on
additional duties without being forced to.
3. Herzberg’s He proposed that ‘hygiene factors’ such as pay, job security, working conditions, fringe benefits, job-policies will only
Motivation - Hygiene reduce dissatisfaction, and by themselves do not motivate people. Other factors such as levels of challenge, work,
Theory recognition, advancement, autonomy and opportunity for creativity are termed as ‘motivational factors’ that make people
want to work.
4. McClelland’s Need also known as Three Needs Theory, proposed by psychologist David McClelland, is a motivational model that attempts
Theory to explain how the needs for Achievement, Power, and Affiliation affect the actions of people from a managerial
context. Employees who are strongly achievement-motivated are driven by the desire for mastery.
5. Expectancy Theory This was proposed by Victor Vroom of Yale School of Management in 1964. This is based on the assumption that
by Victor Vroom people choose a specific behavior based on their expectation of the intended result. He introduced three variables –
Expectancy (E) : Expectation leads to desired Performance
Instrumentality (I) : Performance leads to favorable Outcome (rewards such as promotion, salary increase)
Valence (V) : This is the importance one places on rewards, based on their needs, goals and sources of motivation

Plan Resource Management – T & T
RAM stands for Responsibility Assignment Matrix.
RACI (Responsible, Accountable, Consulted, Informed) is an Example of RAM which shows the relationship
between activities and the team members.
Role Definition
Responsible Conducts the actual work/owns the problem. There should be at least one R (otherwise the
(“doer” of the work) work is not performed) and there can be multipl R’s (this is called team working)
Accountable Approves the completed work and is held fully accountable for it. There should be one and only one
(“owner” of the work) A
Consulted Has the information and/or capability to complete the work. Two-way communication (typically between
R and C) – Optional
(in the “Loop”)
Informed (Keep in the Is to be informed of progress and results. One-way communication (typically from R to I) - Optional
“Picture”)

RACI (Responsible, Accountable, Consulted, Informed)
 Identify all of the processes, activities involved and list them down the left side of the chart. So each row is a separate activity.
 Identify all of the roles on the project (mapping them to people if appropriate) and list them along the top of the chart. So each
column is a different role/person.
 Identify who is responsible, accountable, consulted, and informed by filling in the cells for each activity.
 Identify issues with the current roles. There should be at least one R and only one A for each activity, but no activity should be
missing an "R“ & “A”. More than one "R" is called an Overlap or a Team Work. A missing "R" is considered a gap in
responsibility.
 Resolve issues with gapes and overlaps. Overlaps are typically resolved by taking a closer look at the process or activity itself
and selecting a logical high-level owner. Often one of the "R"s is someone responsible for a subprocess or just a part of the
overall activity. Gaps are usually less difficult to resolve. You just select the appropriate person to be responsible for the
process or task.
 Perform a final cross-check to ensure that changes did not impact other RACI assignments.
Persons
Activity RAM SHYAM BHIM GOPAL RAMPAL MAHIPAL
Define A R I I C I

Design I A C I R R

Develop C A R C R

Test A R R R I I

Customer Approval R, A C SN Panigrahi,
Essenpee
I Business Solutions, India 149
Team Building – Bruce Tuckman Model – Five Stages of
Development
1 Forming Team Forms, meets, learns about project; Roles & Responsibilities are not
clear; PM’s Role : guide & direct the team, and establish clear

objectives.
2 Storming Questioning established norms; conflicts between team members'; differing

working style; team experiences uncomfortable & stress; PMs Role :
Establish processes and structures; Resolve Conflicts; Remain positive.
3 Norming This is when people start to resolve their differences; know one-another
better; socialize; develop a stronger commitment to the team goal; start
progress towards it. PMs Role : Team Building - help team members take
responsibility
4 Performing The team reaches the performing stage when hard work leads, without

friction, to the achievement of the team's goal. The structures and processes
that you have set up support this well. PMs Role : Delegate; concentrate on The Duration of a particular phase
developing team members. depends on team dynamics, size &
5 Adjourning This is the stage of shelving / suspending the project leadership
PMs Role : celebrate the team's achievements

Manage Team – T & T Formal or Legitimate Power
This power comes with the position itself; therefore, this power is also known
Types of Power as positional power. Team members will obey orders from you because they
know that you have the authority to issue orders. PM has such Power in
a Projectized organization and in a Strong Matrix type of organization
Reward Power
Positional Reward power is (to some extent) tied to the formal power of the project manager. You
will earn the team’s support because team members think that you are capable of
Powers rewarding them if they perform well. Rewards may be monetary (salary increase, bonus,
promotion, etc.) or non-monetary (recognition, professional development, appreciation
letter, day off, etc.).
Punishment Power
Punishment Power comes with the formal power of the project
manager. Here, you will get your team’s obedience because the team
Types members are afraid that if they don’t perform their duties efficiently, they may
get punished. Here you use fear as a primary tool to get work done.
of Punishment power is also known as coercive power.
Power Expert Power
Being a subject matter expert itself is a great influential power. Team
members will respect you for your technical expertise. They trust you
because they think that you are an expert and know how to handle issues
Expert power is considered to be a positive power that influences team
Personal members to follow your lead.
Powers Referent Power

If you have connections with some influential people in the organisation, you
are said to possess referent power. Since you are connected with influential
people, your team members want to connect with you as well.
S.N.Panigrahi
1
Project Manager’s Role : CONFLICT RESOLUTION
One of the Major Role of Project Manager is Resolving Conflicts. The
key conflict resolution techniques are:
Confronting (problem solving) / Collaborating
• Confronting means solving the real problem so that the problem goes away. Confronting
leads to a win-win situation.
Compromising
• This is lose-lose situation, since no party gets everything. This technique involves finding
solutions that bring some degree of satisfaction to both parties.
Withdrawal (Avoidance)
• In this technique, the parties retreat or postpone a decision on a problem. Dealing with
problems is a PMI-ism; therefore, withdrawal is not usually the BEST choice for resolving
conflict
Smoothing (Accommodating):
• This technique emphasizes agreement rather than differences of opinion
Forcing
• This technique involves pushing one viewpoint at the expense of another - win-loose
152
India
STYLE DESCRIPTION EFFECTS
Withdrawing/ Retreats from an actual or potential conflict Does not solve the problem
situation
Avoiding
Smoothing/ Emphasizes areas of agreement rather than Provides only short-term solution
areas of difference
Accommodating
Compromising Searches for the bargains for solutions that Does provides definitive resolution
bring some degree of satisfaction to all parties
Forcing Pushes one view-point at the expense of others; Hard feelings may come back in other
offers only win-lose solutions
forms
Confronting/ Problem Incorporates multiple viewpoints and insights Provides long-term resolution
from differing perspectives; leads to consensus
Solving and commitment
Provides ultimate resolution
/ Collaborating Treats conflicts as a problem to be solved by
examining alternatives;

Hersey-Blanchard Situational Leadership Model
Leadership style
Follower 'situation' H & B terminology Quick description
emphasis
Unable and Unwilling Telling
Follower lacks experience or skill, and high task - low Leader gives precise firm instruction, direction,
confidence to do the task, and may relationship instructions and deadlines and autocratic
also lack willingness. closely monitors progress.
Unable but Willing Selling
Persuasion,
Follower lacks the ability, perhaps due high task - high Leader explains goals, tasks,
Encouragement,
to lack of experience, but is relationship methods and reasons, and
Incentive
enthusiastic for the work. remains available to give support.
Able but Unwilling Participating
involvement,
Follower is capable and experienced, low task - high Leader works with follower(s),
consultation,
but lacks confidence or commitment relationship involved with group, seeks input
teamwork
and may question the goal or task. and encourages efforts.
Delegating
Able and Willing
low task - low Leader gives responsibility to trust, empowerment,
Follower is capable, experienced,
relationship followers for setting goals, responsibility
confident and committed to the goals.
planning and execution.

154
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Hersey-Blanchard
Situational
Leadership Model

Project Communication Management
Project Communications Management includes the processes that are required to ensure timely and appropriate
planning, collection, creation, distribution, storage, retrieval, management, control, monitoring and the ultimate
disposition of project information

Group
Plan
Manage Monitor
Communication
Management Communication Communication
156
Knowledge Area: Communications Management
Objectives
•Understand the different Communications Management Processes


• It includes the processes to ensure project team and the stakeholders are effectively
engaging, interacting with the required information at right time intervals based on which
suitable actions/decisions can be taken towards achieving project work deliverables.
•Project Manager spends majority of the time in ensuring the communications are flowing
in the right manner with right information across the project and rightly understood.

• There are 3 Communications Management processes, namely:
Plan Communications Management

• Planning Effective Stakeholder and Team communications by identification of the communication
needs and engaging them at the desired levels of communication
Manage Communications
• Managing Communications to ensure the planned desired level of engagement and
communication is in place.
Control Communications
• Controlling Communications across the project to ensure the stakeholders communication
requirements are met with appropriate changes incase of deficit communication or cut down
excess information flow.

Communication Requirements Analysis
• Sources of information typically used to identify and define project communication requirements
include:
 Stakeholder information and communication
 The Number of potential communication channels = n(n – 1)/2
 Organizational charts
 Project organization and stakeholder responsibility, relationships and interdependencies
 Development approach
 Disciplines, departments, and specialties involved in the project
 Logistics of how many persons will be involved with the project and at which locations
 Internal information needs
 External information needs
 Legal requirements
159
You have six team members working under you. How many lines of communication will you have in your
communication plan?
(a) 16
(b) 15
(c) 21
(d) 30
Ans : C
Tips
You have six team members working under you N= 6+1 (You – Project Manager)
You are a Project Manager. Ten Team Members N = 10 +1 (You – Project Manager)
Reporting to You. Or You are Leading a Ten Member
Team
You are a Project Manager. You have Identified a N= 5 (You – Project Manager already Included in the
Team Size of 5. Team)
Sponsor Presented a Charter where in he Appointed N = 8 +1 (You – Project Manager)
You as a Project Manager. There are Total Ten
Stakeholders out of which Eight Team Members
Reporting to you. Other Two are Reporting Directly to
Sponsor and not to you.
Question: You have four resources reporting to you. Due to some new contracts, you have decided to
add two more resources to your team. What is the total number of communication channels?
A: 21
B: 15
C: 6
D: 28
Ans A
N = 1 (You) + 4 (reporting You) + 2 (Added) = 7
No. of Communication Cannels = N(N-1) / 2 = 21

Project Risk Management
It is a scientific approach to identify, analyze, assign and respond to the risk regularly across the
project life & so as to achieve the maximum towards meeting project objectives.

Group
Plan Risk
Management
Identify
Risks Implement Monitor
Perform Risk Risks
Qualitative Risk Responses
Analysis
Perform
Quantitative Risk
Analysis
Plan Risk
Responses 162
Knowledge Area: Risk Management
There are 6 Risk Management processes, namely:
1.Plan Risk Management

Process of ensuring the Risk management is planned in detailed manner which can be applied
over the course of the project.
2.Identify Risks
Identification of Risks over the Course of the Project and documentation of their characteristics.
3.Perform Qualitative Risk Analysis
Performing a qualitative analysis of risks and conditions to prioritize their effects on project
objectives.
4.Perform Quantitative Risk Analysis
Measuring the probability and consequences of risks and estimating their implications for project
objectives.
Once Risks are prioritized and weighted, each of risks are provided a response plan (Avoid,
Transfer, Mitigate, Accept for Negative Risks and Exploit, Enhance, Share, Accept for Positive
Risks)
6.Control Risks
Controlling Risks over the duration of the project to the benefit of the project objectives.
Most Common Project Risks
 Cost risk, typically escalation of project costs due to poor cost estimating accuracy and scope creep.
 Schedule risk, the risk that activities will take longer than expected. Slippages in schedule typically increase
costs and, also, delay the receipt of project benefits, with a possible loss of competitive advantage.
 Performance risk, the risk that the project will fail to produce results consistent with project specifications.
Other Types of Risks

There are many other types of risks of concern to projects. These risks can result in cost, schedule, or
performance problems and create other types of adverse consequences for the organization. For example:
 Governance risk relates to board and management performance with regard to ethics, community
stewardship, and company reputation.
 Strategic risks result from errors in strategy, such as choosing a technology that can’t be made to work.
 Operational risk includes risks from poor implementation and process problems such as procurement,
production, and distribution.
 Market risks include competition, foreign exchange, commodity markets, and interest rate risk, as well as
liquidity and credit risks.
 Legal risks arise from legal and regulatory obligations, including contract risks and litigation brought against
the organization.
 Risks associated with external hazards, including storms, floods, and earthquakes; vandalism, sabotage, and
terrorism; labor strikes; and civil unrest.

Objectives
•Understand the different Risk Management Processes
• It includes the processes to ensure the project risks are
identified, analyzed, acted, planned with responses and controlled for minimal impact on project
objectives.
• Project Risks can be broadly categorized based on the level of knowledge we have upon them.
• Known Risks. The risks which are identified and are aware to the project management team.
• Unknown Risks. The risks which are not yet identified & might occur instantaneously without prior
knowledge.
• Risks should be perceived as:
• Overall Project Risk. This is the holistic risk of the project itself considering
all individual project risks along with any other unknown risks beyond the project control.
• Individual Project Risks. Risks which can standalone or in a category group
well within reach of the project which impact partially or a complete project objective set.

Types of Risks
Project risk is an uncertain event that will have a positive or negative effect on one or
Project Risk more project objectives, if it occurs. A risk can be either positive or negative. A positive
risk is also known as an opportunity and a negative risk as a threat.
A positive risk is a condition or situation that is favorable to the project and will have a
Positive Risk good impact on any of your project objectives if it occurs.
A negative risk is a condition or situation that is unfavorable to the project and will
Negative Risk have a bad impact on one or more of your project objectives, if it occurs.
Issue is a Current Problem. This is a hot topic or a disputed matter; with an issue,
Issue there is disagreement among the project stakeholders. As a project manager, it will be
your responsibility to manage issues and note them in a log with their resolution.
Known risks are risks that have been identified.

For example, you know that there is a chance that one of your team members may go
Known Risks on leave during the peak of your project. This is a known risk, and to manage this you
make a plan to bring in another identified employee.
You will use the contingency reserve to manage known risks.
These are unidentified; they are not known until they happen. You cannot make a
response plan for these risks and you cannot manage them proactively.
Unknown Risks Unknown risks are managed through workarounds; to manage these kinds of risks, you
will use the management reserve. SN Panigrahi, Essenpee Business Solutions, India 166
Types of Risks
Pure risk, also called Absolute Risk, is a category of threat that is beyond human
control and has only one possible outcome if it occurs: loss. Pure risk includes such
Pure Risk incidents as natural disasters, Accidents, War, Health & Safety, fire or untimely death
etc. Pure Risks are Results Loss only & can be Insured.
Business risk implies uncertainty in profits or danger of loss and the events that
Business Risk could pose a risk due to some unforeseen events in future, which causes business to
fail / growth. Business Risks can be Positive or Negative & Can’t be Insured.
A contingency reserve is a calculated reserve used to manage identified risks.

Contingency Plan This is a part of the cost baseline and a project manager does not need any approval to
use this reserve.
A management reserve is created by expert judgement based on the project’s

complexity and uncertainty. Usually, it is a percentage of the cost baseline, for
Management example, 5% or 10%.
Reserve The management reserve is part of the project budget and a project manager needs
management’s approval to use this reserve.
The management reserve is used for unidentified risks.
This is also used to manage identified risks. You will use this plan when your
Fallback Plan contingency plan proves ineffective or fails; it’s a fallback SN Panigrahi, Essenpee
167
You will use the contingency reserve for the fallback plan Business Solutions, India
Types of Risks
Risk tolerance is about the sensitivity of stakeholders or organizations towards
risks.
High tolerance means people are willing to take risks, while low tolerance means
Risk Tolerance people are not willing to take a high risk unless the benefit of taking the risk
outweighs the fear. Tolerance is shown in limits - Range.
For example, a 5% cost overrun is acceptable for an organization, but anything
above that is not.
This is the amount of risk that an organization or individual is willing to accept.

The risk threshold is usually a definitive figure.
For example, your organization allows you a cost overrun of 10,000 USD, but
Risk Threshold anything more than that is not acceptable.
The risk threshold is a further step in risk tolerance. In other words, you can say that
it quantifies the risk tolerance with a more precise figure.

Types of Risks
These are indications that a risk has occurred or is about to. Risk triggers are
Risk Triggers sometimes called warning signs or risk symptoms.
For example, cloud movement can be a risk trigger for rainfall.
This is a project team member who is assigned the responsibility of ensuring that the
risk response is effective and to plan additional risk responses if required.
Risk Owner Generally, the risk owner and risk action owner is the same person in a small or
medium type of project. However, if the project is large and complex, you can assign a
separate risk action owner.
Usually, you will assign a risk action owner if you have a large project where it is
difficult for the risk owner to manage the risk on their own and they need a helping
hand.
Risk Action Owner The risk action owner helps the risk owner manage the risk. The responsibility of a
risk action owner is to ensure that the agreed-upon risk responses are carried out as
planned.

Secondary Risks & Residual Risks
Secondary Risks Residual Risks
Those risks which are
Those risks which arise as expected to remain after
a direct outcome of the planned response of
Definition
implementing a risk risk has been taken, as well
response as those that have been
deliberately accepted
Action Required? Yes Not always – depends
Creation of a Response
Action to take A contingency plan
plan
Putting out a trap for an
animal in your field but a You end up attending the
Example
member of the family meeting remotely
getting caught in it instead

Responses for
Negative Risks
Risk Avoidance - involves making changes to the project management plan to either eliminate the risk or
protect the negative impact of the risk on project objectives. Eg : Extending the schedule, changing the strategy,
or reducing the scope
Risk Transference - involves transferring risk impact to a third party along with the ownership of risk responses.
It doesn’t eliminate risk – risk exists but only being transferred from one party to the other – involves payment of
risk premium – most effective in dealing with financial risks. Eg : Insurance, Warrantee, Guarantees, Performance
bonds, contracts, agreements, outsourcing. In case of Cost – Plus contract, seller transfers the risk to the
buyer; whereas in case of Fixed –Price contract the risk is transferred by buyer to the seller

NTI – SN Panigrahi SN Panigrahi, Essenpee Business Solutions,
India
171
Risk acceptance is when no change in the project is made to accommodate the risk.
Active acceptance includes further action eg. setting aside contingency to offset the effect of
Active the risk.
Acceptance All unknown or residual risks follows acceptance strategy as no information available about
them & team will deal with those risks as they occur.
Passive acceptance requires no action beyond documenting the decision. This strategy is
used for low severity and low priority risks only. During dealing with this passive acceptance
Passive
in case Project management Team requires funds they may look for approval to get access to
Acceptance management reserves.
Made When the Likeliness of Risk Occurrence is Very Low or Its Impact is Very Low.
One simple way to remember this: remember disaster movies like “Titanic”, “Armageddon” or
“2012”. There are always those characters in the movie where they just accept that they are going
to die and of course there are the heros who take some action to get out alive. Think of the former
as “Passive Acceptance” and the heros as “Active Acceptance”.
Responses for
Positive Risks
Exploit - involves strategies to ensure that the opportunity is definitely realized. Actions are specifically directed to
reduce or remove the uncertainty of the opportunity being missed. Eg : Assigning most experienced resource to reduce time
to complete; adopting new technology or upgrading technology

Enhance - involves strategies of monitoring and emphasizing risk triggers and identifying root causes to increase
probability of opportunity realization. Eg : Adding more resources to finish an activity early to realize opportunity.
Share - involves strategies of assigning partial or complete ownership of the risk to a third party who is in a better
position to make sure the opportunity is realized. Eg : Partnerships, joint ventures, team forming etc
Acceptance – Willing to take advantage of the opportunity if it arises and not pursuing it actively
NTI – SN Panigrahi SN Panigrahi, Essenpee Business Solutions,

India
173
Contingency Plan Fallback Plan Workaround
 It is a Primary Risk Response  It is Not a Primary Risk  For Unidentified Risks which
Strategy Response Strategy are Passively Accepted.
 Used for handling Negative Risks  It is activated when Primary  There is No Pre-existing
proactively Response (Contingency Plan) Plan for workarounds
 Taken only when risk event occurs Not Effective (Plan B)
 Activated only for specific Pre-  Funding for this is taken from
Accepted Risks with certain  To be taken after the Management Reserves upon
triggers Contingency Plan Management Approval
 (i.e. no proactive actions to be taken  For Identified risks (known  PM has No Authority to
to Avoid or Minimize (Mitigate) their unknowns) Use
occurrence)  Developed during Plan Risk
 Only for Identified risks (known  Developed during Control
Responses process Risks Process.
unknowns)
 Funded from Contingency  Implementing
 Developed during Plan Risk workarounds
Responses process Reserves can cause a Change
 Funded from Contingency  PM has Authority to Use Request.
Reserves
 PM has Authority to Use
Sue is named the project manager of a software development project aiming to
automate manual tasks to save labour costs and time in the long run. Mid-way
through the project execution, a risk identified previously comes up. In the risk
register, this risk was marked as an accepted risk. Which of the following plan
should Sue consult to know how to handle this risk?
1.Contingency Plan
2.Workaround Plan
3.Fallback Plan
4.Project Cost Management Plan
Ans : 1. Contingency Plan

You are the project manager of a software development project. Your team is working on a code and
suddenly a risk comes which was identified earlier. You tried to response to the risk but still issue is
not resolved. Now what should be your immediate next strategy.
A. Inform the Management

B. Check for the Fallback Plan in Project Plan
C. Leave that risk and move ahead with that defect as project deadlines are coming
D. Check for Management Reserves
Ans : B
Most of the people would be thinking option A to Inform the Management as Contingency plan was
not able to resolve it which is the primary risk response strategy for identified risk.
But this is not correct option as a PM your immediate next step should be to check for Fallback plan
in project Plan which is Option B as above we are talking about identified risk and primary response
has not work.
Workarounds are determined during which risk management
process?
1.Identify Risks
2.Perform Quantitative Risk Analysis
4.Control Risks
Answer : D
What is active risk acceptance?
a. Creating Contingency Reserves in Money and Time.

b. Developing a plan to minimize potential impact.
c. Developing a plan to minimize probability.
d. Making additional resources available
Ans : A

Expected Monetary Value (EMV)
Expected monetary value (EMV) is a risk management technique to help quantify and compare
risks in many aspects of the project. EMV is a quantitative risk analysis technique since it relies
on specific numbers and quantities to perform the calculations, rather than high-level
approximations like high, medium and low.
EMV = (Probability) x (Impact)
The steps are simple:

1. Assign a probability of occurrence for the risk.
2. Assign monetary value of the impact of the risk when it occurs.
3. Multiply the values produced by step 1 and step 2.
Note: Generally the Opportunities will be expressed as Positive values and Threats as
Negative values.
These sums are then added to the project cost to calculate total EMV.
Assume the project’s Total Cost (cost baseline)is $500,000.
Risk #1: Your lead programmer will be poached. Cost of Replacement $10,000. Probability 50%
So $10,000 x 0.5 = -$5,000.
So the total EMV of the project is now $500,000 - $5,000 = $495,000.

PROJECT A EMV PROJECT B EMV
PROJECT A - cost baseline= Project B - cost baseline=
$175,000 $65,000
Risk #1 cost of $85,000 Risk #1 cost of $50,000
-$850 -$12,500
probability = 0.01 probability = 0.25
Risk #2 cost of $7,000 Risk #2 cost $1,500,000
-$2,100 -$1,125,000
Risk #3 cost of $50,000 Risk #3 cost of $900
-$10,000 -$855
Risk #4 opportunity of $3,000 Risk #4 opportunity of 10,000
$2,700 $6,000
Risk #5 cost of $13,000 Risk #5 opportunity of 1,000
-$6,500 $700
Total . -$16,750 Total . -$1,138,355
TOTAL EMV= $175,000 + TOTAL EMV= $65,000 +
(-16,750)= $158,250 (-$1,138,355) = -1,073,355
Project with Highest EMV should be Selected. Therefore Project A can be Selected

During risk identifying process, you discovered that there some risks that may negatively impact the project and others
provide Opportunity and benefit the Company. Risk (A) has 30 % probability to occur and will cause a cost overrun
of $100,000 and Risk (B) has 10% probability of Delay of Project Completion by way of Penalties costing the project
$200,000. While Risk (‘C) with Probability of 20% will improve the Market Share thereby Benefiting $ 400,000 and
Risk (D) with Probability of 40% that will Reduce the Project Cost by $ 150,000. Now You have to Report to the Sponsor
total Expected Monetary Value for those risks? What you will Report?
a. $90,000
b. $190,000
c. $70,000
d. $100,000
Answer is A
EMV = Probability X Impact
Probability Impact EMV
Risk A – Cost Over Run 30% $ 100,000 - $ 30,000
Risk B – Delay of Project 10% $ 200,000 - $ 20,000
Risk C – Improved Market Share 20% $ 400,000 + $ 80,000
Risk D – Cost Reduction 40% $ 150,000 + $ 60,000
Total EMV $ 90,000

Expected Monetary Value (EMV)
Expected monetary value (EMV) is a risk management technique to help quantify and compare risks in many
aspects of the project. EMV is a quantitative risk analysis technique since it relies on specific numbers and
quantities to perform the calculations, rather than high-level approximations like high, medium and low.
EMV = (Probability) x (Impact)
The steps are simple:

1. Assign a probability of occurrence for the risk.
2. Assign monetary value of the impact of the risk when it occurs.
3. Multiply the values produced by step 1 and step 2.
Note: Generally the Opportunities will be expressed as Positive values and Threats as Negative values.
These sums are then added to the project cost to calculate total EMV.
Assume the project’s Total Cost (cost baseline)is $500,000.
Risk #1: Your lead programmer will be poached. Cost of Replacement $10,000. Probability 50%
So $10,000 x 0.5 = -$5,000.
So the total EMV of the project is now $500,000 - $5,000 = $495,000.
Most common method of this analysis is by using Decision Tree Analysis

During risk identifying process, you discovered that there some risks that may negatively impact the project and others
provide Opportunity and benefit the Company. Risk (A) has 30 % probability to occur and will cause a cost overrun
of $100,000 and Risk (B) has 10% probability of Delay of Project Completion by way of Penalties costing the project
$200,000. While Risk (‘C) with Probability of 20% will improve the Market Share thereby Benefiting $ 400,000 and
Risk (D) with Probability of 40% that will Reduce the Project Cost by $ 150,000. Now You have to Report to the Sponsor
total Expected Monetary Value for those risks? What you will Report?
a. $90,000
b. $190,000
c. $70,000
d. $100,000
Answer is A
EMV = Probability X Impact
Probability Impact EMV
Risk A – Cost Over Run 30% $ 100,000 - $ 30,000
Risk B – Delay of Project 10% $ 200,000 - $ 20,000
Risk C – Improved Market Share 20% $ 400,000 + $ 80,000
Risk D – Cost Reduction 40% $ 150,000 + $ 60,000
Total EMV $ 90,000

Perform Quantitative Risk Analysis – T & T
Example of Expected Monetary Value (EMV)
Project Procurement Management
Project Procurement Management includes the processes necessary to purchase or acquire products,
services, or results from outside the project team.
Objectives :
•Understand the different Procurement Management Processes

Group
Plan
Conduct Control
Procurement
Procurement Procurement
Management
185
Knowledge Area: Procurement Management
Objectives
•Understand the different Procurement Management Processes

•It includes the processes to ensure identification, acquiring and deploying services of a seller to meet the
needs of buyer’s project.
•Usually the seller is recognized as an external party other than the performing project team. This may
include your internal different LOB (Lines of Business) treated as a separate legal entity or external
organization.
•Both the buyer and seller are bonded legally with a contract document serving as the point of reference
for work to be accomplished and payments released. This contract document may be simple or as
complex as it can be based on project needs and legal involvement.
•A mega project may involve multiple sellers being contracted to procure various services for the needs of
the mega project. Managing these many sellers on their individual contracts need a specialized team in
procurement and is normally a part of the administrative or financial function in organizations, however,
project teams may also be employed to administer as well.
•Seller goes through a change of status in the procurement cycle.

•There are 3 Procurement Management processes, namely:
Plan Procurement Management
•It is the process of planning the identification of Sellers, how the contract will be
awarded, and how the project will be executed.
Conduct Procurements
•Process of conducting the procurement which includes circulating proposals,
obtaining seller responses, selection & award of the contract to a particular
seller.
Control Procurement
•Controlling Procurements involve the management of executing the awarded
contract on the parameters defined during the contract award. Validation of the
work being performed as the criteria to release the payments.
RFI (Request for Information)
•To collect various strengths & capabilities of Suppliers/vendors
IFB (Invitation for bid)

•Asking Vendors to bid on price, whereas the work is already predefined by Buyer
RFP (Request for proposal)
• Asking Vendors to submit commercial proposal and how it

would be done
RFQ (Request for quotation)
•Typically for standard items of procurement or with a known Vendor repeated order,
quotation is requested
Tender Notice
• Primarily for the government work orders where the work is already
predefined with Quality, like road laying

Types of Contracts
Time & Cost

Fixed Price
Material Reimbursable
Firm Fixed Price Cost Reimbursement
(FFP) or Lump (CR) or Cost Plus
Sum Contract Fixed Fee (CPFF)
Fixed Price Plus Cost Plus

Incentive Fee Incentive Fee
(FPIF) (CPIF)
Fixed Price with

Cost Plus Award
Economic Price
Adjustment (FP/EPA) Fee (CPAF)
Fixed Price with Cost Plus

Re-determination Percentage of
(FP/RD) Cost (CPPC)
Contract Type & Risk
Risk
Contract Type
India
190
Point of Total Assumption (PTA)
This concept is only related with fixed price incentive fee contracts and refers to the amount
above which the seller bears all the losses of an additional cost overrun. The concept work when
buyer and seller has agreed criteria for fixing the price, and buyer is willing to repay part of cost overrun
till it reaches a ceiling price.
Let’s look at a few terms before we get into the PTA.
Target Cost: This is the estimated budget, which the seller has planned for delivering the given project; it
can be looked as a project budget,in this type of contracts this is shared with the buyer and the process
of estimating project budget is also kept transparent.
Target Fee: This is the fee which the seller wants to charge for the work he is doing, this is the planned
fee, and the actual fee will depend upon how well the seller manages the project (cost overruns)
Target Price: This is the price the buyer is looking towards, this is a sum total of Target Cost + Target
Fee, both seller and buyer use this as a benchmark, if the final project cost less than this price, buyer and
seller will share the profit as per profit sharing agreement, if the price goes beyond the target price,
buyer and seller share the cost as per cost sharing agreement (subject to maximum ceiling of selling
price)
191
India
Share ratio: In this type of contract we will have two types of ratio, one for
sharing profit, which is used when the project cost less than the target cost
and another is cost sharing ratio which is used when the project cost more
than the target cost.
Ceiling Price: this price is put by the buyer to limit the cost liabilities, buyer
will not pay anything beyond this price, even if the actual project cost more
than the ceiling price buyer will not pay anything extra than the ceiling price.
(Ceiling Price – Target Price)

PTA = + Target Cost
Buyer’s Share Ratio

India
192
Lets take an example, I am taking the example from Rita Mulcahy’s
PMP Exam Prep Eighth Edition page no 480.
Target Cost 150,000

Target Fee 30,000
Target Price 180,000
Sharing Ratio (Cost Overrun Sharing 60/40
Ratio)
Ceiling Price 200,000
Let’s calculate PTA for this

PTA = (Ceiling Price – Target Price) / Buyer’s Share Ration + Target Cost
PTA = (200,000 – 180,000) /. 60 + 150,000

PTA = 183,333
What does it mean?

The seller should target that the cost of development should not touch
Point of Total assumption (PTA) (183,333), if it touched PTA all further cost
overrun has to be paid by the seller. SN Panigrahi, Essenpee Business
193Solutions,
India
Let’s take an example:
Target Cost: 1,000,000
Target Profit for Seller: 100,000
Target Price: 1,100,000 (Target Cost + Profit for Seller)
Ceiling Price: 1,300,000 ( the maximum the buyer will pay)
Share Ratio: 80% buyer–20% seller for over-runs, 50%–50% for
under-runs.
PTA = ((1,300,000 – 1,100,000)/ 0.80) + 1,000,000 = 1,250,000.
Beyond the Point of Total Assumption, the seller’s profitability
decreases, and their initiative and interest to complete the project
may diminish too. Therefore, the PTA is also a risk trigger. As this
point is reached, the project risk increases, and more attention is
needed to complete the project at the earliest, with as little cost
deviation as possible.

India
194
An open inquiry that spans the market seeking broad data and knowledge. RFIs are used to gather information.
RFI – Request For An RFI is a solicitation that procurement sends to a broad base of potential suppliers. Its purpose is for
Information conditioning, gaining information, preparing for an RFP or RFQ, forming a strategy, or building a database &
Knowing Supply Base.
A business needs-based request for specific solutions to the sourcing problem. An RFP
RFP – Request For is procurement’s solicitation sent to potential suppliers with whom a creative relationship
Proposal or partnership is a consideration.
A part of the sealed bid process giving detailed written specifications including all the
IFB – Information terms and necessary conditions for projects and invite contractors to bid their proposals
For Bid for various projects.
A chance for potential suppliers to competitively cost the final chosen solution(s). An
RFQ – Request For RFQ is a solicitation sent to potential suppliers. It contains, in exacting detail, a list of all
Quotation relevant parameters of the intended purchase.
Tender Notice It is process to call vendors for doing a certain job or provide certain service at a
competitive price. Usually done through Press Advertisements & Public Notices
Invitation For An invitation to negotiate is not an offer. An invitation to negotiate is merely a

preliminary discussion or an invitation by one party to the other to negotiate or make an
Negotiation offer.
Pre-Bid Pre-bid meetings are gatherings scheduled after an invitation for bids or request for
proposals is advertised. Their purpose is to clarify any concerns bidders may have with
Conference
the solicitation documents, scope of work and other details of the requirement.
Source Selection Criteria
•Selection Criteria is often included as part of the procurement documents to bring
transparency and ensure competitiveness amongst the bidders.
•The selection criteria based on which the contract will be awarded is often
disclosed so that the bidders know upfront on what basis their bids will be
selected.
•In some cases this may be the early phase to narrow down and subsequently have
a follow-on round to ensure the qualified bidders get to know more intricate
details and subsequently re-bid for final award.

Few of the possible sources are based :
• Seller understanding of requirements better
• Lowest Overall Total Cost of Ownership (TCO)
TCO = Purchase + Operating Cost
• Technical Capabilities
• Logical Capabilities
• Risk Management Capabilities
• Management Capabilities
• Financial Capabilities
• Production Capacity
• Lobbying Capabilities
• Government, Business & Political References
• Intellectual rights
• Proprietary rights
• Past Performance history
• Execution capabilities

Independent Estimates
•Before the contract is circulated for bids, buyer may perform an independent
estimate and accordingly plan for circulation of the contract. The estimate
could be also from professional body specialized in estimation.
•Once the contract is circulated to the sellers, the estimates arrived by the
sellers indicate
understanding of them about contract being put in place.
•Large differences in estimates mean the sellers are not in line with contract
understanding.
Advertising
•Advertising is often used to circulate the contracts to a reach a wider seller
community.
•Also Government related procurements are often obligated to publish the
contracts in the news papers and special industry trade journals.

Procurement Negotiations
•Most contracts define if the contract awards will be negotiable or non-negotiable
contracts.
•In case of Negotiable contracts, the bidder conference and/or the contract clearly
establishes the negotiable parts of the contract and what are not negotiable.
•During the process of procurement, usually after the seller is being identified, the
negotiations are called for and before the contract is being awarded.
•Once the contract has been accepted all the negotiations end and the contract work
has to proceed.
•The last chance of any negotiation possible is before the contract is being inked legally.

Project Stakeholder Management
It includes the processes required to
• Identify the Stakeholders : people, groups, or organizations that may impact or be impacted by the
project
• Analyze stakeholder expectations and their impact on the project
• Develop management strategies for engaging stakeholders in the project.
Frequent communication is required with the stakeholders

Group
Plan Manage Monitor

Identify Stakeholder Stakeholder
Stakeholder
Stakeholders Engagement Engagement
Engagement
200
Knowledge Area: Stakeholder Management
Objectives
•Understand the different Stakeholder Management Processes
•It includes processes to ensure identification of stakeholders, effective communication,
engagement of them across project to garner their support/decisions for execution and
success of project objectives.
•Stakeholder Engagement towards their Satisfaction is by default one key project
objective for project success.
•Each Project Stakeholder will exert their influence on the project in one or the other
manner.
•Identifying key stakeholders, understanding their needs along with the relationships
within themselves is one area, a Project Manager has to keep close watch to develop
strategies to ensure the stakeholders are in favor of project objectives.

There are 4 Stakeholder Management processes:
Identify Stakeholders
•Identification of key stakeholders before the project starts, during the project kick off and the project execution to
closure is critical towards the stakeholders engagement rightly and avoid the project being jeopardized.
Plan Stakeholder Management

•Planning to engage identified stakeholders by understanding their implicit & explicit needs on the project along with
development of strategies to transition them towards project needs.
Manage Stakeholder Engagement

•Managing stakeholder information needs, their aspirations & expectations during the project course along with
resolution of any conflicts among the stakeholders.
Control Stakeholder Engagement

•Controlling Stakeholders across the project duration to ensure the stakeholders are active, supportive to the project
needs and success.

• Power/interest grid - grouping the
stakeholders based on their level of
authority (“power”) and their level
or concern (“interest”) regarding
the project outcomes
Eg: Authorities who issues Permits, These folks include funding
• Power/influence grid - grouping
Approvals and Conduct Perform agencies, Top Management, and
the stakeholders based on their Inspections; (often) your customer base.
level of authority (“power”) and
their active involvement
(“influence”) in the project;
• Impact/influence grid - grouping

the stakeholders based on their
Eg: Members of the general
ability to effect changes to the public, who often aren’t even Eg: Community groups and
project’s planning or execution necessarily aware of your project. others that may be affected by
the outcome of your project.
(“impact”) and their active
involvement (“influence”) in the
project SN Panigrahi, Essenpee Business Solutions,
203
India
Stakeholder Mapping and Representation Stakeholder identification – “spheres” of influence
Sleeping Giant
Savior
r (Protector)
we
Po
• Stakeholder cube – This is a refinement of
Friend
grid model. Combines elements into a three Acquaintance
dimensional (Interest, Power, Attitude)

model. Saboteur
Attitude
• It improves the depiction of the stakeholder
Time Bomb
community as a multidirectional entity and Example: Sleeping Giant
Positive Attitude
assists with the development of High Power
Low Interest
communication strategies. Make sure they know
Tripwire Irritant “what’s in it for them”.
Awaken their interest
and get their input and
support.
Interest
204
The term salience means “the quality of being
particularly noticeable, important or prominent,”
and so stakeholder salience means the
importance you give to your stakeholders.
Stakeholder salience can be defined as the

“degree to which managers give priority to
competing stakeholders’ claims in their decision-
making process.”
The stakeholder salience is decided by the assessment

of their power, legitimacy and urgency in the
organization.
•Power – is the ability of a stakeholder to impose their

will.
•Urgency – is the need for immediate action.
•Legitimacy – is to assess if their involvement is
appropriate.

205
India
Stakeholders
Engagement
Assessment
Matrix
C : Current Engagement
D : Desired Engagement

Ethics & Professional Responsibilities

Respect Fairness
Responsibilit
Honesty
y Code of
Ethics and
Professional
Conduct

India
208
Oliver Lehmann (Online) – 100 Q
http://www.oliverlehmann.com/pmp-self-test/100-free-questions.htm
Oliver Lehmann (Online) – 175 Q

http://www.oliverlehmann.com/contents/free-downloads/175_PMP_Sample_Questions.pdf
Simplilearn Free PMP® Mock Exam : 200 Q

https://www.simplilearn.com/pmp-exam-prep-free-practice-test
Edwel Mock Exam : 75 Q

https://www.edwel.com/Free-Resources/PMP-Certification-Practice-Exam.aspx
PM Study Mock Exam : 200 Q

http://www.pmstudy.com/PMP-Exam-Resources/freeSimulatedTest.asp
GreyCampus Mock Exam : 200 Q

https://www.greycampus.com/opencampus/project-management-professional/practise-exams

Some useful Web Sites that offer free PMP Exam sample questions :
www.oliverlehmann.com
http://www.tutorialspoint.com/pmp-exams/pmp_mock_exams.htm.
https://www.pmlearningsolutions.com/
https://www.pmexamsmartnotes.com/
http://certification.about.com/od/projectmanagement/a/pmp_test_whiz.htm.
http://www.examcentral.net/pmp/pmp-exam-questions#.
http://www.preparepm.com/mock1.html.
http://pmhub.net/pmsuccess/Menu.htm.
http://www.ajithn.com/login.php.
http://free.pm-exam-simulator.com/.
http://www.passionatepm.com/free-pmp-exam-practice-test-questions.
Knowledge Areas Initiating Planning Process Executing Process Monitoring & Closing Process
Process Group Group Group Controlling Process Group
Group
3.Direct and Manage 5.Monitor and
Project Integration 4.1 Develop Project 4.2 Develop Project Project Work Control Project Work 4.7 Close Project or
Management Charter Management Plan 4.Manage Project 6.Perform Integrated Phase
Out Put
1. Project Charter Project Management 1. Deliverables 1. Work Performance 1. Project document
2. Assumption Log Plan 2. Work performance Reports updates
data 2. Change requests • Lessons learnt
3. Issue Log 3. Project Plan register
4. Change requests updates 2. Final product,
5. Updates • Any component service or result
4. Project document transition
Updates 3. Final report
4. Organizational
process assets
updates
1. Lessons Learnt 1. Approved change
Register requests
2. Project 2.Project
management plan management plan
updates updates
• Any component • Any component
3. Organization 3. Project document
Process Assets updates
updates • Change Log

Sample Q & As

Question: You are working on a project where one of the suppliers told you
that the shipment would be delayed by 3 weeks due to weather and
transport problems. What will be your first step?
A: Use crashing to avoid the delay.

B: Use fast tracking to avoid the delay.
C: Check how much slack is available on this task.
D: Immediately take a corrective action and try to minimize the impact
of this delay.
Ans : C
Check how much slack is available on this task

Tom is a project manager for a software company. He is contracting a long-
term software project with an external company. That company charges him
$20/hour per employee and $300 overhead per month. What kind of contract
is he using?

A. FP
B. CPAF
C. CR
D. T&M
Ans : D
You work for a seller that is bidding on a contract. Which type of contract has
the MOST risk for your company?

A. CPIF
B. T&M
C. FP
D. CPAF
Ans : C SN Panigrahi, Essenpee Business Solutions,

India
214
In your web development project, you are determining and managing project requirements and stakeholder needs by
posing a question to the project management team, then a moderator writes down all ideas in a flip chart. Which
interpersonal and team skill would enhance it with a voting process to rank the most useful ideas?
A. Autocratic decision making.
B. Multicriteria decision analysis.
C. Nominal group technique.
D. Influencing.
Ans : C
A. In this decision-making technique, one individual takes the responsibility for making the decision for the
entire group. Then, it is not an interpersonal and team skill that enhances the brainstorming process.
B. A decision-making technique that can be used (…) to identify the key issues and suitable alternatives to
be prioritized as a set of decisions for implementation. Criteria are prioritized and weighted before being
applied to all available alternatives to obtain a mathematical score for each alternative.
D. Because project managers often have little or no direct authority over team members in a matrix
environment, their ability to influence stakeholders on a timely basis is critical to project success. It is and
interpersonal and team skill but it does not enhance the brainstorming process.
The nominal group technique enhances brainstorming with a voting process used to rank the most
use-full ideas for further brainstorming or for prioritization.
[PMBOK 6th edition, Page 144] [Project Scope Management]
215
The project team and you are working on the quality management plan. There are two changes related to
quality standards that require a detailed risk analysis. How should you perform this process?
A. In sequence with other planning processes and analyze risks after Plan Quality Management.
B. In parallel with other planning processes and analyze risks in the meantime.
C. You should focus on analyzing the two risks in the Executing Process Group.
D. You should have focused on analyzing all risks in the Initiating Process Group.
Ans : B
C & D. From the process of identifying individual project risks as well as sources of overall project risk and
documenting their characteristics in Identify Risks to 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 in
Plan Risk Responses take part in the Planning Process Group.
A & B. Quality planning should be performed in parallel with the other planning processes. For example,
changes proposed in the deliverables in order to meet identified quality standards may require cost or schedule
adjustments and a detailed risk analysis of the impact to plans. Therefore, right answer is B. [PMBOK 6th
edition, Page 278] [Project Quality Management]

Which of the following Project Scope Management processes involves subdividing the
major project deliverables into smaller, more manageable components?

A.Plan Scope Management
B.Define Scope
C.Validate Scope
D.Create WBS
Ans : D

India
217
The total budget of your project is $200,000. Currently you have completed 30%
worth of work. However, you should have completed 40% worth of work. The
amount currently spent is $50,000. The initial plan is no longer valid and the
bottom up estimate to complete is $116,666. Calculate the estimate at
completion?
A: $190,000
B: $166,666
C: $140,000
D: $155,555
Ans : B

A team’s goal is to improve information flow in a payroll function. They make 25 Post-It
notes, each listing an issue for further investigation. After some discussion, they group them
into four categories: mandated record keeping, privacy concerns, insurance concerns, and
transfer concerns. This grouping process is best described by which approach to problem
solving?
a. Tree diagram

b. Affinity diagram
c. Fishbone diagram
d. Interrelationship diagram
Ans : B
Affinity diagrams are a special kind of brainstorming tool that organize large amounts of

disorganized data and information into groupings based on natural relationships

How much time does the typical project manager spend communicating
both formally and informally?

A.40-60%
B.50-70%
C.60-80%
D.Around -90%
Ans : D

India
220
Fishbone diagrams cluster problems into categories. Which of the following is NOT normally
used as a category?
a) Method
b) Market
c) Man power
d) Measurement
Ans : b Methods
Management Machinery
Mother Effect /
Earth Problem
Manpower Materials Measurement

s
1. A Project manager of a construction project with a time line of 24 months is trying to decide the feasible alternative
of buying a machine that cost $100,000 besides $1000/ month to maintain or leasing that machine with $5000 /
month and $20000 down payment. Which alternative should he use and how many months that machine should
operate to be a feasible buying choice?
a. Lease, 20 months
b. Lease, 24 months
c. Lease, 30 months
d. Buy it
Answer is D
Explanation: Let M equal the number of months where leasing break even with the buying option.
$20,000 + $5000 M = $100,000 + $1000 M

$4000 M = $80,000
M = 20 months.
Therefore, buying will be the cheaper option after 20 months and since the machine is needed for 24 months, then buying
decision is justified.

A project manager is faced with making a decision about a risk that the team has
identified. The risk involves the design of a bicycle. It has been found that the neck of
the bicycle, where the steering bearing is located and the two supporting bars of the
frame come together, will corrode in a high salt environment. If this takes place the
neck may fail and injure the rider. The project team decides that the design of the
bicycle should be modified by using corrosion resistant materials in the design of the
neck. This will eliminate the risk from consideration. This technique is called:

A. Risk avoidance.
B. Risk acceptance.
C. Risk rejection.
D. Risk deflection.
Ans : A

India
223
The difference between the cost baseline and the project budget is defined as:
A. Contingency reserves
B. Funding requirements
C. Management reserves
D. Organizational process assets
Ans : C
The total project budget includes the cost baseline plus the management
reserves. Therefore, the difference between the two is the management
reserves. Withheld for management control purposes, management reserves
are used for unforeseen risks that affect the project. The cost baseline includes
the work package estimates plus contingency reserves. The project manager
can use contingency reserves for identified risks should they occur.

A project kick off meeting is usually conducted to:
A.Setup project team and announce the PM assignment

B.To draft project charter
C.Build up team spirit
D.Define project scope and develop WBS
Ans : A

India
225
Question: Rizwan is a project manager who is excited about a new small project. The project perfectly
aligns with the company's strategic plan and will be a good initiative for them. The Sponsor requested
Rizwan to setup a kick off meeting with all the stakeholders. What should be the top most priority agenda
item for this meeting?
A: To allow everyone to get to know each other and discuss project objectives.
B: To discuss the high level stakeholders’ requirements.
C: To discuss the next steps on the project.
D: To discuss the high level timeline of the project.
Ans : A

A Project Manager is at the project kick-off meeting. He confidently states the
vision and mission for the project. This PM is exhibiting the following
leadership style:
A. Hierarchal
B. Authoritarian
C. Charismatic
D. Associative
Ans : C

India
227
Which of the following is NOT an example of a type of
schedule report?
A.Gantt chart
B.Milestone chart
C.Fishbone diagram
D.Network diagram
Ans : C

India
228
Alice is a Project Manager. She is coordinating a bidder conference
to allow vendors to get clarification on the work that needs to be
performed. Which phase of Project Management is in progress.
1.Conduct Procurements
2.Plan Procurements
3.Control Procurements
4.Close Procurements
CORRECT: 1. During the Conduct Procurements process, bidders

can clarify their doubts using bidder conference.

India
229
You are preparing a Risk Breakdown Structure (RBS) in order to help the project team consider the full range of risk
sources in your project. What is the lowest level of a Risk Breakdown Structure?
A. Risk Category.
B. Individual Project Risk.
C. Risk Response.
D. Risk Register.
Ans : A
X B. Risk categories provide a means for grouping individual project risks.
X C. Where a potential risk response has been identified during the Identify Risks process, it is recorded in the
risk register. This will be confirmed during the Plan Risk Responses process.
X D. The risk register captures details of identified individual project risks. The results of Perform Qualitative
Risk Analysis, Plan Risk Responses, Implement Risk Responses, and Monitor Risks are recorded in the risk
register as those processes are conducted throughout the project. The risk register may contain limited or
extensive risk information depending on project variables such as size and complexity.
A common way to structure risk categories is with a risk breakdown structure (RBS), which is a hierarchical
representation of potential sources of risk. The risk categories in the lowest level of the risk breakdown structure
can be used as a prompt list for individual project risks. An RBS helps the project team consider the full range of
sources from which individual project risks may arise. The organization may have a generic RBS to be used for
all projects, or there may be several RBS frameworks for different types of projects, or the project may develop
a tailored RBS. Where an RBS is not used, an organization may use a custom risk categorization framework,
which may take the form of a simple list of categories or a structure based on project objectives. Therefore,
right answer is A. [PMBOK 6th edition, Page 405,416] [Project Risk Management]
1. Jerry recently took over a project after another project manager left. He needed to
determine how many communication channels existed to ensure he was effectively
reaching all his stakeholders. Looking through his stakeholder registry and removing
the prior PMP, the project has 43 members now. How many communication channels
exist?
A. 903
B. 946
C. 450
D. 900
Ans : B
Number of Communication Channels N = 43 +1
= n(n-1)/2
There are 946 communication channels. Did you remember

to add yourself back into the equation? Remember the PM is
always included and you removed the other PM from the team
member total.
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Question
Rather than use Triangular Distribution while doing Three Point Estimation you choose to use Beta
Distribution. Based on your analysis and understanding you are confident that the project would be completed
with a total cost of 108,000 $.You also estimate that a best case estimate would be 90000 $ while a worst case
scenario would result in the costs incurred to shoot up to 138000 USD. What would the Three point Cost
estimate be using Beta Distribution ?
A. 112000 $
B. 110000 $
C. 101000 $
D. None of the above
B is the correct answer.
The correct answer is B.The question states we should use Three point estimate using Beta
distribution. The formula for this estimation technique is (To + 4Tm + Tp )/ 6 where Tm = Most
Likely estimate , To = Estimate based on Best case scenario and Tp = Estimate based on Worst case
scenario. So the Three point estimate using Beta distribution is (4 *108000) + 90000 + 138000 / 6 =
660000/6 = 110000 $

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In your current project the planned value is 400, earned value is 350, and actual cost is 450.
Based on the work effort needed to date the team determined the original $1000 estimate is
no longer valid. A reestimate of the remaining tasks is 750. What is the current estimate at
completion for this project?
A. 1,000
B. 1,750
C. 750
D. 1,200
Ans : D
EAC = ,AC + Bottoms - up ETC
The EAC is $1,200. Did you catch that the budget was no longer
valid? This should have clued you into using formula above. The
additional information you need was the new estimate to completion
(ETC), which was 750.

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Which of the following is correct order for stages in
Tuckman ladder?
A.Foaming, Steaming, Norming, Perfuming, Dispersing

B.Forming, Storming, Protecting, Norming, Adjourning
C.Forming, Storming, Norming, Performing, Adjourning
D.Framing, Storming, Norming, Protecting, Adjourning
Ans : C

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The unique identifiers assigned to each item of a WBS
are often known collectively as:

A.The work package codes
B.The project identifiers
C.The code of accounts
D.The element accounts
Ans : C

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You are working on a project that has an EV of $7362 and a PV (BCWS) of
$8232. What’s your SV?

A. -$870
B. $870
C. 0.89
D. Not enough information to tell
Ans : A
You are working on a project with a PV of $56,733 and SPI of 1.2. What’s the
Earned Value of your project?

A. $68,079.60
B. $47,277.50
C. $68,733
D. .72
Ans : A

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A tool which links the project roles and
responsibilities to the project scope definition is
called:
A.Scope Definition Matrix

B.Responsibility Assignment Matrix
C.Roles Assignment Matrix
D.Project Scope and Roles Matrix
Ans : B

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If earned value (EV) = 350, actual cost (AC) = 400, planned value (PV) = 325, what is cost
variance (CV)?

A. 350
B. -75
C. 400
D. -50

Ans : D
You’re managing a project, when your client tells you that an external problem
happened, and now you have to meet an earlier deadline. Your supervisor heard that in
a situation like this, you can use schedule compression by either crashing or fast-
tracking the schedule, but he’s not sure which is which. What do you tell him?

A. Crashing the project adds risks, while fast-tracking adds cost
B. When you crash a project, it always shortens the total duration of the project
C. Crashing the project adds cost, while fast-tracking adds risk
D. When you fast-track a project, it always shortens the total duration of the project
Ans : C

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A project manager is managing a project. The original scope baseline
of the project was budgeted at $100,000. Since work on the project
started, there have been seventeen authorized and approved changes
to the project. The changes have a value of $17,000 and the cost of
investigating them prior to their approval was $2,500. What is the
current budget for the project?

A. $100,000
B. $114,500
C. $117,000
D. $119,500
Ans : D

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Herzberg identified factors, which, if present, will lead
to increased motivation. A typical factor would be:
A.Good supervision
B.Job security
C.Regular promotions
D.Good salary
Ans : C

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A project is a temporary endeavor to create a unique product, service or
result.’ What does temporary nature of project means?
 A. The project is of short duration

 B The outcome of the project is temporary
 C. The project has definite beginning and end
 D. None of the above
 Ans : C

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The three major types of communication are:
A.Written and oral, and verbal and nonverbal.

B.Verbal, formal documentation, informal documentation.
C.Verbal, written, and graphic.
D.Verbal, written, and electronic.
Ans : A

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In your design project, you have missed intermediate milestones. This event triggers contingency responses that must be
implemented as a fallback plan. What project document includes fallback plans?
A. Risk management plan.

B. Risk register.
C. Risk report.
D. Issue log.
Ans : B
A. The risk management plan may include some or all of the following elements: Risk Strategy, Methodology, Roles and
responsibilities, Funding, Timing, Risk categories, Stakeholder appetite, Definitions of risk probability and impacts, Probability
and impact matrix, Reporting formats and Tracking documents.
C. The risk report may be updated to present agreed-upon responses to the current overall project risk exposure and high-
priority risks, together with the expected changes that may be expected as a result of implementing these responses.
D. Throughout the life cycle of a project, the project manager will normally face problems, gaps, inconsistencies, or conflicts that
occur unexpectedly and that require some action so they do not impact the project performance. The issue log is a project
document where all the issues are recorded and tracked.
The risk register is updated when appropriate risk responses are chosen and agreed upon. Updates to the risk register may
include but are not limited to; Agreed-upon response strategies, Specific actions to implement the chosen response strategy,
Trigger conditions, symptoms, and warning signs of a risk occurrence, Budget and schedule activities required to implement the
chosen responses, Contingency plans and risk triggers that call for their execution, Fallback plans for use when a risk that has
occurred and the primary response proves to be inadequate, Residual risks and Secondary risks that arise as a direct outcome
of implementing a risk response. Therefore, right answer is B. [PMBOK 6th edition, Page 448] [Project Risk Management]

A cost performance index (CPI) of 0.89 means:

A. At this time, we expect the total project to cost 89 percent more than
planned.
B. When the project is completed we will have spent 89 percent more than
planned.
C. The project is only progressing at 89 percent of that planned.
D. The project is only getting 89 cents out of every dollar invested.
Ans : D

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With a project nearly complete, the project manager has already performed procurement
closure, shared the final project report, updated the lessons learned repository, and obtained
feedback from the relevant stakeholders. What should the project manager do next?
A. Provide final payment to the suppliers

B. Send a summary of how the final product achieved the business needs
C. Transfer the completed assembly line to operations
D. Send formal written notice to the vendors that the contracts have been completed
Answer is C
The question implies that the Close Project or Phase process is underway. Actions and activities
necessary to transfer the project's products, services, or results to the next phase or to
production and/or operations is one aspect of project closure.
Transferring the completed assembly line to operations is an activity that is completed during the Close
Project or Phase process.

An organization has PMO which serves as project repository and supplies
templates, best practices, trainings, lessons learned documents to project
managers. What is this type of PMO is called?
 A. Supportive
 B. Controlling
 C. Directive
 D. Project Management Staff
 Ans : A

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A project is considered complete when the :

A. BAC is equal to the PV.
B. The EV is equal to the AC.
C. The PV is equal to the AC.
D. The BAC is equal to the EV.
Ans : D

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Which of the following is an example of operations activity?
 A. Constructing a building, bridge or infrastructure

 B. Implementing, improving or enhancing existing business processes and
procedures
 C. Conducting a research effort whose outcome will be aptly recorded
 D. Production of a product having great market demand
 Ans : D

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A project manager is trying to complete a software development project, but
cannot get enough attention for the project. Resources are focused on
completing process-related work and the project manager has little authority to
properly assign resources. What form of organization must the project manager
be working in?

A. Functional
B. Matrix
C. Expediter
D. Coordinator
Ans : A
You are managing a project laying underwater fiber optic cable. The total cost of
the project is $52/meter to lay 4 km of cable across a lake. It’s scheduled to take 8
weeks to complete, with an equal amount of cable laid in each week. It’s currently
week 5 and your team has laid 1800 meters of cable so far. What is the SPI of your
project?

A. 1.16
B. 1.08
C. .92
D. .72
Ans : D SN Panigrahi, Essenpee Business Solutions,

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Susan is a project manager on a construction project. When she
hears that her project has run into a snag due to weeks of bad
weather on the job site, she says “No problem, we have insurance
that covers costs overruns due to weather”. What risk response
strategies did she use?

A. Exploit
B. Transfer
C. Mitigate
D. Avoid
Ans B
Risks that are caused by the response to another risk are called

A. Residual risks
B. Secondary risks
C. Cumulative risks
D. Mitigated risks
Ans : B
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A RACI Matrix is one way to show roles and responsibilities on your project.
What does RACI stand for?

A. Responsible, Approve, Consult, Identify
B. Responsible, Accountable, Consulted, Informed
C. Retain, Approve, Consult, Inform
D. Responsible, Accountable, Confirm, Inform
Ans B
Joe is a project manager on a large software project. Very late in his project,
the customer asked for a huge change and wouldn’t give him any more time to
complete the project. At a weekly status meeting, the client demanded that the
project be completed on time. Joe told the client that he wasn’t going to do
any more status meetings until the client was ready to be reasonable about
the situation. Which conflict resolution technique was he using?

A. Forcing
B. Compromise
C. Withdrawal
D. Confronting
Ans A
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You have five people working on you team, a sponsor within your company
and a client, all of whom need to be kept informed of your project’s
progress. How many lines of communications are there?

A. 28
B. 21
C. 19
D. 31
Ans : A
You’re managing a construction project. There’s a 30% chance that weather

will cause a three-day delay, costing $12,000. There’s also a 20% chance that
the price of your building materials will drop, which will save $5,000. What’s
the total EMV for both of these?

A. -$3,600
B. $1,000
C. -$2,600
D. $4,600
Ans : C
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Which is the BEST definition of quality?
A. A product made of very expensive materials
B. A product made with a lot of care by the team who built it
C. A product that satisfies the requirements of the people who pay
for it
D. A product that passes all of its tests
Ans : C
Project A has an internal rate of return (IRR) of 21 percent. Project
B has an IRR of 7 percent. Project C has an IRR of 31 percent.
Project D has an IRR of 15 percent. Which of these would be the
BEST project?

A. Project A
B. Project B
C. Project C
D. Project D
Ans : C
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The lowest level at WBS is one of the following:
A. The task.
B. The activity.
C. The work package.
D. The element.
Ans : C

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The delphi Method is best suited for:
A.Decision-making
B.Cost Control
C.Overhead rate estimating
D.Team discussions
Ans : A

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Group brainstorming encourages all of the following except:
A. Team building
B. Analysis of alternatives
C. Convergent thinking
D. Uninhibited verbalization
Ans : C

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You are working on a project with an SPI of.72 and a CPI of 1.1. Which of
the following BEST describes your project?

A. Your project is ahead of schedule and under budget
B. Your project is behind schedule and over budget
C. Your project is behind schedule and under budget
D. You project is ahead of schedule and over budget
Ans : C

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The sender of a message is responsible for:
A.Confirming the message is understood

B.Ensuring the receiver agrees with the message
C.Scheduling communication exchange
D.Presenting the message in the most agreeable manner
Ans : A

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What constitute the scope baseline?

A. Scope Statement, WBS, and Project Schedule
B. Scope Statement, Project Schedule, and WBS Dictionary
C. WBS Dictionary, Resource Calendars, and Project Schedule
D. Scope Statement, WBS, and WBS Dictionary
Ans : D

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The project was originally budgeted to spend $2,000. At this point
your actual cost is 1,500 and 1,200 worth of work is complete. What
is the TCPI for the project?
A. 1.5
B. 1.6 BAC = 2,000
C. 1.7 EV = 1,200
D. 1.8 Ac = 1,500
Ans : B
TCPI = (BAC-EV)/(BAC-AC)
The TCPI is 1.6.
Did you realize when the question stated work complete of 1,200 that was the earned
value of the project? Remember we need to quantify work and the easiest way is using a
dollar amount. Considering the answer, is this a good thing or a bad thing? Since,
TCPI is > 1, the project is tracking on pace and no adjustment is need – which is a
good thing.
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Your project, with a budget at completion of $1,500, currently has a planned value
of 400, earned value of 350, and actual cost of 450. The current work and all
variances to date are expected to continue; based on this, what is the estimate to
complete the project?
A. 1474
B. 1266
C. 1500
D. 1400
A. 1266
BAC PV EV AC
$1,500 $ 400 $ 350 $ 450
CPI SPI
0.78 0.88
EAC ETC
AC + (BAC-EV) / 1716 ETC = EAC – AC 1266
CPI*SPI
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For the first three questions, assume you are managing the following project:
You are the project manager of a project that is budgeted to cost $1 million at completion. The project will
last ten months and its budget is spread evenly across each month. It is currently 50% complete and has so
far cost $750K but only produced value of $500K.
1. What is the schedule variance (SV) of Answers

the project?
A. $0 1. A. $0 – Schedule Variance = Earned Value – Planned Value,
B. $200K or SV = EV – PV. The project’s current value at 50%
C. $500K
completion is stated in the problem as $500K. To determine the
D. $750K
Planned Value, use the project’s original BAC times percentage
2. What is the cost performance index
complete: $1 million * 50% = $500K. SV = EV – PV = $500K –
(CPI) of the project?
A. 0.67 $500K = $0. The project is on schedule.
B. 1
C. 1.5
2. A. 0.67 – Cost Performance Index = CPI = EV/AC. You
D. 2 determined EV in the previous problem at $500K. The problem
3. If the variance is not expected to
tells you that the project has so far cost $750K, which is the
continue, what is the new budget at AC. CPI = EV/AC = $500K/$750K = 0.67. The project is over
completion (BAC) of the project? budget.
A. $500K
B. $750K 3. D. $1.25 million – The variance is expected to go away, so
C. $1 million use the formula AC + BAC – EV = $700K + $1 million – $500K
D. $1.25 million = $1.2 million. SN Panigrahi, Essenpee Business Solutions,
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5. You are the project manager for a medium-sized project.
There are 14 team members, and everyone communicates with
everyone else on the project team and with you. How many
communication channels are there?
A. 91
B. 105
C. 182
D. 210
Ans
B. 105 – The formula for determining the number of
communication channels on a project is [n(n-1)]/2,
where n is the number of project team members. Don’t
forget to include the project manager! In this
problem, n=15, but you may have accidentally said n=14 if
you forgot the PM.

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6. You are negotiating an FPIF contract. The ceiling price is $2 million, and the
target price is $1.8 million. The buyer’s share ratio is 75% for overruns. What is
the target profit for the seller if the target cost for the buyer is $1.5 million?
A. $150K
B. $200K
C. $300K
D. $1.5 million
Ans
C. $300K – This problem is a good example of (1) not just memorizing the
formula but knowing what goes into it and (2) avoiding extraneous information.
The problem sets you up to think that you’ll be using this formula: PTA = [(Ceiling
– Target)/Buyer’s Share Ratio] + Target. Actually, you just need to know that the
Target Price is made up of both the Buyer’s Target Cost and the Seller’s Target
Profit. $1.8 million – $1.5 million = $300K in target profit for the seller.

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5. You are the project manager for a medium-sized project.
There are 14 team members, and everyone communicates
with everyone else on the project team and with you. How
many communication channels are there?
A. 91
B. 105
C. 182
D. 210
Ans
B. 105 – The formula for determining the number of
communication channels on a project is [n(n-1)]/2,
where n is the number of project team members.
Don’t forget to include the project manager! In this
problem, n=15, but you may have accidentally
said n=14 if you forgot the PM.

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Tom is a project manager for a software company. He is contracting a long-term
software project with an external company. That company charges him $20/hour per
employee and $300 overhead per month. What kind of contract is he using?

A. FP
B. CPAF
C. CR
D. T&M
Ans : D
You work for a seller that is bidding on a contract. Which type of contract has the
MOST risk for your company?

A. CPIF
B. T&M
C. FP
D. CPAF
Ans : C
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Your company has two projects to choose from. Project A is a billing software
project for the Accounts payable department; in the end it will make the
company around $400,000 when it has been rolled out to all the employees in
that department. Project B is a payroll application that will make the company
around $388,000 when it has been put to use throughout the company. After a
long deliberation, your board chooses to go ahead with Project B. What is the
opportunity cost for choosing Project B over Project A?

A. $388,000
B. $400,000
C. $12,000
D. 1.2
Ans : B

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You are part of a project selection team evaluating three proposed projects and you need to select the project that
would bring the best return for the organization. Project A has an NPV of $25,000 and an IRR of 1.5, Project B has a
NPV of $30,000 and an IRR of 1.25, and Project C has an NPV of $15,000 and an IRR of 1.5. What would be the
opportunity cost of selecting Project B over Project A?”
a) $15,000
b) $5,000
c) $25,000
d) $30,000
The correct answer is C. Opportunity Cost is the potential return of the project not selected. In this case we did not
select Project A, so it is $25,000 – Next Best.
There is extra unrelated information in this question; IRR is not relevant when evaluating opportunity cost. Once all
of the unnecessary information is filtered out the questions is simply asking what is the dollar value associated with
Project A.

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As SME you are been Assigned with Task of Selecting Project. You Should Select Either Project A or Projects B&C.
Project A has NPV of $10,000. Project B has NPV of $5,000 and Project C has NPV of $4,000. If You Select Project
A, what is Opportunity Cost?
a) $5,000
b) $4,000
c) $9,000
d) $10,000
The correct answer is C.
Since Project A is Selected, the Opportunity is Not Selecting Projects (B+C)

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Chen is a Project Manager helping his company on selection of a new project. Tim is using Opportunity Cost
project selection method. Which one of the four projects should his company select?
Project A has a opportunity cost of $300K.

Project B has a opportunity cost of $400K.
Project C has a opportunity cost of $500K.
Project D has a opportunity cost of $600K.
CORRECT: a. A project with the smallest opportunity cost should be selected.

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Project manager trying to decide whether to lease a piece of equipment that is required to his project and cost 15000 $
to buy and 500 $ / month to maintain, or to lease that equipment for 2500 $ down payment and 1500 $ a monthly
lease until the equipment is return. How long will it take to break even?
A. 12
B. 12.5
C. 13
D. 14
Answer: B
Let M represent the number of months. To break even you need to have
the cost of buying = to the cost of leasing.
$15000 + $ 500 M = $2500 + $1500 M

$15000 - $2500 = $1500 -$500M
$12500 = $1000 M
M = 12.5 months
No if you intend to use that piece of equipment less than 12.5 months, it is better to lease it than buy. If you plan to
use it more than 12.5 months then you may consider buying it to save money for the project.
Do understand how this technique help the project manager to optimize the cost of the project and save money by
choosing the best alternative.
You have completed the work breakdown structure for the project. In order to move ahead, you are
planning to get an approval from the customer on the WBS. However, the customer is not interested in
seeing the minute details. She is more interested in seeing significant information. Which of the following
process will generate the deliverable customer is looking for?
A: Estimate Activity Resources

B: Define Activities
C: Sequence Activities
D: Estimate Activity Durations
Ans : B

Your company has just been awarded the contract for an important research project. The CEO of your company has
asked you, as the project manager, to create the project charter and send it to her so that she can review and approve
it. To create the project charter, you need the project's statement of work (SOW). What should you do?
A. Create the SOW yourself since you are the project manager
B. Look for the SOW in your organizational process assets (OPAs)
C. Ask your customer to provide you with the SOW
D. Ask your CEO to provide you with the SOW
Ans : C
Explanation: Since your company has been awarded the contract, you would need the project's procurement
SOW agreed upon in the Conduct Procurements process for selecting a seller or in the contract, if there is a
signed agreement in place. Among the four answer choices, the best option is to ask the customer for the SOW.
Asking the customer (i.e., the buyer) for the SOW ensures you have the version that was approved from the
customer's perspective. In addition, collaborating with the initiating company allows you to have a better
understanding of the project purpose, objectives, and expected benefits that will help in crafting the project charter.

For the first three questions, assume you are managing the following project:
You are the project manager of a project that is budgeted to cost $1 million at completion. The
project will last ten months and its budget is spread evenly across each month. It is currently
50% complete and has so far cost $750K but only produced value of $500K.
1. What is the schedule variance (SV) of the project?

A. $0
B. $200K
C. $500K
D. $750K
A. $0 – Schedule Variance = Earned Value – Planned Value, or SV = EV – PV. The project’s current value at
50% completion is stated in the problem as $500K. To determine the Planned Value, use the project’s original
BAC times percentage complete: $1 million * 50% = $500K. SV = EV – PV = $500K – $500K = $0. The
project is on schedule.

2. What is the cost performance index (CPI) of the project?
A. 0.67
B. 1
C. 1.5
D. 2
A. 0.67 – Cost Performance Index = CPI = EV/AC. You determined EV in the

previous problem at $500K. The problem tells you that the project has so far
cost $750K, which is the AC. CPI = EV/AC = $500K/$750K = 0.67. The project
is over budget.

3. If the variance is not expected to continue, what is the expected estimate at
completion (EAC) of the project?
A. $500K
B. $750K
C. $1 million
D. $1.25 million
D. $1.25 million – The variance is expected to go away, so use the formula AC + BAC – EV = $700K
+ $1 million – $500K = $1.2 million.

4. You want to estimate the duration of an activity on your project. Your pessimistic
estimate is 10 days, your most likely estimate is 5 days, and your optimistic estimate is 3
days. Using a triangular PERT distribution, what is your duration estimate?
A. 4.6 days
B. 5 days
C. 6 days
D. 9.3 days
C. 6 days – Your typical PERT estimate is shown by the formula (P + 4L + O)/6, but this problem wants
you to use the triangular PERT estimate instead. (P + L + O)/3 = (10 + 5 + 3)/3 = 18/3 = 6 days. Did you
use the wrong formula because you were moving too fast? Remember to slow down!

5. You are the project manager for a medium-sized project. There are 14 team members, and
everyone communicates with everyone else on the project team. How many communication
channels are there?
A. 91
B. 105
C. 182
D. 210
B. 105 – The formula for determining the number of communication channels on a project is [n(n-1)]/2,
where n is the number of project team members. Don’t forget to include the project manager! In this
problem, n=15, but you may have accidentally said n=14 if you forgot the PM.

6. You are negotiating an FPIF contract. The ceiling price is $2 million, and the target price
is $1.8 million. The buyer’s share ratio is 75% for overruns. What is the target profit for the
seller if the target cost for the buyer is $1.5 million?
A. $150K
B. $200K
C. $300K
D. $1.5 million
C. $300K – This problem is a good example of (1) not just memorizing the formula but knowing what goes
into it and (2) avoiding extraneous information. The problem sets you up to think that you’ll be using this
formula: PTA = [(Ceiling – Target)/Buyer’s Share Ratio] + Target. Actually, you just need to know that the
Target Price is made up of both the Buyer’s Target Cost and the Seller’s Target Profit. $1.8 million – $1.5
million = $300K in target profit for the seller.

7. Activity X takes 4 days and is followed by Activity Y, which takes 3 days. The early
start of Activity X is day 20, and the early start of Activity Y is day 27. What is the free
float of Activity X?
A. 0
B. 3
C. 7
D. 10
B. 3 – Network diagram math questions can be tricky, because they are almost like logic questions
rather than math. For this one, know that free float (which is float on an activity) = ES of following
activity – ES of present activity – present activity duration. We are determining the free float for
Activity X. ES of following is easy because it is stated as 27. The duration of Activity X is also stated
as four days. You need to use the ES information (day 20) and the duration (4 days). So since free
float = ES of following activity – ES of present activity – present activity duration = 27 – 20 – 4 = 3.

8. A project is expected to result in $2 million in five years. The current interest rate is 5%.
What is the PV of the project?
A. $1,359,252
B. $1,567,398
C. $1,784,972
D. $2 million
B. $1,567,398 – Get those PV & FV formulas on your brain dump. Again, this is one of those problems
that may or may not surface on your exam. It did for me! (But depreciation didn’t.) Present Value = FV /
[(1 + r)^n], where r is the rate of return and n is the number of years = $2 million / [(1 + .05)^5].

9. You must select one and only one project to take on for your company. The net
present value (NPV) for each project is as follows: Project A’s NPV is $10K, Project B’s
NPV is $20K, and Project C’s NPV is $30K.
A. Project A
B. Project B
C. Project C
D. This problem cannot be solved without knowing the interest rate for each project.
C. Project C – For project evaluation dealing with internal rate of return (IRR), return on investment
(ROI), and net present value (NPV), simply pick the greatest value. Easy!

10. A new state-of-the-art computer for your project costs $10K. You expect for it to last
for four years and to sell it for $1K for parts. How much should you book in depreciation
each year for the computer? Assume you are using straight-line depreciation.
A. $1250
B. $2000
C. $2250
D. $2500
C. $2250 – (Asset Cost – Scrap Value) / Useful Life = ($10K – $1K) / 4 = $2250 per year. It is possible,
though not certain, that you will encounter a depreciation problem on your PMP exam, though I
happened not to encounter one. Add the formulas to your brain dump anyway — a point is a point.

You have been given 100,000 USD to complete the project. 60,000 USD has been spent, though as per
the schedule, 55,000 USD should have been spent to complete the same work. What is the Budget at
Completion (BAC)?
(a) 55,000 USD

(b) 100,000 USD
(c) 60,000 USD
(d) 105,000 USD
Ans : B - BAC is the total budget assigned to your project

A project manager is leading a project to investigate the feasibility of constructing a dam to generate
hydroelectric power. The project needs to be analyzed from technical, economic, and social points of view. The
project manager has created the project charter on behalf of the project sponsor, and it is now approved. Which
of the following processes should be performed next?
A. Develop Project Management Plan

B. Identify Risks
C. Identify Stakeholders
D. Develop Project Charter
Ans : C Identify Stakeholders
Explanation:The Identify Stakeholders process is the process of identifying all people or organizations
impacted by the project and documenting relevant information regarding their interests, involvement, and
impact on project success. Both the Develop Project Charter process and the Identify Stakeholders process
are part of the Initiating Process Group which should be completed before proceeding to the processes in
the Planning Process Group. In this scenario, since the project charter has been developed and approved,
the Identify Stakeholders process should be performed next.

You are managing a software upgrade project for your company. Your project sponsor has a great deal of authority
regarding project decisions, but you recently discovered that he doesn't have much interest in your project. To
complete the project successfully, you need your project sponsor's continuous support. What stakeholder management
strategy should you use with your project sponsor?
A. Keep the sponsor satisfied

B. Manage the sponsor closely
C. Monitor the sponsor's actions
D. Keep the sponsor informed
Ans : A Keep the sponsor satisfied
power/interest grid is a classification model used for stakeholder analysis and management that groups the
stakeholders based on their level of authority (power) and their level of concern (interest) regarding project
outcomes. The classification and recommended management strategies are as follows:
Low-power/low-interest: monitor only

Low-power/high-interest: keep informed
High-power/low-interest: keep satisfied
High-power/high-interest: manage closely
Based on this scenario, the sponsor can be classified as high-power and low-interest; therefore, the correct
answer is to keep the sponsor satisfied.

A project manager is leading the construction of a new office building. The project sponsor asks the project manager to
email him a project document that was presented during the last project status meeting. The project sponsor states that
he has forgotten the name of the document, but he remembers it contained the description, owner, source, priority, and
status of product requirements. Which project document is the project sponsor requesting?
A. The requirements management plan
B. The requirements traceability matrix
C. The scope management plan
D. The work breakdown structure (WBS)
Ans : B
Explanation:In this scenario, the project sponsor requested a document that provides specific information
about the product requirements of your current project. The requirements traceability matrix is a grid that
links product requirements from their origin to the deliverables that satisfy them. Typical attributes used in
the requirements traceability matrix may include a unique identifier, a textual description of the requirement,
the rationale for inclusion, owner, source, priority, version, current status, and status date. Additional
attributes to ensure that the requirement has met stakeholders' satisfaction may include stability, complexity,
and acceptance criteria.

You are facing problems decomposing the testing work package into the final activities required to complete the work
package. Detailed testing plans and activities cannot be determined until the system is at least 50% developed and more
details become available. The system development work package will take at least three months to complete. What is the
best way to resolve this problem?
A. Use product analysis techniques such as product breakdown and systems analysis to decompose the system
testing work package
B. Decompose the system development work package now and decompose the system testing work package later
C. Break down the project into multiple phases so that the system testing work package goes into the second
project phase
D. Consult the project management plan to determine what to do in this situation
Ans: B
Explanation: Delaying the decomposition of the system testing work package until later in the project is
an example of 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. Decomposition may not be possible for a deliverable or subcomponent that will be
accomplished far into the future. The project management team usually waits until the deliverable or
subcomponent is agreed on, so the details of the work breakdown structure (WBS) can be developed.
Therefore, the best approach is to use rolling wave planning and decompose the system development
work package now and then decompose the system testing work package later, when more project
information becomes available.

You are managing a project in Alaska to extend an existing oil pipeline, and you are about to start project planning. Due
to the large size of the project along with the regulatory and environmental considerations, the development of a detailed
project management plan will be critical. As a starting point for initial project planning, what is the first thing you should
do?
A. Conduct a project kick-off meeting to inform and engage stakeholders and gain commitment
B. Review the project charter to understand the high-level information about the project
C. Begin the process of identifying stakeholders so they can be engaged as necessary for project planning
D. Share the project scope statement with the project team for a common understanding of project deliverables
Ans : B
Explanation:The question states that project planning is about to begin which suggests that project
initiation has been completed. The project charter is created during the Develop Project Charter process
as part of project initiation. The project team uses the project charter as a starting point for initial project
planning. The type and amount of information in the project charter varies depending on the complexity of
the project and the information known at the time of its creation. At a minimum, the project charter should
define the high-level information about the project that will be elaborated in the various components of the
project management plan.

You are a project manager planning a project to develop a new payroll system, and you are currently in the process of
determining, documenting, and managing stakeholder needs and requirements to meet project objectives. A project
stakeholder has suggested that it would be helpful to have a visual depiction showing how people and other systems
will interact with the new payroll system. You like the idea and want to address it. What is the best way to implement
the stakeholder’s suggestion?
A. Develop a context diagram
B. Design an affinity diagram
C. Create a fishbone diagram
D. Build a matrix diagram
Ans : A
Explanation:The question suggests that the project manager is performing the Collect Requirements
process, which is the process of determining, documenting, and managing stakeholder needs and
requirements to meet project objectives. A context diagram is one of the tools and techniques that might
be used during the Collect Requirements process. A context diagram is a visual depiction of the product
scope showing a business system (process, equipment, computer system, etc.), and how people and
other systems (actors) interact with it. Of the available choices, developing the context diagram is the
best way to implement the stakeholder’s suggestion.

Recently, you promoted your star programmer, Sam, to lead the development team. Sam was a fantastic software
coder, and you thought the promotion would mean that he could now share his expertise with the other development
team members. However, you are surprised to learn that the performance of Sam in his new role is not meeting your
expectations. Which empirical rule did you forget while considering the promotion of Sam?

A. Expectancy theory
B. Peter principle
C. Pareto concept
D. Murphy's law
Ans : B
Explanation:The Peter Principle states "In a hierarchy, every employee tends to rise to his/her level of
incompetence." Most project team members are motivated by an opportunity to grow, accomplish, and
apply their professional skills to meet new challenges. Their achievements continuously promote them
within an organization to a certain level until they are unable to perform. Sam might have risen to his
incompetency level. While the topic of this question is not included in the PMBOK® Guide, the Project
Management Professional (PMP)® Examination Content Outline, June 2015, covers cross-cutting
knowledge and skills with which PMP aspirants are expected to be familiar.
Note, the PMBOK® Guide is provided as a reference to indicate that the Acquire Resources process
described in the scenario.

You have just taken over a project to overhaul the company's telecommunications network. During your first week,
you determine that the engineers spend at least 80% of their time responding to unexpected requests for information
from different project stakeholders. Because of these interruptions, your engineers cannot focus on their assigned
project activities, which is resulting in frequent network outages. What should you do first?
A. Immediately tell the engineers to stop responding to unexpected requests since it is not their responsibility
B. Push the engineers to respond to all the requests faster so that they can perform their assigned project
activities
C. Ask the engineers to forward all stakeholder inquiries to you so that they can focus on their originally
planned tasks
D. Review the communications management plan to understand how stakeholder requests should be handled
Ans : D
Explanation:Monitor Communications is the process of monitoring and controlling communications
throughout the entire project life cycle to ensure the information needs of the project and its stakeholders
are met. In this scenario, the stakeholders are reaching out directly to your project engineers, which is not
the most effective use of their time. To determine why this is happening, you need to review the
communications management plan to determine how stakeholder inquiries are to be managed. With this
information, you can best judge whether the stakeholders are violating that agreement and proceed to
make whatever changes are needed to shield the project engineers from the time-consuming requests for
information and develop a better communications protocol for stakeholder information requests.

An accepted deadline for a project approaches. However, the project manager realizes only
75% percent of the work has been completed. The project manager then issues a change
request. What should the change request authorize?
A. Additional resources using the contingency fund

B. Escalation approval to use contingency funding
C. Team overtime to meet schedule
D. Corrective action based on causes
Ans : D
Corrective action based on causes

You are managing a project to develop a new robot for a mining rescue company. You are currently performing a
monitoring and controlling project activity, and you have discovered that some of the project work has not been
performed according to the plan. If these issues are not fixed before the next customer inspection, your project might be
canceled. You have analyzed the situation, and the corrective action will only require a minor adjustment to a
configuration element. What should you do first?
A. Implement the corrective actions

B. Submit a change request
C. Consult the project sponsor
D. Delay the scheduled customer inspection
Ans : B
Explanation:All of the available answers seem like possible options in this scenario, but the question is
specifically asking what you should do 'first'. Although you have already analyzed the situation and you know
what corrective actions are required, you must follow the proper change control procedure. A configuration
element is a project artifact that has been placed under configuration control. Any change to a configuration
element should be formally controlled and will require a change request. Since the question describes a
situation requiring a change to a configuration element, the first thing you should do is submit a change
request and have it approved before you can implement the changes.

A project manager is leading a process improvement project for a factory operation. Currently, the project manager and the
team are performing the Monitor and Control Project Work process. Which of the following activities might the project
manager and the team conduct during this process?
A. Comparing actual project performance against the project management plan
B. Implementing approved change requests to achieve the project's objectives
C. Analyzing change requests and either approving or rejecting them
D. Gaining formal acceptance of the deliverables by the customer or sponsor
Ans : A
Explanation:
Monitor and Control Project Work is the process of tracking, reviewing, and reporting overall progress to meet
the performance objectives defined in the project management plan. Of the available choices, only comparing
actual project performance against the project management plan is performed during the Monitor and Control
Project Work process.

You are employed by a software development company as a project manager. Your company has a policy that a
change control board (CCB) reviews all of the change requests for every project in your organization, and the CCB
follows all the recommended activities outlined in the PMBOK Guide. You and your project team do not serve as
®
members of the CCB. Based on this scenario, which of the following activities might be performed by members of the
CCB?
A. Creating a change request
B. Implementing approved change requests to achieve the project's objectives
C. Evaluating changes to project artifacts not specified in the configuration management plan
D. Monitoring implementation of approved change requests as they occur
Ans : A
Explanation:The change control board (CCB) is a formally chartered group responsible for reviewing,
evaluating, approving, deferring, or rejecting change requests. The CCB can include project stakeholders,
and a change may be requested by any stakeholder involved with the project. Therefore, it is possible for a
member of the CCB to create and submit a change request.

You are managing a hotel construction project, and you have asked your project team to calculate the current
earned value metrics to determine the project performance. Your team reports back that the project's to-complete
performance index (TCPI) is 0.9 based on the budget at completion (BAC). Which of the following is true
regarding your project's current situation as reflected by this TCPI value?
A. The project is within budget
B. The project is over budget
C. The project is behind schedule
D. The project is ahead of schedule
Ans: A
Explanation:The to-complete performance index (TCPI) is a measure of the cost performance that is
required to be achieved with the remaining resources in order to meet a specified management goal,
expressed as the ratio of the cost to finish the outstanding work to the remaining budget. A TCPI value
equal to 1.0 means you are right on budget, and as long as you maintain the present cost performance
index (CPI), you should not exceed the project budget. A TCPI value greater than 1.0 means you need
to take a stricter cost management approach or you will exceed your budget at completion (BAC). A
TCPI value less than 1.0 indicates you are within your budget and have done an excellent job of
managing project costs.

You are working with your team on estimating how much time each activity will take. One of the documents you are
using contains information on categories of labor, material, and equipment required to complete your project. You are
also interested to see skill levels of your labor, any certifications required, and grade levels of your supplies. Which of
the following documents would you primarily refer to for this purpose?
A. Resource breakdown structure
B. Organizational breakdown structure
C. Work breakdown structure
D. Risk breakdown structure
Ans : A
Explanation: Based on the scenario described, the project team is performing the Estimate Activity Durations
process. An input to this process is the resource breakdown structure (RBS) which is a hierarchical list of team
and physical resources related by category and resource type that is used for planning, managing, and
controlling project work. Each descending level represents an increasingly detailed description of the resource
until the information is small enough to be used in conjunction with the WBS to allow the work to be planned,
monitored, and controlled.

You are managing an engineering design project. The vendor has created 50 engineering drawings. Since the project
is on a tight schedule and budget, checking every drawing for accuracy and completeness would be impossible. You
direct the team to randomly select 20 drawings for inspection. This exercise can best be described as an example of:
A. Inspection
B. Statistical sampling
C. Attribute sampling
D. Control charting
Ans : B
Explanation:This scenario is an example of statistical sampling since it involves the team selecting 20 out
of 50 engineering drawings at random to measure accuracy and completeness. Statistical sampling is
among the data gathering techniques that can be used as part of the Control Quality process. Statistical
sampling is often applied when inspecting the entire population would be too costly or time-consuming. In
this instance, given that the project is on a tight schedule and budget, statistical sampling makes sense to
use to inspect the engineering drawings.

During an inspection of a project deliverable, the team detects the same defect in the deliverable that has already been
identified during a previous inspection. The project manager is confused how this could have happened since a change
request was approved to correct the defect. After discussing the issue with the team, the project manager learns that the
team never implemented the approved change request. What could have helped prevent this situation?
A. Holding an approved change requests review
B. Conducting a retrospective meeting
C. Performing a root cause analysis
D. Creating a quality report
Ans : A
Explanation: Inspections carried out as part of the Control Quality process may uncover defects or areas of
noncompliance with project requirements, which, in turn, may generate change requests. It is the
responsibility of the project team to ensure that those approved change requests are implemented and
properly tested, completed, and certified. In this scenario, the project manager learns that an approved
change request was never implemented. Retrospectives, root cause analysis, and quality reports would not
have prevented this issue but could be used to help the team avoid such a mistake in the future. An
approved change request review would have provided the project manager and the team a mechanism for
verifying that the approved change request was implemented and is, therefore, the best answer to the
question asked.

After taking over a project that is in the middle of execution, you are looking for information about the quality
management issues that have been escalated by the team and any corrective actions that have been recommended and/or
implemented. What should you do?
A. Look at the issue log
B. Check the quality management plan
C. Review the quality reports
D. Talk to the previous project manager
Ans: C
Explanation:According to the scenario, you are looking for information about the quality management issues
that have been escalated by the team and any corrective actions that have been recommended and/or
implemented. This is the description of a quality report. Quality reports are an output of the Manage Quality
process and include information that can be used by other processes and departments to take corrective
actions in order to achieve the project quality objectives.
Looking at the issue log is a plausible answer choice. Questions like this, where there are two plausible correct
answers, are tough but they might appear on the exam. Issue logs record and track 'all' issues that arise in the
course of managing a project, whereas the information presented in quality reports is specific to quality
management including the quality management issues escalated by the team which is exactly what the
question asks. Although an issue log could have been used to record those issues, it would also contain non-
quality management related information, which is irrelevant to you in this scenario. Quality reports would
provide exactly the information you are looking for, and most likely in greater detail, making quality reports the
best answer to the question asked. SN Panigrahi, Essenpee Business Solutions, India 302
A project manager is leading a project to streamline the manufacturing process of modular homes. The project manager
researches and discovers a set of technical guidelines that will make the homes easier and cheaper to manufacture
without compromising quality. The team incorporates these guidelines by designing a new modular home that reduces
the total number of parts and uses more standard and multi-functional components. This is an example of:
A. Problem solving
B. Design for X
C. Change request
D. Data gathering
E. Ans : B
F. Explanation:Design for X (DfX) is a set of technical guidelines that may be applied during the
design of a product for the optimization of a specific aspect of the design. In this scenario, technical
guidelines are being applied to design a new modular home that optimizes its manufacturability. DfX
provides the most accurate and precise definition of the technique being used in this scenario and is,
therefore, of the available choices, is the best answer to the question asked.

You are a project manager for a national consumer goods retailer. Currently, you are about to start the development of
the assumption log for a project to build a new retail store. What should you do first?
A. Examine the project management plan
B. Start the Identify Stakeholders process as the assumption log is an output of this process
C. Review the project scope statement
D. Read the project business case
Ans : D
Explanation:The assumption log is a project document used to record all assumptions and constraints
throughout the project life cycle. The assumption log is created as an output of the Develop Project Charter
process, as such limited information is available to create this project document. High-level strategic and
operational assumptions and constraints are normally identified in the business case before the project is
initiated and will flow into the project charter. Lower-level activity and task assumptions are generated
throughout the project. The assumption log is used to record all assumptions and constraints throughout the
project life cycle. Therefore, of the available options, the project business case is the best source of
information to use in the development of the assumption log.

You are managing a project to update the packaging and digital media for a popular snack food to promote a charity
fundraiser. The project is well underway, and you are currently actively collecting and storing information about each
deliverable team's progress, creating forecasts for your sponsor, distributing work performance reports and planning
presentations to key stakeholders, and verifying delivery. Which process are you performing?
A. Manage Communications
B. Monitor Communications
C. Manage Stakeholder Engagement
D. Plan Communications Management
Ans : A
Explanation:To answer this question, first, determine under which knowledge area the described activities
fall. With reference to sponsors and stakeholders, you may guess that it is Stakeholder Management.
However, the activities of collection, creation, distribution, storage, and monitoring project information fall
under Communications Management.
Next, determine what process group is related to these activities. Is it Planning or Monitoring & Controlling?
No, the task is not to develop the communication models in Planning, nor is the task to identify if the planned
communications artifacts and activities have had the desired effect. Instead, the current activities are mostly
collection, creation and distribution and delivery, which take place while executing the work of the project. An
important clue is that you are distributing work performance reports, which is an output of the Direct and
Manage Project Work process in the Integration knowledge area, in the Executing process group.
Therefore, the correct answer is that these activities fall under Manage Communications.
All of the below are inputs to Define Scope process EXCEPT:
1.Project Charter
2.Requirements Document
3.Organizational process assets
4.Project Management Plan
CORRECT: A

The following table is an activity list that includes the duration and predecessor for a series of project activities. What is
the duration of the critical path?
A. 11
B. 14
C. 9
D. 13

Ans : B

A project manager is about to start planning a software development project. The project sponsor would like to
review any project risks that have been identified at this point. Which document should the project manager
recommend the sponsor to review?
A. Project charter
B. Issue log
C. Risk register
D. Risk report
Ans : A
Explanation:Ideally, to learn about all identified risks on the project, the project sponsor would have to
review the risk register. However, the question states that the project manager is about to start project
planning, implying that the risk register, which is created during the Identify Risks process, is not yet
available. At this point in the project, only the project charter can serve the needs of the project sponsor as
it contains a list of high-level risks that were identified at the time the project charter was drafted and
approved.

You have recently been assigned to lead a project that is halfway into execution. The project has many stakeholders,
and you are trying to determine how to engage them effectively. Which of the following will best help you in this
effort?
A. Project management plan
B. Project charter
C. Work performance reports
D. Procurement documents
Ans : A
Explanation:The scenario implies you are performing the Manage Stakeholder Engagement process which
is concerned with communicating and working with stakeholders to meet their needs, address issues, and
foster involvement. One of the inputs to this process is the project management plan which provides
guidance regarding stakeholder communications, risk management, change management, and stakeholder
engagement. Specifically, the stakeholder engagement plan contains information on how to manage
stakeholder expectations thus helping to determine how to engage the stakeholders effectively.

As a project manager, you are in the process of establishing a knowledge management system for your project. Which of
the following actions will be the least beneficial in this process?
A. A review of the lesson learned register
B. Reading the requirements documentation
C. An examination of the resource breakdown structure
D. Studying the project team assignments
Ans : B
Explanation:Central to knowledge management is having the right processes and people with the right
knowledge. Having documents that identify the people and their capabilities are essential to identifying
current knowledge and the gaps that may exist. Keep in mind that the question is asking for the document
that will be 'least' beneficial in this process. The requirements documentation provides a description of how
individual requirements meet the business need for the project. Requirements documents do not identify the
people or processes needed, whereas the other options, namely the lessons learned register, the resource
breakdown structure and project team assignments are useful in determining what is required for a
knowledge management system. Therefore, of the available choices, reading the requirements
documentation would be the least beneficial for establishing a knowledge management system for the
project and is, therefore, the best answer to the question asked.

Two new team members have just joined the project you are leading. The project is large and involves many stakeholders.
You want to get the new team members up to speed with the overall dynamics of the project and engage effectively with
the project stakeholders. What should you do?
A. Ask the team members to record any issues they encounter into the issue log
B. Review the stakeholder register with the new team members
C. Schedule a meeting with the new team members and all project stakeholders
D. Submit a change request to update the stakeholder engagement plan
Ans : B
Explanation:The stakeholder register is a project document that contains all current information about the
stakeholders. The stakeholder register includes stakeholder identification information, assessment
information, and the stakeholder classification. It is used by the project team to maintain information about
the stakeholder's expectations and interests with the project. By reviewing the stakeholder register with the
new team members, the project manager can provide them with the information about each project
stakeholder, politics surrounding the project, and other relevant details about the project and the
stakeholders that may help the new team members to get up to speed with the overall dynamics of the
project and engage effectively with the project stakeholders.

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Six Edition

A Quick Refreshing Guide for PMP

SN Panigrahi, Essenpee Business Solutions, India 2

SN Panigrahi, Essenpee Business Solutions, India 3

At least three years of

+ 35 hours of formal Project + 35 hours of formal Project

•Please read the pmphandbook.pdf from the http://www.pmi.org

SN Panigrahi, Essenpee Business Solutions,

SN Panigrahi, Essenpee Business Solutions, India 8

Projects Drive Change - Achieve Beneficial Change

 Unique Set of Activities (do not involve repetitive processes)

Characteristics  Has a Defined Timescale (specific start and end date)

 Specific Objectives - Deliverables - Defined End Result

 Performs Definable Tasks (Scope)

 Scope, Time, Cost, Quality, Resource & Risk Constraints

 Involve an Element of Risk

 Achieve Beneficial Change

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Who and what is

Focus on to achieve the project

Example of a Project – Construction of a Residential building

OPM3® develops and implements plans to achieve

Identify & Sequence the Estimate Project

Identify Outsourcing Execution of Work;

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PM Competencies Works to Balance the Competing Constraints on the project with

The project manager must define the project, reduce it to a set of

The project manager must inform all Concerned stakeholders of

No project ever goes exactly as planned, so project managers must learn

According to the PMBOK® Guide, 6th Edition:

Progressive elaboration involves continuously improving and detailing a plan as more

Two forms of Progressive Elaboration

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Though the project management

If the project is divided into phases, the

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Schedule • Manage the Timely Completion of the Project 6

Input Process Output

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• May enhance or constrain project management options

Enterprise Environmental Factors

Organizational Process Assets (OPA)

The Project Management Book of

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Key documents created: Project Charter and Stakeholder Register.

Develop Project Charter

2.Identify Key Deliverables based on the business requirements, in order to manage

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8.Inform Stakeholders of the Approved Project Charter, in order to

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Includes Pre Approved Financial Resources - High-Level Budget

Includes Key Stakeholders – Project Team

Includes Issues & Preliminary Risk Register

•The project charter is NOT a Contract

The purpose of the project planning phase is to:

Key documents created: Project Management Plan, Schedule, Risk Register

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