PMP Certification Study Notes 1 - Terms and Concepts - Updated PMP, PMI-ACP & ITIL Exam Tips 2020

10/4/2020 PMP Certification Study Notes 1 - Terms and Concepts - Updated PMP, PMI-ACP & ITIL Exam Tips
CP & ITIL Exam Tips 2020
PMP Certification Study Notes 1 – Terms and

Concepts
BY EDWARD CHUNG, PMP, PMI-ACP, ITIL FOUNDATION · MARCH 26, 2018
UPDATED for the new PMP® Exam thru 2020. Happy learning!
Introduction: This article provides Aspirants taking the exam in 2018 with a list of
important terms from the latest PMBOK® Guide 6th Edition. The definitions of the project
management terms (often according to PMI’s definition) are included here for y0ur easy
reference. PMP® aspirants need to learn these well in order to successfully to understand
the latter sections of the PMBOK® Guide as well as to pass the PMP® exam. (Note: The
most important terms are highlighted in bold.)
This series of PMP® study notes is impossible without the contribution of many
Aspirants. Without their feedback and input, I cannot continually improve and
enhance the study notes to cover the updates in PMBOK® Guide 6th edition. I am
so grateful that my study notes are useful to Aspirants.
Article Highlights [hide]

Important PMP® Terms 1 Important PMP® Terms and Concepts
and Concepts (covering (covering Section 1, 2 and 3 of the PMBOK®
Section 1, 2 and 3 of the Guide 6th Edition)
1.1 Project
1.2 Project Management
https://edward-designer.com/web/pmp-terms-concepts/ 1/10
10/4/2020 PMP Certification Study Notes 1 - Terms and Concepts - Updated PMP, PMI-ACP & ITIL Exam Tips 2020
PMBOK® Guide 6th 1.3 Role of the Project Manager
1.4 Organization System
Edition) 1.5 Project Life Cycle vs Project Management Life Cycle
vs Product Life Cycle
1.6 Other Important Project Management Terms

Project 2 Further PMP® Study Resources
Project – a temporary endeavor to create a

unique product, service or result (or enhancement of existing services/products (e.g v.2
development is a project) ) — may be collectively termed as deliverable — (vs
ongoing operations which manage processes in transforming resources into output)
sometimes may involve handing over the deliverable to the operation teams for
continuous operation
Project drives changes in the organization and often is a means to create business
values and to achieve organizational goals — the net quantifiable benefit derived
from a business endeavour which can be tangible or intangible.
Projects operate in an environment that may have favourable or unfavourable impacts
on them. Two major categories are:
Organization Process Assets is a major input in all planning process, which may be
kept at PMO, directly related to project management, includingProcesses and
Procedures (including templates (e.g. WBS, schedule network diagrams,
etc.), procedures for issuing work authorizations, guidelines, performance
measurements)and Organizational Knowledge Repositories
Enterprise Environment Factors (often are constraints) are influences not
under control of the project team that will affect the project, either intra-organization
and extra-organization, e.g. organizational culture, organization structure, existing
human resources, work authorization system, PMIS,market conditions, legal
requirements, technology
EEF are inputs for all initiating, most planning process, not much in the
executing/controlling process, none in closing process
Projects often involve more risks and uncertainties than operations and thus require
more planning
The following factors influence the operation of the organization which may lead to the
need for projects:
Regulatory/legal/social requirements changes
Stakeholders needs/requests
Changes in technology/business
Improvements, rectification and enhancements to processes/products/services
A project can be subdivided into phases, each phase is a collection of logically related
project activities that result in the completion of deliverable(s). Towards the end of each
phase is a “Phase Gate” which determines whether the project will go on or not.
Process – a package of inputs, tools and outputs, there are 49 processes defined by
PMI. Processes are grouped in the PMBOK® Guide into 5 Process Groups (NOTE:
Process groups are not the same as project phases).
Portfolio > Program > Project
Program – a group of coordinated projects, taking operations into account, maybe
with common goals, achieving benefits not realized by running projects individually,
if only the client/technologies/resource are the same, then the projects should be
managed individually instead of a program
Portfolio – a group of programs and/or projects to achieve organizational strategic
goals within the organization with a view to maximizing the value to the
organization
Actively coordinating and managing portfolios, programs and projects through
organizational project management (OPM) best position the organization to
achieve strategic business goals.
Use of portfolio/program/project management to bridge the gap between organizational
strategy and business value realization
Project Management
Project Management – the application of (all appropriate) knowledge, skills, tools &
techniques and whatsoever to manage project activities with a view to meet the
project requirements and achieve customer satisfaction
The most important task is to alignstakeholder expectations with the project
requirements, around 90% of the PM’s work is related to communication with
stakeholders
PMBOK® Guide is a framework/standard but not methodology (agile, scrum,
PRINCE3, etc.) — A framework allows flexibilities while a methodology would require
the use of a predefined system of practices, techniques, procedures and rules.
Project management emphasizes tailoring — selecting the appropriate project

management processes, inputs, tools, techniques, outputs and life cycle phases
according to the unique nature of each individual project.
Competing constraints: time, cost, scope, quality, risk, resources
Project Management Business Documents
Project Business Case — documents the economic feasibility vs benefits of the
project and is used for authorization of project management activities.
Project Benefits Management Plan —describes how and when the benefits of the
deliverables of the project will bring and describes how to measure the benefits
(also including the alignment with organization strategies, assumptions and risks)
Project Charter — authorizes the project and names the project manager
Project Management Plan — how the project will be performed and managed –
documents assumptions & decisions, helps communication between
stakeholders, goals, costs & time scheduling (milestones), project management
system and subsidiary management plans and documents
Project Success Measures — project success is now more inclined to be measured
by considering the achievement of project objectives as documented in this
document
Role of the Project Manager

Project Manager: an individual assigned by the organization to lead the team and is
responsible for achieving project objectives
is the leader of the project irrespective of the authority
should consider every process to determine if they are needed for individual
projects (tailoring)
the exact role of project manager is to be tailored to suit the needs of individual
organizations and projects
may report to the functional manager, program manager, PMO manager, operation
manager, senior management, etc., maybe part-time or devoted
identifies and documents conflicts of project objectives with organization strategy
as early as possible
Skills required of project managers:
Technical project management— process tailoring, planning, managing

schedule/cost/resources/risk
Leadership — communication (within team and with stakeholders), team
building, motivation, influencing, coaching, trust building, conflict management,
negotiation
Strategic and business management — be aware of the high-level strategies of
the organization and effectively implement decisions/actions that align with
strategic goals (Organization Strategy may be expressed through mission and
vision)
Project Manager must balance the constraints and tradeoffs, effectively communicate
the info (including bad news) to the sponsor for informed decisions
Project Manager needs to involve project team members in the planning process
Project Manager needs to perform integration at process level, cognitive level and
context level
Project Team includes Project Manager, project management staff, project staff, PMO,
SME (subject matter experts can be outsourced), customer representative (with
authority), sellers, business partners, etc., maybe virtual or collocated
Senior management must be consulted for changes to high-level constraints
Leadership vs Management:
Lead: guide through interactive discussion from one point to another
Manage: direct a person to perform a set of expected behaviour
Leadership styles:
Laissez-faire
Transactional
Servant leader
Transformational
Charismatic
Interactional
Organization System
The organizational system determines the power, influence, competence, leadership
and political capabilities of the people who can act within the system. e.g.
Management Elements — general management principles/rules of the

organization, e.g. disciplinary action, division of skills, authorization
model/practices, communication channels
Organizational Governance Frameworks — framework/processes describing how
authority within the organization is exercised
Organizational Structure Types
Organic or Simple
Virtual
Projectized (project manager has the ultimate authority over the project, team
members are often collocated)
Matrix (Strong, Balanced, Week)
Functional
Composite/Hybrid – a combination of different types, depending on the actual
need
PMO
Tight Matrix = co-location, nothingto do with the organization type (not necessarily a
matrix org.)
Functional organizations => the project manager has little authority, often called project
expeditor (no authority) or coordinator (little authority), project coordination among
functional managers
Matrix organization => multiple bosses and more complex
Project Management Office (PMO) – standardizes governance, provides training,
shares tools, templates, resources, etc. across allprojects/programs/portfolios
3 forms: supportive, controlling and directive (lead the project as PM)
functions: training, resource coordination, methodology, document repository,
project management oversight, standards, career management of PMs
may function as a stakeholder / key decision maker (e.g. to terminate the projects)
control shared resources/interdependence across projects at the enterprise level
play a decisive role in project governance
Project Life Cycle vs Project Management Life

Cycle vs Product Life Cycle
Project Life Cycle: includes: initiating, planning and organizing, carrying out/executing
work, closing the project. Project life cycles are independent of a product life cycle.
Within a project life cycle, there can be one or more phases of the development of the
product, service, or result (a.k.a. development life cycles) with the following models:
Predictive [plan driven/waterfall] – scope, time and cost determined early in the
lifecycle, may also employ rolling wave planning
Iterative – repeat the phases as understanding of the project increases until the exit
criteria are met, similar to the rolling wave planning, high-level objectives, either
sequential/overlapping phase, scope/time/resources for each phase may be
different
Incremental – features/scope are added to each incremental cycle
Adaptive [change driven/agile] – for projects with high levels of change, risk and/or
uncertainty, each iterative is very short (2-4 weeks), work is decomposed into
product backlog, each with a production-level product, scrum is one of the most
effective agile methods, stakeholders are involved throughout the process, time
and resources are fixed, allow low change cost/keep stakeholder influence high
Hybrid
The life cycle chosen must be suitable for the intended deliverable and flexible enough
to deal changes.
each project phase within the product lifecycle may include all the five project
management process groups
Product life cycle: development > production > adoption & growth > maturity > decline
> end of life
Other Important Project Management Terms

The Configuration Management Knowledge Bases contain baselines of all organization
standards
Lessons Learned – focus on the deviances from plan (baseline) to actual results and
how to solve these discrepancies
The work authorization system(WAS) is a system used during project integration
management to make sure that the right work gets done at the right time
PMIS includes configuration system and change control system
Never accept a change request to trim down one element of the triple constraint
without changing the rest.
Sponsor – provides resources/support to project, lead the process through initiation
(charter/scope statement) through formally authorized, later involved in authorizing
scope/budget change/review
Customer – NOT necessarily provide the financial resources, may be external to the
organization, final acceptance of the product
Business Partners – certification body, training, support, etc.
Project Statement of Work (SOW): describes the business need, high-level scope
of deliverables and strategic plan of the organization, created by the
sponsor/initiator/buyer
Project Charter is not a contract
Project Management Plan is NOT a project schedule
Project Management System: includes a list of project management processes, level of
implementation (what actions to take in the management processes), description of
tools and techniques, resources, procedures, change control system [forms with
tracking systems, approval levels]
Requirement Traceability Matrix(RTM) – a matrix connecting deliverables to
requirements and their sources (for managing scope)
Work Breakdown Structure (WBS) – a hierarchal chart of decomposing deliverables
into work packages
Activity List – a full list of all activities with indication of relationship to the work
packages
Activity Attributes – further information (duration, start date, end date, etc.) of all the
activities in the list (for scheduling)
Roles and Responsibilities (RAR) – a document listing all the roles and description of
their responsibilities in the project (often by category)
Responsibility Assignment Matrix(RAM) – a matrix connecting people to work
packages/activities, e.g. the RACI matrix (responsible, accountable, consult, inform),
usually only one person is accountable for each activity
Resources Breakdown Structure(RBS) – a hierarchical chart listing all the resources by
categories, e.g. marketing, design, etc.
Risk Breakdown Structure (RBS) – a hierarchical chart listing all risks by categories
Project Management Data and Information
Work Performance Data – raw data collected
Work Performance Info – analyzed in context and integrated data, e.g. some
forecasts
Work Performance Reports – work performance information compiled in report
format
Sunk costs – money already spent, not to be considered whether to terminate a
project, similar to committed cost (often through contracts)
Direct costs, indirect (shared) costs, Fixed costs, Variable costs
Law of diminishing returns – beyond a point, the more input, the less return
Working capital – assets minus liability, what the company has to invest in the projects
Payback period – a time to earn back capital investment
Benefit-cost ratio (BCR) – an indicator, used in the formal discipline of cost-benefit
analysis, that attempts to summarize the overall value for money of a project
Depreciation – straight-line depreciation vs accelerated depreciation (the amount of
depreciation taken each year is higher during the earlier years of an asset’s life)
Under double declining balance, the asset is depreciated twice as fast as under
straight line. Using the example above, 10% of the cost is depreciated each year using
a straight line. Doubling the rate would mean that 20% would be depreciated each
year, so the asset would be fully depreciated in 5 years, rather than 10.
Under sum-of-the-years-digits, the asset is depreciated faster than the straight line but
not as fast as declining balance. As an example of how this method works, let’s say an
asset’s useful life is 5 years. Adding up the digits would be 5+4+3+2+1 or a total of 15.
The first year, 5/15 is expensed; the next year 4/15 is expensed, and so on. So if the
asset’s cost is $1000, 5/15, or $333.34 would be expensed the first year, $266.67 the
second year, and so on.
Economic value added – the value of the project brought minus the cost of project
(including opportunity costs) e.g. for a project cost of $100, the estimated return for 1st
year is $5, assuming the same money can be invested to gain 8% per year, then the
EVA is $5 – $100 * 8% = -$3
Net present value (NPV) – the sum of the present values (PVs) of the individual cash
flows of the same entity
Present value (PV) – or called present discounted value, is a future amount of money
that has been discounted to reflect its current value, as if it existed today (i.e. with
inflation, etc.)
Future value (FV) – is the value of an asset at a specific date
Internal Rate of Return (IRR) – The inherent discount rate or investment yield rate
produced by the project’s deliverables over a pre-defined period of time.
Forecast (future) vs Status Report (current status) vs Progress Report (what have
been done/delivered)
Journey to Abilene (Abilene’s Paradox) – committee decisions can have a paradox
outcome, the joint decision is not welcome by either party (because of fear of raising
objections)
when something unusual happens, always refer to the PM Plan/Charter for instruction
on how to proceed; if not found, ask for direction from the management
unresolved issues will lead to conflicts

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10/4/2020 PMP Certification Study Notes 1 - Terms and Concepts - Updated PMP, PMI-ACP & ITIL Exam Tips

CP & ITIL Exam Tips 2020