Project Management Dr. Anbang Qi Prof. of International Business School of Nankai University The Resources of the Materials • The main content is from “A Guide To The Project Management Body Of Knowledge” (PMBOK). • The copyright belongs to the Project Management Institute. • Its website is www.pmi.org Chapter 1 – Introduction 1. The history of project management • There are three different times – Old times-before 1940’s – Traditional times-1940’s-1980’s – Modern times-1980’s till now • There are two main association: – PMI-Project Management Institute – IPMA-International Project Management Association, before called Internet. Chapter 1 – Introduction 2. Modern Project Management • There are two characteristics for MPM – Enlarged management area-from 3 to 9 areas – Expended to all projects not only the construction and engineering projects. • Become a discipline of Management – Operation or routine management – Project and program management Chapter 1 – Introduction 3. The importance of learning MPM • All things start with project and then may or may not transit into operations. • The project become the great means for a company to make profit in the knowledge economy since all innovations are realized through projects. • The top management should deal with exceptions and that need PMP. Chapter 1 – Introduction • • • • 4. The Definition of Project Project – temporary endeavor undertaken to create a unique product or service Has a definite beginning and end and interrelated activities Under the restriction of resources For some purpose of a organization or even a person. Chapter 1 – Introduction • • • • • • • 5. Typical Projects R & D projects BPR and Reorganization Information system integration Construction and Engineering Scientific research and Dissertation Olympic Games and other sports games Every kind shows and performance Chapter 1 – Introduction 6. The Characteristics of a Project • Products or Service are unique – characteristics are progressively elaborated – Progressively: proceeding in steps – Elaborated: worked with care and detail • The work is temporary. – Time limited – There are resource restriction. Chapter 1 - Introduction 7. The Definition of Project Management • Project Management is the overall planning, control and coordination of project from inception to completion. • Project Management focus on completing project on-time, within the allotted budget and defined scope, and satisfying the required quality standard. Chapter 1 - Introduction 8. The Methods and Tools of PM • Project Management should apply of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a defined project –balancing and integrating the following: – Scope, time, cost, and quality – Stakeholders’ expectations – Requirements (needs) vs. unidentified requirements (expectations) Chapter 1 - Introduction 9. The difference between Program and Project • Programs adopt new set of objectives and continue to work; Projects cease when declared objectives have been attained • Programs are groups of projects managed in a coordinated way to obtain benefits not available from managing the projects individually • Most programs have elements of ongoing operations – Series of repetitive or cyclical undertakings • Projects is no ongoing operation, are often divided into “subprojects” for more manageability – Often contracted out to external organizations Chapter 1 - Introduction 10. Project Management Body of Knowledge – Project integration management – Project scope management – Project time management – Project cost management – Project quality management – Project human resource management – Project communication management – Project risk management – Project procurement management All these make up a knowledge system of PM Project Procurement Management Project Human Resource Management Project Risk Management Project Scope Management Project Cost Management, Project Time Management, Project Quality Management Project Communication Management Project Integration Management The System of PMBOK PMBOK Generally accepted PM knowledge and practices General management knowledge and practices Application area knowledge and practices The relationship of the knowledge Chapter 2 – Project Management Context 1. Project Life Cycle • Project Life Cycle defines or tells: – The phases of the project (time) – The work performed in each phase (work) – The input and output of each phase (result) – The milestone of each phase (end sign) • Common Characteristics of Project Life Cycles: – Cost and Staffing levels are low at start and move higher towards the end – Probability of successfully completing project is low at beginning, higher towards the end as project continues – Stakeholder influence is high at the beginning and progressively lowers as project continues Full operation Installation substantially complete Percentage Complete 100% Major contract let Project ”go” decision Phase 1 Feasibility study -suggestion -feasibility -pre-design -approve Phase 2 Planning & Design -tech-design -cost estimate -scheduling -contracting -plan details Phase 3 Execution -fabrication -construction -installation -trial Phase 4 Turnover -final testing -maintenance Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Determi -nation Concept Engineering Production Operation Demonsof the Exploration and and and tration and Mission and Manufacturing Development Supporting Validation Need Definition Development Milestone 0 Concept Study Approval Milestone 1 Concept Demonstration Approval Milestone 2 Development Approval Milestone 3 Production Approval Project Life Cycle of DOD of USA for Acquisition Milestone 4 Major Modification Approvals Chapter 2 – Project Management Context 2. Phases of a Project • Project Phases are marked by the completion of a deliverable – Tangible, verifiable work product – Review of deliverables and approval/denial are “phase exits, stage gates, or kill points” • Phases are collected into the Project Life Cycle – Set of defined work procedures to establish management control Chapter 2 – Project Management Context 3. Stakeholders of projects • Stakeholders: individuals and organizations who are actively involved in the project – Often have conflicting expectations and objectives – In general, differences should be resolved in favor of the customer – individual(s) or organization(s) that will use the outcome of the project – Stakeholder management is a proactive task • Project Mangers must determine all stakeholders and incorporate their needs into the project Chapter 2 – Project Management Context 3. Stakeholders of projects • Stakeholders are: – – – – – – – – – – Owners Sponsor Customers End User Contractor (Performing Organizations) Supplier Project Managers Project Teams Society and Citizens Others: government agent and so on Supplier Owners Project Manager Sponsor Others Project Teams Customer End User Society, Citizens The relationship of stakeholders of projects Chapter 2 – Project Management Context 4. The Hierarchy of Project Organization Management Stakeholders Management Performing Org. Mana. Project Team Mana. Project Manager Chapter 2 – Project Management Context 5. Organizational Systems • The organizational system of Performing Organization is an very important environment factor for a project. • Project based vs. Non-Project Based – Project Based – derive revenues from performing projects for others (consultants, contractors), “management by projects” – Non-Project Based – seldom have management systems designed to support project needs (manufacturing, financial services) Chapter 2 – Project Management Context 5. Organizational Systems • Organizational Cultures and Styles: – Entrepreneurial firms more likely to adopt highly participative Project Manager – accept higher risk/reward – Hierarchical firms less likely to adopt participative Project Manager – take fewer risks Chapter 2 – Project Management Context 6. Organizational Structures • Functional Organization – More emphasis on functions, Specialists – 1 supervisor – No career path in PM • Projectized Organization – Efficient Organization – Lack of Professionalism – Effective Communication, Duplication of functions • Matrix Organization – – – – – Visible Objectives PM Control – More than 1 boss, Potential for conflict More support – More complex to control Tough resource allocation,Information distribution Coordination – Policies & Procedures Project Coordination Chief Executive Functional Manager Line Depart. Director STAFF P STAFF P STAFF Line Departmen t Line Departmen t STAFF P STAFF STAFF STAFF P STAFF STAFF P STAFF STAFF P STAFF P Functional and Liner Organization Functional Manager Chief Executive Project Coordination Functional Manager Project Manager Project Manager Project Manager STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF STAFF Projectized Organization Chief Executive Functional Manager Functional Manager Functional Manager STAFF P STAFF P Project Manager STAFF P STAFF P STAFF P Project Manager STAFF P STAFF P STAFF P Project Coordination Matrix Organization Line Department STAFF P Line Department Project Manager Line Depart. Director Chief Executive Line Depart. Director Line Department Line Department Project Coordination Functional Manager STAFF P STAFF P STAFF P Functional Manager STAFF P STAFF P STAFF P Composite Organization Functional Manager Manager of Project Managers STAFF P Project Manager STAFF P Project Manager STAFF P Project Manager Project Coordination Chapter 2 – Project Management Context 7. Project Management Skills • General Business Management (consistently producing results expected by stakeholders) • Leading (establishing direction, aligning resources, motivating) • Communicating (clear, unambiguous, and complete) • Negotiating (conferring with others to reach an agreement) • Problem Solving (definition and decision making) – Distinguish causes and symptoms – Identify viable solutions • Influencing Organization (understanding power and politics) Chapter 2 – Project Management Context 8. Socioeconomic Influences • Standards – document approved that provides common, repeated use, rules and guidelines • Regulations – document that identifies products, services or characteristics – Standards often become actual regulations • Internationalization • Cultural Influences Chapter 3 – Project Management Processes • Project Management requires active management of Project Processes – Series of actions that achieve a result – Project Management Processes • Describing and organizing the work – Product-Oriented Processes • Specifying and creating the product Chapter 3 – Project Management Processes 1. The Processes of Project Life Cycle • Production oriented process • Management oriented process • Total Project Life Cycle Turnover Production oriented process Management oriented process Project life cycle including the operation phases General project LC Operation phases Chapter 3 – Project Management Processes 2. Management Process Groups: • Initiating processes: recognizing a project or phase should begin • Planning processes: devising and maintaining a workable plan • Executing processes: coordinating resources to execute the plan • Controlling processes: ensuring project objectives are met; monitoring, correcting and measuring progress • Closing processes: formalized acceptance Chapter 3 – Project Management Processes • • • • 3. The Relationship of Process Groups Process Groups are linked by the results each produces Process Groups are overlapping activities with various levels of intensity Process Group interactions cross phases – “rolling wave planning” Individual processes have inputs, tools and techniques, and outputs (deliverables) Chapter 3 – Project Management Processes Initiating Processes Planning Processes Executing Processes Controlling Processes Closing Processes Links Among Process Groups in a Phase Chapter 3 – Project Management Processes Design Phase Initiating Processes Planning Processes Executing Processes Controlling Processes Closing Processes Implementation Phase Initiating Processes Planning Processes Executing Processes Controlling Processes Closing Processes Interaction between Phases of a project Chapter 3 – Project Management Processes Level of Activity Executing Process Initiating Process Phase Start Planning Process Controlling 控制过程 Process Closing Process Phase Finish Overlap of Process Groups in a Phase of a project Chapter 3 – Project Management Processes 4. The Initiating Processes • Committing the organization to begin a project or a phase of a project – – – – Decision, Initiation, High-level planning, Charter Making Chapter 3 – Project Management Processes 5. Planning Processes • Core Planning – Scope Planning – written statement – Scope Definition – subdividing major deliverables into more manageable units – Activity Definition – determine specific tasks needed to produce project deliverables – Activity Sequencing – plotting dependencies – Activity Duration Estimating – determine amount of work needed to complete the activities (continued) Chapter 3 – Project Management Processes 5. Planning Processes • Core Planning – Schedule Development – analyze activity sequences, duration, and resource requirements – Resource Planning – identify what and how many resources are needed to perform the activities – Cost Estimating – develop resource and total project costs – Cost Budgeting – allocating project estimates to individual work items – Project Plan Development – taking results from other planning processes into a collective document Chapter 3 – Project Management Processes 5. Planning Processes • Facilitating (Planning) Processes – Quality Planning – standards that are relevant to the project and determining how to meet standards – Organizational Planning – identify, document, and assigning project roles and responsibilities – Staff Acquisition – obtaining the human resources – Communications Planning – determining rules and reporting methods to stakeholders (continued) Chapter 3 – Project Management Processes 5. Planning Processes • Facilitating (Planning) Processes – Risk Identification – determining what is likely to affect the project and documenting these risks – Risk Quantification – evaluating risks and interactions to access the possible project outcomes – Risk Response Development – defining enhancement steps and change control measures – Procurement Planning – determining what to buy and when – Solicitation Planning – documenting product requirements and identifying possible sources Chapter 3 – Project Management Processes 5. Planning Processes • The order of planning events : – – – – – – – – – Scope Statement Create Project Team Work Breakdown Structure WBS dictionary Finalize the team Network Diagram Estimate Time and Cost Critical Path Schedule – Budget (continued) Chapter 3 – Project Management Processes • 5. Planning Processes The order of planning events (continued) – – – – – – – – – Procurement Plan Quality Plan Risk Identification, quantification and response development Change Control Plan Communication Plan Management Plan Final Project Plan Project Plan Approval Kick off Chapter 3 – Project Management Processes 6. Executing Processes – – – – – Project Plan Execution – performing the activities Complete Work Packages Information Distribution Scope Verification – acceptance of project scope Quality Assurance – evaluating overall project performance on a regular basis; meeting standards – Team Development – developing team and individual skill sets to enhance the project – Progress Meetings (continued) Chapter 3 – Project Management Processes 6. Executing Processes – Information Distribution – making project information available in a timely manner – Solicitation – obtaining quotes, bids, order, proposals as appropriate – Source Selection – chooseing appropriate suppliers – Contract Administration – managing vendor relationships Chapter 3 – Project Management Processes 7. Controlling Processes • To regularly measure project performance and to adjust project plan • Take preventive actions in anticipation of possible problems – Overall Change Control – coordinating changes across the entire project plan – Scope Change Control – controlling “scope creep” – Schedule Control – adjusting time and project schedule of activities (continued) Chapter 3 – Project Management Processes 7. Controlling Processes – Cost Control – managing project budget – Quality Control – monitoring standards and specific project results; eliminating causes of unsatisfactory performance – Performance Reporting – status, forecasting, and progress reporting schedule – Risk Response Control – responding to changes in risk during the duration of the project Chapter 3 – Project Management Processes 8. Closing Processes • Administrative Closure – generating necessary information to formally recognize phase or project completion • Contract Close-out – completion and delivery of project deliverables and resolving open issues • • • • • • • Procurement Audits Product Verification Formal Acceptance Lessons Learned Update Records Archive Records Release Team Chapter 3 – Project Management Processes 9. The Skills for Process of Groups – – – – – – – Influencing the organization Leading Problem Solving Negotiating Communicating Meetings Project Selection Techniques • Comparative Approach (similar projects) • Constrained Optimization (mathematical approach) Chapter 3 – Project Management Processes 10. Customizing Process Integration • Not all of the processes will be needed on all projects, and not all of the interactions will apply to all projects. • Key aspect of scope verification is customer acceptance • Remember that only 26 % of projects are succeed Chapter 4 – Project Scope Management 1. Project Scope Management – It is the processes required to ensure that the project includes all, and only, work required – It is used to define what “is/is not” included in the project – The project scope shows the work that must be done and measured against project plan – The product scope defines features and functions included in the product or service, and that is measured against requirements – It is primarily concerned with defining and controlling what is or is not included in the project. Chapter 4 – Project Scope Management 1. Project Scope Management Owner’s expectation Defined project scope Actual result The philosophy of project scope management Chapter 4 – Project Scope Management 1. Project Scope Management • There are 5 project scope management processes. They are: – 1. Initiation-committing the organization to begin the next phase of the project. – 2. Scope Planning-developing a written scope statement as the basis for future project decisions. – 3. Scope Definition-subdividing the major project deliverables into smaller, more manageable components. – 4. Scope Verification-formalizing acceptance of the project scope. – 5. Scope Change Control-controlling changes to project scope. Chapter 4 – Project Scope Management 1. Project Scope Management • These processes interact with each other and with the processes in the other knowledge areas as well. • Each process may involve effort from one or more individuals or groups of individuals based on the needs of the project. • Each process generally occurs at least once in every project phase. Chapter 4 – Project Scope Management 2. Initiation Process • A process of formally recognizing that a new project exists, or an existing project continue to next phase • It involves feasibility study, preliminary plan, or equivalent analysis • Authorized as a result of: – Market Demand, Business Need; – Customer Request, Technological Advance; – Legal Requirement or others Chapter 4 – Project Scope Management 2. Initiation Process • Inputs: – Product Description – characteristics of the product/service that the project was to create • Less detail in early phases, more comprehensive in latter • Initial product description is usually provided by the buyer – Strategic Plan – supportive of the organization's goals – Project Selection Criteria – defined in terms of the product and covers range of management concerns (finance, market) – Historical Information – results of previous project decisions and performance should be considered Chapter 4 – Project Scope Management 2. Initiation Process • Tools & Techniques – Project Selection Methods: • Benefit measurement models – comparative approaches, scoring models, economic models • Constrained operation models – programming mathematical • Decision models – generalized and sophisticated techniques – Expert judgment • • • • Business Units with specialized skills Consultant Professional and Technical Associations Delphi Technique Chapter 4 – Project Scope Management 2. Initiation Process • Outputs – Project Charter – formally recognizes project, created by senior manager, includes: • • • • • • • Business need/Business Case Product description & title Signed contract Project Manager Identification & Authority level Senior Management approval Project’s Goals and Objectives Constraints – factors that limit project management team’s options • Assumptions – factors that are considered true for planning purposes. Involve a degree of risk (continued) Chapter 4 – Project Scope Management 3. Scope Planning • Scope Planning – a process of developing a written statement as basis for future decisions – Criteria to determine if the project or phase is successful • Inputs: – – – – Product description Project Charter Constraints Assumptions Chapter 4 – Project Scope Management 3. Scope Planning • Tools & Techniques – Product Analysis - - developing a better understanding of the product of the project – Cost/Benefit Analysis – estimating tangible/intangible costs and returns of various project alternatives and using financial measures to assess desirability – Alternatives Identification – generate different approaches to the project; “brainstorming” – Expert Judgment Chapter 4 – Project Scope Management 3. Scope Planning • Outputs – Scope Statement – documented basis for making project decisions and confirming understanding among stakeholders. Includes: • • • • Project justification –evaluating future trade-offs Project Product – summary of project description Project Deliverables – list of summary of delivery items Project Objectives – quantifiable criteria met for success. – Supporting detail – includes documentation of all assumptions and constraints – Scope Management Plan – how project scope is managed, change control procedure, expected stability, change identification and classification • Control what is/is not in the project; prevents delivering “extra” benefits to the customer that were not specified/required Chapter 4 – Project Scope Management 4. Scope Definition – Subdividing major deliverables into smaller, manageable components – Improve accuracy of cost, time, and resource estimates – Define a baseline for performance measurement – Clear responsibility assignments – Critical to project success – reduces risk of higher cost, redundancy, time delays, and poor productivity – Defines “what” you are doing; WBS is the tool Chapter 4 – Project Scope Management 4. Scope Definition • Inputs: – Scope Statement – Constraints – consider contractual provisions – Assumptions – Other Planning Outputs – Historical Information Chapter 4 – Project Scope Management 4. Scope Definition • Tools & Techniques – Work Breakdown Structure Templates – Decomposition • The main works in scope definition – Major project deliverables and management approach – Decide cost and duration estimates – Tangible and verifiable results to enable performance management, how the work will be accomplished – Verify correctness of decomposition-All items necessary and sufficient? Clearly and completely defined? Appropriately scheduled, budgeted, assigned? Chapter 4 – Project Scope Management 4. Scope Definition • Outputs – Work Breakdown Structure (WBS) • a deliverable-oriented grouping of project assignments that organizes and defines the scope of the project • Each descending level represents further detail; smaller and more manageable pieces • Each item is assigned a unique identifier collectively known as “code of accounts” – Work Breakdown Structure Dictionary (WBSD) • All work element descriptions included in a WBSD (work, schedule and planning information) – Other formats:Contractual WBS, Organizational (OBS) , Resource (RBS) , Bill of Materials (BOM) , Project (PBS) – similar to WBS Software Development Project Project Management Time Product Requirement System Design Construction & Integration Training and Transmitting Owner’s Requir. Logic Sys Design Programming User Documentation quality End User’s Requir. Physic Sys design Integrating Training Program Cost Analysis Result System Design Testing Transmitting Program Scope An illustration of the WBS for a software development project Chapter 4 – Project Scope Management 5. Scope Verification • Inputs – Scope Definition Work Results – WBS, WBSD – Product Documentation – description available for review (requirements) • Tools & Techniques – Inspection – measuring, examining, testing to determine if results conform to requirements • Outputs – Formal acceptance – documentation identifying client and stakeholder approval, customer acceptance of efforts Chapter 4 – Project Scope Management • • • • 6. Scope Change Control Influencing factors to ensure that changes are beneficial Determining scope change has occurred Managing changes when they occur Thoroughly integrated with other control processes Chapter 4 – Project Scope Management 6. Scope Change Control • Scope Change Control Inputs: – Work Breakdown Structure – Performance Reports- issues reported – Change Requests – expansion/shrink of scope derived from : • External events (government regulations) • Scope definition errors of product or project • Value adding change – new technology – Scope Management Plan Chapter 4 – Project Scope Management 6. Scope Change Control • Scope Change Control Tools & Techniques – Scope Change Control System – defines procedures how scope change can occur • All paperwork, tracking systems, approval levels • Integrated with overall change control procedures – Performance Measurement – determine what is causing variances and corrective actions – Additional Planning Chapter 4 – Project Scope Management 6. Scope Change Control • Scope Change Control Outputs: – Scope Changes – fed back through planning processes, revised WBS – Corrective Actions – Lessons Learned – cause and reasoning for variances documented for historical purposes Chapter 5 – Project Time Management 1. Project Time Management • It includes the processes required to ensure timely completion of the project. • The major processes are: – Activity Definition-identifying the specific activities that must be performed to produce project deliverables. – Activity Sequencing-identifying and documenting interactivity dependencies. – Activity Duration Estimating-estimating the work periods needed to complete individual activities. – Schedule Development-analyzing activity sequences, durations,and resource requirements for the schedule. – Schedule Control-controlling changes to the schedule. WBS interactivity dependencies estimating work periods needed Arrange activity time schedule Actual change control Activity Definition identifying the specific activities Activity Sequencing identifying and documenting interactivity dependencies Activity Duration Estimating estimating work periods needed to complete individual activities Schedule Development analyzing sequences, durations, and resource requirements Schedule Control -controlling changes to the schedule Activity Breakdown Analysis Activity Sequencing Critical Path Analysis Measures for time management Change requirement control Chapter 5 – Project Time Management 2. Activity Definition • Identifying and documenting specific activities to produce project deliverables identified in the WBS • Must be defined to meet the project objectives Chapter 5 – Project Time Management 2. Activity Definition • Inputs – WBS – primary input – Scope Statement – project justification & project objectives – Historical Information – Constraints – Assumptions Chapter 5 – Project Time Management 2. Activity Definition • Tools & Techniques – Decomposition – outputs are expressed as activities rather than deliverables – Templates – reuse from previous projects Plant construction project Building subproject Design subproject Design management Design work Construction work Construction M. Integration M. Architecture D. Site preparing Integration M. Scope M. Structure D. Construction Scope M. Time M. Shop Drawing Cost M. Installation D. Installation Time M. Hand over Cost M. ····· ····· The illustration of activity definition of a construction project Changing Executing planning ·· · a component Framework Foundation a component Framework Foundation Settlement Control Payment Budget Estimate ·· · Chapter 5 – Project Time Management 2. Activity Definition • Outputs – Activity List – all to be performed; extension to the WBS and includes description to ensure team members understand work to be performed – Supporting Detail – organized as needed and include all assumptions and constraints – WBS Updates – identify missing deliverables and clarify deliverable descriptions. WBS updates often called refinements; more likely using new technologies in project Chapter 5 – Project Time Management 3. Activity Sequencing • Identifying and documenting interactive dependencies among activities. • Support later development of a realistic schedule Chapter 5 – Project Time Management 3. Activity Sequencing • Inputs: – Activity List – Product Description – Mandatory Sequencing physical limitations, hard logic, inherent in nature of work being done – Discretionary Dependencies defined by project management team; “best practices” or unusual aspects of project – soft logic, preferred logic, preferential logic – External Dependencies relationship between project activities and non-project activities – Constraints – Assumptions Chapter 5 – Project Time Management 3. Activity Sequencing • Tools & Techniques – Precedence Diagramming Method (PDM) constructing network diagram using Activity On Node (AON) or Arrow Diagramming Method (ADM), to indicate dependencies • Includes 4 types of dependencies: – – – – Finish to Start – “from” activity must finish before “to” activity can begin Finish to Finish – “from” activity must finish before the next may finish Start to Start – “from” activity must start before next “to” activity can start Start to Finish – task must start before next activity can finish – Project Time Management Software – Network Templates – standardized networks be used. Chapter 5 – Project Time Management 3. Activity Sequencing • Outputs: – Project Network Diagram • schematic display of project activities and relationships (dependencies). • Should be accompanied by a summary narrative that describes the diagram approach – Activity List Updates A B C Start End D E F Project Network Diagram with Activity On Node (AON) B A C Start End D E F Project Network Diagram with Arrow Diagramming Method (ADM) Chapter 5 – Project Time Management 4. Activity Duration Estimating • Involves assessing number of work periods needed to complete identified activities • Requires consideration of elapsed time, calendars, weekends, and day of week work starts Chapter 5 – Project Time Management 4. Activity Duration Estimating • Inputs: – – – – – Activity Lists Constraints Assumptions Resource Requirements Resource Capabilities • human and material resources, expertise – Historical Information • Previous Project Files, • Commercial Duration Estimates, • Project Team Knowledge Chapter 5 – Project Time Management 4. Activity Duration Estimating • Tools & Techniques – Expert Judgment • guided by historical information should be used whenever possible; • high risk without expertise avail. – Simulation • using different sets of assumptions (Monte Carlo Analysis) to drive multiple durations – Analogous Estimating • “top down estimating” – use actual, similar, previous known durations as basis for future activity duration. • Used when limited knowledge is available. • Form of expert judgment Time 1--Optimistic time Time 2- Most Likely time Probability Time 3-Pessimistic time An activity Critical path Time 1 Time Time 2 ±3δ Time 3 Time 1 Time 2 Time 3 Illustration of the duration simulations Path No.1 A 5 days B 5 days C 5 days Path No.3 Start End D 10 days E 5 days F 5 days Path No.2 (critical path) Project Network Diagram with time duration estimate using Activity On Node (AON) Chapter 5 – Project Time Management 4. Activity Duration Estimating • Outputs: – Activity Duration Estimates • Quantitative assessments of work periods to complete an activity. • Should indicate a range +/- of possible results – Basis of Estimates • all assumptions should be documented – Activity List Updates Chapter 5 – Project Time Management 5. Schedule Development • Determining start and finish dates for project activities • Schedule development process often repeat as more information becomes available (process inputs) • Without realistic dates, project unlikely to be finished as scheduled Chapter 5 – Project Time Management 5. Schedule Development • Inputs: – – – – – Project Network Diagram Activity Duration Estimates Resource Requirements Resource Pool Description Calendars • Project Calendars and Resource Calendars – Constraints • Imposed Dates, Key Events or Milestones that are required – Assumptions – Lead and Lag Time • dependencies may specify time in order to satisfy relationship (example – 2 weeks to receive order) Chapter 5 – Project Time Management 5. Schedule Development • Tools & Techniques – Critical Path Method • One time estimate per task (Most Likely) • Emphasis on controlling cost and leaving schedule flexible – Graphical Evaluation and Review Technique (GERT) • probabilistic treatment of network and activity duration estimates – Program Evaluation and Review Technique (PERT) • Sequential network and weighted average duration. • Using 3 Time estimates per activity:Optimistic, Pessimistic and Most Likely time. • Using weighted average duration( (T1+4T2+T3)/6) to calculate project duration (continued) Chapter 5 – Project Time Management 5. Schedule Development • Tools & Techniques – Monte Carlo Simulation – It tells: – Probability of completing a project on any specific day – Probability of completing a project for any specific amount of cost – Overall Project Risk – Resource Leveling Heuristics – leveling resources that apply to critical path activities – “resource constrained scheduling” or “Resource Based Method” – Project Management Software – Project Manger’s role • Provide the team with necessary information to properly estimate the task • Complete a right check of the estimate and formulate a reserve – Project Team should be involved in determining task estimates with: • Historical Records, Personal Guesses and Judgments. Chapter 5 – Project Time Management 5. Schedule Development • Outputs: – Project Schedule –Usually in following formats: • Project Network Diagrams (with date information added) • Bar or Gantt charts – activity start and end dates, expected durations – Supporting Detail – all assumptions and constraints. Also include: • Resource requirement by time period (resource histogram) • Alternative schedules (best/worst case) • Schedule reserve/risk assessments – Schedule Management Plan – how updates are managed – Resource requirement updates – leveling and activity impact Chapter 5 – Project Time Management 6. Schedule Control • Influencing factors which create schedule changes to ensure changes are beneficial • Determining that schedule has changed • Managing actual changes as they occur Chapter 5 – Project Time Management 6. Schedule Control • Inputs – Project Schedule • baseline approved, measure against project performance – Performance Reports • planned dates met, issues – Change Requests – Schedule Management Plan Chapter 5 – Project Time Management 6. Schedule Control • Tools & Techniques – Schedule Change Control System • defines procedures for schedule changes, paperwork, approval, tracking systems – Performance Measurement • assess magnitude of variations to baseline; determine if corrective action is needed – Additional Planning – Project Management Software Chapter 5 – Project Time Management 6. Schedule Control • Outputs: – Schedule Updates • for any modifications or stakeholder notification • Revisions change scheduled start and finish dates • “Re-baseline” may be needed in drastic situations – Corrective Action • re-align performance with project plan – Lessons Learned Chapter 5 – Project Time Management 7. General Comments • Projects can have more than 1 critical path (increases risk) and can involve dummy tasks • Resource Leveling involves possibly letting schedule and cost slip • Schedules are calendar based – makes this different than a time estimate • To shorten project schedule with the critical path • add more resources to the critical path tasks--usually results in increased cost • performing tasks in parallel--can result in re-work and increased risk • Best to select method that has least impact on the project (is the importance on cost, risk or schedule?) Chapter 5 – Project Time Management 7. General Comments • Different techniques have different advantages and disadvantages • Bar (Gantt) Charts • Weak Planning Tool, effective progress and reporting tool • Does not show interdependencies of tasks • Does not help organize the project more effectively • Network Diagrams (PERT, CPM, PDM) • Shows task interdependencies • Aids in effectively planning and organizing work • Provides a basis for project control • Milestone Charts • Only shows major events • Good for reporting to management and customer • Flow Charts • tell workflow and not commonly used for project management Chapter 6 – Project Cost Management 1. Project Cost Management • Project Cost Management : – Ensure that the project is completed within budget – Concerned with cost of resources needed to complete activities; – Consider effect of project decisions on cost of using product “life-cycle costing” – Most prospective financial impact of using the product is outside the project scope – Consider information needs of stakeholders, controllable and uncontrollable costs (budget separately for reward and recognition systems) Chapter 6 – Project Cost Management 1. Project Cost Management • Project Cost Management: – – – – Estimating should be based on WBS to improve accuracy Estimating should be done by the person performing the work Having historical records is key to improving estimates Costs (schedule, scope, resources) should be managed through estimates, budgeting and controlling – A cost (schedule, scope, baseline) should be kept and not changed – Plans should be revised as necessary during completion of work – Corrective action should be taken when cost problems (schedule, scope and resources) occur. Chapter 6 – Project Cost Management 1. Project Cost Management • Project Cost Management consists of: – Resource Planning – Cost Estimating – Cost Budgeting – Cost Controlling – Earned Value Analysis Chapter 6 – Project Cost Management 2. Resource Planning – Determining what physical resources and quantities are needed to perform work • Inputs : – – – – – Work Breakdown Structure and Activity List Network Diagram Schedule and Risks Historical Information Scope Statement • justification & objectives – Resource Pool Description • what resources are potentially available for resource planning – Organizational Policies • staffing, procurement Chapter 6 – Project Cost Management 2. Resource Planning • Tools & Techniques – Expert Judgment – Alternatives Identification • Outputs: – Resource Requirements • what type & how many resources are needed for each activity in the Work Breakdown Structure Chapter 6 – Project Cost Management 3. Cost Estimating – Develop approximate costs of resources – Distinguish estimating from pricing • Estimating – likely amount • Pricing – business decision – Identify alternatives and consider realigning costs in phases to their expected savings Chapter 6 – Project Cost Management 3. Cost Estimating • Inputs: – – – – – Work Breakdown Structure and Activity List Resource Requirements Resource Rates (if known) Activity Duration Estimates Historical Information –project files, commercial cost databases, team knowledge – Chart Of Accounts – coding structure for accounting; general ledger reporting Chapter 6 – Project Cost Management 3. Cost Estimating • Tools & Techniques – Analogous Estimating – “top down”; using actual costs from previous project as basis for estimate • Quick - Less Accurate – Parametric Modeling – uses project characteristics in mathematical models to predict costs (e.g.building houses) • 2 types: Regression analysis, Learning Curve. – Bottom Up Estimating – rolling up individual activities into project total with quantity survey and its list. • More Accurate, Requires that project be defined and understood – Computerized tools – spreadsheets, software Chapter 6 – Project Cost Management 3. Cost Estimating • Outputs – Cost estimates – quantitative assessments of likely costs of resources required to complete tasks • For all resources (labor, materials, supplies, inflation allowance, reserve) • Expressed in units of currency – Supporting Detail • • • • Description of scope (reference to the WBS) Documentation how estimate was developed Indication of range of possible results Assumptions – Cost Management Plan • how cost variances will be managed – Cost Risk • Associated to seller for Fixed Price; • Associated to buyer for Time and Materials budget (cost plus profit) Chapter 6 – Project Cost Management 3. Cost Estimating • Accuracy of Estimates – Cost Estimate: -25% - 75%; usually made during Initiation Phase – Budget Estimate: -10% - 25%; usually made during the Planning phase – Definitive Estimate: -5% - 10%; usually made during the Planning phase Chapter 6 – Project Cost Management 4. Cost Budgeting – Involves allocation of total estimate to individual work to establish a cost baseline to measure performance • Inputs – Cost Estimate – Work Breakdown Structure and Activity List – Project Schedule – includes planned start and finish dates for items costs are allocated to • Needed to assign costs during the time period when the actual cost will be incurred Chapter 6 – Project Cost Management 4. Cost Budgeting • Tools & Techniques – Same as Cost Estimating Tools and Techniques – Management Reserve – Contingency for all risks • Outputs – Cost Baseline – time phased budget to measure and monitor cost performance • Developed by summing estimated costs by period (S curve of values vs. time) • Larger projects have multiple baselines to measure different aspects of cost performance C1 Unexpected Situation Project Budget (Baseline) C2 C3 Expected Situation Schedule (calendars ) S3 S2 The illustration of project budgeting S1 Chapter 6 – Project Cost Management 5. Cost Control – Concerned with influencing factors that create changes to the cost baseline that are beneficial – Determining that the cost baseline has changed – Managing actual changes as they occur • Monitor cost performance to detect variances • Record all appropriate changes accurately • Preventing incorrect, unauthorized changes being included in the cost baseline • Informing stakeholders of authorized changes – Determine the “why’s” of positive and negative variances – Integrated will all other control processes (scope, change, schedule, quality) Chapter 6 – Project Cost Management 5. Cost Control • Inputs – Cost Baseline – Performance Reports with 3 methods: – 50/50 Rule – task is considered 50% complete when it begins and gets credit for remainder 50% only when completed – 20/80 Rule - task is considered 20% complete when it begins and gets credit for remainder 80% only when completed – 0/100 Rule – task only credited when fully completed – Change Requests – Cost Management Plan Chapter 6 – Project Cost Management 5. Cost Control • Tools & Techniques – Cost Change Control System • defines the procedures by which the cost baseline may be changed – Performance Measurement • assess magnitude of cost variations (Earned Value Analysis) and what is causing the variance – Additional Planning • examine alternatives – Computerized Tools • forecast planned costs, track actual costs, forecast effect of cost changes Chapter 6 – Project Cost Management 5. Cost Control • Outputs – Revised Cost Estimate • Modifications to cost information; require stakeholder approval and adjustments to other project areas – Budget Updates • changes to approved cost baseline; revised in response to scope changes – Corrective Action – Estimate at completion (EAC) – forecast of total expenditures • Actual to date plus remaining budget modified by a factor (cost performance index) – Current variances are seen to apply to future variances • Actual to date plus new estimate for remaining work – Original estimates are flawed, or no longer relevant • Actual to date plus remaining budget – Current variances are typical and similar variances will not occur in the future – Lessons Learned Chapter 6 – Project Cost Management 6. Earned Value Analysis – Integrates cost and schedule – Better that comparing projected vs. actual because time and cost are analyzed separately – Terms: • BCWS – Budgeted Cost of Work Scheduled (Plan Value) • BCWP – Budgeted Cost of Work Performed (Earned Value) [(Work actually Performed)× (Budgeted Cost of that work) • ACWP – Actual Cost of Work Performed (Actual Cost) • BAC – Budget at Completion (total budget for the whole job) • EAC – Estimate at Completion (what do we expect the total project to cost); EAC refers to when job is completed. • ETC – Estimate to Completion (how much more do we expect to spend to finish the job), ETC refers to “this point on” • VAC – Variance at Completion (how much over/under budget do we expect to be) Chapter 6 – Project Cost Management 6. Earned Value Analysis • Earned Value Analysis Formulas – Variance (Plan – Actual) • Cost Variance (CV): BCWP – ACWP; negative is over budget • Schedule Variance (SV): BCWP – BCWS; negative is behind schedule • Cost Performance Index (CPI): BCWP ACWP --I am only getting x¢ out of every $. (continued) Chapter 6 – Project Cost Management • Earned Value Analysis – Formulas • Schedule Performance Index (SPI): BCWP BCWS – I am only progressing x % of the planned rate • Estimate at Completion (EAC): BAC CPI – As of now we expect the total project to cost x$ • Estimate to Complete (ETC): EAC – ACWP; – how much will it cost from now to completion • Variance at Completion: BAC – EAC; – when the project is over how much more or less did we spend (most common way of calculating EVA) – Negative is bad; positive results are good Cost Work performed ETC= EAC – ACWP Time Variance Variance at Com: BAC – EAC Actual Cost Budget (Baseline) Earned Value CV= EV-AC E A C P V E V A C = BCWP – ACWP SV=EV-PV = BCWP – BCWS Schedule (calendars ) Actual time spend 2 years The illustration of EV Analysis 4 years Chapter 7 – Project Quality Management 1. Quality Definition • Quality is the totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs – Critical aspect is to turn implied needs into stated needs through project scope management – Customer satisfaction – conformance to specifications (must produce what is stated) and fitness for use (must satisfy real needs) – Management responsibility – requires participation of team; responsibility of management to provide resources – Quality objectives are approved in conceptual stage by project owner Chapter 7 – Project Quality Management 1. Quality Definition – Responsibility to project quality • • • • Entire organization Ultimate – employee or owner Overall or Primary – Project Manager Design and Test Specifications – engineer – Prevention over inspection • Quality must be planned in not inspected in – Quality attributes • can be subjective, objective and are specific characteristics for which a project is designed and tested Chapter 7 – Project Quality Management 2. Project Quality Management – Processes required to ensure that the project will satisfy the needs for which it was designed – Includes all activities of the overall management function that determine the quality policy, objectives, and responsibilities. – These are implemented by quality planning, quality control, quality assurance, and quality improvement Chapter 7 – Project Quality Management 2. Project Quality Management • 3 major processes: – Quality Planning • identifying quality standards that are relevant to the project (Plan), by Project Manager, Project Owner – Quality Assurance • evaluating overall project performance to provide confidence that project will satisfy relevant quality standards (Implement or Execution); by Project Team – Quality Control • monitoring specific results to comply with quality standards and eliminating unsatisfactory performance causes (Check or Control); by Project Manager, Project Team • Must address(do) the management of the project and the product of the project Chapter 7 – Project Quality Management 3. Quality Planning – Identifying which standards are relevant to project and how to satisfy – done during Project Planning Phases • Inputs – Quality Policy • the overall intentions and direction of an organization with regard to quality as expressed by management – – – – Scope Statement Product Description Standards and Regulations Other Process Outputs • processes from other knowledge areas (procurement planning) Chapter 7 – Project Quality Management 3. Quality Planning • Tools &Techniques – Benefit/Cost Analysis • consider trade-offs, benefit is less rework; cost is expense of project management activities – Benchmarking • comparing actual or planned practices to those of other projects – Flowcharting • Cause and effect diagramming (fishbone diagrams) illustrate how causes relate to potential problems or effects • System or Process flowcharts – show how various elements of the system interrelate – Design of Experiments • analytical technique which defines what variables have most influence of the overall outcome C Cost Quality L1 Quality L2 Total Quality Cost Quality Assurance Cost C0 Economic Quality Cost Quality Failure Cost Q Economic Quality Illustration of Benefit/Cost Analysis Quality Chapter 7 – Project Quality Management 3. Quality Planning • Outputs – Quality Management Plan • describes how team will implement its quality policy; describes the project quality system – organizational structures, responsibilities, procedures, processes and resources needed to implement quality management – Operational Definitions • defines how an item is measured by the quality control process. – Checklists • structured tool used to verify that a set of required steps has been performed – Inputs to other processes • may identify a need for further activity in another area Chapter 7 – Project Quality Management 4. Quality Assurance • All planned activities implemented within the quality system to provide confidence that the project will satisfy quality standards– done during Project Execution phases • Inputs – Quality Management Plan – Results of quality control measurements (testing) – Operational definitions(how an item is measured by the quality control process) Chapter 7 – Project Quality Management 4. Quality Assurance • Tools & Techniques – Quality planning tools & techniques – Quality Audits • structured review of quality management activities to identify lessons learned • Outputs – Quality improvements • taking action to increase the effectiveness and efficiency of the project to provide added benefits to the stakeholders • Most likely will involve change control Chapter 7 – Project Quality Management 5. Quality Control • Monitoring specific results to determine if they comply with quality standards, and identifying ways to eliminate causes of unsatisfactory results, take corrective actions to keep the compliancy of quality standards --done during project Control phases • Process of monitoring specific project results to determine if they comply with relevant quality standards and identify ways of eliminating unsatisfactory performance • Performance of the measurement or process Chapter 7 – Project Quality Management 5. Quality Control • Inputs – Work results • include process and product results – Quality Management Plan – Operational Definitions – Checklists Chapter 7 – Project Quality Management 5. Quality Control • Tools & Techniques – Inspection – Control Charts (see the chart on next page) – Pareto diagrams – Statistical sampling – Flowcharting – Trend Analysis • forecast future outcomes based on historical results – Technical performance (# of errors identified; # of errors that remain) – Cost and Schedule performance (activities per period with significant variances) Quality Specification Upper Specification Limit Upper Control Limit Mean Rule of 7 Lower Control Limit Lower Specification Limit Numbers of Sample Illustration of Control Chart Chapter 7 – Project Quality Management 5. Quality Control • Outputs – Quality Improvement – Acceptance Decisions (accept/reject) – Rework • action to bring defective item into compliance – Completed checklists – Process Adjustments • immediate corrective/preventive actions • Most likely involves change control Chapter 8 – Project Integration Management 1. Project Integration Management – Ensures that the project processes are properly coordinated – It is needed for overall project management and the communication within a project – It is needed to perform project management well and systematically – There are three processes in PIM • Project Plan Development • Project Plan Execution • Overall Change Control – These processes may occur repeatedly over the project duration Project Cost Project Time Project Scope Project Quality The interactive relationship of project factors for integration management Chapter 8 – Project Integration Management 2. Project Plan Development – Uses outputs from other planning processes to create consistent document to guide project execution and control – Iterated (repeated) several times – Documents planning assumptions – Documents planning decisions that are chosen – Facilitates communication – Defines key management reviews(point/time) – Provides a baseline to track progress measurement and project control Chapter 8 – Project Integration Management 2. Project Plan Development • Inputs – Other planning outputs: primarily the planning process outputs (WBS, base documents, application area inputs) – Historical information – verify assumptions, records of past project performance – Organizational policies – quality management, personnel administration, Financial controls – Constraints – factors that limit performance, contractual provisions, budget – Assumptions – risk factors Chapter 8 – Project Integration Management 2. Project Plan Development • Tools & Techniques – Project Planning Methodology – any structured approach (software, templates, forms, start-up meetings – Stakeholder Skills & Knowledge – tap into plan development; use expertise for reasonableness – PMIS – Out of the box approach to support all project aspects through closure Chapter 8 – Project Integration Management 2. Project Plan Development • Outputs – Project Plan ( or PIP/master plan/main plan) is a collection that changes over time as more information about the project becomes available (see the details on next page) – Baseline (for performance measurement) will change only in response to approved scope change – Supporting Details to the Project Plan • Outputs from planning processes • Technical documentation • Business requirements, specifications, and designs • Relevant standards • Additional information not previously known Chapter 8 – Project Integration Management 2. Project Plan Development • Project Plan includes some or all of the following: – – – – – – – – Project Charter Project Management approach or strategy Scope statement Work Breakdown Structure (WBS) Key Staff, Major Milestones Change Control Plan, Communication Management Plan Budget, scheduled and quality responsibility assignments – – – – Required Staff Risks, constraints and assumptions Subsidiary management plans (scope, schedule) Open Issues and Pending Decisions Chapter 8 – Project Integration Management 3. Project Plan Execution – Primary process for carrying out the project plan – Most costly aspect of project management – Direction of organizational resources and interfaces Chapter 8 – Project Integration Management 3. Project Plan Execution • Inputs: – Project Plan – Supporting Detail – Organizational Policies – Corrective Action – anything to bring expected performance in line with the project plan Chapter 8 – Project Integration Management 3. Project Plan Execution • Tools & Techniques – General Management Skills – Product Skills and Knowledge – defined as part of planning, provided by staffing – Work Authorization System – formal procedure for sanctioning work to ensure completion – written or verbal authorization – Status review meetings – regular exchanges of information – Project Management Information System – Organizational Procedures Chapter 8 – Project Integration Management 3. Project Plan Execution • Outputs – Work results – the outcome of activities performed is fed into the performance reporting process – Change Requests – expand/shrink project scope, modify costs and schedule estimates Chapter 8 – Project Integration Management 4. Overall Change Control – Influencing factors that create change to ensure beneficial results; ensure that change is beneficial – Determining that change has occurred – Managing actual changes as they occur • Evaluate impact of change • Meet with team to discuss alternatives • Meet with management to present decision Chapter 8 – Project Integration Management 4. Overall Change Control • Change control requires – Maintaining integrity of performance measurement baselines (project plan) – Ensuring changes to scope are accurately recorded – Coordinating changes across knowledge areas (scheduling, risk, cost, quality, etc.) – Determine all factors that control change and proactively preventing the occurrence; evaluate the impact of change Chapter 8 – Project Integration Management 4. Overall Change Control • Inputs – Project Plan – baseline performance – Performance Reports – issue tracking, risk management – Change Requests – orally or written, externally or internally initiates, legally mandated or optional Chapter 8 – Project Integration Management 4. Overall Change Control • Tools & Techniques – Overall Change Control System – collection of formal procedures, paperwork, tracking systems, approval levels. Including: • Change Control Board, Change Control Plan and Procedures, • Performance Statistics, Reports, Change forms • Specification reviews, Demonstrations, Testing, Meetings – Configuration Management – documented procedure to apply technical and administrative direction • • • • ID and document functional and physical characteristics Control changes to these characteristics Record and report change and implementation status Audit items and system to verify requirements Chapter 8 – Project Integration Management 4. Overall Change Control • Outputs – Project Plan Updates – Corrective Actions – Lessons Learned • variance causes and reasoning documented for historical purposes • What have we done, how can we do it better – – – – Technical Aspects of the project Project Management (WBS, plans, etc.) Overall Management (communications, leadership) Best to have whole team complete and made available Chapter 9 – Project Risk Management 1. Project Risk Management • • • Definition of risk: a discrete occurrence that may affect the project for good or bad. Definition of uncertainty: an uncommon state of nature, characterized by the absence of any information related to a desired outcome. Definition of risk management: The process involved with identifying, analyzing, and responding to risk. maximizing results of positive events and minimizing consequences of negative events. Chapter 9 – Project Risk Management 1. Project Risk Management • Risk Management includes : – Risk Identification • Find out which are likely to affect the project – Risk Quantification • Evaluate the risk to assess the range of possible outcomes – Risk Response Development • define enhancement steps for opportunities and response. Sometimes called response planning/mitigation – Risk Response Control • respond to changes in risk over course of project. May be combined as risk management Chapter 9 – Project Risk Management 2. Risk Identification – Determine which risks are likely to affect the project and documenting them – Performed on a regular basis; address internal and external risks • Internal –project team has control/influence over • External – beyond project team’s control – Identify cause and effect and effects and causes; what could happen vs. what outcomes should be avoided Chapter 9 – Project Risk Management 2. Risk Identification • Inputs – Product Description • There are more risks associated with unproven technologies (innovation/invention). Often described in terms of cost and schedule impact – Other Planning Reports • WBS (any non-traditional approaches) • Cost/Duration Estimates – aggressive schedules; limited information • Staffing Plan – hard to replace/source skilled persons • Procurement Management Plan – market conditions – Historical Information • previous projects: Project Files, Commercial Databases, Project Team Knowledge(members’ experiences) Chapter 9 – Project Risk Management 2. Risk Identification • Tools & Techniques – Checklists • organized by source of risk, included project context, process outputs, product and technology issues, internal sources – Flowcharting • understand cause and effect relationships – Interviewing • conversations with stakeholders Chapter 9 – Project Risk Management 2. Risk Identification • Outputs – Sources of Risk • categories of possible risk events, all-inclusive (Changes in requirements, Design errors, omissions, misunderstanding, poorly defined roles and responsibilities, Insufficiently staff) – Sources: » External: Regulatory, environmental, government » Internal: Schedule, cost, scope change, inexperience, planning, people, staffing, materials, equipment » Technical: Changes in technology » Unforeseeable: small (only about 10%) » Risk I, Risk II • Include estimate of probability, range of possible outcomes, expected timing, anticipated frequency (continued) Classified by probability Classified by risks conjunction Classified by serious of results The Whole Risks of a Project Classified by Unforeseeing Classified by causes of risks Classified by objects of risks Classification of the Risks Chapter 9 – Project Risk Management 2. Risk Identification • Outputs – Potential Risk Events • Discrete (unusual) occurrences that may affect project • New technologies obsolete needed by product • Socio, Political and Economic events • Include estimate of probability, range of possible outcomes, expected timing, anticipated frequency – Risk Symptoms • Early warning signs – Risk Tolerances • amount of risk that is acceptable – Input to other management process (time, cost ,quality etc.) Chapter 9 – Project Risk Management 2. Risk Identification • Common Stumbling Blocks – Risk identification is completed without knowing enough about the project – Project Risk evaluated only by questionnaire, interview or Monte Carlo; does not provided a per task analysis of risk – Risk identification ends too soon – Project Risk identification and Evaluation are combined – results in risks that are evaluated when they appear; decreased total number of risks and stops identification process – Risks are identified too generally – Categories of risks are forgotten (technology, culture) – Only 1 identification method is used – First risk response strategy is used without other consideration – Risks are not devoted enough attention during the Execution phase Chapter 9 – Project Risk Management 3. Risk Quantification – Assess risks to determine range of possible outcomes; which risk events warrant (must have ) a response. This will involve: • Opportunities and threats can provide unanticipated results (e.g. schedule delay is considered for a new strategy) • Multiple effects from a single event • Singular stakeholder’s opportunity may force suffering in other areas • Reliance (based on ) on statistics and forecasting • Probability and Amount of Impact • Develop a ranking (priority) of risks – Qualitative – take an educated guess – Quantitative – estimation by calculation Chapter 9 – Project Risk Management 3. Risk Quantification • Inputs – Stakeholder risk tolerance • More capital to expend; perceptions of severity – Sources of Risk (from RI) – Potential Risk Events(from RI) – Cost Estimates – Activity Duration Estimates Chapter 9 – Project Risk Management 3. Risk Quantification • Tools & Techniques – Expected Monetary Value • Product of 2 numbers P×V • Risk Event Probability – estimate that event will occur • Risk Event Value – estimate of gain or loss – Statistical Sums • Calculate range of total costs from cost estimates for individual work items with probabilities – Simulation • representation or model; provide statistical distribution of calculated results (Monte Carlo, Critical Path, PERT techniques) – Decision Trees – Expert Judgment – Sensitivity Analysis • estimate the effect of change of one project variable on overall project Chapter 9 – Project Risk Management 3. Risk Quantification • Outputs – – – – – – – Risk probability, Range of possible outcomes, Expected timing, Anticipated frequency Priorities of project risks Opportunities to pursue and threats to respond Opportunities to ignore and threats to accept Develop PMIS for risk management Collect all the information for risk identification Knowledge and experience of the team Analysis and judgment of project risk Documents of risk identification Risk? No. Yes End Classification of project risks Analyze and value project risk probabilities Analyze and value risks & range of possible outcomes Analyze and value the serious of project risks results Analysis & value risks timing & causes Report of Risk Identification End Document the result of all analysis Yes No Project end? The Process of Risk Assessment ( Risk Identification + Risk Quantification) Chapter 9 – Project Risk Management 4. Risk Response Development – Defining enhancement steps for opportunities and responses to threats. Main responses are as follows: • Avoidance – eliminating threat by eliminating the cause • Mitigation – reducing expected monetary value of event by reducing the probability of occurrence • Acceptance – accept the consequences (active contingency plan - or passive response) – Determine what will be done, how to make risk smaller or eliminate (not all risks can be eliminated) Chapter 9 – Project Risk Management 4. Risk Response Development • Inputs – Opportunities to pursue – Threats to respond – Opportunities to ignore – Threats to accept Chapter 9 – Project Risk Management 4. Risk Response Development • Tools & Techniques – Procurement • acquire resources (exchange 1 risk for another) – Contingency Planning • defining action steps should a risk event occur – Alternative Strategies(change planned approach) • • • • Avoidance – eliminate the cause Mitigation – effect the probability or impact of risk Acceptance – do nothing Deflection (transfer, allocate) – make another party responsible, outsourcing – Insurance Chapter 9 – Project Risk Management 4. Risk Response Development • Outputs – Risk Management Plan • documents risks identified and how they are addressed; non-critical risks should be recorded to revisit during the execution phase • Addresses risk identification and quantification processes, personnel responsible for managing areas of risk, maintenance of identification and quantification process, implementation of contingency plans and allocation of reserve – Inputs to other processes • alternative strategies, contingency plans, anticipated procurements – Contingency Plans • recommend total of 10% to account for known and unknown risks – Contractual Agreements • insurance, services and other functions to avoid and mitigate threats. Chapter 9 – Project Risk Management 5. Risk Response Control – executing and updating the Risk Management Plan in order to respond to risk events during the project • Control and iteration (repeat) are required; not all risks can be identified in one time. • Inputs – Risk Management Plan – Actual Risk Events • recognize occurrence – Additional Risk Identification (repeat) • surfacing of potential or actual risk sources Chapter 9 – Project Risk Management 5. Risk Response Control • Tools & Techniques – Workarounds • unplanned responses to negative risk events that were unanticipated(response was not defined in advance) – Contingency Plans • Take planned responses according to contingency plans – Additional Risk Response Development • Do the risk response development once more – Three phases risk control method • Potential phase • Risk occurring phase • Reduce the risk impact phase Chapter 9 – Project Risk Management 5. Risk Response Control • Outputs – Corrective Action • performing the planned risk response – Updates to Risk Management Plan Establish the risk control system according to the RI report Determine the risk respond control activities needed for the project Assign the responsibility of the risk control to specific persons Make up Risk Management Plan and Contingency Plans Execute the plans and change the plans Take Corrective Action and do Workarounds Return to RI&RQ Monitoring the risk respond control result No Project end? yes Risk control end Project risk respond development and control process Chapter 10 – Human Resource Management 1. Project Human Resource Management – Processes required to make the most efficient use of people involved with the project (stakeholders) – 3 major processes: • Organizational Planning • Staff Acquisitions • Team Development – Keep in mind of transient (time limited and only one time) nature of projects for its HRM – Ensure HR compliance with project management activities Chapter 10 – Human Resource Management 1. Project Human Resource Management – 1,9 manager = good relationship with team – Project Organization • Conflict between PM and Functional Managers • Dual allegiance (two boss) of team members – Compromise =otherwise both sides will lose – Delegation – If there is a team of experts, PM decisions will promote high satisfaction – Functional/Project Managers likely to exercise:Power, Authority and Influence Chapter 10 – Human Resource Management 2. Organizational Planning – Identifying, documenting and assigning project roles, responsibilities, and reporting relationships • Individual and group assignments • Internal and external employees • Linked with communication planning Chapter 10 – Human Resource Management 2. Organizational Planning • Inputs – Project Interfaces • Organizational interfaces – formal and informal reporting relationships among organizational units (the enterprise) • Technical interfaces - formal and informal reporting relationships among technical disciplines,Engineers, manufacturers(stakeholder) • Interpersonal interfaces – formal and informal reporting relationships among individuals (project) – Staffing Requirements – define skill sets for individual/group in particular time frames – Constraints – factors that limit project team’s options • • • • Organizational structure (strong vs. weak matrix) Collective bargaining agreements – contractual arrangements Preferences of project management team Expected staff assignments Chapter 10 – Human Resource Management 2. Organizational Planning • Tools & Techniques – Templates – reuse a similar project’s role and responsibility definitions – Human Resource Management Practices – corporate policies, guidelines, and practices – Organizational Theory – how organizations are structured (functional, projectized,matrix) – Stakeholder Analysis – needs of stakeholders are ensured Chapter 10 – Human Resource Management 2. Organizational Planning • Outputs (continued) – Role and Responsibility Assignments • Utilizes a Responsibility Assignment Matrix (RAM) to define responsibility for each item in the Work Breakdown Structure/task or activity list • Roles and responsibilities – Project Manger – plan, estimate and schedule of project – Team – help prepare the WBS, Network Diagrams, and estimate time for tasks, complete tasks – Senior Management – approve Overall project plan, budget and schedule and to approve any changes that are made to those figures – The person experiencing the problem must try to solve it themselves as long as means are in their control Chapter 10 – Human Resource Management 2. Organizational Planning • Outputs (continued) – Staffing Management Plan • when and how personnel are included and removed from the project team. • Resource leveling, reduce transition periods, eliminate “dead time” between assignments, sensitivity to morale – Organizational Chart • Organization chart can display the project reporting relationships. • An Organizational Breakdown Structure (OBS) is a specific type of organization chart that shows which organizational units are responsible for which work items. – Supporting Detail • Organizational impact,Job descriptions,Training needs Chapter 10 – Human Resource Management 3. Staff Acquisition – Ensure labor and human resources are available for project work – Involve getting the human resources needed (individuals or groups) and assigned to or working on the project. • Inputs – Staffing Management Plan – Staffing Pool Description • • • • Previous experience Personal interests Personal characteristics Availability – Recruitment Practices Chapter 10 – Human Resource Management 3. Staff Acquisition • Tools & Techniques – Negotiations with functional managers and other teams (Staff utilization and corporate politics) – Pre-assignment – result of a competitive proposal, or an internal initiative – Procurement – outside services are needed (lacking internal skills or availability can not be met) Chapter 10 – Human Resource Management 3. Staff Acquisition • Outputs – Project staff assigned – Project Team Directory – contact list Chapter 10 – Human Resource Management 4. Team Development – Enhancing stakeholders to contribute along with maintaining the project team’s functionality – Personal development is the foundation – Team members often balance responsibilities to a functional manager and project manager – Critical to success of project Chapter 10 – Human Resource Management 4. Team Development • Inputs – Project Staff – Project Plan – Staffing Management Plan – Performance Reports – External Feedback • Periodic measurements of performanc Chapter 10 – Human Resource Management 4. Team Development • Tools & Techniques – Team-building activities – General Management Skills – Reward and recognition systems • Promote desired behavior • Must be achievable; apply to the project • Cultural differences recognition – Co-location – place members in physical location – Training – enhance skills, knowledge, and capabilities of project team • Must be factored in cost analysis of project Chapter 10 – Human Resource Management 4. Team Development • Outputs – Performance Improvements • Individual skills • Team Behavior • Identify more efficient methods of work – Input for performance appraisals Chapter 10 – Human Resource Management 5. Other things for HRM – Conflict • Inevitable consequence of organizational interactions • Can be beneficial • Resolved by identifying the causes and problem solving by people that are involved & their immediate manager • Nature of project • Limited power of the project manager • Necessity for obtaining resources from functional managers – Conflict Sources (in order of frequency) • 1)Schedules, 2)Project Priorities, 3)Resources,4)Technical opinions, 5)Administrative Procedures,6)Cost,7)Personality Chapter 10 – Human Resource Management 5. Other things for HRM • Conflict Avoiding – Informing the team – Clearly assigning tasks without ambiguity – Challenging and interesting work assignments • Leadership Skills – Directive, Facilitating, Coaching, Supportive • Projectized Organization – Conflict between PM and Functional Managers – Dual Allegiance of team members – Complex prioritization of resources – Loss of developed procedures on project dissolution Chapter 11 – Project Communications Management 1. Project Communications Management – Processes to ensure timely and proper generation, collection, dissemination and disposition of project information – General communications management • Communications Planning – determining informational needs, who needs what and when; 90% of PM’s time is spent on communicating • Information Distribution – making information available • Performance Reporting – collecting and disseminating project information • Administrative Closure – formalize project/phase completion (continued) Chapter 11 – Project Communications Management 1. Project Communications Management – Communication Methods • Pick the form of communication that is best for the situation – Formal Written – complex problems, all plans, communicating over long distances – Formal Verbal – presentations, speeches – Informal Written – memos, e-mail, notes – Informal Verbal – meetings, conversations – Communication Blockers • Noise, Distance, Improper en-coding, “bad idea”, Hostility, Language, Culture Chapter 11 – Project Communications Management 2. Communications Planning – Determining information requirements of stakeholders – Tightly linked with organizational planning – There are 5 directions of communication • • • • • Top down Bottom up The peer Internal External – Complex messages need oral, written and non verbal methods – Least effective form of communication for complex situations is verbal and formal Chapter 11 – Project Communications Management 2. Communications Planning • Inputs – Communication requirements • Internal and External communication needs (media) – Communication Technology – used to transfer information • Immediacy of need for information • Availability of technology • Expected project staffing – Constraints • factors that limit project team’s options – Assumptions Chapter 11 – Project Communications Management 2. Communications Planning • Tools & Techniques – Stakeholder analysis • informational needs should be analyzed to develop methodology suited for the project; eliminate unnecessary information or technologies – Communications model feedback Send process idea encode Transit proce. Receive proce. Info.Transit receive decode Unders. noise Illustration of Communication Model Chapter 11 – Project Communications Management 2. Communications Planning • Outputs – Communication Management Plan • Collection and filing structure to detail the gathering and storage of information; updating and dissemination • Distribution structure – who gets info in certain format; compatible with project organization chart • Description of information included – format, level of detail, conventions • Production schedules of each type of communication • Methods for accessing information • Method for updating and refining communications plan Chapter 11 – Project Communications Management 3. Information Distribution – making information available in a timely manner by implementing the communications plan; – responding to requests for information by stakeholders • Inputs – Work Results – Communication Management Plan – Project Plan Chapter 11 – Project Communications Management 3. Information Distribution • Tools & Techniques – Communication Skills • used to exchange information. Sender is responsible for clarity; receiver is responsible for receipt and understanding – Information retrieval systems • filing systems, software – Information distribution systems • meetings, correspondence, networked databases, video/audio conferencing • Outputs – Project Records • maintained in an organized fashion Chapter 11 – Project Communications Management 4. Performance Reporting – Collecting and disseminating performance indicators to provide stakeholders information how resources are achieving project objectives • • • • • • Status reporting Progress reporting Forecasting Variance Report (actual results vs. planned) Earned Value Project scope, schedule, cost and quality, risk and procurement Chapter 11 – Project Communications Management 4. Performance Reporting • Inputs – Project Plan – Work Results – deliverables completed, % completed, costs incurred – Other Project records Chapter 11 – Project Communications Management 4. Performance Reporting • Tools & Techniques – – – – Performance review meetings(to assess status) Variance Analysis (comparing actual results to planned) Trend Analysis (to determine future performance) Earned Value Analysis • integrates scope, cost and schedule measures • calculate 3 keys: – Budgeted Cost of Work (BCWS) – Actual Cost of Work Performed (ACWP) – Earned Value (Budgeted Cost of Work Performed – BCWP) » Cost Variance (CV) = BCWP – ACWP » Schedule Variance (SV) = BCWP – BCWS » Cost Performance Index (CPI) = BCWP/ACWP – Information Distribution Tools & Techniques Chapter 11 – Project Communications Management 4. Performance Reporting • Outputs – Performance Reports – organize and summarize information gathered and present results • Bar charts, Gantt charts, S-curves, etc. – Change Requests – handled as part of change control Chapter 11 – Project Communications Management 5. Administrative Closure – Projects/phases after achieving results or terminated require closure – Verifying and documenting project results to formalize acceptance – Collection of project records, analysis of effectiveness, reflect final specifications and archiving of material Chapter 11 – Project Communications Management 5. Administrative Closure • Inputs – Performance Measurement Documentation • includes planning docs; • all information that records and analyzes performance – Documentation of product and project – Other project records Chapter 11 – Project Communications Management 5. Administrative Closure • Tools & Techniques – Performance Reporting tools & techniques • Outputs – Product Archives • complete index of all records, database updates – Formal Acceptance • signoffs from client or sponsor – Lessons Learned Chapter 12 – Project Procurement Management 1. Project Procurement Management – Processes required to acquire goods and services from outside the organization – Processes including Procurement Planning, Solicitation Planning, Source Selection, Contract Administration and Contract Close Out – Discussed from the perspective of the buyer • Terms and conditions of the contract is a key input to many processes • Buyer is the customer, thus a key stakeholder • Seller’s project management team must be concerned with all processes of project management, not just their knowledge area – Most questions are from the buyer’s perspective Chapter 12 – Project Procurement Management 2. Procurement Planning – Identify project needs that can best be met by acquiring resources – Consideration whether to procure, how to, how much, when to purchase – Subcontractor decisions may provide flexibility • Internal procurement does not involve formal solicitation and contract Chapter 12 – Project Procurement Management 2. Procurement Planning • Inputs – Scope Statement – boundary for needs and strategies – Product Description – broad technical issues, not to be confused with a statement of work – Procurement Resources – formal contracting group (RFP) – Market Conditions – supply and demand, what services are available – Other Planning Outputs – preliminary cost and schedule, quality management plans, cash flow, WBS, risks, staffing – Constraints – factors that limit buying options – Assumptions Chapter 12 – Project Procurement Management 2. Procurement Planning • Tools & Techniques – Make or Buy analysis – determine if the service can be provided from within • Include direct and indirect costs • Factor ongoing need for items vs. 1-time usage – Expert Judgment – assess input – Contract type selection • Fixed Price (lump sum) – incentives for meeting targets • Cost Reimbursable Contracts – Time and Materials basis • Unit Price – preset amount per unit of service Chapter 12 – Project Procurement Management 2. Procurement Planning • Outputs from Procurement Planning – Procurement Management Plan – describes how procurement process will be managed. Including: • • • • • • Type of contract Independent estimates needed? Autonomy of project team Standardized documents Multiple provider management? Incorporate with other project aspects (scheduling and performance reporting) – Statement of Work (SOW) – describes the procurement in detail – clear, concise description of services • Can also be a Statement of Requirements for problem-solving activities Chapter 12 – Project Procurement Management 3. Solicitation Planning – To seek to obtain with enquiry, quotation, offer and counteroffer – Preparing documents needed for procurement • Inputs – Procurement Management Plan – Statement of Work – Other Planning Outputs • Tools & Techniques – Standard Forms and Procedures for buying & bidding • Contract, bid documents standard descriptions of procurement items – Expert Judgment Chapter 12 – Project Procurement Management Standard Procedures for Buying enquiry quotation offer counteroffer accept Standard Procedures for Bidding Form a work group for bid Prepare bid documents Invitation for Negotiation Evaluate and Choose Invitation for tendering Discussion of bids Examine the tenderers Collect tendering files and deposit Chapter 12 – Project Procurement Management 3. Solicitation Planning • Outputs – Procurement Documents – used to solicit proposals from prospective sellers • Bids, Request for Proposal, Request for Quotation, Contractor Initial Response, etc. • Structure to receive complete and accurate responses – Description of desired form of response and any required contractual provisions (e.g. non-disclosure statements) – Flexible to allow seller suggestions – Evaluation Criteria – rate proposals; objective or subjective • • • • Price, Understanding of need by seller Overall/Life Cycle cost (purchase plus operating cost) Technical Capability, Management Approach Financial Capacity – Statement of Work Updates Chapter 12 – Project Procurement Management 4. Solicitation – Obtaining information(bids and proposals) from prospective sellers • Inputs – Procurement Documents – Qualified Seller Lists – preferred vendors • Tools & Techniques – Bidder Conferences – mutual understanding meetings – Advertising – primarily with Government projects • Outputs – Proposals – seller prepared documents describing willingness and ability to provide the service Chapter 12 – Project Procurement Management 5. Source Selection – Apply evaluation criteria (seldom straight-forward) • Price (lowest price may not always result in lowest project cost) • Technical (approach) vs. commercial (price) • Multiple sourcing may be needed for same service – Select the suppliers or contractors • Inputs – Proposals – Evaluation Criteria – Organizational Policies Chapter 12 – Project Procurement Management 5. Source Selection • Tools & Techniques – Contract Negotiation – clarification and mutual agreement on structure and requirements of contract prior to signature • Responsibilities and authorities • Applicable terms and law • Financing and Price • Technical and business management – Weighting – quantifying data to minimize personal prejudice of source selection • Assign numerical weight to evaluation criteria • Rating sellers • Multiply weight by rating and totaling overall score – Screening System – establish minimum performance criteria – Independent Estimates – “should cost” estimates Chapter 12 – Project Procurement Management 5. Source Selection • Outputs from Source Selection – Contract – mutually binding agreement obligates seller provide goods and services and buyer to make payment. – It may be called, among other names, a contract, an agreement, a subcontract, a purchase order, or a memorandum of understanding – That establish: • Legal relationship • Legal review is most often necessary Chapter 12 – Project Procurement Management 6. Contract Administration – Ensuring that the seller’s performance meets contractual requirements • Project Team must be aware of legal affaires of all actions taken • Apply project management processes to contractual relationships and integrate outputs within the project – – – – – Project Plan Execution (authorize work) Performance Reporting (monitor cost, schedule) Quality Control (verify contractor’s output) Change Control Financial Management Chapter 12 – Project Procurement Management 6. Contract Administration • Inputs to Contract Administration – Contract, centralized vs. decentralized contracting – Work Results – seller’s deliverables, quality standards, actual costs – Change Requests – modify contract, or description of product/service • May result in disputes, claims, appeals – Seller Invoices • The seller must submit invoices from time to time to request payment for work performed. • Invoicing requirements, including necessary supporting documentation, are usually defined in the contract. Chapter 12 – Project Procurement Management 6. Contract Administration • Tools & Techniques – Contract Change Control System – defines how a contract may be modified • Includes paperwork, tracking system, dispute resolution procedures and approval levels – Performance Reporting • provides management with information about how effectively the seller is achieving the contractual objectives. – Payment System – Accounts Payable • Payments to the seller are usually handled by the accounts payable system of the performing organization or the owner. • The system must include appropriate reviews and approvals by the project management team. Chapter 12 – Project Procurement Management 6. Contract Administration • Outputs • Correspondence – Contract terms and conditions of written documentation of certain aspects of buyer/seller communications. • Contract changes – Changes (approved and unapproved) are fed back through the appropriate project planning and project procurement processes, and the project plan or other relevant documentation is updated as appropriate. • Payment requests or payments – “Payment requests” for when using an external payment system, “payments.” for when using own internal system. Chapter 12 – Project Procurement Management 7. Contract Close Out – Similar to administrative closure; involves product verification and administrative paperwork – The contract terms and conditions may prescribe specific procedures for contract close-out. • Early termination is a special case • Inputs – Contract Documentation • the contract itself along with all supporting schedules, requested and approved contract changes, any sellerdeveloped technical documentation, seller performance reports, financial documents such as invoices and payment records, and the results of any contract-related inspections. Chapter 12 – Project Procurement Management 7. Contract Close Out • Tools & Techniques – Procurement Audits – structured review of entire procurement process; identify successes and failures that warrant transfer to other procurement items • All documentation must be preserved and filed • Outputs – Contract File – complete index of records – Formal Acceptance and Closure • contract administration responsibility to provide a formal notice that contract has been completed • Requirements for formal acceptance and closure are usually defined in the contract. Chapter 12 – Project Procurement Management 8. Other things related to Procurement – What forms a contract • • • • An offer, counteroffer, An acceptance Consideration - something of value,V=F/C Legal Capacity – separate legal parties, competent parties • Legal Purpose – can not perform illegal goods or services Chapter 12 – Project Procurement Management • 8. Other things related to Procurement – Project Manager’s role for procurement • Risk identification and evaluation • Work within the procurement process – Contract Type Selection – reasonable risk between the buyer and seller and greatest initiative for seller’s efficient and economic performance • Scope – well defined? • Amount or frequency of changes expected after start date • Amount of effort and expertise the buyer can devote to manage the seller • Industry standards Chapter 12 – Project Procurement Management 8. Other things related to Procurement – Cost Reimbursable (CR) contracts; seller’s cost are reimbursed; buyer bears highest risk. • CPFF – cost plus fixed fee, buyer pays all costs – fee (profit) established(fixed) • CPPC – cost plus percentage of costs; bad for buyers (seller not motivated to control costs) • CPIF – cost plus Incentive Fee; seller costs + fee + bonus for meeting/exceeding target (incentive clause) Chapter 12 – Project Procurement Management 8. Other things related to Procurement – Cost based on Time and Materials; priced on per hour basis, elements of fixed price contract and cost reimbursable contracts – buyer has medium risk – Fixed Price (lump sum, or firm fixed price) - most common (1 price for all work), risk of costs is upon seller • FPIF – Fixed Price Incentive Fee • FPEPA – Fixed Price Economic Price Adjustment – long duration projects – Incentives – help bring seller’s objectives in line with buyer’s Chapter 12 – Project Procurement Management • 8. Other things related to Procurement – Incentive Fee and Final Price Calculations • Must Have: – – – – – Target Cost Target Fee Target Price Sharing Ratio (buyer/seller) Actual Cost • Fee = (Target Cost – Actual Cost) x Seller Ratio (%) (incentive fee) • Total Fee = Fee + Target Fee • Final Price = Actual Cost + Total Fee Chapter 12 – Project Procurement Management • 8. Other things related to Procurement – Solicitation • Bidder’s Conference – Benefit both buyer and seller – Can be used for watching out the Collusion • Negotiation Objectives – Obtain a fair and reasonable price – Development a good relationship with seller » Project manager must be involved – Main Terms to negotiate » Responsibilities, Authority, Applicable Law » Technical and Business Management approaches » Contract Financing, Price Chapter 12 – Project Procurement Management 8. Other things related to Procurement • assure seller’s performance meets contractual requirements • Project Managers must understand the contract and manage its completion • Sometimes contract is in conflict with Scope of Work • Only the contracting officer (CO) can change contract language – It is often a source of conflict – Need to deal with a different company’s set of procedures – It is not as easy to “see” problems – Greater reliance on reports to determine if a problem exists – Greater reliance on relationships between buyer and seller’s project managers Supplement – Professional Responsibility 1. Understand Project Management Professional Code of Conduct – Ethics – Legal Issues – Cultural Sensitivity – Managing conflicts of interest Supplement – Professional Responsibility 2. Integrity(honesty) and Professionalism – Understand the legal requirements surrounding the practice of projects – Know ethical standards that should govern the behavior of project managers – Comprehend the values of the community and the various project stakeholders – Practice proper judgment in the pursuit of successful project work – Compliance with all organizational rules and policies • Upon a reasonable and clear factual basis report violations • Responsibility to disclose circumstances that could be construed as a conflict of interest or appearance of impropriety Supplement – Professional Responsibility 2. Integrity and Professionalism – Provide accurate and truthful representation to the public – Maintain and satisfy the scope and objectives of professional services – Maintain the confidentiality of sensitive information – Ensure a conflict of interest does not compromise legitimate interests of client/customer or interfere with professional judgment – Refrain from accepting gifts, inappropriate payments, compensation for personal gain unless in conformity with applicable laws or customs Supplement – Professional Responsibility 3. Contribute to advancing the project management profession – Overall understanding of project management principles – Understand the community and media surrounding projects – Knowledge of research strategies available and proper communication techniques – Learn to communicate and transfer knowledge effectively as a coach and mentor and to use available research strategies – Respect and recognize intellectual property Supplement – Professional Responsibility 4. Enhance Individual Competence – Understand the project manager’s strengths and weaknesses and learning style – become aware of instructional processes and tools – Know the useful competencies for project managers and possible training – Be able to perform self-assessment and competencies development plan – Ability to apply lessons learned Supplement – Professional Responsibility 5. Balance Stakeholder’s Objectives – Understand the various competing stakeholders’ interests and needs – Comprehend the conflict resolution techniques useful in handling differing objectives – Be able to resolve conflicts in a fair manner – Exercise negotiation skills based on proper information Supplement – Professional Responsibility 6. Interact with team and stakeholders in a professional and cooperative manner – Understand cultural diversity, norms and stakeholders’ communication styles – Show flexibility towards diversity, tolerance and self control – Becoming empathetic to differences Thank you for your patient and your work