I gave this presentation at the Integrated Project Management 2008 Conference in Washington DC.

1. CPM100E – Time, Cost, Risk and
Procurement Management
Presented by
Mark A. Buchholz, PMP
2008 Integrated Project
Management Conference
CPM100E - Time, Cost, Risk and Procurement Management slide 1

2. Lesson Overview
Time and Cost Management
The student will understand the concept of time
management
The student will understand the concept of cost
management
Risk and Procurement Management
The student will understand the value of risk
management to the project manager
The student will understand the role of procurement
management in the project office
The student will understand the implications of contract
terminations during project execution
CPM100E - Time, Cost, Risk and Procurement Management slide 2

3. Time Management
Project Time Management (PMBOK 3rd Ed, p. 123)
Activity definition – identifying the specific schedule activities that
need to be performed to produce the various project deliverables
Activity sequencing – identifying and documenting dependencies
among schedule activities
Activity duration estimating – estimating the number of work
periods that will be needed to complete individual activities
Activity resource estimating – estimating the type and quantities
of resources required to perform each schedule activity
Schedule development – analyzing activity sequences, durations,
resource requirements, and schedule constraints to create the
project schedule
Schedule control – controlling changes to the project schedule
CPM100E - Time, Cost, Risk and Procurement Management slide 3

4. Time Management
Project time management
includes the processes to
accomplish timely
completion of the project
PMBOK 3rd Ed, p. 123.
Project Scheduling is the
process of sequencing and
timing when the work will
be performed
Scheduling is determining
“the When”
CPM100E - Time, Cost, Risk and Procurement Management slide 4

5. Time Management
The Project Scheduling Process
We need to know what we’re going to do
We need to know in what order we’re going to do it
We need to know how long each thing we’re going to
do is going to take
We need to know who’s going to do what needs to be
done
We need to arrange those things we’re going to do
according to how they relate to each other
Then over the course of the project we need to control
these things and our plan to do that
CPM100E - Time, Cost, Risk and Procurement Management slide 5

6. The Integrated Master Schedule (IMS)
The IMS is
The document which represents the Integrated Planning and
Scheduling processes
At the top level of the project
A Network diagram which encompasses all the scope, defines
when things will get done, and tracks how much work was
accomplished
CPM100E - Time, Cost, Risk and Procurement Management slide 6

7. The IMS is a Communication Tool
Enables communication by establishing a common
language
Shared understanding of tasks and relationships
Defines “what/who” impacts “my tasks”
Defines “what/who” “my tasks” impact
Enables use of project management language
Focus on planned start/finish versus actual start/finish
How much has been done, versus was planned to be done
Helps to answer the questions
When am I going to start?
When am I going to be done?
What does that mean to the next task?
CPM100E - Time, Cost, Risk and Procurement Management slide 7

8. The IMS is a Management Tool
Enables Baseline to be established
Establishes what was planned to be accomplished
Reference point from which to measure performance
Gives clear picture of slips and early starts
Clarifies task dependencies
Shows who’s responsible for what and when
Shows impact of extending task duration beyond the plan
Reliability of the IMS depends upon
Regular reporting: every day/week/two-weeks/month/etc.
Accurate statusing: how much of the planned work was
actually accomplished in that period
Project Management becomes pro-active not reactive
CPM100E - Time, Cost, Risk and Procurement Management slide 8

9. Cost Management
Project Cost Management includes the processes
involved in planning, estimating, budgeting and
controlling costs so that the project can be completed
within the approved budget (PMBOK 3rd Ed, p. 157)
Cost estimating – developing an approximation of the
costs of the resources needed to complete project
activities
Cost budgeting – aggregating the estimated costs of
individual activities or work packages to establish a
cost baseline
Cost control – influencing the factors that create cost
variances and controlling changes to the project
budget
CPM100E - Time, Cost, Risk and Procurement Management slide 9

10. Cost Estimating
We know what needs to be done
Scope defined in our WBS
Activities defined
Durations estimated
Resources assigned
Now it’s a “simple” matter of A times B equals C
Labor rates times the hours equals the cost
Add in all the “other” costs to get a total cost
Or you can use other methods to estimate cost
Analogous – using the actual cost of a previous project
Resource cost rates – research the market rates for materials
Bottom-up estimating – start with the lowest level tasks and
gradually add-up these costs
Parametric – use of historical data to statistically develop a cost
CPM100E - Time, Cost, Risk and Procurement Management slide 10

11. Cost Budgeting
Adding it all up to create the total cost for the project
Aggregate all the activity or WBS element costs
Apply a reserve margin to the total you develop to create a new
total cost
How much do you need to add in to accommodate the risk on
this project
Adding in funding for the “Unknown Unknowns”
Evaluate and reconcile against how much money is available
Establish a cost baseline
A time-phased budget – when the project will spend the money, i.
e. month-by-month, or quarter-by-quarter
Project funding requirements
Once a management reserve margin is applied, establish what
the total funds the project will need
CPM100E - Time, Cost, Risk and Procurement Management slide 11

12. Risk Management
Project risk management
includes the processes
concerned with conducting risk
management planning,
identification, analysis,
responses, and monitoring and
control on a project; most of
these processes are updated
throughout the project.
(PMBOK 3rd Ed, P. 237)
The objectives of project risk
management are to
Increase the probability
and impact of positive
events
Decrease the probability
and impact of events
adverse to the project
CPM100E - Time, Cost, Risk and Procurement Management slide 12

13. Risk Management
Risk management planning – deciding how to approach, plan
and execute the risk management activities for a project
Risk identification – determining which risks might affect the
project and documenting their characteristics
Qualitative risk analysis – prioritizing the risks for subsequent
further analysis or action by assessing and combining their
probability of occurrence and impact.
Quantitative risk analysis – numerically analyzing the effect on
overall project objectives of identified risks
Risk response planning – developing options and actions to
enhance opportunities and to reduce threats to project
objectives
Risk monitoring and control – tracking identified risks,
monitoring residual risks, identifying new risks, executing risk
response plans, and evaluating their effectiveness 3rd Ed, p. 237
PMBOK
throughout
CPM100E - Time, Cost, life cycle
the project Risk and Procurement Management slide 13

14. Risk Management Planning
Deciding ahead of time how
the project team will handle the
process of risk management
Usually they will simply model
the behavior of their “parent”
organization
Will need to declare on the
project team who, how, and
when risk management
activities will occur
Its everyone’s
responsibility
Its continuous – But it has
to start early!
It must be integrated with
every other process that
the project team performs
Includes deciding on what
level of risk the project is
willing to assume
CPM100E - Time, Cost, Risk and Procurement Management slide 14

15. Risk Identification
Developing a list of what
could go wrong – within
reason (but seriously, dude,
the rain will never get that
bad)
Risk Register
List of identified risks
List of potential
responses
Root causes of the risk
Updated risk
categories
CPM100E - Time, Cost, Risk and Procurement Management slide 15

16. Qualitative and Quantitative Risk Analysis
Qualitative risk analysis – the focus is on whether the
risk event will occur
Quantitative risks – the focus is on the impact if the
risk does occur
Risk factor is probability times impact
Risk alpha has a probability of 3 with an impact of 4
therefore the RF is 12
Risk beta has a probability of 1 with an impact of 5
therefore the RF is 5
Risk gamma has a probability of 5 with an impact of 5
therefore the RF is 25
CPM100E - Time, Cost, Risk and Procurement Management slide 16

17. Risk Response Planning
We know something is going to happen.
We’re not sure when but we know it will hurt when it
happens
So what are we going to do when the risk event
occurs
Make it “hurt” less – Mitigate
Make it go away faster – Mitigate
Make it someone else’s problem – Transfer
Don’t do the thing that is most likely to cause it – Avoid
Have a plan – Contingency response strategy
Suffer the pain – Acceptance
CPM100E - Time, Cost, Risk and Procurement Management slide 17

18. Risk Monitoring and Control
We’ve figured it all out, we
have a plan, now its time to
watch, observe, and be
ready to act
Identify, analyze and plan
for new risks
Monitor triggers to see if a
risk event has occurred
Monitor the execution of
our risk response plans to
make sure that they really
are having the intended
effect
Determine if we need to
change how we are
managing risk
CPM100E - Time, Cost, Risk and Procurement Management slide 18

19. Project Procurement Management
Plan purchases and acquisitions – determining what to purchase or
acquire and determining when and how
Solicitation planning – plan contracting – documenting products,
services and results requirement and identifying potential sellers
Request seller responses – obtaining information, quotations, bids,
offers, or proposals, as appropriate
Source selection – select sellers – reviewing offers, choosing among
potential sellers, and negotiating a written contract with each seller
Contract administration – managing the contract and relationship
between the buyer and seller, reviewing and documenting how a
seller is performing or has performed to establish required corrective
actions and provide a basis for future relationships with the seller,
managing contract-related changes and when appropriate, managing
the contractual relationship with the outside buyer of the project
Contract closure – completing and settling each contract, including the
resolution of any open items, and closing each contract 3rd Ed, p. 269
PMBOK applicable to
the project or a project phase
CPM100E - Time, Cost, Risk and Procurement Management slide 19

20. What is a Contract
A contract is a legally
binding agreement between
two or more parties
Non-verbal
Verbal
Written
A contract has certain key
elements
Offer
Consideration
Acceptance
CPM100E - Time, Cost, Risk and Procurement Management slide 20

21. The Contracting Process
What do we need someone to provide for us
Services, product, support, etc
What are the terms by which we want them to provide it to us
What is it supposed to look like
When do we want it
What are the rules that have to be followed when they provide it
Make us an offer
Accept the offer
Make sure we get what we want when and how we need it –
enforce the terms of the agreement
When we’re done, make sure we’re really done
CPM100E - Time, Cost, Risk and Procurement Management slide 21

22. Questions and Contact Info
Questions/Answers?
Don’t forget to fill out the Course Evaluation Sheets
Contact:
Mark A. Buchholz, PMP
Account Manager, Acquisition Solutions, Inc.
Email: mbuchholz@acquisitionsolutions.com
CPM100E - Time, Cost, Risk and Procurement Management slide 22