LSI - PMP - Training material

PMP® Exam Preparation
Training
PRESENTED BY:
LEARNERSTREET INTERNATIONAL PVT LTD.

Disclaimer
 PMP® is a registered trade mark of the PMI.
 PMBOK® is a registered trade mark of the PMI.
 This course material is based on PMBOK® 5
 This course should be used in combination with eLearning
2© LEARNERSTREET INTERNATIONAL PVT LTD.

Introduction
Name
Company
Role
Experience as PM
Objective
 Certification
 Structured learning
 Implementation of learning

Ground Rules
Mobile Phone - Silent
Active Participation
One discussion at a time
Respect difference in opinion
Breaks
 Nature’s Call – As Many
 Important Phone Calls – Go out and take
 Tea/Coffee – Morning / Evening
 Lunch

Agenda
 Introduction & Framework
 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
 Project Stakeholder Management

PMP Information
 PMI Membership – $139 (Optional)
 Exam fee for Member is $405 & Non Member is $555
 Eligibility – Graduate with 3 years experience & 4500 hours of
Project Management experience or Non-graduates with 5 years
experience & 7500 hours of PM experience & 35 Credit Hours
Training
 PMI Member gets discount in following attempt in certification
 PMP Certification is valid for 3 years. Candidate need to earn and
report 60 PDU and pay certification renewal fee to renew for next
3 years
 Certification Exam - Computer based, Objective type, 200
Question, 175 Carries mark, 25 test questions, Approximately 61%
passing marks, 4 hours duration

Introduction
Key Learning Objectives
 What is a Project?
 Key characteristics of Project
 Project Management
 Project v/s Operations
 Programs and Program Management
 Portfolios and Portfolio Management
 Project Management Office (PMO)
 Project Life Cycle
 Product Life Cycle

What is a Project?
“A temporary endeavor undertaken to create a unique product,
service, or result”
A project is:
 Temporary
 Unique
 Has a definite start and end date
 Progressively elaborated
Project end state in reached when
 Its objectives have been achieved
 Project is terminated because the objectives are not achieved
 Client wishes to cancel the project
 Need for project no longer exists.

What is Project Management?
The application of knowledge, skills, tools, and techniques to project
activities to meet the project requirements.
Project management is accomplished through the appropriate
application and integration of the 47 logically grouped project
management processes from 10 knowledge area under 5 process
groups
Project Management includes
 Identifying Requirements
 Address needs, concerns and expectations of Stakeholders
 Setup, Maintain and carry out Communication among Stakeholders
 Manage Stakeholders to meet project requirements and create project
deliverables.
 Balance the competing project constraints.

Project v/s Operations
Project
 The purpose of a project is to attain
its objective and then terminate
 Project is catalyst for change
 Project concludes when its specific
objectives have been attained
 Does have a definitive start and end
date
 Examples:
 Developing a new product or service
 Discovery of a new drug
Operations
 The objective of an ongoing
operation is to sustain the business
 Operation is maintaining status quo
 Operations adopt a new set of
objectives and the work continues
 Does not have a end date
 Examples:
 Production support services
 Claims processing
 Monthly Pay-roll
 Verification of new applications

Program Management
A program is defined as a group of related projects, subprograms, and program
activities managed in a coordinated way to obtain benefits not available from
managing them individually.
Program management focuses on the project interdependencies and helps to
determine the optimal approach for managing them.
 Resolving resource constraints and/or conflicts that affect multiple projects
within the program,
 Aligning organizational/strategic direction that affects project and program
goals and objectives, and
 Resolving issues and change management within a shared governance
structure.
An example of a program is a new communications satellite system with projects
for design of the satellite and the ground stations, the construction of each, the
integration of the system, and the launch of the satellite.

Portfolio Management
A portfolio refers to projects, programs, sub portfolios, and
operations managed as a group to achieve strategic objectives.
The projects or programs of the portfolio may not necessarily be
interdependent or directly related.
 Portfolio management is driven by business imperatives, market
demands and need to maximize value of the organization
 Key advantages:
 Minimize redundancy, optimally allocated resources, close
monitoring etc.

Project Management Office (PMO)
A project management office (PMO) is a management structure that
standardizes the project-related governance processes and facilitates the
sharing of resources, methodologies, tools, and techniques.
Responsibilities:
 Managing shared resources across all projects administered by the
PMO;
 Identifying and developing project management methodology, best
practices, and standards;
 Coaching, mentoring, training, and oversight;
 Monitoring compliance with project management standards, policies,
procedures, and templates by means of project audits;
 Developing and managing project policies, procedures, templates, and
other shared documentation (organizational process assets); and
 Coordinating communication across projects.

Project Life Cycle v/s Product Life Cycle
A project life cycle is the series of phases that a project passes
through from its initiation to its closure.
The phases can be broken down by functional or partial objectives,
intermediate results or deliverables, specific milestones within the
overall scope of work, or financial availability.
A product life cycle is collection of generally sequential, non-
overlapping product phases whose name and number are
determined by the manufacturing and control needs of the
organization.
The last product life cycle phase for a product is generally the
product’s retirement. Generally, a project life cycle is contained
within one or more product life cycles.

1. You are involved in the activity of designing software that will be used to link the GPS of
the latest model of a car that is under prototype to its internal navigation systems. This
would be a
A. Program
B. Project
C. Production
D. Portfolio
2. You were in-charge of creating prototype of a car and the prototype was accepted by the
management. Now the car is getting manufactured. This state can be
A. Program
B. Project
C. Operations
D. Portfolio
3. How is a project lifecycle different from a product lifecycle ?
A. A project lifecycle has no methodology
B. A project lifecycle depends on the control needs of the performing organization
C. A project lifecycle can contain many product lifecycles
D. A project lifecycle only includes specific project management activities

4. Which of these is not an attribute of a project?
A. Start Date
B. Is a continuous process
C. Produces something unique
D. Temporary
5. Which of the following is not a common attribute between a project and an operation?
A. Unique Outcome
B. Performed by people
C. Planned
D. Executed and controlled
6. Program Management in the context of project management refers to managing
A. A group of projects that are interlinked to enable better control
B. A group of programs developed during the development phase – being managed as a
group
C. A project - Another term for Project Management
D. A group of projects being managed within an organization

Organizational Influences and
Project Life Cycle
MODULE-2

Agenda
 To understand the organization culture, communication and
structure.
 To learn the enterprise environment factors and organizational
process assets.
 To understand enterprise environmental factors.
 To be able to identify stakeholders and setup project governance.
 To understand project organization structure.
 To understand project lifecycle and project phases.

Organization Culture
Organization culture and style affect how it conduct projects.
Organizational culture is shaped by the common experience of
members of the organization.
 Shared vision, mission and value
 Policies, Process, Procedure, Methods etc.
 Motivation & reward system
 Risk tolerance
 View of leadership, hierarchy, and authority relationship
 Code of conduct, work ethics, and work hours
 Operating environments

Enterprise Environment Factors
Enterprise environment factors refer to conditions, not under the control of the
project team, that influence, constraint, or direct the project.
 Organizational culture, structure and governance
 Geographic distribution of facilities and resources
 Government or industry standards and regulations
 Company work authorization system
 Stakeholder risk tolerance
 Political climate
 Organizations communication channel
 Commercial databases
 Project management information system

Organization Process Assets
Organization process assets are the plans, process, policies, procedures, and
knowledge bases specific to and used by the performing organization.
 Processes and Procedures
 Tailoring process to fit specific requirement
 Policies – human resource, health and safety, ethics, process audits, checklists
etc.
 Templates – risk register, contract template, work breakdown structure and
project schedule network diagram
 Procedure – Change control procedure, time reporting procedure, expenditure
reviewing procedure, issue and defect management procedure.
 Corporate Knowledge Base
 Configuration management knowledge base
 Financial, commercial database and historical lesson learned knowledge base.
 Defect management database, risk register, and project file from previous
projects.

Project Stakeholder
A stakeholder is an individual, group or organization who may be affected by the
decision, activity, or outcome of a project.
Example : Customer, Supplier, Agencies, Employee etc.
 Positive Stakeholder
 Supporter of project
 Example - Sponsor
 Negative Stakeholder
 Resister of project
 Example – Person loosing job
 Neutral Stakeholder
 Neither supporter nor resister
 Example – Daily wage labour on the project

Project Governance
Project governance framework provides the project manager and team with
structure, processes, decision-making models and tools for managing the
project, while supporting and controlling the project for successful delivery.
 Making project decision
 Defines roles, responsibilities, and accountabilities
 Removing roadblocks on the way of project
 Project success and deliverable acceptance criteria
 Escalation and resolution process
 Review and approval of changes to budget, scope, schedule and quality
 Process for stage gate or phase review

Project Constraint
Projects are executed in constraints. PMBOK 5’th edition recognize
many constraints:
 Scope – What is the project trying to accomplish?
 Time – How long should it take to complete?
 Cost - What should it cost?
 Quality - What are the quality specification to be delivered?
 Resource - What man, material and equipment required?
 Risk – What are the potential risks?
It is the project manager’s job to balance these often competing
constraints

Organization Structure

Project Lifecycle
A Project bicycle is the series of phases that a project passes
through from its initiation to its closure.
1. Initiation
2. Planning
3. Execution
4. Monitoring & Control
5. Closure

Project Phases
A Project may be divided into any number of phases for ease of
management, planning, and control.
 Generally each phase produce major deliverable
 Each phase end has review which is called: Phase exit, Phase
gate, Kill point, decision gate and stage gate etc.
 Phases can be sequential or over lapping
 Phases can be iterative
 Adaptive lifecycle are intended to respond to high levels of
changes and ongoing stakeholder involvement.

Cost of Change & Risk
 Risk and uncertainty are very high at beginning. As project
progress those uncertainties goes away when risk do not occur.
 Cost of change becomes higher as project progress as at the later
stage changes will cost more money and time.

Management by Objective (MBO)
Management philosophy stating that organization should be
managed by objectives.
Management by objectives are:
 Establish SMART objectives
 Regularly review Actual v/s Target
 Define & implement corrective action

Summary
 To understand the organization culture, communication and
structure
 To learn the enterprise environment factors and organizational
process assets
 To understand enterprise environmental factors
 To be able to identify stakeholders and setup project governance
 To understand project organization structure
 To understand project lifecycle and project phases

1. You have requested that several of the stakeholders participate in the different phases
of the project. Why is this important?
A. It prevents scope creep
B. It allows for scope constraints
C. It improves the probability of satisfying the customer requirements
D. It allows for effective communications
2. Of the following which of them is not a key stakeholder for an internal project
A. External Customer
B. End user
C. Developer
D. Management
3.Who does the project team report to in a projectized organization?
A. No one
B. Project manager
C. Functional manager
D. CEO

4. A key to successful Management by Objectives (MBO) is
A. Insuring that employees have clearly defined objectives
B. Permitting employees to set their own objectives
C. Involving employees in decision meetings
D. Allowing employees to perform their own evaluations
5. Your company is constructing a dam and your project (which is being performed under
a contract) mandates that you should be paying compensation to any person displaced
because of the project. What kind of constraint is this?
A. Social
B. Legal
C. Environmental
D. Humanity
6. In the contract for your project, the time schedules and deliverables in each phase are
clearly specified. From a project perspective, this is a(an) :
A. Risk
B. Assumption
C. Constraint
D. Issue

Project Management Processes
MODULE-3

Agenda
 Project Management Process Groups
 Initiating
 Planning
 Executing
 Monitoring and controlling
 Closing
 Process Group Interactions
 Process Groups and Project Phases

Project management process groups
 Project management processes have been bundled into 5 groups and
these groups are called project management process groups
 Initiating
 Planning
 Executing
 Closing
 These process groups are common to most of the projects across various
domains – construction, technology, IT, life sciences etc.
 Process groups are different than the Phases
 Process groups may overlap / repeat based on the activities in the project

Initiating Process Group
 Processes within this group launches the project or a project
phase
 Key activities associated with Initiation includes:
 Creating a feasibility study
 Identifying business needs
 Creating a Product description
 Creating a Project Charter
 Selecting a Project Manager
 Formal authorization to start project/phase
 Carried out of each phase in multi phase project
 Articulate the high-level project scope, deliverables, duration, cost,
assumption and constrain etc.

Planning Process Group
 The Planning process group collects information from various
constituent processes up to the degree of completion and
confidence
 PM should include stakeholders in the planning process to:
 Get buy-in to the project deliverables
 Provide shared ownership of the project
 Ensure deliverables are in alignment with what the stakeholders
and the project team expect to receive
 Project Management plan integrates scope, cost, schedule, risk etc.
to produce a realistic plan which is acceptable to the stakeholders
 Perform the ongoing iterative planning to progressively detail the
project management plan (Rolling wave planning)

Executing Process Group
 Executing process group consists of processes to complete the work
in each of the phases
 Helps the PM coordinate and direct project resources to meet the
objectives of the project plan
 Key activities would include:
 Direct and manage project execution
 Acquire project team
 Perform quality assurance
 Develop project team
 Vendor solicitation and selection
 Dispersing project information

Monitoring and Controlling Process Group
Controlling processes
 Ensure that the project goes according to plan
 What actions to implement when project is not going as per the plan
Variances from the project baselines are identified and necessary corrective
measures are undertaken
Key activities would include:
 Ensuring Quality Control
 Providing scope verification
 Implementing change control
 Configuration management
 Controlling key parameters like cost, schedule and scope
 Monitoring risk response
 Recommend preventive/corrective actions

Closing Process Group
 This process group includes all processes to close all activities in a project or
project phase
 Closing activities to be performed even for the aborted / terminated projects
 Key activities would include:
 Auditing procurement documents
 Scope verification
 Closing vendor contracts
 Closing administrative duties
 Submitting final reports
 Archiving project records
 Celebrating!!!

Summary
 Project Management Process Groups
 Initiating
 Planning
 Executing
 Closing
 Process Group Interactions
 Process Groups and Project Phases

1. Which of the project management processes is progressively elaborated?
A. Planning
B. Communicating
C. Contract Administration
D. Closing
2. What is a project process?
A. The creation of a product or service
B. The progressive elaboration resulting in a product
C. A series of actions that bring about a result
D. series of actions that allow the project to move from concept to deliverable
3. You are a project manager working on gathering requirements and establishing
estimates for the
project. Which process group are you in?
A. Monitoring and Controlling
B. Initiating
C. Executing
D. Planning

4. What are the five project management process groups, in order?
A. Initiating, Planning, Monitoring and Controlling, Executing, and Closing
B. Initiating, Planning, Executing, Monitoring and Controlling, and Closing
C. Initiating, Monitoring and Controlling, Planning, Executing, and Closing
D. Initiating, Executing, Planning, Monitoring and Controlling, and Closing
5.Which process group is responsible for authorizes the project in organization?
A. Initiating
B. Controlling
C. Executing
D. Planning
6.Which project management process groups takes maximum time and resource in a
project?
A. planning
B. initiation
C. execution
D. closing

Project Integration
Management
MODULE-4

Agenda
 Integration management process
 Develop Project Charter
 Develop Project Management Plan
 Direct and Manager Project Work
 Monitor and Control Project Work
 Perform integrated change control
 Close Project or Phase
 Best Practice

Integration Management Process
Integration Management includes processes and activities
necessary to Identify, define, combine and coordinate the various
processes and project management activities within the Project
Management Process Groups.

Develop Project Charter
Develop project charter is the process of developing a document
that formally authorizes a project or a phase and documenting
initial requirement that satisfy the stakeholder’s need and
expectations.
Input Tools & Techniques Output
Project statement of work Expert Judgment Project charter
Business case Facilitation techniques
Agreements
Enterprise environment
factors
Organization process
assets

Develop Project Charter - Input
 Project Statement of work – Is a narrative description of product, services, or
results to be delivered by a project.
 Internal Project – Project initiator or sponsor provides SOW
 External Project – Customer provides (Sometime part of bid)
 Business Case
 Helps in providing necessary information and identifying whether or not
the project is worth the required investment / effort
 Derived from market demand, business / customer or legal requirement,
technological progress , social needs etc.
 Agreement
 Agreements are used to define initial intentions for a project. Agreement
may take the form of contracts, MOUs, SLAs, LOA, LOI, verbal agreement,
email or written agreement.

Develop Project Charter – T&T
 Expert Judgement – Judgment provided based upon expertise in
an application area, knowledge area, discipline, industry etc. as
appropriate for the activity being performed. Expert judgment
can be provided by:
 Other units within the organization,
 Consultants,
 Stakeholders, including customers or sponsors,
 Professional and technical associations,
 Industry groups,
 Subject matter experts (SME), and
 Project management office (PMO).

Develop Project Charter – T&T
 Facilitation Technique:
Facilitation techniques have broad application within project
management processes and guide the development of the
project charter. Brainstorming, conflict resolution, problem
solving, and meeting management are examples of key
techniques used by facilitators to help teams and individuals
accomplish project activities.

Develop Project Charter - Output
 Project Charter - The project charter is the document issued by the project
initiator or sponsor that formally authorizes the existence of a project and
provides the project manager with the authority to apply organizational
resources to project activities.
 Project purpose or justification,
 Measurable project objectives and related success criteria,
 High-level requirements, Assumptions and constraints,
 High-level project description and boundaries,
 High-level risks, Summary milestone schedule, Summary budget,
 Stakeholder list,
 Assigned project manager, responsibility, and authority level, and
 Name and authority of the sponsor or other person(s) authorizing the
project charter.

Project Selection Methodologies
 Non-Numerical Model
 Sacred Cow - project is suggested by a senior and powerful
official in the organization.
 Operating Necessity - the project is required to keep the
system running.
 Competitive Necessity - project is necessary to sustain a
competitive position.
 Comparative Benefit Model - several projects are considered
and the one with the most benefit to the firm is selected.

 Numerical Model
 Cost Benefit Ratio - Is a systematic process for calculating and
comparing benefits and costs of a project.
 Net Present Value – It compares the present value of money
today to the present value of money in the future, taking
inflation and returns into account.

 Numerical Model
 Payback Period - The Payback period is the length of time that it
takes the company to recover the initial costs.
 Initial investment = $5000, Cash inflows- 1’st Year $3000, 2’nd Year
$2000. Payback period is 2 years, however $5000 in 2’nd year is not
worth $5000 today.
 Internal Rate of Return - Discount rate where the present value of
all cash inflows exactly equals the initial investment. Highest IRR
project should be sleeted.

 Example:
Method Project A Project B Selection
NPV $85,000 $45,000 A
IRR 13% 17% B
Payback Period 20 Months 30 Months A
Cost Benefit Ratio 2.5 1.5 A

Develop Project Management Plan
Develop Project Management Plan is the process of defining,
preparing, and coordinating all subsidiary plans and integrating them
into a comprehensive project management plan. The key benefit of
this process is a central document that defines the basis of all project
work.
Project charter Expert judgment Project management plan
Outputs from other
processes
Facilitation techniques
Enterprise environmental
factors
Organizational process
assets

Develop Project Management Plan - Output
The project management plan is the document that describes how the
project will be executed, monitored, and controlled. It integrates and
consolidates all of the subsidiary plans and baselines from the planning
processes:
 Scope baseline
 Schedule baseline
 Cost baseline
 Scope management plan
 Requirements management plan
 Schedule management plan
 Cost management plan
 Quality management plan
 Process improvement plan
 Human resource management plan
 Communications management plan
 Risk management plan
 Procurement management plan
 Stakeholder management plan

Direct and Manage Project Work
Direct and Manage Project Work is the process of leading and performing
the work defined in the project management plan and implementing
approved changes to achieve the project’s objectives.
Project management plan Expert judgment Deliverables
Approved change
requests
Project management
information system
Work performance data
factors
Meetings Change requests
assets
Project management plan
updates
Project documents
updates

Direct and Manage Project Work - Input
 Approved Change Requests - Approved change requests are an output
of the Perform Integrated Change Control process, and include those
requests reviewed and approved for implementation by the change
control board (CCB). The approved change request may be a corrective
action, a preventative action, or a defect repair.
 Corrective action—An intentional activity that realigns the
performance of the project work with the project management plan
 Preventive action—An intentional activity that ensures the future
performance of the project work is aligned with the project
management plan
 Defect repair—An intentional activity to modify a nonconforming
product or product component.

Direct and Manage Project Work – T&T
 Project Management Information System - An information system
consisting of the tools and techniques used to gather, integrate,
and disseminate the output of project management process. It is
used to support all aspect of project from initiating through
closing, and can include both manual and automated system.
 Meeting - Meetings are used to discuss and address specific
topics of the project when directing and managing project work.
Meetings tend to be one of three types:
 Information exchange;
 Brainstorming and option evaluation;
 Decision making.

Direct and Manage Project Work – Output
 Deliverables - A deliverable is any unique and verifiable product, result
or capability to perform a service that is required to be produced to
complete a process, phase, or project. Deliverables are typically
tangible components completed to meet the project objectives and can
include elements of the project management plan.
 Work Performance Data - Work performance data are the raw
observations and measurements identified during activities being
performed to carry out the project work.
 Work completed
 Start and finish dates of schedule activities
 Number of change requests
 Number of defects
 Actual costs and actual durations

Monitor and Control Project Work
Monitor and Control Project Work is the process of tracking, reviewing, and
reporting the progress to meet the performance objectives defined in the project
management plan. The key benefit of this process is that it allows stakeholders to
understand the current state of the project, the steps taken, and budget,
schedule, and scope forecasts.
Project management plan Expert judgment Change requests
Schedule forecasts Analytical techniques Work performance reports
Cost forecasts Project management
information system
updates
Validated changes Meetings Project documents updates
Work performance information
factors
Organizational process assets

Monitor and Control Project Work - Input
 Schedule & Cost Forecasts - The forecasts are derived from
progress against the baseline. They are presented as:
 Schedule - SV, SPI
 Cost – CV, CPI
 Validated Changes - Approved changes that result from the
Perform Integrated Change Control process require validation to
ensure that the change was appropriately implemented.

Monitor and Control Project Work – T&T
 Analytical Techniques - Analytical techniques are applied in
project management to forecast potential outcomes based on
possible variations of project or environmental variables and
their relationships with other variables.

Monitor and Control Project Work – Output
 Change Requests - As a result of comparing planned results to
actual results, change requests may be issued to expand, adjust,
or reduce project scope, product scope, or quality requirements
and schedule or cost baselines.

Perform Integrated Change Control
Perform Integrated Change Control is the process of reviewing all change
requests; approving changes and managing changes to deliverables,
organizational process assets, project documents, and the project management
plan; and communicating their disposition.
Project management plan Expert judgment Approved change
requests
Work performance reports Meetings Change log
Change requests Change control tools Project management plan
updates
factors
Project documents
updates
assets

Perform Integrated Change Control – T&T
 Change Control Tools
In order to facilitate configuration and change management,
manual or automated tools may be used. Tool selection should
be based on the needs of the project stakeholders including
organizational and environmental considerations and/or
constraints.

Perform Integrated Change Control – Output
 Change Log
A change log is used to document changes that occur during a
project. These changes and their impact to the project in terms of
time, cost, and risk, are communicated to the appropriate
stakeholders. Rejected change requests are also captured in the
change log.

Close Project or Phase
Close Project or Phase is the process of finalizing all activities across all of the
Project Management Process Groups to formally complete the project or
phase. The key benefit of this process is that it provides lessons learned, the
formal ending of project work, and the release of organization resources to
pursue new endeavours.
Project management plan Expert judgment Final product, service, or
result transition
Accepted deliverables Analytical techniques Organizational process
assets updates
assets
Meetings

Close Project or Phase - Input
 Accepted Deliverables
 Accepted deliverables may include approved product specifications,
delivery receipts, and work performance documents. Partial or
interim deliverables may also be included for phased or cancelled
projects.

Close Project or Phase - Output
 Final Product, Service, or Result Transition
This output refers to the transition of the final product, service,
or result that the project was authorized to produce (or in the
case of phase closure, the intermediate product, service, or result
of that phase).

Summary
 Integration management process
 Develop Project Charter
 Develop Project Management Plan
 Direct and Manager Project Work
 Monitor and Control Project Work
 Perform integrated change control
 Close Project or Phase
 Best Practice

1. With respect to Project Integration management, all of the following are true except:
A. Integration is required as processes overlap and interact with each other
B. A project manager needs to constantly make trade-off between competing objectives
C. A change due to one process may require to revisit one or more of other processes
D. PM may choose not to address certain project management processes if he feels its not
applicable to his project.
2. A project manager creates a project charter for her project. Which of the following best
describes how the charter will help the project manager
A. It will provide the project manager authority
B. It will clearly describe what needs to be done for the project
C. It will have the names of all team members
D. It will show the profitability of the project
3. During Direct and Manage Project Execution you would do all of the following except:
A. Use the WBS
B. Identify and implement changes
C. Implement approved process improvement activities
D. Compare actual project performance against the project management plan

4. A project management plan is best described by which of the following:
A. Communication, Risk, Resource, Quality and other management plans
B. Scope of the project
C. Detailed schedule of all deliverables
D. Name of the team members with their responsibilities
5. A project is complete when:
A. The project scope is completed and administrative closure done
B. The customer gives a formal acceptance and all closure conditions as per the contract
have been met.
C. Customer is happy and has made the final payment
D. Documentation of lessons learnt is completed
6. The Project Integration Management Knowledge Area consists of some of the following
processes. Which of these belong to Project Integration Management?
A. Scope Definition, Close Project, and Integrated Change Control
B. Develop Project Management Plan, Direct and Manage Project Execution, and
Integrated Change Control
C. Preliminary Scope Statement, Direct and Manage Project Execution, and Manage
Stakeholders
D. Preliminary Scope Statement, Scope Planning, and Close Project

Project Scope Management
MODULE-5

Agenda
 Product Scope & Project Scope
 Plan Scope Management
 Collect Requirements
 Define Scope
 Create WBS
 Validate Scope
 Control Scope

Project Scope Management
Includes the processes required to ensure that the project includes
all the work required, and only the work required, to complete the
project successfully. Managing the project scope is primarily
concerned with defining and controlling what is and is not included
in the project.
 Product Scope :
The features and functions that characterize a product, Service or
Result. Completion of the product scope is measured against the
product requirements.
 Project Scope :
The work that needs to be accomplished to deliver a product,
service or result with the specified features and functions.
Completion of the project scope is measured against the Project
Management Plan.

Plan Scope Management
The process of creating a scope management plan that documents
how the project scope will be defined, validated, and controlled. The
key benefit of this process is that it provides guidance and direction on
how scope will be managed throughout the project. This plan helps
reduce the risk of project scope creep.
Project management plan Expert judgment Scope management plan
Project charter Meetings Requirements
management plan
factors
assets

Plan Scope Management - Output
 Scope Management Plan - The scope management plan is a
component of the project or program management plan that
describes how the scope will be defined, developed, monitored,
controlled, and verified. The scope management plan is a major
input into the Develop Project Management Plan process, and the
other scope management processes.
 Requirements Management Plan - The requirements management
plan is a component of the project management plan that describes
how requirements will be analysed, documented, and managed.
© LEARNERSTREET INTERNATIONAL PVT LTD. 81

Collect Requirements
Collect Requirements is the process of determining, documenting, and managing
stakeholder needs and requirements to meet project objectives. The key benefit
of this process is that it provides the basis for defining and managing the project
scope including product scope.
Scope management plan Interviews Requirements documentation
Requirements management plan Focus groups Requirements traceability matrix
Stakeholder management plan Facilitated workshops
Project charter Group creativity techniques
Stakeholder register Group decision-making techniques
Questionnaires and surveys
Observations
Prototypes
Benchmarking
Context diagrams
Document analysis

Collect Requirements - Input
 Stakeholder Register - The stakeholder register is used to identify
stakeholders who can provide information on the requirements. The
stakeholder register also captures major requirements and main
expectations stakeholders may have for the project.
Name Designation Department Role in Project Requirement Type of Communication

Collect Requirements – T&T
 Interviews:
• Formal or Informal Approach
• Prepared and Spontaneous Questions
• Record the Responses
• One-on-One, Multiple Interviewers or Interviewees
 Focus Groups
• Bring Prequalified Stakeholders and SME’s together
• Trained Moderator
• More Conversational

 Facilitated Workshops
• Bring Key Cross Functional Stakeholders together
• Quickly define the cross functional requirements
• Quickly reconcile the stakeholder differences
• Increased stakeholders consensus
 Delphi Technique:
• A selected group of experts answer questionnaires and provides
feedback regarding the response from each round of requirement
gathering.
• The responses are only available to the facilitator to maintain
anonymity
• After few rounds of feedback requirements are firmed.

Group Creativity Techniques - Several group activities can be organized to
identify project and product requirements.
 Brainstorming - Used to generate and collect multiple ideas related to
project and product requirements. Although brainstorming by itself
does not include voting or prioritization, it is often used with other
group creativity techniques that do.
 Nominal group technique - Enhances brainstorming with a voting
process used to rank the most useful ideas for further brainstorming or
for prioritization.
 Idea/mind mapping - Ideas created through individual brainstorming
sessions are consolidated into a single map to reflect commonality and
differences in understanding, and generate new ideas.

 Group Creativity Techniques
 Affinity diagram - Allows large numbers of ideas to be classified into
groups for review and analysis.
 Multicriteria decision analysis - Utilizes a decision matrix to provide
a systematic analytical approach for establishing criteria, such as risk
levels, uncertainty, and valuation, to evaluate and rank many ideas.
 Group Decision-Making Techniques
 Unanimity - Everyone agrees on a single course of action
 Majority - More then half agree on a single course of action
 Plurality - Largest block in a group decides, even if a majority is not
achieved
 Dictatorship - One individual makes the decision for the group

 Questionnaires and Surveys - To quickly accumulate the
information from wide number of respondents. Used when there is
Broad Audience, Quick Turnaround is needed, Statistical Analysis is
appropriate
 Observations - Used when the stakeholder has the difficulty or
reluctant to articulate the requirements.
 Example - Job Shadowing, Participant Observer
 Prototype - Used to get the early feedback on requirements by
providing a working model of the expected product
 Benchmarking – Comparing actual practice to those of comparable
organizations to identify best practices

 Context Diagrams – The context diagram is an example of a scope
model. Context diagrams visually depict the product scope by showing
a business system (process, equipment, computer system, etc.), and
how people and other systems (actors) interact with it.
 Document Analysis - Document analysis is used to elicit requirements
by analyzing existing documentation and identifying information
relevant to the requirements. There are a wide range of documents
that may be analyzed to help elicit relevant requirements.
Examples: Business Plans, agreements, requests for proposal, current
process flows, logical data models, business rules repositories,
application software documentation, business process or interface
documentation, use cases etc.

Collect Requirements: Outputs
Requirements Documentation
 Requirements documentation describes how individual requirements
meet the business need for the project. Requirements may start out at a
high level and become progressively more detailed as more about the
requirements is known.
 Before being baselined, requirements need to be unambiguous
(measurable and testable), traceable, complete, consistent, and acceptable
to key stakeholders.
Requirements Traceability Matrix
 The requirements traceability matrix is a grid that links product
requirements from their origin to the deliverables that satisfy them.
 It provides a means to track requirements throughout the project life
cycle, helping to ensure that requirements approved in the requirements
documentation are delivered at the end of the project.

Define Scope
Define Scope is the process of developing a detailed description of the
project and product. The key benefit of this process is that it describes
the project, service, or result boundaries by defining which of the
requirements collected will be included in and excluded from the
project scope.
Scope management plan Expert judgment Project scope statement
Project charter Product analysis Project documents
updates
Requirements
documentation
Alternatives generation
assets
Facilitated workshops

Define Scope – T&T
Product Analysis
For projects that have a product as a deliverable, as opposed to a
service or result, product analysis can be a effective tool.
Each application area has one or more generally accepted methods for
translating high-level product description into tangible deliverables.
Alternatives Generation
Alternatives generation is a technique used to develop as many
potential options as possible in order to identify different approaches
to execute and perform the work of the project. A variety of general
management techniques can be used, such as brainstorming, lateral
thinking, analysis of alternatives, etc.

Define Scope – T&T
Facilitated Workshops
The participation of key players with a variety of expectations and/or
fields of expertise in these intensive working sessions helps to reach a
cross-functional and common understanding of the project objectives
and its limits.

Define Scope – Output
 Project Scope Statement - The project scope statement is the
description of the project scope, major deliverables,
assumptions, and constraints. The project scope statement
documents the entire scope, including project and product scope.
 Product scope description
 Acceptance criteria
 Deliverable
 Project exclusion
 Assumptions and Constraints

Create WBS
Create WBS is the process of subdividing project deliverables and
project work into smaller, more manageable components.
Scope management plan Decomposition Scope baseline
Project scope statement Expert judgment Project documents
updates
Requirements
documentation
factors
assets

Create WBS – T&T
Decomposition - Decomposition is a technique used for dividing and
subdividing the project scope and project deliverables into smaller,
more manageable parts. The work package is the work defined at the
lowest level of the WBS for which cost and duration can be estimated
and managed.

Create WBS - Outputs
Scope Baseline - The scope baseline is the approved version of a scope
statement, work breakdown structure (WBS), and its associated WBS
dictionary, that can be changed only through formal change control
procedures and is used as a basis for comparison. It is a component of the
project management plan.
Project scope statement. The project scope statement includes the
description of the project scope, major deliverables, assumptions, and
constraints.
WBS. The WBS is a hierarchical decomposition of the total scope of work
to be carried out by the project team to accomplish the project objectives
and create the required deliverables. Each descending level of the WBS
represents an increasingly detailed definition of the project work.
WBS dictionary. The WBS dictionary is a document that provides detailed
deliverable, activity, and scheduling information about each component
in the WBS.

Validate Scope
Validate Scope is the process of formalizing acceptance of the
completed project deliverables. The key benefit of this process is that
it brings objectivity to the acceptance process and increases the
chance of final product, service, or result acceptance by validating
each deliverable.
Project management plan Inspection Accepted deliverables
Requirements
documentation
Group decision-making
techniques
Change requests
Requirements traceability
matrix
Work performance
information
Verified deliverables Project documents
updates
Work performance data

Validate Scope - Input
 Verified deliverables:
 Verified deliverables are project deliverables that are completed
and checked for correctness through the Control Quality process
before submitting to customer.
 Work Performance Data:
 Work performance data can include the degree of compliance
with requirements, number of nonconformities, severity of the
nonconformities, or the number of validation cycles performed in
a period of time.
 Validate Scope - Concerned with acceptance of deliverables
 Quality Control - Concerned with correctness of the deliverables

Validate Scope - T&T
 Inspection
• Inspection includes activities such as measuring, examining, and
validating to determine whether work and deliverables meet
requirements and product acceptance criteria. Inspections are
sometimes called reviews, product reviews, audits, and
walkthroughs.
• This process is done by customer. As output of this activity is either
accepted deliverables or change request.
 Group Decision Making

Validate Scope - Output
 Accepted Deliverables
• Deliverables that meet the acceptance criteria are formally signed
off and approved by the customer or sponsor.
• Formal documentation received from the customer or sponsor
acknowledging formal stakeholder acceptance of the project’s
deliverables is forwarded to the Close Project or Phase process
 Change Requests
• The completed deliverables that have not been formally accepted
are documented, along with the reasons for non acceptance of those
deliverables.
• Those deliverables may require a change request for defect repair.
The change requests are processed for review and disposition
through the Perform Integrated Change Control process

Control Scope
 Control Scope is the process of monitoring the status of the project and
product scope and managing changes to the scope baseline.
 It ensures all the recommended corrective or preventive actions are processed
through the Integrated Change Control Process.
 Uncontrolled changes are often referred as Scope Creep.
Project management plan Variance analysis Work performance
information
Requirements documentation Change requests
Requirements traceability
matrix
updates
Work performance data Project documents updates
Organizational process assets Organizational process assets
updates

Control Scope – T&T
 Variance Analysis:
• Variance analysis is a technique for determining the cause and
degree of difference between the baseline and actual
performance.
• Project performance measurements are used to assess the
magnitude of variation from the original scope baseline.
• Important aspects of project scope control include determining
the cause and degree of variance relative to the scope baseline
and deciding whether corrective or preventive action is
required.

Key Terms & Definition
 Constrains : Constrains are limitation within which project must be
executed.
 Assumption : This tool is used where information is not clear and
decision has to be made. It is important that all assumption need to be
documented and validated.
 Control Account - Is a management control point at which budgets
(resource plans) and actual costs are accumulated and compared to
earned value.
 Work packages - Are a subdivision of a control account and consist of a
discrete, or level-of-effort set of tasks that have been planned and
budgeted in detail.
 Planning packages - Are created to describe work within a control
account that will occur in the future.

WBS Structure

Summary
 Product Scope & Project Scope
 Plan Scope Management
 Collect Requirements
 Define Scope
 Create WBS
 Validate Scope
 Control Scope

1. Identify which is not true about Decomposition?
A. It is used to create a WBS
B. It divides major deliverables into smaller components
C. It is used for identifying and analysing the deliverables and related work
D. It is one of the tools and techniques of Define Scope process
2. Which of the following statement is not true about Collect Requirements process
A. Collect requirement is the process of defining stakehodlers needs to meet the project
objectives
B. One of the important inputs of Collect Requirements process is WBS
C. Requirement Traceability Matrix helps to track the project requirements
D. Many organizations categorize requirements into project requirements and product
requirements
3. You have been informed by your senior manager that your project will not continue any
further and needs to be closed in the next 15 days. You should?
A. Remove non-critical tasks to reduce decrease costs
B. Stop work and release all resources
C. Validate the completed scope and start project closure activities
D. Decrease team-size to bare minimum and improve the operating margin

4. As a Project manager, you are responsible for managing the scope of work to be done.
As a part of Scope management, you will do all of the following, EXCEPT?
A. Define what work is required to be done
B. Define the resources required to do this work
C. Make sure that only the work within the scope is completed
D. Define what work is not required to be done
5. The work breakdown structure (WBS) is first developed in which scope management
process?
A. Scope planning
B. Scope verification
C. Scope change control
D. Scope Definition
6. You are the project manager for your organization. You need to ensure the customer
formally accepts the deliverables of each project phase. This process is known as
__________________?
A. Earned Value Management
B. Scope Verification
C. Quality Control
D. Quality Assurance

Project Time Management
MODULE-6

Agenda
 Plan Schedule Management
 Define Activities
 Sequence Activities
 Estimate Activity Resources
 Estimate Activity Durations
 Develop Schedule
 Control Schedule

Project Time Management
Project Time Management includes the processes required to
manage the timely completion of the project.

Plan Schedule Management
The process of establishing the policies, procedures, and
documentation for planning, developing, managing, executing, and
controlling the project schedule.
Project management plan Expert judgment Schedule management plan
Project charter Analytical techniques
factors
Meetings
assets

Plan Schedule Management - Output
 Schedule management plan:
• A component of the project management plan that
establishes the criteria and the activities for developing,
monitoring, and controlling the schedule.
• The schedule management plan may be formal or informal,
highly detailed or broadly framed, based upon the needs of
the project, and includes appropriate control thresholds.

Define Activities
 Define Activities is the process of identifying and documenting the specific
actions to be performed to produce the project deliverables.
 Break down work packages into activities that provide a basis for estimating,
scheduling, executing, monitoring, and controlling the project work.
Schedule management
plan
Decomposition Activity list
Scope baseline Rolling wave planning Activity attributes
factors
Expert judgment Milestone list
assets

Define Activities - T&T
 Decomposition:
• Decomposition is a technique used for dividing and
subdividing the project scope and project deliverables into
smaller, more manageable parts.
• It defines the final outputs as activities rather than
deliverables, as done in the Create WBS process.
 Rolling Wave Planning:
• Rolling wave planning is an iterative planning technique in which
the work to be accomplished in the near term is planned in detail,
while the work in the future is planned at a higher level.
• It is a form of progressive elaboration.

Define Activities - Output
 Activity List:
• The activity list is a comprehensive list that includes all
schedule activities required on the project.
• Each activity should have a unique title that describes its place
in the schedule.
• The activity list also includes the activity identifier and a scope
of work description for each activity.
 Milestone List:
• A milestone list is a list identifying all project milestones and
indicates whether the milestone is mandatory, such as those
required by contract, or optional, such as those based upon
historical information

Define Activities - Output
Activity Attributes:
 Activity attributes extend the description of the activity by
identifying the multiple components associated with each
activity.
 During the initial stages of the project, they include the activity
identifier (ID), WBS ID, and activity label or name
 And when completed, may include
 Activity codes, activity description, predecessor activities,
successor activities, logical relationships, leads and lags resource
requirements, imposed dates, constraints, and assumptions.

Sequence Activities
Sequence Activities is the process of identifying and documenting relationships
among the project activities. It defines the logical sequence of work to obtain the
greatest efficiency given all project constraints.
Inputs Tools & Techniques Outputs
Schedule management
plan
Precedence diagramming
method (PDM)
Project schedule network
diagrams
Activity list Dependency determination Project documents updates
Activity attributes Leads and lags
Milestone list
Project scope statement
factors
assets

Sequence Activities - T&T
 Precedence Diagramming Method:
• The precedence diagramming method (PDM) is a technique
used for constructing a schedule model in which activities are
represented by nodes and are graphically linked by one or
more logical relationships to show the sequence in which the
activities are to be performed.
• Activity-on-node (AON) is one method of representing a
precedence diagram. This is the method used by most project
management software packages.
• A predecessor activity is an activity that logically comes before
a dependent activity in a schedule. A successor activity is a
dependent activity that logically comes after another activity
in a schedule.

PDM includes four types of dependencies or logical relationships.
 Finish-to-start (FS) - A successor activity cannot start until a
predecessor activity has finished.
 Finish-to-finish (FF) - A successor activity cannot finish until a
predecessor activity has finished.
 Start-to-start (SS) – A successor activity cannot start until a
predecessor activity has started.
 Start-to-finish (SF) - A successor activity cannot finish until a
predecessor activity has started.
In PDM, finish-to-start is the most commonly used type of
precedence relationship. The start-to-finish relationship is very
rarely used.

Precedence Diagramming Method

 Dependency determination: Dependency has four attributes, but two
can be applicable at the same time in following ways –
• Mandatory dependencies - Those that are legally or contractually
required or inherent in the nature of the work.
• Discretionary dependencies – Identified by project team based on
knowledge of best practices, even though there may be other
acceptable sequences.
• External dependencies - These dependencies are usually outside
the project team’s control. Ex: Vendor delivery
• Internal dependencies - Internal dependencies involve a
precedence relationship between project activities and are
generally inside the project team’s control. Ex: Team cannot test a
machine until they assemble

 Leads and Lags:
• A lead is the amount of time whereby a successor activity can be
advanced with respect to a predecessor activity.
• A lag is the amount of time whereby a successor activity will be
delayed with respect to a predecessor activity.

Sequence Activities - Outputs
 Project Schedule Network Diagrams:
 A project schedule network diagram is a graphical representation of the
logical relationships, also referred to as dependencies, among the project
schedule activities.

Estimate Activity Resources
 Estimate Activity Resources is the process of estimating the type and
quantities of material, human resources, equipment, or supplies
required to perform each activity.
 It identifies the type, quantity, and characteristics of resources
required to complete the activity which allows more accurate cost and
duration estimates.
 The Estimate Activity Resources process is closely coordinated with
the Estimate Costs process.

Estimate Activity Resources
Estimate Activity Resources is the process of estimating the type and quantities
of material, human resources, equipment, or supplies required to perform each
activity.
Schedule management plan Expert Judgement Activity resource requirements
Activity list Alternative analysis Resource breakdown structure
Activity attributes Published estimating data Project documents updates
Resource calendar Bottom-up estimates
Risk register Project management software
Activity cost estimates
Enterprise environment factors
Organization process assets

Estimate Activity Resources – Inputs
 Resource Calendars:
• A resource calendar is a calendar that identifies the working days
and shifts on which each specific resource is available.
• Information on which resources (such as human resources,
equipment, and material) are potentially available during a
planned activity period, is used for estimating resource
utilization.
• Resource calendars specify when and how long identified project
resources will be available during the project.
• This knowledge includes consideration of attributes such as
resource experience and/or skill level, as well as various
geographical locations from which the resources originate and
when they may be available.

Estimate Activity Resources - T&T
 Alternative Analysis:
Many schedule activities have alternative methods of
accomplishment. They include using various levels of resource
capability or skills, different size or type of machines, different
tools (hand versus automated), and make-rent-or-buy decisions
regarding the resource.
 Published Estimating Data:
Several organizations routinely publish updated production rates
and unit costs of resources for an extensive array of labor trades,
material, and equipment for different countries and geographical
locations within countries.

Estimate Activity Resources - T&T
 Bottom-Up Estimating:
When an activity cannot be estimated with a reasonable degree of
confidence, the work within the activity is decomposed into more
detail. The resource needs are estimated. These estimates are then
aggregated into a total quantity for each of the activity’s resources.
 Project Management Software:
Project management software, has the capability to help plan,
organize, and manage resource pools and develop resource
estimates.

Estimate Activity Resources - Outputs
 Activity Resource Requirements:
• Activity resource requirements identify the types and
quantities of resources required for each activity in a work
package.
• Aggregated to determine the estimated resources for each
work package and each work period.
• The resource requirements documentation for each activity
can include the basis of estimate for each resource, as well as
the assumptions that were made in determining which types
of resources are applied, their availability, and what quantities
are used.

Estimate Activity Resources - Outputs
 Resource Breakdown Structure:
• The resource breakdown structure is a hierarchical
representation of resources by category and type.
• Resource types may include the skill level, grade level, or
other information as appropriate to the project.
• The resource breakdown structure is useful for organizing and
reporting project schedule data with resource utilization
information.

Estimate Activity Durations
Estimate Activity Durations is the process of estimating the number of
work periods needed to complete individual activities with estimated
resources.
Schedule management plan Expert judgment Activity duration estimates
Activity list Analogous estimating Project documents updates
Activity attributes Parametric estimating
Activity resource requirements Three-point estimating
Resource calendars Group decision-making techniques
Project scope statement Reserve analysis
Risk register
Resource breakdown structure
Enterprise environmental factors

Estimate Activity Durations - T&T
 Analogous Estimating – Estimates based on similar past project.
This is less costly, time consuming and less accurate.
 Parametric Estimating – Based on statistical method. Highly
accurate depending on the sophistication and underlying data built
into the model.
 Bottom-up Estimating – The estimate for the project is arrived at by
estimating the cost of work packages and rolling them up.
 Three Point Estimating – Based on optimistic, pessimistic and most
probably estimates.

 Group Decision-Making Techniques:
• Team-based approaches, such as brainstorming, the Delphi or
nominal group techniques, are useful for engaging team
members to improve estimate accuracy and commitment to the
emerging estimates.
• By involving a structured group of people who are close to the
technical execution of work in the estimation process, additional
information is gained and more accurate estimates obtained.
• When people are involved in the estimation process, their
commitment towards meeting the resulting estimates increases.

 Reserve Analysis:
• Duration estimates may include contingency reserves,
sometimes referred to as time reserves or buffers, into the
project schedule to account for schedule uncertainty.
• The contingency reserve may be a percentage of the estimated
activity duration, a fixed number of work periods, or may be
developed by using quantitative analysis methods.
• As more precise information about the project becomes
available, the contingency reserve may be used, reduced, or
eliminated.
• Contingency should be clearly identified in schedule
documentation.

Estimate Activity Durations - Outputs
 Activity Duration Estimates:
• Activity duration estimates are quantitative assessments of the
likely number of time periods that are required to complete an
activity.
• Activity duration estimates may include some indication of the
range of possible results. For example: 2 weeks ± 2 days, which
indicates that the activity will take at least eight days and not
more than twelve (assuming a five-day workweek);

Develop Schedule
 Develop Schedule is the process of analyzing activity sequences,
durations, resource requirements, and schedule constraints to
create the project schedule model.
 By entering schedule activities, durations, resources, resource
availabilities, and logical relationships into the scheduling tool, it
generates a schedule model with planned dates for completing
project activities.

Develop Schedule
Schedule management plan Schedule network analysis Schedule baseline
Activity list Critical path method Project schedule
Activity attributes Critical chain method Schedule data
Project schedule network diagrams Resource optimization techniques Project calendars
Activity resource requirements Modeling techniques Project management plan updates
Resource calendars Leads and lags Project documents updates
Activity duration estimates Schedule compression
Project scope statement Scheduling tool
Risk register
Project staff assignments
Resource breakdown structure
Enterprise environmental factors

Develop Schedule – T&T
Schedule Network Analysis:
 Schedule network analysis is a technique that generates the
project schedule model. It employs various analytical
techniques, such as critical path method, critical chain method,
what-if analysis, and resource optimization techniques to
calculate the early and late start and finish dates for the
uncompleted portions of project activities.
 Some network paths may have points of path convergence or
path divergence that can be identified and used in schedule
compression analysis or other analyses.

Critical Path Method:
 Method used to estimate the minimum project duration and
determine the amount of scheduling flexibility on the logical
network paths within the schedule model.
 On any network path, the schedule flexibility is measured by the
positive difference between early and late dates, and is termed “
total float”.
 Critical paths have either a zero or negative total float on the
critical path. Networks can have multiple near critical paths.
 Adjustments to activity durations, logical relationships, leads and
lags or other schedule constraints may be necessary to produce
network paths with a zero or positive total float.

Critical Path Method

Critical Chain Method:
 The critical chain method (CCM) is a schedule method that
allows the project team to place buffers on any project schedule
path to account for limited resources and project uncertainties.
 It is developed from the critical path method approach and
considers the effects of resource allocation, resource
optimization, resource leveling, and activity duration uncertainty
on the critical path determined using the critical path method.
 The resource-constrained critical path is known as the critical
chain.

Resource Optimization Techniques: Resource optimization techniques
that can be used to adjust the schedule model due to demand and
supply of resources included:
 Resource leveling
• A technique in which start and finish dates are adjusted based
on resource constraints with the goal of balancing demand for
resources with the available supply.
• Resource leveling can be used when shared or critically required
resources are only available at certain times, or in limited
quantities, or over-allocated, such as when a resource has been
assigned to two or more activities during the same time period.
• Resource leveling can often cause the original critical path to
change, usually to increase.

 Resource Smoothing
• A technique that adjusts the activities of a schedule model such
that the requirements for resources on the project do not
exceed certain predefined resource limits.
• In resource smoothing, as opposed to resource leveling, the
project’s critical path is not changed and the completion date
may not be delayed.
• Resource smoothing may not be able to optimize all resources.

 Modeling Techniques:
Examples of modeling techniques include –
 What-If Scenario Analysis –
• What-if scenario analysis is the process of evaluating
scenarios in order to predict their effect, positively or
negatively, on project objectives.
• The outcome of the what-if scenario analysis can be used to
assess the feasibility of the project schedule under adverse
conditions, and in preparing contingency and response plans
to overcome or mitigate the impact of unexpected situations.

 Simulation:
• Simulation involves calculating multiple project durations with
different sets of activity assumptions, usually using probability
distributions constructed from the three-point estimates to
account for uncertainty.
• The most common simulation technique is Monte Carlo analysis,
in which a distribution of possible activity durations is defined
for each activity and used to calculate a distribution of possible
outcomes for the total project.

Schedule Compression:
Schedule compression techniques are used to shorten the schedule
duration without reducing the project scope. Schedule compression
techniques include
 Crashing
• A technique used to shorten the schedule duration for the
least incremental cost by adding resources.
• Crashing works only for activities on the critical path where
additional resources will shorten the activity’s duration.
• Crashing does not always produce a viable alternative and
may result in increased risk and/or cost.

 Fast tracking
• A schedule compression technique in which activities or
phases normally done in sequence are performed in parallel
for at least a portion of their duration.
• Fast tracking may result in rework and increased risk.
• Fast tracking only works if activities can be overlapped to
shorten the project duration.
 Scheduling Tool
• Help expedite the scheduling process by generating start and
finish dates based on the inputs of activities, network
diagrams, resources and activity durations using schedule
network analysis.

Develop Schedule - Outputs
 Schedule Baseline
• A schedule baseline is the approved version of a schedule model
that can be changed only through formal change control procedures
and is used as a basis for comparison to actual results.
• The schedule baseline is a component of the project management
plan.
 Schedule Data
• The schedule data for the project schedule model is the collection
of information for describing and controlling the schedule. The
schedule data includes at least the schedule milestones, schedule
activities, activity attributes, and documentation of all identified
assumptions and constraints.

 Project Schedule
 The project schedule is an output of a schedule model that
presents linked activities with planned dates, durations,
milestones, and resources.
 A project schedule model can be presented in tabular form, it
is more often presented graphically, using one or more of the
following formats, which are classified as presentations:
 Bar charts (Gantt Charts)
 Milestone charts
 Project schedule network diagrams.

 Project Calendars:
• A project calendar identifies working days and shifts that are
available for scheduled activities.
• A schedule model may require more than one project
calendar to allow for different work periods for some activities
to calculate the project schedule.

Control Schedule
Project management plan Performance reviews Work performance information
Project schedule Project management software Schedule forecasts
Work performance data Resource optimization techniques Change requests
Project calendars Modeling techniques Project management plan
updates
Schedule data Leads and lags Project documents updates
Organizational process assets Schedule compression Organizational process assets
updates
Scheduling tool
Control Schedule is the process of monitoring the status of project
activities to update project progress and manage changes to the
schedule baseline to achieve the plan. It provides the means to recognize
deviation from the plan and take corrective and preventive actions and
thus minimize risk.

Control Schedule – T&T
Performance Reviews :
Performance reviews measure, compare, and analyze schedule performance
such as actual start and finish dates, percent complete, and remaining duration
for work in progress. Various techniques may be used, among them:
• Trend analysis - Trend analysis examines project performance over time
to determine whether performance is improving or deteriorating.
• Critical path method - Comparing the progress along the critical path
can help determine schedule status.
• Critical chain method - Comparing the amount of buffer remaining to
the amount of buffer needed to protect the delivery date can help
determine schedule status.
• Earned value management - Earned value management Schedule
performance measurements such as schedule variance (SV) and
schedule performance index (SPI), are used to assess the magnitude of
variation to the original schedule baseline.

Control Schedule - Outputs
Schedule Forecasts:
 Schedule forecasts are estimates or predictions of conditions
and events in the project’s future based on information and
knowledge available at the time of the forecast.
 Organizational Process Assets Updates:
Organizational process assets that may be updated include:
 Causes of variances
 Corrective action chosen and the reasons, and
 Other types of lessons learned from project schedule control.

Summary
 Plan Schedule Management
 Define Activities
 Sequence Activities
 Estimate Activity Resources
 Estimate Activity Durations
 Develop Schedule
 Control Schedule

1. Which of the following statements is not true about critical path:
A. Critical path changes during project execution
B. Multiple critical paths are not possible in any network diagram
C. All tasks on critical path will have zero slack
D. Critical path is the longest duration path in the network
2. Time management is the allocation of time in a project's life cycle through the process
of:
A. Scheduling
B. All of the other alternatives apply
C. Planning
D. Estimating
3. During what Time Management Process are the specific activities that must be
performed to produce the deliverables in the WBS identified and documented?
A. Estimate Activity Durations
B. Define Activities
C. Sequence Activities
D. Develop Schedule

4. Which of the following statements are FALSE regarding Project Time Management?
A. Schedule cost involving changes to the project schedule
B. Schedule development involves analyzing activity sequences, durations, resource
requirements in order to create project schedule
C. Activity resource estimating involves estimating type and qualities of resources
required to perform each schedule activity
D. None of the above
5. Which of the following statement is true about PDM (Precedence Diagramming
Method)?
A. PDM places activities on arrows
B. PDM is also known as AOA (Activities on Arrow)
C. PDM places activities on nodes
D. PDM supports only FS (Finish-to-Start) relationship
6. Where is a project manager most likely to experience a subnet?
A. WBS
B. Kill points
C. GERT charts
D. A network templates

Project Cost Management
MODULE - 7

Agenda
 Why manage costs?
 What are the characteristics of cost in a project?
 Project Cost Management processes
• Cost Estimation
• Cost Budgeting
• Cost Control
• Earn Value Management

Project Cost Management
Project Cost Management includes the processes involved in
planning, estimating, budgeting, financing, funding, managing, and
controlling costs so that the project can be completed within the
approved budget.
 Plan Cost Management
 Estimate Costs
 Determine Budget
 Control Costs

Basic Concept of Cost Management
 Profits are revenues minus expenses.
 Life cycle costing is the total cost of ownership, or development plus
support costs, for a project.
 Cash flow analysis determines the estimated annual costs and benefits for
a project and the resulting annual cash flow.
 Tangible costs or benefits are those costs or benefits that an organization
can easily measure in dollars.
 Intangible costs or benefits are costs or benefits that are difficult to
measure in monetary terms.
 Direct costs are costs that can be directly related to producing the
products and services of the project.
 Indirect costs are costs that are not directly related to the products or
services of the project, but are indirectly related to performing the project.
 Sunk cost is money that has been spent in the past; when deciding what
projects to invest in or continue, you should not include sunk costs.

 Learning curve theory states that when many items are produced (or tasks are
performed) repetitively, the unit cost of those items decreases in a regular
pattern as more units are produced (or more tasks performed).
 Reserves are dollars included in a cost estimate to mitigate cost risk by
allowing for future situations that are difficult to predict.
 Contingency reserves allow for future situations that may be partially
planned for (sometimes called known unknowns) and are included in the
project cost baseline.
Example: Recruiting and training costs for expected personnel turnover during
a project.
 Management reserves allow for future situations that are unpredictable
(sometimes called unknown unknowns).
Example: Extended absence of a manager; supplier goes out of business.

 Capital Budgeting is the process in which a business determines
whether projects such as building a new plant or investing in a long-
term venture are worth pursuing.
 A prospective project's lifetime cash inflows and outflows
are assessed in order to determine whether the returns generated
meet a sufficient target benchmark
 Methods of capital budgeting include:
• Payback period
• Net present value (NPV)
• Internal rate of return (IRR)

Plan Cost Management
 Plan Cost Management is the process that establishes the policies,
procedures, and documentation for planning, managing, expending,
and controlling project costs.
 The key benefit of this process is that it provides guidance and
direction on how the project costs will be managed throughout the
project.
Project management plan Expert judgment Cost management plan
Project charter Analytical techniques
factors
Meetings
assets

Plan Cost Management – T&T
Analytical Techniques
 Developing the cost management plan may involve choosing strategic
options to fund the project such as: self-funding, funding with equity,
or funding with debt
 The cost management plan may also detail ways to finance project
resources such as making, purchasing, renting, or leasing.
 Organizational policies and procedures may influence which financial
techniques are employed in these decisions.
• Payback period
• Return on investment
• Internal rate of return
• Discounted cash flow
• Net present value.

Plan Cost Management – Output
 Cost management plan
The cost management plan is a component of the project
management plan and describes how the project costs will be
planned, structured, and controlled.

Estimate Costs
Estimate Costs is the process of developing an approximation of the monetary
resources needed to complete project activities. The key benefit of this process is
that it determines the amount of cost required to complete project work.
Cost management plan Expert judgment Activity cost estimates
HR management plan Analogous estimating Basis of estimates
Scope baseline Parametric estimating Project documents updates
Project schedule Bottom-up estimating
Risk register Three-point estimating
Enterprise environmental factors Reserve analysis
Organizational process assets Cost of quality
Project management software
Vendor bid analysis
Group decision-making techniques

Estimate Costs – Type of Estimates
 The accuracy of a project estimate will increase as the project
progresses through the project life cycle.
 A project in the initiation phase may have a rough order of
magnitude (ROM) estimate in the range of −25% to +75%.
 Later in the project, as more information is known, definitive
estimates could narrow the range of accuracy to -5% to +10%.
 In some organizations, there are guidelines for when such
refinements can be made and the degree of confidence or
accuracy that is expected.

Estimate Costs – T&T
 Cost of Quality (COQ)
Assumptions about cost of quality (will be discussed in quality
section) may be used to prepare the activity cost estimate.
 Project Management Software
Project management software applications, computerized
spreadsheets, simulation, and statistical tools are used to assist with
cost estimating.
 Vendor Bid Analysis
Analysis of what the project should cost, based on the responsive
bids from qualified vendors.

Estimate Costs - Output
 Activity Cost Estimates
• Activity cost estimates are quantitative assessments of the
probable costs required to complete project work.
• Cost estimates can be presented in summary form or in detail.
• Costs are estimated for all resources that are applied to the
activity cost estimate.
Example : Direct labour, materials, equipment, services,
facilities, information technology, and special categories such as
cost of financing (including interest charges), an inflation
allowance, exchange rates, or a cost contingency reserve.
 Basis of Estimates
• supporting documentation should provide a clear and
complete understanding of how the cost estimate was derived.

Determine Budget
Determine Budget is the process of aggregating the estimated costs of
individual activities or work packages to establish an authorized cost
baseline.
Cost management plan Cost aggregation Cost baseline
Scope baseline Reserve analysis Project funding requirements
Activity cost estimates Expert judgment Project documents updates
Basis of estimates Historical relationships
Project schedule Funding limit reconciliation
Resource calendars
Risk register
Agreements

Determine Budget – T&T
 Cost Aggregation
• Cost estimates are aggregated by work packages in accordance with the WBS.
• The work package cost estimates are then aggregated for the higher
component levels of the WBS (such as control accounts) and finally for the
entire project.
 Historical Relationships
• Any historical relationships that result in parametric estimates or analogous
estimates involve the use of project characteristics (parameters) to develop
mathematical models to predict total project costs.
 Funding Limit Reconciliation
• The expenditure of funds should be reconciled with any funding limits on the
commitment of funds for the project.
• A variance between the funding limits and the planned expenditures will
sometimes necessitate the rescheduling of work to level out the rate of
expenditures.

Determine Budget – Output
 Cost Baseline
• The cost baseline is the approved version of the time-phased
project budget (BAC), excluding any management reserves.
• It can only be changed through formal change control procedures
and is used as a basis for comparison to actual results.
• It is developed as a summation of the approved budgets for the
different schedule activities.
• It is typically displayed in the form of an S-curve.
 Project Funding Requirement

Project Budget Components

Control Costs
Control Costs is the process of monitoring the status of the project to
update the project costs and managing changes to the cost baseline. The
key benefit of this process is that it provides the means to recognize
variance from the plan in order to take corrective action and minimize
risk.
Project management plan Earned value management Work performance information
Project funding requirements Forecasting Cost forecasts
Work performance data To-complete performance index
(TCPI)
Change requests
Organizational process assets Performance reviews Project management plan
updates
Project management software Project documents updates
Reserve analysis Organizational process assets
updates

Control Costs – T&T
Earned Value Management
 Earned value management (EVM) is a methodology that
combines scope, schedule, and resource measurements to assess
project performance and progress.
 It is a commonly used method of performance measurement for
projects.
 It integrates the scope baseline with the cost baseline, along with
the schedule baseline, to form the performance baseline, which
helps the project management team assess and measure project
performance and progress.
 EVM develops and monitors three key dimensions for each work
package and control account: PV, AC, and EV.

 Planned value - Estimated value of the work planned to be done. It
doesn’t include management reserve.
 Earned value - Value of the work actually accomplished.
 Actual cost - Actual cost incurred in accomplishing work
 Schedule variance - Is a measure of schedule performance
expressed as the difference between the earned value and the
planned value.
SV = EV - PV
 Cost variance - is the amount of budget deficit or surplus at a given
point in time, expressed as the difference between earned value
and the actual cost.
CV = EV - AC

Schedule performance index
 Is a measure of schedule efficiency expressed as the ratio of
earned value to planned value.
 SPI = EV/PV
 Less then 1 behind schedule, more then 1 ahead of schedule
Cost performance index
 Is a measure of the cost efficiency of budgeted resources,
expressed as a ratio of earned value to actual cost.
 CPI = EV/AC
 Less then 1 cost overrun, more then 1 cost underrun

Earned Value, Planned Value, and Actual Costs

Forecasting
Budget at Completion (BAC) – Sum of all planned value or approved total cost at
any given point is time.
When it becomes clear that project can’t be completed in approved budget,
forecasting of new total project cost (EAC).
Estimate at Completion (EAC) – EACs are typically based on the actual costs
incurred for work completed, plus an estimate to complete (ETC) the remaining
work.
1. Actual cost + New bottom up estimate -> EAC = AC + Bottom-up ETC.
2. All future work will be done at planned budget -> EAC = AC + (BAC – EV)
3. Same project cost performance will continue ->EAC = BAC / CPI
4. Same project cost and schedule performance will continue ->
EAC = AC + [(BAC – EV) / (CPI × SPI)]

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