PMBOK Chapter 7

1

• PMBOK Chapter 7
• Project Cost Management

2
Mapping the Processes
Process Group
PM Knowledge Area
3
Mapping the Processes (cont.)
Process Group
PM Knowledge Area
4
Planning Process Group
MONITORING CONTROLLING PROCESS GROUP
Scope Definition
Scope Planning
Develop Project Management Plan
Activity Definition
INITIATING PROCESS GROUP
Activity Resource Estimating
Create WBS
Activity Duration Estimating
Cost Estimating
Cost Budgeting
Risk Management Planning
Activity Sequencing
Human Resource Planning
Risk Identification
Schedule Development
Quality Planning
EXECUTING PROCESS GROUP
Qualitative Risk Analysis
Communications Planning
Quantitative Risk Analysis
Plan Purchases and Acquisitions
Plan Contracting
CLOSING PROCESS GROUP
Risk Response Planning
5
Project Cost Management Process Flow
Marketplace conditions Commercial databases
Historical information Organizational policies
Organizational Process Assets
Enterprise Environmental Factors
Project scope statement
Scope Definition
Project Management Plan Cost Management Plan
Cost Estimating
Develop Project Management
WBS WBS Dictionary
Create WBS
Approved change requests Approved corrective
actions
Activity cost estimates Activity cost estimates
supporting detail
Contract
Select Sellers
Cost management plan (updates) Requested changes
Resource calendar
Activity Resource Estimating
Requested changes Cost management plan (updates)
Cost Budgeting
Project schedule
Schedule Development
Cost baseline Project funding requirements
Integrated Change Control
Project Management Plan (updates) Recommended
corrective actions Requested changes Cost
baseline (updates)
Performance reports
Performance Reporting
Cost Control
Direct and Manage Project Execution
Cost estimates (updates) Performance
measurements Forecasted completion
Work performance information
Monitor and Control Project Work
Close Project
Organizational process assets (updates)
6
7.1 Cost Estimating
Tools Techniques
Outputs
Inputs

• Activity cost estimates
• Activity cost estimate
• supporting detail
• (e.g.. BOEs)
• Requested changes
• Cost management plan
• (updates)

• Analogous estimating
• Determine resource cost rates
• Bottom-up estimating
• Parametric modeling
• Project management software
• Vendor bid analysis
• Reserve analysis
• Cost of quality

• Enterprise environmental
• factors
• Organizational process
• assets
• Project scope statement
• WBS
• WBS dictionary
• Project management plan

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
7
Cost Estimating Tools and Techniques

• Analogous Estimating or Top-down Estimating
• using the actual cost of a previous, similar
  project as the basis for estimating a current
  project
• used when there is limited detailed information
• form of expert judgment
• Determine Resource Cost Rates
• Determining cost rates for each resource such as
• Staff cost per hour
• Bulk material cost per cubic yard
• Bottom-up Estimating
• estimating the cost of individual work items,
  then summarizing or rolling-up to get total
  project cost
• more expensive way of estimating
• project management will need to weigh the
  additional accuracy against the additional cost

8
Cost Estimating Tools and Techniques

• Parametric Estimating
• Using project characteristics in a mathematical
  model to predict project costs
• Example cost per line of code
• Vendor Bid Analysis
• Analysis of what the project should cost
• Used in competitive pricing
• Derives a cost that supports the final project
  costs
• Reserve Analysis
• Contingency allowances
• Costing the known unknowns

Project Management Institute, A Guide to the
Project Management Body of Knowledge (PMBOK
Guide) 2000 Edition, Project Management
Institute, Inc., 2000
9
Types of Cost Estimates

• ORDER OF MAGNITUDE -25 TO 75
• Usually during Initiation Phase
• Does not require preliminary design
• Prepared for feasibility studies, selection from
  among alternative designs, and selection from
  alternative investments
• BUDGET -10 TO 25
• Usually during Planning Phase
• Based on flow diagrams and layouts
• Design is generally 5 to 20 complete
• DEFINITIVE -5 TO 10
• Done usually during Planning Phase
• Detailed and defined engineering data is required
• Design may be 20 to 100 complete

10
Planning Process Group
MONITORING CONTROLLING PROCESS GROUP
Scope Definition
Scope Planning
Develop Project Management Plan
Activity Definition
INITIATING PROCESS GROUP
Activity Resource Estimating
Create WBS
Activity Duration Estimating
Cost Estimating
Cost Budgeting
Risk Management Planning
Activity Sequencing
Human Resource Planning
Risk Identification
Schedule Development
Quality Planning
EXECUTING PROCESS GROUP
Qualitative Risk Analysis
Communications Planning
Quantitative Risk Analysis
Plan Purchases and Acquisitions
Plan Contracting
CLOSING PROCESS GROUP
Risk Response Planning
11
Project Cost Management Process Flow
Marketplace conditions Commercial databases
Historical information Organizational policies
Organizational Process Assets
Enterprise Environmental Factors
Project scope statement
Scope Definition
Project Management Plan Cost Management Plan
Cost Estimating
Develop Project Management
WBS WBS Dictionary
Create WBS
Approved change requests Approved corrective
actions
Activity cost estimates Activity cost estimates
supporting detail
Contract
Select Sellers
Cost management plan (updates) Requested changes
Resource calendar
Activity Resource Estimating
Requested changes Cost management plan (updates)
Cost Budgeting
Project schedule
Schedule Development
Cost baseline Project funding requirements
Integrated Change Control
Project Management Plan (updates) Recommended
corrective actions Requested changes Cost
baseline (updates)
Performance reports
Performance Reporting
Cost Control
Direct and Manage Project Execution
Cost estimates (updates) Performance
measurements Forecasted completion
Work performance information
Monitor and Control Project Work
Close Project
Organizational process assets (updates)
12
7.2 Cost Budgeting
Tools Techniques
Outputs
Inputs

• Cost baseline
• Project funding
• requirements
• Cost management plan
• (updates)
• Requested changes

• Cost aggregation
• Reserve analysis
• Parametric estimating
• Funding limit reconciliation

• Project scope statement
• WBS
• WBS dictionary
• Activity cost estimates
• Activity cost estimate
• supporting detail
• Project schedule
• Resource calendars
• Contract
• Cost management plan

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
13
Cost Budgeting Tools and Techniques

• Cost Aggregation
• Work package cost estimates are aggregated for
  higher component levels of the WBS such as
  control accounts
• Funding Limit Reconciliation
• Expenditure of funds is reconciled with the
  funding limits set by the customer
• This requires the scheduling of work to be smooth
  and regulate spending

14
Cost Budgeting Outputs

• Cost Baseline
• A time-phased budget that is used as a basis
  against which to measure, monitor, and control
  over all cost performance on the project
• Large projects may have multiple cost baselines
  (e.g. labor and materials)
• Project Funding Requirements
• Total funds required are those in the cost
  baseline plus the management contingency to
  account for cost overruns or early progress
• Occurs in incremental amounts

15
Cash Flow, Cost Baseline and Funding
Extra reserve at end of project
Cost baseline
Cumulative Values
Funding
Expected Cash Flow
Time
16
Project Cost Management Process Flow
Marketplace conditions Commercial databases
Historical information Organizational policies
Organizational Process Assets
Enterprise Environmental Factors
Project scope statement
Scope Definition
Project Management Plan Cost Management Plan
Cost Estimating
Develop Project Management
WBS WBS Dictionary
Create WBS
Approved change requests Approved corrective
actions
Activity cost estimates Activity cost estimates
supporting detail
Contract
Select Sellers
Cost management plan (updates) Requested changes
Resource calendar
Activity Resource Estimating
Requested changes Cost management plan (updates)
Cost Budgeting
Project schedule
Schedule Development
Cost baseline Project funding requirements
Integrated Change Control
Project Management Plan (updates) Recommended
corrective actions Requested changes Cost
baseline (updates)
Performance reports
Performance Reporting
Cost Control
Direct and Manage Project Execution
Cost estimates (updates) Performance
measurements Forecasted completion
Work performance information
Monitor and Control Project Work
Close Project
Organizational process assets (updates)
17
7.3 Cost Control
Tools Techniques
Outputs
Inputs

• Cost estimate (updates)
• Cost baseline (updates)
• Performance measurements
• Forecasted completion
• Requested changes
• Recommended corrective
• actions
• Organizational process
• assets (updates)
• Project management plan
• (updates)

• Cost change control system
• Performance measurement
• analysis
• Forecasting
• Project performance reviews
• Project management software
• Variance management

• Cost baseline
• Project funding
• requirements
• Performance reports
• Work performance
• information
• Approved change requests
• Project management plan

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
18
Earned Value is a Performance Measurement
Technique

• Earned Value Management is a systematic approach
  to the integration and measurement of cost,
  schedule, and technical accomplishments on a
  project or task.
• Earned Value Management is a way to link your
  detailed schedule information, critical program
  and technical milestones, and cost data to
  generate useful metrics to aid you in the
  decision making process.

19
What Is Earned Value Analysis?
WBS
Formal Reporting System
Earned Value Management System
Project Schedule
Early Warning Detection
Resource Planning/
Informed Management
Cost Estimating
Decisions
Corrective Actions
Define/Assign
Recovering Planning
Schedule/Budget
Establish Baseline
Work Authorization
Work Authorization
Accounting System
Accounting System
Work Authorization
Time Sheet System
Subcontractors
Subcontractors
US Government
20
Planned Value (PV) was Budgeted Cost of Work
Scheduled (BCWS)
How much work should be done (what you planned to
do)
21
Earned Value (EV) was Budgeted Cost of Work
Performed (BCWP)

• How much work is done on a budgeted basis (what
  youve actually done)
• Work completed during a given period of time
  Earned Value

22
Actual Cost (AC) was Actual Cost of Work
Performed (ACWP)
How much did the is done work cost (what you
actually spent or what it actually cost)
23
Schedule Variance (SV)

• EV - PV Value of Work Performed less value of
  Work Scheduled
• A Negative number indicates a Potential Slip
• Schedule Variance status does
• indicate the dollar value difference between
• work that is ahead or behind the plan
• reflect a given measurement method
• Schedule Variance status does not
• address impact of work sequence
• address importance of work
• reflect critical path assessment
• indicate amount of time it will slip
• identify source (labor material) of difference
• indicate the time ahead/behind (or regain)
  schedule
• indicate the cost needed to regain schedule

Example PV 250 EV 200 SV EV -
PV 200 - 250 - 50
24
Cost Variance (CV)
EV - AC Value of Work Performed for Each
Dollars Worth of Work Scheduled A Negative
number indicates an Overrun
Example EV 200 AC 190 CV EV -
AC 200 - 190 10
25
Schedule Performance Index (SPI)

• Is a Measure of Contractor Schedule Efficiency
• SPI EV/PV
• Less Than 1.0 is unfavorable BEHIND schedule
• Greater Than 1.0 is favorable AHEAD of schedule

Example PV 250 EV 200 SPI
EV/PV 200/250 .80
26
Cost Performance Index (CPI)
Is a Measure of Contractor Cost Efficiency
CPI EV/AC Less Than 1.0 is
unfavorable Cost is GREATER than budgeted
Greater Than 1.0 is favorable Cost is LESS
than budgeted
Example EV 200 AC 190 CPI
EV/AC 200/190 1.05
27
Budget at Completion (BAC)

• What is Budget at Completion (BAC)
• Sum of the total budgets for a project

BAC Cum PV (BCWS) for all work packages in the
project
28
Forecasting - Estimate at Completion (EAC)

• What is Estimate at Completion (EAC)
• Expected total cost for a defined scope of work
• Forecast of most likely total project cost

Techniques for developing EAC EAC Actuals to
date plus a new estimate for all remaining work
(AC ETC) What is ETC? Estimate to Complete
(ETC) is the cost for all remaining work. EAC
BAC/CPI Total project budget divided by the
cost performance index EAC AC BAC EV EAC
AC (BAC EV)/CPI
29
Earned Value Graph
Cost
EAC(Forecast)
360M
Cost Overrun
BAC(Total Budget)
300M
BCWS (PV)(Planned)
ACWP (AC)(Actual)
SpendingVariance
CostVariance
CPI
ScheduleVariance
Schedule Slippage
BCWP (EV)(Accomplishment)
Time
40 Mos.
24 Mos.
52 Mos.
30
Summary of Terms and Formulas
TERM
DESCRIPTION
INTERPRETATION
How much work should be done (What you
Planned Value
PV
planned to do)
How much work is done on a budgeted basis
EV
Earned Value
(What youve actually done)
How much did the is done work cost (What you
AC
Actual Cost
Actually spent)
BAC
Budget at Completion
How much you budgeted for the total project.
EAC
Estimate at Completion
What you currently expect the total project to
cost
From a given point in time, what you currently
ETC
Estimate to Complete
expect the remaining cost to be
VAC
Variance at Completion
How much over or under budget you expect to be
31
Summary of Terms and Formulas
NAME
FORMULA
INTERPRETATION
Cost Variance
EV-AC
Negative means over budget, Positive means under
budget
(CV)
Schedule
EV-PV
Negative means behind schedule, Positive means
ahead of schedule
Variance (SV)
Cost
Performance
EV/AC
You are getting X cents out of every 1
Index (CPI)
Schedule
Performance
EV/PV
You progressing at X of the rate originally
planned
Index (SPI)
Estimate at
BAC/CPI or AC
Completion
What, at this time, you expect the total project
to cost
ETC
(EAC)
Estimate to
Completion
EAC - AC
What, at this time, you expect the remaining
scope to cost
(ETC)
Variance at
What, at this time, you expect the final project
cost to be more or less
Completion
BAC - EAC
then budgeted.
(VAC)
32
Present Value (PV) andNet Present Value (NPV)
Present Value (PV) - means the value today of
future cash flows or costs PV FV/(1
r)n Net Present Value (NPV) - means the total
benefits less the costs. NPV is done by
calculating the present value of all benefits and
costs, then subtracting the total benefits from
the total cost.
Note FV Future value, r interest
rate n number of time periods
33
Internal Rate of Return (IRR) Payback Period and
Benefit Cost Ratio (BCR)

• Payback Period
• number of time periods it takes to recover your
  investment. The shorter time the better.
• Benefit Cost Ratio (BCR)
• Compares the cost to the benefits on a project.
  When dealing with multiple project options, you
  would select the project with the greatest BCR.
  BCR gt 1 means benefits are greater than costs,
  BCR lt 1 means costs are greater than benefits,
  and BCR 1 means they are the same.

34
Types of Costs

• Fixed Costs
• Costs that dont change as production changes
  (rent, management pay, etc).
• Variable Costs
• Cost that change with changes in production
  (materials, supplies, hourly wages, etc.).
• Direct Costs (Cost controlled by the PM)
• Costs that are directly attributable to the work
  on the project (travel, wages, material used in
  production, etc.).
• Indirect Costs
• Overhead items or cost incurred for the benefit
  of more than one project (taxes, fringe benefits,
  trash removal, etc.).

35

• PMBOK Chapter 8
• Project Quality Management

36
Mapping the Processes
Process Group
PM Knowledge Area
37
Mapping the Processes (cont.)
Process Group
PM Knowledge Area
38
Planning Process Group
MONITORING CONTROLLING PROCESS GROUP
Scope Definition
Scope Planning
Develop Project Management Plan
Activity Definition
INITIATING PROCESS GROUP
Activity Resource Estimating
Create WBS
Activity Duration Estimating
Cost Estimating
Cost Budgeting
Risk Management Planning
Activity Sequencing
Human Resource Planning
Risk Identification
Schedule Development
Quality Planning
EXECUTING PROCESS GROUP
Qualitative Risk Analysis
Communications Planning
Quantitative Risk Analysis
Plan Purchases and Acquisitions
Plan Contracting
CLOSING PROCESS GROUP
Risk Response Planning
39
Project Quality Management Process Flow
Quality policies, procedures, and
guidelines Lessons learned Knowledge base
Project Management Plan
Quality Planning
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Quality management plan Quality metrics Quality
checklists Process improvement plan Quality
baseline
Governmental standards, rules,
guidelines Commercial databases
Enterprise Environmental Factors
Project scope statement
Scope Definition
Project management plan (updates)
Requested changes Recommended corrective
actions Project management plan (updates)
Perform Quality Assurance
Implemented change requests Implemented
corrective actions Implemented defect
repair Implemented preventive actions Work
performance information
Quality control measurements
Direct and Manage Project Execution
Quality control measurements Quality baseline
(updates) Recommended corrective
actions Recommended preventive actions Recommended
defect repair Project management plan
(updates) Validated deliverables Validated defect
repair Requested changes
Deliverables
Close Project
Integrated Change Control
Perform Quality Control
Organizational process assets (updates)
40
Definitions

• Quality is
• The degree to which a set of inherent
  characteristics fulfill requirements.
• Conformance to requirements fitness for use.
• Quality is not excellence, luxury, prestige or
  grade.
• Precision consistency that the value of
  repeated measurements are clustered and have
  little scatter
• Accuracy correctness that the measured value is
  very close tot the true value

41
Definitions (cont.)

• Customer satisfaction understanding,
  evaluating, defining, and managing expectations
  so that customer requirements are met
• Prevention over inspection cost of preventing
  mistakes is generally much less that the cost of
  correcting them
• Continuous Improvement The idea that improving
  quality is not a one time, discrete event. It is
  the continuous vigilance for opportunities to
  improve products and processes.

42
How Much Quality is Enough

• Ideally the objective is to manufacture parts
  identical to each other. However, there are
  conditions that create uncontrollable variances.
• Unit-to-unit differences usually follow a normal
  distribution called a Bell Curve.
• The standard deviation(Sigma) is a measure of
  variance. As the value of Sigma decreases the
  variance is reduced.

43
Normal Curve Distribution
1 Sigma 68.26 2 Sigma 95.46 3 Sigma
99.73 6 Sigma 99.99
44
How Much Quality is Enough

• Traditionally, a process was considered adequate
  if it was within /- 3 Sigma of the mean.
• This represents 99.73 of the total area under the
  curve that represented the total population of
  products produced.
• Today the 3 Sigma process is considered
  insufficient.
• Motorola began a new QC standardthe Six Sigma
  process which allows for only .002 defects per
  million

45
Project Quality Management Process Flow
Quality policies, procedures, and
guidelines Lessons learned Knowledge base
Project Management Plan
Quality Planning
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Quality management plan Quality metrics Quality
checklists Process improvement plan Quality
baseline
Governmental standards, rules,
guidelines Commercial databases
Enterprise Environmental Factors
Project scope statement
Scope Definition
Project management plan (updates)
Requested changes Recommended corrective
actions Project management plan (updates)
Perform Quality Assurance
Implemented change requests Implemented
corrective actions Implemented defect
repair Implemented preventive actions Work
performance information
Quality control measurements
Direct and Manage Project Execution
Quality control measurements Quality baseline
(updates) Recommended corrective
actions Recommended preventive actions Recommended
defect repair Project management plan
(updates) Validated deliverables Validated defect
repair Requested changes
Deliverables
Close Project
Integrated Change Control
Perform Quality Control
Organizational process assets (updates)
46
8.1 Quality Planning


Tools Techniques
Outputs
Inputs

• Quality management plan
• Quality metrics
• Quality checklists
• Process improvement plan
• Quality baseline
• PMP (updates)

• Cost-benefit Analysis
• Benchmarking
• Design of experiments
• Cost of Quality (COQ)
• Additional quality planning
• tools

• Enterprise environmental
• factors
• Organizational process
• assets
• Project scope statement
• Project management plan

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
47
Selected Quality Planning Tools Techniques

• Cost-Benefit Analysis
• Benefit less rework, lower final costs, and
  increased stakeholder satisfaction.
• Cost expense associated with project quality
  management activities and initiatives.
• Benchmarking
• Comparing actual or planned project practices to
  those of other projects or companies.
• Generating ideas for improvement.
• Providing a standard by which to measure
  performance.

48
Selected Quality Planning Tools Techniques

• Design of Experiments
• An analytical technique which helps identify
  which variable has the most influence on the
  overall outcome.
• Product improvements
• Cost and schedule trade-offs
• Cost of Quality - includes the cost of planning,
  quality assurance, quality control, rework,
  waste, and warranty
• Types of Quality Costs
• Appraisal - cost incurred to determine the
  condition of the product
• Prevention - costs incurred to reduce failure and
  appraisal cost
• Failure costs resulting from failure of the
  product or service

49
Cost of Quality (cont.)

• Conformance (Appraisal Prevention)
• Planning
• Training and Indoctrination
• Product Design / Validation
• Process Validation
• Test and Evaluation
• Quality Audits
• Maintenance / Calibration
• Field Testing

• Non-Conformance (Failure)
• Scrap
• Rework
• Additional Material Cost
• Warranty Repairs
• Complaint Handling
• Liability Judgments
• Product Recall
• Process Corrective Actions

50
Executing Process Group
INITIATING PROCESS GROUP
MONITORING CONTROLLING PROCESS GROUP
Perform Quality Assurance
Acquire Project Team
Direct and Manage Project Execution
Develop Project Team
Information Distribution
PLANNING PROCESS GROUP
Request Seller Responses
CLOSING PROCESS GROUP
Select Sellers
51
Project Quality Management Process Flow
Quality policies, procedures, and
guidelines Lessons learned Knowledge base
Project Management Plan
Quality Planning
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Quality management plan Quality metrics Quality
checklists Process improvement plan Quality
baseline
Governmental standards, rules,
guidelines Commercial databases
Enterprise Environmental Factors
Project scope statement
Scope Definition
Project management plan (updates)
Requested changes Recommended corrective
actions Project management plan (updates)
Perform Quality Assurance
Implemented change requests Implemented
corrective actions Implemented defect
repair Implemented preventive actions Work
performance information
Quality control measurements
Direct and Manage Project Execution
Quality control measurements Quality baseline
(updates) Recommended corrective
actions Recommended preventive actions Recommended
defect repair Project management plan
(updates) Validated deliverables Validated defect
repair Requested changes
Deliverables
Close Project
Integrated Change Control
Perform Quality Control
Organizational process assets (updates)
52
8.2 Quality Assurance

• Quality Assurance is the application of planned,
  systematic quality activities to ensure that the
  project will employ all processes needed to meet
  requirements
• Proactive process
• Performed throughout the project

Project Management Institute, A Guide to the
Project Management Body of Knowledge (PMBOK
Guide) 2000 Edition, Project Management
Institute, Inc., 2000
53
8.2 Quality Assurance (cont.)
Tools Techniques
Outputs
Inputs

• Requested changes
• Recommended corrective
• actions
• Organizational process
• assets (updates)
• Project management plan
• (updates)

• Quality planning tools and
• techniques
• Quality audits
• Process analysis
• Quality control tools
• and techniques

• Quality management plan
• Quality metrics
• Process improvement plan
• Work performance
• information
• Approved change requests
• Quality control measurements
• Implemented change requests
• Implemented corrective
• actions
• Implemented defect repair
• Implemented preventive
• actions

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
54
Selected Quality Assurance Tools Techniques

• Quality Audits
• A structured independent review to determine
  whether project activities comply with
  organizational and project policies, processes,
  and procedures
• Scheduled or random.
• By trained in-house auditors or third parties.
• Process Analysis
• Identifies needed improvements from an
  organizational and technical standpoint

55
Monitoring Controlling Process Group
Scope Verification
INITIATING PROCESS GROUP
Scope Control
Schedule Control
Monitor And Control Project Work
Cost Control
Perform Quality Control
PLANNING PROCESS GROUP
Manage Project Team
Performance Reporting
Integrated Change Control
Manage Stakeholders
Risk Monitoring Control
CLOSING PROCESS GROUP
Executing PROCESS GROUP
Contract Administration
56
Project Quality Management Process Flow
Quality policies, procedures, and
guidelines Lessons learned Knowledge base
Project Management Plan
Quality Planning
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Quality management plan Quality metrics Quality
checklists Process improvement plan Quality
baseline
Governmental standards, rules,
guidelines Commercial databases
Enterprise Environmental Factors
Project scope statement
Scope Definition
Project management plan (updates)
Requested changes Recommended corrective
actions Project management plan (updates)
Perform Quality Assurance
Implemented change requests Implemented
corrective actions Implemented defect
repair Implemented preventive actions Work
performance information
Quality control measurements
Direct and Manage Project Execution
Quality control measurements Quality baseline
(updates) Recommended corrective
actions Recommended preventive actions Recommended
defect repair Project management plan
(updates) Validated deliverables Validated defect
repair Requested changes
Deliverables
Close Project
Integrated Change Control
Perform Quality Control
Organizational process assets (updates)
57
8.3 Perform Quality Control
Tools Techniques
Outputs
Inputs

• Quality control
• measurements
• Validated defect repair
• Quality baseline (updates)
• Recommended corrective
• actions
• Recommended preventive
• actions
• Requested changes
• Recommended defect repair
• Organization process assets
• (updates)
• Validated deliverables
• PMP (updates)

• Cause and effect diagram
• Control charts
• Flowcharting
• Histogram
• Pareto diagrams
• Run chart
• Scatter diagram
• Statistical sampling
• Inspection

• Quality management plan
• Quality metrics
• Quality checklists
• Organizational process
• assets
• Work performance
• information
• Approved change requests
• Deliverables

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
58
Cause and EffectFishbone or Ishikawa Chart
Cause
Effect
Time
Machine
Method
Material
Defect
Environment
People
Measure
Energy

• Classify in related groups
• Visualize the group with the most causes
• Identify causes for defect

59
Selected Quality Control Tools Techniques

• Control Charts Graphic display of results over
  time.
• Used to determine if process is in control.
• Used to collect data on process variance.
• Used to determine cost and schedule variance.
• Flowcharting graphical representation of a
  process to analyze how problems occur
• Inspection - product reviews, audits, and
  walk-through surveys.
• Activities undertaken to determine whether
  results of a single activity or the final product
  conform to requirements.
• Measuring
• Examining
• Testing

60
Selected Quality Control Tools and Techniques
Process Control Chart
61
Control Chart Definitions

• Upper and Lower Control Limits The acceptable
  range of variation of a process
• Mean Middle of the range of acceptable
  variation
• Specification Limits Customers expectations or
  contractual requirements
• Out of Control A data point falls outside the
  upper or lower control limits
• Rule of Seven Non-random data points grouped
  together in a series that total seven on one side
  of the mean
• Assignable Cause A data points, or rule of
  seven, that requires investigation to determine
  the cause of the variation

62
Histogram and Pareto Diagram

• Histogram - bar chart showing a distribution of
  variables
• Pareto Diagram - histogram ordered by frequency
  of occurrence
• Rank ordering is used to focus corrective action
  on the most often occurring problem

63

• PMBOK Chapter 9
• Human Resources

64
Mapping the Processes
Process Group
PM Knowledge Area
65
Mapping the Processes (cont.)
Process Group
PM Knowledge Area
66
Planning Process Group
MONITORING CONTROLLING PROCESS GROUP
Scope Definition
Scope Planning
Develop Project Management Plan
Activity Definition
INITIATING PROCESS GROUP
Activity Resource Estimating
Create WBS
Activity Duration Estimating
Cost Estimating
Cost Budgeting
Risk Management Planning
Activity Sequencing
Human Resource Planning
Risk Identification
Schedule Development
Quality Planning
EXECUTING PROCESS GROUP
Qualitative Risk Analysis
Communications Planning
Quantitative Risk Analysis
Plan Purchases and Acquisitions
Plan Contracting
CLOSING PROCESS GROUP
Risk Response Planning
67
Project Quality Management Process Flow
Human Resource Planning
Project Management Plan
Templates Checklists
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Roles and responsibilities Project organization
charts Staffing management plan
Organizational culture and structure
Enterprise Environmental Factors
Acquire Project Team
Activity resource requirements
Activity Resource Estimating
Project staff assignments Resource
availability Staffing management plan (updates)
Performance reports
Performance Reporting
Develop Project Team
Team performance assessment
Direct and Manage Project Execution
Work performance information
PMP (updates) Requested changes Recommended
corrective actions Recommended preventive actions
Organizational process assets (updates)
Manage Project Team
Integrated Change Control
Close Project
68
Project Quality Management Process Flow
Human Resource Planning
Project Management Plan
Templates Checklists
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Roles and responsibilities Project organization
charts Staffing management plan
Organizational culture and structure
Enterprise Environmental Factors
Acquire Project Team
Activity resource requirements
Activity Resource Estimating
Project staff assignments Resource
availability Staffing management plan (updates)
Performance reports
Performance Reporting
Develop Project Team
Team performance assessment
Direct and Manage Project Execution
Work performance information
PMP (updates) Requested changes Recommended
corrective actions Recommended preventive actions
Organizational process assets (updates)
Manage Project Team
Integrated Change Control
Close Project
69
9.1 Human Resource Planning
Involves identifying, documenting and assigning
project roles, responsibilities, and reporting
relationships.
Tools Techniques
Outputs
Inputs

• Roles and responsibilities
• Project organization charts
• Staffing management plan

• Organizational charts
• Networking
• Organizational theory

• Enterprise environmental
• factors
• Organizational process
• assets
• PMP

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
70
Organizational Planning Outputs

• Role and Responsibility Assignments
• Identify the point person for each WBS item
  (Responsibility Assignment Matrix)
• Organizational Chart
• Graphic display of the project reporting
  relationships
• Staffing Management Plan
• When and how human resources will be added and
  removed from the project team

71
Output Example Responsibility Assignment Matrix
Responsible Staff Members/Positions
Harkin, Project Manager
WBS Element
Oran, Comp. Support
Liu, Developer
Peters, DBA
Task ID
Define Requirements
A I R S
I A A A A
I I I P
I I
2.0 3.0 4.0 5.0 6.0
Design System
Acquire Software
Acquire Hardware
Dev/Test Doc System
P Participant AAccountable RReview
IInput SSign Off
72
Executing Process Group
INITIATING PROCESS GROUP
MONITORING CONTROLLING PROCESS GROUP
Perform Quality Assurance
Acquire Project Team
Direct and Manage Project Execution
Develop Project Team
Information Distribution
PLANNING PROCESS GROUP
Request Seller Responses
CLOSING PROCESS GROUP
Select Sellers
73
Project Quality Management Process Flow
Human Resource Planning
Project Management Plan
Templates Checklists
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Roles and responsibilities Project organization
charts Staffing management plan
Organizational culture and structure
Enterprise Environmental Factors
Acquire Project Team
Activity resource requirements
Activity Resource Estimating
Project staff assignments Resource
availability Staffing management plan (updates)
Performance reports
Performance Reporting
Develop Project Team
Team performance assessment
Direct and Manage Project Execution
Work performance information
PMP (updates) Requested changes Recommended
corrective actions Recommended preventive actions
Organizational process assets (updates)
Manage Project Team
Integrated Change Control
Close Project
74
9.2 Acquire Project Team
Tools Techniques
Outputs
Inputs

• Project staff assignments
• Resource availability
• Staffing management plan
• (updates)

• Pre-assignment
• Negotiation
• Acquisition
• Virtual teams

• Enterprise environmental
• factors
• Organizational process
• assets
• Roles and responsibilities
• Project organization charts
• Staffing management plan

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
75
Staff Acquisition Tools Techniques

• Pre-assignment
• Staff may be pre-assigned in cases of a proposal
  that explicitly identifies the staff
• Negotiations
• PM usually must negotiate with functional manager
  or other PMs for certain resources
• Acquisition
• Contracting the resources when the work cant be
  done internally
• Virtual Teams
• Groups of people with a shared goal, who fulfill
  their roles with little or no time spent meeting
  face to face

76
Executing Process Group
INITIATING PROCESS GROUP
MONITORING CONTROLLING PROCESS GROUP
Perform Quality Assurance
Acquire Project Team
Direct and Manage Project Execution
Develop Project Team
Information Distribution
PLANNING PROCESS GROUP
Request Seller Responses
CLOSING PROCESS GROUP
Select Sellers
77
Project Quality Management Process Flow
Human Resource Planning
Project Management Plan
Templates Checklists
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Roles and responsibilities Project organization
charts Staffing management plan
Organizational culture and structure
Enterprise Environmental Factors
Acquire Project Team
Activity resource requirements
Activity Resource Estimating
Project staff assignments Resource
availability Staffing management plan (updates)
Performance reports
Performance Reporting
Develop Project Team
Team performance assessment
Direct and Manage Project Execution
Work performance information
PMP (updates) Requested changes Recommended
corrective actions Recommended preventive actions
Organizational process assets (updates)
Manage Project Team
Integrated Change Control
Close Project
78
9.3 Develop Project Team
Tools Techniques
Outputs
Inputs

• Team performance
• assessment

• General management skills
• Training
• Team-building activities
• Ground rules
• Co-location
• Recognition and rewards

• Project staff assignments
• Staffing management
• plan
• Resource availability

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
79
Selected Develop Project Team Tools Techniques

• General Management Skills
• Soft skills empathy, influence, creativity,
  etc.
• Training
• Formal and informal
• Team-building Activities
• Any activity taken to improve team productivity
• Co-location
• All or most team members in same physical space
  to encourage synergy
• Reward Recognition Systems
• Motivate team members and understand what rewards
  will work and what wont

80
Selected Develop Project Team Outputs

• Team Performance Assessment
• Evaluation of the teams effectiveness can
  include
• Improvements in skills
• Improvements in competencies and sentiments
• Reduce staff turnover rate

81
Monitoring Controlling Process Group
Scope Verification
INITIATING PROCESS GROUP
Scope Control
Schedule Control
Monitor And Control Project Work
Cost Control
Perform Quality Control
PLANNING PROCESS GROUP
Manage Project Team
Performance Reporting
Integrated Change Control
Manage Stakeholders
Risk Monitoring Control
CLOSING PROCESS GROUP
Executing PROCESS GROUP
Contract Administration
82
Project Quality Management Process Flow
Human Resource Planning
Project Management Plan
Templates Checklists
Develop Project Management
Organizational Process Assets
Approved change requests Approved corrective
actions Approved preventive actions
Roles and responsibilities Project organization
charts Staffing management plan
Organizational culture and structure
Enterprise Environmental Factors
Acquire Project Team
Activity resource requirements
Activity Resource Estimating
Project staff assignments Resource
availability Staffing management plan (updates)
Performance reports
Performance Reporting
Develop Project Team
Team performance assessment
Direct and Manage Project Execution
Work performance information
PMP (updates) Requested changes Recommended
corrective actions Recommended preventive actions
Organizational process assets (updates)
Manage Project Team
Integrated Change Control
Close Project
83
9.4 Manage Project Team
Tools Techniques
Outputs
Inputs

• Requested changes
• Recommended corrective
• actions
• Recommended preventive
• actions
• Organizational process
• assets (updates)
• PMP (updates)

• Observation and
• conversation
• Project performance
• appraisals
• Conflict management
• Issue log

• Organizational process
• assets
• Project staff assignments
• Roles and responsibilities
• Project organization charts
• Staffing management plan
• Team performance
• assessment
• Work performance
• information
• Performance reports

Note Underlined inputs, tools techniques, and
outputs have further explanation
Project Management Institute, A Guide to the
Project Management Body of Knowledge, Third
Edition (PMBOK Guide) 2004 Edition, Project
Management Institute, Inc., 2004
84
Powers of the Project Manager

• Formal Power based on position
• Reward Giving rewards
• Penalty Being able to penalize team members
• Expert Being technical expert
• Referent Based on personality

85
Leadership Styles

• Directing Telling others what to do
• Facilitating Coordinating the input of others
• Coaching Instructing others
• Supporting Providing assistance along the way
• Autocratic Making decisions without input

86
Conflict Resolution Techniques

• Confronting Solving the real problem
• Compromising Finding solutions that bring some
  degree of satisfaction to both parties
• Withdrawal Retreating or postponing a decision
  on a problem
• Smoothing Emphasizing agreement rather than
  differences of opinion
• Forcing Pushing one viewpoint at the expense of
  another

87
Maslows Hierarchy of Needs
Adapted from Maslow, 1943
Self- Actualization Needs
Esteem Needs
Belongingness Needs
Safety Needs
Physiological Needs
88
McGregors Theory

• Theory X
• Traditional View of management - Top Down.
• Managers organize the work, control the people,
  money, and equipment to achieve economic results.
• Workers viewed as inherently self-centered and
  lazy
• Theory Y
• Managers create environment for workers to
  achieve their goals through self direction toward
  organizational objectives
• Workers willing and eager to accept
  responsibility, focused on self-growth and
  self-fulfillment

89
Hertzbergs Motivation Theory

• Hygiene
• Pay, working conditions, bosss attitude
• Poor hygiene factors impact motivation but
  improving them may not increase motivation
• Motivators
• Positive motivation leads to more achievement and
  self-actualization
• Workers have sense of personal growth and
  responsibility