Cost Estimating

A cost estimate is a prediction of the likely cost of the resources that will be required to complete all of the work of the project. Cost estimating is done throughout the project. In the beginning of the project proof of concept estimates must be done to allow the project to go on. An ''order of magnitude'' estimate is performed at this stage of the project. Order of magnitude estimates can have an accuracy of 50 percent to +100 percent. As the project progresses, more accurate estimates are...

Monte Carlo Simulation

When a schedule with activities that have uncertainty associated with their durations is encountered, the PERT method can be used to help predict the probability and range of values that will encompass the actual duration of the project. While the PERT technique uses the normal and beta distributions to determine this probability and range of values, there is a serious flaw in the results. The assumption made in the PERT analysis is that the critical path of the project remains the same under...

Summary

Cost management is a necessary part of project management, for it makes it possible to manage the cost baseline of the project. Without cost management, projects would use more or less money than allocated, and it would be impossible to fund future projects. The project manager, as in all things, is the person responsible for project cost management. The work breakdown structure is the basis for the cost estimate. Since the WBS identifies all of the project work in a detailed workable way, it...

The Project Life Cycle

Projects of any size, large or small, can be managed using the project management methodology. Because all projects are unique in some way, it might be helpful to look at the life cycle or phases of projects and note the many similarities between projects and that all projects go through similar phases. The project life cycle defines the beginning and the end of a project and various phases within it. At various points in the project life cycle the project is reevaluated and a decision is made...

Risk Monitoring and Control

Risk monitoring and control is the process of keeping track of all the identified risks and identifying new risks as their presence becomes known and residual risks that occur when the risk management plans are implemented on individual risks. The effectiveness of the risk management plan is evaluated on an ongoing basis throughout the project. When a risk is apparently going to take place, the contingency plan is put into place. If there is no contingency plan, then the risk is dealt with on...

Motivation

Until modern times there has been little interest in motivation of people in a work environment. From the beginning of the industrial revolution until the end of World War II there was some compelling reason for people to work and work hard. In the beginning of the industrial revolution people moved to the cities to find work that would give them a better standard of living than the farm work that was available to them. Thus there were many people available for all jobs. If someone did not want...

Initiation of the Project

A project comes into existence with the creation of a formal document called the project charter. The project charter is a small document but one that is extremely important to getting a project started in the right direction. Projects are done for a number of reasons. Generally, for commercial companies, the reason for doing a project is to make money. There are many other reasons for doing projects, such as establishing goodwill, conforming to government regulations and laws, and attempting...

Contracts And Procurement

A statement of work is the description of what the project is about and what will be delivered. The project plan is complete and contains the detailed work that the project will do, complete with task descriptions and schedule, cost, and scope baselines containing a real schedule and budget. An exception report describes items that are not as planned. In a fixed-price contract the supplier is obligated to deliver the contracted-for item at a fixed price. The supplier is aware of the risk and...

Cost Control

Cost control is the process of controlling the project cost and taking corrective action when the control indicates that corrective action is necessary. It is important that our cost control system be thoroughly understood by those who are measuring with it as well as by those who are being measured. Inappropriate responses to cost and schedule variances can result in serious quality problems and higher than acceptable risk levels. The earned value reporting system is now the most commonly used...

Quality Management

One of the goals of project management is to meet the expectations of the stakeholders of the project. Managing the quality of the project is the function that will allow this to happen. Quality management will include all the work that is necessary to ensure that each of the objectives of the project is met. In the latest edition of the Guide to the Project Management Body of Knowledge, PMI emphasizes that the purpose of the project is to meet the requirements of the stakeholders. In the past,...

Organizations

In a strong matrix organization the project manager has greater authority or power than the functional manager. In this situation, project managers generally get the people they want. In fact the project managers in this type of organization get more than they should. A manager who is assertive will usually get the personnel he or she wants. The functional manager is not able to overcome the project manager's authority and is not free to assign people where their talent is best utilized. If...

Management

Project management is quickly becoming the method of management for more and more industries. Projects are being done for everything from building the largest skyscrapers to planning the smallest wedding. Many large companies now have a stated policy to manage their entire company using project management methods. We hope to encourage the use of project management in all businesses, and we hope to encourage and help project managers learn more about the profession of project management and pass...

How the Project Manager Makes Projects Successful

When we think of project managers we should think of them as small business managers. Many of the characteristics that are required to be successful in the managing of a small business are the same as those needed for the proper management of projects. In fact, since many project managers today are rooted in technical disciplines, it is surprising that the skills they are called upon to have were previously considered unusual skills for technical managers. Today the project manager is expected...

The Project Office and the Project Management Office

''Project management office'' is a term that has come into use in the past few years. It should be noted that, in common usage, the term ''project office'' is different from ''project management office.'' The project office is the place where the project team is managed and where the project manager and the project team reside. As companies become more project oriented, quite a lot of inefficiency can result. This is because project managers want to have direct control of all the work that goes...

What Is Project Management Anyway

The Guide to the PMBOK defines project management as follows Project Management is the application of knowledge, skills, and techniques to project activities in order to meet stakeholder needs and expectations from a project. So project management is using a set of tools and techniques to manage projects. But it isn't fair to use the words you are defining as the definition. We had better first talk about what a project is and then see if we can come up with something better. There are certain...

Organizing for Project Management

Most projects are smaller than the organizations to which they belong. The management of a project is strongly influenced by the organizational environment to which they belong. The organization's maturity with respect to project management will have a great influence on how the project manager is able to perform the work of managing the project. For example, project managers who have a management style of participative management may have trouble managing projects in a strongly hierarchical...

Project Manager Roles and Responsibilities

It is a long-standing joke in the project management community that if anyone ever asks you who is responsible for anything in the project, the answer will always be the project manager. Truly it is easier to specify what the project manager does not do than to discuss what he or she actually does and is responsible for. The nature and scope of the project should dictate the individual roles and responsibilities of the project team. When all of the team assignments and responsibilities have...

Advantages of Project Management

Project management brings together many of the things that are needed to make endeavors like projects successful. But what do we mean by a successful project A successful project is one that meets the expectations of the stakeholders of the project. By organizing the project in a way that concentrates the efforts of the project team in the direction of accomplishing the project, a great deal of motivation is achieved. This allows for the project teams to concentrate on the project and not be...

Management by Walking Around

Management by walking around is a concept that actually uses a lot of common sense. It is particularly effective for managers who are a little self-conscious about talking to people. Some of these managers are reluctant to come out of their offices and talk to their own people. Such reclusive managers don't communicate well. It is easier to show how to do management by walking around than to explain it. The manager practicing the technique of management by walking around makes a commitment to...

Appendix Probability Distributions

N the discussion so far, I have tried to sound less like a statistician and more like a project management practitioner. The material I have covered here is mainly practical. But there are a few more things we should discuss if we are going to use any of the many statistical packages that are available for project management. Many of these software packages require making decisions on the type of distributions to use, so it is important to know the differences. A probability distribution is a...

Program Evaluation and Review Technique PERT

The PERT system was developed for the Polaris Missile Program in the 1950s. At that time there was a lot of pressure on the U.S. Navy to complete the Polaris Missile Program. The Cold War was raging, and the United States needed a deterrent that would discourage the threat of nuclear weapons by Russia. A mobile missile that could be carried aboard a submarine and launched from beneath the surface of the sea would be a formidable weapon. The problem for the U.S. Navy was that there were two...

Risk Quantification

Comparative Advantage Quantified

As part of the quantification process in risk management, we need to find a way to organize the risks so that they can be dealt with in a logical way. There are two things we need to consider. The first is that the risks need to be put into groups that can then be managed by individuals who are more familiar with the nature ofthese risks. The second is that the risks need to be put into some priority order. This is because no organization will ever have the funds or manpower to deal with all...

Professional Responsibility

The Project Management Institute engaged the Columbia Assessment Service (CAS) to study the PMP examination process. This resulted in changes to the PMP examination. In fact, the exam was revised considerably as a result of the work that was CAS began by analyzing the responsibilities of project management professionals (PMPs). Then it specified a plan for the testing of PMPs, wrote and rewrote questions for the exam, and determined the passing score for the test. The Project Management...

Task

Balance stakeholders' interests by recommending approaches that strive for fair resolution in order to satisfy competing needs and objectives. In the development of any project, one of the most important things that we must do is to accomplish the scope of the project. We have a professional responsibility to make sure that each of the agreed upon stakeholder's needs is met by the completion of the project. We must also take the responsibility of making the stakeholder aware that there may be...

What Is the PMP Exam Like

The Project Management Institute (PMI) has constantly improved the PMP examination since it was first given and will continue to improve the exam as time goes on. April 2002 was significant because of the culmination of several factors that have had an influence on the PMP examination. The Project Management Professional (PMP) Role Delineation Study was begun in 1999 to help define the roles and responsibilities of project management professionals. From this knowledge, an examination could be...

Scope Management

Scope definition is defined by PMI as ''decomposing the major deliverables into smaller, more manageable components to provide better control.'' The chart of accounts is the system used to monitor project costs as defined by PMI. A stakeholder is an individual or organization that is involved in or may be affected by project activities. The actual payback period is between two years and three years. It is the point where the net or cumulative cash flows equal zero. This occurs between year 2...

Logical Relationships

Four logical relationships are possible. These relationships can be remembered if you use the same statement to describe the relationship and simply substitute the letters designating the relationship. The statement is The independent activity must (first letter of the relationship) before the dependent activity can (second letter of the relationship), as shown in Figure 2-4. Most projects that you are likely to encounter will use the logical relationship of finishstart more often than any...

Risk Management

Risk management is one of the most important areas of project management that must be considered. Companies that want to compete with one another have adopted project management as a method of managing their companies. They have had to learn how to define and control project scope, schedule, and cost as baselines, and they have had to learn all of the control elements necessary to make successful projects. But many of these companies have yet to learn to manage the risks involved in managing a...

Preface

This book has been written to help those preparing for the Project Management Professional Examination. It is aimed at those who want to learn project management methodology. It is not intended to be a drill in exam questions there are more than enough of those around. It is intended to cover all of the material that the Project Management Institute (PMI ) considers important enough to be included in the exam. This book has been revised to reflect the changes in the Project Management...

Risk Identification

The identification of risks is very important. Each must be described in detail so that it will not be confused with any other risk or project task that must be done. Each risk should be given an identification number. During the course of the project, as more information is gathered about the risk, all of this information can be consolidated about the particular risk. The first component we need to discuss is the identification of the risk event. In the course of identifying risk events we...

Diagramming Relationships

The convention used in network diagramming of relationships and leads and lags is that the relationship is shown on the logical arrow only if it is not a finish-start relationship. If there are no leads or lags, no designation is given. Project Start and Project Finish Events Each activity in the diagram will always have a predecessor and a successor if the following convention is used. The convention is to create two events, the start of the project and the finish of the project. An event is a...

Contract Management

The first thing we need is a definition of a contract. Texts on business law define a contract as follows A contract is an agreement between competent parties, for consideration, to accomplish some lawful purpose with the terms clearly set forth. First of all, the contract is an ''agreement.'' This means that the parties involved must have a meeting of the minds and decide that they will do the things set forth in the contract. By this definition no contract can be forced on someone. If there...

Time Management

The following information and questions 1 through 10 refer to Figure 1. A schedule was developed for a project to install windows in an apartment building. The project is a rush job, and the contractor has agreed to schedule the work on a single shift basis but will work seven days per week until the job is done. The project is to begin on May 1. Figure 1. Scheduling practice exercise. Figure 1. Scheduling practice exercise. 1. What day in May will activity D have for its early finish date 2....

Work Breakdown Structure

At this point in our project development we have determined the deliverables that are due to all the stakeholders. But we cannot plan the project from this list of deliverables. To plan the project we must convert these into individual pieces of work that must be done to complete the project. For this we need the ''work breakdown structure,'' or WBS. The work breakdown structure is the most central item in the project plan. Without it we do not have a definition of the work that has to be done...

Risk Response Planning

The next task that must be done in our risk management system is risk response planning. At this stage we have discovered all of the risks known to date and have an iterative process for discovering new risks as the project progresses. We have evaluated the risks and assessed their impact and probability of occurrence. We have prioritized the risks in their order of importance. We now must decide what to do about them. This is risk response planning. Risk response planning is the process of...

Activity Sequencing

The activity's identity comes from the work breakdown structure. When the WBS is completed, the bottom of the work breakdown structure defines the individual pieces of work that are necessary to complete the project. These individual pieces of work are the same items that become the activities in the project schedule. One of the things that is done in the development of the WBS is to check that each of the activities has inputs for the work required. Each output from an activity is used by...

Human Resources Management

What are the major advantages of the functional type of organization a. Single point of contact for the customer b. Stable organizational structure d. Multifunctional teams are easy to form 2. The project manager's leadership style should be matched to the corresponding developmental level of the project team and should move through successive steps in the following order a. Disciplinary, autocratic, participative. b. Projectized, matrix, functional. c. Team building, team development,...

Cost Management

A project manager wants to make a trip to California by car. The project manager knows how many miles it will be to drive to California, the current price of gasoline, and how many miles the car will go on a gallon of gasoline. From this information he or she can calculate the estimated cost of the gasoline for the trip. This is a form of what kind of estimating technique 2. A project manager wants to make a trip to California by car. The project manager knows someone who has made this trip...