Contents

PM Milestone Project Management Templates

PM Milestone Business Templates

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Preface xv

Introduction to Project Management 1

What Is Project Management Anyway? 2

Standards and Regulations 2

A True Story 5

Advantages of Project Management 6

Organizing for Project Management 7

The Projectized Organization 7

The Functional or Traditional Organization 9

The Matrix Organization ll

The Project Office and the Project Management Office 12

How the Project Manager Makes Projects Successful 13

The Project Life Cycle 14

Project Management Processes 15

Summary 17

1. Scope Management 1B

Initiation of the Project 19

Project Charter l9

Statement of Work 20

Business Need 20

Scope Description 20

Environmental and Organizational Factors 21

Organizational Process Assets 21

Change Management Procedure 21

Risk Control Procedures 21

Organizational Knowledge Bases 2l

Constraints and Assumptions 22

Project Selection Methods 22

Who Are Those Stakeholders? 22

Cost and Its Relationship to Price 23

Overbid or Underbid: Which Is Better for Your Company? 24

Getting to the Scope Baseline 26

Work Breakdown Structure 28

Systems Approach to Work Breakdown Structure 3l

Work Breakdown Structure Dictionary 32

Additional Project Breakdown Structures 32

Scope Verification 33

Change Management 33

Project Justifications 34

The Breakeven Chart 35

Problems with Breakeven Charts 36

Average Rate ofReturn on Investment 36

Present Value of Money 37

Internal Rate ofReturn on Investment 40

Summary 46

2. Time Management 47

Activity Definition 47

Activity Sequencing 48

Activity on Arrow Diagramming 49

Gantt Charts and Milestone Charts 50

Precedence Diagramming Method (PDM) 51

Logical Relationships 52

Finish-Start Relationship (FS) 52

Start-Start Relationship (SS) 52

Finish-Finish Relationship (FF) 54

Start-Finish Relationship (SF) 55

Leads and Lags 56

Diagramming Relationships 56

Project Start and Project Finish Events 57

Logical Precedence Diagram 57

Activity Durations 57

Building the Network Diagram 58

Buffering the Schedule 63

Reverse Resource Allocation Scheduling 67

Critical Path Method (CPM) 68

Program Evaluation and Review Technique (PERT) 68

Monte Carlo Simulation 73

The Simulation 73

Output from the Monte Carlo Simulation 74

Critical Chain Theory 74

Summary 76

B. Cost Management 77

Why We Need Cost Management 77

Project Life Cycle and Project Cost 78

Using the Work Breakdown Structure 78

Project 78

Cost Estimating 79

Types of Estimates 79

Top-Down Estimates 79

Bottom-Up Estimates 79

Analogous Estimates 80

Parametric Estimates 80

Control Estimates 81

Cost Budgeting 82

Cost Control 84

Earned Value Reporting 84

Cumulative Reporting 85

Earned Value Parameters 86

Difficulties in Data Collection 87

Reporting Work Complete 88

Examples 88

Calculated Values for Earned Value Reports 90

Financial Measures 93

Return on Sales 96

Return on Assets 96

Economic Value Added 97

Depreciation 98

Straight Line Depreciation 99

Accelerated Depreciation 99

Sum of the Years' Digits 100

Double Declining Balances 101

Summary 101

4. Quality Management 103

Quality Planning 104

Quality Assurance 105

Cost of Quality 105

Deming's Fourteen Points 107

Quality Control 107

Inspection 108

Sampling Inspection 108

Acceptable Quality Level (AQL) 109

Buyer's Risk and Seller's Risk 109

Other Quality Control Techniques 110

Flowcharts and Diagrams 110

Cause and Effect Diagrams 110

Pareto Charts 110

Control Charts 113

Run Charts 116

Checklists 116

Kaizen 116

Benchmarking 117

Summary 117

S. Human Resources Management 118

Project Manager Roles and Responsibilities 119

Responsibility-Accountability Matrix 119

Project Schedule 120

Staffing Plan 120

Training Plan 120

Organization Chart 121

Strong Matrix, Weak Matrix, and Balanced Matrix Organizations 121

Strong Matrix 121

Weak Matrix 122

Balanced Matrix 122

Making Matrix Management Work 123

Personnel and Personal Evaluations 124

Motivation 125

Importance of Motivation 125

Industrial Revolution 125

Scientific Management 125

Learning Curve Theory 125

Depression Era 126

World War II 126

Post-World War II 127

Motivational Ideas 127

Procedures vs. Motivation 127

Expectancy Theory 129

Maslow's Hierarchy of Needs Theory 129

Hertzberg's Motivation/Hygiene Theory 131

Supervisory Style and Delegation 132

Job and Work Design 132

Job Enlargement 133

Job Enrichment 134

Quality Circles 134

Power 135

Forms ofPower 135

Coercive Power and Reward Power 135

Legitimate Power 136

Referent Power 136

Expert Power 136

Representative Power 137

Leadership 137

Theory X and Theory Y Managers 137

Conflict Resolution 137

Forcing 138

Smoothing 139

Compromise 139

Problem Solving 140

Withdrawal 140

Managing Meetings 140

Managing Meetings Effectively 142

Before the Meeting 142

Beginning the Meeting 142

Summary 143

6. Communications Management 144

Lessons Learned 144

General Model of Communications 146

Thinking 146

Encoding 146

Symbols 146

Transmitting 147

Perceiving 147

Decoding 147

Understanding 147

Barriers to Communications 147

Distorted Perceptions 147

Distrusted Sources 147

Transmission Errors 148

Improving Communications 148

Make the Message Relevant for the Receiver 148

Reduce the Message to Its Simplest Terms 148

Organize the Message into a Series of Stages 148

Repeat the Key Points 149

Verbal and Written Communications 149

Formal and Informal Communications 150

Formal Communications 150

Informal Communications 150

Improving Listening 151

Don't Interrupt 151

Put the Speaker at Ease 152

Appear Interested 153

Cut Out Distractions 153

Periodically Sum Up What Was Said 153

Networking 153

Circular Networks 154

Chain Networks 154

The Wheel 155

Free and Open Communications 155

Management by Walking Around 157

Performance Reviews 157

Summary 158

7. Risk Management 160

When to Do Risk Management 161

The Risk Process 162

Risk Management Planning 162

Risk Breakdown Structure 162

Risk Identification 163

Documentation Reviews 163

Brainstorming 163

Delphi Technique 164

Nominal Group Technique 165

Crawford Slip 165

Expert Interviews 165

Root Cause Identification 166

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis 166

Checklists 166

Analogy 167

Diagramming Techniques 167

Recording of Risks Identified 169

Risk Assessment 169

Qualitative Risk Analysis 170

Risk Tolerance 170

Risk Probability 172

The Addition Rule 174

The Multiplication Rule 176

Risk Impact 178

Expected Value 178

Decision Trees 180

Risk Quantification 183

Comparative Ranking 184

Sensitivity Analysis 184

Grouping the Risks 185

Affinity Diagramming 186

Risk Response Planning 186

Risk Response Strategies 186

Avoidance 187

Transfer 187

Contracting 188

Acceptance 188

Mitigation 189

Budgeting for Risk 189

Risk Monitoring and Control 190

Summary 191

8. Contract and Procurement Management 192

Contract Management 193

Make or Buy 194

Contract Life Cycle 194

Requirement Process 195

Requisition Process 195

Solicitation Process 196

Award Process 197

Trade-Off Studies 197

Contract Process 198

Contract Administration 198

Contract Types 199

Fixed-Price or Lump-Sum Contract 199

Firm Fixed-Price Contract 200

Fixed-Price Plus Economic-Adjustment Contract 200

Fixed-Price Plus Incentive Contract 201

Cost-Plus Contract 201

Cost Plus Fixed-Fee Contract 202

Cost Plus Award-Fee Contract 202

Cost Plus Incentive-Fee Contract 203

Time-and-Material Contract 203

Procurement Management 203

Commodities 203

Unique Products and Services 204

Forward Buying 204

xiv

Contents |

Blanket Orders

205

Split Orders

205

Summary

206

9. Professional Responsibility

207

Task 1

208

Task 2

209

Task 3

209

Task 4

210

Task 5

211

Code of Professional Conduct

211

10. What Is the PMP Exam Like?

213

Domain 1: Initiating the Project

214

Domain 2: Planning the Project

215

Domain 3: Executing the Project

216

Domain 4: Controlling the Project

216

Domain 5: Closing the Project

217

Domain 6: Professional Responsibility

217

Types of Questions on the Exam

218

Taking the Exam

219

Use of Practice Questions

220

The Application for PMP Certification

221

The Education Qualification

223

Joining PMI

223

Recertification

224

Practice Questions

225

Practice Questions Answer Key

303

Appendix: Probability Distributions

357

Bibliography

365

Index

367

About the Author

379

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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