Time and Materials Contracts

Time and materials (T& M) contracts are sometimes called unit price contracts. They are ideal for instances when an organization contracts out a small project or for instances when smaller amounts of work within a larger project are to be completed by a vendor. T& M contracts, however, can grow dangerously out of control as more work is assigned to the seller. While time and materials is an easy-to-create and administer-contract type, they can pose a threat to the buyer if a not-to-exceed...

Use the Process of Elimination

When you're stumped on a question, use the process of elimination. For each question, there'll be four choices. On your scratch paper, write down ABCD. If you can safely rule out A, cross it out of the ABCD you've written on your paper. Now focus on which of the other answers won't work. If you determine that C won't work, cross it off your list. Now you've got a 50-50 chance of finding the correct choice. If you cannot determine which answer is best, B or D in this instance, here's the best...

The Usual Suspects

There are two more outputs of the cost budgeting process. Care to guess which two Here are the usual outputs Change requests Did you guess this one Just about any process in a project can generate a change request, and cost budgeting is no different. Of course, the change request must be documented and flow through the integrated change control system. There are no free rides, especially in cost management. Cost management plan updates If there's been a change request that is approved, you'll...

Planning the Project Scope

In Chapter 5 we'll discuss and dissect the project scope in detail. For now, know that the project scope is the work that must be done in order to create the product, service, or result the project aims to deliver. The project manager, the project team, and the stakeholders work together to define the project scope their goal is to create the project scope management plan. The project scope management plan defines how the project scope will be defined, verified, controlled, and how the...

Managing the Project Costs

Controlling the project costs is more than a philosophy it's the project manager working with the project team, the stakeholders, and often management to ensure that costs don't creep into the project and then managing the cost increases as they happen. To implement cost control, the project manager must rely on several documents and processes Cost baseline You know this one already. The cost baseline is the expected cost the project will incur and when those expenses will happen. This...

Info

Historical project as a basis for the current project. The cost of the historical project is applied to the cost of the current project, taking into account the scope and size of the current project, as well as other known variables. Analogous estimating is considered a form of expert judgment. This estimating approach takes less time to complete than other estimating models, but is also less accurate. This top-down approach is good for fast estimates to get a general idea of what the project...

Creating the Charter Finally

Now that the project management team is armed with all the inputs, has considered the project selection methodology, and understands the project management methodology in place in their organization, they're ready to create the project. There are two additional tools the project management team can use to create the charter and they're easy Project management information system Remember the computer software that helps the project manager manage the project That software can often help the...

Examining Other Cost Estimating Inputs

I've covered the major inputs for cost estimating, but there are still some smaller, common sense inputs that the project manager or the cost estimator will need to rely upon to complete the cost estimating process. Don't worry it's nothing you've not seen before, and it's all pretty straightforward Work breakdown structure The WBS is needed to create a cost estimate, especially the definitive estimate, because it clearly defines all of the deliverables the project will create. Each...

Considering the Internal Rate of Return

The last benefit measurement method is the internal rate of return (IRR). The IRR is a complex formula to calculate when the present value of the cash inflow equals the original investment. Don't get too lost in this formula it's a tricky business, and you won't need to know how to calculate the IRR for the exam. You will need to know, however, that when comparing multiple projects' IRRs, projects with high IRRs are better choices than projects with low IRRs. This makes sense. Would you like an...

The Project Management Processes

Table B-1 shows the 44 project management processes. The intersection of the knowledge area and each stage (initiating, planning, executing, controlling, and closing) describes the activity that happens at that point in the project. For example, follow the project scope management row and the controlling column to find Scope verification and change control. The number next to each process represents the number of processes you'll find in that process group. Monitor and control project work...

Knowing the Project Management Methodology

Before the project management team can dive in and create the project charter, they also need to understand how their organization approaches project management in general. When I teach my project management seminars, I find that some companies Table 4-1 Net Present Value Calculation Table 4-1 Net Present Value Calculation have a formal, highly structured, rigid project management approach. Other companies are, well, loosey-goosey. Their approach can vary from project manager to project...

Examining the Project Management Context Pmbok Section

Projects typically fall under some other umbrella within an organization project portfolio management, project offices, or programs. The project management context describes all the different environments where a project may reside. Your real-live organization may have one, all, or even none of these descriptions don't sweat it. For your exam, however, you'll need to be familiar with these different organizational situations and how each one affects the project and the project manager. A...

Estimating Project Costs

All of the cost inputs are needed so that the project cost estimator, likely the project management team, can create a reliable cost estimate. The estimates you'll want to know for the CAPM and PMP exam, and for your career, are reflective of the accuracy of the information the estimate is based upon. The more accurate the information, the better the cost estimate will be. Basically, all cost estimates move through progressive elaboration As more details become available, the more accurate the...

Developing the Project Management Plan

The project management plan is not one plan, but a collection of subsidiary plans that dictate how the project will operate within that knowledge area. It also defines how the project will operate within planning, executing, monitoring and controlling, and closing phases. In order to create the project management plan, you'll need A preliminary project scope statement Project management processes Enterprise environmental factors Organizational process assets

Creating the Project Management Plan

As the project completes project planning activities, the outputs will be assimilated into a collection of subsidiary project plans. The collection of these subsidiary project plans will address all of the previous points and help the project manager and the project team know where the project is going and how they will get there. Let's take a moment and look at each of the project management subsidiary plans the project management plan will include Project scope management plan This defines...

Controlling Project Costs Pmbok Section

Once a project has been funded, it's up to the project manager and the project team to work effectively and efficiently to control costs. This means doing the work right the first time It also means, and this is tricky, avoiding scope creep and undocumented changes, as well as getting rid of any non-value-added activities. Basically, if the project team is adding components or features that aren't called for in the project, they're wasting time and money. Cost control focuses on controlling the...

All About the PMP Exam

Project Integration Management

In order to become a PMP, you need the following (check out Figure 1-1 it's pretty) PMP Candidate Choose the appropriate path Figure 1-1 The PMP candidate must qualify to take the examination. Bachelor's degree or global equivalent and 36 non-overlapping months of project management experience totaling 4,500 hours of project management activities within the last eight years. Or a high school diploma, associate's degree, or the global equivalent and 60 non-overlapping months of project...

Change Control System

You'll be hearing an awful lot about change control throughout the remainder of this book. It's essential for a project to have an established change control system, or the project will be riddled with change requests. The change control system (CCS) communicates the process for controlling changes to the project deliverables. This system works with the configuration management system and seeks to control and document proposals to the project's product. Figure 4-3 demonstrates an example of a...

Using Resource Leveling Heuristics

First off, a heuristic is a fancy way of saying rule of thumb. A resource-leveling heuristic is a method to flatten the schedule when resources are over-allocated. Resource leveling can be applied using different methods to accomplish different goals. One of the most common methods is to ensure that workers are not overextended on activities. For example, Sarah is assigned to Task C and Task H, which are planned to happen concurrently. Sarah cannot be in two places at once, so resource leveling...

Factoring in Reserve Time

Parkinson's Law states Work expands so as to fill the time available for its completion. This little nugget of wisdom is oh-so-true. Consider a project team member who knows an activity should last 24 hours. The team member decides, in his own wisdom, to say that the activity will last 32 hours. These extra eight hours, he figures, will allow plenty of time for the work to be completed should any unforeseen incidents pop up. The trouble is, however, that the task will magically expand to...

Miscellaneous Procurement Planning Business

You may have noticed that the Project Management Body of Knowledge (PMBOK) has a habit of little odds and ends that come out of the many planning processes. Procurement planning is no different. You know that one of the procurement planning tools is the make-or-buy decision process. The results of those decisions are documented, including the supporting detail of why the decision to make or buy was determined. Another output of procurement planning is surprise, surprise change requests. During...

Creating Information Retrieval Systems

What good is information if no one can find it An information retrieval system allows for fast and accurate access to project information. It can be a simple manual filing system, an advanced database of information storage, or a robust project management software suite. Whatever the approach, the information must be accessible, organized, and secure. The project team, the project manager, the customer, and other stakeholders may need access to design specs, blueprints, plans, and other project...

Questions

You are using a previous similar project to predict the costs of the current project. Which of the following best describes analogous estimating C. Organizational process assets D. Enterprise environmental factors 2. You are the project manager for a new technology implementation project. Management has requested that your estimates be as exact as possible. Which one of the following methods of estimating will provide the most accurate estimate 3. What does the cost change control system do A....

Project Management Documents

Projects are full of plans, reports, and other documents. Having a clear understanding of each of the document types and why they may, or may not, be needed in a project can help you answer exam questions correctly. What follows is every document type and its Project Management Body of Knowledge (PMBOK) reference. Activity cost estimate supporting detail This is the collection of documents that detail how the project's cost estimate was created. The supporting detail should include the...

Working with Your PMO

Recall that a PMO is a schmancy club where all the project managers get together for cigars and martinis. Not really I just wanted to see if you were paying attention. The PMO coordinates the activities of all the project managers. Its primary goal is to create a uniform approach on how projects operate within the organization. PMOs can exist in any structure, but are most common in matrix structures and in projectized environments. Project Manager's Administrative Staff Table 2-1...

Answers

Contracts can be used as a risk mitigation tool. Procurement of risky activities is known as transference the risk does not disappear, but the responsibility for the risk is transferred to the vendor. A, C, and D are all incorrect. A vendor proposal, a quotation, and project requirements do nothing to serve as a risk mitigation tool. For more information, see the PMBOK, Section 12.2.1.4. 2. A. Of all choices presented, A is the best choice. Contracts have an offer and a consideration. B is...

Using Good Old Project Management Software

Who's creating estimates with their abacus Most organizations rely on software to help the project management team create an accurate cost estimate. While the CAPM and PMP examinations are vendor-neutral, a general knowledge of how computer software can assist the project manager is needed. Several different computer programs are available that can streamline project work estimates and increase their accuracy. These tools can include project management software, spreadsheet programs, and...

Planning for Contracting Pmbok Section

Now that the project manager has made a decision on what needs to be procured, it's time to plan for the actual contracting. Plan contracting, as the PMBOK puts it, is the process of soliciting the vendors to respond to the requests to purchase goods or services. Yes, I said, solicit. Gasp You won't find the word solicit in the third edition of the PMBOK because that word could have a naughty meaning. Come on, we're all adults. We're just talking about buying goods and services just not that...

Completing a Decision Tree

As the project manager of the new GFB Project, you have to decide whether to create a new Web application in-house or send the project out to a developer. The developer you would use (if you were to outsource the work) quotes the project cost at 175,000. Based on previous work with this company, you are 85 percent certain they will finish the work on time. Your in-house development team quotes the cost of the work as 165,000. Again, based on previous experience with your in-house developers,...

Dealing with Team Disagreements

In most projects, there will be instances when the project team, management, and other stakeholders disagree on the progress, decisions, and proposed solutions within the project. It's essential for the project manager to keep calm, lead, and direct the parties to a sensible solution that's best for the project. Here are seven reasons for conflict, in order of most common to least common Administrative policies and procedures Chapter 9 Managing Project Human Resources

Questions On Jkn Project

You are the project manager of the JKN Project. The project customer has requested that you inflate your cost estimates by 25 percent. He reports that his management always reduces the cost of the estimates, so this is the only method to get the monies needed to complete the project. Which of the following is the best response to this situation A. Do as the customer asked to ensure that the project requirements can be met by adding the increase as a contingency reserve. B. Do as the customer...

Chapter Summary

Congrats In this chapter, we talked about the requirements of what it takes to be a project management professional and what it takes to be a certified associate in project management. Which one are you geared for Depending on which certification you're going to achieve, you'll create a strategy on how you'll use this book, your time, and the PM-BOK to pass the examination. The PMBOK describes the 44 management processes and how these processes map to the nine...

Relying on Data Precision

Here's the truth about qualitative risk analysis It's easy, fast, cheap, and not very reliable. One of the toughest parts of qualitative risk analysis is the biased, subjective nature of the process. A project manager and the project team must question the reliability and reality of the data that leads to the ranking of the risks. For example, Susan may have great confidence in herself when it comes to working with new, unproven technologies. Based on this opinion, she petitions the probability...

Key Terms

Balanced matrix structure An organization where organizational resources are pooled into one project team, but the functional managers and the project managers share the project power. Composite structure An organization that creates a blend of the functional, matrix, and projectized structures. Customer user The person(s) who will use the project's deliverables. Deliverable A verifiable, measurable product or service created by a phase and or a project. Functional structure An organization is...

Improvised Scope Composition

Which project management plan guides the creation of the detailed project scope statement D. Project scope management plan 2. Which one of the following is not needed to define the project scope B. Organizational process assets D. Preliminary project scope statement 3. You are the project manager of the BHY Project. Your project customer has demanded that the project be completed by December 1. December 1 is an example of which one of the following 4. The lowest-level item in a WBS is called...

Using Rolling Wave Planning

Have you ever done the wave at a football game You can see the wave moving towards you from across the stadium, and then you're in it, and then it surges past. Rolling wave in project management planning is iterations of planning the work and then doing the project work. Progressive elaboration, which you use to create the WBS and the WBS dictionary, is an example of rolling wave planning. Rolling wave planning considers the big picture of what the project scope will create, but focuses on the...

Choosing the Seller

For the performing organization to finalize the process of selecting a vendor, there must first be eligible sellers. Assuming there is more than one seller that can satisfy the demands of the project, there are seven tools and techniques the project manager can rely on Weighting system A weighting system takes out the personal preferences of the decision-maker in the organization to ensure that the best seller is awarded the contract. A weighting system creates a matrix, as seen in Figure 12-4....

Completing Administrative Closure

This is the guts of the closing process group. First, administrative closure documents everyone who is involved in the project closure team members, vendors, management, the sponsor, and often the project customer. Part of this documentation defines each person's role and related responsibility to close out the project. Consider a large construction project. There are lots of people involved in the formal closing proceedings, so documentation explaining who'll be needed, what they'll be doing,...

C

Calendar updates (resource calendar), 173 Calendars, two types of, 172 Cancellation, completeness of the work before, 148 CAPM (Certified Associate in Project Management), 3 code of ethics, 419 moving on to PMP, 8 CAPM exam, 7-9 preparing for, 405 qualifying for, 7 testing tips, 406-407 tips for passing, 405-407 what you must know, 407-415 CAPM exam application, 7-8 CAPM exam objectives, 9 Case study (Litke Greenhouse and Nursery), 369-372 architectural design procurement, 370 bidder conference...

Examining How the Processes Interact Pmbok Section

The five project management process groups are not unlike the Rubik's Cube toy what you do in one area affects all the other areas. In project management, the interactions between the processes are somewhat chronological but often, the processes are iterative, transient, and allow the project management team to shift from process group to process group. The process groups allow for plenty of overlap throughout the whole project. For example, the extent of the monitoring and controlling...

Planning for Project Scope Changes

When a change is presented, part of considering the change involves additional planning. The project manager and the project team must reconvene to examine the change and how it may affect the project work and the knowledge areas discussed earlier. Changes are sometimes unapproved, such as when a project team member takes the initiative for a change and does not follow the change control procedures. In these instances, the project management team must consider the change and examine the...

Relying on Risk Identification Methods

There are five methods the Project Management Body of Knowledge (PMBOK) dives into when it comes gathering project information regarding risks. You'll likely see these on your exam Brainstorming Good old-fashioned brainstorming is the most common approach to risk identification. It's usually completed as a project team with subject matter experts to identify the risks within the project. The risks are identified in broad terms and posted, and then the risks' characteristics are detailed. Your...

Referencing the Project Management Plan

The project management plan has many things to consider when it comes to staffing the project. Let's take a quick peek at each subsidiary plan, elements within the project management plan, and how they may affect what resources the project manager will require on the project team. Here are the elements of the project management plan Project scope management plan Defines how the project scope will be planned, managed, and controlled. This plan is considered, because the project team will be...

Defining a Project Management System

A project management system is a collection of tools, resources, a project management methodology, and defined procedures a project manager uses to complete a project. Project management is typically defined for the organization, and the collection of tools and resources is considered the project management system it's the approach to managing projects within an organization. Your project management plan defines how your project will work with and utilize the project management system on which...

PMP Exam Readiness Checklist

Conduct Project Selection Methods Define Scope Document Project Risks, Assumptions, and Constraints Identify and Perform Stakeholder Analysis Define and Record Requirements, Constraints, and Assumptions Identify the Project Team and Define Roles and Responsibilities Exam Domain and Exam Percentage Chapter Planning the Project 23 (continued) Exam Domain and Exam Percentage Chapter Planning the Project 23 (continued) Identify Risks and Define Risk Strategies Execute Tasks Defined in the Project...

Developing the Project Management Plan Pmbok Section

You wouldn't go about building a house, creating a new piece of software, or launching any project without a project plan, right The project management plan, however, is more than how the work will be done it's how the project will be done. That's right, the project management plan defines how the project is executed, monitored and controlled, and then closed. It's a plan on how to manage, coordinate, and integrate all the different knowledge areas and processes within a project. It's...

Loving the Project Management Processes Pmbok Section

Before we get too deep into this chapter, learn this You do not have to do every single project management process on every single project. The project manager and the project team must determine which project management processes are most appropriate for each project. Once the needed processes have been identified, the project manager and project team must also determine to what extent the processes are needed. The processes are tailored to their project. As a heuristic, larger projects...

Being a Project Expert Pmbok Section

You can take a project management class and not be an expert in project management. You can even be a PMP or a CAPM and not be a good project manager. Sorry, but it's true. To be an expert in project management, you need to rely on more than just the tools and techniques and other mechanics of project management. You'll need five things The Project Management Body of Knowledge Expertise in your application area and an understanding of the relevant standards and regulations An understanding of...

CAPM Exam Readiness Checklist

The Project Management Framework 4 I The Project Life Cycle and Organization 4 The Project Management Processes for a Project Project Integration Management II Project Human Resources Management 7 Project Communications Management 7 Project Procurement Management 7 B, 7, II, I2 Project Procurement Management 7 B, 7, II, I2

What Is Project Management Pmbok Section

You know what projects are, so what's project management I can hear you sighing and saying, It's just the management of a project. And I'd concur, but your exam will likely need a bit more information than that. The PMBOK defines project management as the application of knowledge, skills, tools, and techniques to meet project requirements. Managing a project centers on four things Identifying your project's requirements Establishing clearly defined project objectives Managing project...

What Is a Project Pmbok Section

You're a project manager, so you've probably got a good idea of what a project is already. I'm hoping. The PMBOK defines a project as a temporary endeavor to create a unique product, service, or result. Projects, like good stories, have a definite beginning and a definite end. A project is over when the product, service, or result is created. Or, in not so pleasant times, when it becomes evident that the project won't be able to create the product, service, or result for whatever reason skills,...