Relying on Enterprise Environmental Factors

Every time I have to say or write "enterprise environmental factors," I cringe. It's just a fancypants way of saying how your organization runs shop. Within any organization, there are "factors" that affect the cost-estimating process. Surprise, surprise. There are two for your exam:

• Marketplace conditions When you have to buy materials and other resources, the marketplace dictates the price, what's available, and from whom will you purchase. We'll talk all about procurement in Chapter 12, but for now, there are three conditions that can affect the price of anything your project needs to purchase:

• Sole source There's only one vendor that can provide what your project needs to purchase. Examples include a specific consultant, specialized service, or unique type of material.

• Single source There are many vendors that can provide what your project needs to purchase, but you prefer to work with a specific vendor. They are your favorite.

• Oligopoly This is a market condition in which the market is so tight, the actions of one vendor affect the actions of all the others. Can you think of any? How about the airline industry, the oil industry, or even training centers and consultants?

• Commercial databases One of my first consulting gigs was for a large commercial printer. We used a database based on the type of materials the job was to be printed on, the number of inks and varnish we wanted to use, and the printing press we'd use to predict how much the job would cost. That's a commercial database. Another accessible example is any price list your vendors may provide so that you can estimate accurately.

EXAM TIP Here's a goofy way to remember all the market conditions for your PMI exam. For a sole source, think of James Brown, the Godfather of Soul. There's only one James Brown, just as there's only one vendor. For a single source, think of all the single people in the world and how you only want to date your sweetie instead of all the others. With a single source, you consider all the different available vendors, but you have your favorite. And for oligopoly? It looks like "oil" which we know is a classic example of an oligopoly market. Hey! I warned you these were goofy.

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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