PMI Project Management Principles

PMI Project Management Principles

A Point of Reference(based on the 5th Edition PMBOK®

Guide)

By Tom Tiede

2

Agenda

• What is PMI and the PMP?• Why PMI Project Management Principles are

Useful to Know• A Few Basic PMI Definitions• Five Process Groups

o Initiatingo Planningo Executingo Monitoring and Controllingo Closing

• Ten Knowledge Areaso Integrationo Scopeo Timeo Costo Qualityo Human Resourceso Communicationo Risko Procuremento Stakeholders

• Project Management Terms, such as:o Triple Constrainto Project Chartero Project Management Plano Work Breakdown Structure (WBS)o Predecessor Relationshipso Earned Value Managemento Gold Platingo Responsibilities Assignment Matrixo Forming, Storming, Norming, Performing,

Adjourningo Communication Noiseo Risk Probability and Impact Matrixo Contract Typeo Stakeholder Power vs. Interest Grid

• Code of Ethics and Professional Conducto Honoro Responsibilityo Respecto Fairnesso Honesty

This material will cover the following project management topics:

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The Project Management Institute (PMI) is the world’s largest membership association for the advocacy of Project and Program management.

What is PMI and the PMP?

• Over 400,000 current members across 180 countries

• Over 600,000 PMI certification holders

• Their most widely recognized certification is the PMP (Project Management Professional). The PMP credential recognizes your:o Experience,

o Education, and

o Competency to lead and manage projects

• Earning the PMP credential requires:o A bachelor’s degree and 4,500 hours of documented project management experience, or a

secondary degree and 7,500 hours of documented project management experience

o 35 hours of certified project management training

o Passing the certification exam

• Regardless of your inclination to pursue PMP certification, PMI project management principles apply to your role as a project leader or stakeholder

The purpose of this material is to share a few PMI project management principles that apply to your role as a project

leader or stakeholder

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Leveraging prescribed PMI project management principles reduces the risk and impact of costly project omissions, changes, and errors.

Why Is This Useful to Know?

ProjectInitiation

ProjectPlanning

ProjectExecution

ProjectClosure

Cost of Resolving Project Omissions, Changes, or Errors

(Illustrative)

The PMI approach places great emphasis on project initiation and planning when requirements are clearly defined and agreed upon and the full scope of the project

is planned

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Let’s Start with a Few PMI Definitions

• PMBOK ® - the Project Management Book of Knowledge from which PMI defines terms, standards, and good practices

• Portfolio – Projects, programs, and operations managed as a group to achieve strategic objectives

• Program - A group of projects and program activities managed in a coordinated way

• Project – a temporary endeavor undertaken to create a unique product, service, or result

• Project Management – the application of knowledge, skills, tools, and techniques to project management activities to meet project requirements

• Project Manager – the person authorized by the performing organization to direct the team accountable for realizing project objectives

• Project Stakeholder – includes all project team members and anyone impacted by or impacting the project

• Triple Constraint – the foundation of project management is balancing scope, time, and cost. Quality is at the center of the triple constraint

Portfolio

Programs

Projects

A few basic definitions:

Quality

Time Cost

Scope

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Initiating Planning Executing

Monitoring &

Controlling

Closing

A process group is a logical grouping of activities, inputs, tools, techniques, and outputs required for any type of project.

Project Management Process Groups

Define a new project or new phase,

identify stakeholders, and

obtain authorization

“Authorize the Work”

Develop an integrated project management plan to attain project

objectives

“Plan the Work”

Complete the work and satisfy project

objectives

“Work the Plan”

Track and review project progress and

performance; manage variance

and change

“Control the Plan”

Finalize all activities and formally close

the project or phase

“End the Work”

• Project Charter• Stakeholder

Register

• Project Mgt. Plans & Related Documents- Scope- Requirements- Schedule- Cost- Quality- Human Resources- Communication- Risk- Procurement- Change- Stakeholders

• Project Deliverables

• Work Performance Data

• Team Performance Assessments

• Project Communications (e.g. status reports)

• Selected Suppliers & Agreements

• Change Requests• Issue Log

• Change Logs• Approved Change

Requests• Work Performance

Information• Schedule Forecasts• Cost Forecasts• Updates to Project

Plan• Quality Control

Measurements• Verified

Deliverable• Accepted

Deliverables

• Final Product, Service, or Result (i.e. purpose of project)

• Closed Procurement (e.g. formal signature of acceptance)

Act

ivit

ies

Key

Ou

tputs

Pro

cess

G

roups

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The five process groups overlap and follow a basic cycle of “plan, do, check, act” until project closure.

Applying Project Management Process Groups

Process Group Overlap

Time

Initiating

Planning

Executing

Monitoring & ControllingClosing

Initiating

Planning ExecutingMonitoring

& Controlling

Change?

Complete?

Closing

Yes Yes

No

No

“Plan, Do, Check, Act”

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A project manager is responsible for applying and managing the following ten knowledge areas:

Knowledge Areas

Identify, define, combine, unify and coordinate activities within the Project Management Process GroupsIntegration

Ensure the project includes all work required to complete the project successfullyScope

Manage the timely completion of the projectTime

Manage the planning, estimating, budgeting, financing, funding, monitoring, and controlling of cost to enable the project to be completed within the approved budgetCost

Determine quality policies , objectives, and responsibilities so that the project will satisfy the needs for which it was undertaken Quality

Organize, manage, and lead the project team, including the identification of roles, responsibilities, required skills, and reporting relationships

Human Resources

Ensure timely and appropriate planning, collection, creation, distribution, storage, retrieval, management, control, monitoring and disposition of project informationCommunicationIdentify and assess risks, plan responses, and control risk to increase the likelihood and impact of positive events and decrease the likelihood and impact of negative events on the project

Risk

Purchase or acquire and control products, services, or results needed from outside the project teamProcurementIdentify people, groups, or organizations that could impact or be impacted by the project; analyze expectations, and develop strategies to engage stakeholders in decisions and activities

Stakeholders

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Activity within each knowledge area is applied based on the appropriate process group.

Knowledge Areas & Process Groups

Process Groups

Knowledge Areas(Below)

Initiating Planning ExecutingMonitoring & Controlling Closing

Integration Applicable Applicable Applicable Applicable Applicable

Scope Applicable Applicable

Time Applicable Applicable

Cost Applicable Applicable

Quality Applicable Applicable Applicable

Human Resources Applicable Applicable

Communication Applicable Applicable Applicable

Risk Applicable Applicable

Procurement Applicable Applicable Applicable Applicable

Stakeholders Applicable Applicable Applicable Applicable

Each shaded intersection has defined activities, inputs, tools & techniques, and outputs

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Change Requests

DevelopProject Charter

DevelopProject Mgt. Plan

Direct & ManageProject Work

Monitor & ControlProject Work

PerformIntegrated Change

Control

UpdatesReports

Change Requests

CloseProject or Phase

UpdatesChange Log

Approved ChangeRequests

Final ProductService, or Results

Project SOWBusiness CaseAgreements

ApprovedChange Requests

Project Mgt. Plan

Project Charter

Project ManagementPlan Updates

Project Documents, Deliverables, &

Work Performance Data

1. Integration Management - Process Activities

Integration management connects all of the knowledge areas together from beginning (project initiation) to end (project closure).

Develop a document that formally authorizes the project

Define, prepare, coordinate and

integrate all subsidiary plans

into a comprehensive

plan

Lead and perform the work to accomplish project objectives

Track, review, and report progress to meet performance

objectives

Review all change requests, approve changes, and manage

changes to deliverables and the project management plan

Finalize all activities across all Process Groups to formally

complete the project or phase

Key:InitiatingPlanningExecutingMonitoring & ControllingClosing

Note, additional inputs, outputs, tools and techniques not depicted may apply

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• A typical charter will identify:o Business need or justificationo Scope (high level)o Objectives (such as the intended product, service, or result)o Requirements (high level)o Risks (high level)o Assumptions and constraintso Stakeholders (primary)o Timing (anticipated)o Costs (anticipated)

• The charter must be signed by someone who can invest authority for the project (typically senior management or a sponsor)

A project charter formally authorizes the project and the project manager to apply resources to project activities. Per PMI, without a charter, there is no project.

Project Charter

Project Charter

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The project management plan is the collection of all plans and related documents pertaining to planning, executing, monitoring, controlling, and closing the project.

Project Management Plan

ProjectManagement

Plan

Procurement

Change

Scope

Cost

Process Improvement

RiskStakeholders

Configuration

Schedule

Quality

Communication

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Accepted Deliverables

PlanScope Management

Collect Requirements

DefineScope

CreateWBS

ValidateScope

ControlScope

Scope Baseline(Scope Baseline, WBS,

WBS Dictionary)

Project Documents

Updates

WorkshopsInterviews

BenchmarkingContext

Diagrams

Decomposition of Work

Change Requests

Inspection

Project ScopeStatement

Reqs DocumentationReqs Traceability

Matrix

Scope Mgt;. PlanReqs Mgt. Plan

Change Requests

Project Charter

This area includes collecting requirements, defining scope, creating the work breakdown structure (WBS), and validating and controlling scope.

2. Scope Management - Process Activities

Project Scope is the work performed to deliver a product, service, or result that satisfies specified features and

functions

Determine, document, and

manage stakeholder needs and

requirements to meet

objectives

Create a plan that documents how the project scope will be

defined, validated, and controlled

Develop a detailed

description of the

project and product

Subdivide project deliverables into

smaller, more manageable components

Gain formal acceptance of

completed project deliverables

Monitor status of

the project scope and manage

changes to the scope baseline



Scope

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The WBS is the decomposition of the work to be performed. The output is called the Scope Baseline.

Work Breakdown Structure (WBS)

Scope Baseline:

• Scope Statement – description of project scope, major deliverables, assumptions, and constraints

• WBS – hierarchical decomposition of the total scope of work

• WBS Dictionary – provides details regarding the deliverables, activities, and scheduling information of each component of the WBS

Project Title

Deliverable 1

Work Packages

Deliverable 2

Work Packages

Control Account

Planning Packages

Work Packages

Illustrative WBS

Used when insufficient detail

is available at the work

package level

Break down the work into the

smallest level for which cost and

time can be assessed and administered

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PlanSchedule

Management

DefineActivities

SequenceActivities

EstimateActivity Resources

EstimateActivity Durations

DevelopSchedule

ControlSchedule

Schedule BaselineProject ScheduleProject Calendars

Exp. JudgmentDecompositionRolling Wave

Planning

PDMDependencies

Leads/Lags

Exp. JudgmentBottom Up

PMIS

Exp. JudgmentAnalogousParametric

3 PointReserve Anal.

Critical PathCompression

Resource Optimization

PMIS

Project ScheduleNetwork Diagrams

Activity ResourceRequirements

RBS

Activity DurationEstimates

Schedule Mgt. Plan

Activity ListMilestone List

Schedule Forecasts

Project Charter

Scope Baseline

Time management includes all activity related to developing and managing the project schedule.

3. Time Management – Process Activities

Establish the policies, procedures, and

documentation for planning, developing, managing, executing,

and controlling the project schedule

Define and document specific actions to be performed to

produce project deliverables

Identify and document relationships among project

activities

Estimate the type and quantities of material, human resources, or

suppliers required to perform each activity

Estimate the number of work periods needed to complete

individual activities with estimated resources

Analyze activity sequences, durations, resource requirements, and schedule constraints to create

the project schedule

Monitor the status of project

activities to update project progress and

manage changes to

the schedule baseline to achieve the

plan



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Below are a few of many terms project managers should know when developing and managing a project schedule.

Time (Schedule) Management Terms

PMI Terms Descriptions

3-Pt. Estimating Based on estimated Pessimistic (P), Optimistic (O), and Most Likely (M) durations

Analogous Estimating High level, top down estimate based on similar projects (usually by a SME - subject matter expert)

Bottom-Up Estimating Estimate at the lowest level of the WBS (level 3) and then roll up for the total project estimate

Parametric Estimating Based on an existing, comparable parameter (e.g. $/ft. in the same neighborhood)

Reserve AnalysisContingency (buffer based on known risk) & include in project budget or Managerial (buffer based on unknown risks)

Rolling Wave PlanningAn iterative technique used when future details aren't known; near term is planned in detail; future is higher level

Predecessor Relationships

Finish to Start (FS) Finish to Finish (FF) Start to Start (SS) Start to Finish (SF)

Default relationship; B cannot start until A is finished

B cannot finish until A is finished

B cannot start until A starts

Rare, A starts before B finishes (e.g. when replacing an old system B with a new system A)

Free Slack The latest an activity can start without delaying next activitiesTotal Slack The latest an activity can start without delaying project finish date Float Often referred to as the same as SlackLag Lag (a delay) = the successor must wait due to some delay after the predecessor is completeLead Lead (an accelerant) = the successor can begin before the predecessor is completeSchedule Compression Crashing or fast tracking the schedule to adjust the schedule to align with the plan

Fast Tracking Compression technique based on overlapping sequential activities (risky)Resource Leveling Adjusting peaks and valleys to create a level usage of resources

Resource SmoothingAdjusting peaks and valleys to create a level usage of resources AND also accounts for individual resource limitations

A BA

B

A

B

A

B

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PlanCost Management

EstimateCosts

DetermineBudget

ControlCosts

Cost BaselineProject FundingRequirements

Work Performance InfoCost Forecasts

Change RequestsUpdates

AnalogousParametricBottom Up

3 PointReserve

Exp. JudgmentAggregation

Reserve Analysis

Funding LImits

Earned ValueTCPI

ForecastingPMIS

Reserve Anal.

Cost Mgt. Plan

Activity Cost EstimatesBasis of Estimates

IRRNPVROI

Opportunity $Payback

This area includes defining how project costs will be managed, estimating activity costs, determining the budget, and controlling costs.

4. Cost Management – Process Activities

Establish the policies,

procedures, and

documentation for planning, managing,

expending, and controlling

project costs

Develop an approximation of the monetary resources needed to complete

project activities

Aggregate estimated costs of individual activities or work

packages to establish an authorized cost baseline

Monitor the status of the project to update project

costs and manage changes to the cost

baseline



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EVM is a means of measuring project cost and schedule vs. the plan.

Earned Value Management (EVM)

Time

Dollars

Cost Baseline (“S” Curve)Approved Time-Phased Budget

BACBudget at Completion (BAC) = total project budget

ETC

Estimate to Complete (ETC) = cost to complete the project based on current spending efficiency

EAC

Estimate at Completion (EAC) = current projected final cost based on current spending efficiency

Variance at Completion (VAC)

Cost Variance(CV)

Cost Performance (CPI) = EV/ACSchedule Variance

(SV)

Schedule Performance (SPI) = EV/PV

Planned Value (PV) = budgeted cost for work scheduled

Actual Cost (AC) at point in time

AC

PV

Point in Time

Earned Value (EV) = budgeted cost for work actually completed

EV

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PlanQuality

Management

PerformQuality Assurance

ControlQuality

Cost/BenefitCost of Quality7 Basic Tools

BenchmarkingSampling

Quality Mgt. PlanProcess Improvement

PlanQuality Metrics

Quality Checklists

Quality AuditsControls Charts

Process Analysis

UpdatesVerified Deliverables

QC MeasuresValidated Changes

Measurements

Quality management includes identifying quality requirements and standards, auditing requirements and control measurements, assessing quality performance, and recommending changes, when needed.

5. Quality Management – Process Activities

Identify quality requirements and/or

standards for the project and its deliverables, and

document how the project will demonstrate

compliance

Audit the quality requirements and the results

from quality control measurements to ensure

appropriate standards and operational definitions are

used Monitor and record results of quality activities to assess

performance and recommend necessary changes


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Quality Management Philosophies and Principles

Quality Philosophies:• Total Quality Management (Deming) –

proactive approach with statistical analysis

• Zero Defects (Crosby) – Do it right the first time

• Fitness for Use (Juran) – Satisfy customer needs

• Continuous Improvement (Kaizen) – proactive approach to process improvement

• Gold Plating – unacceptable practice of providing more than requested

• Cost of Quality – cost of conforming is less than cost of non-conforming

• Design of Experiments – isolate factors that influence results

• 6 Sigma – strive for 99.9997% error free

• ISO 9000 – document what you do; do what you document

Quality Principles:• Define and satisfy customer

needs

• Prevent rather than inspect

• Be proactive rather reactive

• Validate project processes

• Measure against approved standards

• Continually improve

• Take accountability

PMI quality management principles are based on a few popular philosophies.

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Project managers should be familiar with common quality management tools and terms.

Quality Management Tools and Terms

Tools Description

1. Cause and Effect Diagrams Fishbone (Ishikawa) diagram

2. Flowcharts Basic flow chart or GERT diagram with feedback loop3. Checksheets Check list (e.g. pre-flight list to ensure you are "cockpit ready" before taking flight)4. Pareto Diagrams Cumulative histogram (e.g. 80/20 rule)5. Histograms Depiction of volume or frequency of occurrences of several events6. Control Charts Depiction of process output over time with UCL & LCL at 3 sigma from mean7. Scatter Diagrams Depicts pattern of results across two variables

Terms DescriptionBenchmarking Comparing actual or planned processes to comparable projects to identify best practicesDesign of Experiments Variable based analysis (freeze all variables but one and assess outcome)Statistical Sampling Using a % of the population and extrapolating the results within an acceptable confidence level

Quality AuditsIdentify best practices; identify gaps; share best practices; offer assistance to improve; highlight lessons learned

Process Analysis Assess process, identify root causes, alleviate root causesInspection Examination of work product and comparison to documented standards (e.g. reviews, audits)85/15 Rule 85% of quality relates to mgt.; 15% is worker related80/20 Rule 80% of problems come from 20% of the issuesRule of 7 Must have 7 consecutive data points above or below mean to consider process "out of control"Mean Time Before Failure MTBF, example quality metricMean Time to Repair MTTR, example quality metric

Grade vs. QualityNot the same; you can have a lower grade product with high quality and vice versa (e.g. automobile models)

Upper Control Limit UCL = 3 sigma above mean (average)Lower Control Limit LCL = 3 sigma below mean (average)Upper Specification Limit USL is customer established and can be above or below UCLLower Specification Limit USL is customer established and can be above or below LCL

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PlanHR Management

AcquireProject Team

DevelopProject Team

ManageProject Team

Change RequestsUpdates

Org ChartsJob Descriptions

Org. Theory

Pre-AssignmentAcquisitionNegotiation

TrainingTeam BuildingGround RulesRecognition

Rewards

HR Mgt. Plan

Project StaffAssignments

Resource Calendars

Team PerformanceAssessments

ObservationsConversationsConflict Mgt.Performance

Appraisals

Human resource management consists of planning, acquiring, developing, and managing the project team.

6. Human Resource Management - Process Activities

Define roles, responsibilities, required skills, and reporting relationships

Confirm availability and

obtain the necessary team

Improve competencies, team interaction, the team

environment, and enhance project

team performance

Track team member performance, provide

feedback, resolve issues, and manage

changes to the team to optimize team performance



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Responsibility assignment matrix (RAM) charts such as a “RACI” let each team member know who is responsible for each activity and deliverable.

Roles and Responsibilities

• (R) Responsible - those who do the work

• (A) Accountable - The one who:o Is ultimately answerable for the completion of the deliverable

o Delegates the work to those responsible

o Approves the work that the responsible person provides

• (C) Consulted – those whose opinions are sought (typically subject matter experts); typically this is a two way communication

• (I) Informed – those who are kept up-to-date on progress; typically this is a one way communication

RACI Person

Activity Ann Ben Carlos Denny

Develop Schedule A R I I

Collect Requirements

I A R C

Develop Test Plan I A R C

Develop Training Plan

A C I R

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Project Life Cycle - Team Building & Leadership Styles

Team Building Stages

• Forming – creating the team

• Storming – team chaos as people start working with one another

• Norming – team behavior starts to normalize

• Performing – team performs as a unit

• Adjourning – team completes work and disbands

Situational Leadership Styles

• Directing – provide specific, clear instructions and closely supervise

• Coaching – solicit input, offer rationale and examples

• Facilitating –maintain team progress; delegate day-to-day control

• Supporting – support and motivate the team to complete objectives

Project managers should be aware of typical team building dynamics and situational leadership styles across a project life cycle.

Time

Team Building: Forming Storming Norming Performing Adjourning

Directing Coaching Facilitating SupportingLeadership Style:

Project Life CycleInitiating Closing

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Conflict Management

• Scheduling Priorities

• Scarce Resources

• Personal Work Styles

• Methodology/Details

• Cost/Budget

• Personalities

Recommended:

1. Collaborate/Problem Solve

2. Compromise/Reconcile

3. Force/Direct

Not Recommended:

4. Smooth/Accommodate

5. Withdraw/Avoid

Conflict is inevitable. A project manager should be aware of typical sources of project conflict and recommended techniques to resolve them.

Higher

Lower

Probability of

Conflict

Sources of Conflict Conflict Resolution Techniques

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PlanCommunication

Management

ManageCommunications

CommunciationMgt. Plan

ControlCommunications

Project Communications

Req. AnalysisTechnology

ModelsMethodsMeetings

ModelsMethodSystems

Reporting

Exp. JudgmentSystems

Meetings

Work PerformanceInformation

Change Requests

Roughly 90% of a project manager’s job is communication.

7. Communication Management - Process Activities

Develop a communication

approach based on

stakeholder’s informational

needs

Create, collect, distribute, store,

and retrieve information

Monitor and control

communication throughout the

entire project life cycle



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Communication Paths

N

N N

N

• # of Communication Paths

equals [N x (N-1)]/2• N equals # of

Stakeholders• Example: [4 x (4-1)]/2

= 6

Communication Methods• Interactive – between two people

• Push – send to specific recipients

• Pull – recipient actively seeks information

Communication Management

Communication Types• Active listening – receiver verifies correct

interpretation• Effective listening – receiver observes visual

and vocal cues• Feedback – sender receives feedback from

receiver• Nonverbal - ~55% of communication (e.g.

body and facial language)• Para-lingual – Voice characteristics

Project managers should be aware of the basics of effective communication across the broad stakeholder community.

Communication Model

Sender/Encode

Decode/ReceiverTransmi

t

AcknowledgementResponse

Noise

Noise

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PlanRisk Management

IdentifyRisks

PerformQualitative Analysis

PerformQuantitative

Analysis

PlanRisk Response

ControlRisks

Updates

Updates

Project Documents

Risk Register(Risks & Triggers)

Risk Mgt. Plan

Updates

Updates

8. Risk Management – Process Activities

Risks are possible events that could impact the project in a positive (an opportunity) or negative (a threat) way.

Define how to conduct risk management

activities

Determine and document the characteristics of risk

which may affect the project

Prioritize risks for further analysis or action by assessing their

probability of occurrence and impact

Analyze the effect of identified risks on

overall project objectives

Develop options and actions to

enhance opportunities and reduce threats to

project objectives

Implement risk response plans, track identified risks, monitor residual risks, identify new risks, and evaluate risk

process effectiveness



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Risk Probability and Impact Matrix

A probability and impact matrix can be used to evaluate the impact of a risk and the probability of its occurrence.

Low High

High

Moderate

Moderate

Probability of

Occurrence

Level of Impact

Higher Prio

rity

Need

for R

isk R

espon

se

Plan

Positive Risk Responses• Share – split the responsibility and

benefit to maximize the opportunity

• Exploit – take steps to ensure success

• Enhance – improve the size of the risk event and impact

• Accept – do nothing

Negative Risk Responses• Avoid – get rid of the potential

problem

• Transfer – re-assign to another party

• Mitigate – minimize the bad characteristics of the risk

• Accept – do nothing

Probability and Impact Matrix

The higher the combined probability and impact of the risk event the greater the need to develop a risk

response plan

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Project managers should be aware of risk management terms.

Risk Management

Risk Management Terms• Monte Carlo – simulation of possible outcomes

• Risk Breakdown Structure – breakdown by category (e.g. internal, external, technology, organizational, etc.)

• Risk Trigger – an indicator that an event “could” occur

• SWOT Analysis – strengths, weaknesses, opportunities, and threats

• Expected Monetary Value (EMV) – summation of probability x impact of alternative decisions (…not to be confused with EVM – earned value management)

• Contingency Reserves – for known risks (include in budget and schedule)

• Management Reserves – for unknown risks (excluded from baselines for budget and schedule)

• Residual Risk – risk remaining after risk response

• Secondary Risk – potential risk as a result of risk response

• Workaround – “wing it” response when other risk response plans don’t work

• Types of Risk Toleranceo Averse – Avoids risk

o Seeker – Seeks risk

o Neutral – Middle ground

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Procurement Mgt. Plan

PlanProcurement Mgt.

ConductProcurements

ControlProcurements

CloseProcurements

Work Performance InfoUpdates

Change Requests

Procurement Mgt. PlanSOWRFPs

Selection CriteriaMake Buy Decision

Selected SuppliersAgreements

Resource Calendars

Exp. JudgmentMake Buy Analysis

Exp. JudgmentBidder Conf.

Ind. EstimatesAdvertising

Seller Proposals

Inspect/AuditsReporting

A/P SystemsClaims Admin.Records Mgt.

AuditsNegotiationsRecord Mgt.

Closed ProcurementsOPA Udpates

Procurement management includes planning, selecting, contracting, controlling, and closing outsourced products and services.

9. Procurement Management – Process Activities

Document project

procurement decisions, specify the

approach, and identify

potential sellers

Obtain seller response, select a seller, and award a

contract

Manage procurement relationship, monitor

contract performance, and make changes and

corrections as appropriate

Complete each project

procurement, including finalizing

open claims, updating records to reflect final results,

and archiving information



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Project managers should be aware of the benefits and risks of different contract types from a buyer’s perspective and a seller’s perspective.

Contract Types

Buyer’s Risk

Seller’s Risk

Low High

High Low

• (FFP) Firm Fixed Price – allows buyer to budget fixed price; requires seller to detail scope and accurately estimate price; very common

• (FFIF) Fixed Price Incentive Fee – includes incentive to motivate seller to produce at greater speed

• (FF EPA) Fixed Price Economic Price Adjustment – compensates for year to year economic changes

• (T&M) Time and Materials – typically used for smaller initiatives

• (PO) Purchase Order – typically used for commodity items

• (CPFF) Cost Plus Fixed Fee – typically variable costs are cost-plus and predictable costs are fixed fee

• (CPIF) Cost Plus Incentive Fee – actual costs plus incentive to motivate seller to produce at greater speed

• (CPAF) Cost Plus Award Fee – actual costs plus award based on customer satisfaction with agreed criteria

• (CPPC) Cost Plus Percent of Cost – actual cost plus % of actual; the higher the cost, the higher the fees

FFP FPIF FP EPA T&M PO CPFF CPIF CPAF CPPC

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Project managers should be familiar with additional procurement terms in the table below:

Procurement Terms

Terms Description

Make or Buy Analysis Is it more practical to insource or outsource (based on a cost comparison between the two)?

Bidder ConferencePrior to bid submission, offers opportunities for prospective sellers to obtain requirements clarification from buyer

Independent Estimates Used to validate proposal information

Contract (CCOLA) Must have 5 Components: Capacity, Consideration, Offer, Legal Purpose, Acceptance

Point of Total Assumption Point at which seller is responsible for all cost overruns; PTA = (Ceiling Price - Target Price)/Buyer Share + Target Cost

Ceiling Price % of Target Cost (e.g. Ceiling = 140% of target cost)

Target Cost Expected cost of work in the contract

Target Price Equals Target Cost + Target Profit

Share Ratio Ratio of split between buyer and seller of cost savings or overruns (e.g. 70/30)

RFP Request for Proposal, typically used for higher priced, customized services or products

RFQ Request for Quote, typically used for small dollar commodity type products

IFB Invitation to Bid, used for government sealed bids (similar to RFP)

Design Scope of Work (SOW) Buyer provides exact details; generally results in fixed price contractFunctional Scope of Work (SOW) Buyer provides functionality needed; generally results in cost plus contract

Sole Source Go direct to a supplier without any available competition (e.g. supplier holds the patent)

Single Source Go direct to a supplier although competitors are available (e.g. "preferred supplier")

Negotiation PMI prefers "win/win" negotiation approach

Standard Terms & Conditions Typical common (non-negotiable) contract items with a tight range or parameters

Special Provisions Typically added to account for changes to standard terms and conditions

Claims Administration Means of administering contested changes or disagreements regarding compensation

ADRAlternative dispute resolution (e.g. arbitration) used when claims cannot be negotiated between buyer and seller

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Identify Stakeholders

PlanStakeholder

Management

ManageStakeholderEngagement

Stakeholder Register

Stakeholder Mgt. Plan

ControlStakeholder Engagement

Issue LogChange Requests

Updates

Work Performance InfoChange Requests

Updates

Exp. JudgmentStakeholder

Analysis (Power/Interest)

Interpersonal Skills

Management Skills

Stakeholder Engagement Matrix (Unaware, Neutral,

Resistance, Leading)

It is critical to project success to identify stakeholders, address their requirements, meet their expectations, and foster their engagement.

10. Stakeholder Management – Process Activities

Identify the people, groups, or organizations that

could impact or be impacted by

the decision, activity, or

outcome of the project.

Develop appropriate management strategies to

effectively engage stakeholders throughout the project life cycle

based on their needs and potential impact on project

successCommunicate and work with stakeholders to meet their needs and expectations, address issues as they occur, and foster appropriate

stakeholder engagement throughout the project life cycle

Monitor overall project

stakeholder relationships and adjust strategies

and plans for engaging

stakeholders



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Keep Satisfied Manage Closely

Monitor Keep Informed

All stakeholders are different and, therefore, need to be managed differently based on their relative authority (power) and level of concern (interest).

Stakeholder Power vs. Interest Grid

Low High

High

Moderate

Moderate

Power

Interest

StakeholderPower vs. Interest Grid

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All PMI members must agree to adhere to a high personal standard of ethical and professional behavior.

PMI Code of Ethics and Professional Conduct

Tenets of Code:1. Honor

o Do what is right and honorableo Set high standards for yourself and aspire to meet those standards is all aspects of life

2. Responsibility – Take ownership of:o The decisions you make or fail to makeo The actions you take or fail to takeo The consequences that result

3. Respecto Show high regard for yourself, others, and the resources (e.g. people, money, reputation,

safety) entrusted to youo Engender trust confidence, performance excellence, and mutual cooperation in an environment

of diverse perspectives and views

4. Fairnesso Make decisions and act impartially and objectivelyo Conduct yourself in a way free from competing self interest, prejudice, and favoritism

5. Honestyo Understand the trutho Act in a truthful manner both in your communication and in your conduct

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Summary

• What is PMI and the PMP?• Why PMI Project Management Principles are

Useful to Know• A Few Basic PMI Definitions• Five Process Groups

o Initiatingo Planningo Executingo Monitoring and Controllingo Closing

• Ten Knowledge Areaso Integrationo Scopeo Timeo Costo Qualityo Human Resourceso Communicationo Risko Procuremento Stakeholders

• Project Management Terms, such as:o Triple Constrainto Project Chartero Project Management Plano Work Breakdown Structure (WBS)o Predecessor Relationshipso Earned Value Managemento Gold Platingo Responsibilities Assignment Matrixo Forming, Storming, Norming, Performing,

Adjourningo Communication Noiseo Risk Probability and Impact Matrixo Contract Typeo Stakeholder Power vs. Interest Grid

• Code of Ethics and Professional Conducto Honoro Responsibilityo Respecto Fairnesso Honesty

This material covered the following project management topics:

Thank you for taking the time to review this material!

PMI Project Management Principles

Leadership & Management

Transcript of PMI Project Management Principles