The PMBOK ready reckoner
Select the right projects - Select the right projects to execute, which are in line with the organizations strategy. For this we use ratios like NPV (net present value), IRR (internal rate of return), BCR (benefit cost ratio), Payback period etc. This ensures that the right projects, which are in alignment to the organizational strategy and which will give the maximum benefits within a desired time frame only are selected for execution.
FV n = PV (1+r) ^ n where n - the number of years and r is the percentage of interest.
Opportunity cost - the opportunity given up, by selecting one project over the other
Continuous alignment to the organizational strategy - An organization’s business strategy is not static. It changes with the market conditions, hence is very dynamic in nature. When the organizational strategy itself changes, some of the projects can become redundant and at the same time it can open room for some new projects. The right selection of projects, coupled with continuous alignment to the organizations strategy is called as project portfolio management.
An organization’s project portfolio can include projects and programs
The key characterestics of a project are;
fixed start and end dates
performed by people
The key differentiator of projects and operations is that, projects are temporary in nature, resulting in unique outputs - where as operations are ongoing in nature .
Programs - are a collection of projects, which when exceuted together yields in some additional benefits, than when performed one after the other.
Sub projects - for ease of execution, large projects can be broken down into sub-projects
Project chartering - The process of selection and approval of the right projects for execution is called project chartering. This ensures that, only the approved projects are funded.
Project charter - Is a document approved by the project sponsor. It contains;
Vision statement of the project
Project sponsor name and his/her roles and responsibilities
Project manager’s name and his/her responsibilities
High level scope of the projects
Key risks, assumptions and dependencies
Project charter is the only document, where the project manager’s name and roles and responsibilities are documented and approved by the senior management representative (sponsor). Hence we say that the project charter gives authority to the project manager.
Any changes to the project charter needs to be approved by the project sponsor
Project charter and the high level scope statement forms the input for project planning phase from the project initiation phase.
Least authority for the project manager
Project manager plays the role of an expeditor
One plus point is that, the project team will have a home to go, at the end of the project
In a projectized organization, the project manager has maximum authority
All the project managers, report to the program manager
A matrix organization is a mix of projectized and functional organization
A matrix organization can take 3 forms. Strong matrix, weak matrix and balanced matrix
In a strong matrix, the project manager has more authority than the functional manager
In a balanced matrix, both the project manager and the functional manager, share an equal power.
In a weak matrix, the functional manager has more power than the project manager
The steps involved during planning phase include;
Elaboration of the high level scope into a detailed scope statement
Decomposition of the detailed scope into work packages, resulting in a work break down structure (WBS)
The general rule of thumb is that - work packages should be between 8 and 80 hours of work. We call it as a 8-80 rule
A work breakdown structure do not depict any work flow. It just shows the breakdown of work.
It is at the work package level, the estimates of cost, time and scope are frozen. Becuase of this fact, at the work package level the project manager stops control.
The work packages are further broken down into activities
Once the activities are identified, activity costs and durations are estimated. For activity cost and duration estimates, we use techniques such as analogous estimation, parametric estimation, three point estimates and wide band delphi. Wide band delphi is performed by experts.
Estimating using CPM - When estimating using a one time estimate (CPM), one estimate per task is received. For example, the person doing the estimating in effect says that the task will take exactly five days.
PERT - Program evaluation and rview technique
This method has three estimates per activity
Can be used to estimate time or cost
PERT formula (P+4xM+O)/6
Standard deviation of a task using PERT = (P-O)/6
Variance of a task using PERT = ((p-O)/6)^2
The next step is activity sequencing. For this we use AON (activity on node or PDM-precednce diagramming method), AOA (activity on arrow or ADM - arrow digramming method and GERT (flow charts)
The AON diagram can represent the following dependencies
finish to start
finish to finish
start to finish
finish to start
The AON is the most widely used in all software packages
The AOA diagram can implement only F-S dependency
Hammock - Hammock is used in AON diagrams, to represent those activities which cuts across the phases of the project. Example :- Project management activities span throughout the life cycle of the project. We represent project management as hammock.
Dummies - are used in AOA diagrams, to show the F-S start dependency (ease of diagramming). Dummies do not consume any resources and do not have any duration by itself. It is rpresented as a dotted line.
ES,EF - Early start and Early finish of an activity. In an activity on node (PDM), a forward pass is performed to calculate the early start and early finsh dates.
LS,LF - Late start and Late finish of an activity. In an AON or PDM, a backward pass is performed to compute the late start and the late finish
Float - is the amount of time an activity can be delayed, without affecting the project’s end date. float = LS-ES or LF-EF
Float and SLACK are same
When we connect all the activities, whose float is equal to zero, we get the critical path.
Critical path - is the longest path in the network or is the shortest time in which the project can be completed.
A critical path can run over a dummy.
A project can have multiple crical paths. That means, the project is more complex to handle.
Mandatory dependencies or Hard logic - are dependecies on which the project manager do not have any say. Example - The clearance to start construction of a building, The witing time for curing of concrete
Disceretionary dependencies or soft logic - are dependecies on which the the project manager has a say
Inorder to get realistic schedules, we apply mandatory dependencies, discretionary dependencies, leads, lags and buffers to the network diagram.
A project manager uses schedule to communicate the project details / progress with the team
A milestone chart is a rolled up schedule, which will show only the major milestones. A project manager uses a milestone chart to communicate the project status, with the senior management (stakeholders).
Fast tracking - The process of performing tasks in parallell
Crashing - The process of reducing the duration of a task by deploying more resources
The subsidiary plans include risk management plan, quality management plan, human resource plan, contract management plan etc.
Risk management process include
Risk management planning
Qualitative risk analysis
Quantitative risk analysis
Risk response planning
Risk monitoring and control
Risk planning involves;
Identification of the risks (risk register)
Positive risks and negative risks
Qualitative risk analysis (probability x impact)
Risk rating matrix
Quantitative risk analysis (decision tree, monte cralo analysis)
Expected monetary value (probability x consequences)
Risk response planning
Risk response strategies
Contingency planning - planning the specific actions that will be taken if a risk event occurs.
Residual risks - Some risks will remain after risk mitigation or risk response planning. These are candidates for periodic monitoring.
Secondary risks - New risks created by the risk response strategies selected
Fall back planning - Specific actions that will be taken if the contingency plan is not effective
Risk management planning is continuous in nature
Human resource planning involves forecsting of human resource requirements and devising strategies for getting the human resources on board as and when required.
Staffing management plan
Powers of the project manager
Conflict resulution techniques
Maslow’s heirarchy of needs
Stages of team formation
Plan purchases and acquisitions involve identifying and planning the what, when, how, from where of purchases
Quality is defined as conformance to requirements and fitness for use
Gold plating is providing customers extras (either as unwanted features or as unwanted quality)
Prevention is preferred over inspection
Marginal analysis - Optimal quality is reached at the point where the incremental revenue from improvement equals the incremental cost to secure it.
Just in time (JIT) - Approach to decrease the amount of inventory a company carries, by synchronizing the supply system to the production planning and control system.
Probability - likelihood that something will occur
Standard deviation - A measure of how far you are from the mean. (P-O)/6 is the pert formula for standard deviation.
+/- 1 sigma = 68.26%
+/- 2 sigma = 95.46%
+/- 3 sigma = 99.73%
+/- 6 sigma = 99.99%
The project manager has the ultimate responsibility for the quality of the product
Quality control tools
Fish bone diagram (ishikawa diagram)
Upper control limit (UCL)
Lower control limit (LCL)
Out of control
Rule of seven
As per PMBOK, it is not mandatory that, every project should use all the processes explained in the PMBOK. The project manager can pick and choose, depending on the project needs.
During project exceution, the project team executes the plan
Earned value management (EVM) is the key tool used for monitoring and controlling of a project.
The building blocks of earned value management system are;
PV - Planned value (BCWS - budgeted cost of work scheduled)
EV - Earned value (BCWP - budgeted cost of work performed)
AC - Actual cost (ACWP - actual cost of work performed)
SV (schedule variance) = EV-PV
SPI (schedule performance index) = EV/PV
CV (cost variance) = EV-AC
CPI (cost performance index) = EV/AC
SV% (schedule variance %) = ((EV-PV)/PV)*100
BAC (budget at completion) = sum of planned values of all work packages of the project
EAC (estimate at completion) = AC+(BAC-EV)/CPI
50/50 rule - A task is considered 50% complete when it begins and gets credit for the last 50%, only when it is completed.
20/80 rule - A task is considered 20% complete when it begins and gets credit for the last 80% only when it is completed.
0/100 rule - A task does not get credit for partial completion, only for full completion.
During the closing phase of a project, we perform a lessons learned exercise, dismantle the team, close the contract with the client and the sub contractors.
Do the right thing
Follow the right process
Act ethically, fairly and professionally
Watch for conflicts of interest or the appearance of conflicts of interest
Increase knowledge and practices
Deal with problems
Ensure individual integrity
Contribute to the project management knowledge base
Enhance individual competence
Balance stakeholders interest
Interact with team and stakeholders in a professional and cooperative manner