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Project Management Institute

A Guide to the Project MAnAGeMent Body of KnowledGe (PMBOK® Guide) – Fifth Edition

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ISBN: 978-1-935589-67-9

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Library of Congress Cataloging-in-Publication Data

A guide to the project management body of knowledge (PMBOK® guide). -- Fifth edition. pages cm Includes bibliographical references and index. ISBN 978-1-935589-67-9 (pbk. : alk. paper)

1. Project management. I. Project Management Institute. II. Title: PMBOK guide.

HD69.P75G845 2013 658.4’04--dc23 2012046112

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notice The Project Management Institute, Inc. (PMI) standards and guideline publications, of which the document

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TA B L E O F C O N T E N T S

tABle of contents 1. IntroductIon ..................................................................................................................... 1

1.1 Purpose of the PMBOK® Guide ................................................................................ 2 1.2 What is a Project? ...................................................................................................... 3

1.2.1. the relationships Among Portfolios, Programs, and Projects .................... 4 1.3 What is Project Management? ................................................................................... 5 1.4 relationships Among Portfolio Management, Program Management, Project

Management, and organizational Project Management ........................................... 7 1.4.1 Program Management ................................................................................... 9 1.4.2 Portfolio Management .................................................................................... 9 1.4.3 Projects and Strategic Planning .................................................................. 10 1.4.4 Project Management office ......................................................................... 10

1.5 relationship Between Project Management, operations Management, and organizational Strategy ............................................................................................ 12

1.5.1 operations and Project Management .......................................................... 12 1.5.2 organizations and Project Management ..................................................... 14

1.6 Business Value ......................................................................................................... 15 1.7 role of the Project Manager ..................................................................................... 16

1.7.1 responsibilities and competencies of the Project Manager ...................... 17 1.7.2 Interpersonal Skills of a Project Manager ................................................... 17

1.8 Project Management Body of Knowledge ............................................................... 18

2. orGAnIZAtIonAL InFLuEncES And ProJEct LIFE cYcLE .............................................. 19

2.1 organizational Influences on Project Management ................................................ 20 2.1.1 organizational cultures and Styles ............................................................. 20 2.1.2 organizational communications ................................................................. 21 2.1.3 organizational Structures ............................................................................ 21 2.1.4 organizational Process Assets .................................................................... 27 2.1.5 Enterprise Environmental Factors ............................................................... 29

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TA B L E O F C O N T E N T S

2.2 Project Stakeholders and Governance .................................................................... 30 2.2.1 Project Stakeholders .................................................................................... 30 2.2.2 Project Governance ...................................................................................... 34 2.2.3 Project Success ............................................................................................ 35

2.3 Project team ............................................................................................................. 35 2.3.1 composition of Project teams ..................................................................... 37

2.4 Project Life cycle ...................................................................................................... 38 2.4.1 characteristics of the Project Life cycle ..................................................... 38 2.4.2 Project Phases .............................................................................................. 41

3. ProJEct MAnAGEMEnt ProcESSES ............................................................................... 47

3.1 common Project Management Process Interactions .............................................. 50 3.2 Project Management Process Groups ..................................................................... 52 3.3 Initiating Process Group ........................................................................................... 54 3.4 Planning Process Group ........................................................................................... 55 3.5 Executing Process Group ......................................................................................... 56 3.6 Monitoring and controlling Process Group ............................................................. 57 3.7 closing Process Group ............................................................................................. 57 3.8 Project Information ................................................................................................... 58 3.9 role of the Knowledge Areas ................................................................................... 60

4. ProJEct IntEGrAtIon MAnAGEMEnt ............................................................................. 63

4.1 develop Project charter ........................................................................................... 66 4.1.1 develop Project charter: Inputs ................................................................... 68 4.1.2 develop Project charter: tools and techniques .......................................... 71 4.1.3 develop Project charter: outputs ................................................................ 71

4.2 develop Project Management Plan .......................................................................... 72 4.2.1 develop Project Management Plan: Inputs ................................................. 74 4.2.2 develop Project Management Plan: tools and techniques ........................ 76 4.2.3 develop Project Management Plan: outputs ............................................... 76

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TA B L E O F C O N T E N T S

4.3 direct and Manage Project Work ............................................................................. 79 4.3.1 direct and Manage Project Work: Inputs .................................................... 82 4.3.2 direct and Manage Project Work: tools and techniques ........................... 83 4.3.3 direct and Manage Project Work: outputs .................................................. 84

4.4 Monitor and control Project Work ........................................................................... 86 4.4.1 Monitor and control Project Work: Inputs ................................................... 88 4.4.2 Monitor and control Project Work: tools and techniques .......................... 91 4.4.3 Monitor and control Project Work: outputs ................................................ 92

4.5 Perform Integrated change control ......................................................................... 94 4.5.1 Perform Integrated change control: Inputs ................................................ 97 4.5.2 Perform Integrated change control: tools and techniques ....................... 98 4.5.3 Perform Integrated change control: outputs .............................................. 99

4.6 close Project or Phase ........................................................................................... 100 4.6.1 close Project or Phase: Inputs ................................................................... 102 4.6.2 close Project or Phase: tools and techniques .......................................... 102 4.6.3 close Project or Phase: outputs ................................................................ 103

5. ProJEct ScoPE MAnAGEMEnt ...................................................................................... 105

5.1 Plan Scope Management ........................................................................................ 107 5.1.1 Plan Scope Management: Inputs ............................................................... 108 5.1.2 Plan Scope Management: tools and techniques ...................................... 109 5.1.3 Plan Scope Management: outputs ............................................................ 109

5.2 collect requirements ............................................................................................. 110 5.2.1 collect requirements: Inputs .................................................................... 113 5.2.2 collect requirements: tools and techniques ........................................... 114 5.2.3 collect requirements: outputs .................................................................. 117

5.3 define Scope ........................................................................................................... 120 5.3.1 define Scope: Inputs .................................................................................. 121 5.3.2 define Scope: tools and techniques ......................................................... 122 5.3.3 define Scope: outputs ................................................................................ 123

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5.4 create WBS ............................................................................................................. 125 5.4.1 create WBS: Inputs .................................................................................... 127 5.4.2 create WBS: tools and techniques ........................................................... 128 5.4.3 create WBS: outputs .................................................................................. 131

5.5 Validate Scope ........................................................................................................ 133 5.5.1 Validate Scope: Inputs ............................................................................... 134 5.5.2 Validate Scope: tools and techniques ...................................................... 135 5.5.3 Validate Scope: outputs ............................................................................. 135

5.6 control Scope ......................................................................................................... 136 5.6.1 control Scope: Inputs ................................................................................. 138 5.6.2 control Scope: tools and techniques ........................................................ 139 5.6.3 control Scope: outputs .............................................................................. 139

6. ProJEct tIME MAnAGEMEnt ......................................................................................... 141

6.1 Plan Schedule Management ................................................................................. 145 6.1.1 Plan Schedule Management: Inputs .......................................................... 146 6.1.2 Plan Schedule Management: tools and techniques ................................. 147 6.1.3 Plan Schedule Management: outputs ....................................................... 148

6.2 define Activities ...................................................................................................... 149 6.2.1 define Activities: Inputs ............................................................................. 150 6.2.2 define Activities: tools and techniques .................................................... 151 6.2.3 define Activities: outputs .......................................................................... 152

6.3 Sequence Activities ................................................................................................ 153 6.3.1 Sequence Activities: Inputs ....................................................................... 154 6.3.2 Sequence Activities: tools and techniques .............................................. 156 6.3.3 Sequence Activities: outputs ..................................................................... 159

6.4 Estimate Activity resources .................................................................................. 160 6.4.1 Estimate Activity resources: Inputs .......................................................... 162 6.4.2 Estimate Activity resources: tools and techniques ................................. 164 6.4.3 Estimate Activity resources: outputs ....................................................... 165

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TA B L E O F C O N T E N T S

6.5 Estimate Activity durations .................................................................................... 165 6.5.1 Estimate Activity durations: Inputs ........................................................... 167 6.5.2 Estimate Activity durations: tools and techniques .................................. 169 6.5.3 Estimate Activity durations: outputs ........................................................ 172

6.6 develop Schedule ................................................................................................... 172 6.6.1 develop Schedule: Inputs .......................................................................... 174 6.6.2 develop Schedule: tools and techniques ................................................. 176 6.6.3 develop Schedule: outputs ........................................................................ 181

6.7 control Schedule .................................................................................................... 185 6.7.1 control Schedule: Inputs ............................................................................ 187 6.7.2 control Schedule: tools and techniques ................................................... 188 6.7.3 control Schedule: outputs ......................................................................... 190

7. ProJEct coSt MAnAGEMEnt ........................................................................................ 193

7.1 Plan cost Management .......................................................................................... 195 7.1.1 Plan cost Management: Inputs .................................................................. 196 7.1.2 Plan cost Management: tools and techniques ......................................... 198 7.1.3 Plan cost Management: outputs ............................................................... 198

7.2 Estimate costs ........................................................................................................ 200 7.2.1 Estimate costs: Inputs ............................................................................... 202 7.2.2 Estimate costs: tools and techniques ...................................................... 204 7.2.3 Estimate costs: outputs ............................................................................. 207

7.3 determine Budget ................................................................................................... 208 7.3.1 determine Budget: Inputs .......................................................................... 209 7.3.2 determine Budget: tools and techniques ................................................. 211 7.3.3 determine Budget: outputs........................................................................ 212

7.4 control costs .......................................................................................................... 215 7.4.1 control costs: Inputs .................................................................................. 216 7.4.2 control costs: tools and techniques ......................................................... 217 7.4.3 control costs: outputs ............................................................................... 225

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TA B L E O F C O N T E N T S

8. ProJEct QuALItY MAnAGEMEnt ................................................................................... 227

8.1 Plan Quality Management ...................................................................................... 231 8.1.1 Plan Quality Management: Inputs ............................................................. 233 8.1.2 Plan Quality Management: tools and techniques .................................... 235 8.1.3 Plan Quality Management: outputs ........................................................... 241

8.2 Perform Quality Assurance .................................................................................... 242 8.2.1 Perform Quality Assurance: Inputs ............................................................ 244 8.2.2 Perform Quality Assurance: tools and techniques ................................... 245 8.2.3 Perform Quality Assurance: outputs ......................................................... 247

8.3 control Quality ........................................................................................................ 248 8.3.1 control Quality: Inputs ............................................................................... 250 8.3.2 control Quality: tools and techniques ...................................................... 252 8.3.3 control Quality: outputs ............................................................................. 252

9. ProJEct HuMAn rESourcE MAnAGEMEnt .................................................................. 255

9.1 Plan Human resource Management ...................................................................... 258 9.1.1 Plan Human resource Management: Inputs ............................................. 259 9.1.2 Plan Human resource Management: tools and techniques .................... 261 9.1.3 Plan Human resource Management: outputs .......................................... 264

9.2 Acquire Project team ............................................................................................. 267 9.2.1 Acquire Project team: Inputs ..................................................................... 269 9.2.2 Acquire Project team: tools and techniques ............................................ 270 9.2.3 Acquire Project team: outputs .................................................................. 272

9.3 develop Project team ............................................................................................. 273 9.3.1 develop Project team: Inputs .................................................................... 274 9.3.2 develop Project team: tools and techniques ........................................... 275 9.3.3 develop Project team: outputs .................................................................. 278

9.4 Manage Project team ............................................................................................. 279 9.4.1 Manage Project team: Inputs .................................................................... 281 9.4.2 Manage Project team: tools and techniques ........................................... 282 9.4.3 Manage Project team: outputs .................................................................. 284

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TA B L E O F C O N T E N T S

10. ProJEct coMMunIcAtIonS MAnAGEMEnt ................................................................ 287

10.1 Plan communications Management .................................................................... 289 10.1.1 Plan communications Management: Inputs ........................................... 290 10.1.2 Plan communications Management: tools and techniques .................. 291 10.1.3 Plan communications Management: outputs..........................................296

10.2 Manage communications .................................................................................... 297 10.2.1 Manage communications: Inputs ............................................................ 299 10.2.2 Manage communications: tools and techniques ................................... 300 10.2.3 Manage communications: outputs ......................................................... 301

10.3 control communications ...................................................................................... 303 10.3.1 control communications: Inputs ............................................................. 304 10.3.2 control communications: tools and techniques .................................... 306 10.3.3 control communications: outputs ........................................................... 307

11. ProJEct rISK MAnAGEMEnt ....................................................................................... 309

11.1 Plan risk Management ........................................................................................ 313 11.1.1 Plan risk Management: Inputs ................................................................ 314 11.1.2 Plan risk Management: tools and techniques ....................................... 315 11.1.3 Plan risk Management: outputs ............................................................. 316

11.2 Identify risks ........................................................................................................ 319 11.2.1 Identify risks: Inputs ............................................................................... 321 11.2.2 Identify risks: tools and techniques ...................................................... 324 11.2.3 Identify risks: outputs ............................................................................. 327

11.3 Perform Qualitative risk Analysis ....................................................................... 328 11.3.1 Perform Qualitative risk Analysis: Inputs ............................................... 329 11.3.2 Perform Qualitative risk Analysis: tools and techniques ...................... 330 11.3.3 Perform Qualitative risk Analysis: outputs ............................................ 333

11.4 Perform Quantitative risk Analysis ..................................................................... 333 11.4.1 Perform Quantitative risk Analysis: Inputs ............................................ 335 11.4.2 Perform Quantitative risk Analysis: tools and techniques ................... 336 11.4.3 Perform Quantitative risk Analysis: outputs .......................................... 341

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TA B L E O F C O N T E N T S

11.5 Plan risk responses ............................................................................................ 342 11.5.1 Plan risk responses: Inputs ................................................................... 343 11.5.2 Plan risk responses: tools and techniques .......................................... 343 11.5.3 Plan risk responses: outputs ................................................................. 346

11.6 control risks ........................................................................................................ 349 11.6.1 control risks: Inputs ................................................................................ 350 11.6.2 control risks: tools and techniques ....................................................... 351 11.6.3 control risks: outputs ............................................................................. 353

12. ProJEct ProcurEMEnt MAnAGEMEnt ...................................................................... 355

12.1 Plan Procurement Management .......................................................................... 358 12.1.1 Plan Procurement Management: Inputs .................................................. 360 12.1.2 Plan Procurement Management: tools and techniques ......................... 365 12.1.3 Plan Procurement Management: outputs ............................................... 366

12.2 conduct Procurements ......................................................................................... 371 12.2.1 conduct Procurements: Inputs ................................................................ 373 12.2.2 conduct Procurements: tools and techniques ....................................... 375 12.2.3 conduct Procurements: outputs.............................................................. 377

12.3 control Procurements .......................................................................................... 379 12.3.1 control Procurements: Inputs .................................................................. 381 12.3.2 control Procurements: tools and techniques ......................................... 383 12.3.3 control Procurements: outputs ............................................................... 384

12.4 close Procurements ............................................................................................. 386 12.4.1 close Procurements: Inputs ..................................................................... 388 12.4.2 close Procurements: tools and techniques ............................................ 388 12.4.3 close Procurements: outputs .................................................................. 389

13. ProJEct StAKEHoLdEr MAnAGEMEnt ....................................................................... 391

13.1 Identify Stakeholders ........................................................................................... 393 13.1.1 Identify Stakeholders: Inputs ................................................................... 394 13.1.2 Identify Stakeholders: tools and techniques .......................................... 395 13.1.3 Identify Stakeholders: outputs ................................................................ 398

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TA B L E O F C O N T E N T S

13.2 Plan Stakeholder Management ............................................................................ 399 13.2.1 Plan Stakeholder Management: Inputs ................................................... 400 13.2.2 Plan Stakeholder Management: tools and techniques .......................... 401 13.2.3 Plan Stakeholder Management: outputs ................................................. 403

13.3 Manage Stakeholder Engagement ....................................................................... 404 13.3.1 Manage Stakeholder Engagement: Inputs .............................................. 406 13.3.2 Manage Stakeholder Engagement: tools and techniques ..................... 407 13.3.3 Manage Stakeholder Engagement: outputs ............................................ 408

13.4 control Stakeholder Engagement ........................................................................ 409 13.4.1 control Stakeholder Engagement: Inputs ............................................... 411 13.4.2 control Stakeholder Engagement: tools and techniques ...................... 412 13.4.3 control Stakeholder Engagement: outputs ............................................. 413

AnnEX A1 tHE StAndArd For ProJEct MAnAGEMEnt oF A ProJEct .......................... 417

APPEndIX X1 FIFtH EdItIon cHAnGES .............................................................................. 463

APPEndIX X2 contrIButorS And rEVIEWErS oF tHE PMBOK® Guide – FIFtH EdItIon ...................................................................................................................... 483

APPEndIX X3 IntErPErSonAL SKILLS ............................................................................... 513

rEFErEncES ........................................................................................................................ 521

GLoSSArY ............................................................................................................................ 523

IndEX ................................................................................................................................... 569

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L i s t o f tA B L E s A n d f i g u r E s

list of tABles And fiGures Figure 1-1. Portfolio, Program, and Project Management Interactions ................................................5

Figure 2-1. Functional organization ....................................................................................................22

Figure 2-2. Weak Matrix organization .................................................................................................23

Figure 2-3. Balanced Matrix organization ...........................................................................................24

Figure 2-4. Strong Matrix organization ...............................................................................................24

Figure 2-5. Projectized organization ...................................................................................................25

Figure 2-6. composite organization ....................................................................................................26

Figure 2-7. the relationship Between Stakeholders and the Project ................................................31

Figure 2-8. typical cost and Staffing Levels Across a Generic Project Life cycle Structure ............39

Figure 2-9. Impact of Variable Based on Project time .......................................................................40

Figure 2-10. Example of a Single-Phase Project ...................................................................................42

Figure 2-11. Example of a three-Phase Project ....................................................................................43

Figure 2-12. Example of a Project with overlapping Phases ................................................................43

Figure 2-13. Example of Predictive Life cycle .......................................................................................44

Figure 3-1. Project Management Process Groups ...............................................................................50

Figure 3-2. Process Groups Interact in a Phase or Project .................................................................51

Figure 3-3. Project Management Process Interactions ......................................................................53

Figure 3-4. Project Boundaries ............................................................................................................54

Figure 3-5. Project data, Information and report Flow ......................................................................59

Figure 3-6. data Flow diagram Legend ...............................................................................................60

Figure 4-1. Project Integration Management overview ......................................................................65

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L i s t o f tA B L E s A n d f i g u r E s

Figure 4-2. develop Project charter: Inputs, tools and techniques, and outputs .............................66

Figure 4-3. develop Project charter data Flow diagram ....................................................................67

Figure 4-3. develop Project charter data Flow diagram ....................................................................72

Figure 4-5. develop Project Management Plan data Flow diagram ..................................................73

Figure 4-6. direct and Manage Project Work: Inputs, tools and techniques, and outputs ...............79

Figure 4-7. direct and Manage Project Work: data Flow diagram .....................................................80

Figure 4-8. Monitor and control Project Work: Inputs, tools & techniques, and outputs .................86

Figure 4-9. Monitor and control Project Work data Flow diagram ....................................................87

Figure 4-10. Perform Integrated change control: Inputs, tools & techniques, and outputs ..............94

Figure 4-11. Perform Integrated change control data Flow diagram..................................................95

Figure 4-12. close Project or Phase: Inputs, tools & techniques, and outputs .................................100

Figure 4-13. close Project or Phase data Flow diagram ....................................................................101

Figure 5-1. Project Scope Management overview ............................................................................106

Figure 5-2. Plan Scope Management: Inputs, tools & techniques, and outputs .............................107

Figure 5-3. Plan Scope Management data Flow diagram ................................................................107

Figure 5-4. collect requirements: Inputs, tools & techniques, and outputs ..................................111

Figure 5-5. collect requirements data Flow diagram ......................................................................111

Figure 5-6. Example of a requirements traceability Matrix .............................................................119

Figure 5-7. define Scope: Inputs, tools & techniques, and outputs ................................................120

Figure 5-8. define Scope data Flow diagram ...................................................................................120

Figure 5-9. create WBS: Inputs, tools & techniques, and outputs ..................................................125

Figure 5-10. create WBS data Flow diagram ......................................................................................126

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Figure 5-11. Sample WBS decomposed down through Work Packages ...........................................129

Figure 5-12. Sample WBS organized by Phase ...................................................................................130

Figure 5-13. Sample WBS with Major deliverables .............................................................................130

Figure 5-14. Validate Scope: Inputs, tools & techniques, and outputs .............................................133

Figure 5-15. Validate Scope data Flow diagram .................................................................................133

Figure 5-16. control Scope: Inputs, tools & techniques, and outputs ...............................................136

Figure 5-17. control Scope data Flow diagram ..................................................................................137

Figure 6-1. Project time Management overview ..............................................................................143

Figure 6-2. Scheduling overview .......................................................................................................144

Figure 6-3. Plan Schedule Management: Inputs, tools & techniques, and outputs ........................145

Figure 6-4. Plan Schedule Management data Flow diagram ...........................................................145

Figure 6-5. define Activities: Inputs, tools & techniques, and outputs ...........................................149

Figure 6-6. define Activities data Flow diagram ..............................................................................150

Figure 6-7. Sequence Activities: Inputs, tools & techniques, and outputs .....................................153

Figure 6-8. Sequence Activities data Flow diagram .........................................................................154

Figure 6-9. Precedence diagramming Method (PdM) relationship types ......................................157

Figure 6-10. Examples of Lead and Lag ..............................................................................................158

Figure 6-11. Project Schedule network diagram ................................................................................160

Figure 6-12. Estimate Activity resources: Inputs, tools & techniques, and outputs ........................161

Figure 6-13. Estimate Activity resources data Flow diagram ...........................................................161

Figure 6-14. Estimate Activity durations: Inputs, tools & techniques, and outputs .........................166

Figure 6-15. Estimate Activity durations data Flow diagram ............................................................166

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Figure 6-16 develop Schedule: Inputs, tools & techniques, and outputs ........................................173

Figure 6-17. develop Schedule data Flow diagram ............................................................................173

Figure 6-18. Example of critical Path Method .....................................................................................177

Figure 6-19. Example of critical chain Method ...................................................................................178

Figure 6-20. resource Leveling ...........................................................................................................179

Figure 6-21. Project Schedule Presentations —Examples .................................................................183

Figure 6-22. control Schedule: Inputs, tools & techniques, and outputs ..........................................185

Figure 6-23. control Schedule data Flow diagram .............................................................................186

Figure 7-1. Project cost Management overview ...............................................................................194

Figure 7-2. Plan cost Management: Inputs, tools & techniques, and outputs ................................195

Figure 7-3. Plan cost Management: data Flow diagram ..................................................................196

Figure 7-4. Estimate costs: Inputs, tools & techniques, and outputs .............................................200

Figure 7-5. Estimate costs data Flow diagram.................................................................................201

Figure 7-6. determine Budget: Inputs, tools & techniques, and outputs ........................................208

Figure 7-7. determine Budget data Flow diagram ...........................................................................209

Figure 7-8. Project Budget components ............................................................................................213

Figure 7-9. cost Baseline, Expenditures, and Funding requirements .............................................214

Figure 7-10. control costs: Inputs, tools & techniques, and outputs ................................................215

Figure 7-11. control costs data Flow diagram ...................................................................................215

Figure 7-12. Earned Value, Planned Value, and Actual costs .............................................................219

Figure 7-13. to-complete Performance Index (tcPI) ..........................................................................222

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L i s t o f tA B L E s A n d f i g u r E s

Figure 8-1. Project Quality Management overview ...........................................................................230

Figure 8-2. Fundamental relationships of Quality Assurance and control Quality to the IPEcc, PdcA, cost of Quality Models and Project Management Process Groups.....................231

Figure 8-3. Plan Quality Management Inputs, tools & techniques, and outputs ............................232

Figure 8-4. Plan Quality Management data Flow diagram ...............................................................232

Figure 8-5. cost of Quality ..................................................................................................................235

Figure 8-6. the SIPoc Model ..............................................................................................................237

Figure 8-7. Storyboard Illustrating a conceptual Example of Each of the Seven Basic Quality tools ..........................................................................................................239

Figure 8-8. Perform Quality Assurance: Inputs, tools & techniques, and outputs ..........................243

Figure 8-9. Perform Quality Assurance data Flow diagram .............................................................243

Figure 8-10. Storyboard Illustrating the Seven Quality Management and control tools ..................246

Figure 8-11. control Quality: Inputs, tools & techniques, and outputs .............................................249

Figure 8-12. control Quality data Flow diagram .................................................................................249

Figure 9-1. Project Human resource Management overview ..........................................................257

Figure 9-2. Plan Human resource Management: Inputs, tools & techniques, and outputs ...........258

Figure 9-3. Plan Human resource Management data Flow diagram ..............................................258

Figure 9-4. roles and responsibility definition Formats ..................................................................261

Figure 9-5. rAcI Matrix ......................................................................................................................262

Figure 9-6. Illustrative resource Histogram......................................................................................266

Figure 9-7. Acquire Project team: Inputs, tools & techniques, and outputs ...................................267

Figure 9-8. Acquire Project team data Flow diagram ......................................................................268

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Figure 9-9. develop Project team: Inputs, tools & techniques, and outputs ..................................273

Figure 9-10. develop Project team data Flow diagram .....................................................................273

Figure 9-11. Manage Project team: Inputs, tools & techniques, and outputs ..................................279

Figure 9-12. Manage Project team data Flow diagram .....................................................................280

Figure 10-1. Project communications Management overview ..........................................................288

Figure 10-2. Plan communications Management: Inputs, tools & techniques, and outputs ...........289

Figure 10-3. Plan communications Management data Flow diagram ..............................................289

Figure 10-4. Basic communication Model ..........................................................................................294

Figure 10-5. Manage communications: Inputs, tools & techniques, and outputs ............................297

Figure 10-6. Manage communications data Flow diagram ...............................................................298

Figure 10-7. control communications: Inputs, tools & techniques, and outputs .............................303

Figure 10-8. control communications data Flow diagram ................................................................304

Figure 11-1. Project risk Management overview ...............................................................................312

Figure 11-2. Plan risk Management: Inputs, tools & techniques, and outputs ................................313

Figure 11-3. Plan risk Management data Flow diagram ...................................................................313

Figure 11-4. Example of a risk Breakdown Structure (rBS)..............................................................317

Figure 11-5. Identify risks: Inputs, tools & techniques, and outputs ...............................................319

Figure 11-6. Identify risks data Flow diagram...................................................................................320

Figure 11-7. Influence diagram ...........................................................................................................326

Figure 11-8. Perform Qualitative risk Analysis: Inputs, tools & techniques, and outputs ...............328

Figure 11-9. Perform Qualitative risk Analysis data Flow diagram ..................................................328

Figure 11-10. Probability and Impact Matrix.........................................................................................331

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Figure 11-11. Perform Quantitative risk Analysis: Inputs, tools & techniques, and outputs ............334

Figure 11-12. Perform Quantitative risk Analysis data Flow diagram ................................................334

Figure 11-13. range of Project cost Estimates collected during the risk Interview ........................336

Figure 11-14. Examples of commonly used Probability distributions .................................................337

Figure 11-15. Example of tornado diagram ..........................................................................................338

Figure 11-16. decision tree diagram ....................................................................................................339

Figure 11-17. cost risk Simulation results ..........................................................................................340

Figure 11-18. Plan risk responses: Inputs, tools & techniques, and outputs ...................................342

Figure 11-19. Plan risk responses data Flow diagram .......................................................................342

Figure 11-20. control risks: Inputs, tools & techniques, and outputs ................................................349

Figure 11-21. control risks data Flow diagram ...................................................................................349

Figure 12-1. Project Procurement Management overview .................................................................356

Figure 12-2. Plan Procurements: Inputs, tools & techniques, and outputs ......................................358

Figure 12-3. Plan Procurement Management data Flow diagram .....................................................359

Figure 12-4. conduct Procurements: Inputs, tools & techniques, and outputs ................................371

Figure 12-5. conduct Procurements data Flow diagram ...................................................................372

Figure 12-6. control Procurements: Inputs, tools & techniques, and outputs ..................................379

Figure 12-7. control Procurements data Flow diagram .....................................................................380

Figure 12-8. close Procurements: Inputs, tools & techniques, and outputs .....................................386

Figure 12-9. close Procurements data Flow diagram ........................................................................387

Figure 13-1. Project Stakeholder Management overview ..................................................................392

Figure 13-2. Identify Stakeholders: Inputs, tools & techniques, and outputs ...................................393

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Figure 13-3. Identify Stakeholders data Flow diagram ......................................................................393

Figure 13-4. Example Power/Interest Grid with Stakeholders ...........................................................397

Figure 13-5. Plan Stakeholder Management: Inputs, tools & techniques, and outputs ...................399

Figure 13-6. Plan Stakeholder Management data Flow diagram ......................................................399

Figure 13-7. Stakeholders Engagement Assessment Matrix ..............................................................403

Figure 13-8. Manage Stakeholder Engagement: Inputs, tools & techniques, and outputs ..............404

Figure 13-9. Manage Stakeholder Engagement data Flow diagram .................................................405

Figure 13-10. control Stakeholder Engagement: Inputs, tools & techniques, and outputs ...............410

Figure 13-11. control Stakeholder Engagement: data Flow diagram ..................................................410

Figure A1-1. Process Group Interactions in a Project .........................................................................419

Figure A1-2. Project Management Process Interactions ....................................................................421

Figure A1-3. Project Boundaries ..........................................................................................................425

Figure A1-4. Initiating Process Group ..................................................................................................425

Figure A1-5. develop Project charter: Inputs and outputs .................................................................426

Figure A1-6. Identify Stakeholders: Inputs and outputs .....................................................................426

Figure A1-7. Planning Process Group ..................................................................................................428

Figure A1-8. develop Project Management Plan: Inputs and outputs ...............................................429

Figure A1-9. Plan Scope Management: Inputs and outputs ...............................................................429

Figure A1-10. collect requirements: Inputs and outputs .....................................................................430

Figure A1-11. define Scope: Inputs and outputs ..................................................................................430

Figure A1-12. create WBS: Inputs and outputs .....................................................................................431

Figure A1-13. Plan Schedule Management: Inputs and outputs ..........................................................431

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Figure A1-14. define Activities: Inputs and outputs .............................................................................432

Figure A1-15. Sequence Activities: Inputs and outputs ........................................................................432

Figure A1-16. Estimate Activity resources: Inputs and outputs ..........................................................433

Figure A1-17. Estimate Activity durations: Inputs and outputs ...........................................................434

Figure A1-18. develop Schedule: Inputs and outputs ...........................................................................435

Figure A1-19. Plan cost Management: Inputs and outputs ..................................................................436

Figure A1-20. Estimate costs: Inputs and outputs ................................................................................436

Figure A1-21. determine Budget: Inputs and outputs ..........................................................................437

Figure A1-22. Plan Quality Management: Inputs and outputs ..............................................................438

Figure A1-23. Plan Human resource Management: Inputs and outputs .............................................438

Figure A1-24. Plan communications Management: Inputs and outputs .............................................439

Figure A1-25. Plan risk Management: Inputs and outputs ..................................................................439

Figure A1-26. Identify risks: Inputs and outputs ..................................................................................440

Figure A1-27. Perform Qualitative risk Analysis: Inputs and outputs .................................................441

Figure A1-28. Perform Quantitative risk Analysis: Inputs and outputs ...............................................441

Figure A1-29. Plan risk responses: Inputs and outputs ......................................................................442

Figure A1-30. Plan Procurement Management: Inputs and outputs ....................................................443

Figure A1-31. Plan Stakeholder Management: Inputs and outputs .....................................................443

Figure A1-32. Executing Process Group ................................................................................................445

Figure A1-33. direct and Manage Project Work: Inputs and outputs ...................................................446

Figure A1-34. Perform Quality Assurance: Inputs and outputs ............................................................446

Figure A1-35. Acquire Project team: Inputs and outputs .....................................................................447

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Figure A1-36. develop Project team: Inputs and outputs .....................................................................447

Figure A1-37. Manage Project team: Inputs and outputs .....................................................................448

Figure A1-38. Manage communications: Inputs and outputs ..............................................................448

Figure A1-39. conduct Procurements: Inputs and outputs ..................................................................449

Figure A1-40. Manage Stakeholder Engagement: Inputs and outputs ................................................450

Figure A1-41. Monitoring and controlling Process Group ....................................................................451

Figure A1-42. Monitor and control Project Work: Inputs and outputs .................................................452

Figure A1-43. Perform Integrated change control: Inputs and outputs ...............................................453

Figure A1-44. Validate Scope: Inputs and outputs ................................................................................453

Figure A1-45. control Scope: Inputs and outputs .................................................................................454

Figure A1-46. control Schedule: Inputs and outputs ............................................................................455

Figure A1-47. control costs: Inputs and outputs ..................................................................................455

Figure A1-48. control Quality: Inputs and outputs ................................................................................456

Figure A1-49. control communications: Inputs and outputs ...............................................................457

Figure A1-50. control risks: Inputs and outputs ..................................................................................457

Figure A1-51. control Procurements: Inputs and outputs ....................................................................458

Figure A1-52. control Stakeholder Engagement: Inputs and outputs ..................................................459

Figure A1-53. closing Process Group ....................................................................................................460

Figure A1-54. close Project or Phase: Inputs and outputs ...................................................................461

Figure A1-55. close Procurements: Inputs and outputs .......................................................................461

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Figure X1-1. refined data Model .........................................................................................................467

table 1-1. comparative overview of Project, Program, and Portfolio Management ..........................8

table 2-1. Influence of organizational Structures on Projects .........................................................22

table 3-1. Project Management Process Group and Knowledge Area Mapping ..............................61

table 4-1 differentiation Between the Project Management Plan and Project documents ...........78

table 5-1. Elements of the Project charter and Project Scope Statement .....................................124

table 7-1. Earned Value calculations Summary table ....................................................................224

table 11-1. definition of Impact Scales for Four Project objectives ................................................318

table A1-1. Project Management Process Group and Knowledge Area Mapping ............................423

table X1-1. Section 4 changes ...........................................................................................................472

table X1-2. Section 5 changes ...........................................................................................................473

table X1-3. Section 6 changes ...........................................................................................................474

table X1-4. Section 7 changes ...........................................................................................................475

table X1-5. Section 8 changes ...........................................................................................................476

table X1-6. Section 9 changes ...........................................................................................................477

table X1-7. Section 10 changes .........................................................................................................478

table X1-8. Section 11 changes .........................................................................................................479

table X1-9. Section 12 changes .........................................................................................................480

table X1-10. Section 13 changes .........................................................................................................481

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introduction A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition provides guidelines

for managing individual projects and defines project management related concepts. It also describes the project management life cycle and its related processes, as well as the project life cycle.

The PMBOK® Guide contains the globally recognized standard and guide for the project management profession (found in Annex A1). A standard is a formal document that describes established norms, methods, processes, and practices. As with other professions, the knowledge contained in this standard has evolved from the recognized good practices of project management practitioners who have contributed to the development of this standard.

The first two sections of the PMBOK® Guide provide an introduction to key concepts in the project management field. Section 3 summarizes the Process Groups and provides an overview of process interactions among the ten Knowledge Areas and five Process Groups. Sections 4 through 13 are the guide to the project management body of knowledge. These sections expand on the information in the standard by describing the inputs and outputs, as well as tools and techniques used in managing projects. Annex A1 is the standard for project management and presents the processes, inputs, and outputs that are considered to be good practice on most projects most of the time.

This section defines several key terms and the relationship among portfolio management, program management, project management and organizational project management. An overview of the PMBOK® Guide is found within the following sections:

1.1 Purpose of the PMBOK® Guide

1.2 What is a Project?

1.3 What is Project Management?

1.4 relationships Among Portfolio Management, Program Management, Project Management,and organizational Project Management

1.5 relationship Between Project Management, operations Management, and organizational Strategy

1.6 Business Value

1.7 role of the Project Manager

1.8 Project Management Body of Knowledge

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1.1 Purpose of the PMBOK® Guide

The acceptance of project management as a profession indicates that the application of knowledge, processes, skills, tools, and techniques can have a significant impact on project success. The PMBOK® Guide identifies that subset of the project management body of knowledge that is generally recognized as good practice. “Generally recognized” means the knowledge and practices described are applicable to most projects most of the time, and there is consensus about their value and usefulness. “Good practice” means there is general agreement that the application of the knowledge, skills, tools, and techniques can enhance the chances of success over many projects. “Good practice” does not mean that the knowledge described should always be applied uniformly to all projects; the organization and/or project management team is responsible for determining what is appropriate for any given project.

The PMBOK® Guide also provides and promotes a common vocabulary within the project management profession for using and applying project management concepts. A common vocabulary is an essential element of a professional discipline. The PMI Lexicon of Project Management Terms [1]1 provides the foundational professional vocabulary that can be consistently used by project, program, and portfolio managers and other stakeholders.

Annex A1 is a foundational reference for PMI’s project management professional development programs. Annex A1 continues to evolve along with the profession, and is therefore not all-inclusive; this standard is a guide rather than a specific methodology. One can use different methodologies and tools (e.g., agile, waterfall, PRINCE2) to implement the project management framework.

In addition to the standards that establish guidelines for project management processes, the Project Management Institute Code of Ethics and Professional Conduct [2] guides practitioners of the profession and describes the expectations that practitioners should hold for themselves and others. The Project Management Institute Code of Ethics and Professional Conduct is specific about the basic obligation of responsibility, respect, fairness, and honesty. It requires that practitioners demonstrate a commitment to ethical and professional conduct. It carries the obligation to comply with laws, regulations, and organizational and professional policies. Practitioners come from diverse backgrounds and cultures, and the Project Management Institute Code of Ethics and Professional Conduct applies globally. When interacting with any stakeholder, practitioners should be committed to honest, responsible, fair practices and respectful dealings. Acceptance of the code is essential for project managers, and is a requirement for the following PMI® exams:

• Certified Associate in Project Management (CAPM)®

• Project Management Professional (PMP)®

• Program Management Professional (PgMP)®

• PMI Agile Certified Practitioner (PMI-ACP)SM

• PMI Risk Management Professional (PMI-RMP)®

• PMI Scheduling Professional (PMI-SP)®

1The numbers in brackets refer to the list of references at the end of this standard.

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1.2 What is a Project?

A project is a temporary endeavor undertaken to create a unique product, service, or result. The temporary nature of projects indicates that a project has a definite beginning and end. The end is reached when the project’s objectives have been achieved or when the project is terminated because its objectives will not or cannot be met, or when the need for the project no longer exists. A project may also be terminated if the client (customer, sponsor, or champion) wishes to terminate the project. Temporary does not necessarily mean the duration of the project is short. It refers to the project’s engagement and its longevity. Temporary does not typically apply to the product, service, or result created by the project; most projects are undertaken to create a lasting outcome. For example, a project to build a national monument will create a result expected to last for centuries. Projects can also have social, economic, and environmental impacts that far outlive the projects themselves.

Every project creates a unique product, service, or result. The outcome of the project may be tangible or intangible. Although repetitive elements may be present in some project deliverables and activities, this repetition does not change the fundamental, unique characteristics of the project work. For example, office buildings can be constructed with the same or similar materials and by the same or different teams. However, each building project remains unique with a different location, different design, different circumstances and situations, different stakeholders, and so on.

An ongoing work effort is generally a repetitive process that follows an organization’s existing procedures. In contrast, because of the unique nature of projects, there may be uncertainties or differences in the products, services, or results that the project creates. Project activities can be new to members of a project team, which may necessitate more dedicated planning than other routine work. In addition, projects are undertaken at all organizational levels. A project can involve a single individual or multiple individuals, a single organizational unit, or multiple organizational units from multiple organizations.

A project can create:

• A product that can be either a component of another item, an enhancement of an item, or an end item in itself;

• A service or a capability to perform a service (e.g., a business function that supports production or distribution);

• An improvement in the existing product or service lines (e.g., A Six Sigma project undertaken to reduce defects); or

• A result, such as an outcome or document (e.g., a research project that develops knowledge that can be used to determine whether a trend exists or a new process will benefit society).

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Examples of projects include, but are not limited to:

• Developing a new product, service, or result;

• Effecting a change in the structure, processes, staffing, or style of an organization;

• Developing or acquiring a new or modified information system (hardware or software);

• Conducting a research effort whose outcome will be aptly recorded;

• Constructing a building, industrial plant, or infrastructure; or

• Implementing, improving, or enhancing existing business processes and procedures.

1.2.1. the relationships Among Portfolios, Programs, and Projects

The relationship among portfolios, programs, and projects is such that a portfolio refers to a collection of projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives. Programs are grouped within a portfolio and are comprised of subprograms, projects, or other work that are managed in a coordinated fashion in support of the portfolio. Individual projects that are either within or outside of a program are still considered part of a portfolio. Although the projects or programs within the portfolio may not necessarily be interdependent or directly related, they are linked to the organization’s strategic plan by means of the organization’s portfolio.

As Figure 1-1 illustrates, organizational strategies and priorities are linked and have relationships between portfolios and programs, and between programs and individual projects. Organizational planning impacts the projects by means of project prioritization based on risk, funding, and other considerations relevant to the organization’s strategic plan. Organizational planning can direct the management of resources, and support for the component projects on the basis of risk categories, specific lines of business, or general types of projects, such as infrastructure and process improvement.

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Projects

Portfolio

Subportfolios

Programs

Subprograms

Projects

• Strategies and priorities • Progressive elaboration • Governance • Disposition on requested changes • Impacts from changes in other portfolios, programs, or projects

• Performance reports • Change requests with impact on other portfolios, programs, or projects

Programs

Subprograms Projects

Projects

Figure 1-1. Portfolio, Program, and Project Management Interactions

1.3 What is Project Management?

Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. Project management is accomplished through the appropriate application and integration of the 47 logically grouped project management processes, which are categorized into five Process Groups. These five Process Groups are:

• Initiating,

• Planning,

• Executing,

• Monitoring and Controlling, and

• Closing.

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Managing a project typically includes, but is not limited to:

• Identifying requirements;

• Addressing the various needs, concerns, and expectations of the stakeholders in planning and executing the project;

• Setting up, maintaining, and carrying out communications among stakeholders that are active, effective, and collaborative in nature;

• Managing stakeholders towards meeting project requirements and creating project deliverables;

• Balancing the competing project constraints, which include, but are not limited to:

○ Scope,

○ Quality,

○ Schedule,

○ Budget,

○ Resources, and

○ Risks.

The specific project characteristics and circumstances can influence the constraints on which the project management team needs to focus.

The relationship among these factors is such that if any one factor changes, at least one other factor is likely to be affected. For example, if the schedule is shortened, often the budget needs to be increased to add additional resources to complete the same amount of work in less time. If a budget increase is not possible, the scope or targeted quality may be reduced to deliver the project’s end result in less time within the same budget amount. Project stakeholders may have differing ideas as to which factors are the most important, creating an even greater challenge. Changing the project requirements or objectives may create additional risks. The project team needs to be able to assess the situation, balance the demands, and maintain proactive communication with stakeholders in order to deliver a successful project.

Due to the potential for change, the development of the project management plan is an iterative activity and is progressively elaborated throughout the project’s life cycle. Progressive elaboration involves continuously improving and detailing a plan as more detailed and specific information and more accurate estimates become available. Progressive elaboration allows a project management team to define work and manage it to a greater level of detail as the project evolves.

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1.4 relationships Among Portfolio Management, Program Management, Project Management, and organizational Project Management

In order to understand portfolio, program, and project management, it is important to recognize the similarities and differences among these disciplines. It is also helpful to understand how they relate to organizational project management (OPM). OPM is a strategy execution framework utilizing project, program, and portfolio management as well as organizational enabling practices to consistently and predictably deliver organizational strategy producing better performance, better results, and a sustainable competitive advantage.

Portfolio, program, and project management are aligned with or driven by organizational strategies. Conversely, portfolio, program, and project management differ in the way each contributes to the achievement of strategic goals. Portfolio management aligns with organizational strategies by selecting the right programs or projects, prioritizing the work, and providing the needed resources, whereas program management harmonizes its projects and program components and controls interdependencies in order to realize specified benefits. Project management develops and implements plans to achieve a specific scope that is driven by the objectives of the program or portfolio it is subjected to and, ultimately, to organizational strategies. OPM advances organizational capability by linking project, program, and portfolio management principles and practices with organizational enablers (e.g. structural, cultural, technological, and human resource practices) to support strategic goals. An organization measures its capabilities, then plans and implements improvements towards the systematic achievement of best practices.

Table 1-1 shows the comparison of project, program, and portfolio views across several dimensions within the organization.

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table 1-1. comparative overview of Project, Program, and Portfolio Management

Organizational Project Management

Projects Programs Portfolios

Projects have defined objectives. Scope is progres- sively elaborated throughout the project life cycle. Project managers expect change and implement processes to keep change managed and controlled.

Project managers progressively elaborate high-level information into detailed plans throughout the project life cycle.

Project managers manage the project team to meet the project objectives.

Success is measured by product and project quality, timeliness, budget compliance, and degree of customer satisfaction.

Project managers monitor and control the work of producing the products, services, or results that the project was undertaken to produce.

Programs have a larger scope and provide more significant benefits.

Program managers expect change from both inside and outside the program and are prepared to manage it.

Program managers develop the overall program plan and create high-level plans to guide detailed planning at the component level.

Program managers manage the program staff and the project managers; they provide vision and overall leadership.

Success is measured by the degree to which the program satisfies the needs and benefits for which it was undertaken.

Program managers monitor the progress of program components to ensure the overall goals, schedules, budget, and benefits of the program will be met.

Portfolios have an organizational scope that changes with the strategic objectives of the organization.

Portfolio managers continuously monitor changes in the broader internal and external environment.

Portfolio managers create and maintain necessary processes and communication relative to the aggregate portfolio.

Portfolio managers may manage or coordinate portfolio management staff, or program and project staff that may have reporting responsibilities into the aggregate portfolio.

Success is measured in terms of the aggregate investment performance and benefit realization of the portfolio.

Portfolio managers monitor strategic changes and aggregate resource allocation, performance results, and risk of the portfolio.

Scope

Change

Planning

Management

Success

Monitoring

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1.4.1 Program Management

A program is defined as a group of related projects, subprograms, and program activities managed in a coordinated way to obtain benefits not available from managing them individually. Programs may include elements of related work outside the scope of the discrete projects in the program. A project may or may not be part of a program but a program will always have projects.

Program management is the application of knowledge, skills, tools, and techniques to a program in order to meet the program requirements and to obtain benefits and control not available by managing projects individually.

Projects within a program are related through the common outcome or collective capability. If the relationship between projects is only that of a shared client, seller, technology, or resource, the effort should be managed as a portfolio of projects rather than as a program.

Program management focuses on the project interdependencies and helps to determine the optimal approach for managing them. Actions related to these interdependencies may include:

• Resolving resource constraints and/or conflicts that affect multiple projects within the program,

• Aligning organizational/strategic direction that affects project and program goals and objectives, and

• Resolving issues and change management within a shared governance structure.

An example of a program is a new communications satellite system with projects for design of the satellite and the ground stations, the construction of each, the integration of the system, and the launch of the satellite.

1.4.2 Portfolio Management

A portfolio refers to projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives. The projects or programs of the portfolio may not necessarily be interdependent or directly related. For example, an infrastructure firm that has the strategic objective of “maximizing the return on its investments” may put together a portfolio that includes a mix of projects in oil and gas, power, water, roads, rail, and airports. From this mix, the firm may choose to manage related projects as one program. All of the power projects may be grouped together as a power program. Similarly, all of the water projects may be grouped together as a water program. Thus, the power program and the water program become integral components of the enterprise portfolio of the infrastructure firm.

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Portfolio management refers to the centralized management of one or more portfolios to achieve strategic objectives. Portfolio management focuses on ensuring that projects and programs are reviewed to prioritize resource allocation, and that the management of the portfolio is consistent with and aligned to organizational strategies.

1.4.3 Projects and Strategic Planning

Projects are often utilized as a means of directly or indirectly achieving objectives within an organization’s strategic plan. Projects are typically authorized as a result of one or more of the following strategic considerations:

• Market demand (e.g., a car company authorizing a project to build more fuel-efficient cars in response to gasoline shortages);

• Strategic opportunity/business need (e.g., a training company authorizing a project to create a new course to increase its revenues);

• Social need (e.g., a nongovernmental organization in a developing country authorizing a project to provide potable water systems, latrines, and sanitation education to communities suffering from high rates of infectious diseases);

• Environmental consideration (e.g., a public company authorizing a project to create a new service for electric car sharing to reduce pollution);

• Customer request (e.g., an electric utility authorizing a project to build a new substation to serve a new industrial park);

• Technological advance (e.g., an electronics firm authorizing a new project to develop a faster, cheaper, and smaller laptop based on advances in computer memory and electronics technology); and

• Legal requirement (e.g., a chemical manufacturer authorizing a project to establish guidelines for proper handling of a new toxic material).

1.4.4 Project Management office

A project management office (PMO) is a management structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques. The responsibilities of a PMO can range from providing project management support functions to actually being responsible for the direct management of one or more projects.

There are several types of PMO structures in organizations, each varying in the degree of control and influence they have on projects within the organization, such as:

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• Supportive. Supportive PMOs provide a consultative role to projects by supplying templates, best practices, training, access to information and lessons learned from other projects. This type of PMO serves as a project repository. The degree of control provided by the PMO is low.

• controlling. Controlling PMOs provide support and require compliance through various means. Compliance may involve adopting project management frameworks or methodologies, using specific templates, forms and tools, or conformance to governance. The degree of control provided by the PMO is moderate.

• directive. Directive PMOs take control of the projects by directly managing the projects. The degree of control provided by the PMO is high.

The PMO integrates data and information from corporate strategic projects and evaluates how higher level strategic objectives are being fulfilled. The PMO is the natural liaison between the organization’s portfolios, programs, projects, and the corporate measurement systems (e.g. balanced scorecard).

The projects supported or administered by the PMO may not be related, other than by being managed together. The specific form, function, and structure of a PMO are dependent upon the needs of the organization that it supports.

A PMO may have the authority to act as an integral stakeholder and a key decision maker throughout the life of each project, to make recommendations, or to terminate projects or take other actions, as required, to remain aligned with the business objectives. In addition, the PMO may be involved in the selection, management, and deployment of shared or dedicated project resources.

A primary function of a PMO is to support project managers in a variety of ways which may include, but are not limited to:

• Managing shared resources across all projects administered by the PMO;

• Identifying and developing project management methodology, best practices, and standards;

• Coaching, mentoring, training, and oversight;

• Monitoring compliance with project management standards, policies, procedures, and templates by means of project audits;

• Developing and managing project policies, procedures, templates, and other shared documentation (organizational process assets); and

• Coordinating communication across projects.

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Project managers and PMOs pursue different objectives and, as such, are driven by different requirements. All of these efforts are aligned with the strategic needs of the organization. Differences between the role of project managers and a PMO may include the following:

• The project manager focuses on the specified project objectives, while the PMO manages major program scope changes, which may be seen as potential opportunities to better achieve business objectives.

• The project manager controls the assigned project resources to best meet project objectives, while the PMO optimizes the use of shared organizational resources across all projects.

• The project manager manages the constraints (scope, schedule, cost, quality, etc.) of the individual projects, while the PMO manages the methodologies, standards, overall risks/opportunities, metrics, and interdependencies among projects at the enterprise level.

1.5 relationship Between Project Management, operations Management, and organizational Strategy

Operations management is responsible for overseeing, directing, and controlling business operations. Operations evolve to support the day-to-day business, and are necessary to achieve strategic and tactical goals of the business. Examples include: production operations, manufacturing operations, accounting operations, software support, and maintenance.

Though temporary in nature, projects can help achieve the organizational goals when they are aligned with the organization’s strategy. Organizations sometimes change their operations, products, or systems by creating strategic business initiatives that are developed and implemented through projects. Projects require project management activities and skill sets, while operations require business process management, operations management activities, and skill sets.

1.5.1 operations and Project Management

Changes in business operations may be the focus of a dedicated project—especially if there are substantial changes to business operations as a result of a new product or service delivery. Ongoing operations are outside of the scope of a project; however, there are intersecting points where the two areas cross.

Projects can intersect with operations at various points during the product life cycle, such as:

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• At each closeout phase;

• When developing a new product, upgrading a product, or expanding outputs;

• While improving operations or the product development process; or

• Until the end of the product life cycle.

At each point, deliverables and knowledge are transferred between the project and operations for implementation of the delivered work. This implementation occurs through a transfer of project resources to operations toward the end of the project, or through a transfer of operational resources to the project at the start.

Operations are ongoing endeavors that produce repetitive outputs, with resources assigned to do basically the same set of tasks according to the standards institutionalized in a product life cycle. Unlike the ongoing nature of operations, projects are temporary endeavors.

1.5.1.1 operations Management

Operations management is a subject area that is outside the scope of formal project management as described in this standard.

Operations management is an area of management concerned with ongoing production of goods and/or services. It involves ensuring that business operations continue efficiently by using the optimum resources needed and meeting customer demands. It is concerned with managing processes that transform inputs (e.g., materials, components, energy, and labor) into outputs (e.g., products, goods, and/or services).

1.5.1.2 operational Stakeholders in Project Management

While operations management is different from project management (see 1.5.1.1), the needs of stakeholders who perform and conduct business operations are important considerations in projects that will affect their future work and endeavors. Project managers who consider and appropriately include operational stakeholders in all phases of projects, gain insight and avoid unnecessary issues that often arise when their input is overlooked.

Operational stakeholders should be engaged and their needs identified as part of the stakeholder register, and their influence (positive or negative) should be addressed as part of the risk management plan.

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The following list includes examples of operational stakeholders (depending upon the business):

• Plant operators,

• Manufacturing line supervisors,

• Help desk staff,

• Production system support analysts,

• Customer service representative,

• Salespersons,

• Maintenance workers,

• Telephone sales personnel,

• Call center personnel,

• Retail workers,

• Line managers, and

• Training officers.

1.5.2 organizations and Project Management

Organizations use governance to establish strategic direction and performance parameters. The strategic direction provides the purpose, expectations, goals, and actions necessary to guide business pursuit and is aligned with business objectives. Project management activities should be aligned with top-level business direction, and if there is a change, then project objectives need to be realigned. In a project environment, changes to project objectives affect project efficiency and success. When the business alignment for a project is constant, the chance for project success greatly increases because the project remains aligned with the strategic direction of the organization. Should something change, projects should change accordingly.

1.5.2.1 Project-Based organizations

Project-based organizations (PBOs) refer to various organizational forms that create temporary systems for carrying out their work. PBOs can be created by different types of organizations (i.e., functional, matrix, or projectized (see 2.1.3)). The use of PBOs may diminish the hierarchy and bureaucracy inside the organizations as the success of the work is measured by the final result rather than by position or politics.

PBOs conduct the majority of their work as projects and/or provide project rather than functional approaches. PBOs can refer to either entire firms (as in telecommunications, oil and gas, construction, consultancy, and professional services) multi-firm consortia, or networks; it is also possible that some large project-based organizations have functional support areas or that the PBO is nested within subsidiaries or divisions of larger corporations.

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1.5.2.2 the Link Between Project Management and organizational Governance

Projects (and programs) are undertaken to achieve strategic business outcomes, for which many organizations now adopt formal organizational governance processes and procedures. Organizational governance criteria can impose constraints on projects—particularly if the project delivers a service which will be subject to strict organizational governance.

Because project success may be judged on the basis of how well the resultant product or service supports organizational governance, it is important for the project manager to be knowledgeable about corporate/ organizational governance policies and procedures pertaining to the subject matter of the product or service (e.g., if an organization has adopted policies in support of sustainability practices and the project involves construction of a new office building, the project manager should be aware of sustainability requirements related to building construction.)

1.5.2.3 the relationship Between Project Management and organizational Strategy

Organizational strategy should provide guidance and direction to project management—especially when one considers that projects exist to support organizational strategies. Often it is the project sponsor or the portfolio or program manager who identifies alignment or potential conflicts between organizational strategies and project goals and then communicates these to the project manager. If the goals of a project are in conflict with an established organizational strategy, it is incumbent upon the project manager to document and identify such conflicts as early as possible in the project. At times, the development of an organizational strategy could be the goal of a project rather than a guiding principle. In such a case, it is important for the project to specifically define what constitutes an appropriate organizational strategy that will sustain the organization.

1.6 Business Value

Business value is a concept that is unique to each organization. Business value is defined as the entire value of the business; the total sum of all tangible and intangible elements. Examples of tangible elements include monetary assets, fixtures, stockholder equity, and utility. Examples of intangible elements include good will, brand recognition, public benefit, and trademarks. Depending on the organization, business value scope can be short-, medium-, or long-term. Value may be created through the effective management of ongoing operations. However, through the effective use of portfolio, program, and project management, organizations will possess the ability to employ reliable, established processes to meet strategic objectives and obtain greater business value from their project investments. While not all organizations are business driven, all organizations conduct business-related activities. Whether an organization is a government agency or a nonprofit organization, all organizations focus on attaining business value for their activities.

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Successful business value realization begins with comprehensive strategic planning and management. Organizational strategy can be expressed through the organization’s mission and vision, including orientation to markets, competition, and other environmental factors. Effective organizational strategy provides defined directions for development and growth, in addition to performance metrics for success. In order to bridge the gap between organizational strategy and successful business value realization, the use of portfolio, program, and project management techniques is essential.

Portfolio management aligns components (projects, programs, or operations) to the organizational strategy, organized into portfolios or subportfolios to optimize project or program objectives, dependencies, costs, timelines, benefits, resources, and risks. This allows organizations to have an overall view of how the strategic goals are reflected in the portfolio, institute appropriate governance management, and authorize human, financial, or material resources to be allocated based on expected performance and benefits.

Using program management, organizations have the ability to align multiple projects for optimized or integrated costs, schedule, effort, and benefits. Program management focuses on project interdependencies and helps to determine the optimal approach for managing and realizing the desired benefits.

With project management, organizations have the ability to apply knowledge, processes, skills, and tools and techniques that enhance the likelihood of success over a wide range of projects. Project management focuses on the successful delivery of products, services, or results. Within programs and portfolios, projects are a means of achieving organizational strategy and objectives.

Organizations can further facilitate the alignment of these portfolio, program, and project management activities by strengthening organizational enablers such as structural, cultural, technological, and human resource practices. By continuously conducting portfolio strategic alignment and optimization, performing business impact analyses, and developing robust organizational enablers, organizations can achieve successful transitions within the portfolio, program, and project domains and attain effective investment management and business value realization.

1.7 role of the Project Manager

The project manager is the person assigned by the performing organization to lead the team that is responsible for achieving the project objectives. The role of a project manager is distinct from a functional manager or operations manager. Typically the functional manager is focused on providing management oversight for a functional or a business unit, and operations managers are responsible for ensuring that business operations are efficient.

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Depending on the organizational structure, a project manager may report to a functional manager. In other cases, a project manager may be one of several project managers who report to a program or portfolio manager who is ultimately responsible for enterprise-wide projects. In this type of structure, the project manager works closely with the program or portfolio manager to achieve the project objectives and to ensure the project management plan aligns with the overarching program plan. The project manager also works closely and in collaboration with other roles, such as a business analyst, quality assurance manager, and subject matter experts.

1.7.1 responsibilities and competencies of the Project Manager

In general, project managers have the responsibility to satisfy the needs: task needs, team needs, and individual needs. As project management is a critical strategic discipline, the project manager becomes the link between the strategy and the team. Projects are essential to the growth and survival of organizations. Projects create value in the form of improved business processes, are indispensable in the development of new products and services, and make it easier for companies to respond to changes in the environment, competition, and the marketplace. The project manager’s role therefore becomes increasingly strategic. However, understanding and applying the knowledge, tools, and techniques that are recognized as good practice are not sufficient for effective project management. In addition to any area-specific skills and general management proficiencies required for the project, effective project management requires that the project manager possess the following competencies:

• Knowledge—Refers to what the project manager knows about project management.

• Performance—Refers to what the project manager is able to do or accomplish while applying his or her project management knowledge.

• Personal—Refers to how the project manager behaves when performing the project or related activity. Personal effectiveness encompasses attitudes, core personality characteristics, and leadership, which provides the ability to guide the project team while achieving project objectives and balancing the project constraints.

1.7.2 Interpersonal Skills of a Project Manager

Project managers accomplish work through the project team and other stakeholders. Effective project managers require a balance of ethical, interpersonal, and conceptual skills that help them analyze situations and interact appropriately. Appendix X3 on Interpersonal Skills describes important interpersonal skills, such as:

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• Leadership,

• Team building,

• Motivation,

• Communication,

• Influencing,

• Decision making,

• Political and cultural awareness,

• Negotiation,

• Trust building,

• Conflict management, and

• Coaching.

1.8 Project Management Body of Knowledge

The PMBOK® Guide contains the standard for managing most projects most of the time across many types of industries. The standard, included in Annex A1, describes the project management processes used to manage a project toward a more successful outcome.

This standard is unique to the project management field and has interrelationships to other project management disciplines such as program management and portfolio management.

Project management standards do not address all details of every topic. This standard is limited to individual projects and the project management processes that are generally recognized as good practice. Other standards may be consulted for additional information on the broader context in which projects are accomplished, such as:

• The Standard for Program Management [3] addresses the management of programs,

• The Standard for Portfolio Management [4] addresses the management of portfolios,

• Organizational Project Management Maturity Model (OPM3®) [5] examines an enterprise’s project management process capabilities.

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orGAniZAtionAl influences And Project life cycle Projects and project management take place in an environment that is broader than that of the project itself.

Understanding this broader context helps ensure that work is carried out in alignment with the organization’s goals and managed in accordance with the organization’s established practices. This section describes how organizational influences affect the methods used for staffing, managing, and executing the project. It discusses the influence of stakeholders on the project and its governance, the project team’s structure and membership, and different approaches to the phasing and relationship of activities within the project’s life cycle. The following major sections are addressed:

2.1 organizational Influences on Project Management

2.2 Project Stakeholders and Governance

2.3 Project team

2.4 Project Life cycle

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2.1 organizational Influences on Project Management

An organization’s culture, style, and structure influence how its projects are performed. The organization’s level of project management maturity and its project management systems can also influence the project. When a project involves external entities such as those that are part of a joint venture or partnering agreement, the project will be influenced by more than one organization. The following sections describe organizational characteristics, factors, and assets within an enterprise that are likely to influence the project.

2.1.1 organizational cultures and Styles

Organizations are systematic arrangements of entities (persons and/or departments) aimed at accomplishing a purpose, which may involve undertaking projects. An organization’s culture and style affect how it conducts projects. Cultures and styles are group phenomena known as cultural norms, which develop over time. The norms include established approaches to initiating and planning projects, the means considered acceptable for getting the work done, and recognized authorities who make or influence decisions.

Organizational culture is shaped by the common experiences of members of the organization and most organizations have developed unique cultures over time by practice and common usage. Common experiences include, but are not limited to:

• Shared visions, mission, values, beliefs, and expectations;

• Regulations, policies, methods, and procedures;

• Motivation and reward systems;

• Risk tolerance;

• View of leadership, hierarchy, and authority relationships;

• Code of conduct, work ethic, and work hours; and

• Operating environments.

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The organization’s culture is an enterprise environmental factor, as described in Section 2.1.5. Cultures and styles are learned and shared and may have a strong influence on a project’s ability to meet its objectives. A project manager should therefore understand the different organizational styles and cultures that may affect a project. The project manager needs to know which individuals in the organization are the decision makers or influencers and work with them to increase the probability of project success.

In light of globalization, understanding the impact of cultural influences is critical in projects involving diverse organizations and locations around the world. Culture becomes a critical factor in defining project success, and multi- cultural competence becomes critical for the project manager.

2.1.2 organizational communications

Project management success in an organization is highly dependent on an effective organizational communication style, especially in the face of globalization of the project management profession. Organizational communications capabilities have great influence on how projects are conducted. As a consequence, project managers in distant locations are able to more effectively communicate with all relevant stakeholders within the organizational structure to facilitate decision making. Stakeholders and project team members can also use electronic communications (including e-mail, texting, instant messaging, social media, video and web conferencing, and other forms of electronic media) to communicate with the project manager formally or informally.

2.1.3 organizational Structures

Organizational structure is an enterprise environmental factor, which can affect the availability of resources and influence how projects are conducted (see also Section 2.1.5). Organizational structures range from functional to projectized, with a variety of matrix structures in between. Table 2-1 shows key project-related characteristics of the major types of organizational structures.

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table 2-1. Influence of organizational Structures on Projects

Project Manager's Authority

Resource Availability

Who manages the project budget

Project Manager's Role

Project Management Administrative Staff

Project Characteristics

Organization Structure

Functional Weak Matrix Balanced Matrix Strong Matrix

Matrix

Projectized

Little or None

Part-time Part-time Part-time Full-time Full-time

Part-time Part-time Full-time Full-time Full-time

Functional Manager

Functional Manager Mixed

Project Manager

Low

Low to Moderate

Moderate to High

High to Almost Total

The classic functional organization, shown in Figure 2-1, is a hierarchy where each employee has one clear superior. Staff members are grouped by specialty, such as production, marketing, engineering, and accounting at the top level. Specialties may be further subdivided into focused functional units, such as mechanical and electrical engineering. Each department in a functional organization will do its project work independently of other departments.

Functional Manager

Chief Executive

Project Coordination

(Gray boxes represent staff engaged in project activities)

Staff

Staff Staff

Staff

Functional Manager

Staff

StaffStaff

Staff

Figure 2-1. Functional organization

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Matrix organizations, as shown in Figures 2-2 through 2-4, reflect a blend of functional and projectized characteristics. Matrix organizations can be classified as weak, balanced, or strong depending on the relative level of power and influence between functional and project managers. Weak matrix organizations maintain many of the characteristics of a functional organization, and the role of the project manager is more of a coordinator or expediter. A project expediter works as staff assistant and communications coordinator. The expediter cannot personally make or enforce decisions. Project coordinators have power to make some decisions, have some authority, and report to a higher-level manager. Strong matrix organizations have many of the characteristics of the projectized organization, and have full-time project managers with considerable authority and full-time project administrative staff. While the balanced matrix organization recognizes the need for a project manager, it does not provide the project manager with the full authority over the project and project funding. Table 2-1 provides additional details of the various matrix organizational structures.

Functional Manager

Chief Executive

Project Coordination(Gray boxes represent staff engaged in project activities)

Staff

Staff Staff

StaffStaff

Functional Manager

Staff

Figure 2-2. Weak Matrix organization

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Functional Manager

Staff Staff

StaffStaff

Staff

Chief Executive

Functional Manager

Project Coordination

(Gray boxes represent staff engaged in project activities)

Project Manager

Staff

Staff Staff

Figure 2-3. Balanced Matrix organization

Chief Executive

Functional Manager

Manager of Project Managers

Staff

Staff Staff

Project Manager

Staff

Project Coordination(Gray boxes represent staff engaged in project activities)

Figure 2-4. Strong Matrix organization

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At the opposite end of the spectrum to the functional organization is the projectized organization, shown in Figure 2-5. In a projectized organization, team members are often colocated. Most of the organization’s resources are involved in project work, and project managers have a great deal of independence and authority. Virtual collaboration techniques are often used to accomplish the benefits of colocated teams. Projectized organizations often have organizational units called departments, but they can either report directly to the project manager or provide support services to the various projects.

Project Manager

Chief Executive

Project Coordination

(Gray boxes represent staff engaged in project activities)

Project Manager

Staff

Figure 2-5. Projectized organization

Many organizations involve all these structures at various levels, often referred to as a composite organization, as shown in Figure 2-6. For example, even a fundamentally functional organization may create a special project team to handle a critical project. Such a team may have many of the characteristics of a project team in a projectized organization. The team may include full-time staff from different functional departments, may develop its own set of operating procedures, and may even operate outside of the standard, formalized reporting structure during the project. Also, an organization may manage most of its projects in a strong matrix, but allow small projects to be managed by functional departments.

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Chief Executive

Functional Manager

Manager of Project Managers

Staff

Staff Staff

Project Manager

Staff

Project A CoordinationProject B Coordination

(Gray boxes represent staff engaged in project activities)

Figure 2-6. composite organization

Many organizational structures include strategic, middle management, and operational levels. The project manager may interact with all three levels depending on factors such as:

• Strategic importance of the project,

• Capacity of stakeholders to exert influence on the project,

• Degree of project management maturity,

• Project management systems, and

• Organizational communications.

This interaction determines project characteristics such as:

• Project manager’s level of authority,

• Resource availability and management,

• Entity controlling the project budget,

• Project manager’s role, and

• Project team composition.

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2.1.4 organizational Process Assets

Organizational process assets are the plans, processes, policies, procedures, and knowledge bases specific to and used by the performing organization. They include any artifact, practice, or knowledge from any or all of the organizations involved in the project that can be used to perform or govern the project. These process assets include formal and informal plans, processes, policies, procedures, and knowledge bases, specific to and used by the performing organization. The process assets also include the organization’s knowledge bases such as lessons learned and historical information. Organizational process assets may include completed schedules, risk data, and earned value data. Organizational process assets are inputs to most planning processes. Throughout the project, the project team members may update and add to the organizational process assets as necessary. Organizational process assets may be grouped into two categories: (1) processes and procedures, and (2) corporate knowledge base.

2.1.4.1 Processes and Procedures

The organization’s processes and procedures for conducting project work include, but are not limited to:

• Initiating and Planning:

○ Guidelines and criteria for tailoring the organization’s set of standard processes and procedures to satisfy the specific needs of the project;

○ Specific organizational standards such as policies (e.g., human resources policies, health and safety policies, ethics policies, and project management policies), product and project life cycles, and quality policies and procedures (e.g., process audits, improvement targets, checklists, and standardized process definitions for use in the organization); and

○ Templates (e.g., risk register, work breakdown structure, project schedule network diagram, and contract templates).

• Executing, Monitoring and Controlling:

○ Change control procedures, including the steps by which performing organization standards, policies, plans, and procedures or any project documents will be modified, and how any changes will be approved and validated;

○ Financial controls procedures (e.g., time reporting, required expenditure and disbursement reviews, accounting codes, and standard contract provisions);

○ Issue and defect management procedures defining issue and defect controls, issue and defect identification and resolution, and action item tracking;

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○ Organizational communication requirements (e.g., specific communication technology available, authorized communication media, record retention policies, and security requirements);

○ Procedures for prioritizing, approving, and issuing work authorizations;

○ Risk control procedures, including risk categories, risk statement templates, probability and impact definitions, and probability and impact matrix; and

○ Standardized guidelines, work instructions, proposal evaluation criteria, and performance measurement criteria.

• Closing:

○ Project closure guidelines or requirements (e.g., lessons learned, final project audits, project evaluations, product validations, and acceptance criteria).

2.1.4.2 corporate Knowledge Base

The organizational knowledge base for storing and retrieving information includes, but is not limited to:

• Configuration management knowledge bases containing the versions and baselines of all performing organization standards, policies, procedures, and any project documents;

• Financial databases containing information such as labor hours, incurred costs, budgets, and any project cost overruns;

• Historical information and lessons learned knowledge bases (e.g., project records and documents, all project closure information and documentation, information regarding both the results of previous project selection decisions and previous project performance information, and information from risk management activities);

• Issue and defect management databases containing issue and defect status, control information, issue and defect resolution, and action item results;

• Process measurement databases used to collect and make available measurement data on processes and products; and

• Project files from previous projects (e.g., scope, cost, schedule, and performance measurement baselines, project calendars, project schedule network diagrams, risk registers, planned response actions, and defined risk impact).

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2.1.5 Enterprise Environmental Factors

Enterprise environmental factors refer to conditions, not under the control of the project team, that influence, constrain, or direct the project. Enterprise environmental factors are considered inputs to most planning processes, may enhance or constrain project management options, and may have a positive or negative influence on the outcome.

Enterprise environmental factors vary widely in type or nature. Enterprise environmental factors include, but are not limited to:

• Organizational culture, structure, and governance;

• Geographic distribution of facilities and resources;

• Government or industry standards (e.g., regulatory agency regulations, codes of conduct, product standards, quality standards, and workmanship standards);

• Infrastructure (e.g., existing facilities and capital equipment);

• Existing human resources (e.g., skills, disciplines, and knowledge, such as design, development, legal, contracting, and purchasing);

• Personnel administration (e.g., staffing and retention guidelines, employee performance reviews and training records, reward and overtime policy, and time tracking);

• Company work authorization systems;

• Marketplace conditions;

• Stakeholder risk tolerances;

• Political climate;

• Organization’s established communications channels;

• Commercial databases (e.g., standardized cost estimating data, industry risk study information, and risk databases); and

• Project management information system (e.g., an automated tool, such as a scheduling software tool, a configuration management system, an information collection and distribution system, or web interfaces to other online automated systems).

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2.2 Project Stakeholders and Governance

A stakeholder is an individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project. Stakeholders may be actively involved in the project or have interests that may be positively or negatively affected by the performance or completion of the project. Different stakeholders may have competing expectations that might create conflicts within the project. Stakeholders may also exert influence over the project, its deliverables, and the project team in order to achieve a set of outcomes that satisfy strategic business objectives or other needs. Project governance—the alignment of the project with stakeholders’ needs or objectives—is critical to the successful management of stakeholder engagement and the achievement of organizational objectives. Project governance enables organizations to consistently manage projects and maximize the value of project outcomes and align the projects with business strategy. It provides a framework in which the project manager and sponsors can make decisions that satisfy both stakeholder needs and expectations and organizational strategic objectives or address circumstances where these may not be in alignment.

2.2.1 Project Stakeholders

Stakeholders include all members of the project team as well as all interested entities that are internal or external to the organization. The project team identifies internal and external, positive and negative, and performing and advising stakeholders in order to determine the project requirements and the expectations of all parties involved. The project manager should manage the influences of these various stakeholders in relation to the project requirements to ensure a successful outcome. Figure 2-7 illustrates the relationship between the project, the project team, and various stakeholders.

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Project Life Cycle and Organization

Project Stakeholders

Project Team

The Project

Operations Management Functional

Managers

Sellers/ Business Partners

Customers/ Users

Other Project Team

Members Project

Manager

Project Manage-

ment Team

Project Manage-

ment Office

Program Manager

Portfolio Manager

Other Stakeholders Sponsor

Figure 2-7. the relationship Between Stakeholders and the Project

Stakeholders have varying levels of responsibility and authority when participating on a project. This level can change over the course of the project’s life cycle. Their involvement may range from occasional contributions in surveys and focus groups to full project sponsorship which includes providing financial, political, or other support. Some stakeholders may also detract from the success of the project, either passively or actively. These stakeholders require the project manager’s attention throughout the project’s life cycle, as well as planning to address any issues they may raise.

Stakeholder identification is a continuous process throughout the entire project life cycle. Identifying stakeholders, understanding their relative degree of influence on a project, and balancing their demands, needs, and expectations are critical to the success of the project. Failure to do so can lead to delays, cost increases, unexpected issues, and other negative consequences including project cancellation. An example is late recognition that the legal department is a significant stakeholder, which results in delays and increased expenses due to legal requirements that are required to be met before the project can be completed or the product scope is delivered.

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Just as stakeholders can positively or adversely impact a project’s objectives, a project can be perceived by the stakeholders as having positive or negative results. For example, business leaders from a community who will benefit from an industrial expansion project will see positive economic benefits to the community in the form of additional jobs, supporting infrastructure, and taxes. In the case of stakeholders with positive expectations for the project, their interests are best served by making the project successful. In contrast, the interests of negatively affected stakeholders, such as nearby homeowners or small business owners who may lose property, be forced to relocate, or accept unwanted changes in the local environment, are served by impeding the project’s progress. Overlooking negative stakeholder interests can result in an increased likelihood of failures, delays, or other negative consequences to the project.

An important part of a project manager’s responsibility is to manage stakeholder expectations, which can be difficult because stakeholders often have very different or conflicting objectives. Part of the project manager’s responsibility is to balance these interests and ensure that the project team interacts with stakeholders in a professional and cooperative manner. Project managers may involve the project’s sponsor or other team members from different locations to identify and manage stakeholders that could be dispersed around the world.

The following are some examples of project stakeholders:

• Sponsor. A sponsor is the person or group who provides resources and support for the project and is accountable for enabling success. The sponsor may be external or internal to the project manager’s organization. From initial conception through project closure, the sponsor promotes the project. This includes serving as spokesperson to higher levels of management to gather support throughout the organization and promoting the benefits the project brings. The sponsor leads the project through the initiating processes until formally authorized, and plays a significant role in the development of the initial scope and charter. For issues that are beyond the control of the project manager, the sponsor serves as an escalation path. The sponsor may also be involved in other important issues such as authorizing changes in scope, phase-end reviews, and go/no-go decisions when risks are particularly high. The sponsor also ensures a smooth transfer of the project’s deliverables into the business of the requesting organization after project closure.

• customers and users. Customers are the persons or organizations who will approve and manage the project’s product, service, or result. Users are the persons or organizations who will use the project’s product, service, or result. Customers and users may be internal or external to the performing organization and may also exist in multiple layers. For example, the customers for a new pharmaceutical product could include the doctors who prescribe it, the patients who use it and the insurers who pay for it. In some application areas, customers and users are synonymous, while in others, customers refer to the entity acquiring the project’s product, and users refer to those who will directly utilize the project’s product.

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• Sellers. Sellers, also called vendors, suppliers, or contractors, are external companies that enter into a contractual agreement to provide components or services necessary for the project.

• Business partners. Business partners are external organizations that have a special relationship with the enterprise, sometimes attained through a certification process. Business partners provide specialized expertise or fill a specified role such as installation, customization, training, or support.

• organizational groups. Organizational groups are internal stakeholders who are affected by the activities of the project team. Examples of various business elements of an organization that may be affected by the project include marketing and sales, human resources, legal, finance, operations, manufacturing, and customer service. These groups support the business environment where projects are executed, and are therefore affected by the activities of the project. As a result, there is generally a significant amount of interaction between the various business elements of an organization and the project team as they work together to achieve project goals. These groups may provide input to requirements and accept deliverables necessary for a smooth transition to production or related operations.

• Functional managers. Functional managers are key individuals who play a management role within an administrative or functional area of the business, such as human resources, finance, accounting, or procurement. They are assigned their own permanent staff to carry out the ongoing work, and they have a clear directive to manage all tasks within their functional area of responsibility. The functional manager may provide subject matter expertise or their function may provide services to the project.

• other stakeholders. Additional stakeholders, such as procurement entities, financial institutions, government regulators, subject matter experts, consultants, and others, may have a financial interest in the project, contribute inputs to the project, or have an interest in the outcome of the project.

Project stakeholders and stakeholder engagement are further defined in Section 13 on Project Stakeholder Management.

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2.2.2 Project Governance

Project governance is an oversight function that is aligned with the organization’s governance model and that encompasses the project life cycle. Project governance framework provides the project manager and team with structure, processes, decision-making models and tools for managing the project, while supporting and controlling the project for successful delivery. Project governance is a critical element of any project, especially on complex and risky projects. It provides a comprehensive, consistent method of controlling the project and ensuring its success by defining and documenting and communicating reliable, repeatable project practices. It includes a framework for making project decisions; defines roles, responsibilities, and accountabilities for the success of the project; and determines the effectiveness of the project manager. A project’s governance is defined by and fits within the larger context of the portfolio, program, or organization sponsoring it but is separate from organizational governance.

For project governance, the PMO may also play some decisive role. Project governance involves stakeholders as well as documented policies, procedures, and standards; responsibilities; and authorities. Examples of the elements of a project governance framework include:

• Project success and deliverable acceptance criteria;

• Process to identify, escalate, and resolve issues that arise during the project;

• Relationship among the project team, organizational groups, and external stakeholders;

• Project organization chart that identifies project roles;

• Processes and procedures for the communication of information;

• Project decision-making processes;

• Guidelines for aligning project governance and organizational strategy;

• Project life cycle approach;

• Process for stage gate or phase reviews;

• Process for review and approval for changes to budget, scope, quality, and schedule which are beyond the authority of the project manager; and

• Process to align internal stakeholders with project process requirements.

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Within those constraints, as well as the additional limitations of time and budget, it is up to the project manager and the project team to determine the most appropriate method of carrying out the project. While project governance is the framework in which the project team performs, the team is still responsible for planning, executing, controlling, and closing the project. The project governance approach should be described in the project management plan. Decisions are made regarding who will be involved, the escalation procedures, what resources are necessary, and the general approach to completing the work. Another important consideration is whether more than one phase will be involved and, if so, the specific life cycle for the individual project.

2.2.3 Project Success

Since projects are temporary in nature, the success of the project should be measured in terms of completing the project within the constraints of scope, time, cost, quality, resources, and risk as approved between the project managers and senior management. To ensure realization of benefits for the undertaken project, a test period (such as soft launch in services) can be part of the total project time before handing it over to the permanent operations. Project success should be referred to the last baselines approved by the authorized stakeholders.

The project manager is responsible and accountable for setting realistic and achievable boundaries for the project and to accomplish the project within the approved baselines.

2.3 Project team

The project team includes the project manager and the group of individuals who act together in performing the work of the project to achieve its objectives. The project team includes the project manager, project management staff, and other team members who carry out the work but who are not necessarily involved with management of the project. This team is comprised of individuals from different groups with specific subject matter knowledge or with a specific skill set to carry out the work of the project. The structure and characteristics of a project team can vary widely, but one constant is the project manager’s role as the leader of the team, regardless of what authority the project manager may have over its members.

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Project teams include roles such as:

• Project management staff. The members of the team who perform project management activities such as scheduling, budgeting, reporting and control, communications, risk management and administrative support. This role may be performed or supported by a project management office (PMO).

• Project staff. The members of the team who carry out the work of creating the project deliverables.

• Supporting experts. Supporting experts perform activities required to develop or execute the project management plan. These can include such roles as contracting, financial management, logistics, legal, safety, engineering, test, or quality control. Depending on the size of the project and level of support required, supporting experts may be assigned to work full time or may just participate on the team when their particular skills are required.

• user or customer representatives. Members of the organization who will accept the deliverables or products of the project may be assigned to act as representatives or liaisons to ensure proper coordination, advise on requirements, or validate the acceptability of the project’s results.

• Sellers. Sellers, also called vendors, suppliers, or contractors, are external companies that enter into a contractual agreement to provide components or services necessary for the project. The project team is often assigned the responsibility to oversee the performance and acceptance of sellers’ deliverables or services. If the sellers bear a large share of the risk for delivering the project’s results, they may play a significant role on the project team.

• Business partner members. Members of business partners’ organizations may be assigned as members of the project team to ensure proper coordination.

• Business partners. Business partners are also external companies, but they have a special relationship with the enterprise, sometimes attained through a certification process. Business partners provide specialized expertise or fill a specified role such as installation, customization, training, or support.

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2.3.1 composition of Project teams

The composition of project teams varies based on factors such as organizational culture, scope, and location. The relationship between the project manager and the team varies depending on the authority of the project manager. In some cases, a project manager may be the team’s line manager, with full authority over its members. In other cases, a project manager may have little or no direct organizational authority over the team members and may have been brought in to lead the project on a part-time basis or under contract. The following are examples of basic project team compositions:

• dedicated. In a dedicated team, all or a majority of the project team members are assigned to work full-time on the project. The project team may be colocated or virtual and usually reports directly to the project manager. This is the simplest structure for a project manager, as the lines of authority are clear and team members can focus on the project’s objectives.

• Part-time. Some projects are established as temporary additional work, with the project manager and team members working on the project while remaining in their existing organizations and continuing to carry out their normal functions. The functional managers maintain control over the team members and the resources allocated to the project, and the project manager is likely to continue performing other management duties. Part-time team members may also be assigned to more than one project at a time.

Dedicated and part-time project team compositions may exist in any of the organizational structures. Dedicated project teams are often seen in projectized organizations, where most of the organization’s resources are involved in project work and project managers have a great deal of independence and authority. Part-time project teams are common within functional organizations, and matrix organizations use both dedicated and part-time project teams. Other members who have limited involvement at various stages of a project can be thought of as part-time project team members.

Project team composition may also vary based on organizational structure. An example of this is a partnership- based project. A project may be established as a partnership, joint venture, consortium, or alliance among several organizations through contracts or agreements. In this structure, one organization takes the lead and assigns a project manager to coordinate the efforts among the partners. Partnership-based projects can offer flexibility at lower cost. These advantages may be offset by the project manager’s lower degree of control over team members and the need for strong mechanisms for communication and monitoring progress. Partnership projects may be set up to exploit industrial synergies, to undertake ventures that one partner could not afford alone, or for other political and strategic reasons.

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Project team composition may also vary based on the geographic location of its members. An example of this is virtual project teams. Communication technologies allow team members in different locations or countries to work as virtual teams. Virtual teams rely on collaborative tools, such as shared online workspaces and video conferences, to coordinate their activities and exchange information about the project. A virtual team can exist with any type of organizational structure and team composition. Virtual teams are often necessary for projects where resources are located onsite or offsite or both, depending on the project activities. A project manager who is leading a virtual team needs to accommodate differences in the culture, working hours, time zones, local conditions, and languages.

2.4 Project Life cycle

A project life cycle is the series of phases that a project passes through from its initiation to its closure. The phases are generally sequential, and their names and numbers are determined by the management and control needs of the organization or organizations involved in the project, the nature of the project itself, and its area of application. The phases can be broken down by functional or partial objectives, intermediate results or deliverables, specific milestones within the overall scope of work, or financial availability. Phases are generally time bounded, with a start and ending or control point. A life cycle can be documented within a methodology. The project life cycle can be determined or shaped by the unique aspects of the organization, industry, or technology employed. While every project has a definite start and a definite end, the specific deliverables and activities that take place in between will vary widely with the project. The life cycle provides the basic framework for managing the project, regardless of the specific work involved.

Project life cycles can range along a continuum from predictive or plan-driven approaches at one end to adaptive or change-driven approaches at the other. In a predictive life cycle (Section 2.4.2.2), the product and deliverables are defined at the beginning of the project and any changes to scope are carefully managed. In an adaptive life cycle (Section 2.4.2.4), the product is developed over multiple iterations and detailed scope is defined for each iteration only as the iteration begins.

2.4.1 characteristics of the Project Life cycle

Projects vary in size and complexity. All projects can be mapped to the following generic life cycle structure (see Figure 2-8):

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• Starting the project,

• Organizing and preparing,

• Carrying out the project work, and

• Closing the project.

This generic life cycle structure is often referred to when communicating with upper management or other entities less familiar with the details of the project. It should not be confused with the Project Management Process Groups, because the processes in a Process Group consist of activities that may be performed and recur within each phase of a project as well as for the project as a whole. The project life cycle is independent from the life cycle of the product produced by or modified by the project. However, the project should take the current life-cycle phase of the product into consideration. This high-level view can provide a common frame of reference for comparing projects—even if they are dissimilar in nature.

Time

C o st

a n d S

ta ff in

g Le

ve l

Project Management Outputs

Project Charter

Starting the

project

Organizing and preparing

Closing the

project

Carrying out the work

Project Management Plan

Accepted Deliverables

Archived Project

Documents

Figure 2-8. typical cost and Staffing Levels Across a Generic Project Life cycle Structure

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The generic life cycle structure generally displays the following characteristics:

• Cost and staffing levels are low at the start, peak as the work is carried out, and drop rapidly as the project draws to a close. Figure 2-8 illustrates this typical pattern.

• The typical cost and staffing curve above may not apply to all projects. A project may require significant expenditures to secure needed resources early in its life cycle, for instance, or be fully staffed from a point very early in its life cycle.

• Risk and uncertainty (as illustrated in Figure 2-9) are greatest at the start of the project. These factors decrease over the life of the project as decisions are reached and as deliverables are accepted.

• The ability to influence the final characteristics of the project’s product, without significantly impacting cost, is highest at the start of the project and decreases as the project progresses towards completion. Figure 2-9 illustrates the idea that the cost of making changes and correcting errors typically increases substantially as the project approaches completion.

While these characteristics remain present to some extent in almost all project life cycles, they are not always present to the same degree. Adaptive life cycles, in particular, are developed with the intent of keeping stakeholder influences higher and the costs of changes lower throughout the life cycle than in predictive life cycles.

Risk and uncertainty

Cost of changes

Project Time Low

High

D e gr

e e

Figure 2-9. Impact of Variable Based on Project time

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Within the context of the generic life cycle structure, a project manager may determine the need for more effective control over certain deliverables or that certain deliverables are required to be completed before the project scope can be completely defined. Large and complex projects in particular may require this additional level of control. In such instances, the work carried out to complete the project’s objective may benefit from being formally divided into phases.

2.4.2 Project Phases

A project may be divided into any number of phases. A project phase is a collection of logically related project activities that culminates in the completion of one or more deliverables. Project phases are used when the nature of the work to be performed is unique to a portion of the project, and are typically linked to the development of a specific major deliverable. A phase may emphasize processes from a particular Project Management Process Group, but it is likely that most or all processes will be executed in some form in each phase. Project phases typically are completed sequentially, but can overlap in some project situations. Different phases typically have a different duration or effort. The high-level nature of project phases makes them an element of the project life cycle.

The phase structure allows the project to be segmented into logical subsets for ease of management, planning, and control. The number of phases, the need for phases, and the degree of control applied depend on the size, complexity, and potential impact of the project. Regardless of the number of phases comprising a project, all phases have similar characteristics:

• The work has a distinct focus that differs from any other phase. This often involves different organizations, locations, and skill sets.

• Achieving the primary deliverable or objective of the phase requires controls or processes unique to the phase or its activities. The repetition of processes across all five Process Groups, as described in Section 3, provides an additional degree of control and defines the boundaries of the phase.

• The closure of a phase ends with some form of transfer or hand-off of the work product produced as the phase deliverable. This phase end represents a natural point to reassess the activities underway and to change or terminate the project if necessary. This point may be referred to as a stage gate, milestone, phase review, phase gate or kill point. In many cases, the closure of a phase is required to be approved in some form before it can be considered closed.

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There is no single ideal structure that will apply to all projects. Although industry common practices will often lead to the use of a preferred structure, projects in the same industry—or even in the same organization—may have significant variation. Some will have only one phase, as shown in Figure 2-10. Other projects may have two or more phases.

One Approach to Managing the Installation of a Telecommunications Network

Executing Processes

Monitoring and Controlling Processes

Closing ProcessesInitiating Processes Planning Processes

Figure 2-10. Example of a Single-Phase Project

Some organizations have established policies that standardize all projects, while others allow the project team to choose and tailor the most appropriate approach for their individual project. For instance, one organization may treat a feasibility study as routine pre-project work, another may treat it as the first phase of a project, and a third may treat the feasibility study as a separate, stand-alone project. Likewise, one project team may divide a project into two phases whereas another project team may choose to manage all the work as a single phase. Much depends on the nature of the specific project and the style of the project team or organization.

2.4.2.1 Phase-to-Phase relationships

When projects have more than one phase, the phases are part of a generally sequential process designed to ensure proper control of the project and attain the desired product, service, or result. However, there are situations when a project might benefit from overlapping or concurrent phases.

There are two basic types of phase-to-phase relationships:

• Sequential relationship. In a sequential relationship, a phase starts only when the previous phase is complete. Figure 2-11 shows an example of a project with three entirely sequential phases. The step- by-step nature of this approach reduces uncertainty, but may eliminate options for reducing the overall schedule.

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Landscaping

One Approach to Cleaning Up a Hazardous Waste Site

Executing Processes

Monitoring and Controlling Processes

Closing Processes

Initiating Processes

Planning Processes

Waste Removal/Cleanup

Executing Processes

Monitoring and Controlling Processes

Closing Processes

Initiating Processes

Planning Processes

Facility Decommissioning

Executing Processes

Monitoring and Controlling Processes

Closing Processes

Initiating Processes

Planning Processes

Figure 2-11. Example of a three-Phase Project

• overlapping relationship. In an overlapping relationship, a phase starts prior to completion of the previous one (see Figure 2-12). This can sometimes be applied as an example of the schedule compression technique called fast tracking. Overlapping phases may require additional resources to allow work to be done in parallel, may increase risk, and can result in rework if a subsequent phase progresses before accurate information is available from the previous phase.

Construction Phase

Executing Processes

Monitoring and Controlling Processes

Closing Processes

Initiating Processes

Planning Processes

Design Phase

Executing Processes

Monitoring and Controlling Processes

Closing Processes

Initiating Processes

Planning Processes

Potential Approach to Building a New Factory

Figure 2-12. Example of a Project with overlapping Phases

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For projects with more than one phase, there may be different relationships (overlapping, sequential, parallel) between individual phases. Considerations such as level of control required, effectiveness, and degree of uncertainty determine the relationship to be applied between phases. Based on those considerations, both relationships could occur between different phases of a single project.

2.4.2.2 Predictive Life cycles

Predictive life cycles (also known as fully plan-driven) are ones in which the project scope, and the time and cost required to deliver that scope, are determined as early in the project life cycle as practically possible. As shown in Figure 2-13, these projects proceed through a series of sequential or overlapping phases, with each phase generally focusing on a subset of project activities and project management processes. The work performed in each phase is usually different in nature to that in the preceding and subsequent phases, therefore, the makeup and skills required of the project team may vary from phase to phase.

Requirements

Feasibility

Planning

Design

Construct

Test

Turnover

Figure 2-13. Example of Predictive Life cycle

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When the project is initiated, the project team will focus on defining the overall scope for the product and project, develop a plan to deliver the product (and any associated deliverables), and then proceed through phases to execute the plan within that scope. Changes to the project scope are carefully managed and require re planning and formal acceptance of the new scope.

Predictive life cycles are generally preferred when the product to be delivered is well understood, there is a substantial base of industry practice, or where a product is required to be delivered in full to have value to stakeholder groups.

Even projects with predictive life cycles may use the concept of rolling wave planning, where a more general, high-level plan is available and more detailed planning is executed for appropriate time windows, as new work activities are approaching and resources are to be assigned.

2.4.2.3 Iterative and Incremental Life cycles

Iterative and incremental life cycles are ones in which project phases (also called iterations) intentionally repeat one or more project activities as the project team’s understanding of the product increases. Iterations develop the product through a series of repeated cycles, while increments successively add to the functionality of the product. These life cycles develop the product both iteratively and incrementally.

Iterative and incremental projects may proceed in phases, and the iterations themselves will be performed in a sequential or overlapping fashion. During an iteration, activities from all Project Management Process Groups will be performed. At the end of each iteration, a deliverable or set of deliverables will be completed. Future iterations may enhance those deliverables or create new ones. Each iteration incrementally builds the deliverables until the exit criteria for the phase are met, allowing the project team to incorporate feedback.

In most iterative life cycles, a high-level vision will be developed for the overall undertaking, but the detailed scope is elaborated one iteration at a time. Often the planning for the next iteration is carried out as work progresses on the current iteration’s scope and deliverables. The work required for a given set of deliverables may vary in duration and effort, and the project team may change between or during iterations. Those deliverables that are not addressed within the scope of the current iteration are typically scoped at a high level only and may be tentatively assigned to a specific future iteration. Changes to the scope of an iteration are carefully managed once work begins.

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Iterative and incremental life cycles are generally preferred when an organization needs to manage changing objectives and scope, to reduce the complexity of a project, or when the partial delivery of a product is beneficial and provides value for one or more stakeholder groups without impact to the final deliverable or set of deliverables. Large and complex projects are frequently executed in an iterative fashion to reduce risk by allowing the team to incorporate feedback and lessons learned between iterations.

2.4.2.4 Adaptive Life cycles

Adaptive life cycles (also known as change-driven or agile methods) are intended to respond to high levels of change and ongoing stakeholder involvement. Adaptive methods are also iterative and incremental, but differ in that iterations are very rapid (usually with a duration of 2 to 4 weeks) and are fixed in time and cost. Adaptive projects generally perform several processes in each iteration, although early iterations may concentrate more on planning activities.

The overall scope of the project will be decomposed into a set of requirements and work to be performed, sometimes referred to as a product backlog. At the beginning of an iteration, the team will work to determine how many of the highest priority items on the backlog list can be delivered within the next iteration. At the end of each iteration, the product should be ready for review by the customer. This does not mean that the customer is required to accept delivery, just that the product should not include unfinished, incomplete, or unusable features. The sponsor and customer representatives should be continuously engaged with the project to provide feedback on deliverables as they are created and to ensure that the product backlog reflects their current needs.

Adaptive methods are generally preferred when dealing with a rapidly changing environment, when requirements and scope are difficult to define in advance, and when it is possible to define small incremental improvements that will deliver value to stakeholders.

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Project MAnAGeMent Processes Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the

project requirements. This application of knowledge requires the effective management of the project management processes.

A process is a set of interrelated actions and activities performed to create a pre-specified product, service, or result. Each process is characterized by its inputs, the tools and techniques that can be applied, and the resulting outputs. As explained in Section 2, the project manager needs to consider organizational process assets and enterprise environmental factors. These should be taken into account for every process, even if they are not explicitly listed as inputs in the process specification. Organizational process assets provide guidelines and criteria for tailoring the organization’s processes to the specific needs of the project. Enterprise environmental factors may constrain the project management options.

In order for a project to be successful, the project team should:

• Select appropriate processes required to meet the project objectives;

• Use a defined approach that can be adapted to meet requirements;

• Establish and maintain appropriate communication and engagement with stakeholders;

• Comply with requirements to meet stakeholder needs and expectations; and

• Balance the competing constraints of scope, schedule, budget, quality, resources, and risk to produce the specified product, service, or result.

The project processes are performed by the project team with stakeholder interaction and generally fall into one of two major categories:

• Project management processes. These processes ensure the effective flow of the project throughout its life cycle. These processes encompass the tools and techniques involved in applying the skills and capabilities described in the Knowledge Areas (Sections 4 through 13).

• Product-oriented processes. These processes specify and create the project’s product. Product- oriented processes are typically defined by the project life cycle (as discussed in Section 2.4) and vary by application area as well as the phase of the product life cycle. The scope of the project cannot be defined without some basic understanding of how to create the specified product. For example, various construction techniques and tools need to be considered when determining the overall complexity of the house to be built.

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The PMBOK® Guide describes only the project management processes. Although product-oriented processes are outside the scope of this document, they should not be ignored by the project manager and project team. Project management processes and product-oriented processes overlap and interact throughout the life of a project.

Project management processes apply globally and across industry groups. Good practice means there is general agreement that the application of project management processes has been shown to enhance the chances of success over a wide range of projects. Good practice does not mean that the knowledge, skills, and processes described should always be applied uniformly on all projects. For any given project, the project manager, in collaboration with the project team, is always responsible for determining which processes are appropriate, and the appropriate degree of rigor for each process.

Project managers and their teams should carefully address each process and its inputs and outputs and determine which are applicable to the project they are working on. The PMBOK® Guide may be used as a resource in managing a project while considering the overall approach and methodology to be followed for the project. This effort is known as tailoring.

Project management is an integrative undertaking that requires each project and product process to be appropriately aligned and connected with the other processes to facilitate coordination. Actions taken during one process typically affect that process and other related processes. For example, a scope change typically affects project cost, but it may not affect the communications management plan or level of risk. These process interactions often require tradeoffs among project requirements and objectives, and the specific performance tradeoffs will vary from project to project and organization to organization. Successful project management includes actively managing these interactions to meet sponsor, customer, and other stakeholder requirements. In some circumstances, a process or set of processes will need to be iterated several times in order to achieve the required outcome.

Projects exist within an organization and do not operate as a closed system. They require input data from the organization and beyond, and deliver capabilities back to the organization. The project processes may generate information to improve the management of future projects and organizational process assets.

The PMBOK® Guide describes the nature of project management processes in terms of the integration between the processes, their interactions, and the purposes they serve. Project management processes are grouped into five categories known as Project Management Process Groups (or Process Groups):

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• Initiating Process Group. Those processes performed to define a new project or a new phase of an existing project by obtaining authorization to start the project or phase.

• Planning Process Group. Those processes required to establish the scope of the project, refine the objectives, and define the course of action required to attain the objectives that the project was undertaken to achieve.

• Executing Process Group. Those processes performed to complete the work defined in the project management plan to satisfy the project specifications.

• Monitoring and controlling Process Group. Those processes required to track, review, and regulate the progress and performance of the project; identify any areas in which changes to the plan are required; and initiate the corresponding changes.

• closing Process Group. Those processes performed to finalize all activities across all Process Groups to formally close the project or phase.

The remainder of this section provides information for project management of a single project organized as a network of interlinked processes, details the project management processes, and includes the following major sections:

3.1 common Project Management Process Interactions

3.2 Project Management Process Groups

3.3 Initiating Process Group

3.4 Planning Process Group

3.5 Executing Process Group

3.6 Monitoring and controlling Process Group

3.7 closing Process Group

3.8 Project Information

3.9 role of the Knowledge Areas

3.10 the Standard for Project Management of a Project

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3.1 common Project Management Process Interactions

The project management processes are presented as discrete elements with well-defined interfaces. However, in practice they overlap and interact in ways that are not completely detailed in this document. Most experienced project management practitioners recognize there is more than one way to manage a project. The required Process Groups and their processes are guides for applying appropriate project management knowledge and skills during the project. The application of the project management processes is iterative, and many processes are repeated during the project.

The integrative nature of project management requires the Monitoring and Controlling Process Group to interact with the other Process Groups, as shown in Figure 3-1. Monitoring and Controlling processes occur at the same time as processes contained within other Process Groups. Thus, the Monitoring and Controlling Process is pictured as a “background” Process Group for the other four Process Groups shown in Figure 3-1.

Monitoring & Controlling Processes

Planning Processes

Initiating Processes

Closing Processes

Exit Phase/ End project

Enter Phase/ Start project

Executing Processes

Figure 3-1. Project Management Process Groups

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Project Management Process Groups are linked by the outputs which are produced. The Process Groups are seldom either discrete or one-time events; they are overlapping activities that occur throughout the project. The output of one process generally becomes an input to another process or is a deliverable of the project, subproject, or project phase. Deliverables at the subproject or project level may be called incremental deliverables. The Planning Process Group provides the Executing Process Group with the project management plan and project documents, and, as the project progresses, it often creates updates to the project management plan and the project documents. Figure 3-2 illustrates how the Process Groups interact and shows the level of overlap at various times. If the project is divided into phases, the Process Groups interact within each phase.

Planning Process Group

Initiating Process Group

Executing Process Group

Monitoring and Controlling Process Group

Closing Process Group

Start Finish

TIME

Level of Process Interaction

Figure 3-2. Process Groups Interact in a Phase or Project

An example of this interaction is the exit of a design phase, which requires sponsor acceptance of the design document. Once it is available, the design document provides the product description for the Planning and Executing Process Groups in one or more subsequent phases. When a project is divided into phases, the Process Groups are used, as appropriate, to effectively drive the project to completion in a controlled manner. In multiphase projects, processes are repeated within each phase until the criteria for phase completion have been satisfied. Additional information on project organization, life cycles, and project phases is provided in Section 2.

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3.2 Project Management Process Groups

The following sections identify and describe the five Project Management Process Groups required for any project. These five Process Groups have clear dependencies and are typically performed in each project and highly interact with one another. These five Process Groups are independent of application areas or industry focus. Individual Process Groups and individual processes are often iterated prior to completing the project and can have interactions within a Process Group and among Process Groups. The nature of these interactions varies from project to project and may or may not be performed in a particular order.

The process flow diagram, Figure 3-3, provides an overall summary of the basic flow and interactions among Process Groups and specific stakeholders. The project management processes are linked by specific inputs and outputs where the result or outcome of one process becomes the input to another process but not necessarily in the same Process Group. the Process Groups are not project life cycle phases. In fact, it is possible that all Process Groups could be conducted within a phase. As projects are separated into distinct phases or subcomponents, such as concept development feasibility study, design, prototype, build, or test, etc., all of the Process Groups would normally be repeated for each phase or subcomponent along the lines explained previously and illustrated in Figure 3-2.

The project management processes are shown in the Process Group in which most of the related activities takes place. For example, a process that normally takes place in the planning phase is put into the Planning Process Group. When this process is updated by an Executing Process Group process or activity, it is not considered a new process within the Executing Process Group but is still a Planning Process Group process or activity. The iterative nature of project management means that processes from any group may be reused throughout the project life cycle. For example, in response to a risk event, executing a risk response may trigger further analysis, which leads to another iteration of the Identify Risks process and the associated Perform Quantitative Risk Analysis and Perform Quantitative Risk Analysis processes to evaluate the impact.

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Initiating Process Group

Monitoring and

Controlling Process Group

Planning Process Group

Executing Process Group

Closing Process Group

Project Initiator or Sponsor

Enterprise/ Organization

Customer

Sellers

• Project management plan

• Make-or-buy decisions • Source selection criteria

• Deliverables • Change requests • Work performance information • Selected sellers

• Accepted deliverables • Procurement documentation

NOTE: The darker dotted lines represent relationships between Process Groups; the lighter dotted lines are external to the Process Groups.

• Seller proposals

• Procurement contract award

• Requirements

• Teaming agreements

• Organizational process assets • Enterprise environmental factors

• Stakeholder register • Stakeholder management strategy

• Project charter

• Procurement documents

• Project statement of work • Business case • Agreements

• Resource calendars

• Final product, service or result

• Approved change requests • Quality control measurements • Performance reports

Project Documents

Figure 3-3. Project Management Process Interactions

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3.3 Initiating Process Group

The Initiating Process Group consists of those processes performed to define a new project or a new phase of an existing project by obtaining authorization to start the project or phase. Within the Initiating processes, the initial scope is defined and initial financial resources are committed. Internal and external stakeholders who will interact and influence the overall outcome of the project are identified. If not already assigned, the project manager will be selected. This information is captured in the project charter and stakeholder register. When the project charter is approved, the project becomes officially authorized. Although the project management team may help write the project charter, this standard assumes that business case assessment, approval, and funding are handled externally to the project boundaries (Figure 3-4). A project boundary is defined as the point in time that a project or project phase is authorized to its completion. The key purpose of this Process Group is to align the stakeholders’ expectations with the project’s purpose, give them visibility about the scope and objectives, show how their participation in the project and it associated phases can ensure that their expectations are achieved. These processes help set the vision of the project—what is needed to be accomplished.

Project Boundaries

Project Deliverables

Project Records

End Users

Process Assets

Monitoring & Controlling Processes

Planning Processes

Initiating Processes

Closing Processes

Executing Processes

Project Inputs

Project Initiator/ Sponsor

Figure 3-4. Project Boundaries

Large complex projects should be divided into separate phases. In such projects, the Initiating processes are carried out during subsequent phases to validate the decisions made during the original Develop Project Charter and Identify Stakeholders processes. Performing the Initiating processes at the start of each phase helps to keep the project focused on the business need that the project was undertaken to address. The success criteria are verified, and the influence, drivers and objectives of the project stakeholders are reviewed. A decision is then made as to whether the project should be continued, delayed, or discontinued.

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Involving the sponsors, customers, and other stakeholders during initiation creates a shared understanding of success criteria, reduces the overhead of involvement, and generally improves deliverable acceptance, customer satisfaction, and other stakeholder satisfaction.

Initiating processes may be performed at the organizational, program, or portfolio level and therefore, would be outside of the project’s level of control. For example, prior to commencing a project, the need for high-level requirements may be documented as part of a larger organizational initiative. A process of evaluating alternatives may be utilized to determine the feasibility of the new undertaking. Clear descriptions of the project objectives may be developed, including the reasons why a specific project is the best alternative to satisfy the requirements. The documentation for this decision may also contain the initial project scope statement, deliverables, project duration, and a forecast of the resources for the organization’s investment analysis. As part of the Initiating processes, the project manager is given the authority to apply organizational resources to the subsequent project activities.

3.4 Planning Process Group

The Planning Process Group consists of those processes performed to establish the total scope of the effort, define and refine the objectives, and develop the course of action required to attain those objectives. The Planning processes develop the project management plan and the project documents that will be used to carry out the project. The complex nature of project management may require the use of repeated feedback loops for additional analysis. As more project information or characteristics are gathered and understood, additional planning will likely be required. Significant changes occurring throughout the project life cycle trigger a need to revisit one or more of the planning processes and possibly some of the initiating processes. This progressive detailing of the project management plan is called progressive elaboration, indicating that planning and documentation are iterative and ongoing activities. The key benefit of this Process Group is to delineate the strategy and tactics as well as the course of action or path to successfully complete the project or phase. When the Planning Process Group is well managed, it is much easier to get stakeholder buy-in and engagement. These processes express how this will be done, setting the route to the desired objective.

The project management plan and project documents developed as outputs from the Planning Process Group will explore all aspects of the scope, time, cost, quality, communications, human resources, risks, procurements, and stakeholder engagement.

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Updates arising from approved changes during the project (generally during Monitoring and Controlling processes and specifically during the Direct and Manage Project Work Process) may significantly impact parts of the project management plan and the project documents. Updates to these documents provide greater precision with respect to schedule, costs, and resource requirements to meet the defined project scope.

The project team seeks input and encourages involvement from all stakeholders when planning the project and developing the project management plan and project documents. While the act of collecting feedback and refining the documents cannot continue indefinitely, procedures set by the organization dictate when the initial planning ends. These procedures will be affected by the nature of the project, the established project boundaries, appropriate monitoring and controlling activities, as well as the environment in which the project will be performed.

Other interactions among the processes within the Planning Process Group are dependent upon the nature of the project. For example, for some projects there will be little or no identifiable risks until after a significant amount of planning has been done. At that time, the team might recognize that the cost and schedule targets are overly aggressive, thus involving considerably more risk than previously understood. The results of the iterations are documented as updates to the project management plan or to various project documents.

3.5 Executing Process Group

The Executing Process Group consists of those processes performed to complete the work defined in the project management plan to satisfy the project specifications. This Process Group involves coordinating people and resources, managing stakeholder expectations, as well as integrating and performing the activities of the project in accordance with the project management plan.

During project execution, results may require planning updates and rebaselining. This may include changes to expected activity durations, changes in resource productivity and availability, and unanticipated risks. Such variances may affect the project management plan or project documents and may require detailed analysis and development of appropriate project management responses. The results of the analysis can trigger change requests that, if approved, may modify the project management plan or other project documents and possibly require establishing new baselines. A large portion of the project’s budget will be expended in performing the Executing Process Group processes.

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3.6 Monitoring and controlling Process Group

The Monitoring and Controlling Process Group consists of those processes required to track, review, and orchestrate the progress and performance of the project; identify any areas in which changes to the plan are required; and initiate the corresponding changes. The key benefit of this Process Group is that project performance is measured and analyzed at regular intervals, appropriate events, or exception conditions to identify variances from the project management plan. The Monitoring and Controlling Process Group also involves:

• Controlling changes and recommending corrective or preventive action in anticipation of possible problems,

• Monitoring the ongoing project activities against the project management plan and the project performance measurement baseline, and

• Influencing the factors that could circumvent integrated change control or configuration management so only approved changes are implemented.

This continuous monitoring provides the project team insight into the health of the project and identifies any areas requiring additional attention. The Monitoring and Controlling Process Group not only monitors and controls the work being done within a Process Group, but also monitors and controls the entire project effort. In multiphase projects, the Monitoring and Controlling Process Group coordinates project phases in order to implement corrective or preventive actions to bring the project into compliance with the project management plan. This review can result in recommended and approved updates to the project management plan. For example, a missed activity finish date may require adjustments and trade-offs between budget and schedule objectives. In order to reduce or control overhead, management-by-exception procedures and other techniques can be appropriately considered.

3.7 closing Process Group

The Closing Process Group consists of those processes performed to conclude all activities across all Project Management Process Groups to formally complete the project, phase, or contractual obligations. This Process Group, when completed, verifies that the defined processes are completed within all of the Process Groups to close the project or a project phase, as appropriate, and formally establishes that the project or project phase is complete.

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This Process Group also formally establishes the premature closure of the project. Prematurely closed projects may include, for example: aborted projects, cancelled projects, and projects having a critical situation. In specific cases, when some contracts cannot be formally closed (e.g. claims, termination clauses, etc.) or some activities are to be transferred to other organizational units, specific hand-over procedures may be arranged and finalized.

At project or phase closure, the following may occur:

• Obtain acceptance by the customer or sponsor to formally close the project or phase,

• Conduct post-project or phase-end review,

• Record impacts of tailoring to any process,

• Document lessons learned,

• Apply appropriate updates to organizational process assets,

• Archive all relevant project documents in the project management information system (PMIS) to be used as historical data,

• Close out all procurement activities ensuring termination of all relevant agreements, and

• Perform team members’ assessments and release project resources.

3.8 Project Information

Throughout the life cycle of the project, a significant amount of data and information is collected, analyzed, transformed, and distributed in various formats to project team members and other stakeholders. Project data are collected as a result of various Executing processes and are shared within the project team. The collected data are analyzed in context, and aggregated and transformed to become project information during various Controlling processes. The information may then be communicated verbally or stored and distributed as reports in various formats.

The project data are continuously collected and analyzed during the dynamic context of the project execution. As a result, the terms data and information are often used interchangeably in practice. The indiscriminate use of these terms can lead to confusion and misunderstandings by the various project stakeholders. The following guidelines help minimize miscommunication and help the project team use appropriate terminology:

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• Work performance data. The raw observations and measurements identified during activities performed to carry out the project work. Examples include reported percent of work physically completed, quality and technical performance measures, start and finish dates of schedule activities, number of change requests, number of defects, actual costs, actual durations, etc.

• Work performance information. The performance data collected from various controlling processes, analyzed in context and integrated based on relationships across areas. Examples of performance information are status of deliverables, implementation status for change requests, and forecasted estimates to complete.

• Work performance reports. The physical or electronic representation of work performance information compiled in project documents, intended to generate decisions or raise issues, actions, or awareness. Examples include status reports, memos, justifications, information notes, electronic dashboards, recommendations, and updates.

Figure 3-5 illustrates the flow of project information across the various processes used to manage the project.

Project Execution

Work Performance Data

Controlling Processes

Work Performance Information

Project Management Plan Updates Overall

Project Control

Work Performance Reports

Project Team Members

Project Stakeholders

Project Change Control

Project Management

Plan

Project Communications

Change Requests

Reports

Figure 3-5. Project data, Information and report Flow

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3.9 role of the Knowledge Areas

The 47 project management processes identified in the PMBOK® Guide are further grouped into ten separate Knowledge Areas. A Knowledge Area represents a complete set of concepts, terms, and activities that make up a professional field, project management field, or area of specialization. These ten Knowledge Areas are used on most projects most of the time. Project teams should utilize these ten Knowledge Areas and other Knowledge Areas, as appropriate, for their specific project. The Knowledge Areas are: Project Integration Management, Project Scope Management, Project Time Management, Project Quality Management, Project Human Resource Management, Project Communications Management, Project Risk Management, Project Procurement Management and Project Stakeholder Management. Each Knowledge Area within the PMBOK® Guide is contained in a separate section.

The PMBOK® Guide defines the important aspects of each Knowledge Area and how it integrates with the five Process Groups. As supporting elements, the Knowledge Areas provide a detailed description of the process inputs and outputs along with a descriptive explanation of tools and techniques most frequently used within the project management processes to produce each outcome. A data flow diagram is provided in each Knowledge Area (Sections 4 through 8). The data flow diagram is a summary level depiction of the process inputs and process outputs that flow down through all the processes within a specific Knowledge Area (see Figure 3-6 for data flow diagram legend). Although the processes are presented here as discrete elements with well-defined interfaces, in practice they are iterative and can overlap and interact in ways not detailed here.

Table 3-1 reflects the mapping of the 47 project management processes within the 5 Project Management Process Groups and the 10 Knowledge Areas.

Process flow

The data flow diagrams show basic steps and interactions. Many additional interactions are possible.

Inter-knowledge area relationships

Extra-knowledge area relationships

Processes within a Knowledge Area

External to a Process

Process outside of Knowledge Area

Figure 3-6. data Flow diagram Legend

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table 3-1. Project Management Process Group and Knowledge Area Mapping

4. Project Integration Management

5. Project Scope Management

6. Project Time Management

7. Project Cost Management

8. Project Quality Management

9. Project Human Resource Management

10. Project Communications Management

11. Project Risk Management

12. Project Procurement Management

13. Project Stakeholder Management

Project Management Process Groups

Knowledge Areas Initiating Process

Group

Closing Process

Group

Monitoring and Controlling Process Group

Executing Process

Group

Planning Process Group

4.1 Develop Project Charter

13.1 Identify Stakeholders

4.2 Develop Project Management Plan

5.1 Plan Scope Management 5.2 Collect Requirements 5.3 Define Scope 5.4 Create WBS

6.1 Plan Schedule Management 6.2 Define Activities 6.3 Sequence Activities 6.4 Estimate Activity Resources 6.5 Estimate Activity Durations 6.6 Develop Schedule

7.1 Plan Cost Management 7.2 Estimate Costs 7.3 Determine Budget

8.1 Plan Quality Management

9.1 Plan Human Resource Management

10.1 Plan Communications Management

11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses

12.1 Plan Procurement Management

13.2 Plan Stakeholder Management

4.3 Direct and Manage Project Work

8.2 Perform Quality Assurance

9.2 Acquire Project Team 9.3 Develop Project Team 9.4 Manage Project Team

10.2 Manage Communications

12.2 Conduct Procurements

13.3 Manage Stakeholder Engagement

4.4 Monitor and Control Project Work 4.5 Perform Integrated Change Control

5.5 Validate Scope 5.6 Control Scope

6.7 Control Schedule

7.4 Control Costs

8.3 Control Quality

10.3 Control Communications

11.6 Control Risks

12.3 Control Procurements

13.4 Control Stakeholder Engagement

4.6 Close Project or Phase

12.4 Close Procurements

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4 Project inteGrAtion MAnAGeMent

Project Integration Management includes the processes and activities to identify, define, combine, unify, and coordinate the various processes and project management activities within the Project Management Process Groups. In the project management context, integration includes characteristics of unification, consolidation, communication, and integrative actions that are crucial to controlled project execution through completion, successfully managing stakeholder expectations, and meeting requirements. Project Integration Management includes making choices about resource allocation, making trade-offs among competing objectives and alternatives, and managing the interdependencies among the project management Knowledge Areas. The project management processes are usually presented as discrete processes with defined interfaces while, in practice, they overlap and interact in ways that cannot be completely detailed in the PMBOK® Guide.

Figure 4-1 provides an overview of the Project Integration Management processes, which are as follows:

4.1 develop Project charter—The process of developing a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities.

4.2 develop Project Management Plan—The process of defining, preparing, and coordinating all subsidiary plans and integrating them into a comprehensive project management plan. The project’s integrated baselines and subsidiary plans may be included within the project management plan.

4.3 direct and Manage Project Work—The process of leading and performing the work defined in the project management plan and implementing approved changes to achieve the project’s objectives.

4.4 Monitor and control Project Work—The process of tracking, reviewing, and reporting project progress against the performance objectives defined in the project management plan.

4.5 Perform Integrated change control—The process of reviewing all change requests; approving changes and managing changes to deliverables, organizational process assets, project documents, and the project management plan; and communicating their disposition.

4.6 close Project or Phase—The process of finalizing all activities across all of the Project Management Process Groups to formally complete the phase or project.

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These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

The need for Project Integration Management is necessary in situations where individual processes interact. For example, a cost estimate needed for a contingency plan involves integrating the processes in the Project Cost, Time, and Risk Management Knowledge Areas. When additional risks associated with various staffing alternatives are identified, then one or more of those processes may be revisited. The project deliverables may also need integrating with ongoing operations of the performing organization, the requesting organization, and with the long-term strategic planning that takes future problems and opportunities into consideration. Project Integration Management also includes the activities needed to manage project documents to ensure consistency with the project management plan and product, service, or capability deliverables.

Most experienced project management practitioners know there is no single way to manage a project. They apply project management knowledge, skills, and required processes in a preferred order and with varying rigor to achieve the desired project performance. However, the determination that a particular process is not required does not mean that it should not be addressed. The project manager and project team need to address every process and the project environment to determine the level of implementation for each process within the project. If a project has more than one phase, the level of rigor applied within each of the project phases should be appropriate for each phase. This determination is also addressed by the project manager and project team.

The integrative nature of projects and project management can be understood by thinking of other types of activities performed while completing a project. Examples of some activities performed by the project management team are:

• Develop, review, analyze, and understand the scope. This includes the project and product requirements, criteria, assumptions, constraints, and other influences related to a project, and how each will be managed or addressed within the project;

• Transform the collected project information into a project management plan using a structured approach as described in the PMBOK® Guide;

• Perform activities to produce project deliverables; and

• Measure and monitor the project’s progress and take appropriate action to meet project objectives.

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The links among the processes in the Project Management Process Groups are often iterative in nature. For example, the Planning Process Group provides the Executing Process Group with a documented project management plan early in the project and then updates the project management plan if changes occur as the project progresses.

.1 Inputs .1 Project statement of work .2 Business case .3 Agreements .4 Enterprise environmental factors .5 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Facilitation techniques

.3 Outputs .1 Project charter

.1 Inputs .1 Project charter .2 Outputs from other processes .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Facilitation techniques

.3 Outputs .1 Project management plan

.1 Inputs .1 Project management plan .2 Approved change requests .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Project management information system .3 Meetings

.3 Outputs .1 Deliverables .2 Work performance data .3 Change requests .4 Project management plan updates .5 Project documents updates

.1 Inputs .1 Project management plan .2 Schedule forecasts .3 Cost forecasts .4 Validated changes .5 Work performance information .6 Enterprise environmental factors .7 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Analytical techniques .3 Project management information system .4 Meetings

.3 Outputs .1 Change requests .2 Work performance reports .3 Project management plan updates .4 Project documents updates

.1 Inputs .1 Project management plan .2 Work performance reports .3 Change requests .4 Enterprise environmental factors .5 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Meetings .3 Change control tools

.3 Outputs .1 Approved change requests .2 Change log .3 Project management plan updates .4 Project documents updates

.1 Inputs .1 Project management plan .2 Accepted deliverables .3 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Analytical techniques .3 Meetings

.3 Outputs .1 Final product, service, or result transition .2 Organizational process assets updates

Project Integration Management Overview

4.2 Develop Project Management Plan

4.1 Develop Project Charter

4.3 Direct and Manage Project Work

4.4 Monitor and Control Project Work

4.5 Perform Integrated Change Control

4.6 Close Project or Phase

Figure 4-1. Project Integration Management overview

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4.1 develop Project charter

Develop Project Charter is the process of developing a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. The key benefit of this process is a well-defined project start and project boundaries, creation of a formal record of the project, and a direct way for senior management to formally accept and commit to the project. The inputs, tools and techniques, and outputs for this process are shown in Figure 4-2. Figure 4-3 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project statement of work

.2 Business case

.3 Agreements

.4 Enterprise environmental factors .5 Organizational process assets

.1 Expert judgment

.2 Facilitation techniques .1 Project charter

Figure 4-2. develop Project charter: Inputs, tools and techniques, and outputs

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• Agreements • Business case • Project statement of work

• Project charter

• Organizational process assets • Enterprise environmental factors

4.1 Develop Project

Charter

4.2 Develop Project Management

Plan

Project Integration ManagementProject Initiator/ Sponsor

Enterprise/ Organization

5.3 Define Scope

5.2 Collect

Requirements

5.1 Plan Scope

Management

11.1 Plan Risk

Management

13.1 Identify

Stakeholders

7.1 Plan Cost

Management

6.1 Plan Schedule Management

Figure 4-3. develop Project charter data Flow diagram

The project charter establishes a partnership between the performing and requesting organizations. In the case of external projects, a formal contract is typically the preferred way to establish an agreement. In this case, the project team becomes the seller responding to conditions of an offer to buy from an outside entity. A project charter is still used to establish internal agreements within an organization to assure proper delivery under the contract. The approved project charter formally initiates the project. A project manager is identified and assigned as early in the project as is feasible, preferably while the project charter is being developed and always prior to the start of planning. The project charter should be authored by the sponsoring entity. The project charter provides the project manager with the authority to plan and execute the project. It is recommended that the project manager participate in the development of the project charter to obtain a foundational understanding of the project requirements. This understanding will better allow for efficient resources allocation to project activities.

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Projects are initiated by an entity external to the project such as a sponsor, program or project management office (PMO) staff person, or a portfolio governing body chairperson or authorized representative. The project initiator or sponsor should be at the level that is appropriate to procure funding and commit resources to the project. Projects are initiated due to internal business needs or external influences. These needs or influences often trigger the creation of a needs analysis, feasibility study, business case, or description of the situation that the project will address. Chartering a project validates alignment of the project to the strategy and ongoing work of the organization. A project charter is not considered to be a contract, because there is no consideration or money promised or exchanged in its creation.

4.1.1 develop Project charter: Inputs

4.1.1.1 Project Statement of Work

The project statement of work (SOW) is a narrative description of products, services, or results to be delivered by a project. For internal projects, the project initiator or sponsor provides the statement of work based on business needs, product, or service requirements. For external projects, the statement of work can be received from the customer as part of a bid document, (e.g., a request for proposal, request for information, or request for bid) or as part of a contract. The SOW references the following:

• Business need. An organization’s business need may be based on a market demand, technological advance, legal requirement, government regulation, or environmental consideration. Typically, the business need and the cost-benefit analysis are contained in the business case to justify the project.

• Product scope description. The product scope description documents the characteristics of the product, service, or results that the project will be undertaken to create. The description should also document the relationship between the products, services, or results being created and the business need that the project will address.

• Strategic plan. The strategic plan documents the organization’s strategic vision, goals, and objectives and may contain a high-level mission statement. All projects should be aligned with their organization’s strategic plan. Strategic plan alignment ensures that each project contributes to the overall objections of the organization.

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4.1.1.2 Business case

The business case or similar document describes the necessary information from a business standpoint to determine whether or not the project is worth the required investment. It is commonly used for decision making by managers or executives above the project level. Typically, the business need and the cost-benefit analysis are contained in the business case to justify and establish boundaries for the project, and such analysis is usually completed by a business analyst using various stakeholder inputs. The sponsor should agree to the scope and limitations of the business case. The business case is created as a result of one or more of the following:

• Market demand (e.g., a car company authorizing a project to build more fuel-efficient cars in response to gasoline shortages),

• Organizational need (e.g., due to high overhead costs a company may combine staff functions and streamline processes to reduce costs.),

• Customer request (e.g., an electric utility authorizing a project to build a new substation to serve a new industrial park),

• Technological advance (e.g., an airline authorizing a new project to develop electronic tickets instead of paper tickets based on technological advances),

• Legal requirement (e.g., a paint manufacturer authorizing a project to establish guidelines for handling toxic materials),

• Ecological impacts (e.g., a company authorizing a project to lessen its environmental impact), or

Each of the examples in this list may contain elements of risk that should be addressed. In the case of multiphase projects, the business case may be periodically reviewed to ensure that the project is on track to deliver the business benefits. In the early stages of the project life cycle, periodic review of the business case by the sponsoring organization also helps to confirm that the project is still aligned with the business case. The project manager is responsible for ensuring that the project effectively and efficiently meets the goals of the organization and those requirements of a broad set of stakeholders, as defined in the business case.

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4.1.1.3 Agreements

Agreements are used to define initial intentions for a project. Agreements may take the form of contracts, memorandums of understanding (MOUs), service level agreements (SLA), letter of agreements, letters of intent, verbal agreements, email, or other written agreements. Typically, a contract is used when a project is being performed for an external customer.

4.1.1.4 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Develop Project Charter process include, but are not limited to:

• Governmental standards, industry standards, or regulations (e.g. codes of conduct, quality standards, or worker protection standards),

• Organizational culture and structure, and

• Marketplace conditions.

4.1.1.5 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Develop Project Charter process include, but are not limited to:

• Organizational standard processes, policies, and process definitions,

• Templates (e.g., project charter template), and

• Historical information and lessons learned knowledge base (e.g., projects, records, and documents; all project closure information and documentation; information about both the results of previous project selection decisions and previous project performance information; and information from the risk management activity).

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4.1.2 develop Project charter: tools and techniques

4.1.2.1 Expert Judgment

Expert judgment is often used to assess the inputs used to develop the project charter. Expert judgment is applied to all technical and management details during this process. Such expertise is provided by any group or individual with specialized knowledge or training and is available from many sources, including:

• Other units within the organization,

• Consultants,

• Stakeholders, including customers or sponsors,

• Professional and technical associations,

• Industry groups,

• Subject matter experts (SME), and

• Project management office (PMO).

4.1.2.2 Facilitation techniques

Facilitation techniques have broad application within project management processes and guide the development of the project charter. Brainstorming, conflict resolution, problem solving, and meeting management are examples of key techniques used by facilitators to help teams and individuals accomplish project activities.

4.1.3 develop Project charter: outputs

4.1.3.1 Project charter

The project charter is the document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. It documents the business needs, assumptions, constraints, the understanding of the customer’s needs and high-level requirements, and the new product, service, or result that it is intended to satisfy, such as:

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• Project purpose or justification,

• Measurable project objectives and related success criteria,

• High-level requirements,

• Assumptions and constraints,

• High-level project description and boundaries,

• High-level risks,

• Summary milestone schedule,

• Summary budget,

• Stakeholder list,

• Project approval requirements (i.e., what constitutes project success, who decides the project is successful, and who signs off on the project),

• Assigned project manager, responsibility, and authority level, and

• Name and authority of the sponsor or other person(s) authorizing the project charter.

4.2 develop Project Management Plan

Develop Project Management Plan is the process of defining, preparing, and coordinating all subsidiary plans and integrating them into a comprehensive project management plan. The key benefit of this process is a central document that defines the basis of all project work. The inputs, tools and techniques, and outputs for this process are depicted in Figure 4-4. Figure 4-5 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project charter

.2 Outputs from other processes .3 Enterprise environmental factors .4 Organizational process assets

.1 Expert judgment

.2 Facilitation techniques .1 Project management plan

Figure 4-3. develop Project charter data Flow diagram

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• Project management plan

• Project charter

• Organizational process assets • Enterprise environmental factors

• Communications management plan • Cost management plan • Human resource plan • Procurement management plan • Process improvement plan • Quality management plan • Requirements management plan • Risk management plan • Schedule management plan • Scope management plan • Stakeholder management plan • Cost baseline • Schedule baseline • Scope baseline • Project management plan updates

4.2 Develop Project Management

Plan

Project Integration Management 6.1

Plan Schedule Management

5.6 Control Scope

5.1 Plan Scope

Management

7.4 Control Costs

8.1 Plan Quality Management

7.1 Plan Cost

Management

6.7 Control Schedule

10.3 Control

Communications

10.1 Plan

Communications Management

9.1 Plan Human Resource

Management

13.4 Control

Stakeholder Engagement

13.2 Plan

Stakeholder Management

12.4 Close

Procurements

12.3 Control

Procurements

12.1 Plan

Procurement Management

11.6 Control Risks

11.1 Plan Risk

Management

4.3 Direct and Manage

Project Work

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

4.6 Close Project

or Phase

Outputs from Other Processes

Enterprise/ Organization

4.1 Develop Project

Charter

Figure 4-5. develop Project Management Plan data Flow diagram

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The project management plan defines how the project is executed, monitored and controlled, and closed. The project management plan’s content varies depending upon the application area and complexity of the project. It is developed through a series of integrated processes extending through project closure. This process results in a project management plan that is progressively elaborated by updates, and controlled and approved through the Perform Integrated Change Control (Section 4.5) process. Projects that exist in the context of a program should develop a project management plan that is consistent with the program management plan. For example, if the program management plan indicates all changes exceeding a specified cost need to be reviewed by the change control board (CCB), then this process and cost threshold needs to be defined in the project management plan.

4.2.1 develop Project Management Plan: Inputs

4.2.1.1 Project charter

Described in Section 4.1.3.1. The size of the project charter varies depending on the complexity of the project and the information known at the time of its creation. At a minimum, the project charter should define the high-level boundaries of the project. The project manager uses the project charter as the starting point for initial planning throughout the Initiating Process Group.

4.2.1.2 outputs from other Processes

Outputs from many of the other processes described in Sections 5 through 13 are integrated to create the project management plan. Any baselines and subsidiary plans that are an output from other planning processes are inputs to this process. In addition, changes to these documents may necessitate updates to the project management plan.

4.2.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Develop Project Management Plan process include, but are not limited to:

• Governmental or industry standards;

• Project management body of knowledge for vertical market (e.g., construction) and/or focus area (e.g. environmental, safety, risk, or agile software development);

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• Organizational structure, culture, management practices, and sustainability;

• Infrastructure (e.g., existing facilities and capital equipment); and

• Personnel administration (e.g., hiring and termination guidelines, employee performance reviews, and employee development and training records).

4.2.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Develop Project Management Plan process include, but are not limited to:

• Standardized guidelines, work instructions, proposal evaluation criteria, and performance measurement criteria;

• Project management plan template, including:

○ Guidelines and criteria for tailoring the organization’s set of standard processes to satisfy the specific needs of the project, and

○ Project closure guidelines or requirements such as the product validation and acceptance criteria;

• Change control procedures, including the steps by which official organization standards, policies, plans, and procedures, or any project documents will be modified and how any changes will be approved and validated;

• Project files from previous projects (e.g., scope, cost, schedule and performance measurement baselines, project calendars, project schedule network diagrams, and risk registers,);

• Historical information and lessons learned knowledge base; and

• Configuration management knowledge base containing the versions and baselines of all official organization standards, policies, procedures, and any project documents.

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4.2.2 develop Project Management Plan: tools and techniques

4.2.2.1 Expert Judgment

When developing the project management plan, expert judgment is utilized to:

• Tailor the process to meet the project needs,

• Develop technical and management details to be included in the project management plan,

• Determine resources and skill levels needed to perform project work,

• Define the level of configuration management to apply on the project,

• Determine which project documents will be subject to the formal change control process, and

• Prioritize the work on the project to ensure the project resources are allocated to the appropriate work at the appropriate time.

4.2.2.2 Facilitation techniques

Described in Section 4.1.2.2. Facilitation techniques have broad application within project management processes and are used to guide the development of the project management plan. Brainstorming, conflict resolution, problem solving, and meeting management are key techniques used by facilitators to help teams and individuals achieve agreement to accomplish project activities.

4.2.3 develop Project Management Plan: outputs

4.2.3.1 Project Management Plan

The project management plan is the document that describes how the project will be executed, monitored, and controlled. It integrates and consolidates all of the subsidiary plans and baselines from the planning processes.

Project baselines include, but are not limited to:

• Scope baseline (Section 5.4.3.1),

• Schedule baseline (Section 6.6.3.1), and

• Cost baseline (Section 7.3.3.1).

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Subsidiary plans include, but are not limited to:

• Scope management plan (Section 5.1.3.1),

• Requirements management plan (Section 5.1.3.2),

• Schedule management plan (Section 6.1.3.1),

• Cost management plan (Section 7.1.3.1),

• Quality management plan (Section 8.1.3.1),

• Process improvement plan (Section 8.1.3.2),

• Human resource management plan (Section 9.1.3.1),

• Communications management plan (Section 10.1.3.1),

• Risk management plan (Section 11.1.3.1),

• Procurement management plan (Section 12.1.3.1), and

• Stakeholder management plan (Section 13.2.3.1).

Among other things, the project management plan may also include the following:

• Life cycle selected for the project and the processes that will be applied to each phase;

• Details of the tailoring decisions specified by the project management team as follows:

○ Project management processes selected by the project management team,

○ Level of implementation for each selected process,

○ Descriptions of the tools and techniques to be used for accomplishing those processes, and

○ Description of how the selected processes will be used to manage the specific project, including the dependencies and interactions among those processes and the essential inputs and outputs.

• Description of how work will be executed to accomplish the project objectives;

• Change management plan that documents how changes will be monitored and controlled;

• Configuration management plan that documents how configuration management will be performed;

• Description of how the integrity of the project baselines will be maintained;

• Requirements and techniques for communication among stakeholders; and

• Key management reviews for content, the extent of, and timing to address, open issues and pending decisions.

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The project management plan may be either summary level or detailed, and may be composed of one or more subsidiary plans. Each of the subsidiary plans is detailed to the extent required by the specific project. Once the project management plan is baselined, it may only be changed when a change request is generated and approved through the Perform Integrated Change Control process.

While the project management plan is one of the primary documents used to manage the project, other project documents are also used. These other documents are not part of the project management plan. Table 4-1 is a representative list of the project management plan components and project documents.

table 4-1 differentiation Between the Project Management Plan and Project documents

Project DocumentsProject Management Plan

Change management plan

Communications management plan

Configuration management plan

Cost baseline

Cost management plan

Human resource management plan

Process improvement plan

Procurement management plan

Scope baseline • Project scope statement • WBS • WBS dictionary

Quality management plan

Requirements management plan

Risk management plan

Schedule baseline

Schedule management plan

Scope management plan

Stakeholder management plan

Activity attributes

Activity cost estimates

Activity duration estimates

Activity list

Activity resource requirements

Agreements

Basis of estimates

Change log

Change requests

Forecasts • Cost forecast • Schedule forecast

Issue log

Milestone list

Procurement documents

Procurement statement of work

Project calendars

Project charter Project funding requirements Project schedule Project schedule network diagrams

Project staff assignments

Project statement of work

Quality checklists

Quality control measurements

Quality metrics

Requirements documentation

Requirements traceability matrix

Resource breakdown structure

Resource calendars

Risk register

Schedule data

Seller proposals

Source selection criteria

Stakeholder register

Team performance assessments

Work performance data Work performance information Work performance reports

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4.3 direct and Manage Project Work

Direct and Manage Project Work is the process of leading and performing the work defined in the project management plan and implementing approved changes to achieve the project’s objectives. The key benefit of this process is that it provides overall management of the project work. The inputs, tools and techniques, and outputs of this process are depicted in Figure 4-6. Figure 4-7 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Approved change requests .3 Enterprise environmental factors .4 Organizational process assets

.1 Expert judgment

.2 Project management information system .3 Meetings

.1 Deliverables

.2 Work performance data

.3 Change requests

.4 Project management plan updates .5 Project documents updates

Figure 4-6. direct and Manage Project Work: Inputs, tools and techniques, and outputs

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• Organizational process assets • Enterprise environmental factors

• Project management plan

• Approved change requests

• Project management plan updates

• Project documents updates

• Deliverables

• Work performance data

• Change requests

4.3 Direct and

Manage Project Work

4.2 Develop Project Management

Plan

10.3 Control

Communications

8.3 Control Quality

11.6 Control Risks

12.3 Control

Procurements

13.4 Control

Stakeholder Engagement

7.4 Control Costs

6.7 Control Schedule

5.6 Control Scope

5.5 Validate Scope

4.5 Perform

Integrated Change Control

Project Integration Management

Enterprise/ Organization

Project Documents

Figure 4-7. direct and Manage Project Work: data Flow diagram

Direct and Manage Project Work activities include, but are not limited to:

• Perform activities to accomplish project objectives;

• Create project deliverables to meet the planned project work;

• Provide, train, and manage the team members assigned to the project;

• Obtain, manage, and use resources including materials, tools, equipment, and facilities;

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• Implement the planned methods and standards;

• Establish and manage project communication channels, both external and internal to the project team;

• Generate work performance data, such as cost, schedule, technical and quality progress, and status to facilitate forecasting;

• Issue change requests and implement approved changes into the project’s scope, plans, and environment;

• Manage risks and implement risk response activities;

• Manage sellers and suppliers;

• Manage stakeholders and their engagement; and

• Collect and document lessons learned and implement approved process improvement activities.

The project manager, along with the project management team, directs the performance of the planned project activities and manages the various technical and organizational interfaces that exist within the project. The project manager should also manage any unplanned activities and determine the appropriate course of action. The Direct and Manage Project Work process is directly affected by the project application area. Deliverables are produced as outputs from processes performed to accomplish the project work as planned and scheduled in the project management plan.

During project execution, the work performance data is collected and appropriately actioned and communicated. Work performance data includes information about the completion status of deliverables and other relevant details about project performance. The work performance data will also be used as an input to the Monitoring and Controlling Process Group.

Direct and Manage Project Work also requires review of the impact of all project changes and the implementation of approved changes:

• corrective action—An intentional activity that realigns the performance of the project work with the project management plan;

• Preventive action—An intentional activity that ensures the future performance of the project work is aligned with the project management plan; and/or

• defect repair—An intentional activity to modify a nonconforming product or product component.

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4.3.1 direct and Manage Project Work: Inputs

4.3.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains subsidiary plans concerning all aspects of the project. Those subsidiary plans related to project work include, but are not limited to:

• Scope management plan (Section 5.1.3.1),

• Requirements management plan (Section 5.1.3.2),

• Schedule management plan (Section 6.1.3.1),

• Cost management plan (Section 7.1.3.1), and

• Stakeholder management plan (Section 13.2.3.1).

4.3.1.2 Approved change requests

Approved change requests are an output of the Perform Integrated Change Control process, and include those requests reviewed and approved for implementation by the change control board (CCB). The approved change request may be a corrective action, a preventative action, or a defect repair. Approved change requests are scheduled and implemented by the project team, and can impact any area of the project or project management plan. The approved change requests can also modify the policies, project management plan, procedures, costs, or budgets or revise the schedules. Approved change requests may require implementation of preventive or corrective actions.

4.3.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The Direct and Manage Project Work process is influenced by enterprise environmental factors that include, but are not limited to:

• Organizational, company, or customer culture and structure of the performing or sponsor organizations;

• Infrastructure (e.g., existing facilities and capital equipment);

• Personnel administration (e.g., hiring and firing guidelines, employee performance reviews, and training records);

• Stakeholder risk tolerances, for example allowable cost overrun percentage; and

• Project management information system (e.g., an automated tool suite, such as a scheduling software tool, a configuration management system, an information collection and distribution system, or web interfaces to other online automated systems).

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4.3.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Direct and Manage Project Work process include, but are not limited to:

• Standardized guidelines and work instructions;

• Communication requirements defining allowed communication media, record retention, and security requirements;

• Issue and defect management procedures defining issue and defect controls, issue and defect identification and resolution, and action item tracking;

• Process measurement database used to collect and make available measurement data on processes and products;

• Project files from previous projects (e.g., scope, cost, schedule, performance measurement baselines, project calendars, project schedule, network diagrams, risk registers, planned response actions, defined risk impact, and documented lessons learned); and

• Issue and defect management database(s) containing historical issue and defect status, control information, issue and defect resolution, and action item results.

4.3.2 direct and Manage Project Work: tools and techniques

4.3.2.1 Expert Judgment

Expert judgment is used to assess the inputs needed to direct and manage execution of the project management plan. Such judgment and expertise are applied to all technical and management details during this process. This expertise is provided by the project manager and the project management team using specialized knowledge or training. Additional expertise is available from many sources, including:

• Other units within the organization;

• Consultants and other subject matter experts (internal and external);

• Stakeholders, including customers, suppliers, or sponsors; and

• Professional and technical associations.

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4.3.2.2 Project Management Information System

The project management information system, which is part of the environmental factors, provides access to tools, such as a scheduling tool, a work authorization system, a configuration management system, an information collection and distribution system, or interfaces to other online automated systems. Automated gathering and reporting on key performance indicators (KPI) can be part of this system.

4.3.2.3 Meetings

Meetings are used to discuss and address pertinent topics of the project when directing and managing project work. Attendees at the meetings may include the project manager, the project team and appropriate stakeholders involved or affected by the topics addressed. Each attendee should have a defined role to ensure appropriate participation. Meetings tend to be one of three types:

• Information exchange;

• Brainstorming, option evaluation, or design; or

• Decision making.

Meeting types should not be mixed as a best practice. Meetings should be prepared with a well-defined agenda, purpose, objective, and time frame and should be appropriately documented with meeting minutes and action items. Meeting minutes should be stored as defined in the project management plan. Meetings are most effective when all participants can be face-to-face in the same location. Virtual meetings can be held using audio and/ or video conferencing tools, but generally require additional preparation and organization to achieve the same effectiveness of a face-to-face meeting.

4.3.3 direct and Manage Project Work: outputs

4.3.3.1 deliverables

A deliverable is any unique and verifiable product, result or capability to perform a service that is required to be produced to complete a process, phase, or project. Deliverables are typically tangible components completed to meet the project objectives and can include elements of the project management plan.

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4.3.3.2 Work Performance data

Work performance data are the raw observations and measurements identified during activities being performed to carry out the project work. Data are often viewed as the lowest level of detail from which information is derived by other processes. Data is gathered through work execution and passed to the controlling processes of each process area for further analysis.

Examples of work performance data include work completed, key performance indicators, technical performance measures, start and finish dates of schedule activities, number of change requests, number of defects, actual costs, and actual durations, etc.

4.3.3.3 change requests

A change request is a formal proposal to modify any document, deliverable, or baseline. An approved change request will replace the associated document, deliverable, or baseline and may result in an update to other parts of the project management plan. When issues are found while project work is being performed, change requests are submitted, which may modify project policies or procedures, project scope, project cost or budget, project schedule, or project quality. Other change requests cover the needed preventive or corrective actions to forestall negative impact later in the project. Requests for a change can be direct or indirect, externally or internally initiated, and can be optional or legally/contractually mandated, and may include:

• corrective action—An intentional activity that realigns the performance of the project work with the project management plan;

• Preventive action—An intentional activity that ensures the future performance of the project work is aligned with the project management plan;

• defect repair—An intentional activity to modify a nonconforming product or product component; and/or

• updates—Changes to formally controlled project documents, plans, etc., to reflect modified or additional ideas or content.

4.3.3.4 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Scope management plan,

• Requirements management plan,

• Schedule management plan,

• Cost management plan,

• Quality management plan,

• Process improvement plan,

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• Human resource management plan,

• Communications management plan,

• Risk management plan,

• Procurement management plan,

• Stakeholder management plan, and

• Project baselines.

4.3.3.5 Project documents updates

Project documents that may be updated include, but are not limited to:

• Requirements documentation,

• Project logs (issues, assumptions, etc.),

• Risk register, and

• Stakeholder register.

4.4 Monitor and control Project Work

Monitor and Control Project Work is the process of tracking, reviewing, and reporting the progress to meet the performance objectives defined in the project management plan. The key benefit of this process is that it allows stakeholders to understand the current state of the project, the steps taken, and budget, schedule, and scope forecasts. The inputs, tools and techniques, and outputs for this process are depicted in Figure 4-8. Figure 4-9 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Schedule forecasts

.3 Cost forecasts

.4 Validated changes

.5 Work performance information .6 Enterprise environmental factors .7 Organizational process assets

.1 Expert judgment

.2 Analytical techniques

.3 Project management information system .4 Meetings

.1 Change requests

.2 Work performance reports .3 Project management plan updates .4 Project documents updates

Figure 4-8. Monitor and control Project Work: Inputs, tools & techniques, and outputs

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• Change requests • Work performance reports

• Schedule forecasts

• Work performance information

• Cost forecasts

• Validated changes

• Project management plan updates

• Project management plan

• Project documents updates

• Work performance reports

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

Project Integration Management

• Organizational process assets

• Enterprise environmental factors

9.4 Manage

Project Team

10.2 Manage

Communications

11.6 Control Risks

12.3 Control

Procurements

Project Documents

10.3 Control

Communications

5.6 Control Scope

5.5 Validate Scope

6.7 Control Schedule

7.4 Control Costs

12.3 Control

Procurements

11.6 Control Risks

8.3 Control Quality

13.4 Control

Stakeholder Engagement

Enterprise/ Organization

4.2 Develop Project Management

Plan

Figure 4-9. Monitor and control Project Work data Flow diagram

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Monitoring is an aspect of project management performed throughout the project. Monitoring includes collecting, measuring, and distributing performance information, and assessing measurements and trends to effect process improvements. Continuous monitoring gives the project management team insight into the health of the project and identifies any areas that may require special attention. Control includes determining corrective or preventive actions or replanning and following up on action plans to determine whether the actions taken resolved the performance issue. The Monitor and Control Project Work process is concerned with:

• Comparing actual project performance against the project management plan;

• Assessing performance to determine whether any corrective or preventive actions are indicated, and then recommending those actions as necessary;

• Identifying new risks and analyzing, tracking, and monitoring existing project risks to make sure the risks are identified, their status is reported, and that appropriate risk response plans are being executed;

• Maintaining an accurate, timely information base concerning the project’s product(s) and their associated documentation through project completion;

• Providing information to support status reporting, progress measurement, and forecasting;

• Providing forecasts to update current cost and current schedule information;

• Monitoring implementation of approved changes as they occur; and

• Providing appropriate reporting on project progress and status to program management when the project is part of an overall program.

4.4.1 Monitor and control Project Work: Inputs

4.4.1.1 Project Management Plan

Described in Section 4.2.3.1. Monitoring and controlling project work involves looking at all aspects of the project. Subsidiary plans within the project management plan form the basis for controlling the project. Subsidiary plans and baselines include, but are not limited to:

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• Scope management plan (Section 5.1.3.1),

• Requirements management plan (Section 5.1.3.2),

• Schedule management plan (Section 6.1.3.1),

• Cost management plan (Section 7.1.3.1),

• Quality management plan (Section 8.1.3.1),

• Process improvement plan (Section 8.1.3.2),

• Human resource management plan (Section 9.1.3.1),

• Communications management plan (Section 10.1.3.1),

• Risk management plan (Section 11.1.3.1),

• Procurement management plan (Section 12.1.3.1),

• Stakeholder management plan (Section 13.2.3.1),

• Scope baseline (Section 5.4.3.1),

• Schedule baseline (Section 6.6.3.1), and

• Cost baseline (Section 7.3.3.1).

4.4.1.2 Schedule Forecasts

Described in Section 6.7.3.2. The schedule forecasts are derived from progress against the schedule baseline and computed time estimate to complete (ETC). This is typically expressed in terms of schedule variance (SV) and schedule performance index (SPI). For projects not using earned value management, variances against the planned finish dates and forecasted finish dates are provided.

The forecast may be used to determine if the project is still within defined tolerance ranges and identify any necessary change requests.

4.4.1.3 cost Forecasts

Described in Section 7.4.3.2. The cost forecasts are derived from progress against the cost baseline and computed estimates to complete (ETC). This is typically expressed in terms of cost variance (CV) and cost performance index (CPI). An estimate at completion (EAC) can be compared to the budget at completion (BAC) to see if the project is still within tolerance ranges or if a change request is required. For projects not using earned value management, variances against the planned versus actual expenditures and forecasted final costs are provided.

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4.4.1.4 Validated changes

Described in Section 8.3.3.2. Approved changes that result from the Perform Integrated Change Control process require validation to ensure that the change was appropriately implemented. A validated change provides the necessary data to confirm that the change was appropriately executed.

4.4.1.5 Work Performance Information

Work performance information is the performance data collected from various controlling processes, analyzed in context, and integrated based on relationships across areas. Thus work performance data has been transformed into work performance information. Data in itself cannot be used in the decision-making process as it has only out-of-context meaning. Work performance information, however, is correlated and contextualized, and provides a sound foundation for project decisions.

Work performance information is circulated through communication processes. Examples of performance information are status of deliverables, implementation status for change requests, and forecasted estimates to complete.

4.4.1.6 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Monitor and Control Project Work process include, but are not limited to:

• Governmental or industry standards (e.g., regulatory agency regulations, codes of conduct, product standards, quality standards, and workmanship standards),

• Organization work authorization systems,

• Stakeholder risk tolerances, and

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4.4.1.7 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Monitor and Control Project Work process include, but are not limited to:

• Organizational communication requirements;

• Financial controls procedures (e.g., time reporting, required expenditure and disbursement reviews, accounting codes, and standard contract provisions);

• Issue and defect management procedures defining issue and defect controls, issue and defect identification, and resolution and action item tracking;

• Change control procedures, including those for scope, schedule, cost, and quality variances;

• Risk control procedures including risk categories, probability definition and impact, and probability and impact matrix;

• Process measurement database used to make available measurement data on processes and products; and

• Lessons learned database.

4.4.2 Monitor and control Project Work: tools and techniques

4.4.2.1 Expert Judgment

Expert judgment is used by the project management team to interpret the information provided by the monitor and control processes. The project manager, in collaboration with the team, determines the actions required to ensure that project performance matches expectations.

4.4.2.2 Analytical techniques

Analytical techniques are applied in project management to forecast potential outcomes based on possible variations of project or environmental variables and their relationships with other variables. Examples of analytical techniques used in projects are:

• Regression analysis,

• Grouping methods,

• Causal analysis,

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• Root cause analysis,

• Forecasting methods (e.g., time series, scenario building, simulation, etc.),

• Failure mode and effect analysis (FMEA),

• Fault tree analysis (FTA),

• Reserve analysis,

• Trend analysis,

• Earned value management, and

• Variance analysis.

4.4.2.3 Project Management Information System

The project management information system, which is part of enterprise environmental factors, provides access to automated tools, such as scheduling, cost, and resourcing tools, performance indicators, databases, project records, and financials used during the Monitor and Control Project Work process.

4.4.2.4 Meetings

Described in Section 4.3.2.3. Meetings may be face-to-face, virtual, formal, or informal. They may include project team members, stakeholders, and others involved in or affected by the project. Types of meetings include, but are not limited to, user groups and review meetings.

4.4.3 Monitor and control Project Work: outputs

4.4.3.1 change requests

As a result of comparing planned results to actual results, change requests may be issued to expand, adjust, or reduce project scope, product scope, or quality requirements and schedule or cost baselines. Change requests may necessitate the collection and documentation of new requirements. Changes can impact the project management plan, project documents, or product deliverables. Changes that meet the project’s change control criteria should go through the integrated change control process established for the project. Changes may include, but are not limited to, the following:

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• corrective action—An intentional activity that realigns the performance of the project work with the project management plan;

• Preventive action—An intentional activity that ensures the future performance of the project work is aligned with the project management plan; and

• defect repair—An intentional activity to modify a nonconforming product or product component.

4.4.3.2 Work Performance reports

Work performance reports are the physical or electronic representation of work performance information compiled in project documents, intended to generate decisions, actions, or awareness. Project information may be communicated verbally from person to person. However, in order to record, store, and sometimes distribute work performance information, a physical or electronic representation in the form of project documents is required. Work performance reports are a subset of project documents, which are intended to create awareness and generate decisions or actions. Specific work performance metrics may be defined at the start of the project and included in the normal work performance reports provided to key stakeholders.

Examples of work performance reports include status reports, memos, justifications, information notes, recommendations, and updates.

4.4.3.3 Project Management Plan updates

Changes identified during the Monitor and Control Project Work process may affect the overall project management plan. These changes, after being processed through the appropriate change control process can lead to project management plan updates. Project management plan elements that may be updated include, but are not limited to:

• Scope management plan (Section 5.1.3.1),

• Requirements management plan (Section 5.1.3.2),

• Schedule management plan (Section 6.1.3.1),

• Cost management plan (Section 7.1.3.1),

• Quality management plan (Section 8.1.3.1),

• Scope baseline (Section 5.4.3.1),

• Schedule baseline (Section 6.6.3.1), and

• Cost baseline (Section 7.3.3.1).

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4.4.3.4 Project documents updates

Project documents that may be updated include, but are not limited to:

• Schedule and cost forecasts,

• Work performance reports, and

• Issue log.

4.5 Perform Integrated change control

Perform Integrated Change Control is the process of reviewing all change requests; approving changes and managing changes to deliverables, organizational process assets, project documents, and the project management plan; and communicating their disposition. It reviews all requests for changes or modifications to project documents, deliverables, baselines, or the project management plan and approves or rejects the changes. The key benefit of this process is that it allows for documented changes within the project to be considered in an integrated fashion while reducing project risk, which often arises from changes made without consideration to the overall project objectives or plans. The inputs, tools and techniques, and outputs of this process are depicted in Figure 4-10. Figure 4-11 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Work performance reports .3 Change requests .4 Enterprise environmental factors .5 Organizational process assets

.1 Expert judgment

.2 Meetings

.3 Change control tools

.1 Approved change requests .2 Change log .3 Project management plan updates .4 Project documents updates

Figure 4-10. Perform Integrated change control: Inputs, tools & techniques, and outputs

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• Project management plan

• Project management plan updates

• Project documents updates• Change requests

• Change requests

• Approved change requests

• Change log

• Change requests • Work performance reports

Project Integration Management

• Organizational process assets

• Enterprise environmental factors

8.3 Control Quality

12.3 Control

Procurements

13.3 Manage

Stakeholder Engagement

Project Documents

8.3 Control Quality

8.2 Perform Quality

Assurance

7.4 Control Costs

6.7 Control Schedule

5.6 Control Scope

5.5 Validate Scope

11.6 Control Risks

12.2 Conduct

Procurements

10.3 Control

Communications

9.4 Manage

Project Team

12.3 Control

Procurements

13.3 Manage

Stakeholder Engagement

13.4 Control

Stakeholder Engagement

12.1 Plan

Procurement Management

Enterprise/ Organization

4.5 Perform

Integrated Change Control

4.4 Monitor and

Control Project Work

4.3 Direct and

Manage Project Work

4.2 Develop Project Management

Plan

Figure 4-11. Perform Integrated change control data Flow diagram

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The Perform Integrated Change Control process is conducted from project inception through completion and is the ultimate responsibility of the project manager. The project management plan, the project scope statement, and other deliverables are maintained by carefully and continuously managing changes, either by rejecting changes or by approving changes, thereby assuring that only approved changes are incorporated into a revised baseline.

Changes may be requested by any stakeholder involved with the project. Although changes may be initiated verbally, they should be recorded in written form and entered into the change management and/or configuration management system. Change requests are subject to the process specified in the change control and configuration control systems. Those change request processes may require information on estimated time impacts and estimated cost impacts.

Every documented change request needs to be either approved or rejected by a responsible individual, usually the project sponsor or project manager. The responsible individual will be identified in the project management plan or by organizational procedures. When required, the Perform Integrated Change Control process includes a change control board (CCB), which is a formally chartered group responsible for reviewing, evaluating, approving, delaying, or rejecting changes to the project, and for recording and communicating such decisions. Approved change requests can require new or revised cost estimates, activity sequences, schedule dates, resource requirements, and analysis of risk response alternatives. These changes can require adjustments to the project management plan and other project documents. The applied level of change control is dependent upon the application area, complexity of the specific project, contract requirements, and the context and environment in which the project is performed. Customer or sponsor approval may be required for certain change requests after CCB approval, unless they are part of the CCB.

Configuration control is focused on the specification of both the deliverables and the processes; while change control is focused on identifying, documenting, and approving or rejecting changes to the project documents, deliverables, or baselines.

Some of the configuration management activities included in the Perform Integrated Change Control process are as follows:

• configuration identification. Identification and selection of a configuration item to provide the basis for which the product configuration is defined and verified, products and documents are labeled, changes are managed, and accountability is maintained.

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• configuration status accounting. Information is recorded and reported as to when appropriate data about the configuration item should be provided. This information includes a listing of approved configuration identification, status of proposed changes to the configuration, and the implementation status of approved changes.

• configuration verification and audit. Configuration verification and configuration audits ensure the composition of a project’s configuration items is correct and that corresponding changes are registered, assessed, approved, tracked, and correctly implemented. This ensures the functional requirements defined in the configuration documentation have been met.

4.5.1 Perform Integrated change control: Inputs

4.5.1.1 Project Management Plan

Described in Section 4.2.3.1. Elements of the project management plan that may be used include, but are not limited to:

• Scope management plan, which contains the procedures for scope changes;

• Scope baseline, which provides product definition; and

• Change management plan, which provides the direction for managing the change control process and documents the formal change control board (CCB).

Changes are documented and updated within the project management plan as part of the change and configuration management processes.

4.5.1.2 Work Performance reports

Described in Section 4.4.3.2. Work performance reports of particular interest to the Perform Integrated Change Control process include resource availability, schedule and cost data, and earned value management (EVM) reports, burnup or burndown charts.

4.5.1.3 change requests

All of the Monitoring and Controlling processes and many of the Executing processes produce change requests as an output. Change requests may include corrective action, preventive action, and defect repairs. However, corrective and preventive actions do not normally affect the project baselines—only the performance against the baselines.

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4.5.1.4 Enterprise Environmental Factors

Described in Section 2.1.5. The following enterprise environmental factor can influence the Perform Integrated Change Control process: project management information system. The project management information system may include the scheduling software tool, a configuration management system, an information collection and distribution system, or web interfaces to other online automated systems.

4.5.1.5 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Perform Integrated Change Control process include, but are not limited to:

• Change control procedures, including the steps by which official organization standards, policies, plans, and other project documents will be modified, and how any changes will be approved, validated, and implemented;

• Procedures for approving and issuing change authorizations;

• Process measurement database used to collect and make available measurement data on processes and products;

• Project documents (e.g., scope, cost, and schedule baselines, project calendars, project schedule network diagrams, risk registers, planned response actions, and defined risk impact); and

• Configuration management knowledge base containing the versions and baselines of all official organization standards, policies, procedures, and any project documents.

4.5.2 Perform Integrated change control: tools and techniques

4.5.2.1 Expert Judgment

In addition to the project management team’s expert judgment, stakeholders may be asked to provide their expertise and may be asked to sit on the change control board (CCB). Such judgment and expertise are applied to any technical and management details during this process and may be provided by various sources, for example:

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• Consultants,

• Stakeholders, including customers or sponsors,

• Professional and technical associations,

• Industry groups,

• Subject matter experts (SMEs), and

• Project management office (PMO).

4.5.2.2 Meetings

In this case, these meetings are usually referred to as change control meetings. When needed for the project, a change control board (CCB) is responsible for meeting and reviewing the change requests and approving, rejecting, or other disposition of those changes. The CCB may also review configuration management activities. The roles and responsibilities of these boards are clearly defined and agreed upon by appropriate stakeholders and documented in the change management plan. CCB decisions are documented and communicated to the stakeholders for information and follow-up actions.

4.5.2.3 change control tools

In order to facilitate configuration and change management, manual or automated tools may be used. Tool selection should be based on the needs of the project stakeholders including organizational and environmental considerations and/or constraints.

Tools are used to manage the change requests and the resulting decisions. Additional considerations should be made for communication to assist the CCB members in their duties as well as distribute the decisions to the appropriate stakeholders.

4.5.3 Perform Integrated change control: outputs

4.5.3.1 Approved change requests

Change requests are processed according to the change control system by the project manager, CCB, or by an assigned team member. Approved change requests will be implemented through the Direct and Manage Project Work process. The disposition of all change requests, approved or not, will be updated in the change log as part of updates to the project documents.

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4.5.3.2 change Log

A change log is used to document changes that occur during a project. These changes and their impact to the project in terms of time, cost, and risk, are communicated to the appropriate stakeholders. Rejected change requests are also captured in the change log.

4.5.3.3 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Any subsidiary plans, and

• Baselines that are subject to the formal change control process.

Changes to baselines should only show the changes from the current time forward. Past performance may not be changed. This protects the integrity of the baselines and the historical data of past performance.

4.5.3.4 Project documents updates

Project documents that may be updated as a result of the Perform Integrated Change Control process include all documents specified as being subject to the project’s formal change control process.

4.6 close Project or Phase

Close Project or Phase is the process of finalizing all activities across all of the Project Management Process Groups to formally complete the project or phase. The key benefit of this process is that it provides lessons learned, the formal ending of project work, and the release of organization resources to pursue new endeavors. The inputs, tools and techniques, and outputs of this process are depicted in Figure 4-12. Figure 4-13 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Accepted deliverables

.3 Organizational process assets

.1 Expert judgment

.2 Analytical techniques

.3 Meetings

.1 Final product, service, or result transition .2 Organizational process assets updates

Figure 4-12. close Project or Phase: Inputs, tools & techniques, and outputs

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4• Project charter

4.6 Close Project

or Phase

4.2 Develop Project Management

Plan

Project Integration Management

Enterprise/ Organization

Customer

5.5 Validate Scope

• Project management plan

• Accepted deliverables

• Organizational process assets

• Organizational process assets updates

• Final product, service, or result transition

Figure 4-13. close Project or Phase data Flow diagram

When closing the project, the project manager reviews all prior information from the previous phase closures to ensure that all project work is completed and that the project has met its objectives. Since project scope is measured against the project management plan, the project manager reviews the scope baseline to ensure completion before considering the project closed. The Close Project or Phase process also establishes the procedures to investigate and document the reasons for actions taken if a project is terminated before completion. In order to successfully achieve this, the project manager needs to engage all the proper stakeholders in the process.

This includes all planned activities necessary for administrative closure of the project or phase, including step- by-step methodologies that address:

• Actions and activities necessary to satisfy completion or exit criteria for the phase or project;

• Actions and activities necessary to transfer the project’s products, services, or results to the next phase or to production and/or operations; and

• Activities needed to collect project or phase records, audit project success or failure, gather lessons learned and archive project information for future use by the organization.

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4.6.1 close Project or Phase: Inputs

4.6.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan becomes the agreement between the project manager and project sponsor, defining what constitutes project completion.

4.6.1.2 Accepted deliverables

Described in Section 5.5. Accepted deliverables may include approved product specifications, delivery receipts, and work performance documents. Partial or interim deliverables may also be included for phased or cancelled projects.

4.6.1.3 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Close Project or Phase process include, but are not limited to:

• Project or phase closure guidelines or requirements (e.g., administrative procedures, project audits, project evaluations, and transition criteria); and

• Historical information and lessons learned knowledge base (e.g., project records and documents, all project closure information and documentation, information about both the results of previous project selection decisions and previous project performance information, and information from risk management activities).

4.6.2 close Project or Phase: tools and techniques

4.6.2.1 Expert Judgment

Expert judgment is applied when performing administrative closure activities. These experts ensure the project or phase closure is performed to the appropriate standards. Expertise is available from many sources, including but not limited to

• Other project managers within the organization,

• Project management office (PMO), and

• Professional and technical associations.

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4.6.2.2 Analytical techniques

Described in Section 4.4.2.2. Examples of analytical techniques used in project closeout are:

• Regression analysis, and

• Trend analysis.

4.6.2.3 Meetings

Described in Section 4.3.2.3. Meetings may be face-to-face, virtual, formal, or informal. This may include project team members and other stakeholders, involved in or affected by the project. Types of meetings include, but are not limited to lessons learned, closeout, user group, and review meetings.

4.6.3 close Project or Phase: outputs

4.6.3.1 Final Product, Service, or result transition

This output refers to the transition of the final product, service, or result that the project was authorized to produce (or in the case of phase closure, the intermediate product, service, or result of that phase).

4.6.3.2 organizational Process Assets updates

The organizational process assets that are updated as a result of the Close Project or Phase process include, but are not limited to:

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• Project files—Documentation resulting from the project’s activities, for example, project management plan; scope, cost, schedule, and project calendars; risk registers and other registers; change management documentation; planned risk response actions; and risk impact.

• Project or phase closure documents—Project or phase closure documents, consisting of formal documentation that indicates completion of the project or phase and the transfer of the completed project or phase deliverables to others, such as an operations group or to the next phase. During project closure, the project manager reviews prior phase documentation, customer acceptance documentation from the Validate Scope process (Section 5.4), and the contract (if applicable), to ensure that all project requirements are completed prior to finalizing the closure of the project. If the project was terminated prior to completion, the formal documentation indicates why the project was terminated and formalizes the procedures for the transfer of the finished and unfinished deliverables of the cancelled project to others.

• Historical information—Historical information and lessons learned information are transferred to the lessons learned knowledge base for use by future projects or phases. This can include information on issues and risks as well as techniques that worked well that can be applied to future projects.

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Project scoPe MAnAGeMent Project Scope Management includes the processes required to ensure that the project includes all the work

required, and only the work required, to complete the project successfully. Managing the project scope is primarily concerned with defining and controlling what is and is not included in the project.

Figure 5-1 provides an overview of the Project Scope Management processes, which include the following:

5.1 Plan Scope Management—The process of creating a scope management plan that documents how the project scope will be defined, validated, and controlled.

5.2 collect requirements—The process of determining, documenting, and managing stakeholder needs and requirements to meet project objectives.

5.3 define Scope—The process of developing a detailed description of the project and product.

5.4 create WBS—The process of subdividing project deliverables and project work into smaller, more manageable components.

5.5 Validate Scope—The process of formalizing acceptance of the completed project deliverables.

5.6 control Scope—The process of monitoring the status of the project and product scope and managing changes to the scope baseline.

These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

In the project context, the term scope can refer to:

• Product scope. The features and functions that characterize a product, service, or result; and/or

• Project scope. The work performed to deliver a product, service, or result with the specified features and functions. The term project scope is sometimes viewed as including product scope.

The processes used to manage project scope, as well as the supporting tools and techniques, can vary by project. The scope baseline for the project is the approved version of the project scope statement, work breakdown structure (WBS), and its associated WBS dictionary. A baseline can be changed only through formal change control procedures and is used as a basis for comparison while performing Validate Scope and Control Scope processes as well as other controlling processes.

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Completion of the project scope is measured against the project management plan (Section 4.2.3.1). Completion of the product scope is measured against the product requirements (Section 5.2). The Project Scope Management processes need to be well integrated with the other Knowledge Area processes, so that the work of the project will result in delivery of the specified product scope.

.1 Inputs .1 Project management plan .2 Project charter .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Meetings

.3 Outputs .1 Scope management plan .2 Requirements management plan

.1 Inputs .1 Scope management plan .2 Requirements management plan .3 Stakeholder management plan .4 Project charter .5 Stakeholder register

.2 Tools & Techniques .1 Interviews .2 Focus groups .3 Facilitated workshops .4 Group creativity techniques .5 Group decision-making techniques .6 Questionnaires and surveys .7 Observations .8 Prototypes .9 Benchmarking .10 Context diagrams .11 Document analysis

.3 Outputs .1 Requirements documentation .2 Requirements traceability matrix

.1 Inputs .1 Scope management plan .2 Project charter .3 Requirements documentation .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Product analysis .3 Alternatives generation .4 Facilitated workshops

.3 Outputs .1 Project scope statement .2 Project documents updates

.1 Inputs .1 Scope management plan .2 Project scope statement .3 Requirements documentation .4 Enterprise environmental factors .5 Organizational process assets

.2 Tools & Techniques .1 Decomposition .2 Expert judgment

.3 Outputs .1 Scope baseline .2 Project documents updates

.1 Inputs .1 Project management plan .2 Requirements documentation .3 Requirements traceability matrix .4 Verified deliverables .5 Work performance data

.2 Tools & Techniques .1 Inspection .2 Group decision-making techniques

.3 Outputs .1 Accepted deliverables .2 Change requests .3 Work performance information .4 Project documents updates

.1 Inputs .1 Project management plan .2 Requirements documentation .3 Requirements traceability matrix .4 Work performance data .5 Organizational process assets

.2 Tools & Techniques .1 Variance analysis

.3 Outputs .1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Project Scope Management Overview

5.2 Collect Requirements

5.1 Plan Scope Management 5.3 Define Scope

5.4 Create WBS

5.5 Validate Scope

5.6 Control Scope

Figure 5-1. Project Scope Management overview

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5.1 Plan Scope Management

Plan Scope Management is the process of creating a scope management plan that documents how the project scope will be defined, validated, and controlled. The key benefit of this process is that it provides guidance and direction on how scope will be managed throughout the project. The inputs, tools and techniques, and outputs of this process are depicted in Figure 5-2. Figure 5-3 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Project charter

.3 Enterprise environmental factors .4 Organizational process assets

.1 Expert judgment

.2 Meetings .1 Scope management plan .2 Requirements management plan

Figure 5-2. Plan Scope Management: Inputs, tools & techniques, and outputs

5.1 Plan Scope

Management

5.2 Collect

Requirements

5.3 Define Scope

5.4 Create WBS

Project Scope Management Enterprise/ Organization

4.1 Develop Project

Charter

4.2 Develop Project Management

Plan

• Project charter

• Project management plan

• Scope management plan

• Requirements management plan

• Enterprise environmental factors • Organizational process assets

Figure 5-3. Plan Scope Management data Flow diagram

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The scope management plan is a component of the project or program management plan that describes how the scope will be defined, developed, monitored, controlled, and verified. The development of the scope management plan and the detailing of the project scope begin with the analysis of information contained in the project charter (Section 4.1.3.1), the latest approved subsidiary plans of the project management plan (Section 4.2.3.1), historical information contained in the organizational process assets (Section 2.1.4), and any other relevant enterprise environmental factors (Section 2.1.5). This plan helps reduce the risk of project scope creep.

5.1.1 Plan Scope Management: Inputs

5.1.1.1 Project Management Plan

Described in Section 4.2.3.1. Approved subsidiary plans of the project management plan are used to create the scope management plan and influence the approach taken for planning scope and managing project scope.

5.1.1.2 Project charter

Described in Section 4.1.3.1. The project charter is used to provide the project context needed to plan the scope management processes. It provides the high-level project description and product characteristics from the project statement of work.

5.1.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Plan Scope Management process include, but are not limited to:

• Organization’s culture,

• Infrastructure,

• Personnel administration, and

• Marketplace conditions.

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5.1.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Plan Scope Management process include, but are not limited to:

• Policies and procedures, and

• Historical information and lessons learned knowledge base.

5.1.2 Plan Scope Management: tools and techniques

5.1.2.1 Expert Judgment

Expert judgment refers to input received from knowledgeable and experienced parties. Expertise may be provided by any group or person with specialized education, knowledge, skill, experience, or training in developing scope management plans.

5.1.2.2 Meetings

Project teams may attend project meetings to develop the scope management plan. Attendees at these meetings may include the project manager, the project sponsor, selected project team members, selected stakeholders, anyone with responsibility for any of the scope management processes, and others as needed.

5.1.3 Plan Scope Management: outputs

5.1.3.1 Scope Management Plan

The scope management plan is a component of the project or program management plan that describes how the scope will be defined, developed, monitored, controlled, and verified. The scope management plan is a major input into the Develop Project Management Plan process, and the other scope management processes. The components of a scope management plan include:

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• Process for preparing a detailed project scope statement;

• Process that enables the creation of the WBS from the detailed project scope statement;

• Process that establishes how the WBS will be maintained and approved;

• Process that specifies how formal acceptance of the completed project deliverables will be obtained; and

• Process to control how requests for changes to the detailed project scope statement will be processed. This process is directly linked to the Perform Integrated Change Control process (Section 4.5).

The scope management plan can be formal or informal, broadly framed or highly detailed, based on the needs of the project.

5.1.3.2 requirements Management Plan

The requirements management plan is a component of the project management plan that describes how requirements will be analyzed, documented, and managed. The phase-to-phase relationship, described in Section 2.4.2.1, strongly influences how requirements are managed. The project manager chooses the most effective relationship for the project and documents this approach in the requirements management plan. Many of the requirements management plan components are based on that relationship.

Components of the requirements management plan can include, but are not limited to:

• How requirements activities will be planned, tracked, and reported;

• Configuration management activities such as: how changes to the product will be initiated, how impacts will be analyzed, how they will be traced, tracked, and reported, as well as the authorization levels required to approve these changes;

• Requirements prioritization process;

• Product metrics that will be used and the rationale for using them; and

• Traceability structure to reflect which requirement attributes will be captured on the traceability matrix.

5.2 collect requirements

Collect Requirements is the process of determining, documenting, and managing stakeholder needs and requirements to meet project objectives. The key benefit of this process is that it provides the basis for defining and managing the project scope including product scope. The inputs, tools and techniques, and outputs of this process are depicted in Figure 5-4. Figure 5-5 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Scope management plan

.2 Requirements management plan .3 Stakeholder management plan .4 Project charter .5 Stakeholder register

.1 Interviews .2 Focus groups .3 Facilitated workshops .4 Group creativity techniques .5 Group decision-making techniques .6 Questionnaires and surveys .7 Observations .8 Prototypes .9 Benchmarking .10 Context diagrams .11 Document analysis

.1 Requirements documentation .2 Requirements traceability matrix

Figure 5-4. collect requirements: Inputs, tools & techniques, and outputs

• Change log

Project Scope Management

5.2 Collect

Requirements

5.1 Plan Scope

Management

5.3 Define Scope

5.4 Create WBS

5.5 Validate Scope

5.6 Control Scope

• Project charter

• Stakeholder register • Stakeholder

management plan

• Requirements documentation

• Requirements management plan • Scope management plan

• Requirements traceability matrix

13.1 Identify

Stakeholders

13.2 Plan

Stakeholder Management

8.1 Plan Quality Management

12.1 Plan

Procurement Management

4.1 Develop Project

Charter

Figure 5-5. collect requirements data Flow diagram

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The project’s success is directly influenced by active stakeholder involvement in the discovery and decomposition of needs into requirements and by the care taken in determining, documenting, and managing the requirements of the product, service, or result of the project. Requirements include conditions or capabilities that are to be met by the project or present in the product, service, or result to satisfy an agreement or other formally imposed specification. Requirements include the quantified and documented needs and expectations of the sponsor, customer, and other stakeholders. These requirements need to be elicited, analyzed, and recorded in enough detail to be included in the scope baseline and to be measured once project execution begins. Requirements become the foundation of the WBS. Cost, schedule, quality planning, and sometimes procurement are all based upon these requirements. The development of requirements begins with an analysis of the information contained in the project charter (Section 4.1.3.1), the stakeholder register (Section 13.1.3.1) and the stakeholder management plan (Section 13.2.3.1).

Many organizations categorize requirements into different types, such as business and technical solutions, the former referring to stakeholder needs and the latter as to how those needs will be implemented. Requirements can be grouped into classifications allowing for further refinement and detail as the requirements are elaborated. These classifications include:

• Business requirements, which describe the higher-level needs of the organization as a whole, such as the business issues or opportunities, and reasons why a project has been undertaken.

• Stakeholder requirements, which describe needs of a stakeholder or stakeholder group.

• Solution requirements, which describe features, functions, and characteristics of the product, service, or result that will meet the business and stakeholder requirements. Solution requirements are further grouped into functional and nonfunctional requirements:

○ Functional requirements describe the behaviors of the product. Examples include processes, data, and interactions with the product.

○ Nonfunctional requirements supplement functional requirements and describe the environmental conditions or qualities required for the product to be effective. Examples include: reliability, security, performance, safety, level of service, supportability, retention/purge, etc.

• Transition requirements describe temporary capabilities, such as data conversion and training requirements, needed to transition from the current “as-is” state to the future “to-be” state.

• Project requirements, which describe the actions, processes, or other conditions the project needs to meet.

• Quality requirements, which capture any condition or criteria needed to validate the successful completion of a project deliverable or fulfillment of other project requirements.

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5.2.1 collect requirements: Inputs

5.2.1.1 Scope Management Plan

Described in Section 5.1.3.1. The scope management plan provides clarity as to how project teams will determine which type of requirements need to be collected for the project.

5.2.1.2 requirements Management Plan

Described in Section 5.1.3.2. The requirements management plan provides the processes that will be used throughout the Collect Requirements process to define and document the stakeholder needs.

5.2.1.3 Stakeholder Management Plan

Described in Section 13.2.3.1. The stakeholder management plan is used to understand stakeholder communication requirements and the level of stakeholder engagement in order to assess and adapt to the level of stakeholder participation in requirements activities.

5.2.1.4 Project charter

Described in Section 4.1.3.1. The project charter is used to provide the high-level description of the product, service, or result of the project so that detailed requirements can be developed.

5.2.1.5 Stakeholder register

Described in Section 13.1.3.1. The stakeholder register is used to identify stakeholders who can provide information on the requirements. The stakeholder register also captures major requirements and main expectations stakeholders may have for the project.

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5.2.2 collect requirements: tools and techniques

5.2.2.1 Interviews

An interview is a formal or informal approach to elicit information from stakeholders by talking to them directly. It is typically performed by asking prepared and spontaneous questions and recording the responses. Interviews are often conducted on an individual basis between an interviewer and an interviewee, but may involve multiple interviewers and/or multiple interviewees. Interviewing experienced project participants, sponsors and other executives, and subject matter experts can aid in identifying and defining the features and functions of the desired product deliverables. Interviews are also useful for obtaining confidential information.

5.2.2.2 Focus Groups

Focus groups bring together prequalified stakeholders and subject matter experts to learn about their expectations and attitudes about a proposed product, service, or result. A trained moderator guides the group through an interactive discussion, designed to be more conversational than a one-on-one interview.

5.2.2.3 Facilitated Workshops

Facilitated workshops are focused sessions that bring key stakeholders together to define product requirements. Workshops are considered a primary technique for quickly defining cross-functional requirements and reconciling stakeholder differences. Because of their interactive group nature, well-facilitated sessions can build trust, foster relationships, and improve communication among the participants, which can lead to increased stakeholder consensus. In addition, issues can be discovered earlier and resolved more quickly than in individual sessions.

For example, facilitated workshops called joint application design/development (JAD) sessions are used in the software development industry. These facilitated sessions focus on bringing business subject matter experts and the development team together to improve the software development process. In the manufacturing industry, quality function deployment (QFD) is another example of a facilitated workshop technique that helps determine critical characteristics for new product development. QFD starts by collecting customer needs, also known as voice of the customer (VOC). These needs are then objectively sorted and prioritized, and goals are set for achieving them. User stories, which are short, textual descriptions of required functionality, are often developed during a requirements workshop. User stories describe the stakeholder who benefits from the feature (role), what the stakeholder needs to accomplish (goal), and the benefit to the stakeholder (motivation). User stories are widely used with agile methods.

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5.2.2.4 Group creativity techniques

Several group activities can be organized to identify project and product requirements. Some of the group creativity techniques that can be used are:

• Brainstorming. A technique used to generate and collect multiple ideas related to project and product requirements. Although brainstorming by itself does not include voting or prioritization, it is often used with other group creativity techniques that do.

• nominal group technique. A technique that enhances brainstorming with a voting process used to rank the most useful ideas for further brainstorming or for prioritization.

• Idea/mind mapping. A technique in which ideas created through individual brainstorming sessions are consolidated into a single map to reflect commonality and differences in understanding, and generate new ideas.

• Affinity diagram. A technique that allows large numbers of ideas to be classified into groups for review and analysis.

• Multicriteria decision analysis. A technique that utilizes a decision matrix to provide a systematic analytical approach for establishing criteria, such as risk levels, uncertainty, and valuation, to evaluate and rank many ideas.

5.2.2.5 Group decision-Making techniques

A group decision-making technique is an assessment process having multiple alternatives with an expected outcome in the form of future actions. These techniques can be used to generate, classify, and prioritize product requirements.

There are various methods of reaching a group decision, such as:

• unanimity. A decision that is reached whereby everyone agrees on a single course of action. One way to reach unanimity is the Delphi technique, in which a selected group of experts answers questionnaires and provides feedback regarding the responses from each round of requirements gathering. The responses are only available to the facilitator to maintain anonymity.

• Majority. A decision that is reached with support obtained from more than 50 % of the members of the group. Having a group size with an uneven number of participants can ensure that a decision will be reached, rather than resulting in a tie.

• Plurality. A decision that is reached whereby the largest block in a group decides, even if a majority is not achieved. This method is generally used when the number of options nominated is more than two.

• dictatorship. In this method, one individual makes the decision for the group.

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All of these group decision-making techniques can be applied to the group creativity techniques used in the Collect Requirements process.

5.2.2.6 Questionnaires and Surveys

Questionnaires and surveys are written sets of questions designed to quickly accumulate information from a large number of respondents. Questionnaires and/or surveys are most appropriate with varied audiences, when a quick turnaround is needed, when respondents are geographically dispersed, and where statistical analysis is appropriate.

5.2.2.7 observations

Observations provide a direct way of viewing individuals in their environment and how they perform their jobs or tasks and carry out processes. It is particularly helpful for detailed processes when the people that use the product have difficulty or are reluctant to articulate their requirements. Observation is also known as “job shadowing.” It is usually done externally by an observer viewing a business expert performing a job. It can also be done by a “participant observer” who actually performs a process or procedure to experience how it is done to uncover hidden requirements.

5.2.2.8 Prototypes

Prototyping is a method of obtaining early feedback on requirements by providing a working model of the expected product before actually building it. Since a prototype is tangible, it allows stakeholders to experiment with a model of the final product rather than being limited to discussing abstract representations of their requirements. Prototypes support the concept of progressive elaboration in iterative cycles of mock-up creation, user experimentation, feedback generation, and prototype revision. When enough feedback cycles have been performed, the requirements obtained from the prototype are sufficiently complete to move to a design or build phase. Storyboarding is a prototyping technique showing sequence or navigation through a series of images or illustrations. Storyboards are used on a variety of projects in a variety of industries, such as film, advertising, instructional design, and on agile and other software development projects. In software development, storyboards use mock-ups to show navigation paths through webpages, screens, or other user interfaces.

5.2.2.9 Benchmarking

Benchmarking involves comparing actual or planned practices, such as processes and operations, to those of comparable organizations to identify best practices, generate ideas for improvement, and provide a basis for measuring performance. The organizations compared during benchmarking can be internal or external.

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5.2.2.10 context diagrams

The context diagram is an example of a scope model. Context diagrams visually depict the product scope by showing a business system (process, equipment, computer system, etc.), and how people and other systems (actors) interact with it. Context diagrams show inputs to the business system, the actor(s) providing the input, the outputs from the business system, and the actor(s) receiving the output.

5.2.2.11 document Analysis

Document analysis is used to elicit requirements by analyzing existing documentation and identifying information relevant to the requirements. There are a wide range of documents that may be analyzed to help elicit relevant requirements. Examples of documents that may be analyzed include, but are not limited to: business plans, marketing literature, agreements, requests for proposal, current process flows, logical data models, business rules repositories, application software documentation, business process or interface documentation, use cases, other requirements documentation, problem/issue logs, policies, procedures, and regulatory documentation such as laws, codes, or ordinances, etc.

5.2.3 collect requirements: outputs

5.2.3.1 requirements documentation

Requirements documentation describes how individual requirements meet the business need for the project. Requirements may start out at a high level and become progressively more detailed as more about the requirements is known. Before being baselined, requirements need to be unambiguous (measurable and testable), traceable, complete, consistent, and acceptable to key stakeholders. The format of a requirements document may range from a simple document listing all the requirements categorized by stakeholder and priority, to more elaborate forms containing an executive summary, detailed descriptions, and attachments.

Components of requirements documentation can include, but, are not limited to:

• Business requirements, including:

○ Business and project objectives for traceability;

○ Business rules for the performing organization; and

○ Guiding principles of the organization.

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• Stakeholder requirements, including:

○ Impacts to other organizational areas;

○ Impacts to other entities inside or outside the performing organization; and

○ Stakeholder communication and reporting requirements.

• Solution requirements, including:

○ Functional and nonfunctional requirements;

○ Technology and standard compliance requirements;

○ Support and training requirements;

○ Quality requirements; and

○ Reporting requirements, etc. (solution requirements can be documented textually, in models, or both).

• Project requirements, such as:

○ Levels of service, performance, safety, compliance, etc.; and

○ Acceptance criteria.

• Transition requirements.

• Requirements assumptions, dependencies, and constraints.

5.2.3.2 requirements traceability Matrix

The requirements traceability matrix is a grid that links product requirements from their origin to the deliverables that satisfy them. The implementation of a requirements traceability matrix helps ensure that each requirement adds business value by linking it to the business and project objectives. It provides a means to track requirements throughout the project life cycle, helping to ensure that requirements approved in the requirements documentation are delivered at the end of the project. Finally, it provides a structure for managing changes to the product scope.

Tracing includes, but is not limited to, tracing requirements for the following:

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• Business needs, opportunities, goals, and objectives;

• Project objectives;

• Project scope/WBS deliverables;

• Product design;

• Product development;

• Test strategy and test scenarios; and

• High-level requirements to more detailed requirements.

Attributes associated with each requirement can be recorded in the requirements traceability matrix. These attributes help to define key information about the requirement. Typical attributes used in the requirements traceability matrix may include: a unique identifier, a textual description of the requirement, the rationale for inclusion, owner, source, priority, version, current status (such as active, cancelled, deferred, added, approved, assigned, completed), and status date. Additional attributes to ensure that the requirement has met stakeholders’ satisfaction may include stability, complexity, and acceptance criteria. Figure 5-6 provides an example of a requirements traceability matrix with its associated attributes.

Requirements Traceability Matrix

Requirements DescriptionID Business Needs, Opportunities,

Goals, Objectives

Project Objectives

Associate ID

WBS Deliverables

Product Design

Product Development

Test Cases

Programs PortfoliosProject Name: Cost Center:

Project Description:

1.0

1.1

1.2

1.2.1

2.0

2.1

2.1.1

3.0

3.1

3.2

4.0

5.0

001

002

003

004

005

Figure 5-6. Example of a requirements traceability Matrix

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5.3 define Scope

Define Scope is the process of developing a detailed description of the project and product. The key benefit of this process is that it describes the project, service, or result boundaries by defining which of the requirements collected will be included in and excluded from the project scope. The inputs, tools and techniques, and outputs of this process are depicted in Figure 5-7. Figure 5-8 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Scope management plan

.2 Project charter

.3 Requirements documentation .4 Organizational process assets

.1 Expert judgment

.2 Product analysis

.3 Alternatives generation

.4 Facilitated workshops

.1 Project scope statement

.2 Project documents updates

Figure 5-7. define Scope: Inputs, tools & techniques, and outputs

Project Scope Management

5.3 Define Scope

5.1 Plan Scope

Management

5.2 Collect

Requirements

5.4 Create WBS

• Organizational process assets

• Project charter

• Requirements documentation

• Scope management plan

• Project scope statement

• Project documents updates

4.1 Develop Project

Charter

6.3 Sequence Activities

6.5 Estimate

Activity Durations

6.6 Develop Schedule

Project Documents

Enterprise/ Organization

Figure 5-8. define Scope data Flow diagram

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Since all of the requirements identified in Collect Requirements may not be included in the project, the Define Scope process selects the final project requirements from the requirements documentation delivered during the Collect Requirements process. It then develops a detailed description of the project and product, service, or result.

The preparation of a detailed project scope statement is critical to project success and builds upon the major deliverables, assumptions, and constraints that are documented during project initiation. During project planning, the project scope is defined and described with greater specificity as more information about the project is known. Existing risks, assumptions, and constraints are analyzed for completeness and added or updated as necessary. The Define Scope process can be highly iterative. In iterative life cycle projects, a high-level vision will be developed for the overall project, but the detailed scope is determined one iteration at a time and the detailed planning for the next iteration is carried out as work progresses on the current project scope and deliverables.

5.3.1 define Scope: Inputs

5.3.1.1 Scope Management Plan

Described in Section 5.1.3.1.The scope management plan is a component of the project management plan that establishes the activities for developing, monitoring, and controlling the project scope.

5.3.1.2 Project charter

Described in Section 4.1.3.1. The project charter provides the high-level project description and product characteristics. It also contains project approval requirements. If a project charter is not used in the performing organization, then comparable information needs to be acquired or developed, and used as a basis for the detailed project scope statement. Organizations that do not produce a formal project charter will usually perform an informal analysis to identify the content necessary for further scope planning.

5.3.1.3 requirements documentation

Described in Section 5.2.3.1. This documentation will be used to select the requirements that will be included in the project.

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5.3.1.4 organizational Process Assets

Described in Section 2.1.4. Organizational process assets can influence how scope is defined. Examples include, but are not limited to:

• Policies, procedures, and templates for a project scope statement;

• Project files from previous projects; and

• Lessons learned from previous phases or projects.

5.3.2 define Scope: tools and techniques

5.3.2.1 Expert Judgment

Expert judgment is often used to analyze the information needed to develop the project scope statement. Such judgment and expertise is applied to any technical detail. Such expertise is provided by any group or individual with specialized knowledge or training, and is available from many sources, including but not limited to:

• Other units within the organization;

• Consultants;

• Stakeholders, including customers or sponsors;

• Professional and technical associations;

• Industry groups; and

• Subject matter experts.

5.3.2.2 Product Analysis

For projects that have a product as a deliverable, as opposed to a service or result, product analysis can be an effective tool. Each application area has one or more generally accepted methods for translating high-level product descriptions into tangible deliverables. Product analysis includes techniques such as product breakdown, systems analysis, requirements analysis, systems engineering, value engineering, and value analysis.

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5.3.2.3 Alternatives Generation

Alternatives generation is a technique used to develop as many potential options as possible in order to identify different approaches to execute and perform the work of the project. A variety of general management techniques can be used, such as brainstorming, lateral thinking, analysis of alternatives, etc.

5.3.2.4 Facilitated Workshops

Described in Section 5.2.2.3. The participation of key players with a variety of expectations and/or fields of expertise in these intensive working sessions helps to reach a cross-functional and common understanding of the project objectives and its limits.

5.3.3 define Scope: outputs

5.3.3.1 Project Scope Statement

The project scope statement is the description of the project scope, major deliverables, assumptions, and constraints. The project scope statement documents the entire scope, including project and product scope. It describes, in detail, the project’s deliverables and the work required to create those deliverables. It also provides a common understanding of the project scope among project stakeholders. It may contain explicit scope exclusions that can assist in managing stakeholder expectations. It enables the project team to perform more detailed planning, guides the project team’s work during execution, and provides the baseline for evaluating whether requests for changes or additional work are contained within or outside the project’s boundaries.

The degree and level of detail to which the project scope statement defines the work that will be performed and the work that is excluded can help determine how well the project management team can control the overall project scope. The detailed project scope statement, either directly, or by reference to other documents, includes the following:

• Product scope description. Progressively elaborates the characteristics of the product, service, or result described in the project charter and requirements documentation.

• Acceptance criteria. A set of conditions that is required to be met before deliverables are accepted.

• deliverable. Any unique and verifiable product, result, or capability to perform a service that is required to be produced to complete a process, phase, or project. Deliverables also include ancillary results, such as project management reports and documentation. These deliverables may be described at a summary level or in great detail.

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• Project exclusion. Generally identifies what is excluded from the project. Explicitly stating what is out of scope for the project helps to manage stakeholders’ expectations.

• constraints. A limiting factor that affects the execution of a project or process. Constraints identified with the project scope statement list and describe the specific internal or external restrictions or limitations associated with the project scope that affect the execution of the project, for example, a predefined budget or any imposed dates or schedule milestones that are issued by the customer or performing organization. When a project is performed under an agreement, contractual provisions will generally be constraints. Information on constraints may be listed in the project scope statement or in a separate log.

• Assumptions. A factor in the planning process that is considered to be true, real, or certain, without proof or demonstration. Also describes the potential impact of those factors if they prove to be false. Project teams frequently identify, document, and validate assumptions as part of their planning process. Information on assumptions may be listed in the project scope statement or in a separate log.

Although the project charter and the project scope statement are sometimes perceived as containing a certain degree of redundancy, they are different in the level of detail contained in each. The project charter contains high- level information, while the project scope statement contains a detailed description of the scope elements. These elements are progressively elaborated throughout the project. Table 5-1 describes some of the key elements for each document.

table 5-1. Elements of the Project charter and Project Scope Statement

Project Charter

Project purpose or justification

Measurable project objectives and related success criteria

High-level requirements

High-level project description

High-level risks

Summary milestone schedule

Summary budget

Stakeholder list

Project approval requirements (what constitutes success, who decides it, who signs off)

Assigned project manager, responsibility, and authority level

Name and authority of the sponsor or other person(s) authorizing the project charter

Project Scope Statement

Project scope description (progressively elaborated)

Acceptance criteria

Project deliverables

Project exclusions

Project constraints

Project assumptions

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5.3.3.2 Project documents updates

Project documents that may be updated include, but are not limited to:

• Stakeholder register,

• Requirements documentation, and

• Requirements traceability matrix.

5.4 create WBS

Create WBS is the process of subdividing project deliverables and project work into smaller, more manageable components. The key benefit of this process is that it provides a structured vision of what has to be delivered. The inputs, tools and techniques, and outputs of this process are depicted in Figure 5-9. Figure 5-10 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Scope management plan

.2 Project scope statement

.3 Requirements documentation .4 Enterprise environmental factors .5 Organizational process assets

.1 Decomposition

.2 Expert judgment .1 Scope baseline .2 Project documents updates

Figure 5-9. create WBS: Inputs, tools & techniques, and outputs

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Project Scope Management

5.4 Create WBS

5.3 Define Scope

5.1 Plan Scope

Management

5.2 Collect

Requirements

5.5 Validate Scope

• Enterprise environmental factors • Organizational process assets

• Project scope statement

• Requirements documentation

• Scope management plan

• Scope baseline

• Project documents updates 7.2

Estimate Costs

7.3 Determine

Budget

4.2 Develop Project Management

Plan

6.2 Define

Activities

11.2 Identify Risks

11.3 Perform

Qualitative Risk Analysis

Project Documents

Enterprise/ Organization

Figure 5-10. create WBS data Flow diagram

The WBS is a hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables. The WBS organizes and defines the total scope of the project, and represents the work specified in the current approved project scope statement.

The planned work is contained within the lowest level of WBS components, which are called work packages. A work package can be used to group the activities where work is scheduled and estimated, monitored, and controlled. In the context of the WBS, work refers to work products or deliverables that are the result of activity and not to the activity itself.

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5.4.1 create WBS: Inputs

5.4.1.1 Scope Management Plan

Described in Section 5.1.3.1. The scope management plan specifies how to create the WBS from the detailed project scope statement and how the WBS will be maintained and approved.

5.4.1.2 Project Scope Statement

Described in Section 5.3.3.1. The project scope statement describes the work that will be performed and the work that is excluded. It also lists and describes the specific internal or external restrictions or limitations that may affect the execution of the project.

5.4.1.3 requirements documentation

Described in Section 5.2.3.1. Detailed requirements documentation is essential for understanding what needs to be produced as the result of the project and what needs to be done to deliver the project and its final products.

5.4.1.4 Enterprise Environmental Factors

Described in Section 2.1.5. Industry-specific WBS standards, relevant to the nature of the project, may serve as external reference sources for creation of the WBS. For example, engineering projects may reference ISO/IEC 15288 on Systems Engineering – System Life Cycle Processes [6], to create a WBS for a new project.

5.4.1.5 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Create WBS process include, but are not limited to:

• Policies, procedures, and templates for the WBS;

• Project files from previous projects; and

• Lessons learned from previous projects.

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5.4.2 create WBS: tools and techniques

5.4.2.1 decomposition

Decomposition is a technique used for dividing and subdividing the project scope and project deliverables into smaller, more manageable parts. The work package is the work defined at the lowest level of the WBS for which cost and duration can be estimated and managed. The level of decomposition is often guided by the degree of control needed to effectively manage the project. The level of detail for work packages will vary with the size and complexity of the project. Decomposition of the total project work into work packages generally involves the following activities:

• Identifying and analyzing the deliverables and related work;

• Structuring and organizing the WBS;

• Decomposing the upper WBS levels into lower-level detailed components;

• Developing and assigning identification codes to the WBS components; and

• Verifying that the degree of decomposition of the deliverables is appropriate.

A portion of a WBS with some branches of the WBS decomposed down through the work package level is shown in Figure 5-11.

5.4.2.2 Expert Judgment

Expert judgment is often used to analyze the information needed to decompose the project deliverables down into smaller component parts in order to create an effective WBS. Such judgment and expertise is applied to technical details of the project’s scope and used to reconcile differences in opinion on how to best break down the overall scope of the project. This level of expertise is provided by any group or individual with relevant training, knowledge, or experience with similar projects or business areas. Expert judgment can also come in the form of predefined templates that provide guidance on how to effectively break down common deliverables. Such templates may be industry or discipline specific or may come from experience gained in similar projects. The project manager, in collaboration with the project team, then determines the final decomposition of the project scope into the discrete work packages that will be used to effectively manage the work of the project.

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1.0 Value Management

System Project

1.1 Needs

Assessment

1.2 Standards

Development

1.3 Systems

Engineering

1.4 Project

Management

The WBS is illustrative only. It is not intended to represent the full project scope of any specific project, nor to imply that this is the only way to organize a WBS on this type of project.

1.1.1.1 Components Identification

1.1.2.1 Gap

Assessment

1.1.3.1 Alternatives Identification

1.1.4 System Requirements

Development

1.1.3 Alternatives Development

1.1.2 Requirements Determination

1.1.1 Current System

Audit

1.1.1.2 Components

Analysis

1.1.2.2 Requirements

Changes Identification

1.1.3.2 Alternatives

Analysis

Figure 5-11. Sample WBS decomposed down through Work Packages

A WBS structure may be created through various approaches. Some of the popular methods include the top- down approach, the use of organization-specific guidelines, and the use of WBS templates. A bottom-up approach can be used during the integration of subcomponents. The WBS structure can be represented in a number of forms, such as:

• Using phases of the project life cycle as the second level of decomposition, with the product and project deliverables inserted at the third level, as shown in Figure 5-12;

• Using major deliverables as the second level of decomposition, as shown in Figure 5-13; and

• Incorporating subcomponents which may be developed by organizations outside the project team, such as contracted work. The seller then develops the supporting contract WBS as part of the contracted work.

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Planning

Software Product Release 5.0

Detail Design

Construct Integration

and Test Project

Management Product

Requirements

Software Software Software Software

Meetings User

Documentation User

Documentation

Administration Training Program

Materials Training Program

Materials

The WBS is illustrative only. It is not intended to represent the full project scope of any specific project, nor to imply that this is the only way to organize a WBS on this type of project.

Figure 5-12. Sample WBS organized by Phase

System Engineering

Management

Supporting PM Activities

Aircraft System

Project Management

Equipment Training

Facilities Training

Services Training

Training

Technical Orders

Engineering Data

Management Data

Data Air

Vehicle

Organizational Level SE

Intermediate Level SE

Depot Level SE

Support Equipment

Airframe Engine Communication

System Navigation

System Fire Control

System

Base Buildings

Maintenance Facility

Facilities

Mock-ups

Operational Test

Developmental Test

Test

Test and Evaluation

The WBS is illustrative only. It is not intended to represent the full project scope of any specific project, nor to imply that this is the only way to organize a WBS on this type of project.

Figure 5-13. Sample WBS with Major deliverables

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Decomposition of the upper-level WBS components requires subdividing the work for each of the deliverables or subcomponents into its most fundamental elements, where the WBS components represent verifiable products, services, or results. The WBS may be structured as an outline, an organizational chart, or other method that identifies a hierarchical breakdown. Verifying the correctness of the decomposition requires determining that the lower-level WBS components are those that are necessary and sufficient for completion of the corresponding higher-level deliverables. Different deliverables can have different levels of decomposition. To arrive at a work package, the work for some deliverables needs to be decomposed only to the next level, while others need additional levels of decomposition. As the work is decomposed to greater levels of detail, the ability to plan, manage, and control the work is enhanced. However, excessive decomposition can lead to nonproductive management effort, inefficient use of resources, decreased efficiency in performing the work, and difficulty aggregating data over different levels of the WBS.

Decomposition may not be possible for a deliverable or subcomponent that will be accomplished far into the future. The project management team usually waits until the deliverable or subcomponent is agreed on, so the details of the WBS can be developed. This technique is sometimes referred to as rolling wave planning.

The WBS represents all product and project work, including the project management work. The total of the work at the lowest levels should roll up to the higher levels so that nothing is left out and no extra work is performed. This is sometimes called the 100 percent rule.

For specific information regarding the WBS, refer to the Practice Standard for Work Breakdown Structures – Second Edition [7]. This standard contains industry-specific examples of WBS templates that can be tailored to specific projects in a particular application area.

5.4.3 create WBS: outputs

5.4.3.1 Scope Baseline

The scope baseline is the approved version of a scope statement, work breakdown structure (WBS), and its associated WBS dictionary, that can be changed only through formal change control procedures and is used as a basis for comparison. It is a component of the project management plan. Components of the scope baseline include:

• Project scope statement. The project scope statement includes the description of the project scope, major deliverables, assumptions, and constraints.

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• WBS. The WBS is a hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables. Each descending level of the WBS represents an increasingly detailed definition of the project work. The WBS is finalized by assigning each work package to a control account and establishing a unique identifier for that work package from a code of accounts. These identifiers provide a structure for hierarchical summation of costs, schedule, and resource information. A control account is a management control point where scope, budget, actual cost, and schedule are integrated and compared to the earned value for performance measurement. Control accounts are placed at selected management points in the WBS. Each control account may include one or more work packages, but each of the work packages should be associated with only one control account. A control account may include one or more planning packages. A planning package is a work breakdown structure component below the control account with known work content but without detailed schedule activities.

• WBS dictionary. The WBS dictionary is a document that provides detailed deliverable, activity, and scheduling information about each component in the WBS. The WBS dictionary is a document that supports the WBS. Information in the WBS dictionary may include, but is not limited to:

○ Code of account identifier,

○ Description of work,

○ Assumptions and constraints,

○ Responsible organization,

○ Schedule milestones,

○ Associated schedule activities,

○ Resources required,

○ Cost estimates,

○ Quality requirements,

○ Acceptance criteria,

○ Technical references, and

○ Agreement information.

5.4.3.2 Project documents updates

Project documents that may be updated include, but are not limited to, requirements documentation, which may need to be updated to include approved changes. If approved change requests result from the Create WBS process, then the requirements documentation may need to be updated to include approved changes.

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5.5 Validate Scope

Validate Scope is the process of formalizing acceptance of the completed project deliverables. The key benefit of this process is that it brings objectivity to the acceptance process and increases the chance of final product, service, or result acceptance by validating each deliverable. The inputs, tools and techniques, and outputs of this process are depicted in Figure 5-14. Figure 5-15 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Requirements documentation .3 Requirements traceability matrix .4 Verified deliverables .5 Work performance data

.1 Inspection

.2 Group decision-making techniques

.1 Accepted deliverables

.2 Change requests

.3 Work performance information .4 Project documents updates

Figure 5-14. Validate Scope: Inputs, tools & techniques, and outputs

Project Scope Management

5.5 Validate Scope

5.2 Collect

Requirements

• Project charter

• Requirements documentation • Requirements traceability matrix

• Change requests

• Accepted deliverables

• Project documents updates

• Work performance information

• Work performance data

• Validated deliverables

• Project management plan

8.3 Control Quality

4.3 Direct and Manage

Project Work

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

4.6 Close Project

or Phase

Project Documents

4.2 Develop Project

Management Plan

Figure 5-15. Validate Scope data Flow diagram

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The verified deliverables obtained from the Control Quality process are reviewed with the customer or sponsor to ensure that they are completed satisfactorily and have received formal acceptance of the deliverables by the customer or sponsor. In this process, the outputs obtained as a result of the Planning processes in the Project Scope Management Knowledge Area, such as the requirements documentation or the scope baseline, as well as the work performance data obtained from the Execution processes in other Knowledge Areas, are the basis for performing the validation and for final acceptance.

The Validate Scope process differs from the Control Quality process in that the former is primarily concerned with acceptance of the deliverables, while quality control is primarily concerned with correctness of the deliverables and meeting the quality requirements specified for the deliverables. Control Quality is generally performed before Validate Scope, although the two processes may be performed in parallel.

5.5.1 Validate Scope: Inputs

5.5.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains the scope management plan and the scope baseline. As described in Section 5.1.3.1, the scope management plan specifies how formal acceptance of the completed project deliverables will be obtained. The scope baseline (Section 5.4.3.1) includes the approved version of a scope statement, work breakdown structure (WBS), and its associated WBS dictionary, that can be changed only through formal change control procedures and is used as a basis for comparison.

5.5.1.2 requirements documentation

Described in Section 5.2.3.1. The requirements documentation lists all the project, product, and other types of requirements for the project and product, along with their acceptance criteria.

5.5.1.3 requirements traceability Matrix

Described in Section 5.2.3.2. The requirements traceability matrix links requirements to their origin and tracks them throughout the project life cycle.

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5.5.1.4 Verified deliverables

Described in Section 8.3.3.3. Verified deliverables are project deliverables that are completed and checked for correctness through the Control Quality process.

5.5.1.5 Work Performance data

Described in Section 4.3.3.2. Work performance data can include the degree of compliance with requirements, number of nonconformities, severity of the nonconformities, or the number of validation cycles performed in a period of time.

5.5.2 Validate Scope: tools and techniques

5.5.2.1 Inspection

Inspection includes activities such as measuring, examining, and validating to determine whether work and deliverables meet requirements and product acceptance criteria. Inspections are sometimes called reviews, product reviews, audits, and walkthroughs. In some application areas, these different terms have unique and specific meanings.

5.5.2.2 Group decision-Making techniques

Described in Section 5.2.2.5. These techniques are used to reach a conclusion when the validation is performed by the project team and other stakeholders.

5.5.3 Validate Scope: outputs

5.5.3.1 Accepted deliverables

Deliverables that meet the acceptance criteria are formally signed off and approved by the customer or sponsor. Formal documentation received from the customer or sponsor acknowledging formal stakeholder acceptance of the project’s deliverables is forwarded to the Close Project or Phase process (Section 4.6).

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5.5.3.2 change requests

The completed deliverables that have not been formally accepted are documented, along with the reasons for nonacceptance of those deliverables. Those deliverables may require a change request for defect repair. The change requests are processed for review and disposition through the Perform Integrated Change Control process (Section 4.5).

5.5.3.3 Work Performance Information

Work performance information includes information about project progress, such as which deliverables have started, their progress, which deliverables have finished, or which have been accepted. This information is documented as described in Section 10.3.3.1 and communicated to stakeholders.

5.5.3.4 Project documents updates

Project documents that may be updated as a result of the Validate Scope process include any documents that define the product or report status on product completion. Verified project documents may require approvals from the customer or sponsor in the form of signatures or signoffs.

5.6 control Scope

Control Scope is the process of monitoring the status of the project and product scope and managing changes to the scope baseline. The key benefit of this process is that it allows the scope baseline to be maintained throughout the project. The inputs, tools and techniques, and outputs of this process are depicted in Figure 5-16. Figure 5-17 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Requirements documentation .3 Requirements traceability matrix .4 Work performance data .5 Organizational process assets

.1 Variance analysis .1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure 5-16. control Scope: Inputs, tools & techniques, and outputs

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Project Scope Management

5.6 Control Scope

5.2 Collect

Requirements

• Project charter

• Requirements documentation • Requirements traceability matrix

• Work performance information

• Organizational process assets updates

• Change requests

• Project documents updates

• Project management plan updates

• Project management plan

• Work performance data

• Organizational process assets

4.3 Direct and

Manage Project Work

4.2 Develop Project

Management Plan

4.2 Develop Project

Management Plan

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

Project DocumentsEnterprise/

Organization

Enterprise/ Organization

Figure 5-17. control Scope data Flow diagram

Controlling the project scope ensures all requested changes and recommended corrective or preventive actions are processed through the Perform Integrated Change Control process (see Section 4.5). Control Scope is also used to manage the actual changes when they occur and is integrated with the other control processes. The uncontrolled expansion to product or project scope without adjustments to time, cost, and resources is referred to as scope creep. Change is inevitable; therefore some type of change control process is mandatory for every project.

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5.6.1 control Scope: Inputs

5.6.1.1 Project Management Plan

Described in Section 4.2.3.1. The following information from the project management plan is used to control scope:

• Scope baseline. The scope baseline is compared to actual results to determine if a change, corrective action, or preventive action is necessary.

• Scope management plan. Sections from the scope management plan describe how the project scope will be monitored and controlled.

• change management plan. The change management plan defines the process for managing change on the project.

• configuration management plan. The configuration management plan defines those items that are configurable, those items that require formal change control, and the process for controlling changes to such items.

• requirements management plan. This plan is a component of the project management plan and describes how the project requirements will be analyzed, documented, and managed.

5.6.1.2 requirements documentation

Described in Section 5.2.3.1. Requirements should be unambiguous (measurable and testable), traceable, complete, consistent, and acceptable to key stakeholders. Well-documented requirements make it easier to detect any deviation in the scope agreed for the project or product.

5.6.1.3 requirements traceability Matrix

Described in Section 5.2.3.2. The requirements traceability matrix helps to detect the impact of any change or deviation from the scope baseline on the project objectives.

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5.6.1.4 Work Performance data

Described in Section 4.3.3.2. Work performance data can include the number of change requests received, the number of requests accepted or the number of deliverables completed, etc.

5.6.1.5 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Control Scope process include, but are not limited to:

• Existing formal and informal scope, control-related policies, procedures, guidelines; and

• Monitoring and reporting methods and templates to be used.

5.6.2 control Scope: tools and techniques

5.6.2.1 Variance Analysis

Variance analysis is a technique for determining the cause and degree of difference between the baseline and actual performance. Project performance measurements are used to assess the magnitude of variation from the original scope baseline. Important aspects of project scope control include determining the cause and degree of variance relative to the scope baseline (Section 5.4.3.1) and deciding whether corrective or preventive action is required.

5.6.3 control Scope: outputs

5.6.3.1 Work Performance Information

Work performance information produced includes correlated and contextualized information on how the project scope is performing compared to the scope baseline. It can include the categories of the changes received, the identified scope variances and their causes, how they impact schedule or cost, and the forecast of the future scope performance. This information provides a foundation for making scope decisions.

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5.6.3.2 change requests

Analysis of scope performance can result in a change request to the scope baseline or other components of the project management plan. Change requests can include preventive or corrective actions, defect repairs, or enhancement requests. Change requests are processed for review and disposition according to the Perform Integrated Change Control process (Section 4.5).

5.6.3.3 Project Management Plan updates

Project management plan updates may include, but are not limited to:

• Scope Baseline updates. If the approved change requests have an effect on the project scope, then the scope statement, the WBS, and the WBS dictionary are revised and reissued to reflect the approved changes through Perform Integrated Change Control process.

• other Baseline updates. If the approved change requests have an effect on the project besides the project scope, then the corresponding cost baseline and schedule baselines are revised and reissued to reflect the approved changes.

5.6.3.4 Project documents updates

Project documents that may be updated include, but are not limited to:

• Requirements documentation, and

• Requirements traceability matrix.

5.6.3.5 organizational Process Assets updates

Organizational process assets that may be updated include, but are not limited to:

• Causes of variances,

• Corrective action chosen and the reasons, and

• Other types of lessons learned from project scope control.

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Project tiMe MAnAGeMent Project Time Management includes the processes required to manage the timely completion of the project.

Figure 6-1 provides an overview of the Project Time Management processes, which are as follows:

6.1 Plan Schedule Management—The process of establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule.

6.2 define Activities—The process of identifying and documenting the specific actions to be performed to produce the project deliverables.

6.3 Sequence Activities—The process of identifying and documenting relationships among the project activities.

6.4 Estimate Activity resources—The process of estimating the type and quantities of material, human resources, equipment, or supplies required to perform each activity.

6.5 Estimate Activity durations—The process of estimating the number of work periods needed to complete individual activities with estimated resources.

6.6 develop Schedule—The process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule model.

6.7 control Schedule—The process of monitoring the status of project activities to update project progress and manage changes to the schedule baseline to achieve the plan.

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These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

Distinguishing the project schedule presentation (schedule) from the schedule data (Section 6.6.3.3) and calculations that produce the project schedule (Section 6.6.3.2) is practiced by referring to the scheduling tool populated with project data as the schedule model. A schedule model is a representation of the plan for executing the project’s activities including durations, dependencies, and other planning information, used to produce project schedules along with other scheduling artifacts. For specific information regarding the schedule model, refer to the Practice Standard for Scheduling. [8]

On some projects, especially those of smaller scope, defining activities, sequencing activities, estimating activity resources, estimating activity durations, and developing the schedule model are so tightly linked that they are viewed as a single process that can be performed by a person over a relatively short period of time. These processes are presented here as distinct elements because the tools and techniques for each process are different.

The Project Time Management processes and their associated tools and techniques are documented in the schedule management plan. The schedule management plan is a subsidiary plan of, and integrated with, the project management plan through the Develop Project Management Plan process (Section 4.2), The schedule management plan identifies a scheduling method and scheduling tool (Figure 6-2), and sets the format and establishes criteria for developing and controlling the project schedule. The selected scheduling method defines the framework and algorithms used in the scheduling tool to create the schedule model. Some of the better known scheduling methods include critical path method (CPM) and critical chain method (CCM).

Project schedule development uses the outputs from the processes to define activities, sequence activities, estimate activity resources, and estimate activity durations in combination with the scheduling tool to produce the schedule model. The finalized and approved schedule is the baseline that will be used in the Control Schedule process (Section 6.7). As the project activities are being performed, the majority of effort in the Project Time Management Knowledge Area will occur in the Control Schedule process to ensure completion of project work in a timely manner. Figure 6-2 provides a scheduling overview that shows how the scheduling method, scheduling tool, and outputs from the Project Time Management processes interact to create a project schedule.

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.1 Inputs .1 Project management plan .2 Project charter .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Analytical techniques .3 Meetings

.3 Outputs .1 Schedule management plan

Project Time Management Overview

6.1 Plan Schedule Management

.1 Inputs .1 Schedule management plan .2 Scope baseline .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Decomposition .2 Rolling wave planning .3 Expert judgment

.3 Outputs .1 Activity list .2 Activity attributes .3 Milestone list

6.2 Define Activities

.1 Inputs .1 Schedule management plan .2 Activity list .3 Activity attributes .4 Milestone list .5 Project scope statement .6 Enterprise environmental factors .7 Organizational process assets

.2 Tools & Techniques .1 Precedence diagramming method (PDM) .2 Dependency determination .3 Leads and lags .3 Outputs .1 Project schedule network diagrams .2 Project documents updates

6.3 Sequence Activities

.1 Inputs .1 Schedule management plan .2 Activity list .3 Activity attributes .4 Activity resource requirements .5 Resource calendars .6 Project scope statement .7 Risk register .8 Resource breakdown structure .9 Enterprise environmental factors .10 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Analogous estimating .3 Parametric estimating .4 Three-point estimating .5 Group decision-making techniques .6 Reserve analysis

.3 Outputs .1 Activity duration estimates .2 Project documents updates

6.5 Estimate Activity Durations

.1 Inputs .1 Schedule management plan .2 Activity list .3 Activity attributes .4 Project schedule network diagrams .5 Activity resource requirements .6 Resource calendars .7 Activity duration estimates .8 Project scope statement .9 Risk register .10 Project staff assignments .11 Resource breakdown structure .12 Enterprise environmental factors .13 Organizational process assets

.2 Tools & Techniques .1 Schedule network analysis .2 Critical path method .3 Critical chain method .4 Resource optimization techniques .5 Modeling techniques .6 Leads and lags .7 Schedule compression .8 Scheduling tool

.3 Outputs .1 Schedule baseline .2 Project schedule .3 Schedule data .4 Project calendars .5 Project management plan updates .6 Project documents updates

6.6 Develop Schedule

.1 Inputs .1 Project management plan .2 Project schedule .3 Work performance data .4 Project calendars .5 Schedule data .6 Organizational process assets

.2 Tools & Techniques .1 Performance reviews .2 Project management software .3 Resource optimization techniques .4 Modeling techniques .5 Leads and lags .6 Schedule compression .7 Scheduling tool

.3 Outputs .1 Work performance information .2 Schedule forecasts .3 Change requests .4 Project management plan updates .5 Project documents updates .6 Organizational process assets updates

6.7 Control Schedule

.1 Inputs .1 Schedule management plan .2 Activity list .3 Activity attributes .4 Resource calendars .5 Risk register .6 Activity cost estimates .7 Enterprise environmental factors .8 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Alternative analysis .3 Published estimating data .4 Bottom-up estimating .5 Project management software

.3 Outputs .1 Activity resource requirements .2 Resource breakdown structure .3 Project documents updates

6.4 Estimate Activity Resources

Figure 6-1. Project time Management overview

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Examples of Project Schedule Presentations

Network Diagram

Bar ChartActivity List

Project Schedule

Schedule Model

Project Information

Scheduling Method

Scheduling Tool

Output

Generates

Project Specific Data (e.g., WBS, activities, resources, durations,

dependencies, constraints, calendars, milestones

lags, etc.)

For example, CPM

Figure 6-2. Scheduling overview

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6.1 Plan Schedule Management

Plan Schedule Management is the process of establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule. The key benefit of this process is that it provides guidance and direction on how the project schedule will be managed throughout the project. The inputs, tools and techniques, and outputs of this process are depicted in Figure 6-3. Figure 6-4 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Project charter

.3 Enterprise environmental factors .4 Organizational process assets

.1 Expert judgment

.2 Analytical techniques

.3 Meetings

.1 Schedule management plan

Figure 6-3. Plan Schedule Management: Inputs, tools & techniques, and outputs

• Change log

Project Time Management

6.1 Plan Schedule Management

6.2 Define

Activities

6.4 Estimate Activity

Resources

6.3 Sequence Activities

6.5 Estimate Activity

Durations

6.6 Develop Schedule

• Project charter

• Project management plan

• Enterprise environmental factors • Organizational process assets

• Schedule management plan

4.2 Develop Project Management

Plan

11.2 Identify Risks

11.4 Perform

Quantitative Risk Analysis

4.1 Develop Project

Charter

Enterprise/ Organization

Figure 6-4. Plan Schedule Management data Flow diagram

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The schedule management plan is a component of the project management plan. The schedule management plan may be formal or informal, highly detailed or broadly framed, based upon the needs of the project, and includes appropriate control thresholds. The schedule management plan defines how schedule contingencies will be reported and assessed. The schedule management plan may be updated to reflect a change in the way the schedule is managed. The schedule management plan is a major input into the Develop Project Management Plan process, as referenced in Section 6.1.3.1.

6.1.1 Plan Schedule Management: Inputs

6.1.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains information used to develop the schedule management plan which includes, but is not limited to:

• Scope baseline. The scope baseline includes the project scope statement and the work breakdown structure (WBS) details used for defining activities, duration estimation, and schedule management; and

• other information. Other scheduling related cost, risk, and communications decisions from the project management plan are used to develop the schedule.

6.1.1.2 Project charter

Described in Section 4.1.3.1. The project charter defines the summary milestone schedule and project approval requirements that will influence the management of the project schedule.

6.1.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that influence the Plan Schedule Management process include, but are not limited to:

• Organizational culture and structure can all influence schedule management;

• Resource availability and skills that may influence schedule planning;

• Project management software provides the scheduling tool and alternative possibilities for managing the schedule;

• Published commercial information, such as resource productivity information, is often available from commercial databases that track; and

• Organizational work authorization systems.

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6.1.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Plan Schedule Management process include, but are not limited to:

• Monitoring and reporting tools to be used;

• Historical information;

• Schedule control tools;

• Existing formal and informal schedule control related policies, procedures, and guidelines;

• Templates;

• Project closure guidelines;

• Change control procedures; and

• Risk control procedures including risk categories, probability definition and impact, and probability and impact matrix.

6.1.2 Plan Schedule Management: tools and techniques

6.1.2.1 Expert Judgment

Expert judgment, guided by historical information, provides valuable insight about the environment and information from prior similar projects. Expert judgment can also suggest whether to combine methods and how to reconcile differences between them.

Judgment based upon expertise in an application area, Knowledge Area, discipline, industry, etc., as appropriate for the activity being performed, should be used in developing the schedule management plan.

6.1.2.2 Analytical techniques

The Plan Schedule Management process may involve choosing strategic options to estimate and schedule the project such as: scheduling methodology, scheduling tools and techniques, estimating approaches, formats, and project management software. The schedule management plan may also detail ways to fast track or crash (Section 6.6.2.7) the project schedule such as undertaking work in parallel. These decisions, like other schedule decisions affecting the project, may affect project risks.

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Organizational policies and procedures may influence which scheduling techniques are employed in these decisions. Techniques may include, but are not limited to, rolling wave planning (Section 6.2.2.2), leads and lags (Section 6.3.2.3), alternatives analysis (Section 6.4.2.2), and methods for reviewing schedule performance (Section 6.7.2.1).

6.1.2.3 Meetings

Project teams may hold planning meetings to develop the schedule management plan. Participants at these meetings may include the project manager, the project sponsor, selected project team members, selected stakeholders, anyone with responsibility for schedule planning or execution, and others as needed.

6.1.3 Plan Schedule Management: outputs

6.1.3.1 Schedule Management Plan

A component of the project management plan that establishes the criteria and the activities for developing, monitoring, and controlling the schedule. The schedule management plan may be formal or informal, highly detailed or broadly framed, based upon the needs of the project, and includes appropriate control thresholds.

For example, the schedule management plan can establish the following:

• Project schedule model development. The scheduling methodology and the scheduling tool to be used in the development of the project schedule model are specified.

• Level of accuracy. The acceptable range used in determining realistic activity duration estimates is specified and may include an amount for contingencies.

• units of measure. Each unit used in measurements (such as staff hours, staff days, or weeks for time measures, or meters, liters, tons, kilometers, or cubic yards for quantity measures) is defined for each of the resources.

• organizational procedures links. The WBS (Section 5.4) provides the framework for the schedule management plan, allowing for consistency with the estimates and resulting schedules.

• Project schedule model maintenance. The process used to update the status and record progress of the project in the schedule model during the execution of the project is defined.

• control thresholds. Variance thresholds for monitoring schedule performance may be specified to indicate an agreed-upon amount of variation to be allowed before some action needs to be taken. Thresholds are typically expressed as percentage deviations from the parameters established in the baseline plan.

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• rules of performance measurement. Earned value management (EVM) rules or other physical measurement rules of performance measurement are set. For example, the schedule management plan may specify:

○ Rules for establishing percent complete,

○ Control accounts at which management of progress and schedule will be measured,

○ Earned value measurement techniques (e.g., baselines, fixed-formula, percent complete, etc.) to be employed (for more specific information, refer to the Practice Standard for Earned Value Management) [9],

○ Schedule performance measurements such as schedule variance (SV) and schedule performance index (SPI) used to assess the magnitude of variation to the original schedule baseline.

• reporting formats. The formats and frequency for the various schedule reports are defined.

• Process descriptions. Descriptions of each of the schedule management processes are documented.

6.2 define Activities

Define Activities is the process of identifying and documenting the specific actions to be performed to produce the project deliverables. The key benefit of this process is to break down work packages into activities that provide a basis for estimating, scheduling, executing, monitoring, and controlling the project work. The inputs, tools and techniques, and outputs of this process are depicted in Figure 6-5. Figure 6-6 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Schedule management plan .2 Scope baseline .3 Enterprise environmental factors .4 Organizational process assets

.1 Decomposition

.2 Rolling wave planning

.3 Expert judgment

.1 Activity list

.2 Activity attributes

.3 Milestone list

Figure 6-5. define Activities: Inputs, tools & techniques, and outputs

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• Change log

Project Time Management

6.2 Define

Activities

6.1 Plan Schedule Management

6.3 Sequence Activities

6.5 Estimate Activity

Durations

6.4 Estimate Activity

Resources

6.6 Develop Schedule

• Scope baseline

• Milestone list

• Organizational process assets • Enterprise environmental factors

• Schedule management plan

• Activity list • Activity attributes

5.4 Create WBS

Enterprise/ Organization

Figure 6-6. define Activities data Flow diagram

Implicit in this process are defining and planning the schedule activities such that the project objectives will be met. The Create WBS process identifies the deliverables at the lowest level in the WBS—the work package. Work packages are typically decomposed into smaller components called activities that represent the work effort required to complete the work package.

6.2.1 define Activities: Inputs

6.2.1.1 Schedule Management Plan

Described in Section 6.1.3.1. A key input from the schedule management plan is the prescribed level of detail necessary to manage the work.

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6.2.1.2 Scope Baseline

Described in Section 5.4.3.1. The project WBS, deliverables, constraints, and assumptions documented in the scope baseline are considered explicitly while defining activities.

6.2.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. Enterprise environmental factors that influence the Define Activities process include, but are not limited to:

• Organizational cultures and structure,

• Published commercial information from commercial databases, and

• Project management information system (PMIS).

6.2.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Define Activities process include, but are not limited to:

• Lessons learned knowledge base containing historical information regarding activity lists used by previous similar projects,

• Standardized processes,

• Templates that contain a standard activity list or a portion of an activity list from a previous project, and

• Existing formal and informal activity planning-related policies, procedures, and guidelines, such as the scheduling methodology, that are considered in developing the activity definitions.

6.2.2 define Activities: tools and techniques

6.2.2.1 decomposition

Decomposition is a technique used for dividing and subdividing the project scope and project deliverables into smaller, more manageable parts. Activities represent the effort needed to complete a work package. The Define Activities process defines the final outputs as activities rather than deliverables, as done in the Create WBS process (Section 5.4).

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The activity list, WBS, and WBS dictionary can be developed either sequentially or concurrently, with the WBS and WBS dictionary as the basis for development of the final activity list. Each work package within the WBS is decomposed into the activities required to produce the work package deliverables. Involving team members in the decomposition can lead to better and more accurate results.

6.2.2.2 rolling Wave Planning

Rolling wave planning is an iterative planning technique in which the work to be accomplished in the near term is planned in detail, while the work in the future is planned at a higher level. It is a form of progressive elaboration. Therefore, work can exist at various levels of detail depending on where it is in the project life cycle. During early strategic planning, when information is less defined, work packages may be decomposed to the known level of detail. As more is known about the upcoming events in the near term, work packages can be decomposed into activities.

6.2.2.3 Expert Judgment

Project team members or other experts, who are experienced and skilled in developing detailed project scope statements, the WBS, and project schedules, can provide expertise in defining activities.

6.2.3 define Activities: outputs

6.2.3.1 Activity List

The activity list is a comprehensive list that includes all schedule activities required on the project. The activity list also includes the activity identifier and a scope of work description for each activity in sufficient detail to ensure that project team members understand what work is required to be completed. Each activity should have a unique title that describes its place in the schedule, even if that activity title is displayed outside the context of the project schedule.

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6.2.3.2 Activity Attributes

Activities, distinct from milestones, have durations, during which the work of that activity is performed, and may have resources and costs associated with that work. Activity attributes extend the description of the activity by identifying the multiple components associated with each activity. The components for each activity evolve over time. During the initial stages of the project, they include the activity identifier (ID), WBS ID, and activity label or name, and when completed, may include activity codes, activity description, predecessor activities, successor activities, logical relationships, leads and lags (Section 6.3.2.3), resource requirements, imposed dates, constraints, and assumptions. Activity attributes can be used to identify the person responsible for executing the work, geographic area, or place where the work has to be performed, the project calendar the activity is assigned to, and activity type such as level of effort (often abbreviated as LOE), discrete effort, and apportioned effort. Activity attributes are used for schedule development and for selecting, ordering, and sorting the planned schedule activities in various ways within reports. The number of attributes varies by application area.

6.2.3.3 Milestone List

A milestone is a significant point or event in a project. A milestone list is a list identifying all project milestones and indicates whether the milestone is mandatory, such as those required by contract, or optional, such as those based upon historical information. Milestones are similar to regular schedule activities, with the same structure and attributes, but they have zero duration because milestones represent a moment in time.

6.3 Sequence Activities

Sequence Activities is the process of identifying and documenting relationships among the project activities. The key benefit of this process is that it defines the logical sequence of work to obtain the greatest efficiency given all project constraints. The inputs, tools and techniques, and outputs of this process are depicted in Figure 6-7. Figure 6-8 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Schedule management plan .2 Activity list .3 Activity attributes .4 Milestone list .5 Project scope statement .6 Enterprise environmental factors .7 Organizational process assets

.1 Precedence diagramming method (PDM) .2 Dependency determination .3 Leads and lags

.1 Project schedule network diagrams .2 Project documents updates

Figure 6-7. Sequence Activities: Inputs, tools & techniques, and outputs

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Project Time Management

6.3 Sequence Activities

6.2 Define

Activities

6.1 Plan Schedule Management

6.6 Develop Schedule

• Activity list • Activity attributes • Milestone list

• Schedule management plan

• Project schedule network diagrams

• Project documents updates

Project Documents

• Project scope statement

• Organizational process assets • Enterprise environmental factors

5.3 Define Scope

Enterprise/ Organization

Figure 6-8. Sequence Activities data Flow diagram

Every activity and milestone except the first and last should be connected to at least one predecessor with a finish-to-start or start-to-start logical relationship and at least one successor with a finish-to-start or finish-to- finish logical relationship. Logical relationships should be designed to create a realistic project schedule. It may be necessary to use lead or lag time between activities to support a realistic and achievable project schedule. Sequencing can be performed by using project management software or by using manual or automated techniques.

6.3.1 Sequence Activities: Inputs

6.3.1.1 Schedule Management Plan

Described in Section 6.1.3.1. The schedule management plan identifies the scheduling method and tool to be used for the project, which will guide how the activities may be sequenced.

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6.3.1.2 Activity List

Described in Section 6.2.3.1. The activity list contains all schedule activities required on the project, which are to be sequenced. Dependencies and other constraints for these activities can influence the sequencing of the activities.

6.3.1.3 Activity Attributes

Described in Section 6.2.3.2. Activity attributes may describe a necessary sequence of events or defined predecessor or successor relationships.

6.3.1.4 Milestone List

Described in Section 6.2.3.3. The milestone list may have scheduled dates for specific milestones, which may influence the way activities are sequenced.

6.3.1.5 Project Scope Statement

Described in Section 5.3.3.1. The project scope statement contains the product scope description, which includes product characteristics that may affect activity sequencing, such as the physical layout of a plant to be constructed or subsystem interfaces on a software project. Other information from the project scope statement including project deliverables, project constraints, and project assumptions may also affect activity sequencing. While these effects are often apparent in the activity list, the product scope description is generally reviewed to ensure accuracy.

6.3.1.6 Enterprise Environmental Factors

Described in Section 2.1.5. Enterprise environmental factors that influence the Sequence Activities process include, but are not limited to:

• Government or industry standards,

• Project management information system (PMIS),

• Scheduling tool, and

• Company work authorization systems.

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6.3.1.7 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Sequence Activities process include, but are not limited to: project files from the corporate knowledge base used for scheduling methodology, existing formal and informal activity planning-related policies, procedures, and guidelines, such as the scheduling methodology that are considered in developing logical relationships, and templates that can be used to expedite the preparation of networks of project activities. Related activity attributes information in templates can also contain additional descriptive information useful in sequencing activities.

6.3.2 Sequence Activities: tools and techniques

6.3.2.1 Precedence diagramming Method

The precedence diagramming method (PDM) is a technique used for constructing a schedule model in which activities are represented by nodes and are graphically linked by one or more logical relationships to show the sequence in which the activities are to be performed. Activity-on-node (AON) is one method of representing a precedence diagram. This is the method used by most project management software packages.

PDM includes four types of dependencies or logical relationships. A predecessor activity is an activity that logically comes before a dependent activity in a schedule. A successor activity is a dependent activity that logically comes after another activity in a schedule. These relationships are defined below and are illustrated in Figure 6-9:

• Finish-to-start (FS). A logical relationship in which a successor activity cannot start until a predecessor activity has finished. Example: The awards ceremony (successor) cannot start until the race (predecessor) has finished.

• Finish-to-finish (FF). A logical relationship in which a successor activity cannot finish until a predecessor activity has finished. Example: Writing a document (predecessor) is required to finish before editing the document (successor) can finish.

• Start-to-start (SS). A logical relationship in which a successor activity cannot start until a predecessor activity has started. Example: Level concrete (successor) cannot begin until pour foundation (predecessor) begins.

• Start-to-finish (SF). A logical relationship in which a successor activity cannot finish until a predecessor activity has started. Example: The first security guard shift (successor) cannot finish until the second security guard shift (predecessor) starts.

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In PDM, finish-to-start is the most commonly used type of precedence relationship. The start-to-finish relationship is very rarely used but is included to present a complete list of the PDM relationship types.

Activity A Activity B

Activity A Activity A

Activity B Activity B

Activity A Activity B

Finish to Start (FS)

Start to Finish (SF)

Start to Start (SS) Finish to Finish (FF)

Figure 6-9. Precedence diagramming Method (PdM) relationship types

6.3.2.2 dependency determination

Dependencies may be characterized by the following attributes: mandatory or discretionary, internal or external, as described below. Dependency has four attributes, but two can be applicable at the same time in following ways: mandatory external dependencies, mandatory internal dependencies, discretionary external dependencies, or discretionary internal dependencies.

• Mandatory dependencies. Mandatory dependencies are those that are legally or contractually required or inherent in the nature of the work. Mandatory dependencies often involve physical limitations, such as on a construction project, where it is impossible to erect the superstructure until after the foundation has been built, or on an electronics project, where a prototype has to be built before it can be tested. Mandatory dependencies are also sometimes referred to as hard logic or hard dependencies. Technical dependencies may not be mandatory. The project team determines which dependencies are mandatory during the process of sequencing the activities. Mandatory dependencies should not be confused with assigning schedule constraints in the scheduling tool.

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• discretionary dependencies. Discretionary dependencies are sometimes referred to as preferred logic, preferential logic, or soft logic. Discretionary dependencies are established based on knowledge of best practices within a particular application area or some unusual aspect of the project where a specific sequence is desired, even though there may be other acceptable sequences. Discretionary dependencies should be fully documented since they can create arbitrary total float values and can limit later scheduling options. When fast tracking techniques are employed, these discretionary dependencies should be reviewed and considered for modification or removal. The project team determines which dependencies are discretionary during the process of sequencing the activities.

• External dependencies. External dependencies involve a relationship between project activities and non-project activities. These dependencies are usually outside the project team’s control. For example, the testing activity in a software project may be dependent on the delivery of hardware from an external source, or governmental environmental hearings may need to be held before site preparation can begin on a construction project. The project management team determines which dependencies are external during the process of sequencing the activities.

• Internal dependencies. Internal dependencies involve a precedence relationship between project activities and are generally inside the project team’s control. For example, if the team cannot test a machine until they assemble it, this is an internal mandatory dependency. The project management team determines which dependencies are internal during the process of sequencing the activities.

6.3.2.3 Leads and Lags

A lead is the amount of time whereby a successor activity can be advanced with respect to a predecessor activity. For example, on a project to construct a new office building, the landscaping could be scheduled to start two weeks prior to the scheduled punch list completion. This would be shown as a finish-to-start with a two-week lead as shown in Figure 6-10. Lead is often represented as a negative value for lag in scheduling software.

Complete Punch List

Write Draft

Landscape Building Lot

Edit Draft

SS – 15 Days (Lag)FS – 2 Weeks (Lead)

Figure 6-10. Examples of Lead and Lag

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A lag is the amount of time whereby a successor activity will be delayed with respect to a predecessor activity. For example, a technical writing team may begin editing the draft of a large document 15 days after they begin writing it. This can be shown as a start-to-start relationship with a 15-day lag as shown in Figure 6-10. Lag can also be represented in project schedule network diagrams as shown in Figure 6-11 in the relationship between activities H and I, as indicated by the nomenclature SS+10 (start-to-start plus 10 days lag) even though offset is not shown relative to a timescale.

The project management team determines the dependencies that may require a lead or a lag to accurately define the logical relationship. The use of leads and lags should not replace schedule logic. Activities and their related assumptions should be documented.

6.3.3 Sequence Activities: outputs

6.3.3.1 Project Schedule network diagrams

A project schedule network diagram is a graphical representation of the logical relationships, also referred to as dependencies, among the project schedule activities. Figure 6-11 illustrates a project schedule network diagram. A project schedule network diagram is produced manually or by using project management software. It can include full project details, or have one or more summary activities. A summary narrative can accompany the diagram and describe the basic approach used to sequence the activities. Any unusual activity sequences within the network should be fully described within the narrative.

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A B

C D E

Begin H F G End

I J

K L

FS + 15

SS + 10

Figure 6-11. Project Schedule network diagram

6.3.3.2 Project documents updates

Project documents that may be updated include, but are not limited to:

• Activity lists,

• Activity attributes,

• Milestone list, and

• Risk register.

6.4 Estimate Activity resources

Estimate Activity Resources is the process of estimating the type and quantities of material, human resources, equipment, or supplies required to perform each activity. The key benefit of this process is that it identifies the type, quantity, and characteristics of resources required to complete the activity which allows more accurate cost and duration estimates. The inputs, tools and techniques, and outputs of this process are depicted in Figure 6-12. Figure 6-13 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Schedule management plan .2 Activity list .3 Activity attributes .4 Resource calendars .5 Risk register .6 Activity cost estimates .7 Enterprise environmental factors .8 Organizational process assets

.1 Expert judgment

.2 Alternative analysis

.3 Published estimating data

.4 Bottom-up estimating

.5 Project management software

.1 Activity resource requirements .2 Resource breakdown structure .3 Project documents updates

Figure 6-12. Estimate Activity resources: Inputs, tools & techniques, and outputs

Project Time Management

6.4 Estimate Activity

Resources

6.2 Define

Activities

6.1 Plan Schedule Management

6.6 Develop Schedule

6.5 Estimate Activity

Durations

• Activity list • Activity attributes

• Schedule management plan

• Activity resource requirements • Resource breakdown structure

• Project documents updates

• Activity resource requirements

Project Documents

• Resource calendars

• Risk register • Activity cost

estimates

• Organizational process assets • Enterprise environmental factors12.2

Conduct Procurements

9.2 Acquire

Project Team

11.2 Identify Risks

7.2 Estimate

Costs

Enterprise/ Organization

12.1 Plan

Procurement Management

9.1 Plan Human Resource

Management

Figure 6-13. Estimate Activity resources data Flow diagram

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The Estimate Activity Resources process is closely coordinated with the Estimate Costs process (Section 7.2). For example:

• A construction project team will need to be familiar with local building codes. Such knowledge is often readily available from local sellers. However, if the local labor pool lacks experience with unusual or specialized construction techniques, the additional cost for a consultant may be the most effective way to secure knowledge of the local building codes.

• An automotive design team will need to be familiar with the latest in automated assembly techniques. The requisite knowledge might be obtained by hiring a consultant, by sending a designer to a seminar on robotics, or by including someone from manufacturing as a member of the project team.

6.4.1 Estimate Activity resources: Inputs

6.4.1.1 Schedule Management Plan

Described in Section 6.1.3.1. The schedule management plan identifies the level of accuracy and the units of measure for the resources to be estimated.

6.4.1.2 Activity List

Described in Section 6.2.3.1. The activity list identifies the activities which will need resources.

6.4.1.3 Activity Attributes

Described in Section 6.2.3.2. The activity attributes provide the primary data input for use in estimating those resources required for each activity in the activity list.

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6.4.1.4 resource calendars

Described in Sections 9.2.3.2 and 12.2.3.3. A resource calendar is a calendar that identifies the working days and shifts on which each specific resource is available. Information on which resources (such as human resources, equipment, and material) are potentially available during a planned activity period, is used for estimating resource utilization. Resource calendars specify when and how long identified project resources will be available during the project. This information may be at the activity or project level. This knowledge includes consideration of attributes such as resource experience and/or skill level, as well as various geographical locations from which the resources originate and when they may be available.

6.4.1.5 risk register

Described in Section 11.2.3.1. Risk events may impact resource selection and availability. Updates to the risk register are included with project documents updates, described in Section 11.5.3.2, from Plan Risk Responses.

6.4.1.6 Activity cost Estimates

Described in Section 7.2.3.1. The cost of resources may impact resource selection.

6.4.1.7 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Estimate Activity Resources process include, but are not limited to, resource location, availability, and skills.

6.4.1.8 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Estimate Activity Resources process include, but are not limited to:

• Policies and procedures regarding staffing,

• Policies and procedures relating to rental and purchase of supplies and equipment, and

• Historical information regarding types of resources used for similar work on previous projects.

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6.4.2 Estimate Activity resources: tools and techniques

6.4.2.1 Expert Judgment

Expert judgment is often required to assess the resource-related inputs to this process. Any group or person with specialized knowledge in resource planning and estimating can provide such expertise.

6.4.2.2 Alternative Analysis

Many schedule activities have alternative methods of accomplishment. They include using various levels of resource capability or skills, different size or type of machines, different tools (hand versus automated), and make- rent-or-buy decisions regarding the resource (Section 12.1.3.5).

6.4.2.3 Published Estimating data

Several organizations routinely publish updated production rates and unit costs of resources for an extensive array of labor trades, material, and equipment for different countries and geographical locations within countries.

6.4.2.4 Bottom-up Estimating

Bottom-up estimating is a method of estimating project duration or cost by aggregating the estimates of the lower-level components of the WBS. When an activity cannot be estimated with a reasonable degree of confidence, the work within the activity is decomposed into more detail. The resource needs are estimated. These estimates are then aggregated into a total quantity for each of the activity’s resources. Activities may or may not have dependencies between them that can affect the application and use of resources. If there are dependencies, this pattern of resource usage is reflected and documented in the estimated requirements of the activity.

6.4.2.5 Project Management Software

Project management software, such as a scheduling software tool, has the capability to help plan, organize, and manage resource pools and develop resource estimates. Depending on the sophistication of the software, resource breakdown structures, resource availability, resource rates, and various resource calendars can be defined to assist in optimizing resource utilization.

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6.4.3 Estimate Activity resources: outputs

6.4.3.1 Activity resource requirements

Activity resource requirements identify the types and quantities of resources required for each activity in a work package. These requirements then can be aggregated to determine the estimated resources for each work package and each work period. The amount of detail and the level of specificity of the resource requirement descriptions can vary by application area. The resource requirements documentation for each activity can include the basis of estimate for each resource, as well as the assumptions that were made in determining which types of resources are applied, their availability, and what quantities are used.

6.4.3.2 resource Breakdown Structure

The resource breakdown structure is a hierarchical representation of resources by category and type. Examples of resource categories include labor, material, equipment, and supplies. Resource types may include the skill level, grade level, or other information as appropriate to the project. The resource breakdown structure is useful for organizing and reporting project schedule data with resource utilization information.

6.4.3.3 Project documents updates

Project documents that may be updated include, but are not limited to:

• Activity list,

• Activity attributes, and

• Resource calendars.

6.5 Estimate Activity durations

Estimate Activity Durations is the process of estimating the number of work periods needed to complete individual activities with estimated resources. The key benefit of this process is that it provides the amount of time each activity will take to complete, which is a major input into the Develop Schedule process. The inputs, tools and techniques, and outputs of this process are depicted in Figure 6-14. Figure 6-15 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Schedule management plan .2 Activity list .3 Activity attributes .4 Activity resource requirements .5 Resource calendars .6 Project scope statement .7 Risk register .8 Resource breakdown structure .9 Enterprise environmental factors .10 Organizational process assets

.1 Expert judgment

.2 Analogous estimating

.3 Parametric estimating

.4 Three-point estimating

.5 Group decision-making techniques .6 Reserve analysis

.1 Activity duration estimates .2 Project documents updates

Figure 6-14. Estimate Activity durations: Inputs, tools & techniques, and outputs

Project Time Management

6.5 Estimate Activity

Durations

6.1 Plan Schedule Management

6.2 Define

Activities

6.4 Estimate Activity

Resources

6.6 Develop Schedule

• Activity list • Activity attributes

• Schedule management plan

• Activity resource requirements • Resource breakdown structure

• Project documents updates

• Activity duration estimates

Project Documents

• Resource calendars

• Risk register

• Project scope statement

• Organizational process assets • Enterprise environmental factors12.2

Conduct Procurement

9.2 Acquire

Project Team

11.2 Identify Risks

5.3 Define Scope

Enterprise/ Organization

11.2 Identify Risks

Figure 6-15. Estimate Activity durations data Flow diagram

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Estimating activity durations uses information on activity scope of work, required resource types, estimated resource quantities, and resource calendars. The inputs of the estimates of activity duration originate from the person or group on the project team who is most familiar with the nature of the work in the specific activity. The duration estimate is progressively elaborated, and the process considers the quality and availability of the input data. For example, as more detailed and precise data is available about the project engineering and design work, the accuracy of the duration estimates improves. Thus, the duration estimate can be assumed to be progressively more accurate and of better quality.

The Estimate Activity Durations process requires an estimation of the amount of work effort required to complete the activity and the amount of available resources estimated to complete the activity. These estimates are used to approximate the number of work periods (activity duration) needed to complete the activity using the appropriate project and resource calendars. All data and assumptions that support duration estimating are documented for each estimate of activity duration.

6.5.1 Estimate Activity durations: Inputs

6.5.1.1 Schedule Management Plan

Described in Section 6.1.3.1. The schedule management plan defines the method used and the level of accuracy along with other criteria required to estimate activity durations including the project update cycle.

6.5.1.2 Activity List

Described in Section 6.2.3.1. The activity list identifies the activities that will need duration estimates.

6.5.1.3 Activity Attributes

Described in Section 6.2.3.2. The activity attributes provide the primary data input for use in estimating durations required for each activity in the activity list.

6.5.1.4 Activity resource requirements

Described in Section 6.4.3.1. The estimated activity resource requirements will have an effect on the duration of the activity, since the level to which the resources assigned to the activity meet the requirements will significantly influence the duration of most activities. For example, if additional or lower-skilled resources are assigned to an activity, there may be reduced efficiency or productivity due to increased communication, training, and coordination needs leading to a longer duration estimate.

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6.5.1.5 resource calendars

Described in Section 6.4.1.4. The resource calendars influence the duration of schedule activities due to the availability of specific resources, type of resources, and resources with specific attributes. For example, when staff members are assigned to an activity on a full-time basis, in general, a skilled staff member can be expected to complete a given activity in less time than a relatively less-skilled staff member.

6.5.1.6 Project Scope Statement

Described in Section 5.3.3.1. The assumptions and constraints from the project scope statement are considered when estimating the activity durations. Examples of assumptions include, but are not limited to:

• Existing conditions,

• Availability of information, and

• Length of the reporting periods.

Examples of constraints include, but are not limited to:

• Available skilled resources, and

• Contract terms and requirements.

6.5.1.7 risk register

Described in Section 11.2.3.1. The risk register provides the list of risks, along with the results of risk analysis and risk response planning. Updates to the risk register are included with project document updates described in Section 11.5.3.2.

6.5.1.8 resource Breakdown Structure

Described in Section 6.4.3.2. The resource breakdown structure provides a hierarchical structure of the identified resources by resource category and resource type.

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6.5.1.9 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Estimate Activity Durations process include, but are not limited to:

• Duration estimating databases and other reference data,

• Productivity metrics,

• Published commercial information, and

• Location of team members.

6.5.1.10 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Estimate Activity Durations process include, but are not limited to:

• Historical duration information,

• Project calendars,

• Scheduling methodology, and

• Lessons learned.

6.5.2 Estimate Activity durations: tools and techniques

6.5.2.1 Expert Judgment

Expert judgment, guided by historical information, can provide duration estimate information or recommended maximum activity durations from prior similar projects. Expert judgment can also be used to determine whether to combine methods of estimating and how to reconcile differences between them.

6.5.2.2 Analogous Estimating

Analogous estimating is a technique for estimating the duration or cost of an activity or a project using historical data from a similar activity or project. Analogous estimating uses parameters from a previous, similar project, such as duration, budget, size, weight, and complexity, as the basis for estimating the same parameter or measure for a future project. When estimating durations, this technique relies on the actual duration of previous, similar projects as the basis for estimating the duration of the current project. It is a gross value estimating approach, sometimes adjusted for known differences in project complexity. Analogous duration estimating is frequently used to estimate project duration when there is a limited amount of detailed information about the project.

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Analogous estimating is generally less costly and less time consuming than other techniques, but it is also less accurate. Analogous duration estimates can be applied to a total project or to segments of a project and may be used in conjunction with other estimating methods. Analogous estimating is most reliable when the previous activities are similar in fact and not just in appearance, and the project team members preparing the estimates have the needed expertise.

6.5.2.3 Parametric Estimating

Parametric estimating is an estimating technique in which an algorithm is used to calculate cost or duration based on historical data and project parameters. Parametric estimating uses a statistical relationship between historical data and other variables (e.g., square footage in construction) to calculate an estimate for activity parameters, such as cost, budget, and duration.

Activity durations can be quantitatively determined by multiplying the quantity of work to be performed by labor hours per unit of work. For example, activity duration on a design project is estimated by the number of drawings multiplied by the number of labor hours per drawing, or on a cable installation, the meters of cable multiplied by the number of labor hours per meter. For example, if the assigned resource is capable of installing 25 meters of cable per hour, the duration required to install 1,000 meters is 40 hours. (1,000 meters divided by 25 meters per hour).

This technique can produce higher levels of accuracy depending upon the sophistication and underlying data built into the model. Parametric time estimates can be applied to a total project or to segments of a project, in conjunction with other estimating methods.

6.5.2.4 three-Point Estimating

The accuracy of single-point activity duration estimates may be improved by considering estimation uncertainty and risk. This concept originated with the program evaluation and review technique (PERT). PERT uses three estimates to define an approximate range for an activity’s duration:

• Most likely (tM). This estimate is based on the duration of the activity, given the resources likely to be assigned, their productivity, realistic expectations of availability for the activity, dependencies on other participants, and interruptions.

• optimistic (tO). The activity duration based on analysis of the best-case scenario for the activity.

• Pessimistic (tP). The activity duration based on analysis of the worst-case scenario for the activity.

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Depending on the assumed distribution of values within the range of the three estimates the expected duration, tE, can be calculated using a formula. Two commonly used formulas are triangular and beta distributions. The formulas are:

• triangular distribution. tE = (tO + tM + tP) / 3

• Beta distribution (from the traditional PERT technique). tE = (tO + 4tM + tP) / 6

Duration estimates based on three points with an assumed distribution provide an expected duration and clarify the range of uncertainty around the expected duration.

6.5.2.5 Group decision-Making techniques

Team-based approaches, such as brainstorming, the Delphi or nominal group techniques, are useful for engaging team members to improve estimate accuracy and commitment to the emerging estimates. By involving a structured group of people who are close to the technical execution of work in the estimation process, additional information is gained and more accurate estimates obtained. Additionally, when people are involved in the estimation process, their commitment towards meeting the resulting estimates increases.

6.5.2.6 reserve Analysis

Duration estimates may include contingency reserves, sometimes referred to as time reserves or buffers, into the project schedule to account for schedule uncertainty. Contingency reserves are the estimated duration within the schedule baseline, which is allocated for identified risks that are accepted and for which contingent or mitigation responses are developed. Contingency reserves are associated with the “known-unknowns,” which may be estimated to account for this unknown amount of rework. The contingency reserve may be a percentage of the estimated activity duration, a fixed number of work periods, or may be developed by using quantitative analysis methods such as Monte Carlo simulation (Section 11.4.2.2). Contingency reserves may be separated from the individual activities and aggregated into buffers as shown in Figure 6-19.

As more precise information about the project becomes available, the contingency reserve may be used, reduced, or eliminated. Contingency should be clearly identified in schedule documentation.

Estimates may also be produced for the amount of management reserve of time for the project. Management reserves are a specified amount of the project duration withheld for management control purposes and are reserved for unforeseen work that is within scope of the project. Management reserves are intended to address the “unknown-unknowns” that can affect a project. Management reserve is not included in the schedule baseline, but it is part of the overall project duration requirements. Depending on contract terms, use of management reserves may require a change to the schedule baseline.

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6.5.3 Estimate Activity durations: outputs

6.5.3.1 Activity duration Estimates

Activity duration estimates are quantitative assessments of the likely number of time periods that are required to complete an activity. Duration estimates do not include any lags as described in Section 6.3.2.3. Activity duration estimates may include some indication of the range of possible results. For example:

• 2 weeks ± 2 days, which indicates that the activity will take at least eight days and not more than twelve (assuming a five-day workweek); and

• 15 % probability of exceeding three weeks, which indicates a high probability—85 %—that the activity will take three weeks or less.

6.5.3.2 Project documents updates

Project documents that may be updated include, but are not limited to:

• Activity attributes; and

• Assumptions made in developing the activity duration estimate, such as skill levels and availability, as well as a basis of estimates for durations.

6.6 develop Schedule

Develop Schedule is the process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule model. The key benefit of this process is that by entering schedule activities, durations, resources, resource availabilities, and logical relationships into the scheduling tool, it generates a schedule model with planned dates for completing project activities. The inputs, tools and techniques, and outputs of this process are depicted in Figure 6-16. Figure 6-17 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Schedule management plan .2 Activity list .3 Activity attributes .4 Project schedule network diagrams .5 Activity resource requirements .6 Resource calendars .7 Activity duration estimates .8 Project scope statement .9 Risk register .10 Project staff assignments .11 Resource breakdown structure .12 Enterprise environmental factors .13 Organizational process assets

.1 Schedule network analysis .2 Critical path method .3 Critical chain method .4 Resource optimization techniques .5 Modeling techniques .6 Leads and lags .7 Schedule compression .8 Scheduling tool

.1 Schedule baseline

.2 Project schedule

.3 Schedule data

.4 Project calendars

.5 Project management plan updates .6 Project documents updates

Figure 6-16 develop Schedule: Inputs, tools & techniques, and outputs

Project Time Management

6.6 Develop Schedule

6.7 Control

Schedule

• Project schedule network diagrams

• Activity duration estimates

• Activity resource requirements • Resource breakdown structure

• Activity list • Activity attributes

• Project documents updates

• Project schedule

• Project calendars • Schedule data • Project schedule

• Project management plan updates • Schedule baseline

Project Documents

• Resource calendars

• Project staff assignments • Resource calendars

• Risk register

• Project scope statement

• Organizational process assets • Enterprise environmental factors

12.2 Conduct

Procurements

9.2 Acquire

Project Team

11.2 Identify Risks

5.3 Define Scope

Enterprise/ Organization

7.3 Determine

Budget

7.2 Estimate

Costs

4.2 Develop Project Management

Plan

12.1 Plan Procurement

Management

6.5 Estimate Activity

Durations

6.4 Estimate Activity

Resources

6.3 Sequence Activities

6.2 Define

Activities

• Schedule management plan

6.1 Plan Schedule Management

Figure 6-17. develop Schedule data Flow diagram

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Developing an acceptable project schedule is often an iterative process. The schedule model is used to determine the planned start and finish dates for project activities and milestones based on the accuracy of the inputs. Schedule development can require the review and revision of duration estimates and resource estimates to create the project schedule model to establish an approved project schedule that can serve as a baseline to track progress. Once the activity start and finish dates have been determined, it is common to have project staff assigned to the activities review their assigned activities and confirm that the start and finish dates present no conflict with resource calendars or assigned activities in other projects or tasks and thus are still valid. As work progresses, revising and maintaining the project schedule model to sustain a realistic schedule continues throughout the duration of the project, as described in Section 6.7.

For more specific information regarding scheduling, refer to the Practice Standard for Scheduling.

6.6.1 develop Schedule: Inputs

6.6.1.1 Schedule Management Plan

Described in Section 6.1.3.1. The schedule management plan identifies the scheduling method and tool used to create the schedule, and how the schedule is to be calculated.

6.6.1.2 Activity List

Described in Section 6.2.3.1. The activity list identifies the activities that will be included in the schedule model.

6.6.1.3 Activity Attributes

Described in Section 6.2.3.2. The activity attributes provide the details used to build the schedule model.

6.6.1.4 Project Schedule network diagrams

Described in Section 6.3.3.1. The project schedule network diagrams contain the logical relationships of predecessors and successors that will be used to calculate the schedule.

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6.6.1.5 Activity resource requirements

Described in Section 6.4.3.1. The activity resource requirements identify the types and quantities of resources required for each activity used to create the schedule model.

6.6.1.6 resource calendars

Described in Sections 9.2.3.2 and 12.2.3.3. The resource calendars contain information on the availability of resources during the project.

6.6.1.7 Activity duration Estimates

Described in Section 6.5.3.1. The activity duration estimates contain the quantitative assessments of the likely number of work periods that will be required to complete an activity that will be used to calculate the schedule.

6.6.1.8 Project Scope Statement

Described in Section 5.3.3.1. The project scope statement contains assumptions and constraints that can impact the development of the project schedule.

6.6.1.9 risk register

Described in Section 11.2.3.1. The risk register provides the details of all identified risks and their characteristics that affect the schedule model.

6.6.1.10 Project Staff Assignments

Described in Section 9.2.3.1. The project staff assignments specify which resources are assigned to each activity.

6.6.1.11 resource Breakdown Structure

Described in Section 6.4.3.2. The resource breakdown structure provides the details by which resource analysis and organizational reporting can be done.

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6.6.1.12 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors include, but are not limited to:

• Standards,

• Communication channels, and

• Scheduling tool to be used in developing the schedule model.

6.6.1.13 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Develop Schedule process include, but are not limited to: scheduling methodology and project calendar(s).

6.6.2 develop Schedule: tools and techniques

6.6.2.1 Schedule network Analysis

Schedule network analysis is a technique that generates the project schedule model. It employs various analytical techniques, such as critical path method, critical chain method, what-if analysis, and resource optimization techniques to calculate the early and late start and finish dates for the uncompleted portions of project activities. Some network paths may have points of path convergence or path divergence that can be identified and used in schedule compression analysis or other analyses.

6.6.2.2 critical Path Method

The critical path method, which is a method used to estimate the minimum project duration and determine the amount of scheduling flexibility on the logical network paths within the schedule model. This schedule network analysis technique calculates the early start, early finish, late start, and late finish dates for all activities without regard for any resource limitations by performing a forward and backward pass analysis through the schedule network, as shown in Figure 6-18. In this example the longest path includes activities A, C, and D, and, therefore, the sequence of A-C-D is the critical path. The critical path is the sequence of activities that represents the longest path through a project, which determines the shortest possible project duration. The resulting early and late start and finish dates are not necessarily the project schedule, rather they indicate the time periods within which the activity could be executed, using the parameters entered in the schedule model for activity durations, logical relationships, leads, lags, and other known constraints. The critical path method is used to calculate the amount of scheduling flexibility on the logical network paths within the schedule model.

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On any network path, the schedule flexibility is measured by the amount of time that a schedule activity can be delayed or extended from its early start date without delaying the project finish date or violating a schedule constraint, and is termed “total float.” A CPM critical path is normally characterized by zero total float on the critical path. As implemented with PDM sequencing, critical paths may have positive, zero, or negative total float depending on constraints applied. Any activity on the critical path is called a critical path activity. Positive total float is caused when the backward pass is calculated from a schedule constraint that is later than the early finish date that has been calculated during forward pass calculation. Negative total float is caused when a constraint on the late dates is violated by duration and logic. Schedule networks may have multiple near-critical paths. Many software packages allow the user to define the parameters used to determine the critical path(s). Adjustments to activity durations (if more resources or less scope can be arranged), logical relationships (if the relationships were discretionary to begin with), leads and lags, or other schedule constraints may be necessary to produce network paths with a zero or positive total float. Once the total float for a network path has been calculated, then the free float—the amount of time that a schedule activity can be delayed without delaying the early start date of any successor or violating a schedule constraint—can also be determined. For example the free float for Activity B, in Figure 6-18, is 5 days.

Critical Path Link Non-Critical Path Link

Activity Node

Start FinishA

1 5 5

1 0 5

6 10 15

6 0 15

6 5 10

11 5 15

16 15 30

16 0 30

Activity Name

Early Start Duration

Early Finish

Late Start

Total Float

Late Finish

Path A–B–D = 25

Path A–C–D = 30 (Critical Path)

KEY

Figure 6-18. Example of critical Path Method

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6.6.2.3 critical chain Method

The critical chain method (CCM) is a schedule method that allows the project team to place buffers on any project schedule path to account for limited resources and project uncertainties. It is developed from the critical path method approach and considers the effects of resource allocation, resource optimization, resource leveling, and activity duration uncertainty on the critical path determined using the critical path method. To do so, the critical chain method introduces the concept of buffers and buffer management. The critical chain method uses activities with durations that do not include safety margins, logical relationships, and resource availability with statistically determined buffers composed of the aggregated safety margins of activities at specified points on the project schedule path to account for limited resources and project uncertainties. The resource-constrained critical path is known as the critical chain.

The critical chain method adds duration buffers that are non-work schedule activities to manage uncertainty. One buffer, placed at the end of the critical chain, as shown in Figure 6-19, is known as the project buffer and protects the target finish date from slippage along the critical chain. Additional buffers, known as feeding buffers, are placed at each point where a chain of dependent activities that are not on the critical chain feeds into the critical chain. Feeding buffers thus protect the critical chain from slippage along the feeding chains. The size of each buffer should account for the uncertainty in the duration of the chain of dependent activities leading up to that buffer. Once the buffer schedule activities are determined, the planned activities are scheduled to their latest possible planned start and finish dates. Consequently, instead of managing the total float of network paths, the critical chain method focuses on managing the remaining buffer durations against the remaining durations of chains of activities.

Activity A

Critical Chain Link Non-Critical Link

Activity CStart Finish

Activity G

Activity B

Activity D

Feeding Buffer

Activity E Activity F Project Buffer

KEY

Figure 6-19. Example of critical chain Method

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6.6.2.4 resource optimization techniques

Examples of resource optimization techniques that can be used to adjust the schedule model due to demand and supply of resources include, but are not limited to:

• resource leveling. A technique in which start and finish dates are adjusted based on resource constraints with the goal of balancing demand for resources with the available supply. Resource leveling can be used when shared or critically required resources are only available at certain times, or in limited quantities, or over-allocated, such as when a resource has been assigned to two or more activities during the same time period, as shown in Figure 6-20, or to keep resource usage at a constant level. Resource leveling can often cause the original critical path to change, usually to increase.

Start

Activity A Tom: 8 hrs Sue: 8 hrs

Activity B Sue: 8 hrs

Activity C Tom: 8 hrs

Tom: 8 hrs Sue: 16 hrs

Tom: 8 hrs

Day 2 Day 3Day 1

Start

Activity A Tom: 8 hrs Sue: 8 hrs

Activity B Sue: 8 hrs

Activity C Tom: 8 hrs

Tom: 8 hrs Sue: 8 hrs

Sue: 8 hrs Tom: 8 hrs

Day 2 Day 3Day 1

Activities Before Resource Leveling

Activities After Resource Leveling

Figure 6-20. resource Leveling

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• resource Smoothing. A technique that adjusts the activities of a schedule model such that the requirements for resources on the project do not exceed certain predefined resource limits. In resource smoothing, as opposed to resource leveling, the project’s critical path is not changed and the completion date may not be delayed. In other words, activities may only be delayed within their free and total float. Thus resource smoothing may not be able to optimize all resources.

6.6.2.5 Modeling techniques

Examples of modeling techniques include, but are not limited to:

• What-If Scenario Analysis. What-if scenario analysis is the process of evaluating scenarios in order to predict their effect, positively or negatively, on project objectives. This is an analysis of the question, “What if the situation represented by scenario ‘X’ happens?” A schedule network analysis is performed using the schedule to compute the different scenarios, such as delaying a major component delivery, extending specific engineering durations, or introducing external factors, such as a strike or a change in the permitting process. The outcome of the what-if scenario analysis can be used to assess the feasibility of the project schedule under adverse conditions, and in preparing contingency and response plans to overcome or mitigate the impact of unexpected situations.

• Simulation. Simulation involves calculating multiple project durations with different sets of activity assumptions, usually using probability distributions constructed from the three-point estimates (described in Section 6.5.2.4) to account for uncertainty. The most common simulation technique is Monte Carlo analysis (Section 11.4.2.2), in which a distribution of possible activity durations is defined for each activity and used to calculate a distribution of possible outcomes for the total project.

6.6.2.6 Leads and Lags

Described in Section 6.3.2.3. Leads and lags are refinements applied during network analysis to develop a viable schedule by adjusting the start time of the successor activities. Leads are used in limited circumstances to advance a successor activity with respect to the predecessor activity, and lags are used in limited circumstances where processes require a set period of time to elapse between the predecessors and successors without work or resource impact.

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6.6.2.7 Schedule compression

Schedule compression techniques are used to shorten the schedule duration without reducing the project scope, in order to meet schedule constraints, imposed dates, or other schedule objectives. Schedule compression techniques include, but are not limited to:

• crashing. A technique used to shorten the schedule duration for the least incremental cost by adding resources. Examples of crashing include approving overtime, bringing in additional resources, or paying to expedite delivery to activities on the critical path. Crashing works only for activities on the critical path where additional resources will shorten the activity’s duration. Crashing does not always produce a viable alternative and may result in increased risk and/or cost.

• Fast tracking. A schedule compression technique in which activities or phases normally done in sequence are performed in parallel for at least a portion of their duration. An example is constructing the foundation for a building before completing all of the architectural drawings. Fast tracking may result in rework and increased risk. Fast tracking only works if activities can be overlapped to shorten the project duration.

6.6.2.8 Scheduling tool

Automated scheduling tools contain the schedule model and expedite the scheduling process by generating start and finish dates based on the inputs of activities, network diagrams, resources and activity durations using schedule network analysis. A scheduling tool can be used in conjunction with other project management software applications as well as manual methods.

6.6.3 develop Schedule: outputs

6.6.3.1 Schedule Baseline

A schedule baseline is the approved version of a schedule model that can be changed only through formal change control procedures and is used as a basis for comparison to actual results. It is accepted and approved by the appropriate stakeholders as the schedule baseline with baseline start dates and baseline finish dates. During monitoring and controlling, the approved baseline dates are compared to the actual start and finish dates to determine whether variances have occurred. The schedule baseline is a component of the project management plan.

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6.6.3.2 Project Schedule

The outputs from a schedule model are schedule presentations. The project schedule is an output of a schedule model that presents linked activities with planned dates, durations, milestones, and resources. At a minimum, the project schedule includes a planned start date and planned finish date for each activity. If resource planning is done at an early stage, then the project schedule remains preliminary until resource assignments have been confirmed and scheduled start and finish dates are established. This process usually occurs no later than the completion of the project management plan (Section 4.2.3.1). A target project schedule model may also be developed with a defined target start and target finish for each activity. The project schedule presentation may be presented in summary form, sometimes referred to as the master schedule or milestone schedule, or presented in detail. Although a project schedule model can be presented in tabular form, it is more often presented graphically, using one or more of the following formats, which are classified as presentations:

• Bar charts. These charts, also known as Gantt charts, represent schedule information where activities are listed on the vertical axis, dates are shown on the horizontal axis, and activity durations are shown as horizontal bars placed according to start and finish dates. Bar charts are relatively easy to read, and are frequently used in management presentations. For control and management communications, the broader, more comprehensive summary activity, sometimes referred to as a hammock activity, is used between milestones or across multiple interdependent work packages, and is displayed in bar chart reports. An example is the summary schedule portion of Figure 6-21 that is presented in a WBS- structured format.

• Milestone charts. These charts are similar to bar charts, but only identify the scheduled start or completion of major deliverables and key external interfaces. An example is the milestone schedule portion of Figure 6-21.

• Project schedule network diagrams. These diagrams are commonly presented in the activity-on-node diagram format showing activities and relationships without a time scale, sometimes referred to as a pure logic diagram, as shown in Figure 6-11, or presented in a time-scaled schedule network diagram format that is sometimes called a logic bar chart, as shown for the detailed schedule in Figure 6-21.These diagrams, with activity date information, usually show both the project network logic and the project’s critical path schedule activities. This example also shows how each work package is planned as a series of related activities. Another presentation of the project schedule network diagram is a time-scaled logic diagram. These diagrams include a time scale and bars that represent the duration of activities with the logical relationships. It is optimized to show the relationships between activities where any number of activities may appear on the same line of the diagram in sequence.

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Project Schedule Time Frame

Period 5Period 1 Period 2 Period 3 Activity

Identifier

1.1.MB Begin New Product Z

Period 4 Calendar

units

Calendar units

Complete Component 1

Complete Component 2

Finish New Product Z

Activity Description

Project Schedule Time Frame

Period 5Period 1 Period 2 Period 3 Activity

Identifier

1.1.MB 0

120

Period 4 Activity Description

1.1.1.M1

1.1.2.M1

1.1.3.MF

Complete Integration of Components 1 & 2 01.1.3.M1

Project Schedule Time Frame

Period 5Period 1 Period 2 Period 3 Activity

Identifier

1.1 Develop and Deliver New Product Z

Period 4

Work Package 1: Component 1

Work Package 2: Component 2

Work Package 3: Integrated Components 1 and 2

120

Activity Description

1.1.1

1.1.2

1.1.3

Milestone Schedule

Data Date

Data Date Detailed Schedule

1.1.1.T

1.1

1.1.1

1.1.1.D

1.1.1.B

1.1.2.T

1.1.1.M1

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1.1.3.MF

Summary Schedule

Begin New Product Z

Develop and Deliver Product Z

Work Package 1: Component 1

Design Component 1

Build Component 1

Test Component 1

Complete Component 1

Work Package 2: Component 2

Design Component 2

Build Component 2

Test Component 2

Complete Component 2

Work Package 3: Integrated Components 1 and 2

Integrate Components 1 and 2 as Product Z

Complete Integration of Components 1 and 2

Test Integrated Components as Product Z

Deliver Product Z

Finish New Product Z

Figure 6-21. Project Schedule Presentations —Examples

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Figure 6-21 shows schedule presentations for a sample project being executed, with the work in progress reported through the data date, a point in time when the status of the project is recorded, which is sometimes also called the as-of date or status date. For a simple project schedule model, Figure 6-21 reflects schedule presentations in the forms of (1) a milestone schedule as a milestone chart, (2) a summary schedule as a bar chart, and (3) a detailed schedule as a project schedule network diagram. Figure 6-21 also visually shows the relationships among the three different levels of schedule presentation.

6.6.3.3 Schedule data

The schedule data for the project schedule model is the collection of information for describing and controlling the schedule. The schedule data includes at least the schedule milestones, schedule activities, activity attributes, and documentation of all identified assumptions and constraints. The amount of additional data varies by application area. Information frequently supplied as supporting detail includes, but is not limited to:

• Resource requirements by time period, often in the form of a resource histogram;

• Alternative schedules, such as best-case or worst-case, not resource-leveled, or resource-leveled, with or without imposed dates; and

• Scheduling of contingency reserves.

Schedule data could also include such items as resource histograms, cash-flow projections, and order and delivery schedules.

6.6.3.4 Project calendars

A project calendar identifies working days and shifts that are available for scheduled activities. It distinguishes time periods in days or parts of days that are available to complete scheduled activities from time periods that are not available. A schedule model may require more than one project calendar to allow for different work periods for some activities to calculate the project schedule. The project calendars may be updated.

6.6.3.5 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Schedule baseline (Section 6.6.3.1),

• Schedule management plan (Section 6.1.3.1).

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6.6.3.6 Project documents updates

Project documents that may be updated include, but are not limited to:

• Activity resource requirements. Resource leveling can have a significant effect on preliminary estimates for the types and quantities of resources required. If the resource-leveling analysis changes the project resource requirements, then the project resource requirements are updated.

• Activity attributes. Activity attributes (Section 6.2.3.2) are updated to include any revised resource requirements and any other revisions generated by the Develop Schedule process.

• calendars. The calendar for each project may consist of multiple calendars, project calendars, individual resource calendars etc., as the basis for scheduling the project.

• risk register. The risk register may need to be updated to reflect opportunities or threats perceived through scheduling assumptions.

6.7 control Schedule

Control Schedule is the process of monitoring the status of project activities to update project progress and manage changes to the schedule baseline to achieve the plan. The key benefit of this process is that it provides the means to recognize deviation from the plan and take corrective and preventive actions and thus minimize risk. The inputs, tools and techniques, and outputs of this process are depicted in Figure 6-22. Figure 6-23 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Project schedule

.3 Work performance data

.4 Project calendars

.5 Schedule data

.6 Organizational process assets

.1 Performance reviews

.2 Project management software .3 Resource optimization techniques .4 Modeling techniques .5 Leads and lags .6 Schedule compression .7 Scheduling tool

.1 Work performance information .2 Schedule forecasts .3 Change requests .4 Project management plan updates .5 Project documents updates .6 Organizational process assets updates

Figure 6-22. control Schedule: Inputs, tools & techniques, and outputs

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Project Documents

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

Project Time Management

6.7 Control

Schedule

6.6 Develop Schedule

• Work performance data

• Project management plan

• Organizational process assets

• Organizational process assets updates

• Schedule forecasts • Work performance information

• Project documents updates

• Project schedule • Project calendars • Schedule data

• Change requests

• Project management plan updates

4.2 Develop Project Management

Plan

4.3 Direct and

Manage Project Work

Enterprise/ Organization

Figure 6-23. control Schedule data Flow diagram

Updating the schedule model requires knowing the actual performance to date. Any change to the schedule baseline can only be approved through the Perform Integrated Change Control process (Section 4.5). Control Schedule, as a component of the Perform Integrated Change Control process, is concerned with:

• Determining the current status of the project schedule,

• Influencing the factors that create schedule changes,

• Determining if the project schedule has changed, and

• Managing the actual changes as they occur.

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If any agile approach is utilized, control schedule is concerned with:

• Determining the current status of the project schedule by comparing the total amount of work delivered and accepted against the estimates of work completed for the elapsed time cycle,

• Conducting retrospective reviews (scheduled reviews to record lessons learned) for correcting processes and improving, if required,

• Reprioritizing the remaining work plan (backlog),

• Determining the rate at which the deliverables are produced, validated, and accepted (velocity) in given time per iteration (agreed work cycle duration, typically two weeks or one month),

• Determining that the project schedule has changed, and

• Managing the actual changes as they occur.

6.7.1 control Schedule: Inputs

6.7.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains the schedule management plan and the schedule baseline. The schedule management plan describes how the schedule will be managed and controlled. The schedule baseline is used as a reference to compare with actual results to determine if a change, corrective action, or preventive action is necessary.

6.7.1.2 Project Schedule

Described in Section 6.6.3.2. Project schedule refers to the most recent version with notations to indicate updates, completed activities, and started activities as of the indicated data date.

6.7.1.3 Work Performance data

Described in Section 4.3.3.2. Work performance data refers to information about project progress such as which activities have started, their progress (e.g., actual duration, remaining duration, and physical percent complete), and which activities have finished.

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6.7.1.4 Project calendars

Described in Section 6.6.3.4. A schedule model may require more than one project calendar to allow for different work periods for some activities to calculate the schedule forecasts.

6.7.1.5 Schedule data

Described in Section 6.6.3.3. Schedule data will be reviewed and updated in the Control Schedule process.

6.7.1.6 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Control Schedule process include, but are not limited to:

• Existing formal and informal schedule control-related policies, procedures, and guidelines;

• Schedule control tools; and

• Monitoring and reporting methods to be used.

6.7.2 control Schedule: tools and techniques

6.7.2.1 Performance reviews

Performance reviews measure, compare, and analyze schedule performance such as actual start and finish dates, percent complete, and remaining duration for work in progress. Various techniques may be used, among them:

• trend analysis. Trend analysis examines project performance over time to determine whether performance is improving or deteriorating. Graphical analysis techniques are valuable for understanding performance to date and for comparison to future performance goals in the form of completion dates.

• critical path method (Section 6.6.2.2). Comparing the progress along the critical path can help determine schedule status. The variance on the critical path will have a direct impact on the project end date. Evaluating the progress of activities on near critical paths can identify schedule risk.

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• critical chain method (Section 6.6.2.3). Comparing the amount of buffer remaining to the amount of buffer needed to protect the delivery date can help determine schedule status. The difference between the buffer needed and the buffer remaining can determine whether corrective action is appropriate.

• Earned value management (Section 7.4.2.1). Schedule performance measurements such as schedule variance (SV) and schedule performance index (SPI), are used to assess the magnitude of variation to the original schedule baseline. The total float and early finish variances are also essential planning components to evaluate project time performance. Important aspects of schedule control include determining the cause and degree of variance relative to the schedule baseline (Section 6.6.3.1), estimating the implications of those variances for future work to completion, and deciding whether corrective or preventive action is required. For example, a major delay on any activity not on the critical path may have little effect on the overall project schedule, while a much shorter delay on a critical or near-critical activity may require immediate action. For projects not using earned value management, similar variance analysis can be performed by comparing planned activity start or finish dates against actual start or finish dates to identify variances between the schedule baseline and actual project performance. Further analysis can be performed to determine the cause and degree of variance relative to the schedule baseline and any corrective or preventative actions needed.

6.7.2.2 Project Management Software

Project management software for scheduling provides the ability to track planned dates versus actual dates, to report variances to and progress made against the schedule baseline, and to forecast the effects of changes to the project schedule model.

6.7.2.3 resource optimization techniques

Described in Section 6.6.2.4. Resource optimization techniques involve the scheduling of activities and the resources required by those activities while taking into consideration both the resource availability and the project time.

6.7.2.4 Modeling techniques

Described in Section 6.6.2.5. Modeling techniques are used to review various scenarios guided by risk monitoring to bring the schedule model into alignment with the project management plan and approved baseline.

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6.7.2.5 Leads and Lags

Adjusting leads and lags is applied during network analysis to find ways to bring project activities that are behind into alignment with the plan. For example, on a project to construct a new office building, the landscaping can be adjusted to start before the exterior work of the building is complete by increasing the lead time in the relationship. Or, a technical writing team can adjust the start of editing the draft of a large document immediately after the document is completed by eliminating or decreasing lag time.

6.7.2.6 Schedule compression

Described in Section 6.6.2.7. Schedule compression techniques are used to find ways to bring project activities that are behind into alignment with the plan by fast tracking or crashing schedule for the remaining work.

6.7.2.7 Scheduling tool

Schedule data is updated and compiled into the schedule model to reflect actual progress of the project and remaining work to be completed. The scheduling tool (Section 6.6.2.8) and the supporting schedule data are used in conjunction with manual methods or other project management software to perform schedule network analysis to generate an updated project schedule.

6.7.3 control Schedule: outputs

6.7.3.1 Work Performance Information

The calculated SV and SPI time performance indicators for WBS components, in particular the work packages and control accounts, are documented and communicated to stakeholders.

6.7.3.2 Schedule Forecasts

Schedule forecasts are estimates or predictions of conditions and events in the project’s future based on information and knowledge available at the time of the forecast. Forecasts are updated and reissued based on work performance information provided as the project is executed. The information is based on the project’s past performance and expected future performance, and includes earned value performance indicators that could impact the project in the future.

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6.7.3.3 change requests

Schedule variance analysis, along with review of progress reports, results of performance measures, and modifications to the project scope or project schedule may result in change requests to the schedule baseline, scope baseline, and/or other components of the project management plan. Change requests are processed for review and disposition through the Perform Integrated Change Control process (Section 4.5). Preventive actions may include recommended changes to eliminate or reduce the probability of negative schedule variances.

6.7.3.4 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Schedule baseline. Changes to the schedule baseline are incorporated in response to approved change requests (Section 4.4.3.1) related to project scope changes, activity resources, or activity duration estimates. The schedule baseline may be updated to reflect changes caused by schedule compression techniques.

• Schedule management plan. The schedule management plan may be updated to reflect a change in the way the schedule is managed.

• cost baseline. The cost baseline may be updated to reflect approved change requests or changes caused by compression techniques.

6.7.3.5 Project documents updates

Project documents that may be updated include, but are not limited to:

• Schedule data. New project schedule network diagrams may be developed to display approved remaining durations and approved modifications to the schedule. In some cases, project schedule delays can be so severe that development of a new target schedule with forecasted start and finish dates is needed to provide realistic data for directing the work, measuring performance, and measuring progress.

• Project Schedule. An updated project schedule will be generated from the schedule model populated with updated schedule data to reflect the schedule changes and manage the project.

• risk register. The risk register, and risk response plans within it, may also be updated based on the risks that may arise due to schedule compression techniques.

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6.7.3.6 organizational Process Assets updates

Organizational process assets that may be updated include, but are not limited to:

• Causes of variances,

• Corrective action chosen and the reasons, and

• Other types of lessons learned from project schedule control.

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Project cost MAnAGeMent Project Cost Management includes the processes involved in planning, estimating, budgeting, financing, funding,

managing, and controlling costs so that the project can be completed within the approved budget.

Figure 7-1 provides an overview of the following Project Cost Management processes:

7.1 Plan cost Management—The process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs.

7.2 Estimate costs—The process of developing an approximation of the monetary resources needed to complete project activities.

7.3 determine Budget—The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

7.4 control costs—The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.

These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

On some projects, especially those of smaller scope, cost estimating and cost budgeting are tightly linked and can be viewed as a single process that can be performed by a single person over a relatively short period of time. These are presented here as distinct processes because the tools and techniques for each are different. The ability to influence cost is greatest at the early stages of the project, making early scope definition critical (Section 5.3).

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.1 Inputs .1 Project management plan .2 Project charter .3 Enterprise environmental factors .4 Organizational process assets

2. Tools & Techniques .1 Expert judgment .2 Analytical techniques .3 Meetings

.3 Outputs .1 Cost management plan

.1 Inputs .1 Cost management plan .2 Human resource management plan .3 Scope baseline .4 Project schedule .5 Risk register .6 Enterprise environmental factors .7 Organizational process assets

2. Tools & Techniques .1 Expert judgment .2 Analogous estimating .3 Parametric estimating .4 Bottom-up estimating .5 Three-point estimating .6 Reserve analysis .7 Cost of quality .8 Project management software .9 Vendor bid analysis .10 Group decision-making techniques

.3 Outputs .1 Activity cost estimates .2 Basis of estimates .3 Project documents updates

.1 Inputs .1 Cost management plan .2 Scope baseline .3 Activity cost estimates .4 Basis of estimates .5 Project schedule .6 Resource calendars .7 Risk register .8 Agreements .9 Organizational process assets

.2 Tools & Techniques .1 Cost aggregation .2 Reserve analysis .3 Expert judgment .4 Historical relationships .5 Funding limit reconciliation

.3 Outputs .1 Cost baseline .2 Project funding requirements .3 Project documents updates

.1 Inputs .1 Project management plan .2 Project funding requirements .3 Work performance data .4 Organizational process assets

.2 Tools & Techniques .1 Earned value management .2 Forecasting .3 To-complete performance index (TCPI) .4 Performance reviews .5 Project management software .6 Reserve analysis

.3 Outputs .1 Work performance information .2 Cost forecasts .3 Change requests .4 Project management plan updates .5 Project documents updates .6 Organizational process assets updates

Project Cost Management Overview

7.2 Estimate Costs7.1 Plan CostManagement 7.3 Determine Budget

7.4 Control Costs

Figure 7-1. Project cost Management overview

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Project Cost Management should consider the stakeholder requirements for managing costs. Different stakeholders will measure project costs in different ways and at different times. For example, the cost of an acquired item may be measured when the acquisition decision is made or committed, the order is placed, the item is delivered, or the actual cost is incurred or recorded for project accounting purposes.

Project Cost Management is primarily concerned with the cost of the resources needed to complete project activities. Project Cost Management should also consider the effect of project decisions on the subsequent recurring cost of using, maintaining, and supporting the product, service, or result of the project. For example, limiting the number of design reviews can reduce the cost of the project but could increase the resulting product’s operating costs.

In many organizations, predicting and analyzing the prospective financial performance of the project’s product is performed outside of the project. In others, such as a capital facilities project, Project Cost Management can include this work. When such predictions and analyses are included, Project Cost Management may address additional processes and numerous general financial management techniques such as return on investment, discounted cash flow, and investment payback analysis.

The cost management planning effort occurs early in project planning and sets the framework for each of the cost management processes so that performance of the processes will be efficient and coordinated.

7.1 Plan cost Management

Plan Cost Management is the process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs. The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project. The inputs, tools and techniques, and outputs of this process are depicted in Figure 7-2. Figure 7-3 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Project charter

.3 Enterprise environmental factors .4 Organizational process assets

.1 Expert judgment

.2 Analytical techniques

.3 Meetings

.1 Cost management plan

Figure 7-2. Plan cost Management: Inputs, tools & techniques, and outputs

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Project Cost Management

7.1 Plan Cost

Management

6.2 Define

Activities

6.3 Sequence Activities

• Project charter

• Project management plan

• Enterprise environmental factors • Organizational process assets

• Cost management plan

4.2 Develop Project Management

Plan 11.2

Identify Risks

11.4 Perform

Quantitative Risk Analysis

4.1 Develop Project

Charter

Enterprise/ Organization

Figure 7-3. Plan cost Management: data Flow diagram

The cost management processes and their associated tools and techniques are documented in the cost management plan. The cost management plan is a component of the project management plan.

7.1.1 Plan cost Management: Inputs

7.1.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains information used to develop the cost management plan, which contains, but is not limited to:

• Scope baseline. The scope baseline includes the project scope statement and WBS detail for cost estimation and management.

• Schedule baseline. The schedule baseline defines when the project costs will be incurred.

• other information. Other cost-related scheduling, risk, and communications decisions from the project management plan.

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7.1.1.2 Project charter

Described in Section 4.1.3.1. The project charter provides the summary budget from which the detailed project costs are developed. The project charter also defines the project approval requirements that will influence the management of the project costs.

7.1.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that influence the Plan Cost Management process include, but are not limited to:

• Organizational culture and structure can all influence cost management;

• Market conditions describe what products, services, and results are available in the regional and global market;

• Currency exchange rates for project costs sourced from more than one country;

• Published commercial information such as resource cost rate information is often available from commercial databases that track skills and human resource costs, and provide standard costs for material and equipment. Published seller price lists are another source of information; and

• Project management information system, which provides alternative possibilities for managing cost.

7.1.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Plan Cost Management process include, but are not limited to:

• Financial controls procedures (e.g., time reporting, required expenditure and disbursement reviews, accounting codes, and standard contract provisions);

• Historical information and lessons learned knowledge bases;

• Financial databases; and

• Existing formal and informal cost estimating and budgeting-related policies, procedures, and guidelines.

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7.1.2 Plan cost Management: tools and techniques

7.1.2.1 Expert Judgment

Judgment based upon expertise in an application area, Knowledge Area, discipline, industry, etc., as appropriate for the activity being performed should be used in developing the cost management plan.

7.1.2.2 Analytical techniques

Developing the cost management plan may involve choosing strategic options to fund the project such as: self-funding, funding with equity, or funding with debt. The cost management plan may also detail ways to finance project resources such as making, purchasing, renting, or leasing. These decisions, like other financial decisions affecting the project, may affect project schedule and/or risks.

Organizational policies and procedures may influence which financial techniques are employed in these decisions. Techniques may include (but are not limited to): payback period, return on investment, internal rate of return, discounted cash flow, and net present value.

7.1.2.3 Meetings

Project teams may hold planning meetings to develop the cost management plan. Attendees at these meetings may include the project manager, the project sponsor, selected project team members, selected stakeholders, anyone with responsibility for project costs, and others as needed.

7.1.3 Plan cost Management: outputs

7.1.3.1 cost Management Plan

The cost management plan is a component of the project management plan and describes how the project costs will be planned, structured, and controlled. The cost management processes and their associated tools and techniques are documented in the cost management plan.

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For example, the cost management plan can establish the following:

• units of measure. Each unit used in measurements (such as staff hours, staff days, weeks for time measures; or meters, liters, tons, kilometers, or cubic yards for quantity measures; or lump sum in currency form) is defined for each of the resources.

• Level of precision. The degree to which activity cost estimates will be rounded up or down (e.g., US$100.49 to US$100, or US$995.59 to US$1,000), based on the scope of the activities and magnitude of the project.

• Level of accuracy. The acceptable range (e.g., ±10%) used in determining realistic activity cost estimates is specified, and may include an amount for contingencies;

• organizational procedures links. The work breakdown structure (WBS) (Section 5.4) provides the framework for the cost management plan, allowing for consistency with the estimates, budgets, and control of costs. The WBS component used for the project cost accounting is called the control account. Each control account is assigned a unique code or account number(s) that links directly to the performing organization’s accounting system.

• control thresholds. Variance thresholds for monitoring cost performance may be specified to indicate an agreed-upon amount of variation to be allowed before some action needs to be taken. Thresholds are typically expressed as percentage deviations from the baseline plan.

• rules of performance measurement. Earned value management (EVM) rules of performance measurement are set. For example, the cost management plan may:

○ Define the points in the WBS at which measurement of control accounts will be performed;

○ Establish the earned value measurement techniques (e.g., weighted milestones, fixed-formula, percent complete, etc.) to be employed; and

○ Specify tracking methodologies and the earned value management computation equations for calculating projected estimate at completion (EAC) forecasts to provide a validity check on the bottom-up EAC.

For more specific information regarding earned value management, refer to the Practice Standard for Earned Value Management – Second Edition.

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• reporting formats. The formats and frequency for the various cost reports are defined.

• Process descriptions. Descriptions of each of the other cost management processes are documented.

• Additional details. Additional details about cost management activities include, but are not limited to:

○ Description of strategic funding choices,

○ Procedure to account for fluctuations in currency exchange rates, and

○ Procedure for project cost recording.

7.2 Estimate costs

Estimate Costs is the process of developing an approximation of the monetary resources needed to complete project activities. The key benefit of this process is that it determines the amount of cost required to complete project work. The inputs, tools and techniques, and outputs of this process are depicted in Figure 7-4. Figure 7-5 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Cost management plan

.2 Human resource management plan .3 Scope baseline .4 Project schedule .5 Risk register .6 Enterprise environmental factors .7 Organizational process assets

.1 Expert judgment .2 Analogous estimating .3 Parametric estimating .4 Bottom-up estimating .5 Three-point estimating .6 Reserve analysis .7 Cost of quality .8 Project management software .9 Vendor bid analysis .10 Group decision-making techniques

.1 Activity cost estimates

.2 Basis of estimates

.3 Project documents updates

Figure 7-4. Estimate costs: Inputs, tools & techniques, and outputs

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Project Cost Management

7.2 Estimate

Costs

7.3 Determine

Budget

• Cost management plan

• Project documents updates

• Activity cost estimates

• Basis of estimates

Project Documents

• Risk register

• Human resource management plan

• Scope baseline

• Project schedule

• Enterprise environmental factors • Organizational process assets

11.2 Identify Risks

9.1 Plan Human Resource

Management

5.4 Create WBS

6.6 Develop

Schedule

Enterprise/ Organization

11.2 Identify Risks

6.4 Estimate Activity

Resources

12.1 Plan Procurement

Management

7.1 Plan Cost

Management

Figure 7-5. Estimate costs data Flow diagram

Cost estimates are a prediction that is based on the information known at a given point in time. Cost estimates include the identification and consideration of costing alternatives to initiate and complete the project. Cost trade- offs and risks should be considered, such as make versus buy, buy versus lease, and the sharing of resources in order to achieve optimal costs for the project.

Cost estimates are generally expressed in units of some currency (i.e., dollars, euros, yen, etc.), although in some instances other units of measure, such as staff hours or staff days, are used to facilitate comparisons by eliminating the effects of currency fluctuations.

Cost estimates should be reviewed and refined during the course of the project to reflect additional detail as it becomes available and assumptions are tested. The accuracy of a project estimate will increase as the project progresses through the project life cycle. For example, a project in the initiation phase may have a rough order of magnitude (ROM) estimate in the range of −25% to +75%. Later in the project, as more information is known, definitive estimates could narrow the range of accuracy to -5% to +10%. In some organizations, there are guidelines for when such refinements can be made and the degree of confidence or accuracy that is expected.

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Sources of input information are derived from the outputs of processes in other Knowledge Areas. Once received, all of this information will remain available as inputs to all of the cost management processes.

Costs are estimated for all resources that will be charged to the project. This includes, but is not limited to, labor, materials, equipment, services, and facilities, as well as special categories such as an inflation allowance, cost of financing, or contingency costs. A cost estimate is a quantitative assessment of the likely costs for resources required to complete the activity. Cost estimates may be presented at the activity level or in summary form.

7.2.1 Estimate costs: Inputs

7.2.1.1 cost Management Plan

Described in Section 7.1.3.1. The cost management plan defines how project costs will be managed and controlled. It includes the method used and the level of accuracy required to estimate activity cost.

7.2.1.2 Human resource Management Plan

Described in Section 9.1.3.1. The human resource management plan provides project staffing attributes, personnel rates, and related rewards/recognition, which are necessary components for developing the project cost estimates.

7.2.1.3 Scope Baseline

The scope baseline is comprised of the following:

• Project scope statement. The project scope statement (Section 5.3.3.1) provides the product description, acceptance criteria, key deliverables, project boundaries, assumptions, and constraints about the project. One basic assumption that needs to be made when estimating project costs is whether the estimates will be limited to direct project costs only or whether the estimates will also include indirect costs. Indirect costs are those costs that cannot be directly traced to a specific project and therefore will be accumulated and allocated equitably over multiple projects by some approved and documented accounting procedure. One of the most common constraints for many projects is a limited project budget. Examples of other constraints are required delivery dates, available skilled resources, and organizational policies.

• Work breakdown structure. The WBS (Section 5.4) provides the relationships among all the components of the project and the project deliverables.

• WBS dictionary. The WBS dictionary (Section 5.4.3.1) provides detailed information about the deliverables and a description of the work for each component in the WBS required to produce each deliverable.

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Additional information that may be found in the scope baseline with contractual and legal implications, such as health, safety, security, performance, environmental, insurance, intellectual property rights, licenses, and permits. All of this information should be considered when developing the cost estimates.

7.2.1.4 Project Schedule

Described in Section 6.6.3.2. The type and quantity of resources and the amount of time which those resources are applied to complete the work of the project are major factors in determining the project cost. Schedule activity resources and their respective durations are used as key inputs to this process. Estimate Activity Resources (Section 6.4) involves determining the availability of staff, the number of staff hours required, and quantities of material and equipment needed to perform schedule activities. It is closely coordinated with cost estimating. Activity duration estimates (Section 6.5.3.1) will affect cost estimates on any project where the project budget includes an allowance for the cost of financing (including interest charges) and where resources are applied per unit of time for the duration of the activity. Activity duration estimates can also affect cost estimates that have time-sensitive costs included in them, such as union labor with regularly expiring collective bargaining agreements or materials with seasonal cost variations.

7.2.1.5 risk register

Described in Section 11.2.3.1. The risk register should be reviewed to consider risk response costs. Risks, which can be either threats or opportunities, typically have an impact on both activity and overall project costs. As a general rule, when the project experiences a negative risk event, the near-term cost of the project will usually increase, and there will sometimes be a delay in the project schedule. In a similar way, the project team should be sensitive to potential opportunities that can benefit the business either by directly reducing activity costs or by accelerating the schedule.

7.2.1.6 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that influence the Estimate Costs process include, but are not limited to:

• Market conditions. These conditions describe what products, services, and results are available in the market, from whom, and under what terms and conditions. Regional and/or global supply and demand conditions greatly influence resource costs.

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• Published commercial information. Resource cost rate information is often available from commercial databases that track skills and human resource costs, and provide standard costs for material and equipment. Published seller price lists are another source of information.

7.2.1.7 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Estimate Costs process include, but are not limited to:

• Cost estimating policies,

• Cost estimating templates,

• Historical information, and

• Lessons learned.

7.2.2 Estimate costs: tools and techniques

7.2.2.1 Expert Judgment

Expert judgment, guided by historical information, provides valuable insight about the environment and information from prior similar projects. Expert judgment can also be used to determine whether to combine methods of estimating and how to reconcile differences between them.

7.2.2.2 Analogous Estimating

Analogous cost estimating uses the values such as scope, cost, budget, and duration or measures of scale such as size, weight, and complexity from a previous, similar project as the basis for estimating the same parameter or measurement for a current project. When estimating costs, this technique relies on the actual cost of previous, similar projects as the basis for estimating the cost of the current project. It is a gross value estimating approach, sometimes adjusted for known differences in project complexity.

Analogous cost estimating is frequently used to estimate a value when there is a limited amount of detailed information about the project, for example, in the early phases of a project. Analogous cost estimating uses historical information and expert judgment.

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Analogous cost estimating is generally less costly and less time consuming than other techniques, but it is also generally less accurate. Analogous cost estimates can be applied to a total project or to segments of a project, in conjunction with other estimating methods. Analogous estimating is most reliable when the previous projects are similar in fact and not just in appearance, and the project team members preparing the estimates have the needed expertise.

7.2.2.3 Parametric Estimating

Parametric estimating uses a statistical relationship between relevant historical data and other variables (e.g., square footage in construction) to calculate a cost estimate for project work. This technique can produce higher levels of accuracy depending upon the sophistication and underlying data built into the model. Parametric cost estimates can be applied to a total project or to segments of a project, in conjunction with other estimating methods.

7.2.2.4 Bottom-up Estimating

Bottom-up estimating is a method of estimating a component of work. The cost of individual work packages or activities is estimated to the greatest level of specified detail. The detailed cost is then summarized or “rolled up” to higher levels for subsequent reporting and tracking purposes. The cost and accuracy of bottom-up cost estimating are typically influenced by the size and complexity of the individual activity or work package.

7.2.2.5 three-Point Estimating

The accuracy of single-point activity cost estimates may be improved by considering estimation uncertainty and risk and using three estimates to define an approximate range for an activity’s cost:

• Most likely (cM). The cost of the activity, based on realistic effort assessment for the required work and any predicted expenses.

• optimistic (cO). The activity cost based on analysis of the best-case scenario for the activity.

• Pessimistic (cP). The activity cost based on analysis of the worst-case scenario for the activity.

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Depending on the assumed distribution of values within the range of the three estimates the expected cost, cE, can be calculated using a formula. Two commonly used formulas are triangular and beta distributions. The formulas are:

• triangular distribution. cE = (cO + cM + cP) / 3

• Beta distribution (from a traditional PERT analysis). cE = (cO + 4cM + cP) / 6

Cost estimates based on three points with an assumed distribution provide an expected cost and clarify the range of uncertainty around the expected cost.

7.2.2.6 reserve Analysis

Cost estimates may include contingency reserves (sometimes called contingency allowances) to account for cost uncertainty. Contingency reserves are the budget within the cost baseline that is allocated for identified risks, which are accepted and for which contingent or mitigating responses are developed. Contingency reserves are often viewed as the part of the budget intended to address the “known-unknowns” that can affect a project. For example, rework for some project deliverables could be anticipated, while the amount of this rework is unknown. Contingency reserves may be estimated to account for this unknown amount of rework. Contingency reserves can provide for a specific activity, for the whole project, or both. The contingency reserve may be a percentage of the estimated cost, a fixed number, or may be developed by using quantitative analysis methods.

As more precise information about the project becomes available, the contingency reserve may be used, reduced, or eliminated. Contingency should be clearly identified in cost documentation. Contingency reserves are part of the cost baseline and the overall funding requirements for the project.

Estimates may also be produced for the amount of management reserve to be funded for the project. Management reserves are an amount of the project budget withheld for management control purposes and are reserved for unforeseen work that is within scope of the project. Management reserves are intended to address the “unknown unknowns” that can affect a project. The management reserve is not included in the cost baseline but is part of the overall project budget and funding requirements. When an amount of management reserves is used to fund unforeseen work, the amount of management reserve used is added to the cost baseline, thus requiring an approved change to the cost baseline.

7.2.2.7 cost of Quality (coQ)

Assumptions about costs of quality (Section 8.1.2.2) may be used to prepare the activity cost estimate.

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7.2.2.8 Project Management Software

Project management software applications, computerized spreadsheets, simulation, and statistical tools are used to assist with cost estimating. Such tools can simplify the use of some cost-estimating techniques and thereby facilitate rapid consideration of cost estimate alternatives.

7.2.2.9 Vendor Bid Analysis

Cost estimating methods may include analysis of what the project should cost, based on the responsive bids from qualified vendors. When projects are awarded to a vendor under competitive processes, additional cost estimating work may be required of the project team to examine the price of individual deliverables and to derive a cost that supports the final total project cost.

7.2.2.10 Group decision-Making techniques

Team-based approaches, such as brainstorming, the Delphi or nominal group techniques, are useful for engaging team members to improve estimate accuracy and commitment to the emerging estimates. By involving a structured group of people who are close to the technical execution of work in the estimation process, additional information is gained and more accurate estimates are obtained. Additionally, when people are involved in the estimation process, their commitment towards meeting the resulting estimates increases.

7.2.3 Estimate costs: outputs

7.2.3.1 Activity cost Estimates

Activity cost estimates are quantitative assessments of the probable costs required to complete project work. Cost estimates can be presented in summary form or in detail. Costs are estimated for all resources that are applied to the activity cost estimate. This includes, but is not limited to, direct labor, materials, equipment, services, facilities, information technology, and special categories such as cost of financing (including interest charges), an inflation allowance, exchange rates, or a cost contingency reserve. Indirect costs, if they are included in the project estimate, can be included at the activity level or at higher levels.

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7.2.3.2 Basis of Estimates

The amount and type of additional details supporting the cost estimate vary by application area. Regardless of the level of detail, the supporting documentation should provide a clear and complete understanding of how the cost estimate was derived.

Supporting detail for activity cost estimates may include:

• Documentation of the basis of the estimate (i.e., how it was developed),

• Documentation of all assumptions made,

• Documentation of any known constraints,

• Indication of the range of possible estimates (e.g., €10,000 (±10%) to indicate that the item is expected to cost between a range of values), and

• Indication of the confidence level of the final estimate.

7.2.3.3 Project documents updates

Project documents that may be updated include, but are not limited to, the risk register.

7.3 determine Budget

Determine Budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. The key benefit of this process is that it determines the cost baseline against which project performance can be monitored and controlled. The inputs, tools and techniques, and outputs of this process are depicted in Figure 7-6. Figure 7-7 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Cost management plan

.2 Scope baseline

.3 Activity cost estimates

.4 Basis of estimates

.5 Project schedule

.6 Resource calendars

.7 Risk register

.8 Agreements

.9 Organizational process assets

.1 Cost aggregation

.2 Reserve analysis

.3 Expert judgment

.4 Historical relationships

.5 Funding limit reconciliation

.1 Cost baseline

.2 Project funding requirements .3 Project documents updates

Figure 7-6. determine Budget: Inputs, tools & techniques, and outputs

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Project Cost Management

7.3 Determine

Budget

7.4 Control Costs

• Cost management plan

• Activity cost estimates • Basis of estimates

• Project documents updates

• Cost baseline

• Project funding requirements

Project Documents

• Risk register

• Agreements

• Organizational process assets

• Resource calendars

• Scope baseline• Project schedule

• Resource calendars

11.2 Identify Risks

12.2 Conduct

Procurements

9.2 Acquire Project

Team

5.4 Create WBS

6.6 Develop Schedule

Enterprise/ Organization

4.2 Develop Project Management

Plan

7.1 Plan Cost

Management

7.2 Estimate

Costs

Figure 7-7. determine Budget data Flow diagram

A project budget includes all the funds authorized to execute the project. The cost baseline is the approved version of the time-phased project budget, but excludes management reserves.

7.3.1 determine Budget: Inputs

7.3.1.1 cost Management Plan

Described in Section 7.1.3.1. The cost management plan describes how the project costs will be managed and controlled.

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7.3.1.2 Scope Baseline

• Project scope statement. Formal limitations by period for the expenditure of project funds can be mandated by the organization, by agreement (Section 12.2.3.2), or by other entities such as government agencies. These funding constraints are reflected in the project scope statement.

• Work breakdown structure. The WBS (Section 5.4) provides the relationships among all the project deliverables and their various components.

• WBS dictionary. The WBS dictionary (Section 5.4.3.1) and related detailed statements of work provide an identification of the deliverables and a description of the work in each WBS component required to produce each deliverable.

7.3.1.3 Activity cost Estimates

Described in Section 7.2.3.1. Cost estimates for each activity within a work package are aggregated to obtain a cost estimate for each work package.

7.3.1.4 Basis of Estimates

Described in Section 7.2.3.2. Supporting detail for cost estimates contained in the basis for estimates should specify any basic assumptions dealing with the inclusion or exclusion of indirect or other costs in the project budget.

7.3.1.5 Project Schedule

Described in Section 6.6.3.2. The project schedule includes planned start and finish dates for the project’s activities, milestones, work packages, and control accounts. This information can be used to aggregate costs to the calendar periods in which the costs are planned to be incurred.

7.3.1.6 resource calendars

Described in Sections 9.2.3.2 and 12.2.3.3. Resource calendars provide information on which resources are assigned to the project and when they are assigned. This information can be used to indicate resource costs over the duration of the project.

7.3.1.7 risk register

Described in Section 11.2.3.1. The risk register should be reviewed to consider how to aggregate the risk response costs. Updates to the risk register are included with project document updates described in Section 11.5.3.2.

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7.3.1.8 Agreements

Described in Section 12.2.3.2. Applicable agreement information and costs relating to products, services, or results that have been or will be purchased are included when determining the budget.

7.3.1.9 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Determine Budget process include, but are not limited to:

• Existing formal and informal cost budgeting-related policies, procedures, and guidelines;

• Cost budgeting tools; and

• Reporting methods.

7.3.2 determine Budget: tools and techniques

7.3.2.1 cost Aggregation

Cost estimates are aggregated by work packages in accordance with the WBS. The work package cost estimates are then aggregated for the higher component levels of the WBS (such as control accounts) and ultimately for the entire project.

7.3.2.2 reserve Analysis

Budget reserve analysis can establish both the contingency reserves and the management reserves for the project. Management and contingency reserves are addressed in more detail in Section 7.2.2.6.

7.3.2.3 Expert Judgment

Expert judgment, guided by experience in an application area, Knowledge Area, discipline, industry, or similar project, aids in determining the budget. Such expertise may be provided by any group or person with specialized education, knowledge, skill, experience, or training. Expert judgment is available from many sources, including, but not limited to:

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• Other units within the performing organization,

• Consultants,

• Stakeholders, including customers,

• Professional and technical associations, and

• Industry groups.

7.3.2.4 Historical relationships

Any historical relationships that result in parametric estimates or analogous estimates involve the use of project characteristics (parameters) to develop mathematical models to predict total project costs. Such models may be simple (e.g., residential home construction is based on a certain cost per square foot of space) or complex (e.g., one model of software development costing uses multiple separate adjustment factors, each of which has numerous points within it).

Both the cost and accuracy of analogous and parametric models can vary widely. They are most likely to be reliable when:

• Historical information used to develop the model is accurate,

• Parameters used in the model are readily quantifiable, and

• Models are scalable, such that they work for large projects, small projects, and phases of a project.

7.3.2.5 Funding Limit reconciliation

The expenditure of funds should be reconciled with any funding limits on the commitment of funds for the project. A variance between the funding limits and the planned expenditures will sometimes necessitate the rescheduling of work to level out the rate of expenditures. This is accomplished by placing imposed date constraints for work into the project schedule.

7.3.3 determine Budget: outputs

7.3.3.1 cost Baseline

The cost baseline is the approved version of the time-phased project budget, excluding any management reserves, which can only be changed through formal change control procedures and is used as a basis for comparison to actual results. It is developed as a summation of the approved budgets for the different schedule activities.

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Figure 7-8 illustrates the various components of the project budget and cost baseline. Activity cost estimates for the various project activities along with any contingency reserves (Section 7.2.2.6) for these activities are aggregated into their associated work package costs. The work package cost estimates, along with any contingency reserves estimated for the work packages, are aggregated into control accounts. The summation of the control accounts make up the cost baseline. Since the cost estimates that make up the cost baseline are directly tied to the schedule activities, this enables a time-phased view of the cost baseline, which is typically displayed in the form of an S-curve, as is illustrated in Figure 7-9.

Management reserves (Section 7.2.2.6) are added to the cost baseline to produce the project budget. As changes warranting the use of management reserves arise, the change control process is used to obtain approval to move the applicable management reserve funds into the cost baseline.

Activity Cost Estimates

Activity Contingency Reserve

Work Package Cost Estimates

Contingency Reserve

Cost Baseline

Control Accounts

Management Reserve

Project Budget

Project Budget Component

To ta

l A m

ou nt

Figure 7-8. Project Budget components

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BAC

Project Budget

Management Reserve

Funding Requirements

Cost Baseline Expenditures

Time

C um

ul at

iv e

Va lu

Figure 7-9. cost Baseline, Expenditures, and Funding requirements

7.3.3.2 Project Funding requirements

Total funding requirements and periodic funding requirements (e.g., quarterly, annually) are derived from the cost baseline. The cost baseline will include projected expenditures plus anticipated liabilities. Funding often occurs in incremental amounts that are not continuous, and may not be evenly distributed, which appear as steps as shown in Figure 7-9. The total funds required are those included in the cost baseline, plus management reserves, if any. Funding requirements may include the source(s) of the funding.

7.3.3.3 Project documents updates

Project documents that may be updated include, but are not limited to:

• Risk register,

• Activity cost estimates, and

• Project schedule.

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7.4 control costs

Control Costs is the process of monitoring the status of the project to update the project costs and managing changes to the cost baseline. The key benefit of this process is that it provides the means to recognize variance from the plan in order to take corrective action and minimize risk. The inputs, tools and techniques, and outputs of this process are depicted in Figure 7-10. Figure 7-11 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Project funding requirements .3 Work performance data .4 Organizational process assets

.1 Earned value management .2 Forecasting .3 To-complete performance index (TCPI) .4 Performance reviews .5 Project management software .6 Reserve analysis

.1 Work performance information .2 Cost forecasts .3 Change requests .4 Project management plan updates .5 Project documents updates .6 Organizational process assets updates

Figure 7-10. control costs: Inputs, tools & techniques, and outputs

Project Cost Management

7.4 Control Costs

• Project funding requirements

• Project documents updates

• Change requests

• Work performance information • Cost forecasts

• Organizational process assets updates

Project Documents

• Project management plan

• Work performance data

• Organizational process assets

4.3 Direct and

Manage Project Work

4.2 Develop Project Management

Plan

Enterprise/ Organization

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

7.3 Determine

Budget

Figure 7-11. control costs data Flow diagram

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Updating the budget requires knowledge of the actual costs spent to date. Any increase to the authorized budget can only be approved through the Perform Integrated Change Control process (Section 4.5). Monitoring the expenditure of funds without regard to the value of work being accomplished for such expenditures has little value to the project, other than to allow the project team to stay within the authorized funding. Much of the effort of cost control involves analyzing the relationship between the consumption of project funds to the physical work being accomplished for such expenditures. The key to effective cost control is the management of the approved cost baseline and the changes to that baseline.

Project cost control includes:

• Influencing the factors that create changes to the authorized cost baseline;

• Ensuring that all change requests are acted on in a timely manner;

• Managing the actual changes when and as they occur;

• Ensuring that cost expenditures do not exceed the authorized funding by period, by WBS component, by activity, and in total for the project;

• Monitoring cost performance to isolate and understand variances from the approved cost baseline;

• Monitoring work performance against funds expended;

• Preventing unapproved changes from being included in the reported cost or resource usage;

• Informing appropriate stakeholders of all approved changes and associated cost; and

• Bringing expected cost overruns within acceptable limits.

7.4.1 control costs: Inputs

7.4.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains the following information that is used to control cost:

• cost baseline. The cost baseline is compared with actual results to determine if a change, corrective action, or preventive action is necessary.

• cost management plan. The cost management plan describes how the project costs will be managed and controlled (Section 7.1.3.1).

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7.4.1.2 Project Funding requirements

Described in Section 7.3.3.2. The project funding requirements include projected expenditures plus anticipated liabilities.

7.4.1.3 Work Performance data

Described in Section 4.3.3.2. Work performance data includes information about project progress, such as which activities have started, their progress, and which deliverables have finished. Information also includes costs that have been authorized and incurred.

7.4.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Control Costs process include, but are not limited to:

• Existing formal and informal cost control-related policies, procedures, and guidelines;

• Cost control tools; and

• Monitoring and reporting methods to be used.

7.4.2 control costs: tools and techniques

7.4.2.1 Earned Value Management

Earned value management (EVM) is a methodology that combines scope, schedule, and resource measurements to assess project performance and progress. It is a commonly used method of performance measurement for projects. It integrates the scope baseline with the cost baseline, along with the schedule baseline, to form the performance baseline, which helps the project management team assess and measure project performance and progress. It is a project management technique that requires the formation of an integrated baseline against which performance can be measured for the duration of the project. The principles of EVM can be applied to all projects in any industry. EVM develops and monitors three key dimensions for each work package and control account:

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• Planned value. Planned value (PV) is the authorized budget assigned to scheduled work. It is the authorized budget planned for the work to be accomplished for an activity or work breakdown structure component, not including management reserve. This budget is allocated by phase over the life of the project, but at a given moment, planned value defines the physical work that should have been accomplished. The total of the PV is sometimes referred to as the performance measurement baseline (PMB). The total planned value for the project is also known as budget at completion (BAC).

• Earned value. Earned value (EV) is a measure of work performed expressed in terms of the budget authorized for that work. It is the budget associated with the authorized work that has been completed. The EV being measured needs to be related to the PMB, and the EV measured cannot be greater than the authorized PV budget for a component. The EV is often used to calculate the percent complete of a project. Progress measurement criteria should be established for each WBS component to measure work in progress. Project managers monitor EV, both incrementally to determine current status and cumulatively to determine the long-term performance trends.

• Actual cost. Actual cost (AC) is the realized cost incurred for the work performed on an activity during a specific time period. It is the total cost incurred in accomplishing the work that the EV measured. The AC needs to correspond in definition to what was budgeted in the PV and measured in the EV (e.g., direct hours only, direct costs only, or all costs including indirect costs). The AC will have no upper limit; whatever is spent to achieve the EV will be measured.

Variances from the approved baseline will also be monitored:

• Schedule variance. Schedule variance (SV) is a measure of schedule performance expressed as the difference between the earned value and the planned value. It is the amount by which the project is ahead or behind the planned delivery date, at a given point in time. It is a measure of schedule performance on a project. It is equal to the earned value (EV) minus the planned value (PV). The EVM schedule variance is a useful metric in that it can indicate when a project is falling behind or is ahead of its baseline schedule. The EVM schedule variance will ultimately equal zero when the project is completed because all of the planned values will have been earned. Schedule variance is best used in conjunction with critical path methodology (CPM) scheduling and risk management. Equation: SV = EV – PV

• cost variance. Cost variance (CV) is the amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost. It is a measure of cost performance on a project. It is equal to the earned value (EV) minus the actual cost (AC). The cost variance at the end of the project will be the difference between the budget at completion (BAC) and the actual amount spent. The CV is particularly critical because it indicates the relationship of physical performance to the costs spent. Negative CV is often difficult for the project to recover. Equation: CV= EV − AC.

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The SV and CV values can be converted to efficiency indicators to reflect the cost and schedule performance of any project for comparison against all other projects or within a portfolio of projects. The variances are useful for determining project status.

• Schedule performance index. The schedule performance index (SPI) is a measure of schedule efficiency expressed as the ratio of earned value to planned value. It measures how efficiently the project team is using its time. It is sometimes used in conjunction with the cost performance index (CPI) to forecast the final project completion estimates. An SPI value less than 1.0 indicates less work was completed than was planned. An SPI greater than 1.0 indicates that more work was completed than was planned. Since the SPI measures all project work, the performance on the critical path also needs to be analyzed to determine whether the project will finish ahead of or behind its planned finish date. The SPI is equal to the ratio of the EV to the PV. Equation: SPI = EV/PV

• cost performance index. The cost performance index (CPI) is a measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost. It is considered the most critical EVM metric and measures the cost efficiency for the work completed. A CPI value of less than 1.0 indicates a cost overrun for work completed. A CPI value greater than 1.0 indicates a cost underrun of performance to date. The CPI is equal to the ratio of the EV to the AC. The indices are useful for determining project status and providing a basis for estimating project cost and schedule outcome. Equation: CPI = EV/AC

The three parameters of planned value, earned value, and actual cost can be monitored and reported on both a period-by-period basis (typically weekly or monthly) and on a cumulative basis. Figure 7-12 uses S-curves to display EV data for a project that is performing over budget and behind the schedule.

BAC

ETC

Project Budget

Management Reserve

Planned Value (PV)

Earned Value (PV)

Actual Cost (AC)

EAC

Time

C um

ul at

iv e

C os

Data Date

Figure 7-12. Earned Value, Planned Value, and Actual costs

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7.4.2.2 Forecasting

As the project progresses, the project team may develop a forecast for the estimate at completion (EAC) that may differ from the budget at completion (BAC) based on the project performance. If it becomes obvious that the BAC is no longer viable, the project manager should consider the forecasted EAC. Forecasting the EAC involves making projections of conditions and events in the project’s future based on current performance information and other knowledge available at the time of the forecast. Forecasts are generated, updated, and reissued based on work performance data (Section 4.3.3.2) that is provided as the project is executed. The work performance information covers the project’s past performance and any information that could impact the project in the future.

EACs are typically based on the actual costs incurred for work completed, plus an estimate to complete (ETC) the remaining work. It is incumbent on the project team to predict what it may encounter to perform the ETC, based on its experience to date. The EVM method works well in conjunction with manual forecasts of the required EAC costs. The most common EAC forecasting approach is a manual, bottom-up summation by the project manager and project team.

The project manager’s bottom-up EAC method builds upon the actual costs and experience incurred for the work completed, and requires a new estimate to complete the remaining project work. Equation: EAC = AC + Bottom-up ETC.

The project manager’s manual EAC is quickly compared with a range of calculated EACs representing various risk scenarios. When calculating EAC values, the cumulative CPI and SPI values are typically used. While EVM data quickly provide many statistical EACs, only three of the more common methods are described as follows:

• EAc forecast for Etc work performed at the budgeted rate. This EAC method accepts the actual project performance to date (whether favorable or unfavorable) as represented by the actual costs, and predicts that all future ETC work will be accomplished at the budgeted rate. When actual performance is unfavorable, the assumption that future performance will improve should be accepted only when supported by project risk analysis. Equation: EAC = AC + (BAC – EV)

• EAc forecast for Etc work performed at the present cPI. This method assumes what the project has experienced to date can be expected to continue in the future. The ETC work is assumed to be performed at the same cumulative cost performance index (CPI) as that incurred by the project to date. Equation: EAC = BAC / CPI

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• EAc forecast for Etc work considering both SPI and cPI factors. In this forecast, the ETC work will be performed at an efficiency rate that considers both the cost and schedule performance indices. This method is most useful when the project schedule is a factor impacting the ETC effort. Variations of this method weight the CPI and SPI at different values (e.g., 80/20, 50/50, or some other ratio) according to the project manager’s judgment. Equation: EAC = AC + [(BAC – EV) / (CPI × SPI)]

Each of these approaches is applicable for any given project and will provide the project management team with an “early warning” signal if the EAC forecasts are not within acceptable tolerances.

7.4.2.3 to-complete Performance Index (tcPI)

The to-complete performance index (TCPI) is a measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget. TCPI is the calculated cost performance index that is achieved on the remaining work to meet a specified management goal, such as the BAC or the EAC. If it becomes obvious that the BAC is no longer viable, the project manager should consider the forecasted EAC. Once approved, the EAC may replace the BAC in the TCPI calculation. The equation for the TCPI based on the BAC: (BAC – EV) / (BAC – AC).

The TCPI is conceptually displayed in Figure 7-13. The equation for the TCPI is shown in the lower left as the work remaining (defined as the BAC minus the EV) divided by the funds remaining (which can be either the BAC minus the AC, or the EAC minus the AC).

If the cumulative CPI falls below the baseline (as shown in Figure 7-13), all future work of the project will need to be performed immediately in the range of the TCPI (BAC) (as reflected in the top line of Figure 7-13) to stay within the authorized BAC. Whether this level of performance is achievable is a judgment call based on a number of considerations, including risk, schedule, and technical performance. This level of performance is displayed as the TCPI (EAC) line. The equation for the TCPI based on the EAC: (BAC – EV) / (EAC – AC). The EVM formulas are provided in Table 7-1.

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Status Date

1.00

> 1

< 1

TCPI (BAC)

TCPI (EAC)

Baseline Plan

Cumulative CPI

Formula:

= TCPI Work Remaining (BAC-EV)

Funds Remaining (BAC-AC) or (EAC-AC)

Figure 7-13. to-complete Performance Index (tcPI)

7.4.2.4 Performance reviews

Performance reviews compare cost performance over time, schedule activities or work packages overrunning and underrunning the budget, and estimated funds needed to complete work in progress. If EVM is being used, the following information is determined:

• Variance analysis. Variance analysis, as used in EVM, is the explanation (cause, impact, and corrective actions) for cost (CV = EV – AC), schedule (SV = EV – PV), and variance at completion (VAC = BAC – EAC) variances. Cost and schedule variances are the most frequently analyzed measurements. For projects not using earned value management, similar variance analyses can be performed by comparing planned activity cost against actual activity cost to identify variances between the cost baseline and actual project performance. Further analysis can be performed to determine the cause and degree of variance relative to the schedule baseline and any corrective or preventative actions needed. Cost performance measurements are used to assess the magnitude of variation to the original cost baseline. An important aspect of project cost control includes determining the cause and degree of variance relative to the cost baseline (Section 7.3.3.1) and deciding whether corrective or preventive action is required. The percentage range of acceptable variances will tend to decrease as more work is accomplished.

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• trend analysis. Trend analysis examines project performance over time to determine if performance is improving or deteriorating. Graphical analysis techniques are valuable for understanding performance to date and for comparison to future performance goals in the form of BAC versus EAC and completion dates.

• Earned value performance. Earned value performance compares the performance measurement baseline to actual schedule and cost performance. If EVM is not being used, then the analysis of the cost baseline against actual costs for the work performed is used for cost performance comparisons.

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table 7-1. Earned Value calculations Summary table

Earned Value Analysis

Lexicon Definition How Used EquationAbbreviation Name Interpretation of Result

The authorized budget assigned to scheduled work.

The measure of work performed expressed in terms of the budget authorized for that work.

The realized cost incurred for the work performed on an activity during a specific time period.

The sum of all budgets established for the work to be performed.

The amount of budget deficit or surplus at a given point in time, expressed as the difference between the earned value and the actual cost.

The amount by which the project is ahead or behind the planned delivery date, at a given point in time, expressed as the difference between the earned value and the planned value.

A projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.

A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost.

A measure of schedule efficiency expressed as the ratio of earned value to planned value.

The expected total cost of com- pleting all work expressed as the sum of the actual cost to date and the estimate to complete.

The expected cost to finish all the remaining project work.

A measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available.

Planned Value

Earned Value

Actual Cost

Budget at Completion

Cost Variance

Schedule Variance

Variance at Completion

Cost Performance Index

Schedule Performance Index

Estimate At Completion

Estimate to Complete

To Complete Performance Index

BAC

VAC

CPI

SPI

EAC

ETC

TCPI

The value of the work planned to be completed to a point in time, usually the data date, or project completion.

The planned value of all the work completed (earned) to a point in time, usually the data date, without reference to actual costs.

The actual cost of all the work completed to a point in time, usually the data date.

The value of total planned work, the project cost baseline.

The difference between the value of work completed to a point in time, usually the data date, and the actual costs to the same point in time.

The difference between the work completed to a point in time, usually the data date, and the work planned to be completed to the same point in time.

The estimated difference in cost at the completion of the project.

A CPI of 1.0 means the project is exactly on budget, that the work actually done so far is exactly the same as the cost so far. Other values show the percentage of how much costs are over or under the budgeted amount for work accomplished.

An SPI of 1.0 means that the project is exactly on schedule, that the work actually done so far is exactly the same as the work planned to be done so far. Other values show the percentage of how much costs are over or under the budgeted amount for work planned.

If the CPI is expected to be the same for the remainder of the project, EAC can be calculated using:

If future work will be accomplished at the planned rate, use:

If the initial plan is no longer valid, use:

If both the CPI and SPI influence the remaining work, use:

Assuming work is proceeding on plan, the cost of completing the remaining authorized work can be calculated using:

Reestimate the remaining work from the bottom up.

The efficiency that must be maintained in order to complete on plan.

The efficiency that must be maintained in order to complete the current EAC.

EV = sum of the planned value of completed work

CV = EV – AC

SV = EV – PV

VAC = BAC – EAC

CPI = EV/AC

SPI = EV/PV

EAC = BAC/CPI

EAC = AC + BAC – EV

EAC = AC + Bottom-up ETC

EAC = AC + [(BAC – EV)/ (CPI x SPI)]

ETC = EAC – AC

ETC = Reestimate

TCPI = (BAC – EV)/(BAC – AC )

TCPI = (BAC – EV)/(EAC – AC)

Positive = Under planned cost Neutral = On planned cost Negative = Over planned cost

Positive = Ahead of Schedule Neutral = On schedule Negative = Behind Schedule

Positive = Under planned cost Neutral = On planned cost Negative = Over planned cost

Greater than 1.0 = Under planned cost Exactly 1.0 = On planned cost Less than 1.0 = Over planned cost

Greater than 1.0 = Ahead of schedule Exactly 1.0 = On schedule Less than 1.0 = Behind schedule

Greater than 1.0 = Harder to complete Exactly 1.0 = Same to complete Less than 1.0 = Easier to complete

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7.4.2.5 Project Management Software

Project management software is often used to monitor the three EVM dimensions (PV, EV, and AC), to display graphical trends, and to forecast a range of possible final project results.

7.4.2.6 reserve Analysis

During cost control, reserve analysis is used to monitor the status of contingency and management reserves for the project to determine if these reserves are still needed or if additional reserves need to be requested. As work on the project progresses, these reserves may be used as planned to cover the cost of risk mitigation events or other contingencies. Or, if the probable risk events do not occur, the unused contingency reserves may be removed from the project budget to free up resources for other projects or operations. Additional risk analysis during the project may reveal a need to request that additional reserves be added to the project budget. Management and contingency reserves are addressed in more detail in Section 7.2.2.6.

7.4.3 control costs: outputs

7.4.3.1 Work Performance Information

The calculated CV, SV, CPI, SPI, TCPI, and VAC values for WBS components, in particular the work packages and control accounts, are documented and communicated to stakeholders.

7.4.3.2 cost Forecasts

Either a calculated EAC value or a bottom-up EAC value is documented and communicated to stakeholders.

7.4.3.3 change requests

Analysis of project performance may result in a change request to the cost baseline or other components of the project management plan. Change requests may include preventive or corrective actions, and are processed for review and disposition through the Perform Integrated Change Control process (Section 4.5).

7.4.3.4 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

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• cost baseline. Changes to the cost baseline are incorporated in response to approved changes in scope, activity resources, or cost estimates. In some cases, cost variances can be so severe that a revised cost baseline is needed to provide a realistic basis for performance measurement.

• cost management plan. Changes to the cost management plan, such as changes to control thresholds or specified levels of accuracy required in managing the project’s cost, are incorporated in response to feedback from relevant stakeholders.

7.4.3.5 Project documents updates

Project documents that may be updated include, but are not limited to:

• Cost estimates, and

• Basis of estimates.

7.4.3.6 organizational Process Assets updates

Organizational process assets that may be updated include, but are not limited to:

• Causes of variances,

• Corrective action chosen and the reasons,

• Financial databases, and

• Other types of lessons learned from project cost control.

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Project QuAlity MAnAGeMent Project Quality Management includes the processes and activities of the performing organization that

determine quality policies, objectives, and responsibilities so that the project will satisfy the needs for which it was undertaken. Project Quality Management uses policies and procedures to implement, within the project’s context, the organization’s quality management system and, as appropriate, it supports continuous process improvement activities as undertaken on behalf of the performing organization. Project Quality Management works to ensure that the project requirements, including product requirements, are met and validated.

Figure 8-1 provides an overview of the Project Quality Management processes, which include:

8.1 Plan Quality Management—The process of identifying quality requirements and/or standards for the project and its deliverables and documenting how the project will demonstrate compliance with quality requirements.

8.2 Perform Quality Assurance—The process of auditing the quality requirements and the results from quality control measurements to ensure that appropriate quality standards and operational definitions are used.

8.3 control Quality—The process of monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes.

These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

Project Quality Management addresses the management of the project and the deliverables of the project. It applies to all projects, regardless of the nature of their deliverables. Quality measures and techniques are specific to the type of deliverables being produced by the project. For example, the project quality management of software deliverables may use different approaches and measures from those used when building a nuclear power plant. In either case, failure to meet the quality requirements can have serious, negative consequences for any or all of the project’s stakeholders. For example:

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• Meeting customer requirements by overworking the project team may result in decreased profits and increased project risks, employee attrition, errors, or rework.

• Meeting project schedule objectives by rushing planned quality inspections may result in undetected errors, decreased profits, and increased post-implementation risks.

Quality and grade are not the same concepts. Quality as a delivered performance or result is “the degree to which a set of inherent characteristics fulfill requirements” (ISO 9000) [10]. Grade as a design intent is a category assigned to deliverables having the same functional use but different technical characteristics. The project manager and the project management team are responsible for managing the tradeoffs associated with delivering the required levels of both quality and grade. While a quality level that fails to meet quality requirements is always a problem, a low grade of quality may not be a problem. For example:

• It may not be a problem if a suitable low-grade software product (one with a limited number of features) is of high quality (no obvious defects, readable manual). In this example, the product would be appropriate for its general purpose of use.

• It may be a problem if a high-grade software product (one with numerous features) is of low quality (many defects, poorly organized user documentation). In essence, its high-grade feature set would prove ineffective and/or inefficient due to its low quality.

The project management team should determine the appropriate levels of accuracy and precision for use in the quality management plan. Precision is a measure of exactness. For example, the magnitude for each increment on the measurement’s number line is the interval that determines the measurement’s precision—the greater the number of increments, the greater the precision. Accuracy is an assessment of correctness. For example, if the measured value of an item is very close to the true value of the characteristic being measured, the measurement is more accurate. An illustration of this concept is the comparison of archery targets. Arrows clustered tightly in one area of the target, even if they are not clustered in the bull’s-eye, are considered to have high precision. Targets where the arrows are more spread out but equidistant from the bull’s-eye are considered to have the same degree of accuracy. Targets where the arrows are both tightly grouped and within the bull’s-eye are considered to be both accurate and precise. Precise measurements are not necessarily accurate measurements, and accurate measurements are not necessarily precise measurements.

The basic approach to project quality management as described in this section is intended to be compatible with International Organization for Standardization (ISO) quality standards. Every project should have a quality management plan. Project teams should follow the quality management plan and should have data to demonstrate compliance with the plan.

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In the context of achieving ISO compatibility, modern quality management approaches seek to minimize variation and to deliver results that meet defined requirements. These approaches recognize the importance of:

• customer satisfaction. Understanding, evaluating, defining, and managing requirements so that customer expectations are met. This requires a combination of conformance to requirements (to ensure the project produces what it was created to produce) and fitness for use (the product or service needs to satisfy the real needs).

• Prevention over inspection. Quality should be planned, designed, and built into—not inspected into the project’s management or the project’s deliverables. The cost of preventing mistakes is generally much less than the cost of correcting mistakes when they are found by inspection or during usage.

• continuous improvement. The PDCA (plan-do-check-act) cycle is the basis for quality improvement as defined by Shewhart and modified by Deming. In addition, quality improvement initiatives such as Total Quality Management (TQM), Six Sigma, and Lean Six Sigma could improve the quality of the project’s management as well as the quality of the project’s product. Commonly used process improvement models include Malcolm Baldrige, Organizational Project Management Maturity Model (OPM3®), and Capability Maturity Model Integrated (CMMI®).

• Management responsibility. Success requires the participation of all members of the project team. Nevertheless, management retains, within its responsibility for quality, a related responsibility to provide suitable resources at adequate capacities.

• cost of quality (coQ). Cost of quality refers to the total cost of the conformance work and the nonconformance work that should be done as a compensatory effort because, on the first attempt to perform that work, the potential exists that some portion of the required work effort may be done or has been done incorrectly. The costs for quality work may be incurred throughout the deliverable’s life cycle. For example, decisions made by the project team can impact the operational costs associated with using a completed deliverable. Post-project quality costs may be incurred because of product returns, warranty claims, and recall campaigns. Therefore, because of the temporary nature of projects and the potential benefits that may be derived from reducing the post-project cost of quality, sponsoring organizations may choose to invest in product quality improvement. These investments generally are made in the areas of conformance work that act to prevent defects or act to mitigate the costs of defects by inspecting out nonconforming units. Refer to Figure 8-2 and Section 8.1.2.2. Moreover, the issues related to post- project COQ should be the concern of program management and portfolio management such that project, program, and portfolio management offices should apply appropriate reviews, templates, and funding allocations for this purpose.

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.1 Inputs .1 Project management plan .2 Stakeholder register .3 Risk register .4 Requirements documentation .5 Enterprise environmental factors .6 Organizational process assets

.2 Tools & Techniques .1 Cost-benefit analysis .2 Cost of quality .3 Seven basic quality tools .4 Benchmarking .5 Design of experiments .6 Statistical sampling .7 Additional quality planning tools .8 Meetings

.3 Outputs .1 Quality management plan .2 Process improvement plan .3 Quality metrics .4 Quality checklists .5 Project documents updates

.1 Inputs .1 Quality management plan .2 Process improvement plan .3 Quality metrics .4 Quality control measurements .5 Project documents

.2 Tools & Techniques .1 Quality management and control tools .2 Quality audits .3 Process analysis

.3 Outputs .1 Change requests .2 Project management plan updates .3 Project documents updates .4 Organizational process assets updates

.1 Inputs .1 Project management plan .2 Quality metrics .3 Quality checklists .4 Work performance data .5 Approved change requests .6 Deliverables .7 Project documents .8 Organizational process assets

.2 Tools & Techniques .1 Seven basic quality tools .2 Statistical sampling .3 Inspection .4 Approved change requests review

.3 Outputs .1 Quality control measurements .2 Validated changes .3 Validated deliverables .4 Work performance information .5 Change requests .6 Project management plan updates .7 Project documents updates .8 Organizational process assets updates

Project Quality Management Overview

8.2 Perform Quality Assurance

8.1 Plan Quality Management 8.3 Control Quality

Figure 8-1. Project Quality Management overview

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Monitoring & Controlling ClosingExecutingPlanningInitiating

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os t

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on tr

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ua lit

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Validate Conformance

Preventable Not Preventable

Initiate Plan

Essential First-Time Work

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Non-Conformance Work

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Inspection

Fix/ScrapInspection

Execute

Control

Plan Do

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Act

Figure 8-2. Fundamental relationships of Quality Assurance and control Quality to the IPEcc, PdcA, cost of Quality Models and Project Management Process Groups

8.1 Plan Quality Management

Plan Quality Management is the process of identifying quality requirements and/or standards for the project and its deliverables, and documenting how the project will demonstrate compliance with relevant quality requirements. The key benefit of this process is that it provides guidance and direction on how quality will be managed and validated throughout the project. The inputs, tools and techniques, and outputs of this process are depicted in Figure 8-3. Figure 8-4 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Stakeholder register

.3 Risk register

.4 Requirements documentation .5 Enterprise environmental factors .6 Organizational process assets

.1 Cost-benefit analysis

.2 Cost of quality

.3 Seven basic quality tools

.4 Benchmarking

.5 Design of experiments

.6 Statistical sampling

.7 Additional quality planning tools .8 Meetings

.1 Quality management plan

.2 Process improvement plan .3 Quality metrics .4 Quality checklists .5 Project documents updates

Figure 8-3. Plan Quality Management Inputs, tools & techniques, and outputs

Project Quality Management

8.1 Plan

Quality Management

8.2 Perform Quality

Assurance

8.3 Control Quality

• Project documents updates

• Quality management plan

Project Documents

• Risk register

• Requirements documentation

• Stakeholder register

• Project management plan

• Enterprise environmental factors • Organizational process assets

• Process improvement plan

• Quality management plan • Quality metrics

• Quality checklists

11.2 Identify Risks

5.2 Collect

Requirements

4.2 Develop Project Management

Plan

13.1 Identify

Stakeholders

Enterprise/ Organization

11.2 Identify Risks

Figure 8-4. Plan Quality Management data Flow diagram

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Quality planning should be performed in parallel with the other planning processes. For example, proposed changes in the deliverables to meet identified quality standards may require cost or schedule adjustments and a detailed risk analysis of the impact to plans.

The quality planning techniques discussed here are those used most frequently on projects. There are many others that may be useful on certain projects or in some application areas.

8.1.1 Plan Quality Management: Inputs

8.1.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan is used to develop the quality management plan. The information used for the development of the quality management plan includes, but is not limited to:

• Scope baseline. The scope baseline (Section 5.4.3.1) includes:

○ Project scope statement. The project scope statement contains the project description, major project deliverables, and acceptance criteria. The product scope often contains details of technical issues and other concerns that can affect quality planning and that should have been identified as a result of the planning processes in Project Scope Management. The definition of acceptance criteria may significantly increase or decrease quality costs and therefore, project costs. Satisfying all acceptance criteria that the needs of the sponsor and/or customer have been met.

○ Work breakdown structure (WBS). The WBS identifies the deliverables and the work packages used to measure project performance.

○ WBS dictionary. The WBS dictionary provides detailed information for WBS elements.

• Schedule baseline. The schedule baseline documents the accepted schedule performance measures, including start and finish dates (Section 6.6.3.1).

• cost baseline. The cost baseline documents the accepted time interval being used to measure cost performance (Section 7.3.3.1).

• other management plans. These plans contribute to the overall project quality and may highlight actionable areas of concern with regard to the project’s quality.

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8.1.1.2 Stakeholder register

Described in Section 13.1.3.1. The stakeholder register aids in identifying those stakeholders possessing a particular interest in, or having an impact on, quality.

8.1.1.3 risk register

Described in Section 11.2.3.1. The risk register contains information on threats and opportunities that may impact quality requirements.

8.1.1.4 requirements documentation

Described in Section 5.2.3.1. Requirements documentation captures the requirements that the project shall meet pertaining to stakeholder expectations. The components of the requirements documentation include, but are not limited to, project (including product) and quality requirements. The requirements are used by the project team to help plan how quality control will be implemented on the project.

8.1.1.5 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that influence the Plan Quality Management process include, but are not limited to:

• Governmental agency regulations;

• Rules, standards, and guidelines specific to the application area;

• Working or operating conditions of the project or its deliverables that may affect project quality; and

• Cultural perceptions that may influence expectations about quality.

8.1.1.6 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Plan Quality Management process include, but are not limited to:

• Organizational quality policies, procedures, and guidelines. The performing organization’s quality policy, as endorsed by senior management, sets the organization’s intended direction on implementing its quality management approach;

• Historical databases; and

• Lessons learned from previous phases or projects.

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8.1.2 Plan Quality Management: tools and techniques

8.1.2.1 cost-Benefit Analysis

The primary benefits of meeting quality requirements include less rework, higher productivity, lower costs, increased stakeholder satisfaction, and increased profitability. A cost-benefit analysis for each quality activity compares the cost of the quality step to the expected benefit.

8.1.2.2 cost of Quality (coQ)

Cost of quality includes all costs incurred over the life of the product by investment in preventing nonconformance to requirements, appraising the product or service for conformance to requirements, and failing to meet requirements (rework). Failure costs are often categorized into internal (found by the project) and external (found by the customer). Failure costs are also called cost of poor quality. Figure 8-5 provides some examples to consider in each area.

Cost of Conformance Cost of Nonconformance

Prevention Costs (Build a quality product)

• Training • Document processes • Equipment • Time to do it right

Appraisal Costs (Assess the quality)

• Testing • Destructive testing loss • Inspections

Money spent during the project to avoid failures

Internal Failure Costs (Failures found by the project)

• Rework • Scrap

External Failure Costs (Failures found by the customer)

• Liabilities • Warranty work • Lost business

Money spent during and after the project because of failures

Figure 8-5. cost of Quality

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8.1.2.3 Seven Basic Quality tools

The seven basic quality tools, also known in the industry as 7QC Tools, are used within the context of the PDCA Cycle to solve quality-related problems. As conceptually illustrated in Figure 8-7, the seven basic quality tools are:

• Cause-and-effect diagrams, which are also known as fishbone diagrams or as Ishikawa diagrams. The problem statement placed at the head of the fishbone is used as a starting point to trace the problem’s source back to its actionable root cause. The problem statement typically describes the problem as a gap to be closed or as an objective to be achieved. The causes are found by looking at the problem statement and asking “why” until the actionable root cause has been identified or until the reasonable possibilities on each fishbone have been exhausted. Fishbone diagrams often prove useful in linking the undesirable effects seen as special variation to the assignable cause upon which project teams should implement corrective actions to eliminate the special variation detected in a control chart.

• Flowcharts, which are also referred to as process maps because they display the sequence of steps and the branching possibilities that exist for a process that transforms one or more inputs into one or more outputs. Flowcharts show the activities, decision points, branching loops, parallel paths, and the overall order of processing by mapping the operational details of procedures that exist within a horizontal value chain of a SIPOC model (Figure 8-6). Flowcharts may prove useful in understanding and estimating the cost of quality in a process. This is obtained by using the workflow branching logic and associated relative frequencies to estimate expected monetary value for the conformance and nonconformance work required to deliver the expected conforming output.

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8 Requirements and

Feedback Loop Requirements and

Feedback Loop

OUTPUTINPUT

PROCESS CUSTOMERSUPPLIER

Suppliers Inputs Process Outputs Customers

•

Requirements List Measurements List Requirements List Measurements List

•

NOTE: The components of this diagram are flexible and can take any direction depending upon the circumstance.

Figure 8-6. the SIPoc Model

• Checksheets, which are also known as tally sheets and may be used as a checklist when gathering data. Checksheets are used to organize facts in a manner that will facilitate the effective collection of useful data about a potential quality problem. They are especially useful for gathering attributes data while performing inspections to identify defects. For example, data about the frequencies or consequences of defects collected in checksheets are often displayed using Pareto diagrams.

• Pareto diagrams, exist as a special form of vertical bar chart and are used to identify the vital few sources that are responsible for causing most of a problem’s effects. The categories shown on the horizontal axis exist as a valid probability distribution that accounts for 100% of the possible observations. The relative frequencies of each specified cause listed on the horizontal axis decrease in magnitude until the default source named “other” accounts for any nonspecified causes. Typically, the Pareto diagram will be organized into categories that measure either frequencies or consequences.

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• Histograms, are a special form of bar chart and are used to describe the central tendency, dispersion, and shape of a statistical distribution. Unlike the control chart, the histogram does not consider the influence of time on the variation that exists within a distribution.

• Control charts, are used to determine whether or not a process is stable or has predictable performance. Upper and lower specification limits are based on requirements of the agreement. They reflect the maximum and minimum values allowed. There may be penalties associated with exceeding the specification limits. Upper and lower control limits are different from specification limits. The control limits are determined using standard statistical calculations and principles to ultimately establish the natural capability for a stable process. The project manager and appropriate stakeholders may use the statistically calculated control limits to identify the points at which corrective action will be taken to prevent unnatural performance. The corrective action typically seeks to maintain the natural stability of a stable and capable process. For repetitive processes, the control limits are generally set at ±3 s around a process mean that has been set at 0 s. A process is considered out of control when: (1) a data point exceeds a control limit; (2) seven consecutive plot points are above the mean; or (3) seven consecutive plot points are below the mean. Control charts can be used to monitor various types of output variables. Although used most frequently to track repetitive activities required for producing manufactured lots, control charts may also be used to monitor cost and schedule variances, volume, and frequency of scope changes, or other management results to help determine if the project management processes are in control.

• Scatter diagrams, plot ordered pairs (X, Y) and are sometimes called correlation charts because they seek to explain a change in the dependent variable, Y, in relationship to a change observed in the corresponding independent variable, X. The direction of correlation may be proportional (positive correlation), inverse (negative correlation), or a pattern of correlation may not exist (zero correlation). If correlation can be established, a regression line can be calculated and used to estimate how a change to the independent variable will influence the value of the dependent variable.

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Cause & Effect Diagram Flowcharts Checksheets

Pareto Diagrams Histograms Control Charts

Scatter Diagrams

Figure 8-7. Storyboard Illustrating a conceptual Example of Each of the Seven Basic Quality tools

8.1.2.4 Benchmarking

Benchmarking involves comparing actual or planned project practices to those of comparable projects to identify best practices, generate ideas for improvement, and provide a basis for measuring performance.

Benchmarked projects may exist within the performing organization or outside of it, or can be within the same application area. Benchmarking allows for analogies from projects in a different application area to be made.

8.1.2.5 design of Experiments

Design of experiments (DOE) is a statistical method for identifying which factors may influence specific variables of a product or process under development or in production. DOE may be used during the Plan Quality Management process to determine the number and type of tests and their impact on cost of quality.

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DOE also plays a role in optimizing products or processes. DOE is used to reduce the sensitivity of product performance to sources of variations caused by environmental or manufacturing differences. One important aspect of this technique is that it provides a statistical framework for systematically changing all of the important factors, rather than changing the factors one at a time. Analysis of the experimental data should provide the optimal conditions for the product or process, highlight the factors that influence the results, and reveal the presence of interactions and synergy among the factors. For example, automotive designers use this technique to determine which combination of suspension and tires will produce the most desirable ride characteristics at a reasonable cost.

8.1.2.6 Statistical Sampling

Statistical sampling involves choosing part of a population of interest for inspection (for example, selecting ten engineering drawings at random from a list of seventy-five). Sample frequency and sizes should be determined during the Plan Quality Management process so the cost of quality will include the number of tests, expected scrap, etc.

There is a substantial body of knowledge on statistical sampling. In some application areas, it may be necessary for the project management team to be familiar with a variety of sampling techniques to assure the sample selected represents the population of interest.

8.1.2.7 Additional Quality Planning tools

Other quality planning tools are used to define the quality requirements and to plan effective quality management activities. These include, but are not limited to:

• Brainstorming. This technique is used to generate ideas (defined in Section 11.2.2.2).

• Force field analysis. These are diagrams of the forces for and against change.

• nominal group technique. This technique is used to allow ideas to be brainstormed in small groups and then reviewed by a larger group.

• Quality management and control tools. These tools are used to link and sequence the activities identified (defined in Section 8.2.2.1).

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8.1.2.8 Meetings

Project teams may hold planning meetings to develop the quality management plan. Attendees at these meetings may include the project manager; the project sponsor; selected project team members; selected stakeholders; anyone with responsibility for Project Quality Management activities namely Plan Quality Management, Perform Quality Assurance, or Control Quality; and others as needed.

8.1.3 Plan Quality Management: outputs

8.1.3.1 Quality Management Plan

The quality management plan is a component of the project management plan that describes how the organization’s quality policies will be implemented. It describes how the project management team plans to meet the quality requirements set for the project.

The quality management plan may be formal or informal, detailed, or broadly framed. The style and detail of the quality management plan are determined by the requirements of the project. The quality management plan should be reviewed early in the project to ensure that decisions are based on accurate information. The benefits of this review can include a sharper focus on the project’s value proposition and reductions in costs and in the frequency of schedule overruns that were caused by rework.

8.1.3.2 Process Improvement Plan

The process improvement plan is a subsidiary or component of the project management plan (Section 4.2.3.1). The process improvement plan details the steps for analyzing project management and product development processes to identify activities that enhance their value. Areas to consider include:

• Process boundaries. Describe the purpose of the process, the start and end of the process, its inputs and outputs, the process owner, and the stakeholders of the process.

• Process configuration. Provides a graphic depiction of processes, with interfaces identified, used to facilitate analysis.

• Process metrics. Along with control limits, allows analysis of process efficiency.

• targets for improved performance. Guide the process improvement activities.

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8.1.3.3 Quality Metrics

A quality metric specifically describes a project or product attribute and how the control quality process will measure it. A measurement is an actual value. The tolerance defines the allowable variations to the metric. For example, if the quality objective is to stay within the approved budget by ± 10%, the specific quality metric is used to measure the cost of every deliverable and determine the percent variance from the approved budget for that deliverable. Quality metrics are used in the perform quality assurance and control quality processes. Some examples of quality metrics include on-time performance, cost control, defect frequency, failure rate, availability, reliability, and test coverage.

8.1.3.4 Quality checklists

A checklist is a structured tool, usually component-specific, used to verify that a set of required steps has been performed. Based on the project’s requirements and practices, checklists may be simple or complex. Many organizations have standardized checklists available to ensure consistency in frequently performed tasks. In some application areas, checklists are also available from professional associations or commercial service providers. Quality checklists should incorporate the acceptance criteria included in the scope baseline.

8.1.3.5 Project documents updates

Project documents that may be updated include, but are not limited to:

• Stakeholder register (Section 13.1.3.1); and

• Responsibility assignment matrix (Section 9.1.2.1); and

• WBS and WBS Dictionary.

8.2 Perform Quality Assurance

Perform Quality Assurance is the process of auditing the quality requirements and the results from quality control measurements to ensure that appropriate quality standards and operational definitions are used. The key benefit of this process is that it facilitates the improvement of quality processes. The inputs, tools and techniques, and outputs of this process are depicted in Figure 8-8. Figure 8-9 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Quality management plan

.2 Process improvement plan .3 Quality metrics .4 Quality control measurements .5 Project documents

.1 Quality management and control tools .2 Quality audits .3 Process analysis

.1 Change requests

.2 Project management plan updates .3 Project documents updates .4 Organizational process assets updates

Figure 8-8. Perform Quality Assurance: Inputs, tools & techniques, and outputs

Project Quality Management

8.2 Perform Quality

Assurance

8.1 Plan Quality Management

8.3 Control Quality

• Project management plan updates

• Quality control measurements

• Quality management plan • Process improvement plan • Quality metrics

• Change requests

• Project documents updates

• Project documents

• Organizational process assets updates

Project Documents

4.5 Perform

Integrated Change Control

4.2 Develop Project Management

Plan

Enterprise/ Organization

Figure 8-9. Perform Quality Assurance data Flow diagram

The quality assurance process implements a set of planned and systematic acts and processes defined within the project’s quality management plan. Quality assurance seeks to build confidence that a future output or an unfinished output, also known as work in progress, will be completed in a manner that meets the specified requirements and expectations. Quality assurance contributes to the state of being certain about quality by preventing defects through the planning processes or by inspecting out defects during the work-in-progress stage of implementation. Perform Quality Assurance is an execution process that uses data created during Plan Quality Management (Section 8.1) and Control Quality (Section 8.3) processes.

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In project management, the prevention and inspection aspects of quality assurance should have a demonstrable influence on the project. Quality assurance work will fall under the conformance work category in the cost of quality framework.

A quality assurance department, or similar organization, often oversees quality assurance activities. Quality assurance support, regardless of the unit’s title, may be provided to the project team, the management of the performing organization, the customer or sponsor, as well as other stakeholders not actively involved in the work of the project.

Perform Quality Assurance also provides an umbrella for continuous process improvement, which is an iterative means for improving the quality of all processes. Continuous process improvement reduces waste and eliminates activities that do not add value. This allows processes to operate at increased levels of efficiency and effectiveness.

8.2.1 Perform Quality Assurance: Inputs

8.2.1.1 Quality Management Plan

Described in Section 8.1.3.1. The quality management plan describes the quality assurance and continuous process improvement approaches for the project.

8.2.1.2 Process Improvement Plan

Described in Section 8.1.3.2. The project’s quality assurance activities should be supportive of and consistent with the performing organization’s process improvement plans.

8.2.1.3 Quality Metrics

Described in Section 8.1.3.3. The quality metrics provide the attributes that should be measured and the allowable variations.

8.2.1.4 Quality control Measurements

Described in Section 8.3.3.1. Quality control measurements are the results of control quality activities. They are used to analyze and evaluate the quality of the processes of the project against the standards of the performing organization or the requirements specified. Quality control measurements can also compare the processes used to create the measurements, and validate actual measurements to determine their level of correctness.

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8.2.1.5 Project documents

Project documents may influence quality assurance work and should be monitored within the context of a system for configuration management.

8.2.2 Perform Quality Assurance: tools and techniques

8.2.2.1 Quality Management and control tools

The Perform Quality Assurance process uses the tools and techniques of the Plan Quality Management and Control Quality processes. In addition, other tools that are available include (see also Figure 8-10):

• Affinity diagrams. The affinity diagram is similar to mind-mapping techniques in that they are used to generate ideas that can be linked to form organized patterns of thought about a problem. In project management, the creation of the WBS may be enhanced by using the affinity diagram to give structure to the decomposition of scope.

• Process decision program charts (PdPc). Used to understand a goal in relation to the steps for getting to the goal. The PDPC is useful as a method for contingency planning because it aids teams in anticipating intermediate steps that could derail achievement of the goal.

• Interrelationship digraphs. An adaptation of relationship diagrams. The interrelationship digraphs provide a process for creative problem solving in moderately complex scenarios that possess intertwined logical relationships for up to 50 relevant items. The interrelationship digraph may be developed from data generated in other tools such as the affinity diagram, the tree diagram, or the fishbone diagram.

• tree diagrams. Also known as systematic diagrams and may be used to represent decomposition hierarchies such as the WBS, RBS (risk breakdown structure), and OBS (organizational breakdown structure). In project management, tree diagrams are useful in visualizing the parent-to-child relationships in any decomposition hierarchy that uses a systematic set of rules that define a nesting relationship. Tree diagrams can be depicted horizontally (such as a risk breakdown structure) or vertically (such as a team hierarchy or OBS). Because tree diagrams permit the creation of nested branches that terminate into a single decision point, they are useful as decision trees for establishing an expected value for a limited number of dependent relationships that have been diagramed systematically.

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• Prioritization matrices. Identify the key issues and the suitable alternatives to be prioritized as a set of decisions for implementation. Criteria are prioritized and weighted before being applied to all available alternatives to obtain a mathematical score that ranks the options.

• Activity network diagrams. Previously known as arrow diagrams. They include both the AOA (Activity on Arrow) and, most commonly used, AON (Activity on Node) formats of a network diagram. Activity network diagrams are used with project scheduling methodologies such as program evaluation and review technique (PERT), critical path method (CPM), and precedence diagramming method (PDM).

• Matrix diagrams. A quality management and control tool used to perform data analysis within the organizational structure created in the matrix. The matrix diagram seeks to show the strength of relationships between factors, causes, and objectives that exist between the rows and columns that form the matrix.

Affinity Diagram PDPC Interrelationship Digraph

Tree Diagrams Prioritization Matrices Network Diagrams

Matrix Diagrams

Figure 8-10. Storyboard Illustrating the Seven Quality Management and control tools

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8.2.2.2 Quality Audits

A quality audit is a structured, independent process to determine if project activities comply with organizational and project policies, processes, and procedures. The objectives of a quality audit may include:

• Identify all good and best practices being implemented;

• Identify all nonconformity, gaps, and shortcomings;

• Share good practices introduced or implemented in similar projects in the organization and/or industry;

• Proactively offer assistance in a positive manner to improve implementation of processes to help the team raise productivity; and

• Highlight contributions of each audit in the lessons learned repository of the organization.

The subsequent effort to correct any deficiencies should result in a reduced cost of quality and an increase in sponsor or customer acceptance of the project’s product. Quality audits may be scheduled or random, and may be conducted by internal or external auditors.

Quality audits can confirm the implementation of approved change requests including updates, corrective actions, defect repairs, and preventive actions.

8.2.2.3 Process Analysis

Process analysis follows the steps outlined in the process improvement plan to identify needed improvements. This analysis also examines problems experienced, constraints experienced, and non-value-added activities identified during process operation. Process analysis includes root cause analysis—a specific technique used to identify a problem, discover the underlying causes that lead to it, and develop preventive actions.

8.2.3 Perform Quality Assurance: outputs

8.2.3.1 change requests

Change requests are created and used as input into the Perform Integrated Change Control process (Section 4.5) to allow full consideration of the recommended improvements. Change requests are used to take corrective action, preventive action, or to perform defect repair.

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8.2.3.2 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Quality management plan (Section 8.1.3.1),

• Scope management plan (Section 5.1.3.1),

• Schedule management plan (Section 6.1.3.1), and

• Cost management plan (7.1.3.1).

8.2.3.3 Project documents updates

Project documents that may be updated include, but are not limited to:

• Quality audit reports,

• Training plans, and

• Process documentation.

8.2.3.4 organizational Process Assets updates

Elements of the organizational process assets that may be updated include, but are not limited to, the organization’s quality standards and the quality management system.

8.3 control Quality

Control Quality is the process of monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes. The key benefits of this process include: (1) identifying the causes of poor process or product quality and recommending and/or taking action to eliminate them; and (2) validating that project deliverables and work meet the requirements specified by key stakeholders necessary for final acceptance. The inputs, tools and techniques, and outputs of this process are depicted in Figure 8-11. Figure 8-12 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Quality metrics

.3 Quality checklists

.4 Work performance data

.5 Approved change requests .6 Deliverables .7 Project documents .8 Organizational process assets

.1 Seven basic quality tools

.2 Statistical sampling

.3 Inspection

.4 Approved change requests review

.1 Quality control measurements .2 Validated changes .3 Verified deliverables .4 Work performance information .5 Change requests .6 Project management plan updates .7 Project documents updates .8 Organizational process assets updates

Figure 8-11. control Quality: Inputs, tools & techniques, and outputs

Project Quality Management

8.3 Control Quality

8.2 Perform Quality

Assurance

8.1 Plan Quality Management

• Project documents

• Approved change requests

• Deliverables • Work performance data

• Project management plan

• Project management plan updates

• Quality metrics • Quality checklists

• Organizational process assets

• Organizational process assets updates

• Quality control measurements

4.2 Develop Project Management

Plan

4.5 Perform

Integrated Change Control

4.3 Direct and

Manage Project Work

4.2 Develop Project Management

Plan

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

5.5 Validate Scope

Enterprise/ Organization

Project Documents

Enterprise/ Organization

Project Documents

• Project documents updates

• Verified deliverables

• Change requests

• Validated changes • Work performance Information

Figure 8-12. control Quality data Flow diagram

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The Control Quality process uses a set of operational techniques and tasks to verify that the delivered output will meet the requirements. Quality assurance should be used during the project’s planning and executing phases to provide confidence that the stakeholder’s requirements will be met and quality control should be used during the project executing and closing phases to formally demonstrate, with reliable data, that the sponsor and/or customer’s acceptance criteria have been met.

The project management team may have a working knowledge of statistical control processes to evaluate data contained in the control quality outputs. Among other subjects, the team may find it useful to know the differences between the following pairs of terms:

• Prevention (keeping errors out of the process) and inspection (keeping errors out of the hands of the customer).

• Attribute sampling (the result either conforms or does not conform) and variables sampling (the result is rated on a continuous scale that measures the degree of conformity).

• Tolerances (specified range of acceptable results) and control limits (that identify the boundaries of common variation in a statistically stable process or process performance).

8.3.1 control Quality: Inputs

8.3.1.1 Project Management Plan

Described in Section 8.1.3.1. The project management plan contains the quality management plan, which is used to control quality. The quality management plan describes how quality control will be performed within the project.

8.3.1.2 Quality Metrics

Described in Section 4.2.3.1. A quality metric describes a project or product attribute and how it will be measured. Some examples of quality metrics include: function points, mean time between failure (MTBF), and mean time to repair (MTTR).

8.3.1.3 Quality checklists

Described in Section 8.1.3.4. Quality checklists are structured lists that help to verify that the work of the project and its deliverables fulfill a set of requirements.

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8.3.1.4 Work Performance data

Described in Section 4.3.3.2. Work performance data can include:

• Planned vs. actual technical performance,

• Planned vs. actual schedule performance, and

• Planned vs. actual cost performance.

8.3.1.5 Approved change requests

As part of the Perform Integrated Change Control process, a change log update indicates that some changes are approved and some are not. Approved change requests may include modifications such as defect repairs, revised work methods, and revised schedule. The timely implementation of approved changes needs to be verified.

8.3.1.6 deliverables

Described in Section 4.3.3.1. A deliverable is any unique and verifiable product, result, or capability that results in a validated deliverable required by the project.

8.3.1.7 Project documents

Project documents may include, but are not limited to:

• Agreements,

• Quality audit reports and change logs supported with corrective action plans,

• Training plans and assessments of effectiveness, and

• Process documentation such as those obtained using either the seven basic quality tools or the quality management and control tools shown in Figures 8-7 and 8-10.

8.3.1.8 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Control Quality process include, but are not limited to:

• The organization’s quality standards and policies,

• Standard work guidelines, and

• Issue and defect reporting procedures and communication policies.

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8.3.2 control Quality: tools and techniques

8.3.2.1 Seven Basic Quality tools

Described in Section 8.1.2.3. The seven basic quality tools are illustrated conceptually in Figure 8-7.

8.3.2.2 Statistical Sampling

Described in Section 8.1.2.6. Samples are selected and tested as defined in the quality management plan.

8.3.2.3 Inspection

An inspection is the examination of a work product to determine if it conforms to documented standards. The results of an inspection generally include measurements and may be conducted at any level. For example, the results of a single activity can be inspected, or the final product of the project can be inspected. Inspections may be called reviews, peer reviews, audits, or walkthroughs. In some application areas, these terms have narrow and specific meanings. Inspections also are used to validate defect repairs.

8.3.2.4 Approved change requests review

All approved change requests should be reviewed to verify that they were implemented as approved.

8.3.3 control Quality: outputs

8.3.3.1 Quality control Measurements

Quality control measurements are the documented results of control quality activities. They should be captured in the format that was specified through the Plan Quality Management process (Section 8.1).

8.3.3.2 Validated changes

Any changed or repaired items are inspected and will be either accepted or rejected before notification of the decision is provided. Rejected items may require rework.

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8.3.3.3 Verified deliverables

A goal of the Control Quality process is to determine the correctness of deliverables. The results of performing the Control Quality process are verified deliverables. Verified deliverables are an input to Validate Scope (5.5.1.4) for formalized acceptance.

8.3.3.4 Work Performance Information

Work performance information is the performance data collected from various controlling processes, analyzed in context and integrated based on relationships across areas. Examples include information about the project requirements fulfillment such as causes for rejections, rework required, or the need for process adjustments.

8.3.3.5 change requests

If the recommended corrective or preventive actions or a defect repair requires a change to the project management plan, a change request (Section 4.4.3.1) should be initiated in accordance with the defined Perform Integrated Change Control (4.5) process.

8.3.3.6 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Quality management plan (Section 8.1.3.1), and

• Process improvement plan (Section 8.1.3.2).

8.3.3.7 Project documents updates

Project documents that may be updated include, but are not limited to,

• Quality standards;

• Agreements;

• Quality audit reports and change logs supported with corrective action plans;

• Training plans and assessments of effectiveness; and

• Process documentation, such as information obtained using the seven basic quality tools or the quality management and control tools.

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8.3.3.8 organizational Process Assets updates

Elements of the organizational process assets that may be updated include, but are not limited to:

• completed checklists. When checklists are used, the completed checklists become part of the project documents and organizational process assets (Section 4.1.1.5).

• Lessons learned documentation. The causes of variances, the reasoning behind the corrective action chosen, and other types of lessons learned from control quality are documented so they become part of the historical database for both the project and the performing organization.

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Project huMAn resource MAnAGeMent Project Human Resource Management includes the processes that organize, manage, and lead the project

team. The project team is comprised of the people with assigned roles and responsibilities for completing the project. Project team members may have varied skill sets, may be assigned full or part-time, and may be added or removed from the team as the project progresses. Project team members may also be referred to as the project’s staff. Although specific roles and responsibilities for the project team members are assigned, the involvement of all team members in project planning and decision making is beneficial. Participation of team members during planning adds their expertise to the process and strengthens their commitment to the project.

Figure 9-1 provides an overview of the Project Human Resource Management processes, which are as follows:

9.1 Plan Human resource Management—The process of identifying and documenting project roles, responsibilities, required skills, reporting relationships, and creating a staffing management plan.

9.2 Acquire Project team—The process of confirming human resource availability and obtaining the team necessary to complete project activities.

9.3 develop Project team—The process of improving competencies, team member interaction, and overall team environment to enhance project performance.

9.4 Manage Project team—The process of tracking team member performance, providing feedback, resolving issues, and managing changes to optimize project performance.

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These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

As a result of these interactions additional planning may be required throughout the project. For example:

• After initial team members create a work breakdown structure, additional team members may need to be added to the team.

• As additional team members are added to the team, their experience levels, or lack thereof, could decrease or increase project risk, creating the need for additional risk planning.

• When activity durations are estimated, budgeted, scoped, or planned prior to identifying all project team members and their competency levels, the activity durations may change.

The project management team is a subset of the project team and is responsible for the project management and leadership activities such as initiating, planning, executing, monitoring, controlling, and closing the various project phases. This group can also be referred to as the core, executive, or leadership team. For smaller projects, the project management responsibilities may be shared by the entire team or administered solely by the project manager. The project sponsor works with the project management team, typically assisting with matters such as project funding, clarifying scope, monitoring progress, and influencing stakeholders in both the requesting and performing organization for the project benefit.

Managing and leading the project team includes, but is not limited to:

• Influencing the project team. The project manager needs to be aware of and influence, when possible, human resource factors that may impact the project. These factors includes team environment, geographical locations of team members, communications among stakeholders, internal and external politics, cultural issues, organizational uniqueness, and others factors that may alter project performance.

• Professional and ethical behavior. The project management team should be aware of, subscribe to, and ensure that all team members follow professional and ethical behavior.

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.1 Inputs .1 Project management plan .2 Activity resource requirements .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Organization charts and position descriptions .2 Networking .3 Organizational theory .4 Expert judgment .5 Meetings

.3 Outputs .1 Human resource management plan

.1 Inputs .1 Human resource management plan .2 Enterprise environmental factors .3 Organizational process assets

.2 Tools & Techniques .1 Pre-assignment .2 Negotiation .3 Acquisition .4 Virtual teams .5 Multi-criteria decision analysis

.3 Outputs .1 Project staff assignments .2 Resource calendars .3 Project management plan updates

.1 Inputs .1 Human resource management plan .2 Project staff assignments .3 Resource calendars

.2 Tools & Techniques .1 Interpersonal skills .2 Training .3 Team-building activities .4 Ground rules .5 Colocation .6 Recognition and rewards .7 Personnel assessment tools

.3 Outputs .1 Team performance assessments .2 Enterprise environmental factors updates

.1 Inputs .1 Human resource management plan .2 Project staff assignments .3 Team performance assessments .4 Issue log .5 Work performance reports .6 Organizational process assets

.2 Tools & Techniques .1 Observation and conversation .2 Project performance appraisals .3 Conflict management .4 Interpersonal skills

.3 Outputs .1 Change requests .2 Project management plan updates .3 Project documents updates .4 Enterprise environmental factors updates .5 Organizational process assets updates

Project Human Resource Management Overview

9.2 Acquire Project Team9.1 Plan HumanResource Management 9.3 Develop Project Team

9.4 Manage Project Team

Figure 9-1. Project Human resource Management overview

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9.1 Plan Human resource Management

Plan Human Resource Management is the process of identifying and documenting project roles, responsibilities, required skills, reporting relationships, and creating a staffing management plan. The key benefit of this process is that it establishes project roles and responsibilities, project organization charts, and the staffing management plan including the timetable for staff acquisition and release. The inputs, tools and techniques, and outputs of this process are depicted in Figure 9-2. Figure 9-3 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Activity resource requirements .3 Enterprise environmental factors .4 Organizational process assets

.1 Organization charts and position descriptions .2 Networking .3 Organizational theory .4 Expert judgment .5 Meetings

.1 Human resource management plan

Figure 9-2. Plan Human resource Management: Inputs, tools & techniques, and outputs

Project Human Resource Management

9.4 Manage

Project Team

9.3 Develop

Project Team

9.2 Acquire

Project Team

• Human resource management plan

• Organizational process assets • Enterprise environmental factors

7.2 Estimate

Costs

11.2 Identify Risks

9.1 Plan Human Resource

Management

4.2 Develop Project Management

Plan

6.4 Estimate Activity

Resources

• Project management plan

• Activity resource requirements

Enterprise/ Organization

Figure 9-3. Plan Human resource Management data Flow diagram

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Human resource planning is used to determine and identify human resources with the necessary skills required for project success. The human resource management plan describes how the roles and responsibilities, reporting relationships, and staffing management will be addressed and structured within a project. It also contains the staffing management plan including timetables for staff acquisition and release, identification of training needs, team-building strategies, plans for recognition and rewards programs, compliance considerations, safety issues, and the impact of the staffing management plan on the organization.

Effective human resource planning should consider and plan for the availability of or competition for scarce resources. Project roles can be designated for teams or team members. Those teams or team members can be from inside or outside the organization performing the project. Other projects may be competing for human resources with the same competencies or skill sets. Given these factors, project costs, schedules, risks, quality, and other project areas may be significantly affected.

9.1.1 Plan Human resource Management: Inputs

9.1.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan is used to develop the human resource management plan as described in Section 9.1.3.1. The information used for the development of the human resource management plan includes, but is not limited to:

• The project life cycle and the processes that will be applied to each phase,

• How work will be executed to accomplish the project objectives,

• A change management plan that documents how changes will be monitored and controlled,

• A configuration management plan that documents how configuration management will be performed,

• How integrity of the project baselines will be maintained, and

• Needs and methods of communication among stakeholders.

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9.1.1.2 Activity resource requirements

Described in Section 6.4.3.1. Human resource planning uses activity resource requirements to determine the human resource needs for the project. The preliminary requirements regarding the required project team members and their competencies are progressively elaborated as part of the Plan Human Resource Management process.

9.1.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Plan Human Resource Management process include, but are not limited to:

• Organizational culture and structure,

• Existing human resources,

• Geographical dispersion of team members,

• Personnel administration policies, and

• Marketplace conditions.

9.1.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Plan Human Resource Management process include, but are not limited to:

• Organizational standard processes, policies, and role descriptions;

• Templates for organizational charts and position descriptions;

• Lessons learned on organizational structures that have worked in previous projects; and

• Escalation procedures for handling issues within the team and within the performing organization.

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9.1.2 Plan Human resource Management: tools and techniques

9.1.2.1 organization charts and Position descriptions

Various formats exist to document team member roles and responsibilities. Most of the formats fall into one of three types (Figure 9-4): hierarchical, matrix, and text-oriented. Additionally, some project assignments are listed in subsidiary plans, such as the risk, quality, or communications management plans. Regardless of the method utilized, the objective is to ensure that each work package has an unambiguous owner and that all team members have a clear understanding of their roles and responsibilities. For example, a hierarchical format may be used to represent high-level roles, while a text-based format may be better suited to document the detailed responsibilities.

RAM Role

Responsibilities

Authority

Organization Chart (hierarchical)

Responsibility Chart (matrix)

Role Description (text)

Figure 9-4. roles and responsibility definition Formats

• Hierarchical-type charts. The traditional organization chart structure can be used to show positions and relationships in a graphical, top-down format. Work breakdown structures (WBS) designed to show how project deliverables are broken down into work packages provide a way of showing high-level areas of responsibility. While the WBS shows a breakdown of project deliverables, the organizational breakdown structure (OBS) is arranged according to an organization’s existing departments, units, or teams with the project activities or work packages listed under each department. An operational department such as information technology or purchasing can see all of its project responsibilities by looking at its portion of the OBS. The resource breakdown structure (RBS) is a hierarchical list of resources related by category and resource type that is used to facilitate planning and controlling of project work. Each descending (lower) level represents an increasingly detailed description of the resource until small enough to be used in conjunction with the work breakdown structure (WBS) to allow the work to be planned, monitored and controlled. The resource breakdown structure is helpful in tracking project costs and can be aligned with the organization’s accounting system. It can contain resource categories other than human resources.

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• Matrix-based charts. A responsibility assignment matrix (RAM) is a grid that shows the project resources assigned to each work package. It is used to illustrate the connections between work packages or activities and project team members. On larger projects, RAMs can be developed at various levels. For example, a high-level RAM can define what a project team group or unit is responsible for within each component of the WBS, while lower-level RAMs are used within the group to designate roles, responsibilities, and levels of authority for specific activities. The matrix format shows all activities associated with one person and all people associated with one activity. This also ensures that there is only one person accountable for any one task to avoid confusion of responsibility. One example of a RAM is a RACI (responsible, accountable, consult, and inform) chart, shown in Figure 9-5. The sample chart shows the work to be done in the left column as activities. The assigned resources can be shown as individuals or groups. The project manager can select other options such as “lead” and “resource” designations or others, as appropriate for the project. A RACI chart is a useful tool to use when the team consists of internal and external resources in order to ensure clear divisions of roles and expectations.

RACI Chart Person

Activity

Create charter

Collect requirements

Submit change request

Develop test plan

Ann Ben Carlos Dina Ed

R = Responsible A = Accountable C = Consult I = Inform

C C

I I

I R

Figure 9-5. rAcI Matrix

• text-oriented formats. Team member responsibilities that require detailed descriptions can be specified in text-oriented formats. Usually in outline form, the documents provide information such as responsibilities, authority, competencies, and qualifications. The documents are known by various names including position descriptions and role-responsibility-authority forms. These documents can be used as templates for future projects, especially when the information is updated throughout the current project by applying lessons learned.

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9.1.2.2 networking

Networking is the formal and informal interaction with others in an organization, industry, or professional environment. It is a constructive way to understand political and interpersonal factors that will impact the effectiveness of various staffing management options. Human resource management benefits from successful networking by improving knowledge of and access to human resource assets such as strong competencies, specialized experience, and external partnership opportunities. Examples of human resources networking activities include proactive correspondence, luncheon meetings, informal conversations including meetings and events, trade conferences, and symposia. Networking can be a useful technique at the beginning of a project. It can also be an effective way to enhance project management professional development during the project and after the project ends.

9.1.2.3 organizational theory

Organizational theory provides information regarding the way in which people, teams, and organizational units behave. Effective use of common themes identified in organizational theory can shorten the amount of time, cost, and effort needed to create the Plan Human Resource Management process outputs and improve planning efficiency. It is important to recognize that different organizational structures have different individual response, individual performance, and personal relationship characteristics. Also, applicable organizational theories may recommend exercising a flexible leadership style that adapts to the changes in a team’s maturity level throughout the project life cycle.

9.1.2.4 Expert Judgment

When developing the human resource management plan, expert judgment is used to:

• List the preliminary requirements for the required skills;

• Assess the roles required for the project based on standardized role descriptions within the organization;

• Determine the preliminary effort level and number of resources needed to meet project objectives;

• Determine reporting relationships needed based on the organizational culture;

• Provide guidelines on lead time required for staffing, based on lessons learned and market conditions;

• Identify risks associated with staff acquisition, retention, and release plans; and

• Identify and recommend programs for complying with applicable government and union contracts.

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9.1.2.5 Meetings

When planning human resource management of the project, the project management team will hold planning meetings. These meetings leverage a combination of other tools and techniques to allow for all project management team members to reach consensus on the human resource management plan.

9.1.3 Plan Human resource Management: outputs

9.1.3.1 Human resource Management Plan

The human resource management plan, a part of the project management plan, provides guidance on how project human resources should be defined, staffed, managed, and eventually released. The human resource management plan and any subsequent revisions are also inputs into the Develop Project Management Plan process.

The human resource management plan includes, but is not limited to, the following:

• roles and responsibilities. The following should be addressed when listing the roles and responsibilities needed to complete a project:

○ Role. The function assumed by or assigned to a person in the project. Examples of project roles are civil engineer, business analyst, and testing coordinator. Role clarity concerning authority, responsibilities, and boundaries should also be documented.

○ Authority. The right to apply project resources, make decisions, sign approvals, accept deliverables, and influence others to carry out the work of the project. Examples of decisions that need clear authority include the selection of a method for completing an activity, quality acceptance, and how to respond to project variances. Team members operate best when their individual levels of authority match their individual responsibilities.

○ Responsibility. The assigned duties and work that a project team member is expected to perform in order to complete the project’s activities.

○ Competency. The skill and capacity required to complete assigned activities within the project constraints. If project team members do not possess required competencies, performance can be jeopardized. When such mismatches are identified, proactive responses such as training, hiring, schedule changes, or scope changes are initiated.

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• Project organization charts. A project organization chart is a graphic display of project team members and their reporting relationships. It can be formal or informal, highly detailed or broadly framed, based on the needs of the project. For example, the project organization chart for a 3,000-person disaster response team will have greater detail than a project organization chart for an internal, twenty-person project.

• Staffing management plan. The staffing management plan is a component of the human resource management plan that describes when and how project team members will be acquired and how long they will be needed. It describes how human resource requirements will be met. The staffing management plan can be formal or informal, highly detailed, or broadly framed, depending upon the needs of the project. The plan is updated continually during the project to direct ongoing team member acquisition and development actions. Information in the staffing management plan varies by application area and project size, but items to consider include:

○ Staff acquisition. A number of questions arise when planning the acquisition of project team members. For example, whether the human resources come from within the organization or from external, contracted sources; whether the team members need to work in a central location or may work from distant locations; costs associated with each level of expertise needed for the project; and level of assistance that the organization’s human resource department and functional managers are able to provide to the project management team.

○ Resource calendars. Calendars that identify the working days and shifts on which each specific resource is available. The staffing management plan describes necessary time frames for project team members, either individually or collectively, as well as when acquisition activities such as recruiting should start. One tool for charting human resources is a resource histogram, used by the project management team as a means of providing a visual representation or resources allocation to all interested parties. This chart illustrates the number of hours a person, department, or entire project team that will be needed each week or month over the course of the project. The chart can include a horizontal line that represents the maximum number of hours available from a particular resource. Bars that extend beyond the maximum available hours identify the need for a resource optimization strategy (Section 6.6.2.4), such as adding more resources or modifying the schedule. An example of a resource histogram is illustrated in Figure 9-6.

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300

275

250

225

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175

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Jan Feb Mar Apr May

9 16 23 30 6 13 20 27 6 13 20 27 3 10 17 24 1 8 15 22

S ta

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f o r

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Figure 9-6. Illustrative resource Histogram

○ Staff release plan. Determining the method and timing of releasing team members benefits both the project and team members. When team members are released from a project, the costs associated with those resources are no longer charged to the project, thus reducing project costs. Morale is improved when smooth transitions to upcoming projects are already planned. A staff release plan also helps mitigate human resource risks that may occur during or at the end of a project.

○ Training needs. If it is expected that the team members to be assigned will not have the required competencies, a training plan can be developed as part of the project. The plan can also include ways to help team members obtain certifications that would support their ability to benefit the project.

○ Recognition and rewards. Clear criteria for rewards and a planned system for their use help promote and reinforce desired behaviors. To be effective, recognition and rewards should be based on activities and performance under a person’s control. For example, a team member who is to be rewarded for meeting cost objectives should have an appropriate level of control over decisions that affect expenses. Creating a plan with established times for distribution of rewards ensures that recognition takes place and is not forgotten. Recognition and rewards are part of the Develop Project Team process (Section 9.3).

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○ Compliance. The staffing management plan can include strategies for complying with applicable government regulations, union contracts, and other established human resource policies.

○ Safety. Policies and procedures that protect team members from safety hazards can be included in the staffing management plan as well as in the risk register.

9.2 Acquire Project team

Acquire Project Team is the process of confirming human resource availability and obtaining the team necessary to complete project activities. The key benefit of this process consists of outlining and guiding the team selection and responsibility assignment to obtain a successful team. The inputs, tools and techniques, and outputs of this process are depicted in Figure 9-7. Figure 9-8 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Human resource management plan .2 Enterprise environmental factors .3 Organizational process assets

.1 Pre-assignment

.2 Negotiation

.3 Acquisition

.4 Virtual teams

.5 Multi-criteria decision analysis

.1 Project staff assignments

.2 Resource calendars

.3 Project management plan updates

Figure 9-7. Acquire Project team: Inputs, tools & techniques, and outputs

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Project Human Resource Management

9.2 Acquire

Project Team

9.1 Plan Human Resource

Management

9.3 Develop Project

Team

9.4 Manage

Project Team

• Organizational process assets • Enterprise environmental factors

• Human resource management plan

• Resource calendars

• Project staff assignments

• Project management plan updates

6.5 Estimate Activity

Durations

6.4 Estimate Activity

Resources

4.2 Develop Project Management

Plan

6.6 Develop Schedule

7.3 Determine

Budget

Enterprise/ Organization

Figure 9-8. Acquire Project team data Flow diagram

The project management team may or may not have direct control over team member selection because of collective bargaining agreements, use of subcontractor personnel, matrix project environment, internal or external reporting relationships, or other various reasons. It is important that the following factors are considered during the process of acquiring the project team:

• The project manager or project management team should effectively negotiate and influence others who are in a position to provide the required human resources for the project.

• Failure to acquire the necessary human resources for the project may affect project schedules, budgets, customer satisfaction, quality, and risks. Insufficient human resources or capabilities decrease the probability of success and, in a worst case scenario, could result in project cancellation.

• If the human resources are not available due to constraints, such as economic factors or previous assignments to other projects, the project manager or project team may be required to assign alternative resources, perhaps with lower competencies, provided there is no violation of legal, regulatory, mandatory, or other specific criteria.

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These factors should be considered and planned for in the planning stages of the project. The project manager or project management team will be required to reflect the impact of any unavailability of required human resources in the project schedule, project budget, project risks, project quality, training plans, and the other project management plans.

9.2.1 Acquire Project team: Inputs

9.2.1.1 Human resource Management Plan

Described in Section 9.1.3.1. The human resource management plan provides guidance on how project human resources should be identified, staffed, managed, and eventually released. It includes:

• Roles and responsibilities defining the positions, skills, and competencies that the project demands;

• Project organization charts indicating the number of people needed for the project; and

• Staffing management plan delineating the time periods each project team member will be needed and other information important to engage the project team.

9.2.1.2 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that influence the Acquire Project Team process include, but are not limited to:

• Existing information on human resources including availability, competency levels, prior experience, interest in working on the project and their cost rate;

• Personnel administration policies such as those that affect outsourcing;

• Organizational structure as described in Section 2.3.1; and

• Colocation or multiple locations.

9.2.1.3 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that influence the Acquire Project Team process include, but are not limited to, organizational standard policies, processes, and procedures.

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9.2.2 Acquire Project team: tools and techniques

9.2.2.1 Pre-assignment

When project team members are selected in advance, they are considered pre-assigned. This situation can occur if the project is the result of specific people being identified as part of a competitive proposal, if the project is dependent upon the expertise of particular persons, or if some staff assignments are defined within the project charter.

9.2.2.2 negotiation

Staff assignments are negotiated on many projects. For example, the project management team may need to negotiate with:

• Functional managers, to ensure that the project receives appropriately competent staff in the required time frame and that the project team members will be able, willing, and authorized to work on the project until their responsibilities are completed;

• Other project management teams within the performing organization, to appropriately assign scarce or specialized human resources; and

• External organizations, vendors, suppliers, contractors, etc., for appropriate, scarce, specialized, qualified, certified, or other such specified human resources. Special consideration should be given to external negotiating policies, practices, processes, guidelines, legal, and other such criteria.

The project management team’s ability to influence others plays an important role in negotiating staff assignments, as do the politics of the organizations involved. For example, a functional manager will weigh the benefits and visibility of competing projects when determining where to assign exceptional performers requested by various project teams.

9.2.2.3 Acquisition

When the performing organization is unable to provide the staff needed to complete a project, the required services may be acquired from outside sources. This can involve hiring individual consultants or subcontracting work to another organization.

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9.2.2.4 Virtual teams

The use of virtual teams creates new possibilities when acquiring project team members. Virtual teams can be defined as groups of people with a shared goal who fulfill their roles with little or no time spent meeting face to face. The availability of communication technology such as e-mail, audio conferencing, social media, web-based meetings and video conferencing has made virtual teams feasible. The virtual team model makes it possible to:

• Form teams of people from the same organization who live in widespread geographic areas;

• Add special expertise to a project team even though the expert is not in the same geographic area;

• Incorporate employees who work from home offices;

• Form teams of people who work different shifts, hours, or days;

• Include people with mobility limitations or disabilities; and

• Move forward with projects that would have been ignored due to travel expenses.

There are some disadvantages related to virtual teams, such as possibility for misunderstandings, feeling of isolation, difficulties in sharing knowledge and experience between team members, and cost of appropriate technology. Communication planning becomes increasingly important in a virtual team environment. Additional time may be needed to set clear expectations, facilitate communications, develop protocols for resolving conflict, include people in decision making, understand cultural differences, and share credit in successes.

9.2.2.5 Multi-criteria decision Analysis

Selection criteria are often used as a part of acquiring the project team. By use of a multi-criteria decision analysis tool, criteria are developed and used to rate or score potential team members. The criteria are weighted according to the relative importance of the needs within the team. Some examples of selection criteria that can be used to score team members are shown as follows:

• Availability. Identify whether the team member is available to work on the project within the time period needed. If there are there any concerns for availability during the project timeline.

• cost. Verify if the cost of adding the team member is within the prescribed budget.

• Experience. Verify that the team member has the relevant experience that will contribute to the project success.

• Ability. Verify that the team member has the competencies needed by the project.

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• Knowledge. Consider if the team member has relevant knowledge of the customer, similar implemented projects, and nuances of the project environment.

• Skills. Determine whether the member has the relevant skills to use a project tool, implementation, or training.

• Attitude. Determine whether the member has the ability to work with others as a cohesive team.

• International factors. Consider team member location, time zone and communication capabilities.

9.2.3 Acquire Project team: outputs

9.2.3.1 Project Staff Assignments

The project is staffed when appropriate people have been assigned to the team. The documentation of these assignments can include a project team directory, memos to team members, and names inserted into other parts of the project management plan, such as project organization charts and schedules.

9.2.3.2 resource calendars

Resource calendars document the time periods that each project team member is available to work on the project. Creating a reliable schedule (Section 6.6.3.1) depends on having a good understanding of each person’s availability and schedule constraints, including time zones, work hours, vacation time, local holidays, and commitments to other projects.

9.2.3.3 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to, the human resource management plan. For example, the person assigned to a predefined role may not fulfill all staffing requirements outlined in the human resource management plan. When gaps occur, the project management plan needs to be updated to change the team structure, roles, or responsibilities.

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9.3 develop Project team

Develop Project Team is the process of improving competencies, team member interaction, and overall team environment to enhance project performance. The key benefit of this process is that it results in improved teamwork, enhanced people skills and competencies, motivated employees, reduced staff turnover rates, and improved overall project performance. The inputs, tools and techniques, and outputs of this process are depicted in Figure 9-9. Figure 9-10 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Human resource management plan .2 Project staff assignments .3 Resource calendars

.1 Interpersonal skills

.2 Training

.3 Team-building activities

.4 Ground rules

.5 Colocation

.6 Recognition and rewards

.7 Personnel assessment tools

.1 Team performance assessments .2 Enterprise environmental factors updates

Figure 9-9. develop Project team: Inputs, tools & techniques, and outputs

Project Human Resource Management

9.3 Develop

Project Team

9.1 Plan Human Resource

Management

9.2 Acquire Project

Team

9.4 Manage

Project Team

• Enterprise environmental factors updates

• Human resource management plan

• Resource calendars

• Team performance assessments

• Project staff assignments • Resource calendars

12.2 Conduct

Procurements

Enterprise/ Organization

Figure 9-10. develop Project team data Flow diagram

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Project managers should acquire skills to identify, build, maintain, motivate, lead, and inspire project teams to achieve high team performance and to meet the project’s objectives. Teamwork is a critical factor for project success, and developing effective project teams is one of the primary responsibilities of the project manager. Project managers should create an environment that facilitates teamwork. Project managers should continually motivate their team by providing challenges and opportunities, by providing timely feedback and support as needed, and by recognizing and rewarding good performance. High team performance can be achieved by using open and effective communication, creating team building opportunities, developing trust among team members, managing conflicts in a constructive manner, and encouraging collaborative problem solving and decision making. The project manager should request management support and/or influence the appropriate stakeholders to acquire the resources needed to develop effective project teams.

Project managers operate in a global environment and work on projects characterized by cultural diversity. Team members often have diverse industry experience, know multiple languages, and sometimes operate in the “team language” that may be a different language or norm than their native one. The project management team should capitalize on cultural differences, focus on developing and sustaining the project team throughout the project life cycle, and promote working together interdependently in a climate of mutual trust. Developing the project team improves the people skills, technical competencies, and overall team environment and project performance. It requires clear, timely, effective, and efficient communication between team members throughout the life of the project. Objectives of developing a project team include, but are not limited to:

• Improving knowledge and skills of team members to increase their ability to complete project deliverables, while lowering costs, reducing schedules, and improving quality;

• Improving feelings of trust and agreement among team members to raise morale, lower conflict, and increase team work; and

• Creating a dynamic, cohesive, and collaborative team culture to (1) improve individual and team productivity, team spirit, and cooperation and (2) allow cross training and mentoring between team members to share knowledge and expertise.

9.3.1 develop Project team: Inputs

9.3.1.1 Human resource Management Plan

Described in Section 9.1.3.1. The human resource management plan provides guidance on how project human resources should be defined, staffed, managed, controlled, and eventually released. It identifies training strategies and plans for developing the project team. Items such as rewards, feedback, additional training, and disciplinary actions can be added to the plan as a result of ongoing team performance assessments and other forms of project team management.

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9.3.1.2 Project Staff Assignments

Described in Section 9.2.3.1. Team development starts with a list of the project team members. Project staff assignment documents identify the people who are on the team.

9.3.1.3 resource calendars

Described in Section 9.2.3.2. Resource calendars identify times when the project team members can participate in team development activities.

9.3.2 develop Project team: tools and techniques

9.3.2.1 Interpersonal Skills

Interpersonal skills, sometimes known as “soft skills,” are behavioral competencies that include proficiencies such as communication skills, emotional intelligence, conflict resolution, negotiation, influence, team building, and group facilitation. These soft skills are valuable assets when developing the project team. For example, the project management team can use emotional intelligence to reduce tension and increase cooperation by identifying, assessing, and controlling the sentiments of project team members, anticipating their actions, acknowledging their concerns, and following up on their issues.

9.3.2.2 training

Training includes all activities designed to enhance the competencies of the project team members. Training can be formal or informal. Examples of training methods include classroom, online, computer-based, on-the-job training from another project team member, mentoring, and coaching. If project team members lack the necessary management or technical skills, such skills can be developed as part of the project work. Scheduled training takes place as stated in the human resource management plan. Unplanned training takes place as a result of observation, conversation, and project performance appraisals conducted during the controlling process of managing the project team. Training costs could be included in the project budget, or supported by performing organization if the added skills may be useful for future projects. It could be performed by in-house or external trainers.

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9.3.2.3 team-Building Activities

Team-building activities can vary from a 5-minute agenda item in a status review meeting to an off-site, professionally facilitated experience designed to improve interpersonal relationships. The objective of team-building activities is to help individual team members work together effectively. Team-building strategies are particularly valuable when team members operate from remote locations without the benefit of face-to-face contact. Informal communication and activities can help in building trust and establishing good working relationships.

As an ongoing process, team building is crucial to project success. While team building is essential during the initial stages of a project, it is a never-ending process. Changes in a project environment are inevitable, and to manage them effectively, a continued or a renewed team-building effort should be applied. The project manager should continually monitor team functionality and performance to determine if any actions are needed to prevent or correct various team problems.

One of the models used to describe team development is the Tuckman ladder (Tuckman, 1965; Tuckman & Jensen, 1977), which includes five stages of development that teams may go through. Although it’s common for these stages to occur in order, it’s not uncommon for a team to get stuck in a particular stage or slip to an earlier stage. Projects with team members who worked together in the past may skip a stage.

• Forming. This phase is where the team meets and learns about the project and their formal roles and responsibilities. Team members tend to be independent and not as open in this phase.

• Storming. During this phase, the team begins to address the project work, technical decisions, and the project management approach. If team members are not collaborative and open to differing ideas and perspectives, the environment can become counterproductive.

• norming. In the norming phase, team members begin to work together and adjust their work habits and behaviors to support the team. The team learns to trust each other.

• Performing. Teams that reach the performing stage function as a well-organized unit. They are interdependent and work through issues smoothly and effectively.

• Adjourning. In the adjourning phase, the team completes the work and moves on from the project. This typically occurs when staff is released from the project as deliverables are completed or as part of carrying out the Close Project or Phase process (Section 4.6).

The duration of a particular stage depends upon team dynamics, team size, and team leadership. Project managers should have a good understanding of team dynamics in order to move their team members through all stages in an effective manner.

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9.3.2.4 Ground rules

Ground rules establish clear expectations regarding acceptable behavior by project team members. Early commitment to clear guidelines decreases misunderstandings and increases productivity. Discussing ground rules in areas such as code of conduct, communication, working together, or meeting etiquette allows team members to discover values that are important to one another. All project team members share responsibility for enforcing the rules once they are established.

9.3.2.5 colocation

Colocation, also referred to as “tight matrix,” involves placing many or all of the most active project team members in the same physical location to enhance their ability to perform as a team. Colocation can be temporary, such as at strategically important times during the project, or for the entire project. Colocation strategies can include a team meeting room (sometimes called “war room”), places to post schedules, and other conveniences that enhance communication and a sense of community. While colocation is considered a good strategy, the use of virtual teams can bring benefits such as the use of more skilled resources, reduced costs, less travel, and relocation expenses and the proximity of team members to suppliers, customers, or other key stakeholders.

9.3.2.6 recognition and rewards

Part of the team development process involves recognizing and rewarding desirable behavior. The original plans concerning ways in which to reward people are developed during the Plan Human Resource Management process. It is important to recognize that a particular reward given to any individual will be effective only if it satisfies a need which is valued by that individual. Award decisions are made, formally or informally, during the process of managing the project team through project performance appraisals (Section 9.4.2.2). Cultural differences should be considered when determining recognition and rewards.

People are motivated if they feel they are valued in the organization and this value is demonstrated by the rewards given to them. Generally, money is viewed as a tangible aspect of any reward system, but intangible rewards could be equally or even more effective. Most project team members are motivated by an opportunity to grow, accomplish, and apply their professional skills to meet new challenges. A good strategy for project managers is to give the team recognition throughout the life cycle of the project rather than waiting until the project is completed.

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9.3.2.7 Personnel Assessment tools

Personnel assessment tools give the project manager and the project team insight into areas of strength and weakness. These tools help project managers assess the team preferences, aspirations, how they process and organize information, how they tend to make decisions, and how they prefer to interact with people.

Various tools are available such as attitudinal surveys, specific assessments, structured interviews, ability tests, and focus groups. These tools can provide improved understanding, trust, commitment, and communications among team members and facilitate more productive teams throughout the project.

9.3.3 develop Project team: outputs

9.3.3.1 team Performance Assessments

As project team development efforts such as training, team building, and colocation are implemented, the project management team makes formal or informal assessments of the project team’s effectiveness. Effective team development strategies and activities are expected to increase the team’s performance, which increases the likelihood of meeting project objectives. Team performance assessment criteria should be determined by all appropriate parties and incorporated in the Develop Project Team inputs.

The performance of a successful team is measured in terms of technical success according to agreed-upon project objectives (including quality levels), performance on project schedule (finished on time), and performance on budget (finished within financial constraints). High-performance teams are characterized by these task-oriented and results-oriented outcomes.

The evaluation of a team’s effectiveness may include indicators such as:

• Improvements in skills that allow individuals to perform assignments more effectively,

• Improvements in competencies that help the team perform better as a team,

• Reduced staff turnover rate, and

• Increased team cohesiveness where team members share information and experiences openly and help each other to improve the overall project performance.

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As a result of conducting an evaluation of the team’s overall performance, the project management team can identify the specific training, coaching, mentoring, assistance, or changes required to improve the team’s performance. This should also include identification of the appropriate or required resources necessary to achieve and implement the improvements identified in the assessment. These resources and recommendations for team improvement should be well documented and forwarded to the relevant parties.

9.3.3.2 Enterprise Environmental Factors updates

The enterprise environmental factors that may be updated as a result of the Develop Project Team process include, but are not limited to, personnel administration, employee training records, and skill assessments.

9.4 Manage Project team

Manage Project Team is the process of tracking team member performance, providing feedback, resolving issues, and managing team changes to optimize project performance. The key benefit of this process is that it influences team behavior, manages conflict, resolves issues, and appraises team member performance. The inputs, tools and techniques, and outputs of this process are depicted in Figure 9-11. Figure 9-12 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Human resource management plan .2 Project staff assignments .3 Team performance assessments .4 Issue log .5 Work performance reports .6 Organizational process assets

.1 Observation and conversation .2 Project performance appraisals .3 Conflict management .4 Interpersonal skills

.1 Change requests

.2 Project management plan updates .3 Project documents updates .4 Enterprise environmental factors updates .5 Organizational process assets updates

Figure 9-11. Manage Project team: Inputs, tools & techniques, and outputs

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Project Human Resource Management

9.4 Manage

Project Team

9.2 Acquire Project Team

9.1 Plan Human Resource

Management

9.3 Develop Project Team

• Organizational process assets updates • Enterprise environmental factors updates

• Project staff assignments

• Team performance assessments

• Human resource management plan

• Project documents updates

• Change requests• Issue log

• Organizational process assets

• Work performance reports

• Project management plan updates

4.2 Develop Project Management

Plan

4.5 Perform

Integrated Change Control

13.3 Manage

Stakeholder Engagement

4.4 Monitor and

Control Project Work

Enterprise/ Organization

Project Documents

Figure 9-12. Manage Project team data Flow diagram

As a result of managing the project team, change requests are submitted, the human resource management plan is updated, issues are resolved, input is provided for performance appraisals, and lessons learned are added to the organization’s database.

Managing the project team requires a variety of management skills for fostering teamwork and integrating the efforts of team members to create high-performance teams. Team management involves a combination of skills with special emphasis on communication, conflict management, negotiation, and leadership. Project managers should provide challenging assignments to team members and provide recognition for high performance.

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9.4.1 Manage Project team: Inputs

9.4.1.1 Human resource Management Plan

• Roles and responsibilities,

• Project organization, and

• Staffing management plan.

9.4.1.2 Project Staff Assignments

Described in Section 9.2.3.1. Project staff assignments provide documentation, which includes the list of project team members.

9.4.1.3 team Performance Assessments

Described in Section 9.3.3.1. The project management team makes ongoing formal or informal assessments of the project team’s performance. By continually assessing the project team’s performance, actions can be taken to resolve issues, modify communication, address conflict, and improve team interaction.

9.4.1.4 Issue Log

Issues arise in the course of managing the project team. An issue log can be used to document and monitor who is responsible for resolving specific issues by a target date.

9.4.1.5 Work Performance reports

Described in Section 4.4.3.2. Work performance reports provide documentation about the current project status compared to project forecasts. Performance areas that can help with project team management include results from schedule control, cost control, quality control, and scope validation. The information from performance reports and related forecasts assists in determining future human resource requirements, recognition and rewards, and updates to the staffing management plan.

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9.4.1.6 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Manage Project Team process include, but are not limited to:

• Certificates of appreciation,

• Newsletters,

• Websites,

• Bonus structures,

• Corporate apparel, and

• Other organizational perquisites.

9.4.2 Manage Project team: tools and techniques

9.4.2.1 observation and conversation

Observation and conversation are used to stay in touch with the work and attitudes of project team members. The project management team monitors progress toward project deliverables, accomplishments that are a source of pride for team members, and interpersonal issues.

9.4.2.2 Project Performance Appraisals

Objectives for conducting performance appraisals during the course of a project can include clarification of roles and responsibilities, constructive feedback to team members, discovery of unknown or unresolved issues, development of individual training plans, and the establishment of specific goals for future time periods.

The need for formal or informal project performance appraisals depends on the length of the project, complexity of the project, organizational policy, labor contract requirements, and the amount and quality of regular communication.

9.4.2.3 conflict Management

Conflict is inevitable in a project environment. Sources of conflict include scarce resources, scheduling priorities, and personal work styles. Team ground rules, group norms, and solid project management practices, like communication planning and role definition, reduce the amount of conflict.

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Successful conflict management results in greater productivity and positive working relationships. When managed properly, differences of opinion can lead to increased creativity and better decision making. If the differences become a negative factor, project team members are initially responsible for their resolution. If conflict escalates, the project manager should help facilitate a satisfactory resolution. Conflict should be addressed early and usually in private, using a direct, collaborative approach. If disruptive conflict continues, formal procedures may be used, including disciplinary actions.

The success of project managers in managing their project teams often depends a great deal on their ability to resolve conflict. Different project managers may utilize different conflict resolution methods. Factors that influence conflict resolution methods include:

• Relative importance and intensity of the conflict,

• Time pressure for resolving the conflict,

• Position taken by persons involved, and

• Motivation to resolve conflict on a long-term or a short-term basis.

There are five general techniques for resolving conflict. As each one has its place and use, these are not given in any particular order:

• Withdraw/Avoid. Retreating from an actual or potential conflict situation; postponing the issue to be better prepared or to be resolved by others.

• Smooth/Accommodate. Emphasizing areas of agreement rather than areas of difference; conceding one’s position to the needs of others to maintain harmony and relationships.

• compromise/reconcile. Searching for solutions that bring some degree of satisfaction to all parties in order to temporarily or partially resolve the conflict.

• Force/direct. Pushing one’s viewpoint at the expense of others; offering only win-lose solutions, usually enforced through a power position to resolve an emergency.

• collaborate/Problem Solve. Incorporating multiple viewpoints and insights from differing perspectives; requires a cooperative attitude and open dialogue that typically leads to consensus and commitment.

9.4.2.4 Interpersonal Skills

Project managers use a combination of technical, personal, and conceptual skills to analyze situations and interact appropriately with team members. Using appropriate interpersonal skills allows project managers to capitalize on the strengths of all team members.

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Examples of interpersonal skills that a project manager uses most often include:

• Leadership. Successful projects require strong leadership skills. Leadership is important through all phases of the project life cycle. There are multiple leadership theories defining leadership styles that should be used as needed for each situation or team. It is especially important to communicate the vision and inspire the project team to achieve high performance.

• Influencing. Because project managers often have little or no direct authority over team members in a matrix environment, their ability to influence stakeholders on a timely basis is critical to project success. Key influencing skills include:

○ Ability to be persuasive and clearly articulate points and positions;

○ High levels of active and effective listening skills;

○ Awareness of, and consideration for, the various perspectives in any situation; and

○ Gathering relevant and critical information to address important issues and reach agreements while maintaining mutual trust.

• Effective decision making. This involves the ability to negotiate and influence the organization and the project management team. Some guidelines for decision making include:

○ Focus on goals to be served,

○ Follow a decision-making process,

○ Study the environmental factors,

○ Analyze available information,

○ Develop personal qualities of the team members,

○ Stimulate team creativity, and

○ Manage risk.

9.4.3 Manage Project team: outputs

9.4.3.1 change requests

Staffing changes, whether by choice or by uncontrollable events, can affect the rest of the project management plan. When staffing issues disrupt the project team from adhering to the project management plan such as causing the schedule to be extended or the budget to be exceeded, a change request can be processed through the Perform Integrated Change Control process. Staffing changes may include moving people to different assignments, outsourcing some of the work, and replacing team members who leave.

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Preventive actions are those actions that are developed to reduce the probability and/or impact of problems before they occur. These actions may include cross training to reduce problems during project team member absences and additional role clarification to ensure all responsibilities are fulfilled.

9.4.3.2 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to, the human resource management plan.

9.4.3.3 Project documents updates

Project documents that may indirectly be updated include, but are not limited to:

• Issue log,

• Roles description, and

• Project staff assignments.

9.4.3.4 Enterprise Environmental Factors updates

Enterprise environmental factors that may require updates as a result of the Manage Project Team process include, but are not limited to:

• Input to organizational performance appraisals, and

• Personnel skill updates.

9.4.3.5 organizational Process Assets updates

Organizational process assets that may require updates as a result of the Manage Project Team process include, but are not limited to:

• Historical information and lessons learned documentation,

• Templates, and

• Organizational standard processes.

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Project coMMunicAtions MAnAGeMent Project Communications Management includes the processes that are required to ensure timely and appropriate

planning, collection, creation, distribution, storage, retrieval, management, control, monitoring, and the ultimate disposition of project information. Project managers spend most of their time communicating with team members and other project stakeholders, whether they are internal (at all organizational levels) or external to the organization. Effective communication creates a bridge between diverse stakeholders who may have different cultural and organizational backgrounds, different levels of expertise, and different perspectives and interests, which impact or have an influence upon the project execution or outcome.

Figure 10-1 provides an overview of the Project Communications Management processes, which are as follows:

10.1 Plan communications Management—The process of developing an appropriate approach and plan for project communications based on stakeholder’s information needs and requirements, and available organizational assets.

10.2 Manage communications—The process of creating, collecting, distributing, storing, retrieving and the ultimate disposition of project information in accordance with the communications management plan.

10.3 control communications—The process of monitoring and controlling communications throughout the entire project life cycle to ensure the information needs of the project stakeholders are met.

These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

The communication activities involved in these processes may often have many potential dimensions that need to be considered, including, but not limited to:

• Internal (within the project) and external (customer, vendors, other projects, organizations, the public);

• Formal (reports, minutes, briefings) and informal (emails, memos, ad-hoc discussions);

• Vertical (up and down the organization) and horizontal (with peers);

• Official (newsletters, annual report) and unofficial (off the record communications); and

• Written and oral, and verbal (voice inflections) and nonverbal (body language).

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Most communication skills are common for both general management and project management, such as, but not limited to:

• Listening actively and effectively;

• Questioning and probing ideas and situations to ensure better understanding;

• Educating to increase team’s knowledge so that they can be more effective;

• Fact-finding to identify or confirm information;

• Setting and managing expectations;

• Persuading a person, a team, or an organization to perform an action;

• Motivating to provide encouragement or reassurance;

• Coaching to improve performance and achieve desired results;

• Negotiating to achieve mutually acceptable agreements between parties;

• Resolving conflict to prevent disruptive impacts; and

• Summarizing, recapping, and identifying the next steps.

.1 Inputs .1 Project management plan .2 Stakeholder register .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Communication requirements analysis .2 Communication technology .3 Communication models .4 Communication methods .5 Meetings

.3 Outputs .1 Communications management plan .2 Project documents updates

.1 Inputs .1 Communications management plan .2 Work performance reports .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Communication technology .2 Communication models .3 Communication methods .4 Information management systems .5 Performance reporting

.3 Outputs .1 Project communications .3 Project management plan updates .2 Project documents updates .4 Organizational process assets updates

.1 Inputs .1 Project management plan .2 Project communications .3 Issue log .4 Work performance data .5 Organizational process assets

.2 Tools & Techniques .1 Information management systems .2 Expert judgment .3 Meetings

.3 Outputs .1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Project Communications Management Overview

10.2 Manage Communications

10.1 Plan Communications Management

10.3 Control Communications

Figure 10-1. Project communications Management overview

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10.1 Plan communications Management

Plan Communications Management is the process of developing an appropriate approach and plan for project communications based on stakeholder’s information needs and requirements, and available organizational assets. The key benefit of this process is that it identifies and documents the approach to communicate most effectively and efficiently with stakeholders. The inputs, tools and techniques, and outputs of this process are depicted in Figure 10-2. Figure 10-3 depicts the data flow diagram of the Plan Communications Management process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Stakeholder register

.3 Enterprise environmental factors .4 Organizational process assets

.1 Communication requirements analysis .2 Communication technology .3 Communication models .4 Communication methods .5 Meetings

.1 Communications management plan .2 Project documents updates

Figure 10-2. Plan communications Management: Inputs, tools & techniques, and outputs

Project Communications Management

10.1 Plan

Communications Management

10.2 Manage

Communications

• Stakeholder register • Communications

management plan

• Organizational process assets • Enterprise environmental factors

• Project management plan

• Project documents updates

4.2 Develop Project Management

Plan

13.3 Manage

Stakeholder Engagement

13.1 Identify

Stakeholders

Enterprise/ Organization

Project Documents

Figure 10-3. Plan communications Management data Flow diagram

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Planning the project communications is important to the ultimate success of any project. Inadequate communications planning may lead to problems such as delay in message delivery, communication of information to the wrong audience, or insufficient communication to the stakeholders and misunderstanding or misinterpretation of the message communicated.

On most projects, communication planning is performed very early, such as during project management plan development. This allows appropriate resources, such as time and budget, to be allocated to communication activities. Effective communication means that the information is provided in the right format, at the right time, to the right audience, and with the right impact. Efficient communication means providing only the information that is needed.

While all projects share the need to communicate project information, the information needs and methods of distribution may vary widely. In addition, the methods of storage, retrieval, and ultimate disposition of the project information need to be considered and appropriately documented during this process. Important considerations that may need to be taken into account include, but are not limited to:

• Who needs what information, and who is authorized to access that information;

• When they will need the information;

• Where the information should be stored;

• What format the information should be stored in;

• How the information can be retrieved; and

• Whether time zone, language barriers, and cross-cultural considerations need to be taken into account.

The results of the Plan Communications Management process should be reviewed regularly throughout the project and revised as needed to ensure continued applicability.

10.1.1 Plan communications Management: Inputs

10.1.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan provides information on how the project will be executed, monitored, controlled, and closed.

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10.1.1.2 Stakeholder register

Described in Section 13.1.3.1. The stakeholder register provides the information needed to plan the communication with project stakeholders.

10.1.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The Plan Communications Management process is tightly linked with enterprise environmental factors, since the structure of an organization will have a major effect on the project’s communication requirements. All enterprise environmental factors described in Section 2.1.5 are used as inputs for this process, since communications need to be adapted to the project environment.

10.1.1.4 organizational Process Assets

Described in Section 2.1.4. All organizational process assets described in Section 2.1.4 are used as inputs to the Plan Communications Management process. Of these, lessons learned and historical information are of particular importance because they can provide insights on both the decisions taken regarding communications issues and the results of those decisions in previous similar projects. These can be used as guiding information to plan the communication activities for the current project.

10.1.2 Plan communications Management: tools and techniques

10.1.2.1 communication requirements Analysis

The analysis of the communication requirements determines the information needs of the project stakeholders. These requirements are defined by combining the type and format of information needed with an analysis of the value of that information. Project resources should be expended only on communicating information that contributes to the success of the project or where a lack of communication can lead to failure.

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The project manager should also consider the number of potential communication channels or paths as an indicator of the complexity of a project’s communications. The total number of potential communication channels is n(n – 1)/2, where n represents the number of stakeholders. For example, a project with 10 stakeholders has 10(10 – 1)/2 = 45 potential communication channels. As a result, a key component of planning the project’s actual communications is to determine and limit who will communicate with whom and who will receive what information.

Sources of information typically used to identify and define project communication requirements include, but are not limited to:

• Organizational charts;

• Project organization and stakeholder responsibility relationships;

• Disciplines, departments, and specialties involved in the project;

• Logistics of how many persons will be involved with the project and at which locations;

• Internal information needs (e.g., when communicating within organizations);

• External information needs (e.g., when communicating with the media, public, or contractors); and

• Stakeholder information and communication requirements from within the stakeholder register.

10.1.2.2 communication technology

The methods used to transfer information among project stakeholders may vary significantly. For example, a project team may use techniques from brief conversations to extended meetings, or from simple written documents to extensive materials (e.g., schedules, databases, and websites), which are accessible online as methods of communication.

Factors that can affect the choice of communication technology include:

• urgency of the need for information. There is a need to consider the urgency, frequency, and format of the information to be communicated as they may vary from project to project and also within different stages of a project.

• Availability of technology. There is a need to ensure that the technology that is required to facilitate communication is compatible, available, and accessible for all stakeholders throughout the life of the project.

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• Ease of use. There is a need to ensure that the choice of communication technologies is suitable for project participants and that appropriate training events are planned for, where appropriate.

• Project environment. There is a need to determine if the team will meet and operate on a face-to-face basis or in a virtual environment; whether they will be located in one or multiple time zones; whether they will use multiple languages for communication; and finally, whether there are any other project environmental factors, such as culture, which may affect communications.

• Sensitivity and confidentiality of the information. There is a need to determine if the information to be communicated is sensitive or confidential and whether or not additional security measures need to be taken. Also, the most appropriate way to communicate the information should be considered.

10.1.2.3 communication Models

The communication models used to facilitate communications and the exchange of information may vary from project to project and also within different stages of the same project. A basic communication model, shown in Figure 10-4, consists of two parties, defined as the sender and receiver. Medium is the technology medium and includes the mode of communication while noise includes any interference or barriers that might compromise the delivery of the message. The sequence of steps in a basic communication model is:

• Encode. Thoughts or ideas are translated (encoded) into language by the sender.

• transmit Message. This information is then sent by the sender using communication channel (medium). The transmission of this message may be compromised by various factors (e.g., distance, unfamiliar technology, inadequate infrastructure, cultural difference, and lack of background information). These factors are collectively termed as noise.

• decode. The message is translated by the receiver back into meaningful thoughts or ideas.

• Acknowledge. Upon receipt of a message, the receiver may signal (acknowledge) receipt of the message but this does not necessarily mean agreement with or comprehension of the message.

• Feedback/response. When the received message has been decoded and understood, the receiver encodes thoughts and ideas into a message and then transmits this message to the original sender.

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Sender

Encode

Decode

Receiver

Decode

Encode

Transmit Message

Feedback MessageNoise

Medium

Noise

Acknowledge Message

Figure 10-4. Basic communication Model

The components of the basic communication model need to be considered when project communications are discussed. As part of the communications process, the sender is responsible for the transmission of the message, ensuring the information being communicated is clear and complete, and confirming the communication is correctly understood. The receiver is responsible for ensuring that the information is received in its entirety, understood correctly, and acknowledged or responded to appropriately.

There are many challenges in using these components to effectively communicate with project stakeholders, such as in a highly technical, multinational project team. Successful communication of a technical concept from one team member to another team member in a different country could involve encoding the message in the appropriate language, sending the message using a variety of technologies, and having the receiver decode the message into his or her native language and then reply or provide feedback. Any noise introduced along the way may compromise the original meaning of the message. In this example, there are multiple factors that may lead to the intended meaning of the message being misunderstood or misinterpreted.

10.1.2.4 communication Methods

There are several communication methods that are used to share information among project stakeholders. These methods are broadly classified as follows:

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• Interactive communication. Between two or more parties performing a multidirectional exchange of information. It is the most efficient way to ensure a common understanding by all participants on specified topics, and includes meetings, phone calls, instant messaging, video conferencing, etc.

• Push communication. Sent to specific recipients who need to receive the information. This ensures that the information is distributed but does not ensure that it actually reached or was understood by the intended audience. Push communications include letters, memos, reports, emails, faxes, voice mails, blogs, press releases, etc.

• Pull communication. Used for very large volumes of information, or for very large audiences, and requires the recipients to access the communication content at their own discretion. These methods include intranet sites, e-learning, lessons learned databases, knowledge repositories, etc.

The choices of communication methods that are used for a project may need to be discussed and agreed upon by the project stakeholders based on communication requirements; cost and time constraints; and familiarity and availability of the required tools and resources that may be applicable to the communications process.

10.1.2.5 Meetings

Described in Section 4.3.2.3. The Plan Communications Management process requires discussion and dialogue with the project team to determine the most appropriate way to update and communicate project information, and to respond to requests from various stakeholders for that information. These discussions and dialogue are commonly facilitated through meetings, which may be conducted face to face or online and in different locations, such as the project site or the customer’s site.

There are several types of project-related meetings where project communications may occur. Most project meetings consist of stakeholders coming together for the purpose of resolving problems or making decisions. Although casual discussions may be construed as a meeting, most project meetings are more formal with a prearranged time, place, and agenda. Typical meetings begin with a defined list of issues to be discussed, which are circulated in advance with minutes and other information documented specifically for the meeting. This information is then disseminated to other appropriate stakeholders on an as-needed basis.

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10.1.3 Plan communications Management: outputs

10.1.3.1 communications Management Plan

The communications management plan is a component of the project management plan that describes how project communications will be planned, structured, monitored, and controlled. The plan contains the following information:

• Stakeholder communication requirements;

• Information to be communicated, including language, format, content, and level of detail;

• Reason for the distribution of that information;

• Time frame and frequency for the distribution of required information and receipt of acknowledgment or response, if applicable;

• Person responsible for communicating the information;

• Person responsible for authorizing release of confidential information;

• Person or groups who will receive the information;

• Methods or technologies used to convey the information, such as memos, e-mail, and/or press releases;

• Resources allocated for communication activities, including time and budget;

• Escalation process identifying time frames and the management chain (names) for escalation of issues that cannot be resolved at a lower staff level;

• Method for updating and refining the communications management plan as the project progresses and develops;

• Glossary of common terminology;

• Flow charts of the information flow in the project, workflows with possible sequence of authorization, list of reports, and meeting plans, etc.; and

• Communication constraints usually derived from a specific legislation or regulation, technology, and organizational policies, etc.

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The communications management plan can also include guidelines and templates for project status meetings, project team meetings, e-meetings, and e-mail messages. The use of a project website and project management software can also be included if these are to be used in the project.

10.1.3.2 Project documents updates

Project documents that may be updated include, but are not limited to:

• Project schedule, and

• Stakeholder register.

10.2 Manage communications

Manage Communications is the process of creating, collecting, distributing, storing, retrieving, and the ultimate disposition of project information in accordance to the communications management plan. The key benefit of this process is that it enables an efficient and effective communications flow between project stakeholders. The inputs, tools and techniques, and outputs of this process are depicted in Figure 10-5. Figure 10-6 depicts the data flow diagram of the Manage Communications process.

Inputs Tools & Techniques Outputs

.1 Communications management plan .2 Work performance reports .3 Enterprise environmental factors .4 Organizational process assets

.1 Communication technology .2 Communication models .3 Communication methods .4 Information management systems .5 Performance reporting

.1 Project communications

.3 Project management plan updates .2 Project documents updates .4 Organizational process assets updates

Figure 10-5. Manage communications: Inputs, tools & techniques, and outputs

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Project Communications Management

10.2 Manage

Communications

10.1 Plan

Communications Management

10.3 Control

Communications

• Organizational process assets updates

• Communications management plan

• Project documents updates

• Project communications

• Enterprise environmental factors • Organizational process assets

• Work performance reports

• Project management plan updates

4.2 Develop Project Management

Plan

4.4 Monitor and

Control Project Work

Enterprise/ Organization

Project Documents

Figure 10-6. Manage communications data Flow diagram

This process goes beyond the distribution of relevant information and seeks to ensure that the information being communicated to project stakeholders has been appropriately generated, as well as received and understood. It also provides opportunities for stakeholders to make requests for further information, clarification, and discussion. Techniques and considerations for effective communications management include, but are not limited to, the following:

• Sender-receiver models. Incorporating feedback loops to provide opportunities for interaction/ participation and remove barriers to communication.

• choice of media. Situation specifics as to when to communicate in writing versus orally, when to prepare an informal memo versus a formal report, and when to communicate face to face versus by e-mail.

• Writing style. Appropriate use of active versus passive voice, sentence structure, and word choice.

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• Meeting management techniques. Preparing an agenda and dealing with conflicts.

• Presentation techniques. Awareness of the impact of body language and design of visual aids.

• Facilitation techniques. Building consensus and overcoming obstacles.

• Listening techniques. Listening actively (acknowledging, clarifying, and confirming understanding) and removal of barriers that adversely affect comprehension.

10.2.1 Manage communications: Inputs

10.2.1.1 communications Management Plan

Described in Section 10.1.3.1. The communications management plan describes how project communications will be planned, structured, monitored, and controlled.

10.2.1.2 Work Performance reports

Described in Section 4.4.3.2. Work performance reports are a collection of project performance and status information that may be used to facilitate discussion and to create communications. To optimize this process, it is important that reports be comprehensive, accurate, and available in a timely manner.

10.2.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. Specific enterprise environmental factors that can influence the Manage Communications process include, but are not limited to:

• Organizational culture and structure,

• Government or industry standards and regulations, and

• Project management information system.

10.2.1.4 organizational Process Assets

Described in Section 2.1.4. Organizational process assets that can influence the Manage Communications process include, but are not limited to:

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• Policies, procedures, processes, and guidelines regarding communications management;

• Templates; and

• Historical information and lessons learned.

10.2.2 Manage communications: tools and techniques

10.2.2.1 communication technology

Described in Section 10.1.2.2. The choice of communication technology is an important consideration in the Manage Communications process. As this can vary significantly from project to project and also throughout the life of a project, the focus is to ensure that the choice is appropriate for the information that is being communicated.

10.2.2.2 communication Models

Described in Section 10.1.2.3. The choice of communication models is an important consideration in this process. As the components in the communications all contribute toward an effective and efficient communications process, the focus is to ensure that the choice of the communication model is appropriate for the project that is undertaken and that any barriers (noise) are identified and managed.

10.2.2.3 communication Methods

Described in Section 10.1.2.4. The choice of communication methods is an important consideration in this process. As there can be many potential barriers and challenges during this process, the focus is to ensure that the information that has been created and distributed has been received and understood to enable response and feedback.

10.2.2.4 Information Management Systems

Project information is managed and distributed using a variety of tools, including:

• Hard-copy document management: letters, memos, reports, and press releases;

• Electronic communications management: e-mail, fax, voice mail, telephone, video and web conferencing, websites, and web publishing; and

• Electronic project management tools: web interfaces to scheduling and project management software, meeting and virtual office support software, portals, and collaborative work management tools.

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10.2.2.5 Performance reporting

Performance reporting is the act of collecting and distributing performance information, including status reports, progress measurements, and forecasts. Performance reporting involves the periodic collection and analysis of baseline versus actual data to understand and communicate the project progress and performance as well as to forecast the project results.

Performance reporting needs to provide information at an appropriate level for each audience. The format may range from a simple status report to more elaborate reports and may be prepared regularly or on an exception basis. A simple status report might show performance information, such as percent complete or status dashboards for each area (i.e., scope, schedule, cost, and quality). More elaborate reports may include:

• Analysis of past performance,

• Analysis of project forecasts (including time and cost),

• Current status of risks and issues,

• Work completed during the period,

• Work to be completed in the next period,

• Summary of changes approved in the period, and

• Other relevant information, which is reviewed and discussed.

10.2.3 Manage communications: outputs

10.2.3.1 Project communications

The Manage Communications process involves the activities that are required for information to be created, distributed, received, acknowledged, and understood. Project communications may include but are not limited to: performance reports, deliverables status, schedule progress, and cost incurred. Project communications can vary significantly and are influenced by factors such as, but not limited to, the urgency and impact of the message, its method of delivery, and level of confidentiality.

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10.2.3.2 Project Management Plan updates

The project management plan provides information on project baselines, communications management, and stakeholder management. Each of these areas may require updates based upon the current performance of the project against the performance measurement baseline (PMB). The performance measurement baseline is an approved plan for the project work to which the project execution is compared, and deviations are measured for management control. The performance measurement baseline typically integrates scope, schedule, and cost parameters of a project, but may also include technical and quality parameters.

10.2.3.3 Project documents updates

Project documents that may be updated include, but are not limited to:

• Issue log,

• Project schedule, and

• Project funding requirements.

10.2.3.4 organizational Process Assets updates

The organizational process assets, which may be updated include, but are not limited to:

• Stakeholder notifications. Information may be provided to stakeholders about resolved issues, approved changes, and general project status.

• Project reports. Formal and informal project reports describe project status and include lessons learned, issue logs, project closure reports, and outputs from other Knowledge Areas (Sections 4-13).

• Project presentations. The project team provides information formally or informally to any or all of the project stakeholders. The information and presentation method should be relevant to the needs of the audience.

• Project records. Project records may include correspondence, memos, meeting minutes, and other documents describing the project. This information should, to the extent possible and appropriate, be maintained in an organized manner. Project team members can also maintain records in a project notebook or register, which could be physical or electronic.

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• Feedback from stakeholders. Information received from stakeholders concerning project operations is distributed and used to modify or improve future performance of the project.

• Lessons learned documentation. Documentation includes the causes of issues, reasoning behind the corrective action chosen, and other types of lessons learned about communications management. Lessons learned need to be documented and distributed so that it becomes part of the historical database for both the project and the performing organization.

10.3 control communications

Control Communications is the process of monitoring and controlling communications throughout the entire project life cycle to ensure the information needs of the project stakeholders are met. The key benefit of this process is that it ensures an optimal information flow among all communication participants, at any moment in time. The inputs, tools and techniques, and outputs of this process are depicted in Figure 10-7. Figure 10-8 depicts the data flow diagram of the Control Communications process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Project communications

.3 Issue log

.4 Work performance data

.5 Organizational process assets

.1 Information management systems .2 Expert judgment .3 Meetings

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure 10-7. control communications: Inputs, tools & techniques, and outputs

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Project Communications Management

10.2 Manage

Communications

• Organizational process assets updates

• Project communications

• Project documents updates

• Change requests

• Organizational process assets

• Work performance data

• Issue log

• Project management plan

• Project management plan updates

• Work performance information

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

4.2 Develop Project Management

Plan

4.3 Direct and

Manage Project Work

13.3 Manage

Stakeholder Engagement

10.3 Control

Communications

Enterprise/ Organization

Project Documents

Figure 10-8. control communications data Flow diagram

The Control Communications process can trigger an iteration of the Plan Communications Management and/or Manage Communications processes. This iteration illustrates the continuous nature of the Project Communications Management processes. Specific communication elements, such as issues or key performance indicators (e.g., actual vs. planned schedule, cost, and quality), may trigger an immediate revision, while others may not. The impact and repercussions of project communications should be carefully evaluated and controlled to ensure that the right message is delivered to the right audience at the right time.

10.3.1 control communications: Inputs

10.3.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan describes how the project will be executed, monitored, controlled, and closed. It provides valuable information for the Control Communications process such as, but not limited to:

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• Stakeholder communication requirements,

• Reason for the distribution of the information,

• Timeframe and frequency for the distribution of required information,

• Individual or group responsible for communication of the information, and

• Individual or group receiving the information.

10.3.1.2 Project communications

Described in Section 10.2.3.1. The Control Communications process involves the activities that are required for information and communications to be monitored, acted upon, and released to stakeholders. Project communications come from multiple sources and may vary significantly in their format, level of detail, degree of formality and confidentiality. Project communications may include but are not limited to:

• Deliverables status,

• Schedule progress, and

• Costs incurred.

10.3.1.3 Issue Log

Described in Section 13.3.3.1. An issue log is used to document and monitor the resolution of issues. It may be used to facilitate communication and ensure a common understanding of issues. A written log documents and helps to monitor who is responsible for resolving specific issues by a target date. Issue resolution addresses obstacles that can block the team from achieving its goals. This information is important to the Control Communications process as it provides both a repository for what has already happened in the project and a platform for subsequent communications to be delivered.

10.3.1.4 Work Performance data

Described in Section 4.3.3.2. Work performance data organizes and summarizes the information gathered, and presents the results of comparative analysis to the performance measurement baseline.

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10.3.1.5 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that may influence the Control Communications process include, but are not limited to:

• Report templates;

• Policies, standards, and procedures that define communications;

• Specific communication technologies available;

• Allowed communication media;

• Record retention policies; and

• Security requirements.

10.3.2 control communications: tools and techniques

10.3.2.1 Information Management Systems

An information management system provides a set of standard tools for the project manager to capture, store, and distribute information to stakeholders about the project’s costs, schedule progress, and performance. Some software packages allow the project manager to consolidate reports from several systems and facilitate report distribution to the project stakeholders. Examples of distribution formats may include table reporting, spreadsheet analysis, and presentations. Graphic capabilities can be used to create visual representations of project performance information.

10.3.2.2 Expert Judgment

Expert judgment is often relied upon by the project team to assess the impact of the project communications, need for action or intervention, actions that should be taken, responsibility for taking such actions, and the timeframe for taking action. Expert judgment may need to be applied to technical and/or management details and may be provided by any group or individual with specialized knowledge or training, such as:

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• Other units within the organization,

• Consultants,

• Stakeholders, including customers or sponsors,

• Professional and technical associations,

• Industry groups,

• Subject matter experts, and

• Project management office (PMO).

The project manager, in collaboration with the project team, then determines the actions required to ensure that the right message is communicated to the right audience at the right time.

10.3.2.3 Meetings

The Control Communications process requires discussion and dialogue with the project team to determine the most appropriate way to update and communicate project performance, and to respond to requests from stakeholders for information. These discussions and dialogues are commonly facilitated through meetings, which may be conducted face to face or online and in different locations, such as the project site or the client’s site. Project meetings also include discussions and dialog with suppliers, vendors, and other project stakeholders.

10.3.3 control communications: outputs

10.3.3.1 Work Performance Information

Described in Section 4.4.1.5. Work performance information organizes and summarizes the performance data gathered. This performance data typically provides status and progress information on the project at the level of detail required by the various stakeholders. This information is then communicated to the appropriate stakeholders.

10.3.3.2 change requests

Described in Section 4.3.3.3. The Control Communications process often results in the need for adjustment, action, and intervention. As a result, change requests will be generated as an output. These change requests are processed through the Perform Integrated Change Control process (Section 4.5) and may result in:

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• New or revised cost estimates, activity sequences, schedule dates, resource requirements, and analysis of risk response alternatives;

• Adjustments to the project management plan and documents;

• Recommendations of corrective actions that may bring the expected future performance of the project back in line with the project management plan; and

• Recommendations of preventive actions that may reduce the probability of incurring future negative project performance.

10.3.3.3 Project Management Plan updates

Control Communications process may trigger updates to the communications management plan as well as other components of the project management plan (e.g. stakeholders and human resource management plans).

10.3.3.4 Project documents updates

Project documents may be updated as a result of the Control Communications process. These updates may include, but are not limited to:

• Forecasts,

• Performance reports, and

• Issue log.

10.3.3.5 organizational Process Assets updates

The organizational process assets that may be updated include, but are not limited to, report formats and lessons learned documentation. This documentation may become part of the historical database for both this project and the performing organization and may include the causes of issues, reasons behind the corrective action chosen, and other types of lessons learned during the project.

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Project risK MAnAGeMent Project Risk Management includes the processes of conducting risk management planning, identification,

analysis, response planning, and controlling risk on a project. The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.

Figure 11-1 provides an overview of the Project Risk Management processes, which are as follows:

11.1 Plan risk Management—The process of defining how to conduct risk management activities for a project.

11.2 Identify risks—The process of determining which risks may affect the project and documenting their characteristics.

11.3 Perform Qualitative risk Analysis—The process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact.

11.4 Perform Quantitative risk Analysis—The process of numerically analyzing the effect of identified risks on overall project objectives.

11.5 Plan risk responses—The process of developing options and actions to enhance opportunities and to reduce threats to project objectives.

11.6 control risks—The process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.

These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

1111

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Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives such as scope, schedule, cost, and quality. A risk may have one or more causes and, if it occurs, it may have one or more impacts. A cause may be a given or potential requirement, assumption, constraint, or condition that creates the possibility of negative or positive outcomes. For example, causes could include the requirement of an environmental permit to do work, or having limited personnel assigned to design the project. The risk is that the permitting agency may take longer than planned to issue a permit; or, in the case of an opportunity, additional development personnel may become available who can participate in design, and they can be assigned to the project. If either of these uncertain events occurs, there may be an impact on the project, scope, cost, schedule, quality, or performance. Risk conditions may include aspects of the project’s or organization’s environment that contribute to project risk, such as immature project management practices, lack of integrated management systems, concurrent multiple projects, or dependency on external participants who are outside the project’s direct control.

Project risk has its origins in the uncertainty present in all projects. Known risks are those that have been identified and analyzed, making it possible to plan responses for those risks. Known risks that cannot be managed proactively, should be assigned a contingency reserve. Unknown risks cannot be managed proactively and therefore may be assigned a management reserve. A negative project risk that has occurred is considered an issue.

Individual project risks are different from overall project risk. Overall project risk represents the effect of uncertainty on the project as a whole. It is more than the sum of the individual risks within a project, since it includes all sources of project uncertainty. It represents the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.

Organizations perceive risk as the effect of uncertainty on projects and organizational objectives. Organizations and stakeholders are willing to accept varying degrees of risk depending on their risk attitude. The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three themes:

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• Risk appetite, which is the degree of uncertainty an entity is willing to take on in anticipation of a reward.

• Risk tolerance, which is the degree, amount, or volume of risk that an organization or individual will withstand.

• Risk threshold, which refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest. Below that risk threshold, the organization will accept the risk. Above that risk threshold, the organization will not tolerate the risk.

For example, an organization’s risk attitude may include its appetite for uncertainty, its threshold for risk levels that are unacceptable, or its risk tolerance at which point the organization may select a different risk response.

Positive and negative risks are commonly referred to as opportunities and threats. The project may be accepted if the risks are within tolerances and are in balance with the rewards that may be gained by taking the risks. Positive risks that offer opportunities within the limits of risk tolerances may be pursued in order to generate enhanced value. For example, adopting an aggressive resource optimization technique is a risk taken in anticipation of a reward for using fewer resources.

Individuals and groups adopt attitudes toward risk that influence the way they respond. These risk attitudes are driven by perception, tolerances, and other biases, which should be made explicit wherever possible. A consistent approach to risk should be developed for each project, and communication about risk and its handling should be open and honest. Risk responses reflect an organization’s perceived balance between risk taking and risk avoidance.

To be successful, an organization should be committed to address risk management proactively and consistently throughout the project. A conscious choice should be made at all levels of the organization to actively identify and pursue effective risk management during the life of the project. Project risk could exist at the moment a project is initiated. Moving forward on a project without a proactive focus on risk management is likely to lead to more problems arising from unmanaged threats.

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.1 Inputs .1 Project management plan .2 Project charter .3 Stakeholder register .4 Enterprise environmental factors .5 Organizational process assets

.2 Tools & Techniques .1 Analytical techniques .2 Expert judgment .3 Meetings

.3 Outputs .1 Risk management plan

.1 Inputs .1 Risk management plan .2 Cost management plan .3 Schedule management plan .4 Quality management plan .5 Human resource management plan .6 Scope baseline .7 Activity cost estimates .8 Activity duration estimates .9 Stakeholder register .10 Project documents .11 Procurement documents .12 Enterprise environmental factors .13 Organizational process assets

.2 Tools & Techniques .1 Documentation reviews .2 Information gathering techniques .3 Checklist analysis .4 Assumptions analysis .5 Diagramming techniques .6 SWOT analysis .7 Expert judgment

. 3 Outputs .1 Risk register

.1 Inputs .1 Risk management plan .2 Scope baseline .3 Risk register .4 Enterprise environmental factors .5 Organizational process assets

.2 Tools & Techniques .1 Risk probability and impact assessment .2 Probability and impact matrix .3 Risk data quality assessment .4 Risk categorization .5 Risk urgency assessment .6 Expert judgment

.3 Outputs .1 Project documents updates

.1 Inputs .1 Risk management plan .2 Cost management plan .3 Schedule management plan .4 Risk register .5 Enterprise environmental factors .6 Organizational process assets

.2 Tools & Techniques .1 Data gathering and representation techniques .2 Quantitative risk analysis and modeling techniques .3 Expert judgment

.3 Outputs .1 Project documents updates

Project Risk Management Overview

11.2 Identify Risks11.1 Plan Risk Management 11.3 Perform Qualitative

Risk Analysis

.1 Inputs .1 Risk management plan .2 Risk register

.2 Tools & Techniques .1 Strategies for negative risks or threats .2 Strategies for positive risks or opportunities .3 Contingent response strategies .4 Expert judgment

.3 Outputs .1 Project management plan updates .2 Project documents updates

.1 Inputs .1 Project management plan .2 Risk register .3 Work performance data .4 Work performance reports

.2 Tools & Techniques .1 Risk reassessment .2 Risk audits .3 Variance and trend analysis .4 Technical performance measurement .5 Reserve analysis .6 Meetings

.3 Outputs .1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

11.5 Plan Risk Responses

11.6 Control Risks

11.4 Perform Quantitative Risk Analysis

Figure 11-1. Project risk Management overview

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11.1 Plan risk Management

Plan Risk Management is the process of defining how to conduct risk management activities for a project. The key benefit of this process is it ensures that the degree, type, and visibility of risk management are commensurate with both the risks and the importance of the project to the organization. The risk management plan is vital to communicate with and obtain agreement and support from all stakeholders to ensure the risk management process is supported and performed effectively over the project life cycle. The inputs, tools and techniques, and outputs of this process are depicted in Figure 11-2. Figure 11-3 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Project charter

.3 Stakeholder register

.4 Enterprise environmental factors .5 Organizational process assets

.1 Analytical techniques

.2 Expert judgment

.3 Meetings

.1 Risk management plan

Figure 11-2. Plan risk Management: Inputs, tools & techniques, and outputs

Project Risk Management

11.1 Plan Risk

Management

• Project charter

• Stakeholder register

• Enterprise environmental factors • Organizational process assets

• Risk management plan

• Project management plan

4.2 Develop Project Management

Plan

11.2 Identify Risks

11.3 Perform

Qualitative Risk Analysis

11.4 Perform

Quantitative Risk Analysis

11.5 Plan Risk

Responses

13.1 Identify

Stakeholders

4.1 Develop Project

Charter

Enterprise/ Organization

Figure 11-3. Plan risk Management data Flow diagram

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Careful and explicit planning enhances the probability of success for other risk management processes. Planning is also important to provide sufficient resources and time for risk management activities and to establish an agreed- upon basis for evaluating risks. The Plan Risk Management process should begin when a project is conceived and should be completed early during project planning.

11.1.1 Plan risk Management: Inputs

11.1.1.1 Project Management Plan

In planning risk management, all approved subsidiary management plans and baselines should be taken into consideration in order to make the risk management plan consistent with them. The risk management plan is also a component of the project management plan. The project management plan provides baseline or current state of risk-affected areas including scope, schedule, and cost.

11.1.1.2 Project charter

Described in Section 4.1.3.1. The project charter can provide various inputs such as high-level risks, high-level project descriptions, and high-level requirements.

11.1.1.3 Stakeholder register

Described in Section 13.1.3.1. The stakeholder register, which contains all details related to the project’s stakeholders, provides an overview of their roles.

11.1.1.4 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Plan Risk Management process include, but are not limited to, risk attitudes, thresholds, and tolerances that describe the degree of risk that an organization will withstand.

11.1.1.5 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Plan Risk Management process include, but are not limited to:

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• Risk categories,

• Common definitions of concepts and terms,

• Risk statement formats,

• Standard templates,

• Roles and responsibilities,

• Authority levels for decision making, and

• Lessons learned.

11.1.2 Plan risk Management: tools and techniques

11.1.2.1 Analytical techniques

Analytical techniques are used to understand and define the overall risk management context of the project. Risk management context is a combination of stakeholder risk attitudes and the strategic risk exposure of a given project based on the overall project context. For example, a stakeholder risk profile analysis may be performed to grade and qualify the project stakeholder risk appetite and tolerance. Other techniques, such as the use of strategic risk scoring sheets, are used to provide a high-level assessment of the risk exposure of the project based on the overall project context. Depending on these assessments, the project team can allocate appropriate resources and focus on the risk management activities.

11.1.2.2 Expert Judgment

To ensure a comprehensive establishment of the risk management plan, judgment, and expertise should be considered from groups or individuals with specialized training or knowledge on the subject area, such as:

• Senior management,

• Project stakeholders,

• Project managers who have worked on projects in the same area (directly or through lessons learned),

• Subject matter experts (SMEs) in business or project area,

• Industry groups and consultants, and

• Professional and technical associations.

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11.1.2.3 Meetings

Project teams hold planning meetings to develop the risk management plan. Attendees at these meetings may include the project manager, selected project team members and stakeholders, anyone in the organization with responsibility to manage the risk planning and execution activities, and others, as needed.

High-level plans for conducting the risk management activities are defined in these meetings. Risk management cost elements and schedule activities should be developed for inclusion in the project budget and schedule, respectively. Risk contingency reserve application approaches may be established or reviewed. Risk management responsibilities should be assigned. General organizational templates for risk categories and definitions of terms such as levels of risk, probability by type of risk, impact by type of objectives, and the probability and impact matrix will be tailored to the specific project. If templates for other steps in the process do not exist, they may be generated in these meetings. The outputs of these activities are summarized in the risk management plan.

11.1.3 Plan risk Management: outputs

11.1.3.1 risk Management Plan

The risk management plan is a component of the project management plan and describes how risk management activities will be structured and performed. The risk management plan includes the following:

• Methodology. Defines the approaches, tools, and data sources that will be used to perform risk management on the project.

• roles and responsibilities. Defines the lead, support, and risk management team members for each type of activity in the risk management plan, and clarifies their responsibilities.

• Budgeting. Estimates funds needed, based on assigned resources, for inclusion in the cost baseline and establishes protocols for application of contingency and management reserves.

• timing. Defines when and how often the risk management processes will be performed throughout the project life cycle, establishes protocols for application of schedule contingency reserves, and establishes risk management activities for inclusion in the project schedule.

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• risk categories. Provide a means for grouping potential causes of risk. Several approaches can be used, for example, a structure based on project objectives by category. A risk breakdown structure (RBS) helps the project team to look at many sources from which project risk may arise in a risk identification exercise. Different RBS structures will be appropriate for different types of projects. An organization can use a previously prepared custom categorization framework, which may take the form of a simple list of categories or may be structured into an RBS. The RBS is a hierarchical representation of risks according to their risk categories. An example is shown in Figure 11-4.

Beta and triangular distributions are frequently used in quantitative risk analysis. The data shown in the figure on the left (Beta Distribution) is one example of a family of such distributions determined by two "shape parameters". Other commonly used distributions include the uniform, normal and lognormal. In these charts the horizontal (X) axes represent possible values of time or cost and the vertical (Y) axes represent relative likelihood.

Beta Distribution Triangular Distribution

0.1

0.0

0.1

0.0

Figure 11-4. Example of a risk Breakdown Structure (rBS)

• definitions of risk probability and impact. The quality and credibility of the risk analysis requires that different levels of risk probability and impact be defined that are specific to the project context. General definitions of probability levels and impact levels are tailored to the individual project during the Plan Risk Management process for use in subsequent processes. Table 11-1 is an example of definitions of negative impacts that could be used in evaluating risk impacts related to four project objectives. (Similar tables may be established with a positive impact perspective). Table 11-1 illustrates both relative and numerical (in this case, nonlinear) approaches.

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table 11-1. definition of Impact Scales for Four Project objectives

•

Defined Conditions for Impact Scales of a Risk on Major Project Objectives (Examples are shown for negative impacts only)

Relative or numerical scales are shown

This table presents examples of risk impact definitions for four different project objectives. They should be tailored in the Risk Management Planning process to the individual project and to the organization's risk thresholds. Impact definitions can be developed for opportunities in a similar way.

Project Objective

Cost

Time

Scope

Quality

Very low /0.05 Low /0.10 Moderate /0.20 High /0.40 Very high /0.80

Insignificant cost increase

Insignificant time increase

Scope decrease barely noticeable

Quality degradation barely noticeable

< 10% cost increase

< 5% time increase

Minor areas of scope affected

Only very demanding applications are affected

10 – 20% cost increase

5 – 10% time increase

Major areas of scope affected

Quality reduction requires sponsor

approval

20 – 40% cost increase

10 – 20% time increase

Scope reduction unacceptable to

sponsor

Quality reduction unacceptable to

sponsor

> 40% cost increase

> 20% time increase

Project end item is effectively

useless

Project end item is effectively

useless

Probability and impact matrix. A probability and impact matrix is a grid for mapping the probability of each risk occurrence and its impact on project objectives if that risk occurs. Risks are prioritized according to their potential implications for having an effect on the project’s objectives. A typical approach to prioritizing risks is to use a look-up table or a probability and impact matrix. The specific combinations of probability and impact that lead to a risk being rated as “high,” “moderate,” or “low” importance are usually set by the organization.

• revised stakeholders’ tolerances. Stakeholders’ tolerances, as they apply to the specific project, may be revised in the Plan Risk Management process.

• reporting formats. Reporting formats define how the outcomes of the risk management process will be documented, analyzed, and communicated. It describes the content and format of the risk register as well as any other risk reports required.

• tracking. Tracking documents how risk activities will be recorded for the benefit of the current project and how risk management processes will be audited.

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11.2 Identify risks

Identify Risks is the process of determining which risks may affect the project and documenting their characteristics. The key benefit of this process is the documentation of existing risks and the knowledge and ability it provides to the project team to anticipate events. The inputs, tools and techniques, and outputs of this process are depicted in Figure 11-5. Figure 11-6 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Risk management plan .2 Cost management plan .3 Schedule management plan .4 Quality management plan .5 Human resource management plan .6 Scope baseline .7 Activity cost estimates .8 Activity duration estimates .9 Stakeholder register .10 Project documents .11 Procurement documents .12 Enterprise environmental factors .13 Organizational process assets

.1 Documentation reviews

.2 Information gathering techniques .3 Checklist analysis .4 Assumptions analysis .5 Diagramming techniques .6 SWOT analysis .7 Expert judgment

.1 Risk register

Figure 11-5. Identify risks: Inputs, tools & techniques, and outputs

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• Risk management plan

• Risk register

• Scope baseline

• Schedule management plan

• Activity duration estimates

• Cost management plan

• Activity cost estimates

• Quality management plan

• Human resource management plan

• Procurement documents

• Stakeholder register

Project Risk Management

• Organizational process assets

• Enterprise environmental factors

7.2 Estimate

Costs

8.1 Plan Quality Management

12.1 Plan

Procurement Management

Project Documents

5.4 Create WBS

7.1 Project Cost Management

8.1 Plan Quality Management

6.5 Estimate

Activity Durations

6.1 Plan Schedule Management

12.1 Plan Procurement

Management

13.1 Identify

Stakeholders

9.1 Plan Human Resource

Management

Enterprise/ Organization

11.2 Identify Risks

11.3 Perform

Qualitative Risk Analysis

11.5 Plan Risk

Responses

11.4 Perform

Quantitative Risk Analysis

11.6 Control Risks

11.1 Plan Risk

Management

7.2 Estimate Costs

Figure 11-6. Identify risks data Flow diagram

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Participants in risk identification activities may include the following: project manager, project team members, risk management team (if assigned), customers, subject matter experts from outside the project team, end users, other project managers, stakeholders, and risk management experts. While these personnel are often key participants for risk identification, all project personnel should be encouraged to identify potential risks.

Identify risks is an iterative process, because new risks may evolve or become known as the project progresses through its life cycle. The frequency of iteration and participation in each cycle will vary by situation. The format of the risk statements should be consistent to ensure that each risk is understood clearly and unambiguously in order to support effective analysis and response development. The risk statement should support the ability to compare the relative effect of one risk against others on the project. The process should involve the project team so they can develop and maintain a sense of ownership and responsibility for the risks and associated risk response actions. Stakeholders outside the project team may provide additional objective information.

11.2.1 Identify risks: Inputs

11.2.1.1 risk Management Plan

Described in Section 11.1.3.1. Key elements of the risk management plan that contribute to the Identify Risks process are the assignments of roles and responsibilities, provision for risk management activities in the budget and schedule, and categories of risk, which are sometimes expressed as a risk breakdown structure (Figure 11-4).

11.2.1.2 cost Management Plan

Described in Section 7.1.3.1. The cost management plan provides processes and controls that can be used to help identify risks across the project.

11.2.1.3 Schedule Management Plan

Described in Section 6.1.3.1. The schedule management plan provides insight to project time/schedule objectives and expectations which may be impacted by risks (known and unknown).

11.2.1.4 Quality Management Plan

Described in Section 8.1.3.1. The quality management plan provides a baseline of quality measures and metrics for use in identifying risks.

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11.2.1.5 Human resource Management Plan

Described in Section 9.1.3.1. The human resource management plan provides guidance on how project human resources should be defined, staffed, managed, and eventually released. It can also contain roles and responsibilities, project organization charts, and the staffing management plan, which form a key input to identify risk process.

11.2.1.6 Scope Baseline

Described in Section 5.4.3.1. Project assumptions are found in the project scope statement. Uncertainty in project assumptions should be evaluated as potential causes of project risk.

The WBS is a critical input to identifying risks as it facilitates an understanding of the potential risks at both the micro and macro levels. Risks can be identified and subsequently tracked at summary, control account, and/or work package levels.

11.2.1.7 Activity cost Estimates

Described in Section 7.2.3.1. Activity cost estimate reviews are useful in identifying risks as they provide a quantitative assessment of the likely cost to complete scheduled activities and ideally are expressed as a range, with the width of the range indicating the degree(s) of risk. The review may result in projections indicating the estimate is either sufficient or insufficient to complete the activity (i.e., pose a risk to the project).

11.2.1.8 Activity duration Estimates

Described in Section 6.5.3.1. Activity duration estimate reviews are useful in identifying risks related to the time allowances for the activities or project as a whole, again with the width of the range of such estimates indicating the relative degree(s) of risk.

11.2.1.9 Stakeholder register

Described in Section 13.1.3.1. Information about the stakeholders is useful for soliciting inputs to identify risks, as this will ensure that key stakeholders, especially the stakeholder, sponsor, and customer are interviewed or otherwise participate during the Identify Risks process.

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11.2.1.10 Project documents

Project documents provide the project team with information about decisions that help better identify project risks. Project documents improve cross-team and stakeholder communications and include, but are not limited to:

• Project charter,

• Project schedule,

• Schedule network diagrams,

• Issue log,

• Quality checklist, and

• Other information proven to be valuable in identifying risks.

11.2.1.11 Procurement documents

Defined in Section 12.1.3.3. If the project requires external procurement of resources, procurement documents become a key input to the Identify Risks process. The complexity and the level of detail of the procurement documents should be consistent with the value of, and risks associated with, planned procurement.

11.2.1.12 Enterprise Environmental Factors

Described in Section 2.1.5. Enterprise environmental factors that can influence the Identify Risks process include, but are not limited to:

• Published information, including commercial databases,

• Academic studies,

• Published checklists,

• Benchmarking,

• Industry studies, and

• Risk attitudes.

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11.2.1.13 organizational Process Assets

Described in Section 2.1.4. Organizational process assets that can influence the Identify Risks process include, but are not limited to:

• Project files, including actual data,

• Organizational and project process controls,

• Risk statement formats or templates, and

• Lessons learned.

11.2.2 Identify risks: tools and techniques

11.2.2.1 documentation reviews

A structured review of the project documentation may be performed, including plans, assumptions, previous project files, agreements, and other information. The quality of the plans, as well as consistency between those plans and the project requirements and assumptions, may be indicators of risk in the project.

11.2.2.2 Information Gathering techniques

Examples of information gathering techniques used in identifying risks can include:

• Brainstorming. The goal of brainstorming is to obtain a comprehensive list of project risks. The project team usually performs brainstorming, often with a multidisciplinary set of experts who are not part of the team. Ideas about project risk are generated under the leadership of a facilitator, either in a traditional free-form brainstorm session or structured mass interviewing techniques. Categories of risk, such as in a risk breakdown structure, can be used as a framework. Risks are then identified and categorized by type of risk and their definitions are refined.

• delphi technique. The Delphi technique is a way to reach a consensus of experts. Project risk experts participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas about the important project risks. The responses are summarized and are then recirculated to the experts for further comment. Consensus may be reached in a few rounds of this process. The Delphi technique helps reduce bias in the data and keeps any one person from having undue influence on the outcome.

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• Interviewing. Interviewing experienced project participants, stakeholders, and subject matter experts helps to identify risks.

• root cause analysis. Root-cause analysis is a specific technique used to identify a problem, discover the underlying causes that lead to it, and develop preventive action.

11.2.2.3 checklist Analysis

Risk identification checklists are developed based on historical information and knowledge that has been accumulated from previous similar projects and from other sources of information. The lowest level of the RBS can also be used as a risk checklist. While a checklist may be quick and simple, it is impossible to build an exhaustive one, and care should be taken to ensure the checklist is not used to avoid the effort of proper risk identification. The team should also explore items that do not appear on the checklist. Additionally, the checklist should be pruned from time to time to remove or archive related items. The checklist should be reviewed during project closure to incorporate new lessons learned and improve it for use on future projects.

11.2.2.4 Assumptions Analysis

Every project and its plan is conceived and developed based on a set of hypotheses, scenarios, or assumptions. Assumptions analysis explores the validity of assumptions as they apply to the project. It identifies risks to the project from inaccuracy, instability, inconsistency, or incompleteness of assumptions.

11.2.2.5 diagramming techniques

Risk diagramming techniques may include:

• cause and effect diagrams. These are also known as Ishikawa or fishbone diagrams and are useful for identifying causes of risks.

• System or process flow charts. These show how various elements of a system interrelate and the mechanism of causation.

• Influence diagrams. These are graphical representations of situations showing causal influences, time ordering of events, and other relationships among variables and outcomes, as shown in Figure 11-7.

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Project Activity

Project Estimates

Deliverables

Risk Condition

Figure 11-7. Influence diagram

11.2.2.6 SWot Analysis

This technique examines the project from each of the strengths, weaknesses, opportunities, and threats (SWOT) perspectives to increase the breadth of identified risks by including internally generated risks. The technique starts with identification of strengths and weaknesses of the organization, focusing on either the project, organization, or the business area in general. SWOT analysis then identifies any opportunities for the project that arise from organizational strengths, and any threats arising from organizational weaknesses. The analysis also examines the degree to which organizational strengths offset threats, as well as identifying opportunities that may serve to overcome weaknesses.

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11.2.2.7 Expert Judgment

Risks may be identified directly by experts with relevant experience with similar projects or business areas. Such experts should be identified by the project manager and invited to consider all aspects of the project and suggest possible risks based on their previous experience and areas of expertise. The experts’ bias should be taken into account in this process.

11.2.3 Identify risks: outputs

11.2.3.1 risk register

The primary output from Identify Risks is the initial entry into the risk register. The risk register is a document in which the results of risk analysis and risk response planning are recorded. It contains the outcomes of the other risk management processes as they are conducted, resulting in an increase in the level and type of information contained in the risk register over time. The preparation of the risk register begins in the Identify Risks process with the following information, and then becomes available to other project management and risk management processes:

• List of identified risks. The identified risks are described in as much detail as is reasonable. A structure for describing risks using risk statements may be applied, for example, EVENT may occur causing IMPACT, or If CAUSE exists, EVENT may occur leading to EFFECT. In addition to the list of identified risks, the root causes of those risks may become more evident. These are the fundamental conditions or events that may give rise to one or more identified risks. They should be recorded and used to support future risk identification for this and other projects.

• List of potential responses. Potential responses to a risk may sometimes be identified during the Identify Risks process. These responses, if identified in this process, should be used as inputs to the Plan Risk Responses process.

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11.3 Perform Qualitative risk Analysis

Perform Qualitative Risk Analysis is the process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact. The key benefit of this process is that it enables project managers to reduce the level of uncertainty and to focus on high-priority risks. The inputs, tools and techniques, and outputs of this process are depicted in Figure 11-8. Figure 11-9 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Risk management plan

.2 Scope baseline

.3 Risk register

.4 Enterprise environmental factors .5 Organizational process assets

.1 Risk probability and impact assessment .2 Probability and impact matrix .3 Risk data quality assessment .4 Risk categorization .5 Risk urgency assessment .6 Expert judgment

.1 Project documents updates

Figure 11-8. Perform Qualitative risk Analysis: Inputs, tools & techniques, and outputs

Project Risk Management

11.3 Perform

Qualitative Risk Analysis

11.1 Plan Risk

Management

11.2 Identify Risks

• Project documents updates

• Risk register• Risk management plan

• Enterprise environmental factors • Organizational process assets

• Scope baseline

5.4 Create WBS

Enterprise/ Organization

Project Documents

Figure 11-9. Perform Qualitative risk Analysis data Flow diagram

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Perform Qualitative Risk Analysis assesses the priority of identified risks using their relative probability or likelihood of occurrence, the corresponding impact on project objectives if the risks occur, as well as other factors such as the time frame for response and the organization’s risk tolerance associated with the project constraints of cost, schedule, scope, and quality. Such assessments reflect the risk attitude of the project team and other stakeholders. Effective assessment therefore requires explicit identification and management of the risk approaches of key participants in the Perform Qualitative Risk Analysis process. Where these risk approaches introduce bias into the assessment of identified risks, attention should be paid to identifying bias and correcting for it.

Establishing definitions of the levels of probability and impact can reduce the influence of bias. The time criticality of risk-related actions may magnify the importance of a risk. An evaluation of the quality of the available information on project risks also helps to clarify the assessment of the risk’s importance to the project.

Perform Qualitative Risk Analysis is usually a rapid and cost-effective means of establishing priorities for Plan Risk Responses and lays the foundation for Perform Quantitative Risk Analysis, if required. The Perform Qualitative Risk Analysis process is performed regularly throughout the project life cycle, as defined in the project’s risk management plan. This process can lead into Perform Quantitative Risk Analysis (Section 11.4) or directly into Plan Risk Responses (Section 11.5).

11.3.1 Perform Qualitative risk Analysis: Inputs

11.3.1.1 risk Management Plan

Described in Section 11.1.3.1. Key elements of the risk management plan used in the Perform Qualitative Risk Analysis process include roles and responsibilities for conducting risk management, budgets, schedule activities for risk management, risk categories, definitions of probability and impact, the probability and impact matrix, and revised stakeholders’ risk tolerances. These inputs are usually tailored to the project during the Plan Risk Management process. If they are not available, they may be developed during the Perform Qualitative Risk Analysis process.

11.3.1.2 Scope Baseline

Described in Section 5.4.3.1. Projects of a common or recurrent type tend to have more well-understood risks. Projects using state-of-the-art or first-of-its-kind technology, and highly complex projects, tend to have more uncertainty. This can be evaluated by examining the scope baseline.

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11.3.1.3 risk register

Described in Section 11.2.3.1. The risk register contains the information that will be used to assess and prioritize risks.

11.3.1.4 Enterprise Environmental Factors

Described in Section 2.1.5. Enterprise environmental factors may provide insight and context to the risk assessment, such as:

• Industry studies of similar projects by risk specialists, and

• Risk databases that may be available from industry or proprietary sources.

11.3.1.5 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Perform Qualitative Risk Analysis process include information on prior, similar completed projects.

11.3.2 Perform Qualitative risk Analysis: tools and techniques

11.3.2.1 risk Probability and Impact Assessment

Risk probability assessment investigates the likelihood that each specific risk will occur. Risk impact assessment investigates the potential effect on a project objective such as schedule, cost, quality, or performance, including both negative effects for threats and positive effects for opportunities.

Probability and impact are assessed for each identified risk. Risks can be assessed in interviews or meetings with participants selected for their familiarity with the risk categories on the agenda. Project team members and knowledgeable persons external to the project are included.

The level of probability for each risk and its impact on each objective is evaluated during the interview or meeting. Explanatory detail, including assumptions justifying the levels assigned, are also recorded. Risk probabilities and impacts are rated according to the definitions given in the risk management plan. Risks with low ratings of probability and impact will be included within the risk register as part of the watch list for future monitoring.

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11.3.2.2 Probability and Impact Matrix

Risks can be prioritized for further quantitative analysis and planning risk responses based on their risk rating. Ratings are assigned to risks based on their assessed probability and impact. Evaluation of each risk’s importance and priority for attention is typically conducted using a look-up table or a probability and impact matrix. Such a matrix specifies combinations of probability and impact that lead to rating the risks as low, moderate, or high priority. Descriptive terms or numeric values can be used depending on organizational preference.

Each risk is rated on its probability of occurrence and impact on an objective if it does occur. The organization should determine which combinations of probability and impact result in a classification of high risk, moderate risk, and low risk. In a black-and-white matrix, these conditions are denoted using different shades of gray. Specifically in Figure 11-10, the dark gray area (with the largest numbers) represents high risk: the medium gray area (with the smallest numbers) represents low risk, and the light gray area (with in-between numbers) represents moderate risk. Usually, these risk-rating rules are specified by the organization in advance of the project and included in organizational process assets. Risk rating rules can be tailored in the Plan Risk Management process to the specific project.

Probability and Impact Matrix

Probability

0.90

0.70

0.50

0.30

0.10

0.05

0.04

0.03

0.02

0.01

0.05/ Very Low

0.09

0.07

0.05

0.03

0.01

0.10/ Low

0.18

0.14

0.10

0.06

0.02

0.20/ Moderate

0.36

0.28

0.20

0.12

0.04

0.40/ High

0.72

0.56

0.40

0.24

0.08

0.80/ Very High

Impact (numerical scale) on an objective (e.g., cost, time, scope or quality)

Each risk is rated on its probability of occurring and impact on an objective if it does occur. The organization's thresholds for low, moderate or high risks are shown in the matrix and determine whether the risk is scored as high, moderate or low for that objective.

Threats

0.05

0.04

0.03

0.02

0.01

0.05/ Very Low

0.09

0.07

0.05

0.03

0.01

0.10/ Low

0.18

0.14

0.10

0.06

0.02

0.20/ Moderate

0.36

0.28

0.20

0.12

0.04

0.40/ High

0.72

0.56

0.40

0.24

0.08

0.80/ Very High

Opportunities

Figure 11-10. Probability and Impact Matrix

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As illustrated in Figure 11-10, an organization can rate a risk separately for each objective (e.g., cost, time, and scope). In addition, it may develop ways to determine one overall rating for each risk. Finally, opportunities and threats are handled in the same matrix using definitions of the different levels of impact that are appropriate for each.

The risk score helps guide risk responses. For example, risks that have a negative impact on objectives, otherwise known as threats if they occur, and that are in the high-risk (dark gray) zone of the matrix, may require priority action and aggressive response strategies. Threats found in the low-risk (medium gray) zone may not require proactive management action beyond being placed in the risk register as part of the watch list or adding a contingency reserve. Similarly for opportunities, those in the high-risk (dark gray) zone, which may be obtained most easily and offer the greatest benefit, should be targeted first. Opportunities in the low-risk (medium gray) zone should be monitored.

11.3.2.3 risk data Quality Assessment

Risk data quality assessment is a technique to evaluate the degree to which the data about risks is useful for risk management. It involves examining the degree to which the risk is understood and the accuracy, quality, reliability, and integrity of the data about the risk.

The use of low-quality risk data may lead to a qualitative risk analysis of little use to the project. If data quality is unacceptable, it may be necessary to gather better data. Often, the collection of information about risks is difficult, and consumes more time and resources than originally planned. The values used in the example in Figure 11-10 are representative. The numbers of steps in the scale are usually established when defining the risk attitude of the organization.

11.3.2.4 risk categorization

Risks to the project can be categorized by sources of risk (e.g., using the RBS), the area of the project affected (e.g., using the WBS), or other useful categories (e.g., project phase) to determine the areas of the project most exposed to the effects of uncertainty. Risks can also be categorized by common root causes. This technique helps determine work packages, activities, project phases or even roles in the project, which can lead to the development of effective risk responses.

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11.3.2.5 risk urgency Assessment

Risks requiring near-term responses may be considered more urgent to address. Indicators of priority may include probability of detecting the risk, time to affect a risk response, symptoms and warning signs, and the risk rating. In some qualitative analyses, the assessment of risk urgency is combined with the risk ranking that is determined from the probability and impact matrix to give a final risk severity rating.

11.3.2.6 Expert Judgment

Expert judgment is required to assess the probability and impact of each risk to determine its location in the matrix shown in Figure 11-10. Experts generally are those having experience with similar, recent projects. Gathering expert judgment is often accomplished with the use of risk facilitation workshops or interviews. The experts’ bias should be taken into account in this process.

11.3.3 Perform Qualitative risk Analysis: outputs

11.3.3.1 Project documents updates

Project documents that may be updated include, but are not limited to:

• risk register updates. As new information becomes available through the qualitative risk assessment, the risk register is updated. Updates to the risk register may include assessments of probability and impacts for each risk, risk ranking or scores, risk urgency information or risk categorization, and a watch list for low probability risks or risks requiring further analysis.

• Assumptions log updates. As new information becomes available through the qualitative risk assessment, assumptions could change. The assumptions log needs to be revisited to accommodate this new information. Assumptions may be incorporated into the project scope statement or in a separate assumptions log.

11.4 Perform Quantitative risk Analysis

Perform Quantitative Risk Analysis is the process of numerically analyzing the effect of identified risks on overall project objectives. The key benefit of this process is that it produces quantitative risk information to support decision making in order to reduce project uncertainty. The inputs, tools and techniques, and outputs of this process are depicted in Figure 11-11. Figure 11-12 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Risk management plan

.2 Cost management plan

.3 Schedule management plan .4 Risk register .5 Enterprise environmental factors .6 Organizational process assets

.1 Data gathering and representation techniques .2 Quantitative risk analysis and modeling techniques .3 Expert judgment

.1 Project documents updates

Figure 11-11. Perform Quantitative risk Analysis: Inputs, tools & techniques, and outputs

Project Risk Management

11.4 Perform

Quantitative Risk Analysis

11.1 Plan Risk

Management

11.2 Identify Risks

• Project documents updates

• Risk register• Risk management plan

• Organizational process assets • Enterprise environmental factors

• Cost management plan

7.1 Plan Cost

Management • Schedule management plan

6.1 Plan Schedule Management

Enterprise/ Organization

Project Documents

Figure 11-12. Perform Quantitative risk Analysis data Flow diagram

Perform Quantitative Risk Analysis is performed on risks that have been prioritized by the Perform Qualitative Risk Analysis process as potentially and substantially impacting the project’s competing demands. The Perform Quantitative Risk Analysis process analyzes the effect of those risks on project objectives. It is used mostly to evaluate the aggregate effect of all risks affecting the project. When the risks drive the quantitative analysis, the process may be used to assign a numerical priority rating to those risks individually.

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Perform Quantitative Risk Analysis generally follows the Perform Qualitative Risk Analysis process. In some cases, it may not be possible to execute the Perform Quantitative Risk Analysis process due to lack of sufficient data to develop appropriate models. The project manager should exercise expert judgment to determine the need for and the viability of quantitative risk analysis. The availability of time and budget, and the need for qualitative or quantitative statements about risk and impacts, will determine which method(s) to use on any particular project. Perform Quantitative Risk Analysis should be repeated, as needed, as part of the Control Risks process to determine if the overall project risk has been satisfactorily decreased. Trends may indicate the need for more or less focus on appropriate risk management activities.

11.4.1 Perform Quantitative risk Analysis: Inputs

11.4.1.1 risk Management Plan

Described in Section 11.1.3.1. The risk management plan provides guidelines, methods, and tools to be used in quantitative risk analysis.

11.4.1.2 cost Management Plan

Described in Section 7.1.3.1. The cost management plan provides guidelines on establishing and managing risk reserves.

11.4.1.3 Schedule Management Plan

Described in Section 6.1.3.1. The schedule management plan provides guidelines on establishing and managing risk reserves.

11.4.1.4 risk register

Described in Section 11.2.3.1. The risk register is used as a reference point for performing quantitative risk analysis.

11.4.1.5 Enterprise Environmental Factors

Described in Section 2.1.5. Enterprise environmental factors may provide insight and context to the risk analysis, such as:

• Industry studies of similar projects by risk specialists, and

• Risk databases that may be available from industry or proprietary sources.

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11.4.1.6 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Perform Quantitative Risk Analysis process include information from prior, similar completed projects.

11.4.2 Perform Quantitative risk Analysis: tools and techniques

11.4.2.1 data Gathering and representation techniques

• Interviewing. Interviewing techniques draw on experience and historical data to quantify the probability and impact of risks on project objectives. The information needed depends upon the type of probability distributions that will be used. For instance, information would be gathered on the optimistic (low), pessimistic (high), and most likely scenarios for some commonly used distributions. Examples of three- point estimates for cost are shown in Figure 11-13. Additional information on three-point estimates appears in Estimate Activity Durations (Section 6.5) and Estimate Costs (Section 7.2). Documenting the rationale of the risk ranges and the assumptions behind them are important components of the risk interview because they can provide insight on the reliability and credibility of the analysis.

Range of Project Cost Estimates

WBS Element

Design

Build

Test

Total Project

$4M

$16M

$11 M

$31 M

$6M

$20M

$15 M

$41M

$10 M

$35 M

$23 M

$68M

Interviewing relevant stakeholders helps determine the three-point estimates for each WBS element for triangular, beta or other distributions. In this example, the likelihood of completing the project at or below the most likely estimate of $41 million is relatively small as shown in the simulation results in Figure 11-17 (Cost Risk Simulation Results).

Low Most Likely High

Figure 11-13. range of Project cost Estimates collected during the risk Interview

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• Probability distributions. Continuous probability distributions, which are used extensively in modeling and simulation, represent the uncertainty in values such as durations of schedule activities and costs of project components. Discrete distributions can be used to represent uncertain events, such as the outcome of a test or a possible scenario in a decision tree. Two examples of widely used continuous distributions are shown in Figure 11-14. These distributions depict shapes that are compatible with the data typically developed during the quantitative risk analysis. Uniform distributions can be used if there is no obvious value that is more likely than any other between specified high and low bounds, such as in the early concept stage of design.

Beta Distribution Triangular Distribution

0.1

0.0

0.1

0.0

Figure 11-14. Examples of commonly used Probability distributions

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11.4.2.2 Quantitative risk Analysis and Modeling techniques

Commonly used techniques use both event-oriented and project-oriented analysis approaches, including:

• Sensitivity analysis. Sensitivity analysis helps to determine which risks have the most potential impact on the project. It helps to understand how the variations in project’s objectives correlate with variations in different uncertainties. Conversely, it examines the extent to which the uncertainty of each project element affects the objective being studied when all other uncertain elements are held at their baseline values. One typical display of sensitivity analysis is the tornado diagram (Figure 11-15), which is useful for comparing relative importance and impact of variables that have a high degree of uncertainty to those that are more stable. The Tornado diagram is also helpful in analyzing risk-taking scenarios enabled on specific risks whose quantitative analysis highlights possible benefits greater than corresponding identified negative impacts. A tornado diagram is a special type of bar chart used in sensitivity analysis for comparing the relative importance of the variables. In a tornado diagram, the Y-axis contains each type of uncertainty at base values, and the X-axis contains the spread or correlation of the uncertainty to the studied output. In this figure, each uncertainty contains a horizontal bar and is ordered vertically to show uncertainties with a decreasing spread from the base values.

Risk 1

Risk 2

Risk 3

Risk 4

Risk 5

Risk 6

Negative Impact Positive Impact

KEY

-15,000 -10,000 -5,000 0 5,000 10,000 15,000 20,000

Figure 11-15. Example of tornado diagram

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• Expected monetary value analysis. Expected monetary value (EMV) analysis is a statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen (i.e., analysis under uncertainty). The EMV of opportunities are generally expressed as positive values, while those of threats are expressed as negative values. EMV requires a risk-neutral assumption— neither risk averse nor risk seeking. EMV for a project is calculated by multiplying the value of each possible outcome by its probability of occurrence and adding the products together. A common use of this type of analysis is a decision tree analysis (Figure 11-16).

Computed: Payoffs minus Costs

along Path

Decision Definition Decision Node Chance Node Net Path Value

Decision to be Made

Input: Cost of Each Decision Output: Decision Made

Input: Scenario Probability, Reward if it Occurs

Output: Expected Monetary Value (EMV)

Build or Upgrade?

$80M 60%

40%

60%

40%

-$30M$36M = .60 ($80M) + .40 (–$30M) EMV (before costs) of Build New Plant considering demand

$46M = .60 ($70M) + .40 ($10M) EMV (before costs) of Upgrade Plant considering demand

Decision EMV = $46M (the larger of $36M and $46M)

$80M = $200M – $120M

–$30M = $90M – $120M

$70M = $120M – $50M

$10M = $60M – $50M

$70M

$10M

Note 1: The decision tree shows how to make a decision between alternative capital strategies (represented as “decision nodes”) when the environment contains uncertain elements (represented as “chance nodes”).

Note 2: Here, a decision is being made whether to invest $120M US to build a new plant or to instead invest only $50M US to upgrade the existing plant. For each decision, the demand (which is uncertain, and therefore represents a “chance node”) must be accounted for. For example, strong demand leads to $200M revenue with the new plant but only $120M US for the upgraded plant, perhaps due to capacity limitations of the upgraded plant. The end of each branch shows the net effect of the payoffs minus costs. For each decision branch, all effects are added (see shaded areas) to determine the overall Expected Monetary Value (EMV) of the decision. Remember to account for the investment costs. From the calculations in the shaded areas, the upgraded plant has a higher EMV of $46M – also the EMV of the overall decision. (This choice also represents the lowest risk, avoiding the worst case possible outcome of a loss of $30M).

Decision Node

Chance Node

End of Branch

Strong Demand ($200M)

Weak Demand ($90M)

Strong Demand ($120M)

Weak Demand ($60M)

Build New Plant (Invest $120M)

Upgrade Plant (Invest $50M)

Figure 11-16. decision tree diagram

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• Modeling and simulation. A project simulation uses a model that translates the specified detailed uncertainties of the project into their potential impact on project objectives. Simulations are typically performed using the Monte Carlo technique. In a simulation, the project model is computed many times (iterated), with the input values (e.g., cost estimates or activity durations) chosen at random for each iteration from the probability distributions of these variables. A histogram (e.g., total cost or completion date) is calculated from the iterations. For a cost risk analysis, a simulation uses cost estimates. For a schedule risk analysis, the schedule network diagram and duration estimates are used. The output from a cost risk simulation using the three-element model and risk ranges is shown in Figure 11-17. It illustrates the respective probability of achieving specific cost targets. Similar curves can be developed for other project objectives.

This cumulative distribution, assuming the data ranges in Figure 11-13 and triangular distributions, shows that the project is only 12 percent likely to meet the $41 million most likely cost estimate. If a conservative organization wants a 75% likelihood of success, a budget of $50 million (a contingency of nearly 22 % ($50M - $41M)/$41M)) is required.

Total Project Cost Cumulative Chart

Cost

100%

75%

50%

25%

P ro

b a b ili

$30.00M $38.75M $47.50M $56.25M $65.00M

12%

Mean = $46.67M

$41M $50M

Figure 11-17. cost risk Simulation results

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11.4.2.3 Expert Judgment

Expert judgment (ideally using experts with relevant, recent experience) is required to identify potential cost and schedule impacts, to evaluate probability, and to define inputs such as probability distributions into the tools.

Expert judgment also comes into play in the interpretation of the data. Experts should be able to identify the weaknesses of the tools as well as their strengths. Experts may determine when a specific tool may or may not be more appropriate given the organization’s capabilities and culture.

11.4.3 Perform Quantitative risk Analysis: outputs

11.4.3.1 Project documents updates

Project documents are updated with information resulting from quantitative risk analysis. For example, risk register updates could include:

• Probabilistic analysis of the project. Estimates are made of potential project schedule and cost outcomes listing the possible completion dates and costs with their associated confidence levels. This output, often expressed as a cumulative frequency distribution, is used with stakeholder risk tolerances to permit quantification of the cost and time contingency reserves. Such contingency reserves are needed to bring the risk of overrunning stated project objectives to a level acceptable to the organization.

• Probability of achieving cost and time objectives. With the risks facing the project, the probability of achieving project objectives under the current plan can be estimated using quantitative risk analysis results. For instance, in Figure 11-17, the likelihood of achieving the cost estimate of US$41 million is about 12%.

• Prioritized list of quantified risks. This list includes those risks that pose the greatest threat or present the greatest opportunity to the project. These include the risks that may have the greatest effect on cost contingency and those that are most likely to influence the critical path. These risks may be evaluated, in some cases, through a tornado diagram generated as a result of the simulation analysis.

• trends in quantitative risk analysis results. As the analysis is repeated, a trend may become apparent that leads to conclusions affecting risk responses. Organizational historical information on project schedule, cost, quality, and performance should reflect new insights gained through the Perform Quantitative Risk Analysis process. Such history may take the form of a quantitative risk analysis report. This report may be separate from, or linked to, the risk register.

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11.5 Plan risk responses

Plan Risk Responses is the process of developing options and actions to enhance opportunities and to reduce threats to project objectives. The key benefit of this process is that it addresses the risks by their priority, inserting resources and activities into the budget, schedule and project management plan as needed. The inputs, tools and techniques, and outputs of this process are depicted in Figure 11-18. Figure 11-19 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Risk management plan

.2 Risk register .1 Strategies for negative risks or threats .2 Strategies for positive risks or opportunities .3 Contingent response strategies .4 Expert judgment

.1 Project management plan updates .2 Project documents updates

Figure 11-18. Plan risk responses: Inputs, tools & techniques, and outputs

Project Risk Management

11.5 Plan Risk

Responses

11.1 Plan Risk

Management

11.2 Identify Risks

• Project management plan updates

• Project documents updates

• Risk register• Risk management plan

4.2 Develop Project

Management Plan

Project Documents

Figure 11-19. Plan risk responses data Flow diagram

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The Plan Risk Responses process follows the Perform Quantitative Risk Analysis process (if used). Each risk response requires an understanding of the mechanism by which it will address the risk. This is the mechanism used to analyze if the risk response plan is having the desired effect. It includes the identification and assignment of one person (an owner for risk response) to take responsibility for each agreed-to and funded risk response. Risk responses should be appropriate for the significance of the risk, cost-effective in meeting the challenge, realistic within the project context, agreed upon by all parties involved, and owned by a responsible person. Selecting the optimum risk response from several options is often required.

The Plan Risk Responses process presents commonly used approaches to planning responses to the risks. Risks include threats and opportunities that can affect project success, and responses are discussed for each.

11.5.1 Plan risk responses: Inputs

11.5.1.1 risk Management Plan

Important components of the risk management plan include roles and responsibilities, risk analysis definitions, timing for reviews (and for eliminating risks from review), and risk thresholds for low, moderate, and high risks. Risk thresholds help identify those risks for which specific responses are needed.

11.5.1.2 risk register

The risk register refers to identified risks, root causes of risks, lists of potential responses, risk owners, symptoms and warning signs, the relative rating or priority list of project risks, risks requiring responses in the near term, risks for additional analysis and response, trends in qualitative analysis results, and a watch list, which is a list of low- priority risks within the risk register.

11.5.2 Plan risk responses: tools and techniques

Several risk response strategies are available. The strategy or mix of strategies most likely to be effective should be selected for each risk. Risk analysis tools, such as decision tree analysis (Section 11.4.2.2), can be used to choose the most appropriate responses. Specific actions are developed to implement that strategy, including primary and backup strategies, as necessary. A fallback plan can be developed for implementation if the selected strategy turns out not to be fully effective or if an accepted risk occurs. Secondary risks should also be reviewed. Secondary risks are risks that arise as a direct result of implementing a risk response. A contingency reserve is often allocated for time or cost. If developed, it may include identification of the conditions that trigger its use.

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11.5.2.1 Strategies for negative risks or threats

Three strategies, which typically deal with threats or risks that may have negative impacts on project objectives if they occur, are: avoid, transfer, and mitigate. The fourth strategy, accept, can be used for negative risks or threats as well as positive risks or opportunities. Each of these risk response strategies have varied and unique influence on the risk condition. These strategies should be chosen to match the risk’s probability and impact on the project’s overall objectives. Avoidance and mitigation strategies are usually good strategies for critical risks with high impact, while transference and acceptance are usually good strategies for threats that are less critical and with low overall impact. The four strategies for dealing with negative risks or threats are further described as follows:

• Avoid. Risk avoidance is a risk response strategy whereby the project team acts to eliminate the threat or protect the project from its impact. It usually involves changing the project management plan to eliminate the threat entirely. The project manager may also isolate the project objectives from the risk’s impact or change the objective that is in jeopardy. Examples of this include extending the schedule, changing the strategy, or reducing scope. The most radical avoidance strategy is to shut down the project entirely. Some risks that arise early in the project can be avoided by clarifying requirements, obtaining information, improving communication, or acquiring expertise.

• transfer. Risk transference is a risk response strategy whereby the project team shifts the impact of a threat to a third party, together with ownership of the response. Transferring the risk simply gives another party responsibility for its management—it does not eliminate it. Transferring does not mean disowning the risk by transferring it to a later project or another person without his or her knowledge or agreement. Risk transference nearly always involves payment of a risk premium to the party taking on the risk. Transferring liability for risk is most effective in dealing with financial risk exposure. Transference tools can be quite diverse and include, but are not limited to, the use of insurance, performance bonds, warranties, guarantees, etc. Contracts or agreements may be used to transfer liability for specified risks to another party. For example, when a buyer has capabilities that the seller does not possess, it may be prudent to transfer some work and its concurrent risk contractually back to the buyer. In many cases, use of a cost-plus contract may transfer the cost risk to the buyer, while a fixed-price contract may transfer risk to the seller.

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• Mitigate. Risk mitigation is a risk response strategy whereby the project team acts to reduce the probability of occurrence or impact of a risk. It implies a reduction in the probability and/or impact of an adverse risk to be within acceptable threshold limits. Taking early action to reduce the probability and/or impact of a risk occurring on the project is often more effective than trying to repair the damage after the risk has occurred. Adopting less complex processes, conducting more tests, or choosing a more stable supplier are examples of mitigation actions. Mitigation may require prototype development to reduce the risk of scaling up from a bench-scale model of a process or product. Where it is not possible to reduce probability, a mitigation response might address the risk impact by targeting linkages that determine the severity. For example, designing redundancy into a system may reduce the impact from a failure of the original component.

• Accept. Risk acceptance is a risk response strategy whereby the project team decides to acknowledge the risk and not take any action unless the risk occurs. This strategy is adopted where it is not possible or cost-effective to address a specific risk in any other way. This strategy indicates that the project team has decided not to change the project management plan to deal with a risk, or is unable to identify any other suitable response strategy. This strategy can be either passive or active. Passive acceptance requires no action except to document the strategy, leaving the project team to deal with the risks as they occur, and to periodically review the threat to ensure that it does not change significantly. The most common active acceptance strategy is to establish a contingency reserve, including amounts of time, money, or resources to handle the risks.

11.5.2.2 Strategies for Positive risks or opportunities

Three of the four responses are suggested to deal with risks with potentially positive impacts on project objectives. The fourth strategy, accept, can be used for negative risks or threats as well as positive risks or opportunities. These strategies, described below, are to exploit, share, enhance, and accept.

• Exploit. The exploit strategy may be selected for risks with positive impacts where the organization wishes to ensure that the opportunity is realized. This strategy seeks to eliminate the uncertainty associated with a particular upside risk by ensuring the opportunity definitely happens. Examples of directly exploiting responses include assigning an organization’s most talented resources to the project to reduce the time to completion or using new technologies or technology upgrades to reduce cost and duration required to realize project objectives.

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• Enhance. The enhance strategy is used to increase the probability and/or the positive impacts of an opportunity. Identifying and maximizing key drivers of these positive-impact risks may increase the probability of their occurrence. Examples of enhancing opportunities include adding more resources to an activity to finish early.

• Share. Sharing a positive risk involves allocating some or all of the ownership of the opportunity to a third party who is best able to capture the opportunity for the benefit of the project. Examples of sharing actions include forming risk-sharing partnerships, teams, special-purpose companies, or joint ventures, which can be established with the express purpose of taking advantage of the opportunity so that all parties gain from their actions.

• Accept. Accepting an opportunity is being willing to take advantage of the opportunity if it arises, but not actively pursuing it.

11.5.2.3 contingent response Strategies

Some responses are designed for use only if certain events occur. For some risks, it is appropriate for the project team to make a response plan that will only be executed under certain predefined conditions, if it is believed that there will be sufficient warning to implement the plan. Events that trigger the contingency response, such as missing intermediate milestones or gaining higher priority with a supplier, should be defined and tracked. Risk responses identified using this technique are often called contingency plans or fallback plans and include identified triggering events that set the plans in effect.

11.5.2.4 Expert Judgment

Expert judgment is input from knowledgeable parties pertaining to the actions to be taken on a specific and defined risk. Expertise may be provided by any group or person with specialized education, knowledge, skill, experience, or training in establishing risk responses.

11.5.3 Plan risk responses: outputs

11.5.3.1 Project Management Plan updates

Elements of the project management plan that may be updated as a result of carrying out this process include, but are not limited to:

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• Schedule management plan. The schedule management plan is updated to reflect changes in process and practice driven by the risk responses. This may include changes in tolerance or behavior related to resource loading and leveling, as well as updates to the schedule strategy.

• cost management plan. The cost management plan is updated to reflect changes in process and practice driven by the risk responses. This may include changes in tolerance or behavior related to cost accounting, tracking, and reports, as well as updates to the budget strategy and how contingency reserves are consumed.

• Quality management plan. The quality management plan is updated to reflect changes in process and practice driven by the risk responses. This may include changes in tolerance or behavior related to requirements, quality assurance, or quality control, as well as updates to the requirements documentation.

• Procurement management plan. The procurement management plan may be updated to reflect changes in strategy, such as alterations in the make-or-buy decision or contract type(s) driven by the risk responses.

• Human resource management plan. The staffing management plan, part of the human resource management plan, is updated to reflect changes in project organizational structure and resource applications driven by the risk responses. This may include changes in tolerance or behavior related to staff allocation, as well as updates to the resource loading.

• Scope baseline. Because of new, modified or omitted work generated by the risk responses, the scope baseline may be updated to reflect those changes.

• Schedule baseline. Because of new work (or omitted work) generated by the risk responses, the schedule baseline may be updated to reflect those changes.

• cost baseline. Because of new work (or omitted work) generated by the risk responses, the cost baseline may be updated to reflect those changes.

11.5.3.2 Project documents updates

In the Plan Risk Responses process, several project documents are updated as needed. For example, when appropriate risk responses are chosen and agreed upon, they are included in the risk register. The risk register should be written to a level of detail that corresponds with the priority ranking and the planned response. Often, the high and moderate risks are addressed in detail. Risks judged to be of low priority are included in a watch list for periodic monitoring. Updates to the risk register can include, but are not limited to:

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• Risk owners and assigned responsibilities;

• Agreed-upon response strategies;

• Specific actions to implement the chosen response strategy;

• Trigger conditions, symptoms, and warning signs of a risk occurrence;

• Budget and schedule activities required to implement the chosen responses;

• Contingency plans and triggers that call for their execution;

• Fallback plans for use as a reaction to a risk that has occurred and the primary response proves to be inadequate;

• Residual risks that are expected to remain after planned responses have been taken, as well as those that have been deliberately accepted;

• Secondary risks that arise as a direct outcome of implementing a risk response; and

• Contingency reserves that are calculated based on the quantitative risk analysis of the project and the organization’s risk thresholds.

Other project documents updated could include:

• Assumptions log updates. As new information becomes available through the application of risk responses, assumptions could change. The assumptions log needs to be revisited to accommodate this new information.

• technical documentation updates. As new information becomes available through the application of risk responses, technical approaches and physical deliverables may change. Any supporting documentation needs to be revisited to accommodate this new information.

• change requests. Planning for possible risk responses can often result in recommendations for changes to the resources, activities, cost estimates, and other items identified during other planning processes. When such recommendations are identified, change requests are generated and processed through the Perform Integrated Change Control process.

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11.6 control risks

Control Risks is the process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project. The key benefit of this process is that it improves efficiency of the risk approach throughout the project life cycle to continuously optimize risk responses. The inputs, tools and techniques, and outputs of this process are depicted in Figure 11-20. Figure 11-21 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Risk register

.3 Work performance data

.4 Work performance reports

.1 Risk reassessment

.2 Risk audits

.3 Variance and trend analysis .4 Technical performance measurement .5 Reserve analysis .6 Meetings

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure 11-20. control risks: Inputs, tools & techniques, and outputs

Project Risk Management

11.6 Control Risks

11.2 Identify Risks

• Risk register

• Project documents updates

• Project management plan updates

• Organizational process assets updates

• Work performance reports

• Work performance data

• Project management plan

• Change requests

• Work performance information

4.5 Perform

Integrated Change Control

4.2 Develop Project

Management Plan

4.4 Monitor and

Control Project Work

4.2 Develop Project Management

Plan

4.4 Monitor and

Control Project Work

4.3 Direct and Manage

Project Work

Enterprise/ Organization

Project Documents

Figure 11-21. control risks data Flow diagram

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Planned risk responses that are included in the risk register are executed during the life cycle of the project, but the project work should be continuously monitored for new, changing, and outdated risks.

The Control Risks process applies techniques, such as variance and trend analysis, which require the use of performance information generated during project execution. Other purposes of the Control Risks process are to determine if:

• Project assumptions are still valid,

• Analysis shows an assessed risk has changed or can be retired,

• Risk management policies and procedures are being followed, and

• Contingency reserves for cost or schedule should be modified in alignment with the current risk assessment.

Control Risks can involve choosing alternative strategies, executing a contingency or fallback plan, taking corrective action, and modifying the project management plan. The risk response owner reports periodically to the project manager on the effectiveness of the plan, any unanticipated effects, and any correction needed to handle the risk appropriately. Control Risks also includes updating the organizational process assets, including project lessons learned databases and risk management templates, for the benefit of future projects.

11.6.1 control risks: Inputs

11.6.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan, which includes the risk management plan, provides guidance for risk monitoring and controlling.

11.6.1.2 risk register

The risk register has key inputs that include identified risks and risk owners, agreed-upon risk responses, control actions for assessing the effectiveness of response plans, risk responses, specific implementation actions, symptoms and warning signs of risk, residual and secondary risks, a watch list of low-priority risks, and the time and cost contingency reserves. The watch list is within the risk register and provides a list of low-priority risks.

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11.6.1.3 Work Performance data

Described in Section 4.3.3.2. Work performance data related to various performance results possibly impacted by risks includes, but is not limited to:

• Deliverable status,

• Schedule progress, and

• Costs incurred.

11.6.1.4 Work Performance reports

Described in Section 4.4.3.2. Work performance reports take information from performance measurements and analyze it to provide project work performance information including variance analysis, earned value data, and forecasting data. These data points could be impactful in controlling performance related risks.

11.6.2 control risks: tools and techniques

11.6.2.1 risk reassessment

Control Risks often results in identification of new risks, reassessment of current risks, and the closing of risks that are outdated. Project risk reassessments should be regularly scheduled. The amount and detail of repetition that are appropriate depends on how the project progresses relative to its objectives.

11.6.2.2 risk Audits

Risk audits examine and document the effectiveness of risk responses in dealing with identified risks and their root causes, as well as the effectiveness of the risk management process. The project manager is responsible for ensuring that risk audits are performed at an appropriate frequency, as defined in the project’s risk management plan. Risk audits may be included during routine project review meetings, or the team may choose to hold separate risk audit meetings. The format for the audit and its objectives should be clearly defined before the audit is conducted.

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11.6.2.3 Variance and trend Analysis

Many control processes employ variance analysis to compare the planned results to the actual results. For the purposes of controlling risks, trends in the project’s execution should be reviewed using performance information. Earned value analysis and other methods of project variance and trend analysis may be used for monitoring overall project performance. Outcomes from these analyses may forecast potential deviation of the project at completion from cost and schedule targets. Deviation from the baseline plan may indicate the potential impact of threats or opportunities.

11.6.2.4 technical Performance Measurement

Technical performance measurement compares technical accomplishments during project execution to the schedule of technical achievement. It requires the definition of objective, quantifiable measures of technical performance, which can be used to compare actual results against targets. Such technical performance measures may include weight, transaction times, number of delivered defects, storage capacity, etc. Deviation, such as demonstrating more or less functionality than planned at a milestone, can help to forecast the degree of success in achieving the project’s scope.

11.6.2.5 reserve Analysis

Throughout execution of the project, some risks may occur with positive or negative impacts on budget or schedule contingency reserves. Reserve analysis compares the amount of the contingency reserves remaining to the amount of risk remaining at any time in the project in order to determine if the remaining reserve is adequate.

11.6.2.6 Meetings

Project risk management should be an agenda item at periodic status meetings. The amount of time required for that item will vary, depending upon the risks that have been identified, their priority, and difficulty of response. The more often risk management is practiced, the easier it becomes. Frequent discussions about risk make it more likely that people will identify risks and opportunities.

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11.6.3 control risks: outputs

11.6.3.1 Work Performance Information

Work performance information, as a Control Risks output, provides a mechanism to communicate and support project decision making.

11.6.3.2 change requests

Implementing contingency plans or workarounds sometimes results in a change request. Change requests are prepared and submitted to the Perform Integrated Change Control process (Section 4.5). Change requests can include recommended corrective and preventive actions as well.

• recommended corrective actions. These are activities that realign the performance of the project work with the project management plan. They include contingency plans and workarounds. The latter are responses that were not initially planned, but are required to deal with emerging risks that were previously unidentified or accepted passively.

• recommended preventive actions. These are activities that ensure that future performance of the project work is aligned with the project management plan.

11.6.3.3 Project Management Plan updates

If the approved change requests have an effect on the risk management processes, the corresponding component documents of the project management plan are revised and reissued to reflect the approved changes. The elements of the project management plan that may be updated are the same as those in the Plan Risk Responses process.

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11.6.3.4 Project documents updates

Project documents that may be updated as a result of the Control Risk process include, but are not limited to the risk register. Risk register updates may include:

• outcomes of risk reassessments, risk audits, and periodic risk reviews. These outcomes may include identification of new risks, updates to probability, impact, priority, response plans, ownership, and other elements of the risk register. Outcomes can also include closing risks that are no longer applicable and releasing their associated reserves.

• Actual outcomes of the project’s risks and of the risk responses. This information can help project managers to plan for risk throughout their organizations, as well as on future projects.

11.6.3.5 organizational Process Assets updates

The risk management processes produce information that may be used for future projects, and should be captured in the organizational process assets. The organizational process assets that may be updated include, but are not limited to:

• Templates for the risk management plan, including the probability and impact matrix and risk register,

• Risk breakdown structure, and

• Lessons learned from the project risk management activities.

These documents should be updated as needed and at project closure. Final versions of the risk register and the risk management plan templates, checklists, and risk breakdown structure are included.

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Project ProcureMent MAnAGeMent Project Procurement Management includes the processes necessary to purchase or acquire products, services,

or results needed from outside the project team. The organization can be either the buyer or seller of the products, services, or results of a project.

Project Procurement Management includes the contract management and change control processes required to develop and administer contracts or purchase orders issued by authorized project team members.

Project Procurement Management also includes controlling any contract issued by an outside organization (the buyer) that is acquiring deliverables from the project from the performing organization (the seller), and administering contractual obligations placed on the project team by the contract.

Figure 12-1 provides an overview of the Project Procurement Management processes which include the following:

12.1 Plan Procurement Management—The process of documenting project procurement decisions, specifying the approach, and identifying potential sellers.

12.2 conduct Procurements—The process of obtaining seller responses, selecting a seller, and awarding a contract.

12.3 control Procurements—The process of managing procurement relationships, monitoring contract performance, and making changes and corrections as appropriate.

12.4 close Procurements—The process of completing each project procurement.

These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

1212

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.1 Inputs .1 Project management plan .2 Requirements documentation .3 Risk register .4 Activity resource requirements .5 Project schedule .6 Activity cost estimates .7 Stakeholder register .8 Enterprise environmental factors .9 Organizational process assets

.2 Tools & Techniques .1 Make-or-buy analysis .2 Expert judgment .3 Market research .4 Meetings

.3 Outputs .1 Procurement management plan .2 Procurement statement of work .3 Procurement documents .4 Source selection criteria .5 Make-or-buy decisions .6 Change requests .7 Project documents updates

.1 Inputs .1 Procurement management plan .2 Procurement documents .3 Source selection criteria .4 Seller proposals .5 Project documents .6 Make-or-buy decisions .7 Procurement statement of work .8 Organizational process assets .2 Tools & Techniques .1 Bidder conference .2 Proposal evaluation techniques .3 Independent estimates .4 Expert judgment .5 Advertising .6 Analytical techniques .7 Procurement negotiations .3 Outputs .1 Selected sellers .2 Agreements .3 Resource calendars .4 Change requests .5 Project management plan updates .6 Project documents updates

.1 Inputs .1 Project management plan .2 Procurement documents .3 Agreements .4 Approved change requests .5 Work performance reports .6 Work performance data

.2 Tools & Techniques .1 Contract change control system .2 Procurement performance reviews .3 Inspections and audits .4 Performance reporting .5 Payment systems .6 Claims administration .7 Records management system

.3 Outputs .1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Project Procurement Management Overview

12.2 Conduct Procurements

12.1 Plan Procurement Management

12.3 Control Procurements

.1 Inputs .1 Project management plan .2 Procurement documents

.2 Tools & Techniques .1 Procurement audits .2 Procurement negotiations .3 Records management system

.3 Outputs .1 Closed procurements .2 Organizational process assets updates

12.4 Close Procurements

Figure 12-1. Project Procurement Management overview

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The Project Procurement Management processes involve agreements, including contracts, which are legal documents between a buyer and a seller. A contract represents a mutually binding agreement that obligates the seller to provide something of value (e.g., specified products, services, or results) and obligates the buyer to provide monetary or other valuable compensation. An agreement can be simple or complex, and may reflect the simplicity or complexity of the deliverables or required effort.

A procurement contract includes terms and conditions, and may incorporate other items that the buyer specifies as to what the seller is to perform or provide. It is the project management team’s responsibility to make certain that all procurements meet the specific needs of the project while adhering to organizational procurement policies. Depending upon the application area, a contract can also be called an agreement, an understanding, a subcontract, or a purchase order. Most organizations document policies and procedures specifically defining the procurement rules and specifying who has authority to sign and administer such agreements on behalf of the organization.

Although all project documents may be subject to some form of review and approval, the legally binding nature of a contract or agreement usually means it will be subjected to a more extensive approval process. In all cases, the primary focus of the review and approval process is to ensure that the contract language describes the products, services, or results that will satisfy the identified project need.

The project management team may seek support in early phases from specialists in contracting, purchasing, law, and technical disciplines. Such involvement can be mandated by an organization’s policies.

The various activities involved in the Project Procurement Management processes form the life cycle of an agreement. By actively managing the agreement life cycle and carefully wording the terms and conditions of a procurement, some identifiable project risks may be shared or transferred to a seller. Entering into an agreement for products or services is one method of allocating the responsibility for managing or sharing potential risks.

A complex project may involve managing multiple contracts or subcontracts simultaneously or in sequence. In such cases, each contract life cycle may end during any phase of the project life cycle. Project Procurement Management is discussed within the perspective of the buyer-seller relationship. The buyer-seller relationship may exist at many levels on any one project, and between organizations internal to and external to the acquiring organization.

Depending on the application area, the seller may be identified as a contractor, subcontractor, vendor, service provider, or supplier. Depending on the buyer’s position in the project acquisition cycle, the buyer may be called a client, customer, prime contractor, contractor, acquiring organization, service requestor, or purchaser. The seller can be viewed during the contract life cycle first as a bidder, then as the selected source, and then as the contracted supplier or vendor.

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The seller will typically manage the work as a project if the acquisition is not just for shelf material, goods, or common products. In such cases:

• The buyer becomes the customer, and is thus a key project stakeholder for the seller.

• The seller’s project management team is concerned with all the processes of project management, not only with those of this Knowledge Area.

• Terms and conditions of the contract become key inputs to many of the seller’s management processes. The contract can actually contain the inputs (e.g., major deliverables, key milestones, cost objectives), or it can limit the project team’s options (e.g., buyer approval of staffing decisions is often required on design projects).

In this section, it is assumed that the buyer of an item for the project is assigned to the project team and that the seller is organizationally external to the project team. It is also assumed that a formal contractual relationship will be developed and exists between the buyer and the seller. However, most of the discussion in this section is equally applicable to non-contractual work entered into with other units of the project team’s organization.

12.1 Plan Procurement Management

Plan Procurement Management is the process of documenting project procurement decisions, specifying the approach, and identifying potential sellers. The key benefit of this process is that it determines whether to acquire outside support, and if so, what to acquire, how to acquire it, how much is needed, and when to acquire it. The inputs, tools and techniques, and outputs of this process are depicted in Figure 12-2. Figure 12-3 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Requirements documentation .3 Risk register .4 Activity resource requirements .5 Project schedule .6 Activity cost estimates .7 Stakeholder register .8 Enterprise environmental factors .9 Organizational process assets

.1 Make-or-buy analysis

.2 Expert judgment

.3 Market research

.4 Meetings

.1 Procurement management plan .2 Procurement statement of work .3 Procurement documents .4 Source selection criteria .5 Make-or-buy decisions .6 Change requests .7 Project documents updates

Figure 12-2. Plan Procurements: Inputs, tools & techniques, and outputs

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Project Procurement Management

12.1 Plan

Procurement Management

4.2 Develop Project Management

Plan

12.3 Control

Procurements

12.4 Close

Procurements

12.2 Conduct

Procurements

• Risk register

• Requirements documentation

• Project management plan

• Change requests

• Procurement documents

• Make-or-buy decisions • Procurement management plan • Procurement statement of work • Source selection criteria

• Project documents updates

• Activity resource requirements

• Project schedule

• Activity cost estimates

• Stakeholder register • Organizational process assets • Enterprise environmental factors

11.2 Identify Risks

13.1 Identify

Stakeholders

4.5 Perform

Integrated Change Control

Project Documents

Enterprise/ Organization

5.2 Collect

Requirements

11.2 Identify Risks

6.4 Estimate Activity

Resources

6.6 Develop Schedule

7.2 Estimate

Costs

13.1 Identify

Stakeholders

Figure 12-3. Plan Procurement Management data Flow diagram

Plan Procurement Management identifies those project needs that can best be met or should be met by acquiring products, services, or results outside of the project organization, versus those project needs which can be accomplished by the project team. When the project obtains products, services, and results required for project performance from outside of the performing organization, the processes from Plan Procurement Management through Close Procurements are performed for each item to be acquired.

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The Plan Procurement Management process also includes evaluating potential sellers, particularly if the buyer wishes to exercise some degree of influence or control over acquisition decisions. Thought should also be given to who is responsible for obtaining or holding any relevant permits and professional licenses that may be required by legislation, regulation, or organizational policy in executing the project.

The requirements of the project schedule can significantly influence the strategy during the Plan Procurement Management process. Decisions made in developing the procurement management plan can also influence the project schedule and are integrated with Develop Schedule, Estimate Activity Resources, and make-or-buy analysis.

The Plan Procurement Management process includes evaluating the risks involved with each make-or-buy analysis. It also includes reviewing the type of contract planned to be used with respect to avoiding or mitigating risks, sometimes transferring risks to the seller.

12.1.1 Plan Procurement Management: Inputs

12.1.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan describes the need, justification, requirements, and current boundaries for the project. It includes, but is not limited to, the scope baseline contents:

• Project scope statement. The project scope statement contains the product scope description, service description and result description, the list of deliverables, and acceptance criteria, as well as important information regarding technical issues or concerns that could impact cost estimating. Identified constraints may include required delivery dates, available skilled resources, and organizational policies.

• WBS. The work breakdown structure (WBS) contains the components of work that may be resourced externally.

• WBS dictionary. The WBS dictionary and related detailed statements of work provide an identification of the deliverables and a description of the work in each WBS component required to produce each deliverable.

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12.1.1.2 requirements documentation

Described in Section 5.2.3.1. Requirements documentation may include:

• Important information about project requirements that is considered during planning for procurements, and

• Requirements with contractual and legal implications that may include health, safety, security, performance, environmental, insurance, intellectual property rights, equal employment opportunity, licenses, and permits—all of which are considered when planning for procurements.

12.1.1.3 risk register

12.1.1.4 Activity resource requirements

Described in Section 6.4.3.1. Activity resource requirements contain information on specific needs such as people, equipment, or location.

12.1.1.5 Project Schedule

Described in Section 6.6.3.2. Project schedule contains information on required timelines or mandated deliverable dates.

12.1.1.6 Activity cost Estimates

Described in Section 7.2.3.1. Cost estimates developed by the procuring activity are used to evaluate the reasonableness of the bids or proposals received from potential sellers.

12.1.1.7 Stakeholder register

Described in Section 13.1.3.1. The stakeholder register provides details on the project participants and their interests in the project.

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12.1.1.8 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Plan Procurement Management process include, but are not limited to:

• Marketplace conditions;

• Products, services, and results that are available in the marketplace;

• Suppliers, including past performance or reputation;

• Typical terms and conditions for products, services, and results or for the specific industry; and

• Unique local requirements.

12.1.1.9 organizational Process Assets

Described in Section 2.1.4. The various types of contractual agreements used by the organization also influence decisions for the Plan Procurement Management process. The organizational process assets that influence the Plan Procurement Management process include, but are not limited to:

• Formal procurement policies, procedures, and guidelines. Most organizations have formal procurement policies and buying organizations. When such procurement support is not available, the project team should supply both the resources and the expertise to perform such procurement activities.

• Management systems that are considered in developing the procurement management plan and selecting the contractual relationships to be used.

• An established multi-tier supplier system of prequalified sellers based on prior experience.

All legal contractual relationships generally fall into one of two broad families: either fixed-price or cost reimbursable. Also, there is a third hybrid type commonly in use called the time and materials contract. The more popular contract types in use are discussed below as discrete types, but in practice it is not unusual to combine one or more types into a single procurement.

• Fixed-price contracts. This category of contracts involves setting a fixed total price for a defined product, service, or result to be provided. Fixed-price contracts may also incorporate financial incentives for achieving or exceeding selected project objectives, such as schedule delivery dates, cost and technical performance, or anything that can be quantified and subsequently measured. Sellers under fixed-price contracts are legally obligated to complete such contracts, with possible financial damages if they do not. Under the fixed-price arrangement, buyers need to precisely specify the product or services being procured. Changes in scope may be accommodated, but generally with an increase in contract price.

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○ Firm Fixed Price Contracts (FFP). The most commonly used contract type is the FFP. It is favored by most buying organizations because the price for goods is set at the outset and not subject to change unless the scope of work changes. Any cost increase due to adverse performance is the responsibility of the seller, who is obligated to complete the effort. Under the FFP contract, the buyer should precisely specify the product or services to be procured, and any changes to the procurement specification can increase the costs to the buyer.

○ Fixed Price Incentive Fee Contracts (FPIF). This fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation from performance, with financial incentives tied to achieving agreed upon metrics. Typically such financial incentives are related to cost, schedule, or technical performance of the seller. Performance targets are established at the outset, and the final contract price is determined after completion of all work based on the seller’s performance. Under FPIF contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller, who is obligated to complete the work.

○ Fixed Price with Economic Price Adjustment Contracts (FP-EPA). This contract type is used whenever the seller’s performance period spans a considerable period of years, as is desired with many long-term relationships. It is a fixed-price contract, but with a special provision allowing for pre defined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases (or decreases) for specific commodities. The EPA clause needs to relate to some reliable financial index, which is used to precisely adjust the final price. The FP-EPA contract is intended to protect both buyer and seller from external conditions beyond their control.

• cost-reimbursable contracts. This category of contract involves payments (cost reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit. Cost-reimbursable contracts may also include financial incentive clauses whenever the seller exceeds, or falls below, defined objectives such as costs, schedule, or technical performance targets. Three of the more common types of cost-reimbursable contracts in use are Cost Plus Fixed Fee (CPFF), Cost Plus Incentive Fee (CPIF), and Cost Plus Award Fee (CPAF). A cost-reimbursable contract provides the project flexibility to redirect a seller whenever the scope of work cannot be precisely defined at the start and needs to be altered, or when high risks may exist in the effort.

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○ Cost Plus Fixed Fee Contracts (CPFF). The seller is reimbursed for all allowable costs for performing the contract work, and receives a fixed-fee payment calculated as a percentage of the initial estimated project costs. A fee is paid only for completed work and does not change due to seller performance. Fee amounts do not change unless the project scope changes.

○ Cost Plus Incentive Fee Contracts (CPIF). The seller is reimbursed for all allowable costs for performing the contract work and receives a predetermined incentive fee based upon achieving certain performance objectives as set forth in the contract. In CPIF contracts, if the final costs are less or greater than the original estimated costs, then both the buyer and seller share costs from the departures based upon a prenegotiated cost-sharing formula, for example, an 80/20 split over/under target costs based on the actual performance of the seller.

○ Cost Plus Award Fee Contracts (CPAF). The seller is reimbursed for all legitimate costs, but the majority of the fee is earned only based on the satisfaction of certain broad subjective performance criteria defined and incorporated into the contract. The determination of fee is based solely on the subjective determination of seller performance by the buyer, and is generally not subject to appeals.

• time and Material contracts (t&M). Time and material contracts are a hybrid type of contractual arrangement that contain aspects of both cost-reimbursable and fixed-price contracts. They are often used for staff augmentation, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed. These types of contracts resemble cost-reimbursable contracts in that they can be left open ended and may be subject to a cost increase for the buyer. The full value of the agreement and the exact quantity of items to be delivered may not be defined by the buyer at the time of the contract award. Thus, T&M contracts can increase in contract value as if they were cost- reimbursable contracts. Many organizations require not-to-exceed values and time limits placed in all T&M contracts to prevent unlimited cost growth. Conversely, T&M contracts can also resemble fixed unit price arrangements when certain parameters are specified in the contract. Unit labor or material rates can be preset by the buyer and seller, including seller profit, when both parties agree on the values for specific resource categories, such as senior engineers at specified rates per hour, or categories of materials at specified rates per unit.

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12.1.2 Plan Procurement Management: tools and techniques

12.1.2.1 Make-or-Buy Analysis

A make-or-buy analysis is a general management technique used to determine whether particular work can best be accomplished by the project team or should be purchased from outside sources. Sometimes a capability may exist within the project organization, but may be committed to working on other projects, in which case, the project may need to source such effort from outside the organization in order to meet its schedule commitments.

Budget constraints may influence make-or-buy decisions. If a buy decision is to be made, then a further decision of whether to purchase or lease is also made. A make-or-buy analysis should consider all related costs—both direct costs as well as indirect support costs. For example, the buy-side of the analysis includes both the actual out-of-pocket costs to purchase the product, as well as the indirect costs of supporting the purchasing process and purchased item.

Available contract types are also considered during the buy analysis. The risk sharing between the buyer and seller determines the suitable contract types, while the specific contract terms and conditions formalize the degree of risk being assumed by the buyer and seller. Some jurisdictions have other types of contracts defined, for example, contract types based on the obligations of the seller—not the customer—and the contract parties have the obligation to identify the appropriate type of contract as soon as the applicable law has been agreed upon.

12.1.2.2 Expert Judgment

Expert judgment is often used to assess the inputs to and outputs from this process. Expert purchasing judgment can also be used to develop or modify the criteria that will be used to evaluate seller proposals. Expert legal judgment may involve the services of legal staff to assist with unique procurement issues, terms, and conditions. Such judgment, including business and technical expertise, can be applied to both the technical details of the acquired products, services, or results and to various aspects of the procurement management processes.

12.1.2.3 Market research

Market research includes examination of industry and specific vendor capabilities. Procurement teams may leverage information gained at conferences, online reviews and a variety of sources to identify market capabilities. The team may also refine particular procurement objectives to leverage maturing technologies while balancing risks associated with the breadth of vendors who can provide the materials or services desired.

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12.1.2.4 Meetings

Research alone may not provide specific information to formulate a procurement strategy without additional information interchange meetings with potential bidders. By collaborating with potential bidders, the organization purchasing the material or service may benefit while the supplier can influence a mutually beneficial approach or product.

12.1.3 Plan Procurement Management: outputs

12.1.3.1 Procurement Management Plan

The procurement management plan is a component of the project management plan that describes how a project team will acquire goods and services from outside the performing organization. It describes how the procurement processes will be managed from developing procurement documents through contract closure. The procurement management plan can include guidance for:

• Types of contracts to be used;

• Risk management issues;

• Whether independent estimates will be used and whether they are needed as evaluation criteria;

• Those actions the project management team can take unilaterally, if the performing organization has a prescribed procurement, contracting, or purchasing department;

• Standardized procurement documents, if needed;

• Managing multiple suppliers;

• Coordinating procurement with other project aspects, such as scheduling and performance reporting;

• Any constraints and assumptions that could affect planned procurements;

• Handling the long lead times to purchase certain items from sellers and coordinating the extra time needed to procure these items with the development of the project schedule;

• Handling the make-or-buy decisions and linking them into the Estimate Activity Resources and Develop Schedule processes;

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• Setting the scheduled dates in each contract for the contract deliverables and coordinating with the schedule development and control processes;

• Identifying requirements for performance bonds or insurance contracts to mitigate some forms of project risk;

• Establishing the direction to be provided to the sellers on developing and maintaining a work breakdown structure (WBS);

• Establishing the form and format to be used for the procurement/contract statements of work;

• Identifying prequalified sellers, if any, to be used; and

• Procurement metrics to be used to manage contracts and evaluate sellers.

A procurement management plan can be formal or informal, can be highly detailed or broadly framed, and is based upon the needs of each project.

12.1.3.2 Procurement Statement of Work

The statement of work (SOW) for each procurement is developed from the project scope baseline and defines only that portion of the project scope that is to be included within the related contract. The procurement SOW describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results. Sufficient detail can vary based on the nature of the item, the needs of the buyer, or the expected contract form. Information included in a SOW can include specifications, quantity desired, quality levels, performance data, period of performance, work location, and other requirements.

The procurement SOW is written to be clear, complete, and concise. It includes a description of any collateral services required, such as performance reporting or post-project operational support for the procured item. In some application areas, there are specific content and format requirements for a procurement SOW. Each individual procurement item requires a SOW; however, multiple products or services can be grouped as one procurement item within a single SOW.

The procurement SOW can be revised and refined as required as it moves through the procurement process until incorporated into a signed agreement.

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12.1.3.3 Procurement documents

Procurement documents are used to solicit proposals from prospective sellers. Terms such as bid, tender, or quotation are generally used when the seller selection decision will be based on price (as when buying commercial or standard items), while a term such as proposal is generally used when other considerations, such as technical capability or technical approach are paramount. Common terms are in use for different types of procurement documents and may include request for information (RFI), invitation for bid (IFB), request for proposal (RFP), request for quotation (RFQ), tender notice, invitation for negotiation, and invitation for seller’s initial response. Specific procurement terminology used may vary by industry and location of the procurement.

The buyer structures procurement documents to facilitate an accurate and complete response from each prospective seller and to facilitate easy evaluation of the responses. These documents include a description of the desired form of the response, the relevant procurement statement of work (SOW) and any required contractual provisions. With government contracting, some or all of the content and structure of procurement documents may be defined by regulation.

The complexity and level of detail of the procurement documents should be consistent with the value of, and risks associated with, the planned procurement. Procurement documents are required to be sufficient to ensure consistent, appropriate responses, but flexible enough to allow consideration of any seller suggestions for better ways to satisfy the same requirements.

Issuing a procurement request to potential sellers to submit a proposal or bid is normally done in accordance with the policies of the buyer’s organization, which can include publication of the request in public newspapers, in trade journals, in public registries, or on the internet.

12.1.3.4 Source Selection criteria

Source selection criteria are often included as a part of the procurement documents. Such criteria are developed and used to rate or score seller proposals, and can be objective or subjective.

Selection criteria may be limited to only the purchase price if the procurement item is readily available from a number of acceptable sellers. Purchase price in this context includes both the cost of the item and all ancillary expenses such as delivery.

Other selection criteria can be identified and documented to support an assessment for more complex products, services, or results. Some possible source selection criteria are:

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• understanding of need. How well does the seller’s proposal address the procurement statement of work?

• overall or life-cycle cost. Will the selected seller produce the lowest total cost of ownership (purchase cost plus operating cost)?

• technical capability. Does the seller have, or can the seller be reasonably expected to acquire, the technical skills and knowledge needed?

• risk. How much risk is embedded in the statement of work, how much risk will be assigned to the selected seller and how does the seller mitigate risk?

• Management approach. Does the seller have, or can the seller be reasonably expected to develop, management processes and procedures to ensure a successful project?

• technical approach. Do the seller’s proposed technical methodologies, techniques, solutions, and services meet the procurement documents requirements or are they likely to provide more or less than the expected results?

• Warranty. What does the seller propose to warrant for the final product, and through what time period?

• Financial capacity. Does the seller have, or can the seller reasonably be expected to obtain, the necessary financial resources?

• Production capacity and interest. Does the seller have the capacity and interest to meet potential future requirements?

• Business size and type. Does the seller’s enterprise meet a specific category of business such as small business (disadvantaged, specific programs, etc.) as defined by the organization or established by governmental agency and set forth as a condition of the agreement award?

• Past performance of sellers. What has been the past experience with selected sellers?

• references. Can the seller provide references from prior customers verifying the seller’s work experience and compliance with contractual requirements?

• Intellectual property rights. Does the seller assert intellectual property rights in the work processes or services they will use or in the products they will produce for the project?

• Proprietary rights. Does the seller assert proprietary rights in the work processes or services they will use or in the products they will produce for the project?

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12.1.3.5 Make-or-Buy decisions

A make-or-buy analysis results in a decision of whether particular work can best be accomplished by the project team or needs to be purchased from outside sources. If the decision is to make the item, then the procurement plan may define processes and agreements internal to the organization. A buy decision drives a similar process of reaching agreement with a supplier for the product or services.

12.1.3.6 change requests

A decision that involves procuring goods, services, or resources typically requires a change request. Other decisions during procurement planning can also create the need for additional change requests. Change requests are processed for review and disposition through the Perform Integrated Change Control process (Section 4.5). Changes to the project management plan, its subsidiary plans, and other components may result in change requests that impact procurement actions. Change requests are processed for review and disposition through the Perform Integrated Change Control process (Section 4.5).

12.1.3.7 Project documents updates

Project documents that may be updated include, but are not limited to:

• Requirements documentation,

• Requirements traceability matrix, and

• Risk register.

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12.2 conduct Procurements

Conduct Procurements is the process of obtaining seller responses, selecting a seller, and awarding a contract. The key benefit of this process is that it provides alignment of internal and external stakeholder expectations through established agreements. The inputs, tools and techniques, and outputs of this process are depicted in Figure 12-4. Figure 12-5 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Procurement management plan .2 Procurement documents .3 Source selection criteria .4 Seller proposals .5 Project documents .6 Make-or-buy decisions .7 Procurement statement of work .8 Organizational process assets

.1 Bidder conference

.2 Proposal evaluation techniques .3 Independent estimates .4 Expert judgment .5 Advertising .6 Analytical techniques .7 Procurement negotiations

.1 Selected sellers

.2 Agreements

.3 Resource calendars

.4 Change requests

.5 Project management plan updates .6 Project documents updates

Figure 12-4. conduct Procurements: Inputs, tools & techniques, and outputs

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• Selected sellers

Project Procurement Management

12.2 Conduct

Procurements

12.1 Plan

Procurement Management

12.3 Control

Procurements

4.1 Develop Project

Charter

• Organizational process assets

• Project documents

• Procurement management plan • Procurement documents • Source selection criteria • Make-or-buy decisions • Procurement statement of work

• Resource calendars

• Change requests

• Agreements

• Project management plan updates

• Project documents updates

• Seller proposals 6.5

Estimate Activity

Durations

4.5 Perform

Integrated Change Control

6.4 Estimate Activity

Resources

4.2 Develop Project Management

Plan

6.6 Develop Schedule

7.3 Determine

Budget

9.3 Develop

Project Team

Project Documents

Enterprise/ Organization

Sellers

Figure 12-5. conduct Procurements data Flow diagram

During the Conduct Procurements process, the team will receive bids or proposals and will apply previously defined selection criteria to select one or more sellers who are qualified to perform the work and acceptable as a seller.

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On major procurement items, the overall process of requesting responses from sellers and evaluating those responses can be repeated. A short list of qualified sellers can be established based on a preliminary proposal. A more detailed evaluation can then be conducted based on a more specific and comprehensive requirements document requested from the sellers on the short list. In addition, tools and techniques described here may be used alone or in combination with select sellers. For example, a weighting system can be used to:

• Select a single seller that will be asked to sign a standard contract; and

• Establish a negotiating sequence by ranking all proposals by the weighted evaluation scores assigned to each proposal.

12.2.1 conduct Procurements: Inputs

12.2.1.1 Procurement Management Plan

Described in Section 4.2.3.1. The procurement management plan describes how the procurement processes will be managed from developing procurement documentation through contract closure.

12.2.1.2 Procurement documents

Described in Section 12.1.3.3. Procurement documents provide an audit trail for contracts and other agreements.

12.2.1.3 Source Selection criteria

Described in Section 12.1.3.4.

Source selection criteria can include information on the supplier’s required capabilities, capacity, delivery dates, product cost, life-cycle cost, technical expertise, and the approach to the contract.

12.2.1.4 Seller Proposals

Seller proposals, prepared in response to a procurement document package, form the basic information that will be used by an evaluation body to select one or more successful bidders (sellers).

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12.2.1.5 Project documents

Described in Section 11.5.3.2. Project documents that are often considered include the risk-related contract decisions included within the risk register.

12.2.1.6 Make-or-Buy decisions

Described in Section 12.1.3.5. Organizations procuring goods or services analyze the need, identify resources, and then compare procurement strategies when deciding to buy. Organizations also evaluate the need of buying products versus making the items themselves. Factors that influence make-or-buy decisions may include:

• Core capabilities of the organization,

• Value delivered by vendors meeting the need,

• Risks associated with meeting the need in a cost-effective manner, and

• Capability internally compared with the vendor community.

12.2.1.7 Procurement Statement of Work

Described in Section 12.1.3.2. The procurement statement of work provides suppliers with a clearly stated set of goals, requirements, and outcomes from which they can provide a quantifiable response. The statement of work is a critical component of the procurement process and can be modified as needed through this process until a final agreement is in place. The statements of work may include, but are not limited to:

• Specifications,

• Quantity desired,

• Quality levels,

• Performance data,

• Period of performance,

• Work location, and

• Other requirements.

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12.2.1.8 organizational Process Assets

Described in Section 2.1.4. Elements of the organizational process assets that can influence the Conduct Procurements process include, but are not limited to:

• Listings of prospective and previously qualified sellers,

• Information on relevant past experience with sellers, both good and bad, and

• Prior agreements.

Whenever a prior agreement is in place, the buyer and seller roles will have already been decided by executive management. In some cases, the seller may already be working under a contract funded by the buyer or jointly by both parties. The effort of the buyer and seller in this process is to collectively prepare a procurement statement of work that will satisfy the requirements of the project. The parties will then negotiate a final contract for award.

12.2.2 conduct Procurements: tools and techniques

12.2.2.1 Bidder conferences

Bidder conferences (sometimes called contractor conferences, vendor conferences, and pre-bid conferences) are meetings between the buyer and all prospective sellers prior to submittal of a bid or proposal. They are used to ensure that all prospective sellers have a clear and common understanding of the procurement requirements), and that no bidders receive preferential treatment. To be fair, buyers should take great care to ensure that all prospective sellers hear every question from any individual prospective seller and every answer from the buyer. Typically fairness is addressed by techniques such as collecting questions from bidders or arranging field visits in advance of the bidder conference. Responses to questions can be incorporated into the procurement documents as amendments.

12.2.2.2 Proposal Evaluation techniques

On complex procurements, where source selection will be made based on seller responses to previously defined weighted criteria, a formal evaluation review process will be defined by the buyer’s procurement policies. The evaluation committee will make their selection for approval by management prior to the award.

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12.2.2.3 Independent Estimates

For many procurement items, the procuring organization may elect to either prepare its own independent estimate, or have an estimate of costs prepared by an outside professional estimator, to serve as a benchmark on proposed responses. Significant differences in cost estimates can be an indication that the procurement statement of work was deficient, ambiguous, and/or that the prospective sellers either misunderstood or failed to respond fully to the procurement statement of work.

12.2.2.4 Expert Judgment

Expert judgment may be used in evaluating seller proposals. The evaluation of proposals may be accomplished by a multi-discipline review team with expertise in each of the areas covered by the procurement documents and proposed contract. This can include expertise from functional disciplines such as contracting, legal, finance, accounting, engineering, design, research, development, sales, and manufacturing.

12.2.2.5 Advertising

Existing lists of potential sellers often can be expanded by placing advertisements in general circulation publications such as selected newspapers or in specialty trade publications. Some organizations use online resources to communicate solicitations to the vendor community. Some government jurisdictions require public advertising of certain types of procurement items, and most government jurisdictions require public advertising or online posting of pending government contracts.

12.2.2.6 Analytical techniques

Procurements involve defining a need in such a way that vendors can bring value through their offerings. To ensure that the need can be and is met, analytical techniques can help organizations identify the readiness of a vendor to provide the desired end state, determine the cost expected to support budgeting, and avoid cost overruns due to changes. By examining past performance information, teams may identify areas that may have more risk and that need to be monitored closely to ensure success of the project.

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12.2.2.7 Procurement negotiations

Procurement negotiations clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached prior to signing the contract. Final contract language reflects all agreements reached. Subjects covered should include responsibilities, authority to make changes, applicable terms and governing law, technical and business management approaches, proprietary rights, contract financing, technical solutions, overall schedule, payments, and price. Negotiations conclude with a contract document that can be executed by both buyer and seller.

For complex procurement items, contract negotiation can be an independent process with inputs (e.g., issues or an open items listing) and outputs (e.g., documented decisions) of its own. For simple procurement items, the terms and conditions of the contract can be previously set and nonnegotiable, and only need to be accepted by the seller.

The project manager may not be the lead negotiator on procurements. The project manager and other members of the project management team may be present during negotiations to provide assistance, and, if needed, to add clarification of the project’s technical, quality, and management requirements.

12.2.3 conduct Procurements: outputs

12.2.3.1 Selected Sellers

The selected sellers are those who have been judged to be in a competitive range based upon the outcome of the proposal or bid evaluation, and who have negotiated a draft contract that will become the actual contract when an award is made. Final approval of all complex, high-value, high-risk procurements will generally require organizational senior management approval prior to award.

12.2.3.2 Agreements

A procurement agreement includes terms and conditions, and may incorporate other items that the buyer specifies regarding what the seller is to perform or provide. It is the project management team’s responsibility to make certain that all agreements meet the specific needs of the project while adhering to organizational procurement policies. Depending upon the application area, an agreement can also be called an understanding, a contract, a subcontract, or a purchase order. Regardless of the document’s complexity, a contract is a mutually binding legal agreement that obligates the seller to provide the specified products, services, or results, and obligates the buyer to compensate the seller. A contract is a legal relationship subject to remedy in the courts. The major components in an agreement document will vary, but may include the following:

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• Statement of work or deliverables,

• Schedule baseline,

• Performance reporting,

• Period of performance,

• Roles and responsibilities,

• Seller’s place of performance,

• Pricing,

• Payment terms,

• Place of delivery,

• Inspection and acceptance criteria,

• Warranty,

• Product support,

• Limitation of liability,

• Fees and retainer,

• Penalties,

• Incentives,

• Insurance and performance bonds,

• Subordinate subcontractor approvals,

• Change request handling, and

• Termination clause and alternative dispute resolution (ADR) mechanisms. The ADR method can be decided in advance as a part of the procurement award.

12.2.3.3 resource calendars

The quantity and availability of contracted resources and those dates on which each specific resource or resource group can be active or idle are documented.

12.2.3.4 change requests

Change requests to the project management plan, its subsidiary plans, and other components are processed for review and disposition through the Perform Integrated Change Control process (Section 4.5).

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12.2.3.5 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Cost baseline,

• Scope baseline,

• Schedule baseline,

• Communications management plan, and

• Procurement management plan.

12.2.3.6 Project documents updates

Project documents that may be updated include, but are not limited to:

• Requirements documentation,

• Requirements traceability documentation,

• Risk register, and

• Stakeholder register.

12.3 control Procurements

Control Procurements is the process of managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as appropriate. The key benefit of this process is that it ensures that both the seller’s and buyer’s performance meets procurement requirements according to the terms of the legal agreement. The inputs, tools and techniques, and outputs of this process are depicted in Figure 12-6. Figure 12-7 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Procurement documents

.3 Agreements

.4 Approved change requests .5 Work performance reports .6 Work performance data

.1 Contract change control system .2 Procurement performance reviews .3 Inspections and audits .4 Performance reporting .5 Payment systems .6 Claims administration .7 Records management system

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure 12-6. control Procurements: Inputs, tools & techniques, and outputs

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Project Procurement Management

12.3 Control

Procurements

12.1 Plan

Procurement Management

12.2 Conduct

Procurements

• Work performance information

• Agreements

• Procurement documents

• Project documents updates

• Change requests

• Work performance reports

• Work performance data

• Approved change requests

• Project management plan

• Project management plan updates

• Organizational process assets updates

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

4.5 Perform

Integrated Change Control

4.2 Develop Project Management

Plan

4.3 Direct and

Manage Project Work

Enterprise/ Organization

Project Documents

Figure 12-7. control Procurements data Flow diagram

Both the buyer and the seller will administer the procurement contract for similar purposes. Each are required to ensure that both parties meet their contractual obligations and that their own legal rights are protected. The legal nature of the contractual relationship makes it imperative that the project management team is aware of the legal implications of actions taken when controlling any procurement. On larger projects with multiple providers, a key aspect of contract administration is managing interfaces among the various providers.

Due to varying organizational structures, many organizations treat contract administration as an administrative function separate from the project organization. While a procurement administrator may be on the project team, this individual typically reports to a supervisor from a different department. This is usually true if the performing organization is also the seller of the project to an external customer.

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Control Procurements includes application of the appropriate project management processes to the contractual relationship(s) and integration of the outputs from these processes into the overall management of the project. This integration will often occur at multiple levels when there are multiple sellers and multiple products, services, or results involved. The project management processes that are applied may include, but are not limited to:

• direct and Manage Project Work. To authorize the seller’s work at the appropriate time.

• control Quality. To inspect and verify the adequacy of the seller’s product.

• Perform Integrated change control. To assure that changes are properly approved and that all those with a need to know are aware of such changes.

• control risks. To ensure that risks are mitigated.

Control Procurements also has a financial management component that involves monitoring payments to the seller. This ensures that payment terms defined within the contract are met and that seller compensation is linked to seller progress, as defined in the contract. One of the principal concerns when making payments to suppliers is that there is a close relationship of payments made to the work accomplished.

The Control Procurements process reviews and documents how well a seller is performing or has performed based on the contract and establishes corrective actions when needed. This performance review may be used as a measure of the seller’s competency for performing similar work on future projects. Similar evaluations are also carried out when it is necessary to confirm that a seller is not meeting the seller’s contractual obligations and when the buyer contemplates corrective actions. Control Procurements includes capturing the necessary details for managing any early terminations of the contracted work (for cause, convenience, or default) in accordance with the termination clause of the agreement. These details are used in the Close Procurements process to terminate the agreement.

Agreements can be amended at any time prior to contract closure by mutual consent, in accordance with the change control terms of the agreement. Such amendments are typically captured in writing.

12.3.1 control Procurements: Inputs

12.3.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan describes how the procurement processes will be managed from developing procurement documentation through contract closure.

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12.3.1.2 Procurement documents

Described in Section 12.1.3.3. Procurement documents contain complete supporting records for administration of the procurement processes; this includes procurement contract awards and the statement of work.

12.3.1.3 Agreements

Described in Section 12.2.3.2. Agreements are understandings between parties, including understanding of the duties of each party.

12.3.1.4 Approved change requests

Approved change requests can include modifications to the terms and conditions of the contract, including the procurement statement of work, pricing, and descriptions of the products, services, or results to be provided. All procurement-related changes are formally documented in writing and approved before being implemented through the Control Procurements process.

12.3.1.5 Work Performance reports

Described in Section 4.4.3.2. Seller performance-related documentation includes:

• technical documentation. Seller-developed technical documentation and other deliverable information are provided in accordance with the terms of the contract.

• Work performance information. The seller’s performance reports indicate which deliverables have been completed and which have not.

12.3.1.6 Work Performance data

Described in Section 4.3.3.2. Work performance data includes (1) the extent to which quality standards are being satisfied, (2) the costs that have been incurred or committed, and (3) identification of the seller invoices that have been paid. All data are collected as part of project execution.

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12.3.2 control Procurements: tools and techniques

12.3.2.1 contract change control System

A contract change control system defines the process by which the procurement can be modified. It includes the paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes. The contract change control system is integrated with the integrated change control system.

12.3.2.2 Procurement Performance reviews

A procurement performance review is a structured review of the seller’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract. It can include a review of seller-prepared documentation and buyer inspections, as well as quality audits conducted during seller’s execution of the work. The objective of a performance review is to identify performance successes or failures, progress with respect to the procurement statement of work, and contract noncompliance, which allow the buyer to quantify the seller’s demonstrated ability or inability to perform work. Such reviews may take place as a part of project status reviews, which would include key suppliers.

12.3.2.3 Inspections and Audits

Inspections and audits required by the buyer and supported by the seller, as specified in the procurement contract, can be conducted during execution of the project to verify compliance in the seller’s work processes or deliverables. If authorized by contract, some inspection and audit teams can include buyer procurement personnel.

12.3.2.4 Performance reporting

Work performance data and reports supplied by sellers are evaluated against the agreement requirements. Work performance information from this evaluation is then reported as appropriate. Performance reporting provides management with information about how effectively the seller is achieving the contractual objectives.

12.3.2.5 Payment Systems

Payments to the seller are typically processed by the accounts payable system of the buyer after certification of satisfactory work by an authorized person on the project team. All payments should be made and documented in strict accordance with the terms of the contract.

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12.3.2.6 claims Administration

Contested changes and potential constructive changes are those requested changes where the buyer and seller cannot reach an agreement on compensation for the change or cannot agree that a change has occurred. These contested changes are variously called claims, disputes, or appeals. Claims are documented, processed, monitored, and managed throughout the contract life cycle, usually in accordance with the terms of the contract. If the parties themselves do not resolve a claim, it may have to be handled in accordance with alternative dispute resolution (ADR) typically following procedures established in the contract. Settlement of all claims and disputes through negotiation is the preferred method.

12.3.2.7 records Management System

A records management system is used by the project manager to manage contract and procurement documentation and records. It consists of a specific set of processes, related control functions, and automation tools that are consolidated and combined as part of the project management information system (Section 4.4.2.3). The system contains a retrievable archive of contract documents and correspondence.

12.3.3 control Procurements: outputs

12.3.3.1 Work Performance Information

Work performance information provides a basis for identification of current or potential problems to support later claims or new procurements. By reporting on the performance of a vendor, the organization increases knowledge of the performance of the procurement, which supports improved forecasting, risk management, and decision making. Performance reports also assist in the event there is a dispute with the vendor.

Work performance information includes reporting compliance of contracts, which provides procuring organizations a mechanism to track specific deliverables expected and received from vendors. Contract compliance reports support improved communications with vendors so that potential issues are addressed promptly to the satisfaction of all parties.

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12.3.3.2 change requests

Change requests to the project management plan, its subsidiary plans, and other components, such as the cost baseline, schedule baseline, and procurement management plan, may result from the Control Procurements process. Change requests are processed for review and approval through the Perform Integrated Change Control process.

Requested but unresolved changes can include direction provided by the buyer or actions taken by the seller, which the other party considers a constructive change to the contract. Since any of these constructive changes may be disputed by one party and can lead to a claim against the other party, such changes are uniquely identified and documented by project correspondence.

12.3.3.3 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to:

• Procurement management plan. The procurement management plan is updated to reflect any approved change requests that affect procurement management, including impacts to costs or schedules.

• Schedule baseline. If there are slippages that impact overall project performance, the schedule baseline may need to be updated to reflect the current expectations.

• cost baseline. If there are changes that impact overall project costs, the cost baseline may need to be updated to reflect the current expectations.

12.3.3.4 Project documents updates

Project documents that may be updated include, but are not limited to, procurement documentation. Procurement documentation may include the procurement contract with all supporting schedules, requested unapproved contract changes, and approved change requests. Procurement documentation also includes any seller-developed technical documentation and other work performance information, such as deliverables, seller performance reports and warranties, financial documents including invoices and payment records, and the results of contract-related inspections.

12.3.3.5 organizational Process Assets updates

Elements of the organizational process assets that may be updated include, but are not limited to:

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• correspondence. Contract terms and conditions often require written documentation of certain aspects of buyer/seller communications, such as the need for warnings of unsatisfactory performance and requests for contract changes or clarification. This can include the reported results of buyer audits and inspections that indicate weaknesses the seller needs to correct. In addition to specific contract requirements for documentation, a complete and accurate written record of all written and oral contract communications, as well as actions taken and decisions made, are maintained by both parties.

• Payment schedules and requests. All payments should be made in accordance with the procurement contract terms and conditions.

• Seller performance evaluation documentation. Seller performance evaluation documentation is prepared by the buyer. Such performance evaluations document the seller’s ability to continue to perform work on the current contract, indicate if the seller can be allowed to perform work on future projects, or rate how well the seller is performing the project work. These documents may form the basis for early termination of the seller’s contract or determine how contract penalties, fees, or incentives are administered. The results of these performance evaluations can also be included in the appropriate qualified seller lists.

12.4 close Procurements

Close Procurements is the process of completing each procurement. The key benefit of this process is that it documents agreements and related documentation for future reference. The inputs, tools and techniques, and outputs of this process are depicted in Figure 12-8. Figure 12-9 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Procurement documents .1 Procurement audits .2 Procurement negotiations .3 Records management system

.1 Closed procurements

.2 Organizational process assets updates

Figure 12-8. close Procurements: Inputs, tools & techniques, and outputs

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Project Procurement Management

12.4 Close

Procurements

12.1 Plan

Procurement Management

• Organizational process assets updates

• Procurement documents

• Project management plan

• Closed procurements

4.2 Develop Project Management

Plan

Enterprise/ Organization

Figure 12-9. close Procurements data Flow diagram

The Close Procurements process also involves administrative activities such as finalizing open claims, updating records to reflect final results, and archiving such information for future use. Close Procurements addresses each contract applicable to the project or a project phase. In multiphase projects, the term of a contract may only be applicable to a given phase of the project. In these cases, the Close Procurements process closes the procurement(s) applicable to that phase of the project. Unresolved claims may be subject to litigation after closure. The contract terms and conditions can prescribe specific procedures for agreement closure. The Close Procurements process supports the Close Project or Phase process (Section 4.6) by ensuring contractual agreements are completed or terminated.

Early termination of a contract is a special case of procurement closure that can result from a mutual agreement by both parties, from the default of one party, or for convenience of the buyer if provided for in the contract. The rights and responsibilities of the parties in the event of an early termination are contained in the terminations clause of the contract. Based upon those procurement terms and conditions, the buyer may have the right to terminate the whole contract or a portion of the contract, at any time, for cause or convenience. However, based upon those contract terms and conditions, the buyer may have to compensate the seller for seller’s preparations and for any completed and accepted work related to the terminated part of the contract.

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12.4.1 close Procurements: Inputs

12.4.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains the procurement management plan, which provides the details and guidelines for closing out procurements.

12.4.1.2 Procurement documents

To close the contract, all procurement documentation is collected, indexed, and filed. Information on contract schedule, scope, quality, and cost performance along with all contract change documentation, payment records, and inspection results are cataloged. This information can be used for lessons learned information and as a basis for evaluating contractors for future contracts.

12.4.2 close Procurements: tools and techniques

12.4.2.1 Procurement Audits

A procurement audit is a structured review of the procurement process originating from the Plan Procurement Management process through Control Procurements. The objective of a procurement audit is to identify successes and failures that warrant recognition in the preparation or administration of other procurement contracts on the project, or on other projects within the performing organization.

12.4.2.2 Procurement negotiations

In all procurement relationships, the final equitable settlement of all outstanding issues, claims, and disputes by negotiation is a primary goal. Whenever settlement cannot be achieved through direct negotiation, some form of alternative dispute resolution (ADR) including mediation or arbitration may be explored. When all else fails, litigation in the courts is the least desirable option.

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12.4.2.3 records Management System

Described in Section 12.3.2.7. A records management system is used by the project manager to manage contract and procurement documentation and records. Contract documents and correspondence are archived through the records management system as part of the Close Procurements process.

12.4.3 close Procurements: outputs

12.4.3.1 closed Procurements

The buyer, usually through its authorized procurement administrator, provides the seller with formal written notice that the contract has been completed. Requirements for formal procurement closure are usually defined in the terms and conditions of the contract and are included in the procurement management plan.

12.4.3.2 organizational Process Assets updates

Elements of the organizational process assets that may be updated include, but are not limited to:

• Procurement file. A complete set of indexed contract documentation, including the closed contract, is prepared for inclusion with the final project files.

• deliverable acceptance. Documentation of formal acceptance of seller-provided deliverables may be required to be retained by the organization. The Close Procurement process ensures this documentation requirement is satisfied. Requirements for formal deliverable acceptance and how to address nonconforming deliverables are usually defined in the agreement.

• Lessons learned documentation. Lessons learned, what has been experienced, and process improvement recommendations, should be developed for the project file to improve future procurements.

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Project stAKeholder MAnAGeMent Project Stakeholder Management includes the processes required to identify the people, groups, or

organizations that could impact or be impacted by the project, to analyze stakeholder expectations and their impact on the project, and to develop appropriate management strategies for effectively engaging stakeholders in project decisions and execution. Stakeholder management also focuses on continuous communication with stakeholders to understand their needs and expectations, addressing issues as they occur, managing conflicting interests and fostering appropriate stakeholder engagement in project decisions and activities. Stakeholder satisfaction should be managed as a key project objective.

Figure 13-1 provides an overview of the Project Stakeholder Management processes that include the following:

13.1 Identify Stakeholders—The process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project; and analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success.

13.2 Plan Stakeholder Management—The process of developing appropriate management strategies to effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs, interests, and potential impact on project success.

13.3 Manage Stakeholder Engagement—The process of communicating and working with stakeholders to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle.

13.4 control Stakeholder Engagement—The process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders.

These processes interact with each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex A1.

Every project will have stakeholders who are impacted by or can impact the project in a positive or negative way. While some stakeholders may have a limited ability to influence the project, others may have significant influence on the project and its expected outcomes. The ability of the project manager to correctly identify and manage these stakeholders in an appropriate manner can mean the difference between success and failure.

1313

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.1 Inputs .1 Project charter .2 Procurement documents .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Stakeholder analysis .2 Expert judgment .3 Meetings

.3 Outputs .1 Stakeholder register

.1 Inputs .1 Project management plan .2 Stakeholder register .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Meetings .3 Analytical techniques

.3 Outputs .1 Stakeholder management plan .2 Project documents updates

.1 Inputs .1 Stakeholder management plan .2 Communications management plan .3 Change log .4 Organizational process assets

.2 Tools & Techniques .1 Communication methods .2 Interpersonal skills .3 Management skills

.3 Outputs .1 Issue log .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Project Stakeholder Management Overview

13.2 Plan Stakeholder Management

13.1 Identify Stakeholders

.1 Inputs .1 Project management plan .2 Issue log .3 Work performance data .4 Project documents

.2 Tools & Techniques .1 Information management systems .2 Expert judgment .3 Meetings

.3 Outputs .1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

13.4 Control Stakeholder Engagement

13.3 Manage Stakeholder Engagement

Figure 13-1. Project Stakeholder Management overview

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13.1 Identify Stakeholders

Identify Stakeholders is the process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project, analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success. The key benefit of this process is that it allows the project manager to identify the appropriate focus for each stakeholder or group of stakeholders. The inputs, tools and techniques, and outputs of this process are depicted in Figure 13-2. Figure 13-3 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project charter

.2 Procurement documents

.3 Enterprise environmental factors .4 Organizational process assets

.1 Stakeholder analysis

.2 Expert judgment

.3 Meetings

.1 Stakeholder register

Figure 13-2. Identify Stakeholders: Inputs, tools & techniques, and outputs

Project Stakeholder Management

13.1 Identify

Stakeholders

13.2 Plan

Stakeholder Management

• Procurement documents

• Project charter

• Stakeholder register

• Organizational process assets • Enterprise environmental factors

10.1 Plan

Communications Management

12.1 Plan

Procurement Management

12.1 Plan

Procurement Management

4.1 Develop Project

Charter

5.2 Collect

Requirements

8.1 Plan Quality Management

11.1 Plan Risk

Management

11.2 Identify Risks

Enterprise/ Organization

Figure 13-3. Identify Stakeholders data Flow diagram

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Project stakeholders are individuals, groups, or organizations who may affect, be affected by, or perceive themselves to be affected by a decision, activity, or outcome of a project. They are comprised of persons and organizations such as customers, sponsors, the performing organization, and the public who are actively involved in the project, or whose interests may be positively or negatively affected by the execution or completion of the project. They may also exert influence over the project and its deliverables. Stakeholders may be at different levels within the organization and may possess different authority levels, or may be external to the performing organization for the project. Section 13.1.2.1 identifies various types of project stakeholders.

It is critical for project success to identify the stakeholders early in the project or phase and to analyze their levels of interest, their individual expectations, as well as their importance and influence. This initial assessment should be reviewed and updated regularly. Most projects will have a diverse number of stakeholders depending on their size, type, and complexity. While the project manager’s time is limited and should be used as efficiently as possible, these stakeholders should be classified according to their interest, influence, and involvement in the project, taking into consideration the fact that the affect or influence of a stakeholder may not occur or become evident until later stages in the project or phase. This enables the project manager to focus on the relationships necessary to ensure the success of the project.

13.1.1 Identify Stakeholders: Inputs

13.1.1.1 Project charter

Described in Section 4.1.3.1. The project charter can provide information about internal and external parties related with the project and affected by the result or the execution of the project, such as project sponsor(s), customers, team members, groups and departments participating in the project, and other people or organizations affected by the project.

13.1.1.2 Procurement documents

Described in Section 12.1.3.3. If a project is the result of a procurement activity or is based on an established contract, the parties in that contract are key project stakeholders. Other relevant parties, such as suppliers, should also be considered as part of the project stakeholder list.

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13.1.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. The enterprise environmental factors that can influence the Identify Stakeholders process include, but are not limited to:

• Organizational culture and structure;

• Governmental or industry standards (e.g., regulations, product standards); and

• Global, regional or local trends, and practices or habits.

13.1.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Identify Stakeholders process include, but are not limited to:

• Stakeholder register templates,

• Lessons learned from previous projects or phases, and

• Stakeholder registers from previous projects.

13.1.2 Identify Stakeholders: tools and techniques

13.1.2.1 Stakeholder Analysis

Stakeholder analysis is a technique of systematically gathering and analyzing quantitative and qualitative information to determine whose interests should be taken into account throughout the project. It identifies the interests, expectations, and influence of the stakeholders and relates them to the purpose of the project. It also helps to identify stakeholder relationships (with the project and with other stakeholders) that can be leveraged to build coalitions and potential partnerships to enhance the project’s chance of success, along with stakeholder relationships that need to be influenced differently at different stages of the project or phase.

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Stakeholder analysis generally follows the steps described below:

• Identify all potential project stakeholders and relevant information, such as their roles, departments, interests, knowledge, expectations, and influence levels. Key stakeholders are usually easy to identify. They include anyone in a decision-making or management role who is impacted by the project outcome, such as the sponsor, the project manager, and the primary customer. Identifying other stakeholders is usually done by interviewing identified stakeholders and expanding the list until all potential stakeholders are included.

• Analyze the potential impact or support each stakeholder could generate, and classify them so as to define an approach strategy. In large stakeholder communities, it is important to prioritize the stakeholders to ensure the efficient use of effort to communicate and manage their expectations.

• Assess how key stakeholders are likely to react or respond in various situations, in order to plan how to influence them to enhance their support and mitigate potential negative impacts.

There are multiple classification models used for stakeholders analysis, such as:

• Power/interest grid, grouping the stakeholders based on their level of authority (“power”) and their level or concern (“interest”) regarding the project outcomes;

• Power/influence grid, grouping the stakeholders based on their level of authority (“power”) and their active involvement (“influence”) in the project;

• Influence/impact grid, grouping the stakeholders based on their active involvement (“influence”) in the project and their ability to effect changes to the project’s planning or execution (“impact”); and

• Salience model, describing classes of stakeholders based on their power (ability to impose their will), urgency (need for immediate attention), and legitimacy (their involvement is appropriate).

Figure 13-4 presents an example of a power/interest grid with A-H representing the placement of generic stakeholders.

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Keep Satisfied

Manage Closely

• B

• H • F

• A

• G • C

• E • D

Monitor Keep

Informed

High

Power

Low Low Interest High

Figure 13-4. Example Power/Interest Grid with Stakeholders

13.1.2.2 Expert Judgment

To ensure comprehensive identification and listing of stakeholders, judgment and expertise should be sought from groups or individuals with specialized training or subject matter expertise, such as:

• Senior management;

• Other units within the organization;

• Identified key stakeholders;

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• Project managers who have worked on projects in the same area (directly or through lessons learned);

• Subject matter experts (SMEs) in the business or project area;

• Industry groups and consultants; and

• Professional and technical associations, regulatory bodies, and nongovernmental organizations (NGOs).

Expert judgment can be obtained through individual consultations (one-on-one meetings, interviews, etc.) or through a panel format (focus groups, surveys, etc.).

13.1.2.3 Meetings

Profile analysis meetings are project meetings designed to develop an understanding of major project stakeholders, and they can be used to exchange and analyze information about roles, interests, knowledge, and the overall position of each stakeholder facing the project.

13.1.3 Identify Stakeholders: outputs

13.1.3.1 Stakeholder register

The main output of the Identify Stakeholders process is the stakeholder register. This contains all details related to the identified stakeholders including, but not limited to:

• Identification information. Name, organizational position, location, role in the project, contact information;

• Assessment information. Major requirements, main expectations, potential influence in the project, phase in the life cycle with the most interest; and

• Stakeholder classification. Internal/external, supporter/neutral/resistor, etc.

The stakeholder register should be consulted and updated on a regular basis, as stakeholders may change—or new ones identified—throughout the life cycle of the project.

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13.2 Plan Stakeholder Management

Plan Stakeholder Management is the process of developing appropriate management strategies to effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs, interests, and potential impact on project success. The key benefit of this process is that it provides a clear, actionable plan to interact with project stakeholders to support the project’s interests. The inputs, tools and techniques, and outputs of this process are depicted in Figure 13-5. Figure 13-6 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Stakeholder register

.3 Enterprise environmental factors .4 Organizational process assets

.1 Expert judgment

.2 Meetings

.3 Analytical techniques

.1 Stakeholder management plan .2 Project documents updates

Figure 13-5. Plan Stakeholder Management: Inputs, tools & techniques, and outputs

Project Stakeholder Management

13.1 Identify

Stakeholders

• Stakeholder management plan

• Project documents updates

• Stakeholder register• Organizational

process assets • Enterprise environmental factors

• Project management plan

5.2 Collect

Requirements

4.2 Develop Project Management

Plan

Enterprise/ Organization

Project Documents

13.2 Plan

Stakeholder Management

13.3 Manage

Stakeholder Engagement

Figure 13-6. Plan Stakeholder Management data Flow diagram

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Plan Stakeholder Management identifies how the project will affect stakeholders, which then allows the project manager to develop various ways to effectively engage stakeholders in the project, to manage their expectations, and to ultimately achieving the project objectives. Stakeholder management is more than improving communications and requires more than managing a team. Stakeholder management is about creation and maintenance of relationships between the project team and stakeholders, with the aim to satisfy their respective needs and requirements within project boundaries.

This process generates the stakeholder management plan, which contains detailed plans on how effective stakeholder management can be realized. As the project progresses, the membership of the stakeholder community and required level of engagement may change, therefore, stakeholder management planning is an iterative process that is reviewed on a regular basis by the project manager.

13.2.1 Plan Stakeholder Management: Inputs

13.2.1.1 Project Management Plan

Described in Section 4.2.3.1. The information used for the development of the stakeholder management plan includes, but is not limited to:

• Life cycle selected for the project and the processes that will be applied to each phase;

• Description of how work will be executed to accomplish the project objectives;

• Description of how human resources requirements will be met and how roles and responsibilities, reporting relationships, and staffing management will be addressed and structured for the project;

• Change management plan that documents how changes will be monitored and controlled; and

• Need and techniques for communication among stakeholders.

13.2.1.2 Stakeholder register

Described in Section 13.1.3.1. The stakeholder register provides the information needed to plan appropriate ways to engage project stakeholders.

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13.2.1.3 Enterprise Environmental Factors

Described in Section 2.1.5. All enterprise environmental factors are used as inputs to this process, because the management of stakeholders should be adapted to the project environment. Of these, organizational culture, structure, and political climate are of particular importance, because they help in determining the best options to support a better adaptive process for managing stakeholders.

13.2.1.4 organizational Process Assets

Described in Section 2.1.4. All organizational process assets are used as inputs for the Plan Stakeholder Management process. Of these, lessons learned database and historical information are of particular importance, because they provide insights on previous stakeholder management plans and their effectiveness. These can be used to plan the stakeholder management activities for the current project.

13.2.2 Plan Stakeholder Management: tools and techniques

13.2.2.1 Expert Judgment

Based on the project objectives, the project manager should apply expert judgment to decide upon the level of engagement required at each stage of the project from each stakeholder. For example, at the beginning of a project, it may be necessary for senior stakeholders to be highly engaged in order to clear away any obstacles to success. Once these have been successfully removed, it may be sufficient for senior stakeholders to change their level of engagement from leading to supportive, and other stakeholders, such as end users, may become more important.

In order to create the stakeholder management plan, judgment and expertise should be sought from groups or individuals with specialized training or subject matter expertise or insight into the relationships within the organization, such as:

• Senior management;

• Project team members;

• Other units or individuals within the organization;

• Identified key stakeholders;

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• Project managers who have worked on projects in the same area (directly or through lessons learned);

• Subject matter experts in business or project area;

• Industry groups and consultants; and

• Professional and technical associations, regulatory bodies, and nongovernmental organization (NGOs).

Expert judgment can be obtained through individual consultations (one-on-one meetings, interviews, etc.) or through a panel format (focus groups, surveys, etc.).

13.2.2.2 Meetings

Meetings should be held with experts and the project team to define the required engagement levels of all stakeholders. This information can be used to prepare the stakeholder management plan.

13.2.2.3 Analytical techniques

The current engagement level of all stakeholders needs to be compared to the planned engagement levels required for successful project completion. Stakeholder engagement throughout the life cycle of the project is critical to project success.

The engagement level of the stakeholders can be classified as follows:

• unaware. Unaware of project and potential impacts.

• resistant. Aware of project and potential impacts and resistant to change.

• neutral. Aware of project yet neither supportive nor resistant.

• Supportive. Aware of project and potential impacts and supportive to change.

• Leading. Aware of project and potential impacts and actively engaged in ensuring the project is a success.

The current engagement can be documented using Stakeholders Engagement Assessment Matrix, as shown in Figure 13-7, where C indicates the current engagement, and D indicates the desired engagement. The project team needs to identify the desired engagement level for the current phase of the project, based on available information.

The example in Figure 13-7 shows that stakeholder 3 is at the desired engagement level, while stakeholders 1 and 2 require further communications and additional actions to move them to the desired level of engagement.

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LeadingNeutralResistantUnawareStakeholder Supportive

Stakeholder 1

Stakeholder 2

Stakeholder 3

D C

Figure 13-7. Stakeholders Engagement Assessment Matrix

Through this analytical process, gaps between the current and desired engagement levels can be identified. Actions and communications required to close these gaps can be identified by the project team using expert judgment.

13.2.3 Plan Stakeholder Management: outputs

13.2.3.1 Stakeholder Management Plan

The stakeholder management plan is a component of the project management plan (Section 4.2.3.1) and identifies the management strategies required to effectively engage stakeholders. The stakeholder management plan can be formal or informal, highly detailed or broadly framed, based on the needs of the project.

In addition to the data gathered in the stakeholder register, the stakeholder management plan often provides:

• Desired and current engagement levels of key stakeholders;

• Scope and impact of change to stakeholders;

• Identified interrelationships and potential overlap between stakeholders;

• Stakeholder communication requirements for the current project phase;

• Information to be distributed to stakeholders, including language, format, content, and level of detail;

• Reason for the distribution of that information and the expected impact to stakeholder engagement;

• Time frame and frequency for the distribution of required information to stakeholders; and

• Method for updating and refining the stakeholder management plan as the project progresses and develops.

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Project managers should be aware of the sensitive nature of the stakeholder management plan and take appropriate precautions. For example, information on stakeholders who are resistant to the project can be potentially damaging, and due consideration should be given regarding the distribution of such information. When updating the stakeholder management plan, the validity of underlying assumptions should be reviewed to ensure continued accuracy and relevancy.

13.2.3.2 Project documents updates

Project documents that may be updated include, but are not limited to:

• Project schedule, and

• Stakeholder register.

13.3 Manage Stakeholder Engagement

Manage Stakeholder Engagement is the process of communicating and working with stakeholders to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle. The key benefit of this process is that it allows the project manager to increase support and minimize resistance from stakeholders, significantly increasing the chances to achieve project success. The inputs, tools and techniques, and outputs of this process are depicted in Figure 13-8. Figure 13-9 depicts the data flow diagram of the process.

Inputs Tools & Techniques Outputs

.1 Stakeholder management plan .2 Communications management plan .3 Change log .4 Organizational process assets

.1 Communication methods

.2 Interpersonal skills

.3 Management skills

.1 Issue log

.2 Change requests

.3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure 13-8. Manage Stakeholder Engagement: Inputs, tools & techniques, and outputs

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Project Stakeholder Management

13.2 Plan

Stakeholder Management

• Issue log

• Change requests

• Project documents updates

• Project management plan updates

• Stakeholder management plan

• Change log

• Communications management plan

• Organizational process assets updates

• Organizational process assets

4.5 Perform

Integrated Change Control

10.1 Plan

Communications Management

4.5 Perform

Integrated Change Control

4.2 Develop Project Management

Plan

9.4 Manage Project Team

Enterprise/ Organization

Project Documents

13.3 Manage

Stakeholder Engagement

10.3 Control

Communications

13.4 Control

Stakeholder Engagement

Figure 13-9. Manage Stakeholder Engagement data Flow diagram

Manage Stakeholder Engagement involves activities such as:

• Engaging stakeholders at appropriate project stages to obtain or confirm their continued commitment to the success of the project;

• Managing stakeholder expectations through negotiation and communication, ensuring project goals are achieved;

• Addressing potential concerns that have not yet become issues and anticipating future problems that may be raised by stakeholders. Such concerns need to be identified and discussed as soon as possible to assess associated project risks; and

• Clarifying and resolving issues that have been identified.

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Managing stakeholder engagement helps to increase the probability of project success by ensuring that stakeholders clearly understand the project goals, objectives, benefits, and risks. This enables them to be active supporters of the project and to help guide activities and project decisions. By anticipating people’s reactions to the project, proactive actions can be taken to win support or minimize negative impacts.

The ability of stakeholders to influence the project is typically highest during the initial stages and gets progressively lower as the project progresses. The project manager is responsible for engaging and managing the various stakeholders in a project and may call upon the project sponsor to assist as needed. Active management of stakeholder involvement decreases the risk of the project failing to meet its goals and objectives.

13.3.1 Manage Stakeholder Engagement: Inputs

13.3.1.1 Stakeholder Management Plan

Described in Section 13.2.3.1. The stakeholder management plan provides guidance on how the various stakeholders can be best involved in the project. The stakeholder management plan describes the methods and technologies used for stakeholder communication.

This plan is used to determine the level of interactions of various stakeholders and—together with other documents—helps define a strategy for identifying and managing stakeholders throughout the project life cycle.

13.3.1.2 communications Management Plan

Described in Section 10.1.3.1. The communications management plan provides guidance and information on managing stakeholder expectations. The information used includes, but is not limited to:

• Stakeholder communications requirements;

• Information to be communicated, including language, format, content, and level of detail;

• Reason for distribution of information;

• Person or groups who will receive information; and

• Escalation process.

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13.3.1.3 change Log

Described in Section 4.5.3.2. A change log is used to document changes that occur during a project. These changes—and their impact on the project in terms of time, cost, and risk—are communicated to the appropriate stakeholders.

13.3.1.4 organizational Process Assets

Described in Section 2.1.4. The organizational process assets that can influence the Manage Stakeholder Engagement process include, but are not limited to:

• Organizational communication requirements,

• Issue management procedures,

• Change control procedures, and

• Historical information about previous projects.

13.3.2 Manage Stakeholder Engagement: tools and techniques

13.3.2.1 communication Methods

Described in Section 10.1.2.4. The methods of communication identified for each stakeholder in the communications management plan are utilized during stakeholder engagement management. Based on the stakeholders’ communication requirements, the project manager decides how, when, and which of these communication methods are to be used in the project.

13.3.2.2 Interpersonal Skills

The project manager applies interpersonal skills to manage stakeholders’ expectations. For example:

• Building trust,

• Resolving conflict,

• Active listening, and

• Overcoming resistance to change.

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13.3.2.3 Management Skills

The project manager applies management skills to coordinate and harmonize the group toward accomplishing the project objectives. For example:

• Facilitate consensus toward project objectives,

• Influence people to support the project,

• Negotiate agreements to satisfy the project needs, and

• Modify organizational behavior to accept the project outcomes.

13.3.3 Manage Stakeholder Engagement: outputs

13.3.3.1 Issue Log

Managing stakeholder engagement may result in the development of an issue log. This log is updated as new issues are identified and current issues are resolved.

13.3.3.2 change requests

Managing stakeholder engagement may result in a change request to the product or the project. It may also include corrective or preventive actions to the project itself or to the interaction with the impacted stakeholders, as appropriate.

13.3.3.3 Project Management Plan updates

Elements of the project management plan that may be updated include, but are not limited to, the stakeholder management plan. This plan is updated when new or changed stakeholders requirements are identified. For example, some communications may no longer be necessary, an ineffective communication method may be replaced by another method, or a new communication requirement may be identified. It is also updated as a result of addressing concerns and resolving issues. For example, it may be determined that a stakeholder has additional informational needs.

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13.3.3.4 Project documents updates

Project documents that may be updated include, but are not limited to, the stakeholder register. This is updated as information on stakeholders change, when new stakeholders are identified, or if registered stakeholders are no longer involved in or impacted by the project, or other updates for specific stakeholders are required.

13.3.3.5 organizational Process Assets updates

The organizational process assets that may be updated include, but are not limited to:

• Stakeholder notifications. Information may be provided to stakeholders about resolved issues, approved changes, and general project status.

• Project presentations. Information formally or informally provided by the project team to any or all project stakeholders.

• Project records. Project records include correspondence, memos, meeting minutes, and other documents describing the project.

• Feedback from stakeholders. Information received from stakeholders concerning project operations can be distributed and used to modify or improve future performance of the project.

• Lessons learned documentation. Documentation includes the root cause analysis of issues faced, reasoning behind the corrective action chosen, and other types of lessons learned about stakeholder management. Lessons learned are documented and distributed, and become part of the historical database for both the project and the performing organization.

13.4 control Stakeholder Engagement

Control Stakeholder Engagement is the process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders. The key benefit of this process is that it will maintain or increase the efficiency and effectiveness of stakeholder engagement activities as the project evolves and its environment changes. The inputs, tools and techniques, and outputs of this process are depicted in Figure 13-10. Figure 13-11 depicts the data flow diagram of the process.

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Inputs Tools & Techniques Outputs

.1 Project management plan

.2 Issue log

.3 Work performance data

.4 Project documents

.1 Information management systems .2 Expert judgment .3 Meetings

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure 13-10. control Stakeholder Engagement: Inputs, tools & techniques, and outputs

Project Stakeholder Management

13.3 Manage

Stakeholder Engagement

• Change requests

• Work performance information

• Organizational process assets updates

• Issue log

• Project management plan updates

• Project management plan

• Work performance data

• Project documents

• Project documents updates

4.2 Develop Project Management

Plan

4.3 Direct and

Manage Project Work

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

Enterprise/ Organization

Project Documents

13.4 Control

Stakeholder Engagement

Figure 13-11. control Stakeholder Engagement: data Flow diagram

Stakeholder engagement activities are included in the stakeholder management plan and are executed during the life cycle of the project. Stakeholder engagement should be continuously controlled.

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13.4.1 control Stakeholder Engagement: Inputs

13.4.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan is used to develop the stakeholder management plan, as described in Section 13.1.3.1. The information used to Control Stakeholder Engagement includes, but is not limited to:

• The life cycle selected for the project and the processes that will be applied to each phase;

• How work will be executed to accomplish the project objectives;

• How human resources requirements will be met, how roles and responsibilities, reporting relationships, and staffing management will be addressed and structured for the project;

• A change management plan that documents how changes will be monitored and controlled; and

• Needs and techniques for communication among stakeholders.

13.4.1.2 Issue Log

Described in Section 13.3.3.1. The issue log is updated as new issues are identified and current issues are resolved.

13.4.1.3 Work Performance data

Described in Section 4.3.3.2. The work performance data are the primary observations and measurements identified during activities being performed to carry out the project work. Various measurements on project activities and deliverables are collected during various controlling processes. Data are often viewed as the lowest level of abstraction from which information is derived by other processes.

Examples of work performance data include reported percentage of work completed, technical performance measures, start and finish dates of schedule activities, number of change requests, number of defects, actual costs, actual durations etc.

13.4.1.4 Project documents

Multiple project documents originating from initiation, planning, execution, or control processes may be used as supporting inputs for controlling stakeholder engagement. These include, but are not limited to:

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• Project schedule,

• Stakeholder register,

• Issue log,

• Change log, and

• Project communications.

13.4.2 control Stakeholder Engagement: tools and techniques

13.4.2.1 Information Management Systems

An information management system provides a standard tool for the project manager to capture, store, and distribute information to stakeholders about the project cost, schedule progress, and performance. It also allows the project manager to consolidate reports from several systems and facilitate report distribution to the project stakeholders. Examples of distribution formats may include table reporting, spreadsheet analysis, and presentations. Graphical capabilities can be used to create visual representations of project performance information.

13.4.2.2 Expert Judgment

To ensure comprehensive identification and listing of new stakeholders, reassessment of current stakeholders can be performed. Input should be sought from groups or individuals with specialized training or subject matter expertise, such as:

• Senior management;

• Other units or individuals within the organization;

• Identified key stakeholders;

• Project managers who have worked on projects in the same area (directly or through lessons learned);

• Subject matter experts in the business or project area;

• Industry groups and consultants; and

• Professional and technical associations, regulatory bodies, and nongovernmental organizations.

Expert judgment can be obtained through individual consultations (such as one-on-one meetings or interviews) or through a panel format (such as focus groups or surveys).

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13.4.2.3 Meetings

Status review meetings are used to exchange and analyze information about stakeholder engagement.

13.4.3 control Stakeholder Engagement: outputs

13.4.3.1 Work Performance Information

The work performance information is the performance data collected from various controlling processes, analyzed in context, and integrated based on relationships across areas. Thus work performance data have been transformed into work performance information. Data per se are not used in the decision-making process, because the meaning may be misinterpreted. Information, however, is correlated and contextualized and provides a sound foundation for project decisions.

13.4.3.2 change requests

Analysis of project performance and interactions with stakeholders often generates change requests. These change requests are processed through the Perform Integrated Change Control process (Section 4.5) as follows:

• Recommended corrective actions include changes that bring the expected future performance of the project in line with the project management plan; and

• Recommended preventive actions can reduce the probability of incurring future negative project performance.

13.4.3.3 Project Management Plan updates

As stakeholders engage with the project the overall effectiveness of the stakeholder management strategy can be evaluated. As needed changes in approach or strategy are identified, affected sections of the project management plan may need to be updated to reflect these changes. Elements of the project management plan that may be updated include, but are not limited to the:

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• Change management plan,

• Communications management plan,

• Cost management plan,

• Human resource management plan,

• Procurement management plan,

• Quality management plan,

• Requirements management plan,

• Risk management plan,

• Schedule management plan,

• Scope management plan, and

• Stakeholder management plan.

13.4.3.4 Project documents updates

Project documents that may be updated include, but are not limited to:

• Stakeholder register. This is updated as information on stakeholders change, when new stakeholders are identified, or if registered stakeholders are no longer involved in or impacted by the project, or other updates for specific stakeholders are required.

• Issue log. This is updated as new issues are identified and current issues are resolved.

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13.4.3.5 organizational Process Assets updates

The organizational process assets, which may be updated include, but are not limited to:

• Stakeholder notifications. Information may be provided to stakeholders about resolved issues, approved changes, and general project status.

• Project presentations. Information formally or informally provided by the project team to any or all project stakeholders.

• Project records. Project records include correspondence, memos, meeting minutes, and other documents describing the project.

• Feedback from stakeholders. Information received from stakeholders concerning project operations can be distributed and used to modify or improve future performance of the project.

• Lessons learned documentation. Documentation includes the root cause analysis of issues faced, reasoning behind the corrective action chosen, and other types of lessons learned about stakeholder management. Lessons learned are documented and distributed so that they become part of the historical database for both the project and the performing organization.

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AnneX A1 the stAndArd for Project MAnAGeMent of A Project

A project is a temporary endeavor undertaken to create a unique product, service, or result. The temporary nature of projects indicates a definite beginning and end. The end is reached when the project’s objectives have been achieved or when the project is terminated because its objectives will not or cannot be met, or when the need for the project no longer exists.

Project management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements. Project management is accomplished through the appropriate application and integration of logically grouped project management processes.

Managing a project typically includes:

• Identifying requirements;

• Addressing the various needs, concerns, and expectations of the stakeholders as the project is planned and carried out;

• Setting and maintaining active communication with stakeholders; and

• Balancing the competing project constraints, which include, but are not limited to:

○ Scope,

○ Quality,

○ Schedule,

○ Budget,

○ Resources, and

○ Risks.

The specific project circumstances will influence the constraints on which the project manager needs to focus and require effective application and management of appropriate project management processes.

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A1.1 What is a Standard?

The International Organization for Standardization (ISO) and others define a standard as a “Document approved by a recognized body, that provides, for common and repeated use, rules, guidelines, or characteristics for products, processes or services with which compliance are not mandatory.” (ISO 9453) [11]

In October 1998, PMI was accredited as a standards developer by the American National Standards Institute (ANSI). The processes outlined in this Annex, which are described in the PMBOK® Guide – Fifth Edition, provide the standard for project management of a project.

A1.2 Framework for this Standard

This standard describes the nature of project management processes in terms of the integration between the processes, their interactions, and the purposes they serve. For this standard, it is assumed that the project, the project manager and the project team are assigned to the performing organization. Project management processes are grouped into five categories known as Project Management Process Groups (or Process Groups):

• Initiating Process Group. Those processes performed to define a new project or a new phase of an existing project by obtaining authorization to start the project or phase.

• Executing Process Group. Those processes performed to complete the work defined in the project management plan to satisfy the project specifications.

• closing Process Group. Those processes performed to finalize all activities across all Process Groups to formally close the project or phase.

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Project Management Process Groups are linked by the outputs they produce. The Process Groups are seldom either discrete or one-time events; they are overlapping activities that occur throughout the project. The output of one process generally becomes an input to another process or is a deliverable of the project, subproject, or project phase. Deliverables at the subproject or project level may be called incremental deliverables. The Planning Process Group provides the Executing Process Group with the project management plan and project documents, and, as the project progresses, it often creates updates to the project management plan and the project documents. Figure A1-1 illustrates how the Process Groups interact and shows the level of overlap at various times. If the project is divided into phases, the Process Groups interact within each phase.

Planning Process Group

Initiating Process Group

Executing Process Group

Monitoring and Controlling Process Group

Closing Process Group

Start Finish

TIME

Level of Process Interaction

Figure A1-1. Process Group Interactions in a Project

An example of this interaction would be the exit of a design phase, which requires sponsor acceptance of the design document. Once it is available, the design document provides the product description for the Planning and Executing Process Groups in one or more subsequent phases. When a project is divided into phases, the Process Groups are carried out, as appropriate, to effectively drive the project to completion in a controlled manner. In multiphase projects, processes are repeated within each phase until the criteria for phase completion have been satisfied.

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A1.3 Project Management Process Groups

The process flow diagram, Figure A1-2, provides an overall summary of the basic flow and interactions among Process Groups and specific stakeholders. The project management processes are linked by inputs and outputs where the result or outcome of one process becomes the input to another process but not necessarily in the same Process Group. the Process Groups are not project phases. In fact, it is possible that all Process Groups could be conducted within a phase. As projects are separated into distinct phases or subcomponents, such as concept development, feasibility study, design, prototype, build, or test, etc., all of the Process Groups would normally be repeated for each phase or subcomponent along the lines explained above and illustrated in Figure A1-2.

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Initiating Process Group

Monitoring and

Controlling Process Group

Planning Process Group

Executing Process Group

Closing Process Group

Project Initiator or Sponsor

Enterprise/ Organization

Customer

Sellers

• Project management plan

• Make-or-buy decisions • Source selection criteria

• Deliverables • Change requests • Work performance information • Selected sellers

• Accepted deliverables • Procurement documentation

NOTE: The darker dotted lines represent relationships between Process Groups; the lighter dotted lines are external to the Process Groups.

• Seller proposals

• Procurement contract award

• Requirements

• Teaming agreements

• Organizational process assets • Enterprise environmental factors

• Stakeholder register • Stakeholder management strategy

• Project charter

• Procurement documents

• Project statement of work • Business case • Agreements

• Resource calendars

• Final product, service or result

• Approved change requests • Quality control measurements • Performance reports

Project Documents

Figure A1-2. Project Management Process Interactions

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Table A1-1 reflects the mapping of the 47 project management processes into the 5 Project Management Process Groups and the 10 Project Management Knowledge Areas.

The project management processes are shown in the Process Group in which most of the activity takes place. For example, when a process that normally takes place in the Planning Process Group is updated in the Executing Process Group, it is not considered a new process. The iterative nature of project management means that processes from any group may be used throughout the project life cycle. For example, executing a risk response may trigger the Perform Quantitative Risk Analysis process to evaluate the impact.

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table A1-1. Project Management Process Group and Knowledge Area Mapping

4. Project Integration Management

5. Project Scope Management

6. Project Time Management

7. Project Cost Management

8. Project Quality Management

9. Project Human Resource Management

10. Project Communications Management

11. Project Risk Management

12. Project Procurement Management

13. Project Stakeholder Management

Project Management Process Groups

Knowledge Areas Initiating Process

Group

Closing Process

Group

Monitoring

Process Group

Executing Process

Group

Planning Process Group

4.1 Develop Project Charter

13.1 Identify Stakeholders

4.2 Develop Project Management Plan

5.1 Plan Scope Management 5.2 Collect Requirements 5.3 Define Scope 5.4 Create WBS

6.1 Plan Schedule Management 6.2 Define Activities 6.3 Sequence Activities 6.4 Estimate Activity Resources 6.5 Estimate Activity Durations 6.6 Develop Schedule

7.1 Plan Cost Management 7.2 Estimate Costs 7.3 Determine Budget

8.1 Plan Quality Management

9.1 Plan Human Resource Management

10.1 Plan Communications Management

11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses

12.1 Plan Procurement Management

13.2 Plan Stakeholder Management

4.3 Direct and Manage Project Work

8.2 Perform Quality Assurance

9.2 Acquire Project Team 9.3 Develop Project Team 9.4 Manage Project Team

10.2 Manage Communications

12.2 Conduct Procurements

13.3 Manage Stakeholder Engagement

4.4 Monitor and Control Project Work 4.5 Perform Integrated Change Control

5.5 Validate Scope 5.6 Control Scope

6.7 Control Schedule

7.4 Control Costs

8.3 Control Quality

10.3 Control Communications

11.6 Control Risks

12.3 Control Procurements

13.4 Control Stakeholder Engagement

4.6 Close Project or Phase

12.4 Close Procurements

and Controlling

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A1.4 Initiating Process Group

The Initiating Process Group consists of those processes performed to define a new project or a new phase of an existing project by obtaining authorization to start the project or phase. Within the Initiating processes, the initial scope is defined and initial financial resources are committed. Internal and external stakeholders who will interact and influence the overall outcome of the project are identified. If not already assigned, the project manager will be selected. This information is captured in the project charter and stakeholder register. When the project charter is approved, the project becomes officially authorized. Although the project management team may help to write the project charter, this standard assumes that business case assessment, approval, and funding are handled external to the project boundaries (Figure A1-3). A project boundary is defined as the point in time that a project or project phase is authorized to its completion. The key purpose of this Process Group is to align the stakeholders’ expectations with the project’s purpose, give them visibility about the scope and objectives, and show how their participation in the project and it associated phases can ensure that their expectations are achieved. These processes help to set the vision of the project—what is needed to be accomplished.

Large complex projects should be divided into separate phases. In such projects, the Initiating processes are carried out during subsequent phases to validate the decisions made during the original Develop Project Charter and Identify Stakeholders processes. Performing the Initiating processes at the start of each phase helps to keep the project focused on the business need that the project was undertaken to address. The success criteria are verified, and the influence, drivers, and objectives of the project stakeholders are reviewed. A decision is then made as to whether the project should be continued, delayed, or discontinued.

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Project Boundaries

Project Deliverables

Project Records

End Users

Process Assets

Monitoring & Controlling Processes

Planning Processes

Initiating Processes

Closing Processes

Executing Processes

Project Inputs

Project Initiator/ Sponsor

Figure A1-3. Project Boundaries

Initiating processes may be performed at the organizational, program, or portfolio level and would then be outside of the project’s level of control. For example, prior to commencing a project, the need for high- level requirements may be documented as part of a larger organizational initiative. A process of evaluating alternatives may be utilized to determine the feasibility of the new undertaking. Clear descriptions of the project objectives may be developed, including the reasons why a specific project is the best alternative to satisfy the requirements. The documentation for this decision may also contain the initial project scope statement, deliverables, project duration, and a forecast of the resources for the organization’s investment analysis. As part of the Initiating processes, the project manager is given the authority to apply organizational resources to the subsequent project activities.

The dashed circular arrow indicates that the process is part of the Project Integration Management Knowledge Area. This Knowledge Area coordinates and unifies the processes from the other Knowledge Areas.

Project Integration Management

Project Stakeholder Management

4.1 Develop Project

Charter

13.1 Identify

Stakeholders

Figure A1-4. Initiating Process Group

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A1.4.1 develop Project charter

Develop Project Charter is the process of developing a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. The key benefit of this process is a well-defined project start and project boundaries, creation of a formal record of the project, and a direct way for senior management to formally accept and commit to the project. The inputs and outputs for this process are shown in Figure A1-5.

Inputs Outputs

.1 Project statement of work

.2 Business case

.3 Agreements

.4 Enterprise environmental factors .5 Organizational process assets

.1 Project charter

Figure A1-5. develop Project charter: Inputs and outputs

A1.4.2 Identify Stakeholders

Identify Stakeholders is the process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project; and analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success. The key benefit of this process is that it allows the project manager to identify the appropriate focus for each stakeholder or group of stakeholders. The inputs and outputs of this process are depicted in Figure A1-6.

Inputs Outputs

.1 Project charter

.2 Procurement documents

.3 Enterprise environmental factors .4 Organizational process assets

.1 Stakeholder register

Figure A1-6. Identify Stakeholders: Inputs and outputs

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A1.5 Planning Process Group

The Planning Process Group consists of those processes performed to establish the total scope of the effort, define and refine the objectives, and develop the course of action required to attain those objectives. The Planning processes develop the project management plan and the project documents that will be used to carry out the project. The complex nature of project management may require the use of repeated feedback loops for additional analysis. As more project information or characteristics are gathered and understood, additional planning will likely be required. Significant changes occurring throughout the project life cycle trigger a need to revisit one or more of the planning processes and, possibly, some of the initiating processes. This progressive detailing of the project management plan is called progressive elaboration, indicating that planning and documentation are iterative and ongoing activities. The key benefit of this Process Group is to delineate the strategy and tactics as well as the course of action or a path to successfully complete the project or phase. When the Planning Process Group is well managed, it is much easier to get stakeholder buy-in and engagement. These processes describe how this will be done, resulting in the desired objectives.

The project management plan and project documents developed as outputs from the Planning Process Group will explore all aspects of the scope, time, costs, quality, communications, human resources, risks, procurements, and stakeholder management.

Updates arising from approved changes during the project (generally during Monitoring and Controlling processes and specifically during Direct and Manage Project Work process) may significantly impact parts of the project management plan and the project documents. Updates to these documents provide greater precision with respect to schedule, costs, and resource requirements to meet the defined project scope.

The project team seeks input and encourages involvement from all stakeholders when planning the project and developing the project management plan and project documents. Since the feedback and refinement process cannot continue indefinitely, procedures set by the organization dictate when the initial planning effort ends. These procedures will be affected by the nature of the project, the established project boundaries, appropriate monitoring and controlling activities, as well as the environment in which the project will be performed.

Other interactions among the processes within the Planning Process Group are dependent upon the nature of the project. For example, for some projects there will be little or no identifiable risks until after significant planning has been done. At that time, the team might recognize that the cost and schedule targets are overly aggressive, thus involving considerably more risk than previously understood. The results of the iterations are documented as updates to the project management plan or to various project documents.

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The Planning Process Group (Figure A1-7) includes the project management processes identified in Figures A1-8 through A1-31 (see Sections A1.5.1 through A1.5.24).

Project Cost Management

7.3 Determine

Budget

7.2 Estimate

Costs

Project Integration Management

4.2 Develop Project

Management Plan

Project Scope Management

5.4 Create WBS

5.3 Define Scope

Project Quality Management

8.1 Plan Quality Management

Project Procurement Management

12.1 Plan

Procurement Management

Project Communications Management

10.1 Plan

Communications Management

Project Human Resource Management

9.1 Develop Human

Resource Management

Project Stakeholder Management

13.2 Plan

Stakeholder Management

Project Time Management

5.2 Collect

Requirements

5.1 Plan Scope

Management

6.2 Define

Activities

6.1 Plan Schedule Management

6.3 Sequence Activities

6.4 Estimate Activity

Resources

6.5 Estimate Activity

Durations

6.6 Develop Schedule

Project Risk Management

11.2 Identify Risks

11.1 Plan Risk

Management

11.3 Perform

Qualitative Risk Analysis

11.5 Plan Risk

Responses

11.4 Perform

Quantitative Risk Analysis

7.1 Plan Cost

Management

Figure A1-7. Planning Process Group

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A1.5.1 develop Project Management Plan

Develop Project Management Plan is the process of defining, preparing, and coordinating all subsidiary plans and integrating them into a comprehensive project management plan. The key benefit of this process is a central document that defines the basis of all project work. The inputs and outputs for this process are depicted in Figure A1-8.

Inputs Outputs

.1 Project charter

.2 Outputs from other processes .3 Enterprise environmental factors .4 Organizational process assets

.1 Project management plan

Figure A1-8. develop Project Management Plan: Inputs and outputs

A1.5.2 Plan Scope Management

Plan Scope Management is the process of creating a scope management plan that documents how the project scope will be defined, validated, and controlled. The key benefit of this process is that it provides guidance and direction on how scope will be managed throughout the project. The inputs and outputs of this process are depicted in Figure A1-9.

Inputs Outputs

.1 Project management plan

.2 Project charter

.3 Enterprise environmental factors .4 Organizational process assets

.1 Scope management plan

.2 Requirements management plan

Figure A1-9. Plan Scope Management: Inputs and outputs

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A1.5.3 collect requirements

Collect Requirements is the process of determining, documenting, and managing stakeholder needs and requirements to meet project objectives. The key benefit of this process is that it provides the basis for defining and managing the project scope including product scope. The inputs and outputs of this process are depicted in Figure A1-10.

Inputs Outputs

.1 Scope management plan

.2 Requirements management plan .3 Stakeholder management plan .4 Project charter .5 Stakeholder register

.1 Requirements documentation .2 Requirements traceability matrix

Figure A1-10. collect requirements: Inputs and outputs

A1.5.4 define Scope

Define Scope is the process of developing a detailed description of the project and product. The key benefit of this process is that it describes the project, service, or result boundaries by defining which of the requirements collected will be included in and excluded from the project scope. The inputs and outputs of this process are depicted in Figure A1-11.

Inputs Outputs

.1 Scope management plan

.2 Project charter

.3 Requirements documentation .4 Organizational process assets

.1 Project scope statement

.2 Project documents updates

Figure A1-11. define Scope: Inputs and outputs

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A1.5.5 create WBS

Create WBS is the process of subdividing project deliverables and project work into smaller, more manageable components. The key benefit of this process is that it provides a structured vision of what has to be delivered. The inputs and outputs of this process are depicted in Figure A1-12.

Inputs Outputs

.1 Scope management plan

.2 Project scope statement

.3 Requirements documentation .4 Enterprise environmental factors .5 Organizational process assets

.1 Scope baseline

.2 Project documents updates

Figure A1-12. create WBS: Inputs and outputs

A1.5.6 Plan Schedule Management

Plan Schedule Management is the process of establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule. The key benefit of this process is that it provides guidance and direction on how the project schedule will be managed throughout the project. The inputs and outputs of this process are depicted in Figure A1-13.

Inputs Outputs

.1 Project management plan

.2 Project charter

.3 Enterprise environmental factors .4 Organizational process assets

.1 Schedule management plan

Figure A1-13. Plan Schedule Management: Inputs and outputs

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A1.5.7 define Activities

Define Activities is the process of identifying and documenting the specific actions to be performed to produce the project deliverables. The key benefit of this process is to break down work packages into activities that provide a basis for estimating, scheduling, executing, monitoring, and controlling the project work. The inputs and outputs of this process are depicted in Figure A1-14.

Inputs Outputs

.1 Schedule management plan .2 Scope baseline .3 Enterprise environmental factors .4 Organizational process assets

.1 Activity list

.2 Activity attributes

.3 Milestone list

Figure A1-14. define Activities: Inputs and outputs

A1.5.8 Sequence Activities

Sequence Activities is the process of identifying and documenting relationships among the project activities. The key benefit of this process is that it defines the logical sequence of work to obtain the greatest efficiency given all project constraints. The inputs and outputs of this process are depicted in Figure A1-15.

Inputs Outputs

.1 Schedule management plan .2 Activity list .3 Activity attributes .4 Milestone list .5 Project scope statement .6 Enterprise environmental factors .7 Organizational process assets

.1 Project schedule network diagrams .2 Project documents updates

Figure A1-15. Sequence Activities: Inputs and outputs

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A1.5.9 Estimate Activity resources

Estimate Activity Resources is the process of estimating the type and quantities of material, human resources, equipment, or supplies required to perform each activity. The key benefit of this process is that it identifies the type, quantity, and characteristics of resources required to complete the activity which allows more accurate cost and duration estimates. The inputs and outputs of this process are depicted in Figure A1-16.

Inputs Outputs

.1 Activity resource requirements .2 Resource breakdown structure .3 Project documents updates

Figure A1-16. Estimate Activity resources: Inputs and outputs

A1.5.10 Estimate Activity durations

Estimate Activity Durations is the process of estimating the number of work periods needed to complete individual activities with estimated resources. The key benefit of this process is that it provides the amount of time each activity will take to complete, which is a major input into the Develop Schedule process. The inputs and outputs of this process are depicted in Figure A1-17.

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Inputs Outputs

.1 Activity duration estimates

.2 Project documents updates

Figure A1-17. Estimate Activity durations: Inputs and outputs

A1.5.11 develop Schedule

Develop Schedule is the process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule model. The key benefit of this process is that by entering schedule activities, durations, resources, resource availabilities, and logical relationships into the scheduling tool, it generates a schedule model with planned dates for completing project activities. The inputs and outputs of this process are depicted in Figure A1-18.

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Inputs Outputs

.1 Schedule baseline

.2 Project schedule

.3 Schedule data

.4 Project calendars

.5 Project management plan updates .6 Project documents updates

Figure A1-18. develop Schedule: Inputs and outputs

A1.5.12 Plan cost Management

Plan Cost Management is the process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs. The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project. The inputs and outputs of this process are depicted in Figure A1-19.

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Inputs Outputs

.1 Project management plan

.2 Project charter

.3 Enterprise environmental factors .4 Organizational process assets

.1 Cost management plan

Figure A1-19. Plan cost Management: Inputs and outputs

A1.5.13 Estimate costs

Estimate Costs is the process of developing an approximation of the monetary resources needed to complete project activities. The key benefit of this process is that it determines the amount of cost required to complete project work. The inputs and outputs of this process are depicted in Figure A1-20.

Inputs Outputs

.1 Cost management plan

.2 Human resource management plan .3 Scope baseline .4 Project schedule .5 Risk register .6 Enterprise environmental factors .7 Organizational process assets

.1 Activity cost estimates

.2 Basis of estimates

.3 Project documents updates

Figure A1-20. Estimate costs: Inputs and outputs

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A1.5.14 determine Budget

Determine Budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. The key benefit of this process is that it determines the cost baseline against which project performance can be monitored and controlled. The inputs and outputs of this process are depicted in Figure A1-21.

Inputs Outputs

.1 Cost management plan

.2 Scope baseline

.3 Activity cost estimates

.4 Basis of estimates

.5 Project schedule

.6 Resource calendars

.7 Risk register

.8 Agreements

.9 Organizational process assets

.1 Cost baseline

.2 Project funding requirements .3 Project documents updates

Figure A1-21. determine Budget: Inputs and outputs

A1.5.15 Plan Quality Management

Plan Quality Management is the process of identifying quality requirements and/or standards for the project and its deliverables, and documenting how the project will demonstrate compliance with relevant quality requirements. The key benefit of this process is that it provides guidance and direction on how quality will be managed and validated throughout the project. The input and outputs of this process are depicted in Figure A1-22.

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Inputs Outputs

.1 Project management plan

.2 Stakeholder register

.3 Risk register

.4 Requirements documentation .5 Enterprise environmental factors .6 Organizational process assets

.1 Quality management plan

.2 Process improvement plan

.3 Quality metrics

.4 Quality checklists

.5 Project documents updates

Figure A1-22. Plan Quality Management: Inputs and outputs

A1.5.16 Plan Human resource Management

Plan Human Resource Management is the process of identifying and documenting project roles, responsibilities, required skills, reporting relationships, and creating a staffing management plan. The key benefit of this process is that it establishes project roles and responsibilities, project organization charts, and the staffing management plan including the timetable for staff acquisition and release. The input and outputs of this process are depicted in Figure A1-23.

Inputs Outputs

.1 Project management plan

.2 Activity resource requirements .3 Enterprise environmental factors .4 Organizational process assets

.1 Human resource management plan

Figure A1-23. Plan Human resource Management: Inputs and outputs

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A1.5.17 Plan communications Management

Plan Communications Management is the process of developing an appropriate approach and plan for project communications based on stakeholder’s information needs and requirements, and available organizational assets. The key benefit of this process is that it identifies and documents the approach to communicate most effectively and efficiently with stakeholders. The inputs and outputs of this process are depicted in Figure A1-24.

Inputs Outputs

.1 Project management plan

.2 Stakeholder register

.3 Enterprise environmental factors .4 Organizational process assets

.1 Communications management plan .2 Project documents updates

Figure A1-24. Plan communications Management: Inputs and outputs

A1.5.18 Plan risk Management

Plan Risk Management is the process of defining how to conduct risk management activities for a project. The key benefit of this process is that it ensures that the degree, type, and visibility of risk management are commensurate with both the risks and the importance of the project to the organization. The input and outputs of this process are depicted in Figure A1-25.

Inputs Outputs

.1 Project management plan

.2 Project charter

.3 Stakeholder register

.4 Enterprise environmental factors .5 Organizational process assets

.1 Risk management plan

Figure A1-25. Plan risk Management: Inputs and outputs

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A1.5.19 Identify risks

Identify Risks is the process of determining which risks may affect the project and documenting their characteristics. The key benefit of this process is the documentation of existing risks and the knowledge and ability it provides to the project team to anticipate events. The inputs and outputs of this process are depicted in Figure A1-26.

Inputs Outputs

.1 Risk register

Figure A1-26. Identify risks: Inputs and outputs

A1.5.20 Perform Qualitative risk Analysis

Perform Qualitative Risk Analysis is the process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact. The key benefit of this process is that it enables project managers to reduce the level of uncertainty and to focus on high-priority risks. The inputs and outputs of this process are depicted in Figure A1-27.

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Inputs Outputs

.1 Risk management plan

.2 Scope baseline

.3 Risk register

.4 Enterprise environmental factors .5 Organizational process assets

.1 Project documents updates

Figure A1-27. Perform Qualitative risk Analysis: Inputs and outputs

A1.5.21 Perform Quantitative risk Analysis

Perform Quantitative Risk Analysis is the process of numerically analyzing the effect of identified risks on overall project objectives. The key benefit of this process is that it produces quantitative risk information to support decision making in order to reduce project uncertainty. The inputs and outputs of this process are depicted in Figure A1-28.

Inputs Outputs

.1 Risk management plan

.2 Cost management plan

.3 Schedule management plan .4 Risk register .5 Enterprise environmental factors .6 Organizational process assets

.1 Project documents updates

Figure A1-28. Perform Quantitative risk Analysis: Inputs and outputs

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A1.5.22 Plan risk responses

Plan Risk Responses is the process of developing options and actions to enhance opportunities and to reduce threats to project objectives. The key benefit of this process is that it addresses the risks by their priority, inserting resources and activities into the budget, schedule and project management plan as needed. The inputs and outputs of this process are depicted in Figure A1-29.

Inputs Outputs

.1 Risk management plan

.2 Risk register .1 Project management plan updates .2 Project documents updates

Figure A1-29. Plan risk responses: Inputs and outputs

A1.5.23 Plan Procurement Management

Plan Procurement Management is the process of documenting project procurement decisions, specifying the approach, and identifying potential sellers. The key benefit of this process is that it determines whether to acquire outside support, and if so, what to acquire, how to acquire it, how much is needed, and when to acquire it. The inputs and outputs of this process are depicted in Figure A1-30.

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Inputs Outputs

.1 Project management plan

.1 Procurement management plan .2 Procurement statement of work .3 Procurement documents .4 Source selection criteria .5 Make-or-buy decisions .6 Change requests .7 Project documents updates

Figure A1-30. Plan Procurement Management: Inputs and outputs

A1.5.24 Plan Stakeholder Management

Plan Stakeholder Management is the process of developing appropriate management strategies to effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs, interests, and potential impact on project success. The key benefit of this process is that it provides a clear, actionable plan to interact with project stakeholders to support the project’s interests. The inputs and outputs of this process are depicted in Figure A1-31.

Inputs Outputs

.1 Project management plan

.2 Stakeholder register

.3 Enterprise environmental factors .4 Organizational process assets

.1 Stakeholder management plan .2 Project documents updates

Figure A1-31. Plan Stakeholder Management: Inputs and outputs

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A1.6 Executing Process Group

During project execution, results may require planning updates and rebaselining. This can include changes to expected activity durations, changes in resource productivity and availability, and unanticipated risks. Such variances may affect the project management plan or project documents and may require detailed analysis and development of appropriate project management responses. The results of the analysis can trigger change requests that, if approved, may modify the project management plan or other project documents and possibly require establishing new baselines. A large portion of the project’s budget will be expended in performing the Executing Process Group processes. The Executing Process Group (Figure A1-32) includes the project management processes identified in Figures A1-33 through A1-40 (see Sections A1.6.1 through A1.6.8).

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Project Integration Management

4.3 Direct and Manage Project Work

Project Quality Management

8.2 Perform Quality

Assurance

Project Stakeholder Management

13.3 Manage

Stakeholder Engagement

Project Procurement Management

12.2 Conduct

Procurements

Project Human Resource Management

9.4 Manage

Project Team

Project Communications Management

10.2 Manage

Communications

9.3 Develop

Project Team

9.2 Acquire

Project Team

Figure A1-32. Executing Process Group

A1.6.1 direct and Manage Project Work

Direct and Manage Project Work is the process of leading and performing the work defined in the project management plan and implementing approved changes to achieve the project’s objectives. The key benefit of this process is that it provides overall management of the project work. The inputs and outputs of this process are depicted in Figure A1-33.

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Inputs Outputs

.1 Project management plan

.2 Approved change requests .3 Enterprise environmental factors .4 Organizational process assets

.1 Deliverables

.2 Work performance data

.3 Change requests

.4 Project management plan updates .5 Project documents updates

Figure A1-33. direct and Manage Project Work: Inputs and outputs

A1.6.2 Perform Quality Assurance

Perform Quality Assurance is the process of auditing the quality requirements and the results from quality control measurements to ensure that appropriate quality standards and operational definitions are used. The key benefit of this process is it facilitates the improvement of quality processes. The input and outputs of this process are depicted in Figure A1-34.

Inputs Outputs

.1 Quality management plan

.2 Process improvement plan

.3 Quality metrics

.4 Quality control measurements .5 Project documents

.1 Change requests

.2 Project management plan updates .3 Project documents updates .4 Organizational process assets updates

Figure A1-34. Perform Quality Assurance: Inputs and outputs

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A1.6.3 Acquire Project team

Acquire Project Team is the process of confirming human resource availability and obtaining the team necessary to complete project activities. The key benefit of this process consists of outlining and guiding the team selection and responsibility assignment to obtain a successful team. The inputs and outputs of this process are depicted in Figure A1-35.

Inputs Outputs

.1 Human resource management plan .2 Enterprise environmental factors .3 Organizational process assets

.1 Project staff assignments

.2 Resource calendars

.3 Project management plan updates

Figure A1-35. Acquire Project team: Inputs and outputs

A1.6.4 develop Project team

Develop Project Team is the process of improving competencies, team member interaction, and overall team environment to enhance project performance. The key benefit of this process is that it results in improved teamwork, enhanced people skills and competencies, motivated employees, reduced staff turnover rates, and improved overall project performance. The inputs and outputs of this process are depicted in Figure A1-36.

Inputs Outputs

.1 Human resource management plan .2 Project staff assignments .3 Resource calendars

.1 Team performance assessments .2 Enterprise environmental factors updates

Figure A1-36. develop Project team: Inputs and outputs

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A1.6.5 Manage Project team

Manage Project Team is the process of tracking team member performance, providing feedback, resolving issues, and managing team changes to optimize project performance. The key benefit of this process is that it influences team behavior, manages conflict, resolves issues, and appraises team member performance. The inputs and outputs of this process are depicted in Figure A1-37.

Inputs Outputs

.1 Human resource management plan .2 Project staff assignments .3 Team performance assessments .4 Issue log .5 Work performance reports .6 Organizational process assets

.1 Change requests

.2 Project management plan updates .3 Project documents updates .4 Enterprise environmental factors updates .5 Organizational process assets updates

Figure A1-37. Manage Project team: Inputs and outputs

A1.6.6 Manage communications

Manage Communications is the process of creating, collecting, distributing, storing, retrieving, and the ultimate disposition of project information in accordance with the communications management plan. The key benefit of this process is that it enables an efficient and effective communications flow between project stakeholders. The inputs and outputs of this process are depicted in Figure A1-38.

Inputs Outputs

.1 Communications management plan .2 Work performance reports .3 Enterprise environmental factors .4 Organizational process assets

.1 Project communications

.2 Project management plan updates .3 Project documents updates .4 Organizational process assets updates

Figure A1-38. Manage communications: Inputs and outputs

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A1.6.7 conduct Procurements

Conduct Procurements is the process of obtaining seller responses, selecting a seller, and awarding a contract. The key benefit of this process is that it provides alignment of internal and external stakeholder expectations through established agreements. The inputs and outputs of this process are depicted in Figure A1-39.

Inputs Outputs

.1 Selected sellers

.2 Agreements

.3 Resource calendar

.4 Change requests

.5 Project management plan updates .6 Project documents updates

Figure A1-39. conduct Procurements: Inputs and outputs

A1.6.8 Manage Stakeholder Engagement

Manage Stakeholder Engagement is the process of communicating and working with stakeholders to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle. The key benefit of this process is that it allows the project manager to increase support and minimize resistance from stakeholders, significantly increasing the chances to achieve project success. The inputs and outputs of this process are depicted in Figure A1-40.

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Inputs Outputs

.1 Stakeholder management plan .2 Communications management plan .3 Change log .4 Organizational process assets

.1 Issue log

.2 Change requests

.3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure A1-40. Manage Stakeholder Engagement: Inputs and outputs

A1.7 Monitoring and controlling Process Group

The Monitoring and Controlling Process Group consists of those processes required to track, review, and orchestrate the progress and performance of the project; identify any areas in which changes to the plan are required; and initiate the corresponding changes. The key benefit of this Process Group is that project performance is measured and analyzed at regular intervals, appropriate events or exception conditions to identify variances from the project management plan. The Monitoring and Controlling Process Group also involves:

• Controlling changes and recommending corrective or preventive action in anticipation of possible problems,

• Monitoring the ongoing project activities against the project management plan and the project performance measurement baseline, and

• Influencing the factors that could circumvent integrated change control or configuration management so only approved changes are implemented.

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This continuous monitoring provides the project team insight into the health of the project and identifies any areas requiring additional attention. The Monitoring and Controlling Process Group not only monitors and controls the work being done within a Process Group, but also monitors and controls the entire project effort. In multiphase projects, the Monitoring and Controlling Process Group coordinates project phases in order to implement corrective or preventive actions to bring the project into compliance with the project management plan. This review can result in recommended and approved updates to the project management plan. For example, a missed activity finish date may require adjustments and trade-offs between budget and schedule objectives. In order to reduce control overheads, management by exception procedures and other techniques can be appropriately considered. The Monitoring and Controlling Process Group (Figure A1-41) includes the following project management processes (Sections A1.7.1 through A1.7.11):

Project Integration Management

4.4 Monitor and

Control Project Work

4.5 Perform

Integrated Change Control

Project Scope Management

5.6 Control Scope

5.5 Validate Scope

Project Quality Management

8.3 Control Quality

Project Stakeholder Management

13.4 Control

Stakeholder Engagement

Project Cost Management

7.4 Control Costs

Project Procurement Management

12.3 Control

Procurements Project Risk Management

11.6 Control Risks

Project Communications Management

10.35 Control

Communications

Project Time Management

6.7 Control

Schedule

Figure A1-41. Monitoring and controlling Process Group

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A1.7.1 Monitor and control Project Work

Monitor and Control Project Work is the process of tracking, reviewing, and reporting the progress to meet the performance objectives defined in the project management plan. The key benefit of this process is that it allows stakeholders to understand the current state of the project; the steps taken; and budget, schedule, and scope forecasts. The inputs and outputs for this process are depicted in Figure A1-42.

Inputs Outputs

.1 Project management plan

.2 Schedule forecasts

.3 Cost forecasts

.4 Validated changes

.5 Work performance information .6 Enterprise environmental factors .7 Organizational process assets

.1 Change requests

.2 Work performance reports

.3 Project management plan updates .4 Project documents updates

Figure A1-42. Monitor and control Project Work: Inputs and outputs

A1.7.2 Perform Integrated change control

Perform Integrated Change Control is the process of reviewing all change requests; approving changes and managing changes to deliverables, organizational process assets, project documents, and the project management plan; and communicating their disposition. It reviews all requests for changes or modifications to project documents, deliverables, baselines or the project management plan, and approves or rejects the changes. The key benefit of this process is that it allows for documented changes within the project to be considered in an integrated fashion while reducing project risk, which often arises from changes made without consideration to the overall project objectives or plans. The inputs and outputs of this process are depicted in Figure A1-43.

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Inputs Outputs

.1 Project management plan

.2 Work performance reports

.3 Change requests

.4 Enterprise environmental factors .5 Organizational process assets

.1 Approved change requests .2 Change log .3 Project management plan updates .4 Project documents updates

Figure A1-43. Perform Integrated change control: Inputs and outputs

A1.7.3 Validate Scope

Validate Scope is the process of formalizing acceptance of the completed project deliverables. The key benefit of this process is that it brings objectivity to the acceptance process and increases the chance of final product, service, or result acceptance by validating each deliverable. The inputs and outputs of this process are depicted in Figure A1-44.

Inputs Outputs

.1 Project management plan

.2 Requirements documentation .3 Requirements traceability matrix .4 Verified deliverables .5 Work performance data

.1 Accepted deliverables

.2 Change requests

.3 Work performance information .4 Project documents updates

Figure A1-44. Validate Scope: Inputs and outputs

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A1.7.4 control Scope

Control Scope is the process of monitoring the status of the project and product scope and managing changes to the scope baseline. The key benefit of this process is that it allows the scope baseline to be maintained throughout the project. The inputs and outputs of this process are depicted in Figure A1-45.

Inputs Outputs

.1 Project management plan

.2 Requirements documentation .3 Requirements traceability matrix .4 Work performance data .5 Organizational process assets

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure A1-45. control Scope: Inputs and outputs

A1.7.5 control Schedule

Control Schedule is the process of monitoring the status of project activities to update project progress and manage changes to the schedule baseline to achieve the plan. The key benefit of this process is that it provides the means to recognize deviation from the plan and take corrective and preventive actions and thus minimize risk. The inputs and outputs of this process are depicted in Figure A1-46.

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Inputs Outputs

.1 Project management plan

.2 Project schedule

.3 Work performance data

.4 Project calendars

.5 Schedule data

.6 Organizational process assets

.1 Work performance information .2 Schedule forecasts .3 Change requests .4 Project management plan updates .5 Project documents updates .6 Organizational process assets updates

Figure A1-46. control Schedule: Inputs and outputs

A1.7.6 control costs

Control Costs is the process of monitoring the status of the project to update the project costs and managing changes to the cost baseline. The key benefit of this process is that it provides the means to recognize variance from the plan in order to take corrective action and minimize risk. The inputs and outputs of this process are depicted in Figure A1-47.

Inputs Outputs

.1 Project management plan

.2 Project funding requirements .3 Work performance data .4 Organizational process assets

.1 Work performance information .2 Cost forecasts .3 Change requests .4 Project management plan updates .5 Project documents updates .6 Organizational process assets updates

Figure A1-47. control costs: Inputs and outputs

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A1.7.7 control Quality

Control Quality is the process of monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes. The key benefits of this process include: (1) identifying the causes of poor process or product quality and recommending and/or taking action to eliminate them; and (2) validating that project deliverables and work meet the requirements specified by key stakeholders necessary for final acceptance. The inputs and outputs of this process are depicted in Figure A1-48.

Inputs Outputs

.1 Project management plan

.2 Quality metrics

.3 Quality checklists

.4 Work performance data

.5 Approved change requests .6 Deliverables .7 Project documents .8 Organizational process assets

Figure A1-48. control Quality: Inputs and outputs

A1.7.8 control communications

Control Communications is the process of monitoring and controlling communications throughout the entire project life cycle to ensure the information needs of the project stakeholders are met. The key benefit of this process is that it ensures an optimal information flow among all communication participants at any moment in time. The inputs and outputs of this process are depicted in Figure A1-49.

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Inputs Outputs

.1 Project management plan

.2 Project communications

.3 Issue log

.4 Work performance data

.5 Organizational process assets

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure A1-49. control communications: Inputs and outputs

A1.7.9 control risks

Control Risks is the process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project. The key benefit of this process is that it improves efficiency of the risk approach throughout the project life cycle to continuously optimize risk responses. The inputs and outputs of this process are depicted in Figure A1-50.

Inputs Outputs

.1 Project management plan

.2 Risk register

.3 Work performance data

.4 Work performance reports

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure A1-50. control risks: Inputs and outputs

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A1.7.10 control Procurements

Control Procurements is the process of managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as appropriate. The key benefit of this process is that it ensures that both the seller’s and buyer’s performance meets procurement requirements according to the terms of the legal agreement. The inputs and outputs of this process are depicted in Figure A1-51.

Inputs Outputs

.1 Project management plan

.2 Procurement documents

.3 Agreements

.4 Approved change requests .5 Work performance reports .6 Work performance data

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure A1-51. control Procurements: Inputs and outputs

A1.7.11 control Stakeholder Engagement

Control Stakeholder Engagement is the process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders. The key benefit of this process is that it will maintain or increase the efficiency and effectiveness of stakeholder engagement activities as the project evolves and its environment changes. The inputs and outputs of this process are depicted in Figure A1-52.

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Inputs Outputs

.1 Project management plan

.2 Issue log

.3 Work performance data

.4 Project documents

.1 Work performance information .2 Change requests .3 Project management plan updates .4 Project documents updates .5 Organizational process assets updates

Figure A1-52. control Stakeholder Engagement: Inputs and outputs

A1.8 closing Process Group

The Closing Process Group consists of those processes performed to conclude all activities across all Project Management Process Groups to formally complete the project, phase, or contractual obligations. This Process Group, when completed, verifies that the defined processes are completed within all the Process Groups to close the project or a project phase, as appropriate, and formally establishes that the project or project phase is complete.

This Process Group also formally establishes the premature closure of the project. Prematurely closed projects may include, for example: aborted projects, cancelled projects, and projects in a critical situation. In specific cases, when some contracts cannot be formally closed (e.g. claims, ending clauses etc.) or some activities are to be transferred to other organizational units, specific hand-over procedures may be arranged and finalized.

At project or phase closure, the following may occur:

• Obtain acceptance by the customer or sponsor to formally close the project or phase,

• Conduct post-project or phase-end review,

• Record impacts of tailoring to any process,

• Document lessons learned,

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• Apply appropriate updates to organizational process assets,

• Archive all relevant project documents in the project management information system (PMIS) to be used as historical data,

• Close out all procurements activities ensuring termination of all relevant agreements, and

• Perform team members’ assessment and release project resources.

The Closing Process Group (Figure A1-53) includes the following project management processes (See Sections A1.8.1 and A1.8.2):

Project Integration Management

Project Procurement Management

4.6 Close Project

or Phase

12.4 Close

Procurements

Figure A1-53. closing Process Group

A1.8.1 close Project or Phase

Close Project or Phase is the process of finalizing all activities across all of the Project Management Process Groups to formally complete the project or phase. The key benefit of this process is that it provides lessons learned, the formal ending of project work, and the release of organization resources to pursue new endeavors. The inputs and outputs of this process are depicted in Figure A1-54.

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Inputs Outputs

.1 Project management plan

.2 Accepted deliverables

.3 Organizational process assets

.1 Final product, service, or result transition .2 Organizational process assets updates

Figure A1-54. close Project or Phase: Inputs and outputs

A1.8.2 close Procurements

Close Procurements is the process of completing each procurement. The key benefit of this process is that it documents agreements and related documentation for future reference. The inputs and outputs of this process are depicted in Figure A1-55.

Inputs Outputs

.1 Project management plan

.2 Procurement documents .1 Closed procurements .2 Organizational process assets updates

Figure A1-55. close Procurements: Inputs and outputs

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APPendiX X1 fifth edition chAnGes

The purpose of this appendix is to give a detailed explanation of the changes made to A Guide to the Project Management Body of Knowledge (PMBOK® Guide)—Fourth Edition to create the PMBOK® Guide—Fifth Edition.

X1.1 Scope of update

The approved scope for the PMBOK® Guide – Fifth Edition explicitly states:

• Comments and feedback, both deferred during the development of the PMBOK® Guide – Fourth Edition and received by PMI since its development, will be reviewed and determined whether material will be included or excluded in the new edition.

• Review all text and graphics in the document to make sure the information is accurate, clear, complete and relevant, revising as necessary.

• Review, interpret, and ensure appropriate alignment with ISO 21500 [12] in the development of the standard.

• Ensure harmonization with any other relevant PMI standards.

• Consider project management role delineation study results, as appropriate.

• Reposition Section 3 (The Standard for Project Management) as a stand-alone, ANSI-approved standard included within the Fifth Edition as an Appendix or attachment.

• Standard is written for project management practitioners and other stakeholders of the project management profession.

• Standard describes the principles and processes that shape the practices that are unique to projects.

• Standard ensures that any terminology contained within the PMI Lexicon is represented consistently and identically in the standard.

With that directive in mind, the update team adopted an approach aimed at achieving a greater degree of consistency and clarity by refining the processes, standardizing inputs and outputs where possible, and implementing a global approach for documenting the inputs and outputs.

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Along with a focus on consistency and clarity, the update team worked to complete the requirements for factoring feedback received for the PMBOK® Guide – Fourth Edition, and ensure alignment and harmonization with relevant PMI standards, ISO 21500, PMI Lexicon of Project Management Terms, and the PMI role delineation study for project managers.

X1.2 rules for Handling Inputs, tools and techniques, and outputs (Ittos)

Business rules were established to further aid consistency in handling the order and detail of information within the ITTOs for each project management process. These rules are:

• ITTO Fundamental Rules:

○ Inputs are any documents that are key to the process.

○ Process outputs should map as an input to another project management process unless the output is a terminal output or embedded within another input such as process documents.

○ Process inputs should map as an output from another project management process unless the input comes from outside the project.

• Project Documents Rules:

○ On the ITTO input list, if the input is a major project document, it needs to be specifically listed out.

○ On the ITTO output list, specific project documents are put on the list the first time they are created as an output. Subsequently, these are listed as “project document updates” on the ITTO output list, and described in the section narrative.

• Project Management Plan Rules:

○ On the ITTO input list, if the subsidiary plans and baselines from the project management plan serve as major process inputs, then these need to be specifically listed out.

○ On the ITTO output list, subsidiary plans and baselines for the project management plan are grouped as a single output as “project management plan updates” and described in the section narrative.

○ On the ITTO input list, for those planning processes that create a subsidiary plan, the project management plan is listed as the key input.

○ For control processes, the key input is “project management plan,” rather than specific subsidiary plans. And the output is “project management plan updates” rather than an update to a specific subsidiary plan.

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• EEF/OPA Referencing Rule for Process Inputs:

○ When referencing EEFs or OPAs, include the phrase “Described in Section” and state 2.1.4 for OPAs or 2.1.5 for EEFs.

• Other Consistency Rules:

○ Rename “project document update” and “organizational process asset updates” to “project documents updates” and “organizational process assets updates.”

○ For consistency across the PMBOK® Guide, document titles are not to be capitalized in the text.

• Sequencing Rules:

○ For inputs and outputs: plans, subsidiary plans, and baselines are listed first.

○ Project management plan first, then subsidiary plans, then baselines.

○ When plans are a major output, they are always listed first.

○ For inputs work performance data/information/reports, these are listed immediately before the enterprise environmental factors.

○ Enterprise environmental factors and organizational process assets are listed last in that order.

○ Tools and techniques have meetings listed last.

○ When updates are an output they are listed in the following sequence:

○ Project management plan/subsidiary plan updates,

○ Project documents updates,

○ Enterprise environmental factors updates, and

○ Organizational process assets updates.

X1.3 Established rules for Ensuring Harmonization Between Glossary terms and the PMI Lexicon of Project Management terms

To ensure that terms used in the PMBOK® Guide align with the PMI Lexicon of Project Management Terms and harmonize with other PMI standards, business rules were established and adhered to in the Fifth Edition update.

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• For terms found in both the PMBOK® Guide and the PMI Lexicon, the definition from the PMI Lexicon takes precedence.

• Where terms used in the PMBOK® Guide are not found in the PMI Lexicon but are found in other relevant PMI standards (e.g., The Standard for Program Management, Organizational Project Management Maturity Model (OPM3®), The Standard for Portfolio Management, Practice Standard for Earned Value Management, Practice Standard for Scheduling, etc.), the definition of the terms shall be the same. If the definitions do not align with the respective standards, the term is elevated to the PMI Lexicon team for assistance in creating an acceptable common definition.

X1.4 Project Management Plan and Its Subsidiary Plans

To improve consistency and aid clarity around the various subsidiary plans that make up the overall project management plan, the team added four planning processes: Plan Scope Management, Plan Schedule Management, Plan Cost Management, and Plan Stakeholder Management. These changes bring back the scope planning process from the Third Edition and add three new planning processes. The additions provide clearer guidance for the concept that each major Knowledge Area has a need for the project team to actively think through and plan how aspects from the related processes are planned and managed. It also reinforces the concept that each of the subsidiary plans are integrated through the overall project management plan, which becomes the major planning document for guiding further project planning and execution.

This change also ensures harmonization with other PMI standards. For example, a detailed planning process for Plan Schedule Management reinforces the need for detailed planning to address project scheduling issues such as selecting the scheduling method and tool during early planning stages as part of the overall Project Time Management processes. This concept of detailed planning for project scheduling related decisions aligns with the Practice Standard for Scheduling and ensures harmonization across PMI standards.

X1.5 consistency in Handling Project Management Work Execution data and Information Flow

To improve consistency and add clarity regarding project data and information flows during project work execution, the team redefined work performance data, work performance information, and work performance reports to align with the DIKW (Data, Information, Knowledge, Wisdom) model used in the field of Knowledge Management.

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• Work Performance data. The raw observations and measurements identified during activities performed to carry out the project work. Examples include reported percent of work physically completed, quality technical performance measures, start and finish dates of schedule activities, number of change requests, number of defects, actual costs, actual durations, etc.

• Work Performance Information. The performance data collected from various controlling processes, analyzed in context and integrated based on relationships across areas. Examples of performance information are status of deliverables, implementation status for change requests, forecasted estimates to complete.

• Work Performance reports. The physical or electronic representation of work performance information compiled in project documents, intended to generate decisions, raise issues, actions, or awareness. Examples include status reports, memos, justifications, information notes, electronic dashboards, recommendations, and updates.

The redefined data model was then applied consistently to the inputs and outputs for the various controlling and executing processes as illustrated in Figure X1-1.

Direct and Manage

Project Work

Validate Scope

Control Scope

Control Schedule

Control Costs

Control Quality

Control Communi- cations

Control Procure- ments

Control Risks

Control Stakeholder Engagement

Work performance data

Monitor and Control

Project Work

Work performance reports

Work performance information

Project document updates

Project plan updates

Change requests

Perform Integrated

Change Control

Develop Project Management

Plan

Manage Communications

Manage Project Team

Figure X1-1. refined data Model

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X1.6 Section 1—Introduction

Sections 1.2, 1.4, and 1.6 were realigned and harmonized with first sections in The Standard for Program Management – Third Edition and The Standard for Portfolio Management – Third Edition. This ensures the information regarding the relationship between projects, programs, and portfolios is treated consistently across all three standards. Additional text was added to Section 1.4.4 to expand the discussion on project management offices. Section 1.5 on Project Management and Operations Management was expanded to more broadly address the relationship among project management, operations management, and organizational strategy. A new section was added to address the importance of interpersonal skills of a project manager and refers the reader to Appendix X3 of the PMBOK® Guide for further discussion on the importance of interpersonal skills in managing projects. Section 1.8 on Enterprise Environmental Factors was moved to Section 2.

X1.7 Section 2—Project Life cycle and organization

The content of Section 2 was reorganized to improve content flow and understanding. The section on organizational influence on project management was moved to the beginning of the section and expanded to provide broader coverage of how organizational factors can influence the conduct of project teams. The discussion of enterprise environmental factors was moved into this section from Section 1. The section on stakeholders was expanded to better address project stakeholders and their impact on project governance. A new section was added to address the characteristics and structure of the project team. The section on project life cycle was moved to the end of the section and expanded to further explain life cycles and phases.

X1.8 Section 3 Project Management Processes for a Project

Section 3 of the PMBOK® Guide – Fourth Edition was moved into a new Annex in the PMBOK® Guide – Fifth Edition (Annex A1 – The Standard for Project Management of a Project). The introduction to this section was cleaned up and expanded to enable this annex to serve as a stand-alone document. This positions the Standard for Project Management away from the main body of the PMBOK® Guide material allowing the evolution of the Body of Knowledge material to be separate from the actual Standard for Project Management.

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X1.9 new Section 3 for PMBOK® Guide – Fifth Edition

A replacement Section 3 was developed for the PMBOK® Guide – Fifth edition. This new section bridges the content between Sections 1 and 2 and the Knowledge Area sections. The new section introduces the project management processes and Process Groups as in the previous editions of the PMBOK® Guide. However, it does not list each of the processes associated with each of the Project Management Process Groups.

X1.10 Split Section 10 on Project communications Management into two Separate Sections

Deferred and post-publication comments on the Project Communications Knowledge Area of the PMBOK® Guide – Fourth Edition uncovered a need to modify this Knowledge Area as well as the processes within the Knowledge Area. In general, the comments fell into three groups:

• Eliminate confusion created between the processes of Distribute Information and Report Performance and their overlap with processes for Control Scope, Control Schedule, and Control Cost.

• Tighten the focus of Project Communications Management to planning for the communications needs of the project, collecting, storing, and disseminating project information, and monitoring overall project communications to ensure its efficiency.

• Break out and expand on stakeholder management concepts to reflect not solely upon (a) analyzing stakeholder expectations and its impact on the project, and (b) developing appropriate management strategies for effectively engaging stakeholders in project decisions and execution, but also upon continuous dialogue with stakeholders to meet their needs and expectations, address issues as they occur, and foster appropriate stakeholder engagement in project decisions and activities.

Planning for and managing the communication needs of the project as well as the stakeholders’ needs are two distinct keys to project success. The concept being reinforced is that both are discrete Knowledge Areas in which stakeholder management is not simply better management of communications nor which improved communications is simply better stakeholder management. This concept drives the need to treat these two critical keys for project success as distinct areas.

Revamping this Knowledge Area by separating Project Stakeholders Management from Project Communications Management provides the following benefits:

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• Focuses on not only managing the expectations of the various stakeholder groups but actively working to ensure an appropriate level of engagement of project stakeholders in the decision making and activities of the project.

• Aligns with the growing body of research showing stakeholder engagement as one of the keys to overall project success.

• Improves the alignment between the PMBOK® Guide and The Standard for Program Management.

• Aligns better with the focus on stakeholder management being put forward with the new ISO 21500 standard.

• Allows better emphasis on Project Communications Management by focusing on the main purpose of communication activities to collect, store, organize, and distribute project information.

• Enables the realignment of project communications processes, thus addressing the confusion and overlap surrounding project performance analysis and reporting.

Section 10 was separated into two distinct Knowledge Areas: Project Communications Management and Project Stakeholder Management. This change takes the communication processes currently contained in Section 10 and refocuses them to project communications planning, executing, and controlling. The two current stakeholder aligned processes within Section 10 (Identify Stakeholders and Manage Stakeholder Expectations) were moved into a new section addressing stakeholder management. Stakeholder-related text from Section 2.3 was also moved into this new section. The project management processes related to managing project stakeholders were expanded to include:

• Identify Stakeholders,

• Develop Stakeholder Management Plan,

• Manage Stakeholder Engagement, and

• Control Stakeholder Engagement.

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X1.11 Process changes

As part of the process, changes several process names were changed to improve consistency across the processes and to improve clarity. All processes that create a subsidiary plan were named using the form of Plan {XXX} Management. The Monitor and Controlling processes were named using the form Control {XXX}, since the act of controlling a process includes monitoring the process. These changes improved the consistency of how processes are named across all processes. In addition to process name changes, several other processes were added or modified as described elsewhere in this appendix. The list below summarizes the process changes.

• 4.3 Direct and Manage Project Execution—changed to Direct and Manage Project Work

• 5.1 Plan Scope Management—added

• 5.5 Verify Scope—changed to Validate Scope

• 6.1 Plan Schedule Management—added

• 7.1 Plan Cost Management—added

• 8.1 Plan Quality—changed to Plan Quality Management

• 8.3 Perform Quality Control—changed to Control Quality

• 9.1 Develop Human Resource Plan—changed to Plan Human Resource Management

• 10.2 Plan Communications—changed to Section 10.1 Plan Communications Management

• 10.3 Distribute Information—changed to Section 10.2 Manage Communications

• 10.5 Report Performance—changed to Section 10.3 Control Communications

• 11.6 Monitor and Control Risks—changed to Control Risks

• 12.1 Plan Procurements—changed to Plan Procurement Management

• 12.3 Administer Procurements—changed to Control Procurements

• 10.1 Identify Stakeholders—moved to Section 13.1 Identify Stakeholders

• 13.2 Plan Stakeholder Management—added

• 10.4 Manage Stakeholder Expectations—changed to Section 13.3 Manage Stakeholders Engagement

• 13.4 Control Stakeholders Engagement—added

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X1.12 Section 4—Project Integration Management changes

Process definitions were revised for Develop Project Charter, Develop Project Management Plan, Direct and Manage Project Work, Monitor and Control Project Work, and Perform Integrated Change Control to better align with the PMI Lexicon and improve clarity of the definitions. The Direct and Manage Project Execution was renamed to Direct and Manage Project Work to better align with its definition and reinforce that this process applies beyond the Executing processes. Other changes consist primarily of expanded explanations, refinements to tools and techniques for several processes, and refinements to the inputs and outputs for several processes to better tie the integration processes to other project management processes. A table was added to the discussion of the output for of the Develop Project Management Plan process to bring clarity to the differentiation between project documents and Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 4 processes:

table X1-1. Section 4 changes

Fourth Edition Sections Fifth Edition Sections

4.1 Develop Project Charter 4.1 Develop Project Charter

4.2 Develop Project Management Plan 4.2 Develop Project Management Plan

4.3 Direct and Manage Project Execution 4.3 Direct and Manage Project Work

4.4 Monitor and Control Project Work 4.4 Monitor and Control Project Work

4.5 Perform Integrated Change Control 4.5 Perform Integrated Change Control

4.6 Close Project or Phase 4.6 Close Project or Phase

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X1.13 Section 5—Project Scope Management changes

In Section 5.1, the concept of a Develop Scope Management Plan process was brought back as a way to ensure consistency across all project planning processes and to reinforce that subsidiary plans are developed to plan the details for each major Knowledge Area. To support consistency in naming, the processes that create the subsidiary plans, the Develop Scope Management Plan was named Plan Scope Management. The discussion within the Collect Requirements process was expanded to make clear this process focuses on collecting all requirements necessary for project success. These requirements include the requirements for the product, service, or result to be delivered by the project, any quality requirements the project must meet, and any other project management related requirements deemed critical for project success. The Verify Scope process was renamed to Validate Scope and the text was reworked to add emphasis that this process is not solely about accepting deliverables but validating that the deliverables will deliver value to the business and confirms that the deliverables, as provided, will fulfill the project objectives, as well as their intended use to the project stakeholders. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 5 processes:

table X1-2. Section 5 changes

Fourth Edition Sections Fifth Edition Sections

5.1 Plan Scope Management

5.1 Collect Requirements 5.2 Collect Requirements

5.2 Define Scope 5.3 Define Scope

5.3 Create WBS 5.4 Create WBS

5.4 Verify Scope 5.5 Validate Scope

5.5 Control Scope 5.6 Control Scope

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X1.14 Section 6—Project time Management changes

Section 6 reflects changes within the industry and detailed in the Practice Standard for Scheduling – Second Edition.

As part of reinforcing the concept of detailed subsidiary plans being created for each major Knowledge Area and then aggregated into the overall project management plan, a new process was added for Plan Schedule Management. This process adds focus on the preliminary decisions around developing and maintaining the project’s schedule model. Process definitions were revised for Define Activities, Estimate Activity Resources, Estimate Activity Durations, and Control Schedule to improve clarity of the definitions. Several processes were modified with new inputs and/or updated outputs. Agile concepts were incorporated into the Develop Schedule process. Figures and associated text were updated to clarify scheduling concepts addressed in the section. Added emphasis was placed on resource optimization techniques used in project scheduling. Some inputs and outputs were renamed for several processes to support consistency between the various project management processes. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 6 processes:

table X1-3. Section 6 changes

Fourth Edition Sections Fifth Edition Sections

6.1 Plan Schedule Management

6.1 Define Activities 6.2 Define Activities

6.2 Sequence Activities 6.3 Sequence Activities

6.3 Estimate Activity Resources 6.4 Estimate Activity Resources

6.4 Estimate Activity Durations 6.5 Estimate Activity Durations

6.5 Develop Schedule 6.6 Develop Schedule

6.6 Control Schedule 6.7 Control Schedule

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X1.15 Section 7—Project cost Management changes

Section 7 reflects changes coming from within the industry and detailed in the Practice Standard for Estimating and the Practice Standard for Earned Value Management – Second Edition.

As part of reinforcing the concept of detailed subsidiary plans being created for each major Knowledge Area and then aggregated into the overall project management plan, a new process was added for Plan Cost Management. This process adds focus on the preliminary decisions around developing and maintaining the project’s cost estimates and budget. Added emphasis was placed on reserve analysis including contingency and management reserves with a new figure, Figure 7-8, added to illustrate the various components making up the project budget. A new table, Table 7-1 on earned value calculations summary, was added to collect in one place all of the formulas used for earned value analysis. Figures for earned value and project funding requirements were updated to reflect the added emphasis on management reserves. Some inputs and outputs were renamed for several processes to support consistency between the various project management processes. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 7 processes:

table X1-4. Section 7 changes

Fourth Edition Sections Fifth Edition Sections

7.1 Plan Cost Management

7.1 Estimate Costs 7.2 Estimate Costs

7.2 Determine Budget 7.3 Determine Budget

7.3 Control Cost 7.4 Control Costs

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X1.16 Section 8—Project Quality Management changes

No new processes were added in the project management processes contained within this section. The Quality Planning process was renamed Plan Quality Management to support consistency in naming the processes that create the subsidiary plans. The definition for Plan Quality Management was updated to better align with the added focus on quality requirements for the project. The Perform Quality Control process was renamed Control Quality to support consistency in naming the various controlling processes. Changes consist primarily of expanding discussion on various tools and techniques within the Quality Management processes. Figure 8-2 on IPECC and PDCA Cycles in Relation to QA, QC, and COQ, was added to illustrate the fundamental relationships between quality assurance, quality control, and cost of quality to the Plan-Do-Check-Act and Initiate-Plan-Execute-Control-Close models. A new input was added for the Plan Quality Management process to better tie the requirements gathered during the Collect Requirements process to the overall quality planning for the project. More emphasis was placed on the basic quality management tools used in managing project quality. New figures were added to better summarize the seven basic quality tools and the seven quality management and control tools. Some inputs and outputs were renamed for several processes to support consistency between the various project management processes. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 8 processes:

table X1-5. Section 8 changes

Fourth Edition Sections Fifth Edition Sections

8.1 Plan Quality 8.1 Plan Quality Management

8.2 Perform Quality Assurance 8.2 Perform Quality Assurance

8.3 Perform Quality Control 8.3 Control Quality

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X1.17 Section 9—Project Human resource Management changes

No significant changes were implemented in project management processes contained within this section. The Human Resource Planning process was renamed Plan Human Resource Management to support consistency in naming the processes that create the subsidiary plans. Changes consist primarily of some added or modified inputs, tools and techniques, and outputs, and the replacement of project management plan by human resource plan as an input of processes 9.2 Acquire Project Team, 9.3 Develop Project Team, and 9.4.Manage Project Team for consistency with processes in other Knowledge Areas. The definitions for Plan Human Resource Management, Acquire Project Team, and Develop Project Team were updated to better align with the details of these processes. Some inputs and outputs were renamed for several processes to support consistency in how information flows between the various project management processes.

The following table summarizes the Section 9 processes:

table X1-6. Section 9 changes

Fourth Edition Sections Fifth Edition Sections

9.1 Develop Human Resource Plan 9.1 Plan Human Resource Management

9.2 Acquire Project Team 9.2 Acquire Project Team

9.3 Develop Project Team 9.3 Develop Project Team

9.4 Manage Project Team 9.4 Manage Project Team

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X1.18 Section 10—Project communications Management changes

Information about stakeholder management was moved from Section 10 to a new Knowledge Area for Stakeholder Management. The Plan Communications process was renamed Plan Communications Management to support consistency in naming the processes that create the subsidiary plans. The processes for Distribute Information and Report Performance were reworked to clear up confusion between these processes and their overlap with processes for Control Scope, Control Schedule, and Control Cost. The processes were refocused toward the activity of communication as performed in projects, considering more the process of communicating rather than the intent or desired outcome of the message with emphasis on planning for the communications needs of the project, collecting, storing, and disseminating project information, and monitoring overall project communications to ensure its efficiency. The process names were changed to Manage Communications and Control Communications. The definitions for Plan Communications Management, Manage Communications, and Control Communications were updated to reflect these changes. Some inputs and outputs were renamed for several processes to support consistency between the various project management processes. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 10 processes:

table X1-7. Section 10 changes

Fourth Edition Sections Fifth Edition Sections

10.1 Identify Stakeholders Moved to 13.1

10.2 Plan Communications 10.1 Plan Communications Management

10.3 Distribute Information 10.2 Manage Communications

10.4 Manage Stakeholder Expectations Moved to 13.3

10.5 Report Performance 10.3 Control Communications

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X1.19 Section 11—Project risk Management changes

No significant changes were implemented in project management processes contained within this section. The Monitor and Control Risks process was renamed Control Risks to support consistency in naming the various controlling processes. Changes were made to move the emphasis away from the term “positive risks” toward “opportunity” to better align with the feedback from the project management community. Text was added to expand upon the concepts of risk attitude, risk appetite, risk tolerance, and risk thresholds. Other changes consist primarily of cleaning up text, incorporating feedback, and aligning inputs and outputs with changes from other Knowledge Areas. Some inputs and outputs were renamed for several processes to support consistency between the various project management processes. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 11 processes:

table X1-8. Section 11 changes

Fourth Edition Sections Fifth Edition Sections

11.1 Plan Risk Management 11.1 Plan Risk Management

11.2 Identify Risks 11.2 Identify Risks

11.3 Perform Qualitative Risk Analysis 11.3 Perform Qualitative Risk Analysis

11.4 Perform Quantitative Risk Analysis 11.4 Perform Quantitative Risk Analysis

11.5 Plan Risk Responses 11.5 Plan Risk Responses

11.6 Monitor and Control Risk 11.6 Control Risks

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X1.20 Section 12—Project Procurement Management changes

The Plan Procurements process was renamed Plan Procurement Management to support consistency in naming the processes that create the subsidiary plans. The Administer Procurement process was renamed Control Procurements to support consistency in naming the various controlling processes. Other changes consist primarily of cleaning up text, incorporating feedback, and aligning inputs and outputs with changes from other Knowledge Areas. Some inputs and outputs were renamed for several processes to support consistency between the various project management processes. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 12 processes:

table X1-9. Section 12 changes

Fourth Edition Sections Fifth Edition Sections

12.1 Plan Procurements 12.1 Plan Procurement Management

12.2 Conduct Procurements 12.2 Conduct Procurements

12.3 Administer Procurements 12.3 Control Procurements

12.4 Close Procurements 12.4 Close Procurements

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X1.21 Section 13—Project Stakeholder Management changes

In keeping with the evolution of thinking regarding stakeholder management within projects, a new Knowledge Area was added addressing Project Stakeholder Management. Information on stakeholder identification and managing stakeholder expectations was moved from Section 10 on Project Communications Management to this new Knowledge Area to expand upon and increase the focus on the importance of appropriately engaging project stakeholders in the key decisions and activities associated with the project. New processes were added for Plan Stakeholders Management and Control Stakeholders Engagement. Some inputs and outputs were renamed for several processes to support consistency between the various project management processes. Inputs and outputs were adjusted for several processes to reflect the new model of project data and information flow during the execution of project work.

The following table summarizes the Section 13 processes:

table X1-10. Section 13 changes

Fourth Edition Sections Fifth Edition Sections

10.1 Identify Stakeholders 13.1 Identify Stakeholders

13.2 Plan Stakeholder Management

10.4 Manage Stakeholders Expectations 13.3 Manage Stakeholder Engagement

13.4 Control Stakeholder Engagement

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X1.22 Glossary

The glossary of the PMBOK® Guide – Fifth Edition has been expanded and updated to include those terms within the PMBOK® Guide that need to be defined to support an understanding of the document’s contents:

• Clarify meaning and improve the quality and accuracy of any translations;

• Eliminate terms not used within the PMBOK® Guide – Fifth Edition; and

• Ensure terms align and harmonize with the terms in the PMI Lexicon and other key PMI standards.

X1.23 data Flow diagrams

The data flow diagrams for all project management processes were cleaned up and updated to remove inconsistencies and ensure each diagram accurately reflects the inputs and outputs associated with a given process.

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APPendiX X2 contriButors And reviewers of the PMBoK® Guide—fifth edition:

PMI volunteers first attempted to codify the Project Management Body of Knowledge in the Special Report on Ethics, Standards, and Accreditation, published in 1983. Since that time, other volunteers have come forward to update and improve that original document and contribute to this globally recognized standard for project management, PMI’s A Guide to the Project Management Body of Knowledge (PMBOK® Guide). This appendix lists, alphabetically within groupings, those individuals who have contributed to the development and production of the PMBOK® Guide – Fifth Edition. No simple list or even multiple lists can adequately portray all the contributions of those who have volunteered to develop the PMBOK® Guide – Fifth Edition.

The Project Management Institute is grateful to all of these individuals for their support and acknowledges their contributions to the project management profession.

X2.1 PMBOK® Guide—Fifth edition core committee

The following individuals served as members, were contributors of text or concepts, and served as leaders within the Project Core Committee:

Dave Violette, MPM, PMP, Chair Joseph W. Kestel, PMP, Vice Chair Nick Clemens, PMP (Sections 3 and 4 Lead) Dan Deakin, PMP (Sections 11 and 12 Lead) Theofanis C. Giotis, PMP, PMI-ACP (Sections 1 and 2 Lead) Marie A. Gunnerson, (Sections 6 and 7 Lead) Vanina Mangano, PMP, PMI-RMP (Integrated Content and Change Control Lead) Mercedes Martinez Sanz, PMP (Sections 5 and 8 Lead) Carolina Gabriela Spindola, PMP, SSBB (Quality Control Lead) Kristin L. Vitello, CAPM, Standards Project Specialist

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X2.2 PMBOK® Guide—Fifth edition Subcommittee

The following individuals served as contributors of text or concepts and as leaders of the Project Subcommittee:

Matthew B. Anderson, PMP, PMI-ACP (Section 4 Leader) Gilbert B. Asher, MBA, PMP (Data Flow Working Group Leader) Brad Bigelow, PMP, MSP (Section 2 Leader) Cecilia Boggi, PMP (Section 9 Leader) Bernardo O. Bustamante, PE, PMP (Section 1 Leader) Akshata Karanth, PMP (Section 6 Leader) David L. Keeney, PMP, CTT+ (Section 8 Leader) David Kramer (Section 12 Leader) Karthikeyan Kumaraguru MS, PMP (Section 11 Leader) Mary-Elizabeth Larson, PMP, CBAP (Section 5 Leader) Charles J. Lesko, Jr., Ph.D., PMP (Section 10 Leader) Claudia Alex Morris, MBA, PMP (Editorial Leader) John M. Nevison (Section 7 Leader) M.K.Ramesh, BE, PMP (Section 3 Leader through 6/2011) Krupakar Reddy, PMP, PRINCE2 Practitioner (Section 3 Leader) Yad Senapathy (Section 4 Leader through 6/2011) Anca E. Slușanschi, MSc, PMP (Section 13 Leader)

X2.3 Significant contributors

In addition to the members of the Project Core Committee and Subcommittee, the following individuals provided significant input or concepts:

George F. Burton MBA, PMP Tammy Clark Joel R. Erickson, MAcc, PMP Stanisław Gasik, PhD Ashok Jain, PMP, CSM Andrea Pantano, PMP Federico Roman Demo, PMP, ITIL Anthony Tsui, MIT, PMP Jennifer L. Walker, PMP

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X2.4 PMBOK® Guide—Fifth edition content committee

The following individuals were contributors of text or concepts and provided recommendations on drafts of the PMBOK® Guide—Fifth Edition:

Humayun Akhtar, PE, PMP Mark O. Alexander, P.Eng, PMP Miguel Angel Hernandez Ayala, MBA, PMP Katherine A. Barnoski, PMP, CPCP Sameer S. Bendre, PMP, CSM Manuela Borlovan Hector E. A. Boye, MSc, PMP Carlos M. Brenes, MPM Kevin Brennan, PMP, CBAP Melissa F. Bull, PMP Guido Caciagli B., PMP Jesus Mario Garcia Cano, PMP Ramesh Chandak Carol Dekkers, PMP, CFPS Wayne D. Ellis, PE, PMP Andrés Falcón, MBA, PMP Anna Maria Felici, PMP, CMC®

Sachin Ghai, PMP Juan Carlos González, PMP, ITIL Mike Griffiths, PMP, PMI-ACP Joseph Gruber, PMP, CAPM Sharnikya F. Howard, MBA, PMP Harold S. Hunt, PMP Suhail Iqbal, PgMP, PMP Rajan T. Janjani, PMP, ITIL Expert Chandrashekhar S. Joshi, PMP, Chartered Engineer

Puja Kasariya, PMP Khalid Ahmad Khan, PE, PMP Terri Herman Kimball, PMP Vijay Kumar Gaspar Pacheco Leal, PMP Nguyen Long Son, PMP, PMI-RMP Debra J. Lovelace, PMP Tom Magee, MBA, PMP Ahsan Maqbool, PMP, PMI-RMP Conrado Morlan, PgMP, PMP Tilden Moschetti Jacob Kottackal Ninan Abdul Nsubuga Reuben Oshomah, MSc, PMP Marcus S. Parker Sr., PMP Sergio A. Peñaloza, PMP Ute Riemann, MBA, MCS Nick Riordan, MBA, PMP Shivkanth V. Rohith, PMP, PMI-ACP Bruce Schwickrath, PMP, LSS-MBB Kishankumar J. Solanki Tejas V. Sura, MS, PMP Federico Vargas, PMP, MPM Srikanth Victory Himanshu Shripad Warudkar, PMP, ITIL S. K. Steve Wong, PMP, CMA

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X2.5 reviewers:

X2.5.1 SME review

In addition to the members of the Committee, the following individuals provided their review and recommendations on drafts of the standard:

Stephen Kwasi Agyei, PMP, LLM Lavanya Arul, PMP, PMI-RMP Ernest Baker, PMP, PRINCE2 Practitioner Mamoun Besaiso, CE James C. Bradford, Jr., PMP Damiano Bragantini, PMP Georgeta Brehoi, PMP Peter Brown Andrea Caccamese, PMP, Prince2 Practitioner Panos Chatzipanos, PhD, PE Jared Curtis, PMP Mario C. Delvas, MBA, PMP Dipti Desai, PMP Lakshmi Dhruvarao, PMP, CSM George Diakonikolaou, PhD, PMP Peter Dimov, PMP, CBM Richard Egelstaff, PMP, MBA Charles T. Follin, PMP Prabhat Garg, PMP Vivek Goel, PMP, CSM Mustafa Hafizoglu Dr. Sheriff Hashem, PhD, PMP David A. Hillson, PhD, PMI Fellow Christine Hoffman Hiroto Horio, PMP David T. Hulett, PhD Poornaselvan Jeevanandam Gregory I. Jepson Kazuo Kawai, PMP

Konstantinos Kirytopoulos, PhD, PMP Adrian W. Lovel-Hall, PMP, PMI-RMP Thomas F. McCabe, PMP, CSSMBB Harold “Mike” Mosley, Jr., PE, PMP Daud Nasir, PMP, LSSBB Alexandre Vieira de Oliveira, MBA, PMP Sneha V. Patel, PMP Richard Perrin Walter Plagge, MBA, PMP Marlene Derian Robertson Fernan Rodriguez, PMP Tres Roeder, MBA, PMP Guy Schleffer, MBA, PgMP Nitin Shende, PMP, CSM Nagendra Sherman, PMP J. Greg Smith Cyndi Snyder, PMP, EVP Geree V. Streun, PMP, PMI-ACP Jurgen Sturany, PMP Yasuji Suzuki, PMP Shoji Tajima Yvonne Tan EY, PMP Gerhard J. Tekes, PMP, PMI-OPM3 Certified Professional Biagio Tramontana, Eng., PMP Thomas M. Walsh, PMP Juanita M. Woods, PMP, PgMP Ronaldo Zanardo, CAPM Heinz Zimmermann, PMP

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X2.5.2 Member Advisory Group (MAG) review

The following individuals served as members of the PMI Standards Program Member Advisory Group and voted on the final draft of the PMBOK® Guide – Fifth Edition:

Monique Aubry, PhD, MPM Chris Cartwright, MPM, PMP Laurence Goldsmith, PMP Paul E. Shaltry, PMP Cyndi Snyder, MBA, PMP, EVP

X2.5.3 consensus Body review

The following individuals served as members of the PMI Standards Program Consensus Body and voted on the final draft of the PMBOK® Guide – Fifth Edition:

Monique Aubry, PhD, MPM Nigel Blampied, PE, PMP Nathalie Bohbot, PMP Dennis L. Bolles, PMP Peggy Brady Chris Cartwright, MPM, PMP Sergio Coronado, PdD. Andrea Demaria, PMP John L. Dettbarn, Jr., DSc, PE Charles T. Follin, PMP Laurence Goldsmith, MBA, PMP Dana J Goulston, PMP Dorothy L. Kangas, PMP Thomas Kurihara Timothy MacFadyen David Christopher Miles, CEng, OPM3-CC Harold “Mike” Mosley, Jr., PE, PMP Mike Musial, PMP, CBM Eric S. Norman, PgMP, PMP Deborah O’Bray, CIM (Hons)

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Nanette Patton, MSBA, PMP Crispin (“Kik”) Piney, BSc, PgMP Michael Reed, PMP Chris Richards, PMP Paul E. Shaltry, PMP Jen L. Skrabak, MBA, PMP Matthew D. Tomlinson, PgMP, PMP

X2.5.4 Final Exposure draft review

In addition to the members of the Committee, the following individuals provided recommendations for improving the Exposure Draft of the PMBOK® Guide—Fifth Edition:

Javed A. Abbasi, MBA, PMP Klaus Abert Biju B. Abraham, PMP Mohammad I. Abu Irshaid, PMP Mohammad Adel, PMP Yaser Afaneh, MSCE, PMP Eng. Ahmed Taha, MBA, PMP Mounir Ajam Phill C. Akinwale, MSc, PMP Mfon D. Akpan, MBA, PMP Mobasher Abdu Al-Asmry, CE, KSA Homam Al khateeb, PMP, PMI-RMP Ahmad Al-Nahar, MBA, PMP Melad Alaqra, PMP José Rafael Alcalá Gómez, MBA, PMP Martin Alemán Valdés, PMP Mohammed Faiq Al-Hadeethi,

PMP, MSc (Mech.) Anwar Ali, MBA, PMP Allam V V S Venu, PMP Barnabas Seth Amarteifio, PMP, ITIL Yousif Amin, PMP Andy Anderson, MA, PMP David Angelow, MBA, PMP Luciano Antoniucci Mark A. Archer, PhD, PMP Ondiappan Arivazhagan “Ari” PMP, PMI-RMP Wisdom Kwasi Asare- Amegashie Babissakana, PMP Mohamed A. Badie, PMP, Prince2 Practitioner Ammar N. Baidas, PgMP, PMP Kamal Bajaj, PMP, PGDBA Jehad J. Baker, PgMP, PMP

J. Balamurali, PMP Federica Ballone, PMP Manuel F. Baquero V., MSc, PMP Brent R. Barton Anupam Baruah Olaf Baumgartner, PMP Iain Begg, PMP Laura Benedetti Wayne F. Best Harwinder Singh Bhatia, PMP, CSM Pius Bienz, PhD, PMP Jean Binder, PMP Nigel Blampied, PE, PMP Michael P. Bomi, BSc, PMP Raúl Borges, PMP Farid F. Bouges, MSc, PMP Lynda Bourne, DPM, FAIM Joao Carlos Boyadjian, MSc, PMP

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Didier Brackx, PMP Jim Branden, MBA, PMP Wayne R. Brantley, MSEd, PMP Ralf Braune, PMP Tamela J. Brittingham, PMP Jerry Bucknoff, MBA, PMP Syed Asad Hasnain Bukhari, MBA (MIS), PMP Jeffrey S. Busch, PMP Mario Castro Caballero Anthony Cabri, PMP Andrea Caccamese, PMP, Prince2 Practitioner Roberto A. Cadena Legaspi, PMP Jacob Calabrese, CSP, CBAP Maria Cardullo James F. Carilli, PgMP, PMP Christopher W. Carson, PMP, CCM Angela M. Cason, PMP Ralph Celento Rebecca Cervoni, PMP Bruce C. Chadbourne, PgMP, PMI-RMP Kameswaran Chandrasekaran, PMP Theodore Jiyon Chang Ramesh Chepur, PMP, PRINCE2 Practitioner Subrahmanyam VN Chinta PMP, CSM Marcin Chomicz, MBA, PMP Abhishek Chopra

Angel R. Chourio, PMP Eric Christoph, PMP, EVP Rose M. Clark, PMP Rogerio L. Clavello, PMP Xavier Clerfeuille, MSc, SSL Black Belt Paul Converti, PMP, CISSP Mario Coquillat de Travesedo, PMP Franco Cosenza, PE, MScEE Jeremy Coster, PMP Raymond Covert Holly Cowe Adriano José da Silva Neves, MSc, PMP William L. (Bill) Dam, PMP, CPG Joseph W. Daniel, PMP Richard Gary Daniels Mohamed Daoud Russell W. Darnall, DM, PMP Fariborz Davarpanah, MBA, PMP Luiz Guilherme de Carvalho Elisa De Mattia P.H. Manjula Deepal De Silva, BSc, PMP Vijay Deshpande Salvatore Di’iorio George Diakonikolaou John H. Dittmer, VI, CISSP- ISSMP, PMP Marcelo Sans Dodson, PMP, MPM Roland Doerr, MBA, PMP

Serge Dolivet, PMP Bhushan Dongare R. Bernadine Douglas, MS, PMP Xinhua Du Arun Dubagunta Stephen Duffield, MPM, CPPD Pradip Kumar Dwevedi, PMP Hany A. Elhay, PMP Bilal M. El Itani, MBA, PMP Abdurazag Elkhadrawe William Ernest, MPM, PMP Dmitry A. Ezhov, PMP Leandro Faria, PMP, PMI-ACP Daniel Fay, PMP Madhu Fernando, DBA, PMP Jesse Fewell, PMP, CST Claudia Fiallo, PMP John C. ‘Buck’ Field, MBA, PMP Robinson Figueroa, MS, PMP David Foley, MBA Sandra Fonseca-Lind Scott D. Freauf, PMP, IPMA-C Sakae Fujino Yoichi Fukuhara, PMP Nestor C. Gabarda Jr., ECE, PMP Luca Gambetti, PMP, CFPS Gerardo A. Garavito F, PMP, PMI-ACP Jose Eduardo Motta Garcia, MBA, PMP Jorge Garcia Solano, PMP, MPM

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Sergio Garon, MS Jay D. Gassaway, PMP, PMP-SP Michael J. Gauthier, MA, CPM Darline Georges Soumajit (Sam) Ghosh, PMP, PhD Candidate Carl M. Gilbert, PMP, Cert OPM3 Professional Peter James Gilliland, PMP Sulema de Oliveira Barcelos Gobato, MsC, PMP Emily Godinet Lounge, PMP Peter Goldberg Andrés F. Gómez, MSc, PMP Guillermo Gomez Hdez., CSM José Abranches Gonçalves, MSc, PMP Himanshu Kumar Goswami Jean Gouix, Eng, PgMP, PMP Gary J. Graham, CISM, CISSP Charlie Green, PMP Roy C. Greenia, MPM, PMP Salomon Pineda Guerrero Pier Luigi Guida, PgMP, PMP Lakshmeesha T. Gundurao, PMP, CSM Guo Ming-Hui (MARS), PMP Kapil Gupta, PMP Edward Hall, PMP Noha Hamdy Sharad S Harale, MBA, PMP Simon Harris, PMP, D4® Accredited

Abdulrahman M Hassan, MSc Gregory T. Haugan, Sr., PhD, PMP Larry J. Hawkins, DSc, PMP Susumu Hayakawa, PMP Kym Henderson, RFD MSc (Comp) Robert Hierholtz Robert N. Higgins V, PMP Danny N. Hinton, PMP Shirley P. Hinton, PMP Hisashi Hirose, PMP Jack J. Holmes, PMP Keith D. Hornbacher, MBA Tim Hornett, PMP Christina M. House, PMP, EMBA, Seth Huckabee Robert F. Hull, PE, PMP Guillermo A. Ibañez, PMP, ITIL Shuichi Ikeda, PMP Hemant Israni, PMP, PMI-RMP Vladimir Ivanov, IPMA-B Assessor, ITIL Expert Vidya Iyer, PMP Can Izgi, PMP Elaine T. Jackson, BS, PMP James M. Jackson, PMP, FLMI Rajesh Jadhav, PgMP, PMI-RMP Rebecca Jahelka, PMP Gagan Jain, MBA, PMP Don R. James, PMP Vicki James Chandra Shekar Jayanna, PMP

Johannan ‘Johnny’ Jhirad, B. Tech (IIT Bombay) Marco Antonio Jimenez, MBA, PMP Jaime Jiménez Ayala, PhD, PMP Tony Johnson, PgMP, PMP Fayez Jolani, MBA, PMP Michele J. Jones, PMP Yves Jordan, PMP Chandrashekhar S. Joshi, PMP, Chartered Engineer Rameshchandra Joshi Donaliya K. Porter, MBA, MPM SS Kanagaraj, PMP, ITIL Edwin J. Kapinus, PE, PgMP Madhavi Karanam, MBA Heinrich Karageorgou, MBA, DBA Naoki Kasahara, PMP Ramakrishna Kavirayani, PMP Kenichi Kawamata, PMP Babatunde Oluwayomi Kayode, MS ProjM, MSc(PM) Tarig A. Khalid, PMP, CBAP Adil Khan Muhammad Ehsan Khan, PhD, PgMP, PMP Nader Khorrami Rad, PMP Mangesh A Khunte, PMP, PMI-ACP Mostafa Kilani Athens Kolias, PMP, MPM Walter Kriegl, PMP

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Srikanth Krishnamoorthy, PMP, PGDSA Kannan Krishnan Casimer “Casey” Kroll, PMP, MASc Gustavo Krowczuk, PMP Devesh Kumar, PMP, PMI-ACP L. Senthil Kumar, PMP Pavan S. Kumar, PMP Raghu Kumar Vladimir Kupershteyn, PhD, PMP Thomas M. Kurihara Puneet Kuthiala, PMP, CGEIT Massimo La Rosa, PMP Thierry Labriet, PMP, IPMA-B Rangarajan Lakshminarasimhan, PMP Arun Lal Elixender Lamprea León, PE-ITIL, MSc IT Hagit Landman, PMP, PMI-SP Ayotunde O. Lawal, PMP, CAPM Roberta Lawrence, BAppMgt (Project Management) PMP S. Douglas Leard, PMP, ACP Oliver F. Lehmann, PMP, CLI-CP Ginger Levin, PhD, PgMP, PMP Jean-Pierre Lhomme, PMP Jian Liang Kanak Limbu, PMP, ITILV3 Frank MC Lin Marco Antonio L. Lo Visco, MBA, PMP Lohokare

Anand Lokhande, PMP Alberto J. Lopez, PMP Samuel López González de Murillo, PMP Zheng Lou, MBA, PMP Sérgio Lourenço, PMI-RMP, PMP Hugo K. M. Lourenço, PMP Robert A. Lyell, PMP Frederick G. Mackaden, MBA, PMP Engr. Sangu Maha Rajan, BTech Abhijit A. Maity, PMP Richard Maltzman Anthony Mampilly, PMP Kenneth Manahl Ammar Mango David Mantle, PMP Len Marchese, PMP Daniel Marigliano Shobhana M., BTech, Prince2 Antonio Marino, PMP, PMI-ACP Tom Mastal, PMP, CSM Flávio Matsuyama, PhD Vincent McGevna, PMP, PRINCE2 Practitioner Jon McGlothian, MBA, PMP Alan McLoughlin, BE, MPM Suzette A. McNaught, MBA, PMP Peter Berndt de Souza Mello, SpS, PMI-SP Yan Bello Méndez, PMP Katia M. Méndez Madrigal, MAP, PMP Ernst Menet, PMP

Rashmi Menon Mohammed M’hamdi, PMP Joachim Modern, PMP Megat Ahmad Zainuri B. Mohamed, PMP Mannan Mohammed, PMP, PEng Haitham K. M. Mokhtar, BSc, PG Dip Andres Molano Trujillo Marshciene Hendrix Moor, MBA, MS Lacheta Moore Carlos Morais John Morck, Med, PMP Harold “Mike” Mosley, Jr., PE, PMP Saradhi Motamarri, MTech, PMP Henrique Moura, PMP Nathan M. Mourfield, MBA, PMP Hazim Muhssin Kristin Munro Mike Musial, PMP, CBM Khalid M. Musleh, PMP, ISO 9001 LA Arul SP Muthupandian Amir Naderi, Msc, PMP Basab Nandi Sergio Nascimento Faig Nasibov, PMP Mthokozisi Ncube, MSc, PMP Ta-Tianna K. Nealy, PMP, RMP Shashank Neppalli, PMP Nghi M. Nguyen, PhD, PMP Thuthuy C. Nguyen, PMP

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Tri Hue Nguyen, PMP Idika U Ngwobia, MSc, PMP Jonathan Nickerson, PMP Praveen K. Nidumolu, PMP, CSM Eric Nielsen, PMP Jeffrey S. Nielsen, PgMP, PMP Sanjay Nivargikar Takuji Noguchi, PMP Michael Nollet Alireza Noordoust Behtouei Fernando Nunes de Oliveira, PMP, PMI-SP Henry Lapid Nuqui, PEE, PMP Kevin T. O’Brien, PEng, PMP Peter O’Driscoll, PMP Dayo Odunlami, MBA, PMP Siobhan-Louise O’Keefe Bayonle Oladoja, mnse, PMP Neil Olshansky Johnson O. Omosule, Bsc Thomas Q. O’Rourke, PMP, PMI-RMP Venkateswar P. Oruganti, PMP, FIETE Mahmoud Assaad Othmane, PMP, CIPM Maksym Ovsianikov, PMP Hariyo D. Pangarso, MT, PMP James W. Parcels Sandro Pasini, MBA, PMP Yadaiah Pathkula Marcello Patrese, PMP, PMC Dražen Penzar, PMP

Richard J Perrin, PMP, MBB D. John Peter, PMP Lachlan Peter, CPEng, PMP Massimo Pica, Brig. Gen.(ret.)- Italian Army, Dr (Eng) Joseph Pignato Raj Pillai, PMP, MIFireE Teresita L. Pineda, PMP, LEED AP Crispin (“Kik”) Piney, BSc, PgMP Jose Angelo Pinto, PMP, OPM3 CC Alan L. Plastow, PMP, MAT Fredric L. Plotnick, PhD, PE Shaligram Pokharel, PhD, REng George E. Porter, MBA, PMP Marcus Possi, MBA-FGV, SpS Edwin A. Provencal, MBA, PMP Naseer Pervaz Qureshi Norman Radatz, PMP João Ramalho, PMP S. Ramani, PgMP, PMP Phalguna K Ramaraju, PMP, PMI-ACP Rajkumar Ramaswamy, P Eng, PMP M.K.Ramesh, BE, PMP Gurdev Randhawa Raghunathan Rangapathy, PMP Madhavan S Rao , PMP Raju N Rao , PMP, Cert OPM3 Professional Michael Reed, PMP Vicky Restrepo, PMP

Gustavo De Abreu Ribas, PMP Andriele Ribeiro, MSc, PMP Juan Carlos Ribero Gomez, PMP Richard A. Rodberg, PMP Bernard Roduit David Roe, PMP Brandon Joseph Rogers, PMP Yvette Roserie, PMP Cecile T Ross, PMP Mohamed Saad Kumar Sadasivan, PMP Mihail I.E. Sadeanu, PhD, PMP Keiko Sakagami, PMP Eng. Salem Mahaboob Saliha Sheriff MBA, PMP Christian Q. Salvaleon Angela M. Sammon, PMP Ranga Sarangan, MBA, PMP Vikas Sarin, PMP, ME(SS) Kyoichi Sato, PMP Sara Sattar, PMP Anatoliy A. Savin, PMP Doina T. Scafaru, PMP Danilo Scalmani, PMP Gary D. Schmitz, PMP Martin R. Schneider William T. Schulz, PMP Ulrich Schumann, PMP Hemant Seigell, MBA, PMP Yoshiro Sekihara Dhruba P. Sen, PMP, CSDP Maharajan Skandarajah, PMP Shrenik Shah, PMP

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Nitin Shende, PMP, CSM Kazuo Shimizu, PMP David Shirley, MBA, PMP Sandeep Shouche, PgMP, PMP Hilary Shreter, MBA, PMP Sameer Siddhanti, MSc, PMP Edson Silva Evandro Silva Fay Simcock Gurpreet Singh, MBA, PMP Ravi H. Singh, PMP Nabakishore Singha Y., EMBA, PMP Rajesh Singla, PMP Darnell Singleton, PMP, MSPM Sumit Kumar Sinha, PMP Malik Skaljic, PMP, MBA Charles D. Smith, PMP J. Greg Smith Kenneth F. Smith, PMP, DPA Cyndi Snyder, PMP, EVP Pamela Soderholm, PMP Emad Eldin Soliman Wang Songping Mauro Sotille, PMP Frank Spiegel, PMP Babou Srinivasan, PMP Ravishankar Srinivasan, PMP Sriram Srinivasan, PMP, ITIL Expert Dennis E. Stevens Kevin Stokes Zendre Strother

Murali Sundararaju, PMP Yasuji Suzuki, PMP Sudhir Swamy, PMP Marcus Tabart, PMP Afif Tabsh, PMP Shoji Tajima, PMP, ITC Roberto Taraschi, PMP Isabella Taschetta, PMP Sunil Telkar, PMP, MIMA John G Terdik, PMP, CSM Carlos Tessore, PhD, PMP Riad Thalji, PMP Srinivasan Thiruvengadathan John B. Thomas, PMP Sal J. Thompson, MBA, PMP Ronald Togatorop, PMP Mark Tolbert, PMP Ricardo Torres Luis Eduardo Torres Calzada, PMP John T. Tracy, MBA, PMP Mario H Trentim, PMP, PMI-RMP Ankit M. Trivedi, MS, PMP Mahmoud M. Turkistani, PMP Bruce E. Turner, PhD, PMP Junichi Uchiyama, PMP Hafiz Umar Krishnakant T Upadhyaya, PMP Srikanth U.S., MS, PGCPM M. Fahad Usmani, PMP, PMI- RMP Ali Vahedi Diz, PgMP, PMP Richard E. Vail, PMP

Jorge Valdés Garciatorres, PMP, ACB José Félix Valdez, PMP Tom Van Medegael, PMP Mårten van Rheinberg, PMP, PMI-ACP Stephan Vandevoorde, Ing. Ravi Vanukuru, B.E., PMP Lelio Varella, PMP Ricardo Viana Vargas, MSc, PMP Jouko Vaskimo, PMP, IPMA Level B Cynthia A. Vaughn, MBA, PMP Isabel Rosario Vega Palomino, PMP Vedananda V Venkata, MS, PMP Thierry Verlynde, MS, PMP Basskar Verma Aloysio Vianna Jr., PMP Jaime Videla, PMP Carlos Augusto Freitas, PMP, CAPM Tiziano Villa, PMP, CMC Jorge Archivaldo Villa, CE Ananth Vishakantiah, PMP Mangi Vishnoi, PMP, MIEAust Poonam Vishnoi, PMGTI Yiannis Vithynos PMP, PMI-ACP Atin Wadehra, MBA, PMP Paul Waits Jr., PMP, CPM Xiaojin Wang, PhD, PMP Patrick Weaver, PMP, FAICD Kevin R. Wegryn, PMP, MA

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Stacia Weiner, PMP Roger K. Weld, PE, PMP Philip Wells PMP, CEH Sean Whitaker, MBA, PMP S. White Rebecca A. Winston, JD Stephen Wise, PMP

Sheng Jun Tony Wu, PMP Wenyi Xiao, PMP Chen YanJi, PMP Clement C.L. Yeung, PMP Masafumi Yoshizawa, PMP Yong Yu Ricardo T. Yugue, MSc, PMP

Azam M. Zaqzouq, MCT, PMP Omran Mohamed Zbeida, PMP, BSP Bin Zhang Salim Zid, PMP, LEED AP BD+C

X2.6 PMI Standards Program Member Advisory Group (MAG)

The following individuals served as members of the PMI Standards Program Member Advisory Group during development of the PMBOK® Guide—Fifth Edition:

Monique Aubry, PhD, MPM Margareth F.S. Carneiro, MSc, PMP Chris Cartwright, MPM, PMP Terry Cooke-Davies, PhD Laurence Goldsmith, PMP Paul E. Shaltry, PMP Cyndi Snyder, MBA, PMP, EVP John Zlockie, MBA, PMP, PMI Standards Manager

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X2.7 Harmonization team

Karl F. Best, CAPM, CStd Steve Butler, MBA, PMP Folake Dosunmu, PgMP, OPM3 Randy Holt, MBS, PMP, Chair Dorothy L. Kangas, PMP Joseph W. Kestel, PMP M. Elaine Lazar, AStd, MA Timothy MacFadyen Vanina Mangano David Christopher Miles CEng, OPM3-CC Eric S. Norman, PgMP, PMP Michael Reed, PMP Chris Richards, PMP Jen L. Skrabak, MBA, PMP Carol Steuer, PMP Bobbye S. Underwood, PMP, PMI-ACP® Dave Violette, MPM, PMP Kristin Vitello, CAPM Quynh Woodward, MBA, PMP John Zlockie, MBA, PMP

X2.8 Production Staff

Special mention is due to the following employees of PMI:

Donn Greenberg, Publications Manager Roberta Storer, Product Editor Barbara Walsh, Publications Production Supervisor

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X2.9 contributors to Past Editions

X2.9.1 the PMBOK® Guide—Fourth Edition:

Cynthia Stackpole, MBA, PMP, Project Manager Karen Rasmussen Noll, Deputy Project Manager Murray Grooms, BA, PMP (Communications) Sandra Hyman (Chapter Coordinator) Joseph W. Kestel, PMP, MSIS (Chapter 3 and 5 Lead) Tom Malicki (Volunteer Lead, Front & Back Lead) Clifford W. Sprague, PMP (Volunteer Coordinator) Geree V. Streun, CSQE, PMP (Chief Architect) Kristin L. Vitello, Standards Project Specialist

X2.9.2 other contributors:

Wayne F. Abba Ahmed Taha Abd El Hameed Ir Hj Ahmad Khairiri Abdul Ghani, Int PE, ASEAN Eng Klaus Abert Biju B. Abraham, PMP Ed Adelman, PMP Yasser Thiab Ali Afaneh Mohit Agarwal Upinder Aggarwal, PMP Eva D. Aimable Shigeru Akiba, PMP Phill C. Akinwale, PMP James E. Aksel, MS, PMP Neil F. Albert Mohammad M. Ali

Hussain Ali Al-Ansari, Eur Ing, C Eng Mohammed Abdulla Al-Kuwari, Eur Ing, PMP Graeme A. Allan, BSc(Hons), PMP Marcia de Almeida Wasel A. Al-Muhammad, MBA, PMP Noor Hamad Alnisif, PMP Fayez Mosaed Al-Talhi, PMP Alonso Loaiza A., PMP Barnabas Seth Amarteifio, PMP Ketal Amin, BB, PMP Alok N. Anadkat, BS, PMP P. Lingesh Ananth, PMP

Abel Andrew Anderson, CBM, PMP Chet R. Anderson, PMP Niels Erik Andersen, MSc CS Jagathnarayanan P. Angyan, FIE, CE Ondiappan Arivazhagan “Ari”, PMP, CSSBB Muhammad Waqar Asghar, PMP Syed S. Asghar, MSA, PMP Usman Asif, PMP Naing Moe Aung, PMP Shigeo Awamura Mike Awuah, MBA, PMP Tanin I. Ayabakan, MD, PMP

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Jacklyn Ayoung-Chee, MBA, PMP Mahadhir Aziz, PMP Karthegesan B., MBA, PMP Rozinah Bachik, MSc (PM), PMP Ernest Baker, PMP Ramanan Balakrishna, PMP Sunil Bansal, PMP Ricardo do Rêgo Barros, PMP Patricia J. Bartl, PMP Nazir M. Bashir, PMP Herminia Bastos, PMP, CMC Mohammed Safi Batley, MIM Fred Beckmann, PMP Debra C. Bedford Julia M. Bednar, PMP Eric Berry, PMP Stephen Berté, PhD, PMP Mamoun A. Besaiso, CE Dale L. Beyer, MBA, PMP Christie Biehl, EdD, PMP Shantanu Bhamare, PMP Alok Bhaskar, MBA, PMP Kurmarao V. Bhavanasi, PMP Artur Bialy, PMP Craig Nicholas Blackford Rhonda R. Blevins, PMP Edward Bogak, MBA Dennis L. Bolles, PMP, LLC Stephen F. Bonk, PMP, PE Adolfo Borja, MBS. PMP Al Bornmann, PE, PMP Lyn Bos, MHA, MBA

Jean-Luc Boulanger, PMP Lynda Bourne, DPM, PMP Didier Brackx, EMS Prof, PMP, Robin G. Bradshaw, PMP Carlos Eduardo M. F. Braga, PMP Wayne R. Brantley, MS Ed, PMP Ralf Braune, PMP Michael C. Broadway, PMP Alex S. Brown, PMP IPMA-C Ian A. Brown, MBA, PMP Jerry L. Brown, PMP Joan Browne Jeannine Allison Bryan Pat Buckna, PMP Camper Bull, PMP Mitchell S. Burke, MS, MBA Janet P. Burns, PMP Kenny E. Burrow, PhD, PMP Bernardo O. Bustamante, PE, PMP John Buxton, PE, PMP Andrea Caccamese, PMP, PRINCE2 Practitioner Roberto Alejandro Cadena Charles Cain, PMP Teresa W. Calhoon, PMP Sergio A. Calvo, PMP Luis Eduardo Torres Calzada, MPM, PMP Franco Caron, PhD Alejandro M. Polanco Carrasco Chris Cartwright, MPM, PMP Brian L. Cassita

Roberto Castro William A Cather, PhD, PMP Roberto Celkevicius, PMP, ITIL Bruce C. Chadbourne, PMP, PgMP K. K. Chakraborty, PMP, BE Krishna Datta Nallani Chakravartula, MBA, PMP Ka-Keung Chan, PMP, MBA Paul E. Chaney, PMP Supriyo Chatterji, MCA, PMP Tony Tze Wai Chau, PMP, MAPM Noman Zafar Chaudry, PE, PMP Ashish Chawla, MS Zhen Cheng David Kwok Keung Chenung Ramesh Chepur, CSQA, PMP David K. Cheung, MSc, MBA Tomio Chiba, PMP Ananaba Marcellinus Chikwendu, MBA, PMP Hsing-Tung Chou, PhD Lung-Hung Roger Chou, PMP, MCT David Christensen Manuel Cisneros, MBA, PMP Douglas Clark Darrell S. Cleavenger, PMP Alexandre Coelho, PMP Richard J. Coffelt, PMP Brenda Connor, PMP Terry Cooke-Davies, PhD, FCMI Edmund H. Conrow, PhD, PMP

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Betty Corbin, PMP John E. Cormier, PMP Mauricio E. Cornejo, PMP Anthony R. Corridore, PMP William T. Craddock Larry E. Criger, PE, PMP Darren D. Criglar, MLA, MA Jacqueline M. Cruit, PMP Mary Colleen Cullinan, PMP Michael J. Cunningham, PMP Craig Curran-Morton, MA, PMP Robert L. Cutler, PMP Barbara Y. DaCosta, MPA, PMP Venkatesh Dakshinamurthy Claudio D’Arcangelo, PMP Claudio Da Rold, PMP Anirban Das, PMP Venkateswarlu B. Dasigi, PhD, PMP Patricia A. David-Gentsch Allan Edward Dean, MBA, PMP Jim Delrie, PE, PMP Madhavi Desai, MS, PMP Rahul P. Deshpande Anita Dhir, PMP Laurie Diethelm, CAPM David Dominguez Nick Doralp, PMP, ECM George R. Dorer, MBA, PMP, Bernadine Douglas Nicolas Douliez Nigel O. D’Souza, PMP, ITIL John A. Dullnig, PMP

Francine J. Duncan, MIEEE, PMP Azra Duric, PMP Teresa Duvall, PMP, CDR Phillip Dyer, PMP G. Ebynayagam Susan Holly Edelman, PMP Judith A. Edwards, PhD, PMP Paul J. Egan Tarek El-Misalami, PhD, PMP Waleed M. ElToulkhy, PMP Ramon Espinoza, PMP Brian M. Evans, PMP Peter Ewart-Brookes, PMP Steven L. Fahrenkrog, PMP Bruce E. Falk, PMP John L. Fallon, PMP Giovanni Fanduiz, MSc, PMP Sabeeh U. Faruqui, BE Elect, PMP Kathleen M. Federici, MEd, CAPM AnnaMaria Felici, PMP, CMC Luis Cláudio Tavares Fernandes, PMP Marcelo B. Ferreira Ann Marie Ficarra, PMP Michael H. Fisher, MSPM, PMP Matthew J. Fiske, PE, PMP Cheryl Fitzgarrald, PMP Edgardo J. Fitzpatrick, PMP Martin Flank, MBA, PMP Joel E. Fleiss, PMP Quentin W. Fleming

Gloria Elena Folle Estrada Charles T. Follin, PMP Dean J. Fragos Amanda Freitick Scott D. Freauf, PMP Mark R. Friedman, CISA, PMP Scott J. Friedman, PMP Andrew H. Furber, PMP, PRINCE2 W. Anders Fusia, PMP Ravindra Gajendragadkar, PMP Sharyn H. Gallagher, EdD, PMP Xue Gang (Gabriel), PMP, QSLA George F. Garas, MBA Jose Eduardo Motta Garcia, MBA, PMP Anand Swaroop Garg Stanisław Gasik Jay D. Gassaway David P. Gent, CEng, PMP Mitchlyn Gentry, MISM Joseph Sanju George Subir Ghosh, PMP Carl M. Gilbert, PMP, OPM3A/C Peter James Gilliland, PMP Theofanis Giotis, MSc, PMP Fernando Hurtado Giraldo Jonathan Glaser, PhD, PMP Sulema de Oliveira Barcelos Gobato, MSc, PMP Joelle A. Godfrey, PMP Vivek Goel, PMP Marshall Goldman, PMP Roger K. Goodman, PMP

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Jean Gouix, Eng, PMP Priyesh Gopalakrishnan Derek R. Grant, BSc, PMP Thomas J. Gray, PE, PMP Paul A. Green, BSc (Hons) Donn Greenberg Roy Greenia Stephen Grey, PhD Mireya Grieco, PMP Liz Grinzo, PMP Torben Grut, PMP Jeff Jianfei Gu, MBA, PMP Ruth Anne Guerrero, MBA, PMP Pier Luigi Guida, Ing, PMP Joy Gumz, CPA, PMP Marie Gunnerson Swati Gupta, PMP Raj Guttha Anne N. Gwankobe, PMP, CSSGB Mustafa Hafizoglu, PMP Edward Hall, PMP, CQM Matthew W. Handi, PMP John Haneiko, PMP Sharad S. Harale, PMP, MIM Kurt J. Harris, PMP Donna M. Harrison, PMP Akkiraju V. Harshavardhan, PMP Dr. Sheriff Hashem, PhD, PMP Mohamed Hassan, PMP, CSWP Lawrence Hattenburg, PMP Larry J. Hawkins, DSc, PMP Ernesto Yo Hayashi, MEng Jim Hayden, PMP

Gary R. Heerkens, PMP, PE Mohamed S. Hefny, MSc, PMP Krzysztof Hejduk, PhD, PMP Kel Henderson Robert Hierholtz Gary Higgs Hideyuki Hikida, PMP Merleen Cowie Hilley Bob Hillier, PMP David A. Hillson, PhD, PMP Lecia L. Hogan, MPM Mark Holdrege Carol Holliday, MA, PMP Felicia Hong, PMP, MBA George H. Hopman, PhD , PE Tim Hornett, PMP Gheorghe Hriscu, PMP, OCP Chih-Yang Hsia, PMP, MBA Jeff M Hughes, BA (Hons), PMP David T. Hulett, PhD Theresa L. Hunt, CSQE, CSTE Marta Hurst, CLSSBB Jean-Pierre Husereau, PMP, OPM3-CC Huma Hydari, MBA, PMP Zulfiqar Hussain, PE, PMP Midori Ito Suhail Iqbal, PE, PMP George Jackelen David S. Jacob, MS, PE Tony Jacob, PMP Dhanojkumar D. Jadhav Ashok Jain, PAHM, PMP

T.D. Jainendrakumar, PMP Nilesh D. Jaltare, PMP Ganesh Jambunathan, PMP Raj Kumar Jhajharia, PMP Marco Antonio Jimenez, PMP, MBA Merna M. Johnson, PMP Tony Johnson, PMP, PgMP Elden F. Jones II, PMP, MSPM Marylinda Jones, PMP, Six Sigma Greenbelt Michele J. Jones, PMP Nancy A. Joseph, PMP George Jucan, PMP Marijana Jurgec Lenin Babu Kamma, PMP Nils Kandelin, PhD, PMP Edwin J. Kapinus, PMP, PE Sanjay Kapoor Carl Karshagen, PMP Puja Kasariya, PMP Kenneth P. Katz, PMP Ramakrishna Kavirayani, PMP Kenichi Kawamata, PMP Genny Kelly Lance Kelson, CISSP, PMP Tom Kendrick, PMP Roger Kent, PMP Joseph W. Kestel, MSIS, PMP Rameshchandra B. Ketharaju Thomas C. Keuten, PMP, OPM3-CC Hamed Keyvanfar

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Tausif Khawaja Jim Kinard, PMP Konstantinos Kirytopoulos, PhD, PMP Joan Knutson, PMP Kimberly A. Kook, PMP, ITIL Foundations Roman S. Kosarzycki, PMP Chetana S. Koulagi, PMP, CSQA Mark Krahn, PhD, PMP Edie E. Kubomoto, PMP, CQM Takahiko Kuki, PMP, JPE Milan Kumar, MCM, ITIL Sasi Kumar, PMP Karthikeyan Kumaraguru, MS, PMP Vijaya Kurada, MBA, PMP Thomas M. Kurihara Lisa M. LaCourse, PMP Jerry D. Lainhart, PMP S Lakshminarasimhan, MBA(Fin), PMP Tim K.Y. Lam, PMP, MBA Philippe Landucci, PMP David J. Lanners, MBA, PMP David K. Larson Mary-Elizabeth Larson, PMP, CBAP Richard G. Larson, PMP, CBAP Marta M. Laszcz, PMP Charlene Lattier, PMP Jim Lee Sr., PMP Patty Leung Juanita Jane Lightfoot

Donald Likens Diana Lilla, MA, PMP Michelle Z. Lim-Watson Robin Lindenmeier, PMP Michael Linegar, PMP, MBA Kristin Linoski, PMP John D. Lissaman, BEng, PMP Arden Lockwood, MBA, PMP Mary K. Lofsness Anand Lokhande, PMP Alberto Lopez, PMP Enrique López-Mingueza, PMP Margaret L. Love, PMP Adrian Lovel-Hall Angela Cheng-Jui Lu, PhD, PMP Chuanqing James Lu, PMP Yves M. Lucas, PMP Christina Luik Raymond Maczka Shankar Mahadevan, PMP, CWA Robin Maher Catryana C. Malcolm, PMP Konstantinos Maliakas, PMP Rich Maltzman, PMP Vasantha R. Manda, MS, PMP Rick Mandarino, PMP, MBA Srinivas Mandgi, PMP, SAP HR Carmelene Mangahis Ammar W. Mango, PgMP, PMP Brian J. Mangravite Joachim Manz, PhD, PMP Lou Marks, PMP Mark Marlin, PMP, PE Robert A. Marshall, PhD, PMP

Cristinel Damian Martalogu John A. Marzullo, PMP Rebecca P. Masucci Jamie Mata Mohit Raj Mathur, PMP Nael Mattar Rahma Mbarki Eng, MSc, MBA Laura McDonough, PMP Colleen A. McGraw, PMP David McKenna, MSc, PMP Yan Bello Méndez, PMP Louis J. Mercken, PMI Fellow, PMP Su Mei-Shih, PMP Kenneth Merten Predrag Fred Mikanovic, MBA, PMP Berne C. Miller, PMP, CPL Walter Warren Miller III, PhD, PMP Sumith Alvet Miranda, PMP Purvi Sheth Mishra Gregg Mohrmann Mark A. Monteleone, PMP, CBAP Gary Monti, PMP Carlos Morais, PMP John Morck Alberto Moreno, PMP Paola Morgese, PE, PMP Kaoru Mori, PMP Rogan Morrison, PMP Saradhi Motamarri, MTech, PMP Bhagchand S. Motwani Stephen E. Mueller, PMP, EVP

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Hazim Muhssin, PMP Rita Mulcahy, PMP Philips Tharakan Mulackal, PMP, CCE Gerald Mulenburg, DBA, PMP John L. Murphy, PE, PMP Pradeep Murti Carlo Muzzarelli Takamichi Nagano Prakash Nagaraju, PMP John T. Napier Kalyanraman Narayanswamy, PMP Faig Nasibov, PMP Muhammad Nasir John T. Nelson, BSc Mohammed Taher Netarwala, BE Mech, PMP Edgard Pedreira de Cerqueira Neto, PhD, PMP Michael Newell, PMP Thuthuy C. Nguyen, PMP Praveen K. Nidumolu, PMP Jeffrey S. Nielsen, PMP James S. Niziurski, PMP Michael C. Nollet, MBA, PMP Peter Ntiforo, PMP, BSc (Hons) Jeff Nuding, PMP Michael O’Brochta, MPM, PMP Deborah O’Bray, CIM (Hons) Edward A. O’Connor, PMP Charis Ogbonna Kazuhiko Okubo, PE, PMP James Ostad, PMP

Dmitry Ostroushko, PhD Beth Ouellette, MBA, PMP Priya Padmanabhan, PMP Nariman Panahian, PhD, PMP Mohan Pandey, MPharm, PGDM(IIMA) Tara Pangakis, PMP Leah Paras, PMP Balaji Parasuraman Kent D. Paris, PMP Hyung Ki Park, PMP William J. Parkes, PMP Frank R. Parth, MBA, PMP Jerry L. Partridge, PMP George Pasieka, aCPP, PMP Marcello Patrese, PMP, MPM Mridul Paul, PMP, MBA Peter B. Paulauskas, PMP Seenivasan Pavanasam, B Tech, PMP Almir dos Santos Pereira, PMP Nancy Perosio, PMP Robert E. Perrine, PMP Sitarama Chakravarthy Peruvel, PMP Bruce T. Petro, PMP Daniel Picard, PMP Crispin (“Kik”) Piney, BSc, PMP George Pitagorsky, PMP Rama P. Pokala, PMP Morris A. Pondfield, MBA, MS Roberto Henrique Nogueira Pons Charles M. Poplos, EdD, PMP Steven S. Popovich

Steven R. Potter, PMP Janice Preston, PMP Carl L. Pritchard, PMP, EVP Carl W. Pro, PMP Nathan Pryce, EMTM, PMP Javier Pumar, PMP Jan F.M. Raes, PhD, PMP Regina Rahmilov V. Raja, PMP Aditya Rajguru, PMP S. Ramani, PgMP, PMP Ananthakrishnan Ramaswami, PMP Claudia Elisa Ramírez, PMP Dave Randell, PMP Gurdev S. Randhawa, PMP Shrish Rangaramanujam, PMP Banshidhar Rayaguru, PMP, M Tech Krupakara Reddy, PMP, PRINCE2 Practitioner Caroline Robison, PMP Ana I. Rodríguez García, PMP Asbjørn Rolstadås, PhD, Ing Rafael Fernando Ronces Rosas, PMP Kenneth H. Rose, PMP Prakash Roshan, PMP David W. Ross, PMP, PgMP Neal L. Rowland, PMP Jaideep Roy Laurie M. Rudnitsky, PMP Lee Ryan Nani Sadowski-Alvarez, PMP

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Osamu Sakamoto, PMP Brian Salk, MA Ed, PMP Gladstone Leslie Samuel Paul Sanghera, PhD, PMP Satheesh Santhangopalan, PMP Otavio Ritter Santos, PMP Rick B. Santos, MBA, PMP Vikas Sarin, ME(SS),MCA Ramanathan Sathianaraynan, PMP, CSQA Kyoichi Sato, PMP Curt Schlonies, PMP Eugene Schreiner John Schuyler, PE, PMP Salvatore J. Sciascia, PMP Anna Self Benjamin R. Sellers, PMP, CPCM Kathakali Seth Mark B. Shadowens, PMP Paul E. Shaltry, PMP Archana Sharma, MS, PMP Dhilan N. Shah, CPA, PMP Manar Shami, PhD, PMP Shervin Shariatpanahi Mojtabanejad Pawan Sharma Rachna Sharma John Sheers, PMP Jinmei Shen, PMP Nitin Shende Eng. S.M. Saliha Sheriff, MBA, PMP Kazuo Shimizu, PMP Toshihiro Shoji, PMP

Hilary Shreter, MBA, PMP Evandro L.P. Silva João Carlos A. Silva Neto, Msc, PMP Michael D. Simants Michael Simmering, PE, OPM3-CC Nicklaus B. Sims, PMP Manas Singh Siddharth Singh John Singley, PhD, PMP Marzena Zych- Skrzypkowska Kathy J. Slater, PMP Martin J. Smit, PMP Carolyn E. Smith, PMP Bruce F. Snow Juliette A. Soczka Jorge Garcia Solano, PMP John P. Soltesz, PE, PMP Nguyen Hoanh Son Brijesh Sonawane, PMP Mauro Sotille, PMP Patricia Spadea, PMP Bernd Spiehl Carolina Gabriela Spindola, SSBB, PMP Clifford W. Sprague, PMP Rob Spurgeon Varadarajan Sriram Pranay Srivastava, PMP, CISA Jolene R. Staruch, PMP Joyce Statz, PhD, PMP Doug Stephon Samuel N. Stevens III, PhD

Delores Stimpson, PMP Roberta Storer Dr Kenneth D Strang, PhD, PMP Geree V. Streun, CSQE, PMP Michael E. (Mike) Strom, PMP Juergen Sturany, PMP Chinta V.N. Subrahmanyam, PMP Brian T. Sullivan, PMP Raghavan Sundararajan, PMP Yasuji Suzuki, PMP Rashid M. Syed, MBA, PMP Michal Szymaczek, PMP Amin Tabatabayi, BEng, MBA Shoji Tajima, PMP Masanori Takahashi, PMP, MA Paraminder Talwar, PMP Randy Tangco, PMP, CSM Nilesh Adrian Pieris Tavarayan, AMBCS, MACS (Prov) John Terdik, PMP, DCB Gangesh Thakur, CPIM, CSCP Jaimini Thakore Pham Minh Thang Claire-Jodane Thermidor William M. Thom, PMP Darin Thomas, PMP William J. Thompson, PE, PMP Rocky Thurston, PMP Linus G. Tibayan, FLMI, PMP Surendra Tipparaju, ME Lulu V. Tobin, PMP Victoria Todas-Lozada, PMP Mark Tolbert

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Nagla Toma, MA Carolyn A. Toomer, PMP Terry D. Tosh, PMP Lee Towe, PMP, MBA Biagio Tramontana, Ing, PMP R. Trant, BA, C Mar Eng Ricardo Triana, PMP Daniel J. Troxell, MBA, PMP Shi-Ja Tseng William Stephen Turner Vidyasagar Uddagiri, PMP Nnanna Charles Ukaegbu, PE, PMP Krishnakant T. Upadhyaya, PMP Eric Uyttewaal, MS Business, PMP Ali Vahedi Diz, MSc, PMP Jorge Valdés Garciatorres, PMP, ITIL Dennis K. Van Gemert, MS, PMP Paula Ximena Varas, PMP Ricardo Viana Vargas, MSc, PMP Jouko Vaskimo, PMP Thierry Verlynde, PMP Malay Verma, PMP, PGCBM Vijay K. Verma, PMP, MBA

Aloysio Vianna Jr. David Violette, MPM, PMP Pepijn Visser Cornelis (Kees) Vonk Paul E. Waits, Jr., PMP, CPM Mike Wakshull, PMP, MSc Ronald P. C. Waller, PMI Fellow, PMP Barbara Walsh, CAPM Thomas M. Walsh, PMP Steve J. Walter, PhD, CSEP, PMP Xiaojin Wang, PhD, PMP Lou Ware, PMP William W. Wassel, PE, PMP Ian J. Watson, PMP Michael D. Watson, PMP Patrick Weaver, PMP, FAICD John A. Weber, PMP Kevin R. Wegryn, PMP, CPM Linda Westfall, CSQE, PE John White Mark Wilfer, PMP Donald Wilkinson, PMP Nancy Wilkinson, MBA, PMP Dale K. Williams, PMP, CSM Terry Williams, PhD, PMP

John Wilson, PhD, PMP Rebecca A. Winston, JD Michael Witzorky, PMP Audrey R. Wojcik Nan Wolfslayer, AStd Rick Woods, SSBB, PMP Mark A. Wright, PMP Vicki Wrona, PMP Andrew Lam Tug Wye, PMP, CITPM (Associate) Kazuo Yamamoto, PMP Shahrzad Yazdani, PMP, LSS GB Clement C.L. Yeung, PMP Masakazu Yonezaki Tan EE Yuen Yvonne Azam M. Zaqzouq, MCT, PMP Omran M. Zbeida Xuyan Zhang Rob Zilay, MBA, PMP K. Kimi Hirotsu Ziemski, PMP Paul W. Zilmer, PMP William A. Zimmer, PMP Heinz Zimmermann, MSc, PMP John Zlockie, MBA, PMP

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X2.10.1 other contributors:

X2.10 the PMBOK® Guide—third Edition

Dennis Bolles, PMP, Project Manager Darrel G. Hubbard, PE, Deputy Project Manager J. David Blaine, PMP (Quality Control Coordinator) Theodore R. Boccuzzi, PMP (Document Research Team Leader) Elden Jones, PMP (Configuration Management Coordinator) Dorothy Kangas, PMP (Product Overview Team Leader) Carol Steuer, PMP (Framework Team Leader) Geree Streun, PMP (Process Groups Team Leader) Lee Towe, PMP (Special Appointment)

Abdallah Abi-Aad, PMP, PEng Muhamed Abdomerovic, PMP Adrian Abramovici, PMP Fred Abrams, PMP, CPL Yassir Afaneh Hussain Ali Al-Ansari, Eur Ing, CEng Mohammed Abdulla Al-Kuwari, Eur Ing, CEng Jamie K. Allen, PMP Mark Allyn, PMP Sumner Alpert, PMP, CMC Frank Anbari Scott C. Anderson, PMP Lionel Andrew, MBA, ISP Russell Archibald, PMP Prabu V. Ayyagari, PhD, PMP

William W. Bahnmaier, PMP Alfred Baker Ernest Baker, PMP Pamela M. Baker, PMP W. Clifton Baldwin, PMP B. D. Barnes Kevin E. Bast, PMP Jefferson Bastreghi Mohammed Safi Batley, MIM Julia M. Bednar, PMP James S. Bennett, PMP Cynthia A. Berg, PMP Sally Bernstein, PMP Mamoun A. Besaiso, CE Ionut C. Bibac Howland Blackiston J. David Blaine, PMP, CSQE

Ray Blake, PMP Nigel Blampied, PE, PMP Dennis Bolles, PMP Stephen Bonk Barbara Borgmann, PMP Charles W. Bosler, Jr. Gregory M. Bowen, CSDP Rollin O. Bowen, Jr. Carolyn Boyles, MBA, PMP David Bradford, PMP James (Jim) P. Branden, MBA, PMP Wayne R. Brantley, PMP, MS Ed Gary D. Brawley, PEng., PMP Alex S. Brown, PMP Timothy S. Brown Stephen C. Burgan, PMP

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Anne Cagle, PMP Dean J. Calabrese, PMP Neil R. Caldwell Giuseppe A. Caruso, PMP Edgard P. Cerqueira Neto, PhD, PMP Bruce Chadbourne Bill Chadick, PMP Clare Chan Porfirio Chen Chang, MBA, PMP Ho Lee Cheong, PhD, MIMechE Gene Chiappetta, PMP Tomio Chiba, PMP Mark T. Chism, PMP Aaron Coffman, PMP, CQM Kim D. Colenso, PMP, CSQE Edmund H. Conrow, PhD, PMP Helen S. Cooke, PMP Michael Corish John E. Cormier, PMP John Cornman, PMP, MBA Sergio R. Coronado Andy Crowe, PMP Robert L. Cutler, PMP Darren Dalcher, PhD, MAPM Mario Damiani, PMP Shari M. Daniel, PMP Arindam Das Pranab Das, PMP Aloysio da Silva Allan E. Dean Robert de Jong, PMP Juan De La Cruz M. Pilar De La Cruz

Alfredo del Cano, PE, PhD Connie Delisle Andrea Giulio Demaria, PMP John M. Dery, PMP Barbara De Vries, PMP Ravi Kumar Dikshit, PMP Jerry Dimos, PMP James A. Doanes Capt. Nick Doralp, PMP John Downing Magnus Karl Drengwitz, PMP Daniel Dudek Peter Duignan, PMP Lloyd R. Duke, Jr., PMP Suhas Dutta, PMP Judith Edwards, PhD, PMP Bradford R. Eichhorn, PMP Gary S. Elliott, MS, MD Robert L. Emerson, PMP Alison Evanish Gregory William Fabian, PMP Steven L. Fahrenkrog, PMP Morten Fangel, PhD Keith Farndale, PEng, PMP Martin Christopher Fears, PMP Eve Featherman AnnaMaria Felici Flynn M. Fernandes, MSPM, PMP John C. “Buck” Field, MBA, PMP Linda Fitzgerald Quentin W. Fleming David Foley, MBA Kirby Fortenberry, PMP

Gary W. Fortune, PMP John M. Foster, PMP, MBA Scott D. Freauf, PMP Denis Freeland Ichiro Fujita, PMP John S. Galliano Donald G. Gardner, PMP Stanisław Gasik Jackelen George Jose A. George, B Tech, PGDM Dan Georgopulos Paul H. Gil, MCP, PMP Greg Githens, PMP Earl Glenwright, PE, VEA Leo A.Giulianetti, PMP Christopher A. Goetz, PMP Donna Golden Dan Goldfischer Neil P. Goldman, PMP Margarida Goncalves, PhD John C. Goodpasture, PMP Dana J. Goulston, PMP Neal S. Gray, PMP Steve Grey, PhD, PMP Robert J. Gries, PE, PMP Mike Griffiths, PMP Patrick D. Guest, PMP Jinendra Gunathilaka, PE Navneet Gupta, PMP David R. Haas, PMP, FLMI Aaron S. Hall, PMP Robert W. Harding, RA Delbert K. Hardy, PMP Patti Harter

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A p p e n d i x x 2 - C o n t r i b u t o r s A n d r e v i e w e r s o f t h e P M B O K ® G u i d e — f i f t h e d i t i o n

J. Ray Harwood, PMP Ali Hassan, PMP Ralph Hernandez Rick Hiett Pat Hillcoat, PMP Bob Hillier, PMP David Hillson, PhD, PMP Guy N. Hindley, MAPM, MILT Danny N. Hinton, PMP Bobby Tsan Fai Ho, PMP, CISM J. Brian Hobbs, PhD, PMP Piet Holbrouck, MSc Carol Holliday, PMP Gopi V. Hombal Martin Hopkinson, BSc, APMP Keith D. Hornbacher, MBA Darrel G. Hubbard, PE Kenneth Alan Hudacsko, PMP David T. Hulett, PhD, PMP Clinton in’t Veld Adesh Jain, PMP, MPD Don R. James, PMP Grant Jefferson Noel C. Jensen, PMP Wei Jing Bruce Johnson, PMP Elden Jones, MSPM, PMP Granville H. Jones, Sr., MBA, PMP Kevin B. Jones, BMath, PMP Howard J. Kalinsky, PMP, MPM Constance Katsanis Roger Kent

Tom Kerr, PMP Ajmal Afzal Khan Asadullah Khan, PMP Lucy Kim, PE, PMP Mihail Kitanovski Jennifer Eileen Kraft Takahiko Kuki, PE, PMP Polisetty V.S. Kumar, M Tech, PMP Avis Kunz Thomas Kurihara Antonio Carlos Laranjo da Silva John S. Layman, PMP Lawrence (Larry) P. Leach, PMP Craig Letavec Ben Linders Erik D. Lindquist, PE, PMP Mary K. Lofsness Elizabeth Ann Long, PMP Raul S. Lopez, PE, PMP Enrique Lopez-Mingueza, PMP Pier Paolo Lo Valvo, PMP Karen Griffin MacNeil, PMP Sajith K. Madapatu, PMP Vijaya Kumar Mani, PMP Mark Marlin, PMP Enrique Martinez Victor J. Matheron, PMP Stephen S. Mattingly Christopher J. Maughan, CEng, PMP Giuseppe Mauri Yves Mboda, PMP

David L. McPeters, PMP Ed Mechler, PMP Godfrey I. Meertens, PMP Richard Meertens, MBA, PMP Yan Bello Mendez, PMP Gordon R. Miller, PMP, CCP Liu Min Santosh Kumar Mishra, PMP, CSQA Andrew H. Moore, MBA, PMP Colin Morris, PE, PMP Saradhi Motamarri, M Tech, PMP Mhlabaniseni Moses Mitmunye Rita Mulcahy, PMP Charles L. Munch, PMP K.S. Keshava Murthy Jo Musto, PMP AnathaKrishnan S. Nallepally, PMP NB Narayanan Vijayalakshimi Neela, MCA, PMP Beatrice Nelson, PMP Brian D. Nelson, PMP Jeffrey S. Nielsen, PMP Isabella Nizza, PMP Jim O’Brien, PMP Kazuhiko Okubo, PE, PMP David M. Olson, MBA (ITM) Peter Ostrom, PhD, PMP Jeffery L. Ottesen, PE Michael T. Ozeranic Laura Dorival Paglione Ravindranath Palahalli

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A p p e n d i x x 2 - C o n t r i b u t o r s A n d r e v i e w e r s o f t h e P M B O K ® G u i d e — f i f t h e d i t i o n

Glen R. Palmer Jon Palmquist Nick Palumbo, PMP David Parker Jerry L. Partridge, PMP George Pasieka, PMP Eric Patel Anil Peer, PEng, PMP Francisco Perez-Polo Paul W. Phister, Jr., PhD, PE Crispin (Kik) Piney, BSc, PMP Natasha Pollard Sreenivasa Rao Potti, MCA, PMP Manohar Powar, PMP Ravindranath P S Patrick J. Quairoli Ge Qun Vara Prasad Raju Kunada Gurdev Randhawa Prem Ranganath, PMP Raju Rao, PMP Ulka Rathi Carol Rauh, PhD, PMP Tony Raymond Vijay Sai Reddy, PMP, CSQA J. Logan C. Rice Steven Ricks, PMP Steven F. Ritter, PMP Thad B. Ring, PMP Dee Rizor Susan Rizzi Michael C. Roach Alexandre G. Rodrigues, PhD

Cheryl N. Rogers, PMP Asbjorn Rolstadas, PhD Hans (Ron) Ronhovde, PMP Scott A. Rose, PMP Ed Rosenstein, PMP David W. Ross, PMP Samuel S. Roth, PMP Joseph A. Roushdi Gurdev Roy, PMP Paul S. Royer, PMP James J. Rutushni, PMP Robbi Ryan Frank Ryle, PMP Anjali Sabharwal, PMP Srinivasa R. Sajja, PMP Brian Salk, MA Ed, PMP Nashaat A. Salman, PMP Kyoichi Sato Markus Scheibel, PMP, Dipl-Ing Suzanne Lee Schmidt, PMP John Schmitt, PMP Amy Schneider, PMP Michael J. Schollmeyer, PMP Randa Schollmeyer, PMP Richard E. Schwartz Andrea R. Scott Benjamin R. Sellers, PMP, CPCM Tufan Sevim, PMP Sanjay Shah, PMP Mundaje S. Shetty, PMP Kazuo Shimizu, PMP Rali Shital Ganga Siebertz

Larry Sieck Melvin Silverman, PhD, PE Fernando Demattio de O. Simoes, PMP Richard L. Sinatra, PhD, PMP Raghavendra Singh John E. Singley, PhD, PMP Edward Smith Patricia Smith Cynthia Snyder, MBA, PMP Antonio Soares Paul Solomon, PMP Richard Spector, PMP Allison St. Jean Michael Stefanovic, PEng, PMP Geree Streun, PMP Juergen Sturany Donglin Su Sambasivam S., PMP, CSQA George Sukumar, MSChe, OE Karen Z. Sullivan, PMP Karen Tate, MBA, PMP David E. Taylor, PMP James E. Teer, Jr. Sai K. Thallam, MBA, PMP John A. Thoren, Jr., PhD, PMP Surendra Tipparaju, ME Massimo Torre, PhD, PMP Luis Eduardo Torres Calzada, MBA, PMP Rogerio Carlos Traballi Lee Towe, MBA, PMP Rufis A. Turpin, CQA, CSQE

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A p p e n d i x x 2 - C o n t r i b u t o r s A n d r e v i e w e r s o f t h e P M B O K ® G u i d e — f i f t h e d i t i o n

Marion J. Tyler, PMP M. Raj Ullagaraj, PhD Bobbye Underwood, PMP Eric Uyttewaal, PMP Dalton L. Valeriano-Alves, ME JR Vanden Eynde, PMP Gary Van Eck Judy Van Meter J.R. Vanden Eynde, PMP Gerrit van Otterdijk, BSc Thomas G. Van Scoyoc, PMP Paula X. Varas, PMP Ricardo Vargas Ricardo Viana Vargas, MSc, PMP Aloysio Vianna, Jr. Mark M. Vertin, PE, PMP

Craig Veteto, PMP, CPIM Roberto Viale, PMP Eduardo Newton Vieira, PMP Dave Violette, MPM, PMP Desmond Joseph Vize, PMP Cornelius (Kees) Vonk, PMP J. Wendell Wagner, PMP Barbara Walsh Thomas M. Walsh, PMP William W. Wassel, PE, PMP Patrick Weaver, PMP, FAICD Kevin R. Wegryn, PMP, CPM Timothy E. Welker, PMP Linda Westfall, PE, CSQE Gwen Whitman, PMP Tammo T. Wilkens, PE, PMP

Alan K. Williams, Sr., PMP Charles M. Williamson, MBA, PMP Stephen D. Wise Allan Wong Robert Wood Kristin L. Wright Thomas Wuttke, PMP, CPM Uma S. Yalamanchili, PMP Clement C.L. Yeung, PMP Angela F. Young, PMP John Zachar, BSc, APMP Kathy Zandbergen Cristine Zerpa Paul Zilmer Eire E. Zimmermann, PMP

X2.11 the PMBOK® Guide—2000 Edition

Cynthia A. Berg, PMP Judith A. Doll, PMP Daniel Dudek, PMP Quentin Fleming Greg Githens, PMP Earl Glenwright David T. Hulett, PhD Gregory J. Skulmoski

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Muhamed Abdomerovic, PMP, D. Eng. John R. Adams Yassir Afaneh Frank Allen, PMP Jon D. Allen, PMP MaryGrace Allenchey, PMP Robert A. Andrejko, PMP Ichizo Aoki Paul C. Aspinwall Ronald Auffrédou, PMP Edward Averill, PMP Frederick L. Ayer, PMP William W. Bahnmaier, PMP A. C. “Fred” Baker, PMP Carole J. Bass, PMP George Belev Berndt Bellman Sally Bernstein, PMP Nigel Blampied, PE, PMP John Blatta Patrick Brown, PMP Alfredo del Caño Chris Cartwright, PMP Bruce C. Chadbourne, PMP Michael T. Clark, PMP Raymond C. Clark, PE Elizabeth Clarke David Coates, PMP Kim Colenso, PMP

Edmund H. Conrow, PMP Kenneth G. Cooper Sergio Coronado Arrechedera John Cornman, PMP Richard F. Cowan, PMP Kevin Daly, PMP Mario Damiani, PMP Thomas Diethelm, PMP David M. Drevinsky, PMP William R. Duncan Frank D. Einhorn, PMP Steven L. Fahrenkrog Edward Fern, PMP Lisa Fisher Christian Frankenberg, PMP Scott D. Freauf, PMP Jean-Luc Frere, PMP Ichiro Fujita, PMP Chikako Futamura, PMP Serge Garon, PEng, PMP Brian L. Garrison, PMP Lewis M. Gedansky Linda V. Gillman Eric Glover Eva T. Goldman Peter Bryan Goldsbury Michael Goodman, PMP Jean Gouix, PMP Paul Grace Alexander Grassi Sr., PMP

Roger Graves Franz X. Hake Peter Heffron Chris Herbert, PMP Dr. David Hillson, PMP, FAPM J. Brian Hobbs, PMP Marion Diane Holbrook Robin Hornby David Hotchkiss, PMP Bill Hubbard Charles L. Hunt Thomas P. Hurley, PMP George Jackelen Angyan P. Jagathnarayanan Sandy Jenkins Elden F. Jones II, PMP, CMII Sada Joshi, PMP Lewis Kana, PMP Subramaniam Kandaswamy, PhD, PMP Ronald L. Kempf, PMP Robert Dohn Kissinger, PhD, PMP Kurt V. Kloecker Toni D. Knott Jan Kristrom Blase Kwok, PMP Sam Lane Lawrence P. Leach Philip A. Lindeman

X2.11.1 other contributors:

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A p p e n d i x x 2 - C o n t r i b u t o r s A n d r e v i e w e r s o f t h e P M B O K ® G u i d e — f i f t h e d i t i o n

Gábor Lipi Lyle W. Lockwood, PMP J. W. Lowthian, PMP Arif Mahmood, PMP James Martin (on behalf of INCOSE) Stephen S. Mattingly Glen Maxfield Peter McCarthy Rob McCormack, PMP John McHugh Krik D. McManus Dewey L. Messer David Michaud Mary F. Miekoski, PMP Oscar A. Mignone Gordon R. Miller, PMP Roy E. Morgan, PMP Jim Morris, PMP Bert Mosterd, PMP William A. Moylan, PMP John D. Nelson, PMP Wolfgang Obermeier Cathy Oest, PMP Masato Ohori, PMP Kazuhiko Okubo, PE, PMP Edward Oliver Michelle Triggs Owen Mark S. Parker Shirley B. Parker Matthew H. Parry

Jerry Partridge, PMP Francisco Perez-Polo, PMP James M. Phillips, PMP Crispin (Kik) Piney, PMP George Pitagorsky, PMP David L. Prater, PMP Janice Preston Bradford S. Price, PMP Samuel L. Raisch, PMP Naga Rajan G. Ramachandran, PMP Stephen Reed Bill Righter, PMP Bernice L. Rocque, PMP Wolfgang Theodore Roesch Fernando Romero Peñailillo Jon Rude Linda Rust, PMP Fabian Sagristani, PMP James N. Salapatas, PMP Seymour Samuels Bradford N. Scales H. Peter Schiller John R. Schuyler, PMP Maria Scott, PMP Shoukat Sheikh, MBA, PMP Larry Sieck Kazuo Shimizu, PMP David Shuster Melvin Silverman, PhD, PE Loren J. Simer Jr.

Keith Skilling, PE, PMP Ed Smith Kenneth F. Smith, PMP Barry Smythe, PMP Paul J. Solomon Joe Soto Sr., PMP Christopher Wessley Sours, PMP Charlene Spoede, PMP Joyce Statz, PMP Emmett Stine, PMP Alan Stretton Thangavel Subbu Jim Szpakowski Ahmet N. Taspinar, PMP John A. Thoren Jr., PMP Iesha D. Turner-Brown Alan D. Uren, PMP Juan Luis Valero, PMP S. Rao Vallabhaneni William Simon Vaughan Robinson Ana Isabel Vazquez Urbina Ricardo Viana Vargas, PMP Mike Wakshull Stephen E. Wall, PMP William W. Wassel, PMP R. Max Wideman Tammo T. Wilkens, PE, PMP Robert Williford, PMP Robert Youker

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A p p e n d i x x 2 - C o n t r i b u t o r s A n d r e v i e w e r s o f t h e P M B O K ® G u i d e — f i f t h e d i t i o n

X2.12 the PMBOK® Guide—1996 Edition William R. Duncan Frederick Ayer Cynthia Berg Mark Burgess Helen Cooke Judy Doll Drew Fetters Brian Fletcher Earl Glenwright Eric Jenett Deborah O’Bray Diane Quinn Anthony Rizzotto Alan Stretton Douglas E. Tryloff

X2.12.1 other contributors:

John Adams Edward L. Averill C. “Fred” Baker F. J. “Bud” Baker Tom Belanger John A. Bing Brian Bock Paul Bosakowski Keely Brunner Dorothy J. Burton

Jeannette M. Cabanis Louis J. Cabano Kim Colenso Samuel K. Collier Karen Condos-Alfonsi E. J. Coyle Darlene Crane David Curling Russ Darnall Misty N. Dillard

Maureen Dougherty John J. Downing Daniel D. Dudek Lawrence East Quentin W. Fleming Rick Fletcher Linda V. Gillman Greg Githens Douglas Gordon Leo Giulianeti

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A p p e n d i x x 2 - C o n t r i b u t o r s A n d r e v i e w e r s o f t h e P M B O K ® G u i d e — f i f t h e d i t i o n

Martha D. Hammonds Abdulrazak Hajibrahim G. Alan Hellawell Bobby R. Hensley Jonathan Hicks Paul Hinkley Wayne L. Hinthorn Mark E. Hodson David T. Hulett Edward Ionata Lew Ireland Elvin Isgrig Murray Janzen Frank Jenes Sandy Jenkins Walter Karpowski William F. Kerrigan Harold Kerzner Robert L. Kimmons Richard King J. D. “Kaay” Koch Lauri Koskela Richard E. Little Lyle W. Lockwood Lawrence Mack Christopher Madigan Michael L. McCauley Hugh McLaughlin Frank McNeely Pierre Menard Dewey L. Messer

Rick Michaels Raymond Miller Alan Minson Colin Morris R. Bruce Morris Danell Moses David J. Mueller Gary Nelson John M. Nevison John P. Nolan Louise C. Novakowski James O’Brien JoAnn C. Osmer Jon V. Palmquist Mark S. Parker Shirley B. Parker Matthew Parry John G. Phippen Hans E. Picard Melissa Pendergast James S. Pennypacker Serge Y. Piotte PMI Houston Chapter PMI Manitoba Chapter PMI New Zealand Chapter Charles J. Pospisil Janice Y. Preston Mark T. Price Christopher Quaife Peter E. Quinn Hadley Reynolds

Steven F. Ritter William S. Ruggles Ralph B. Sackman Agnes Salvo Alice Sapienza W. Stephen Sawle Darryl M. Selleck Melvin Silverman Roy Smith Leonard Stolba Craig T. Stone Hiroshi Tanaka Ahmet Taspinar Robert Templeton Dick Thiel Saul Thomashow J. Tidhar Janet Toepfer Michelle Triggs Vijay K. Verma Alex Walton Jack Way Francis M. Webster Jr. R. Max Wideman Rebecca Winston Hugh M. Woodward Lisa Woodring Robert Youker Shakir H. Zuberi Dirk Zwart

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A P P E N D I X X 3 - I N T E R P E R S O N A L S K I L L S

APPendiX X3 interPersonAl sKills

Project managers accomplish work through the project team and other stakeholders. Effective project managers acquire a balance of technical, interpersonal, and conceptual skills that help them analyze situations and interact appropriately. This appendix describes important interpersonal skills, such as:

• Leadership

• Team building

• Motivation

• Communication

• Influencing

• Decision making

• Political and cultural awareness

• Negotiation

• Trust building

• Conflict management

• Coaching

While there are additional interpersonal skills that project managers use, the appropriate use of these skills assists the project manager in effectively managing the project.

X3.1 Leadership

Leadership involves focusing the efforts of a group of people toward a common goal and enabling them to work as a team. In general terms, leadership is the ability to get things done through others. Respect and trust, rather than fear and submission, are the key elements of effective leadership. Although important throughout all project phases, effective leadership is critical during the beginning phases of a project when the emphasis is on communicating the vision and motivating and inspiring project participants to achieve high performance.

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A P P E N D I X X 3 - I N T E R P E R S O N A L S K I L L S

Throughout the project, the project team leaders are responsible for establishing and maintaining the vision, strategy, and communications; fostering trust and team building; influencing, mentoring, and monitoring; and evaluating the performance of the team and the project.

X3.2 team Building

Team building is the process of helping a group of individuals, bound by a common purpose, to work with each other, the leader, external stakeholders, and the organization. The result of good leadership and good team building is teamwork.

Team-building activities consist of tasks (establish goals, define, and negotiate roles, responsibilities, and procedures) and processes (interpersonal behavior with emphasis on communication, conflict management, motivation, and leadership). Developing a team environment involves handling project team problems and discussing these as team issues without placing blame on individuals. Team building can be further enhanced by obtaining top management support; encouraging team member commitment; introducing appropriate rewards, recognition, and ethics; creating a team identity; managing conflicts effectively; promoting trust and open communication among team members; and providing leadership.

While team building is essential during the front end of a project, it is an ongoing process. Changes in a project environment are inevitable. To manage these changes effectively, a continued or renewed team-building effort is required. Outcomes of team building include mutual trust, high quality of information exchange, better decision making, and effective project management.

X3.3 Motivation

Project teams are comprised of team members with diverse backgrounds, expectations, and individual objectives. The overall success of the project depends upon the project team’s commitment, which is directly related to their level of motivation.

Motivating in a project environment involves creating an environment to meet project objectives while providing maximum satisfaction related to what people value most. These values may include job satisfaction, challenging work, a sense of accomplishment, achievement and growth, sufficient financial compensation, and other rewards and recognition the individual considers necessary and important.

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X3.4 communication

Communication has been identified as one of the single biggest reasons for project success or failure. Effective communication within the project team and between the project manager, team members, and all external stakeholders is essential. Openness in communication is a gateway to teamwork and high performance. It improves relationships among project team members and creates mutual trust.

To communicate effectively, the project manager should be aware of the communication styles of other parties, cultural nuances/norms, relationships, personalities, and the overall context of the situation. Awareness of these factors leads to mutual understanding and thus to effective communication. Project managers should identify various communication channels, understand what information they need to provide, what information they need to receive, and which interpersonal skills will help them communicate effectively with various project stakeholders. Carrying out team-building activities to determine team member communications styles (e.g., directive, collaborative, logical, explorer, etc.), allows managers to plan their communications with appropriate sensitivity to relationships and cultural differences.

Listening is an important part of communication. Listening techniques, both active and passive give the user insight to problem areas, negotiation and conflict management strategies, decision making, and problem resolution.

X3.5 Influencing

Influencing is a strategy of sharing power and relying on interpersonal skills to get others to cooperate towards common goals. Using the following guidelines can influence team members:

• Lead by example, and follow through with commitments.

• Clarify how a decision will be made.

• Use a flexible interpersonal style and adjust the style to the audience.

Apply your power skillfully and cautiously. Think of long-term collaboration.

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X3.6 decision Making

There are four basic decision styles normally used by project managers: command, consultation, consensus, and coin flip (random). There are four major factors that affect the decision style: time constraints, trust, quality, and acceptance. Project managers may make decisions individually, or they may involve the project team in the decision-making process.

Project managers and project teams use a decision-making model or process such as the six-phase model shown below.

• Problem definition. Fully explore, clarify, and define the problem.

• Problem Solution Generation. Prolong the new idea-generating process by brainstorming multiple solutions and discouraging premature decisions.

• Ideas to Action. Define evaluation criteria, rate pros and cons of alternatives, select best solution.

• Solution Action Planning. Involve key participants to gain acceptance and commitment to making the solution work.

• Solution Evaluation Planning. Perform post-implementation analysis, evaluation, and lessons learned.

• Evaluation of the outcome and Process. Evaluate how well the problem was solved or project goals were achieved (extension of previous phase).

X3.7 Political and cultural Awareness

Organizational politics are inevitable in project environments due to the diversity in norms, backgrounds, and expectations of the people involved with a project. The skillful use of politics and power helps the project manager to be successful. Conversely, ignoring or avoiding project politics and inappropriate use of power can lead to difficulty in managing projects.

Today project managers operate in a global environment, and many projects exist in an environment of cultural diversity. By understanding and capitalizing on cultural differences, the project management team is more likely to create an environment of mutual trust and a win-win atmosphere. Cultural differences can be both individual and corporate in nature and may involve both internal and external stakeholders. An effective way to manage this cultural diversity is through getting to know the various team members and the use of good communication planning as part of the overall project plan.

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Culture at a behavioral level includes those behaviors and expectations that occur independently of geography, ethnic heritage, or common and disparate languages. Culture can impact the speed of working, the decision- making process, and the impulse to act without appropriate planning. This may lead to conflict and stress in some organizations, thereby affecting the performance of project managers and project teams.

X3.8 negotiation

Negotiation is a strategy of conferring with parties of shared or opposed interests with a view toward compromise or reaching an agreement. Negotiation is an integral part of project management and done well, increases the probability of project success.

The following skills and behaviors are useful in negotiating successfully:

• Analyze the situation.

• Differentiate between wants and needs, both theirs and yours.

• Focus on interests and issues rather than on positions.

• Ask high and offer low, but be realistic.

• When you make a concession, act as if you are yielding something of value, don’t just give in.

• Both parties should feel as if they have won. This win-win negotiating style is preferred but not always achievable. If possible, don’t let the other party leave feeling as though he or she has been taken advantage of.

• Listen attentively and communicate articulately.

X3.9 trust Building

The ability to build trust across the project team and other key stakeholders is a critical component in effective team leadership. Trust is associated with cooperation, information sharing, and effective problem resolution. Without trust it is difficult to establish the positive relationships necessary between the various stakeholders engaged in the project. When trust is compromised, relationships deteriorate, people disengage, and collaboration becomes more difficult, if not impossible.

Some actions project managers can take to help build trust:

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A P P E N D I X X 3 - I N T E R P E R S O N A L S K I L L S

• Engage in open and direct communications to resolve problems.

• Keep all stakeholders informed, especially when fulfilling commitments is at risk.

• Spend time directly engaged with the team asking nonassumptive questions to gain a better understanding of the situations affecting the team.

• Be direct and explicit about what you need or expect.

• Do not withhold information out of a fear of being wrong but be willing to share information even if you may be wrong.

• Be receptive to innovation and address any issues or concerns in a forthright manner.

• Look beyond your own interests.

• Demonstrate a true concern for others and avoid engaging in pursuits that could be viewed as being detrimental to the interest of others.

X3.10 conflict Management

Conflict is inevitable in a project environment. Incongruent requirements, competition for resources, breakdowns in communications, and many other factors could become sources of conflict. Within a project’s environment, conflict may yield dysfunctional outcomes. However, if actively managed, conflicts can actually help the team arrive at a better solution. The project manager must be able to identify the causes for conflict and then actively manage the conflict thus minimizing potential negative impacts. The project team is then able to deliver better solutions and increase the probability of project success.

Project managers must develop the skills and experience necessary to effectively adapt their personal conflict management style to the situation. Managing conflict in a project environment involves building the trust necessary for all involved parties to be open and honest, and to engage in seeking a positive resolution to the situation creating the conflict. Project managers strive to establish a collaborative approach among the team members involved in order to fully resolve the problems. In situations where a collaborative approach is not possible, the project manager must then revert to other active management styles for handling the conflict; e.g., assertiveness, accommodation, avoidance, or compromise.

Managing conflict is one of the biggest challenges a project manager faces. It draws upon all of the other interpersonal skills of a project manager in order to lead the team to a successful resolution of the situation in conflict.

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A P P E N D I X X 3 - I N T E R P E R S O N A L S K I L L S

X3.11 coaching

Coaching is a means of developing the project team to higher levels of competency and performance. Coaching is about helping people recognize their potential through empowerment and development. Coaching is used to aid team members in developing or enhancing their skills or to build new skills required to enable project success. Coaching can take many forms and approaches. In some instances, formal or informal training may be developed to increase technical skills or assist team-building efforts and facilitate consistent interpersonal interactions.

Coaching is also used to address poor performance and to help team members overcome deficiencies in their skill sets. Coaching is distinct from counseling. Counseling focuses on addressing situations where team members “won’t do” something rather than “can’t do.” If the situation is one where the team member is not performing or meeting expectations due to a lack of skill, knowledge, or experience, coaching can be employed to help the team member to develop this skill and thus turn a “can’t do” situation into one of “can do.”

Coaching can be a powerful motivator for teams. As teams develop their skills, abilities, and confidence, their willingness to take on challenging or demanding tasks is increased. This can lead to more effective and productive teams.

X3.12 references

Covey, S. R. “Seven Habits of Highly Effective People,” A Fireside Book, Simon and Schuster, New York, NY.

Dinsmore, P.C. “Human Factors in Project Management (Revised Edition),” American Management Association: New York, NY.

Levin, G. and Flannes, S. “Essential People Skills for Project Managers,” Management Concepts Inc., Vienna, VA.

Verma, V. K. “Organizing Projects for Success,” PMI, Newtown Square, PA.

Verma, V. K. “Human Resource Skills for the Project Manager,” PMI, Newtown Square, PA.

Verma, V. K. “Managing the Project Team,” PMI, Newtown Square, PA.

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R E F E R E N C E S

references [1] Project Management Institute. 2012. PMI Lexicon of Project Management Terms. Available from

http://www.pmi.org/lexiconterms

[2] Project Management Institute. PMI Code of Ethics and Professional Conduct. Available from http://www.pmi.org/codeofethicsPDF

[3] Project Management Institute. 2013. The Standard for Program Management – Third Edition. Newtown Square, PA: PMI.

[4] Project Management Institute. 2013. The Standard for Portfolio Management – Third Edition. Newtown Square, PA: PMI.

[5] Project Management Institute. 2013. Organizational Project Management Maturity Model (OPM3®) – Third Edition. Newtown Square, PA: PMI.

[6] International Standards Organization. 2008. ISO/IEC 15288:2008. Systems and Software Engineering – System Life Cycle Processes. Geneva, Switzerland: ISO.

[7] Project Management Institute. 2006. Practice Standard for Work Breakdown Structures (WBS) – Second Edition (Reaffirmed). Newtown Square, PA: PMI.

[8] Project Management Institute. 2011. Practice Standard for Scheduling – Second Edition. Newtown Square, PA: PMI.

[9] Project Management Institute. 2011. Practice Standard for Earned Value Management – Second Edition. Newtown Square, PA: PMI.

[10] International Standards Organization. 2008. ISO 9000:2008. Quality Management Systems – Fundamentals and Vocabulary. Geneva, Switzerland: ISO.

[11] International Standards Organization. 2004. ISO/IEC 2:2004. Standardization and Related Activities– General Vocabulary. Geneva, Switzerland: ISO.

[12] International Standards Organization. 2012. ISO 21500:2012 Guidance on Project Management. Geneva, Switzerland: ISO.

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G l o s s a ry

GlossAry

1. Inclusions and Exclusions

This glossary includes terms that are:

• Unique or nearly unique to project management (e.g., project scope statement, work package, work breakdown structure, critical path method).

• Not unique to project management, but used differently or with a narrower meaning in project management than in general everyday usage (e.g., early start date,).

This glossary generally does not include:

• Application area-specific terms.

• Terms used in project management which do not differ in any material way from everyday use (e.g., calendar day, delay).

• Compound terms whose meaning is clear from the combined meanings of the component parts.

• Variants when the meaning of the variant is clear from the base term.

As a result of the above inclusions and exclusions, this glossary includes:

• A preponderance of terms related to Project Scope Management, Project Time Management, and Project Risk Management, since many of the terms used in these Knowledge Areas are unique or nearly unique to project management.

• Many terms from Project Quality Management, since these terms are used more narrowly than in their everyday usage.

• Relatively few terms related to Project Human Resource Management, Project Communications Management, and Project Stakeholder Management, since most of the terms used in these Knowledge Areas do not differ significantly from everyday usage.

• Relatively few terms related to Project Cost Management, Project Integration Management, and Project Procurement Management, since many of the terms used in these Knowledge Areas have narrow meanings that are unique to a particular application area.

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2. common Acronyms

AC actual cost

ACWP actual cost of work performed

BAC budget at completion

CCB change control board

COQ cost of quality

CPAF cost plus award fee

CPFF cost plus fixed fee

CPI cost performance index

CPIF cost plus incentive fee

CPM critical path methodology

CV cost variance

EAC estimate at completion

EF early finish date

EMV expected monetary value

ES early start date

ETC estimate to complete

EV earned value

EVM earned value management

FF finish-to-finish

FFP firm fixed price contract

FMEA failure mode and effect analysis

FP-EPA fixed price with economic price adjustment

FPIF fixed price incentive fee

FS finish to start

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IFB invitation for bid

LF late finish date

LOE level of effort

LS late start date

OBS organizational breakdown structure

PDM precedence diagramming method

PMBOK Project Management Body of Knowledge

PV planned value

QFD quality function deployment

RACI responsible, accountable, consult, and inform

RAM responsibility assignment matrix

RBS risk breakdown structure

RFI request for information

RFP request for proposal

RFQ request for quotation

SF start-to-finish

SOW statement of work

SPI schedule performance index

SS start-to-start

SV schedule variance

SWOT strengths, weaknesses, opportunities, and threats

T&M time and material contract

WBS work breakdown structure

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G l o s s a ry

3. definitions

Many of the words defined here have broader, and in some cases different, dictionary definitions.

The definitions use the following conventions:

• In some cases, a single glossary term consists of multiple words (e.g., risk urgency assessment).

• When synonyms are included, no definition is given and the reader is directed to the preferred term (i.e., see preferred term).

• Related terms that are not synonyms are cross-referenced at the end of the definition (i.e., see also related term).

Acceptance criteria. A set of conditions that is required to be met before deliverables are accepted.

Accepted deliverables. Products, results, or capabilities produced by a project and validated by the project customer or sponsors as meeting their specified acceptance criteria.

Accuracy. Within the quality management system, accuracy is an assessment of correctness.

Acquire Project team. The process of confirming human resource availability and obtaining the team necessary to complete project activities.

Acquisition. Obtaining human and material resources necessary to perform project activities. Acquisition implies a cost of resources, and is not necessarily financial.

Activity. A distinct, scheduled portion of work performed during the course of a project.

Activity Attributes. Multiple attributes associated with each schedule activity that can be included within the activity list. Activity attributes include activity codes, predecessor activities, successor activities, logical relationships, leads and lags, resource requirements, imposed dates, constraints, and assumptions.

Activity code. One or more numerical or text values that identify characteristics of the work or in some way categorize the schedule activity that allows filtering and ordering of activities within reports.

Activity cost Estimates. The projected cost of the schedule activity that includes the cost for all resources required to perform and complete the activity, including all cost types and cost components.

Activity duration. The time in calendar units between the start and finish of a schedule activity. See also duration.

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Activity duration Estimate. A quantitative assessment of the likely amount or outcome for the duration of an activity.

Activity Identifier. A short, unique numeric or text identification assigned to each schedule activity to differentiate that project activity from other activities. Typically unique within any one project schedule network diagram.

Activity List. A documented tabulation of schedule activities that shows the activity description, activity identifier, and a sufficiently detailed scope of work description so project team members understand what work is to be performed.

Activity network diagrams. See project schedule network diagram.

Activity-on-node (Aon). See precedence diagramming method (PDM).

Activity resource requirements. The types and quantities of resources required for each activity in a work package.

Actual cost (Ac). The realized cost incurred for the work performed on an activity during a specific time period.

Actual duration. The time in calendar units between the actual start date of the schedule activity and either the data date of the project schedule if the schedule activity is in progress or the actual finish date if the schedule activity is complete.

Adaptive Life cycle. A project life cycle, also known as change-driven or agile methods, that is intended to facilitate change and require a high degree of ongoing stakeholder involvement. Adaptive life cycles are also iterative and incremental, but differ in that iterations are very rapid (usually 2–4 weeks in length) and are fixed in time and resources.

Additional Quality Planning tools. A set of tools used to define the quality requirements and to plan effective quality management activities. They include, but are not limited to: brainstorming, force field analysis, nominal group techniques and quality management and control tools.

Adjusting Leads and Lags. A technique used to find ways to bring project activities that are behind into alignment with plan during project execution.

Advertising. The process of calling public attention to a project or effort.

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Affinity diagram. A group creativity technique that allows large numbers of ideas to be classified into groups for review and analysis.

Agreements. Any document or communication that defines the initial intentions of a project. This can take the form of a contract, memorandum of understanding (MOU), letters of agreement, verbal agreements, email, etc.

Alternative Analysis. A technique used to evaluate identified options in order to select which options or approaches to use to execute and perform the work of the project.

Alternatives Generation. A technique used to develop as many potential options as possible in order to identify different approaches to execute and perform the work of the project.

Analogous Estimating. A technique for estimating the duration or cost of an activity or a project using historical data from a similar activity or project.

Analytical techniques. Various techniques used to evaluate, analyze, or forecast potential outcomes based on possible variations of project or environmental variables and their relationships with other variables.

Application Area. A category of projects that have common components significant in such projects, but are not needed or present in all projects. Application areas are usually defined in terms of either the product (i.e., by similar technologies or production methods) or the type of customer (i.e., internal versus external, government versus commercial) or industry sector (i.e., utilities, automotive, aerospace, information technologies, etc.). Application areas can overlap.

Applying Leads and Lags. A technique that is used to adjust the amount of time between predecessor and successor activities.

Apportioned Effort. An activity where effort is allotted proportionately across certain discrete efforts and not divisible into discrete efforts. [Note: Apportioned effort is one of three earned value management (EVM) types of activities used to measure work performance.]

Approved change request. A change request that has been processed through the integrated change control process and approved.

Approved change requests review. A review of the change requests to verify that these were implemented as approved.

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Assumption. A factor in the planning process that is considered to be true, real, or certain, without proof or demonstration.

Assumptions Analysis. A technique that explores the accuracy of assumptions and identifies risks to the project from inaccuracy, inconsistency, or incompleteness of assumptions.

Attribute Sampling. Method of measuring quality that consists of noting the presence (or absence) of some characteristic (attribute) in each of the units under consideration. After each unit is inspected, the decision is made to accept a lot, reject it, or inspect another unit.

Authority. The right to apply project resources, expend funds, make decisions, or give approvals.

Backlog. A listing of product requirements and deliverables to be completed, written as stories, and prioritized by the business to manage and organize the project’s work.

Backward Pass. A critical path method technique for calculating the late start and late finish dates by working backward through the schedule model from the project end date.

Bar chart. A graphic display of schedule-related information. In the typical bar chart, schedule activities or work breakdown structure components are listed down the left side of the chart, dates are shown across the top, and activity durations are shown as date-placed horizontal bars. See also Gantt chart.

Baseline. The approved version of a work product that can be changed only through formal change control procedures and is used as a basis for comparison.

Basis of Estimates. Supporting documentation outlining the details used in establishing project estimates such as assumptions, constraints, level of detail, ranges, and confidence levels.

Benchmarking. Benchmarking is the comparison of actual or planned practices, such as processes and operations, to those of comparable organizations to identify best practices, generate ideas for improvement, and provide a basis for measuring performance.

Bidder conference. The meetings with prospective sellers prior to the preparation of a bid or proposal to ensure all prospective vendors have a clear and common understanding of the procurement. Also known as contractor conferences, vendor conferences, or pre-bid conferences.

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Bottom-up Estimating. A method of estimating project duration or cost by aggregating the estimates of the lower-level components of the work breakdown structure (WBS).

Brainstorming. A general data gathering and creativity technique that can be used to identify risks, ideas, or solutions to issues by using a group of team members or subject matter experts.

Budget. The approved estimate for the project or any work breakdown structure component or any schedule activity.

Budget at completion (BAc). The sum of all budgets established for the work to be performed.

Buffer. See reserve.

Business case. A documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition and that is used as a basis for the authorization of further project management activities.

Business Value. A concept that is unique to each organization and includes tangible and intangible elements. Through the effective use of project, program, and portfolio management disciplines, organizations will possess the ability to employ reliable, established processes to meet enterprise objectives and obtain greater business value from their investments.

Buyer. The acquirer of products, services, or results for an organization.

cause and Effect diagram. A decomposition technique that helps trace an undesirable effect back to its root cause.

central tendency. A property of the central limit theorem predicting that the data observations in a distribution will tend to group around a central location. The three typical measures of central tendency are the mean, median, and mode.

change control. A process whereby modifications to documents, deliverables, or baselines associated with the project are identified, documented, approved, or rejected.

change control Board (ccB). A formally chartered group responsible for reviewing, evaluating, approving, delaying, or rejecting changes to the project, and for recording and communicating such decisions.

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change control System. A set of procedures that describes how modifications to the project deliverables and documentation are managed and controlled.

change control tools. Manual or automated tools to assist with change and/or configuration management. At a minimum, the tools should support the activities of the CCB.

change Log. A comprehensive list of changes made during the project. This typically includes dates of the change and impacts in terms of time, cost, and risk.

change request. A formal proposal to modify any document, deliverable, or baseline.

charter. See project charter.

checklist Analysis. A technique for systematically reviewing materials using a list for accuracy and completeness.

checksheets. A tally sheet that can be used as a checklist when gathering data.

claim. A request, demand, or assertion of rights by a seller against a buyer, or vice versa, for consideration, compensation, or payment under the terms of a legally binding contract, such as for a disputed change.

claims Administration. The process of processing, adjudicating, and communicating contract claims.

close Procurements. The process of completing each project procurement.

close Project or Phase. The process of finalizing all activities across all of the Project Management Process Groups to formally complete a project or phase.

closed Procurements. Project contracts or other procurement agreements that have been formally acknowledged by the proper authorizing agent as being finalized and signed off.

closing Process Group. Those processes performed to finalize all activities across all Process Groups to formally close a project or phase.

code of Accounts. A numbering system used to uniquely identify each component of the work breakdown structure (WBS).

collect requirements. The process of determining, documenting, and managing stakeholder needs and requirements to meet project objectives.

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G l o s s a ry

colocation. An organizational placement strategy where the project team members are physically located close to one another in order to improve communication, working relationships, and productivity.

communication constraints. Restrictions on the content, timing, audience, or individual who will deliver a communication usually stemming from specific legislation or regulation, technology, or organizational policies.

communication Methods. A systematic procedure, technique, or process used to transfer information among project stakeholders.

communication Models. A description, analogy or schematic used to represent how the communication process will be performed for the project.

communication requirements Analysis. An analytical technique to determine the information needs of the project stakeholders through interviews, workshops, study of lessons learned from previous projects, etc.

communication technology. Specific tools, systems, computer programs, etc., used to transfer information among project stakeholders.

communications Management Plan. A component of the project, program, or portfolio management plan that describes how, when, and by whom information about the project will be administered and disseminated.

compliance. A general concept of conforming to a rule, standard, law, or requirement such that the assessment of compliance results in a binomial result stated as “compliant” or “noncompliant.”

conduct Procurements. The process of obtaining seller responses, selecting a seller, and awarding a contract.

configuration Management System. A subsystem of the overall project management system. It is a collection of formal documented procedures used to apply technical and administrative direction and surveillance to: identify and document the functional and physical characteristics of a product, result, service, or component; control any changes to such characteristics; record and report each change and its implementation status; and support the audit of the products, results, or components to verify conformance to requirements. It includes the documentation, tracking systems, and defined approval levels necessary for authorizing and controlling changes.

conflict Management. Handling, controlling, and guiding a conflictual situation to achieve a resolution.

conformance. Within the quality management system, conformance is a general concept of delivering results that fall within the limits that define acceptable variation for a quality requirement.

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G l o s s a ry

conformance Work. In the cost of quality framework, conformance work is done to compensate for imperfections that prevent organizations from completing planned activities correctly as essential first-time work. Conformance work consists of actions that are related to prevention and inspection.

constraint. A limiting factor that affects the execution of a project, program, portfolio, or process.

context diagrams. A visual depiction of the product scope showing a business system (process, equipment, computer system, etc.), and how people and other systems (actors) interact with it.

contingency. An event or occurrence that could affect the execution of the project that may be accounted for with a reserve.

contingency Allowance. See reserve.

contingency reserve. Budget within the cost baseline or performance measurement baseline that is allocated for identified risks that are accepted and for which contingent or mitigating responses are developed.

contingent response Strategies. Responses provided which may be used in the event that a specific trigger occurs.

contract. A contract is a mutually binding agreement that obligates the seller to provide the specified product or service or result and obligates the buyer to pay for it.

contract change control System. The system used to collect, track, adjudicate, and communicate changes to a contract.

control. Comparing actual performance with planned performance, analyzing variances, assessing trends to effect process improvements, evaluating possible alternatives, and recommending appropriate corrective action as needed.

control Account. A management control point where scope, budget, actual cost, and schedule are integrated and compared to earned value for performance measurement.

control chart. A graphic display of process data over time and against established control limits, which has a centerline that assists in detecting a trend of plotted values toward either control limit.

control communications. The process of monitoring and controlling communications throughout the entire project life cycle to ensure the information needs of the project stakeholders are met.

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G l o s s a ry

control costs. The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.

control Limits. The area composed of three standard deviations on either side of the centerline or mean of a normal distribution of data plotted on a control chart, which reflects the expected variation in the data. See also specification limits.

control Procurements. The process of managing procurement relationships, monitoring contract performance, and making changes and corrections as appropriate.

control Quality. The process of monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes.

control risks. The process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.

control Schedule. The process of monitoring the status of project activities to update project progress and manage changes to the schedule baseline to achieve the plan.

control Scope. The process of monitoring the status of the project and product scope and managing changes to the scope baseline.

control Stakeholder Engagement. The process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders.

corrective Action. An intentional activity that realigns the performance of the project work with the project management plan.

cost Aggregation. Summing the lower-level cost estimates associated with the various work packages for a given level within the project’s WBS or for a given cost control account.

cost Baseline. The approved version of the time-phased project budget, excluding any management reserves, which can be changed only through formal change control procedures and is used as a basis for comparison to actual results.

cost Management Plan. A component of a project or program management plan that describes how costs will be planned, structured, and controlled.

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G l o s s a ry

cost of Quality. A method of determining the costs incurred to ensure quality. Prevention and appraisal costs (cost of conformance) include costs for quality planning, quality control (QC), and quality assurance to ensure compliance to requirements (i.e., training, QC systems, etc.). Failure costs (cost of nonconformance) include costs to rework products, components, or processes that are non-compliant, costs of warranty work and waste, and loss of reputation.

cost Performance Index (cPI). A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost.

cost Plus Award Fee contracts (cPAF). A category of contract that involves payments to the seller for all legitimate actual costs incurred for completed work, plus an award fee representing seller profit.

cost Plus Fixed Fee contract (cPFF). A type of cost-reimbursable contract where the buyer reimburses the seller for the seller’s allowable costs (allowable costs are defined by the contract) plus a fixed amount of profit (fee).

cost Plus Incentive Fee contract (cPIF). A type of cost-reimbursable contract where the buyer reimburses the seller for the seller’s allowable costs (allowable costs are defined by the contract), and the seller earns its profit if it meets defined performance criteria.

cost Variance (cV). The amount of budget deficit or surplus at a given point in time, expressed as the difference between the earned value and the actual cost.

cost-Benefit Analysis. A financial analysis tool used to determine the benefits provided by a project against its costs.

cost-reimbursable contract. A type of contract involving payment to the seller for the seller’s actual costs, plus a fee typically representing seller’s profit. Cost-reimbursable contracts often include incentive clauses where, if the seller meets or exceeds selected project objectives, such as schedule targets or total cost, then the seller receives from the buyer an incentive or bonus payment.

crashing. A technique used to shorten the schedule duration for the least incremental cost by adding resources.

create WBS. The process of subdividing project deliverables and project work into smaller, more manageable components.

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criteria. Standards, rules, or tests on which a judgment or decision can be based or by which a product, service, result, or process can be evaluated.

critical chain Method. A schedule method that allows the project team to place buffers on any project schedule path to account for limited resources and project uncertainties.

critical Path. The sequence of activities that represents the longest path through a project, which determines the shortest possible duration.

critical Path Activity. Any activity on the critical path in a project schedule.

critical Path Method. A method used to estimate the minimum project duration and determine the amount of scheduling flexibility on the logical network paths within the schedule model.

customer. Customer is the person(s) or organization(s) that will pay for the project’s product, service, or result. Customers can be internal or external to the performing organization.

customer Satisfaction. Within the quality management system, a state of fulfillment in which the needs of a customer are met or exceeded for the customer’s expected experiences as assessed by the customer at the moment of evaluation.

data date. A point in time when the status of the project is recorded.

data Gathering and representation techniques. Techniques used to collect, organize, and present data and information.

decision tree Analysis. A diagramming and calculation technique for evaluating the implications of a chain of multiple options in the presence of uncertainty.

decomposition. A technique used for dividing and subdividing the project scope and project deliverables into smaller, more manageable parts.

defect. An imperfection or deficiency in a project component where that component does not meet its requirements or specifications and needs to be either repaired or replaced.

defect repair. An intentional activity to modify a nonconforming product or product component.

define Activities. The process of identifying and documenting the specific actions to be performed to produce the project deliverables.

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define Scope. The process of developing a detailed description of the project and product.

deliverable. Any unique and verifiable product, result, or capability to perform a service that is required to be produced to complete a process, phase, or project.

delphi technique. An information gathering technique used as a way to reach a consensus of experts on a subject. Experts on the subject participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas about the important project points related to the subject. The responses are summarized and are then recirculated to the experts for further comment. Consensus may be reached in a few rounds of this process. The Delphi technique helps reduce bias in the data and keeps any one person from having undue influence on the outcome.

dependency. See logical relationship.

dependency determination. A technique used to identify the type of dependency that is used to create the logical relationships between predecessor and successor activities.

design of Experiments. A statistical method for identifying which factors may influence specific variables of a product or process under development or in production.

determine Budget. The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

develop Project charter. The process of developing a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities.

develop Project Management Plan. The process of defining, preparing, and coordinating all subsidiary plans and integrating them into a comprehensive project management plan.

develop Project team. The process of improving competencies, team member interaction, and overall team environment to enhance project performance.

develop Schedule. The process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule model.

diagramming techniques. Approaches to presenting information with logical linkages that aid in understanding.

dictatorship. A group decision-making technique in which one individual makes the decision for the group.

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direct and Manage Project Work. The process of leading and performing the work defined in the project management plan and implementing approved changes to achieve the project’s objectives.

discrete Effort. An activity that can be planned and measured and that yields a specific output. [Note: Discrete effort is one of three earned value management (EVM) types of activities used to measure work performance.]

discretionary dependency. A relationship that is established based on knowledge of best practices within a particular application area or an aspect of the project where a specific sequence is desired.

document Analysis. An elicitation technique that analyzes existing documentation and identifies information relevant to the requirements.

documentation reviews. The process of gathering a corpus of information and reviewing it to determine accuracy and completeness.

duration (du or dur). The total number of work periods (not including holidays or other nonworking periods) required to complete a schedule activity or work breakdown structure component. Usually expressed as workdays or workweeks. Sometimes incorrectly equated with elapsed time. Contrast with effort.

Early Finish date (EF). In the critical path method, the earliest possible point in time when the uncompleted portions of a schedule activity can finish based on the schedule network logic, the data date, and any schedule constraints.

Early Start date (ES). In the critical path method, the earliest possible point in time when the uncompleted portions of a schedule activity can start based on the schedule network logic, the data date, and any schedule constraints.

Earned Value (EV). The measure of work performed expressed in terms of the budget authorized for that work.

Earned Value Management. A methodology that combines scope, schedule, and resource measurements to assess project performance and progress.

Effort. The number of labor units required to complete a schedule activity or work breakdown structure component, often expressed in hours, days, or weeks.

Emotional Intelligence. The capability to identify, assess, and manage the personal emotions of oneself and other people, as well as the collective emotions of groups of people.

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Enterprise Environmental Factors. Conditions, not under the immediate control of the team, that influence, constrain, or direct the project, program, or portfolio.

Estimate. A quantitative assessment of the likely amount or outcome. Usually applied to project costs, resources, effort, and durations and is usually preceded by a modifier (i.e., preliminary, conceptual, feasibility, order-of- magnitude, definitive). It should always include some indication of accuracy (e.g., ± x percent). See also budget and cost.

Estimate Activity durations. The process of estimating the number of work periods needed to complete individual activities with estimated resources.

Estimate Activity resources. The process of estimating the type and quantities of material, human resources, equipment, or supplies required to perform each activity.

Estimate at completion (EAc). The expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete.

Estimate costs. The process of developing an approximation of the monetary resources needed to complete project activities.

Estimate to complete (Etc). The expected cost to finish all the remaining project work.

Execute. Directing, managing, performing, and accomplishing the project work; providing the deliverables; and providing work performance information.

Executing Process Group. Those processes performed to complete the work defined in the project management plan to satisfy the project specifications.

Expected Monetary Value (EMV) Analysis. A statistical technique that calculates the average outcome when the future includes scenarios that may or may not happen. A common use of this technique is within decision tree analysis.

Expert Judgment. Judgment provided based upon expertise in an application area, knowledge area, discipline, industry, etc., as appropriate for the activity being performed. Such expertise may be provided by any group or person with specialized education, knowledge, skill, experience, or training.

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External dependency. A relationship between project activities and non-project activities.

Facilitated Workshops. An elicitation technique using focused sessions that bring key cross-functional stakeholders together to define product requirements.

Failure Mode and Effect Analysis (FMEA). An analytical procedure in which each potential failure mode in every component of a product is analyzed to determine its effect on the reliability of that component and, by itself or in combination with other possible failure modes, on the reliability of the product or system and on the required function of the component; or the examination of a product (at the system and/or lower levels) for all ways that a failure may occur. For each potential failure, an estimate is made of its effect on the total system and of its impact. In addition, a review is undertaken of the action planned to minimize the probability of failure and to minimize its effects.

Fallback Plan. Fallback plans include an alternative set of actions and tasks available in the event that the primary plan needs to be abandoned because of issues, risks, or other causes.

Fast tracking. A schedule compression technique in which activities or phases normally done in sequence are performed in parallel for at least a portion of their duration.

Fee. Represents profit as a component of compensation to a seller.

Finish date. A point in time associated with a schedule activity’s completion. Usually qualified by one of the following: actual, planned, estimated, scheduled, early, late, baseline, target, or current.

Finish-to-Finish (FF). A logical relationship in which a successor activity cannot finish until a predecessor activity has finished.

Finish-to-Start (FS). A logical relationship in which a successor activity cannot start until a predecessor activity has finished.

Firm-Fixed-Price contract (FFP). A type of fixed price contract where the buyer pays the seller a set amount (as defined by the contract), regardless of the seller’s costs.

Fishbone diagram. See Cause and Effect Diagram.

Fixed Formula Method. An earned value method for assigning a specified percentage of budget value for a work package to the start milestone of the work package with the remaining budget value percentage assigned when the work package is complete.

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Fixed Price Incentive Fee contract (FPIF). A type of contract where the buyer pays the seller a set amount (as defined by the contract), and the seller can earn an additional amount if the seller meets defined performance criteria.

Fixed Price with Economic Price Adjustment contracts (FP-EPA). A fixed-price contract, but with a special provision allowing for predefined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases (or decreases) for specific commodities.

Fixed-Price contracts. An agreement that sets the fee that will be paid for a defined scope of work regardless of the cost or effort to deliver it.

Float. Also called slack. See total float and free float.

Flowchart. The depiction in a diagram format of the inputs, process actions, and outputs of one or more processes within a system.

Focus Groups. An elicitation technique that brings together prequalified stakeholders and subject matter experts to learn about their expectations and attitudes about a proposed product, service, or result.

Forecast. An estimate or prediction of conditions and events in the project’s future based on information and knowledge available at the time of the forecast. The information is based on the project’s past performance and expected future performance, and includes information that could impact the project in the future, such as estimate at completion and estimate to complete.

Forward Pass. A critical path method technique for calculating the early start and early finish dates by working forward through the schedule model from the project start date or a given point in time.

Free Float. The amount of time that a schedule activity can be delayed without delaying the early start date of any successor or violating a schedule constraint.

Functional Manager. Someone with management authority over an organizational unit within a functional organization. The manager of any group that actually makes a product or performs a service. Sometimes called a line manager.

Functional organization. A hierarchical organization where each employee has one clear superior, and staff are grouped by areas of specialization and managed by a person with expertise in that area.

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Funding Limit reconciliation. The process of comparing the planned expenditure of project funds against any limits on the commitment of funds for the project to identify any variances between the funding limits and the planned expenditures.

Gantt chart. A bar chart of schedule information where activities are listed on the vertical axis, dates are shown on the horizontal axis, and activity durations are shown as horizontal bars placed according to start and finish dates.

Grade. A category or rank used to distinguish items that have the same functional use (e.g., “hammer”) but do not share the same requirements for quality (e.g., different hammers may need to withstand different amounts of force).

Ground rules. Expectations regarding acceptable behavior by project team members.

Group creativity techniques. Techniques that are used to generate ideas within a group of stakeholders.

Group decision-Making techniques. Techniques to assess multiple alternatives that will be used to generate, classify, and prioritize product requirements.

Guideline. An official recommendation or advice that indicates policies, standards, or procedures for how something should be accomplished.

Hammock Activity. See summary activity.

Hard Logic. See mandatory dependency.

Histogram. A special form of bar chart used to describe the central tendency, dispersion, and shape of a statistical distribution.

Historical Information. Documents and data on prior projects including project files, records, correspondence, closed contracts, and closed projects.

Human resource Management Plan. A component of the project management plan that describes how the roles and responsibilities, reporting relationships, and staff management will be addressed and structured.

Idea/Mind Mapping. Technique used to consolidate ideas created through individual brainstorming sessions into a single map to reflect commonality and differences in understanding and to generate new ideas.

Identify risks. The process of determining which risks may affect the project and documenting their characteristics.

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Identify Stakeholders. The process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project; and analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success.

Imposed date. A fixed date imposed on a schedule activity or schedule milestone, usually in the form of a “start no earlier than” and “finish no later than” date.

Incentive Fee. A set of financial incentives related to cost, schedule, or technical performance of the seller.

Incremental Life cycle. A project life cycle where the project scope is generally determined early in the project life cycle, but time and cost estimates are routinely modified as the project team’s understanding of the product increases. Iterations develop the product through a series of repeated cycles, while increments successively add to the functionality of the product.

Independent Estimates. A process of using a third party to obtain and analyze information to support prediction of cost, schedule, or other items.

Influence diagram. A graphical representation of situations showing causal influences, time ordering of events, and other relationships among variables and outcomes.

Information Gathering techniques. Repeatable processes used to assemble and organize data across a spectrum of sources.

Information Management Systems. Facilities, processes, and procedures used to collect, store, and distribute information between producers and consumers of information in physical or electronic format.

Initiating Process Group. Those processes performed to define a new project or a new phase of an existing project by obtaining authorization to start the project or phase.

Input. Any item, whether internal or external to the project that is required by a process before that process proceeds. May be an output from a predecessor process.

Inspection. Examining or measuring to verify whether an activity, component, product, result, or service conforms to specified requirements.

Inspections and Audits. A process to observe performance of contracted work or a promised product against agreed-upon requirements.

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Interpersonal Skills. Ability to establish and maintain relationships with other people.

Interrelationship digraphs. A quality management planning tool, the interrelationship digraphs provide a process for creative problem-solving in moderately complex scenarios that possess intertwined logical relationships.

Interviews. A formal or informal approach to elicit information from stakeholders by talking to them directly.

Invitation for Bid (IFB). Generally, this term is equivalent to request for proposal. However, in some application areas, it may have a narrower or more specific meaning.

Issue. A point or matter in question or in dispute, or a point or matter that is not settled and is under discussion or over which there are opposing views or disagreements.

Issue Log. A project document used to document and monitor elements under discussion or in dispute between project stakeholders.

Iterative Life cycle. A project life cycle where the project scope is generally determined early in the project life cycle, but time and cost estimates are routinely modified as the project team’s understanding of the product increases. Iterations develop the product through a series of repeated cycles, while increments successively add to the functionality of the product.

Lag. The amount of time whereby a successor activity is required to be delayed with respect to a predecessor activity.

Late Finish date (LF). In the critical path method, the latest possible point in time when the uncompleted portions of a schedule activity can finish based on the schedule network logic, the project completion date, and any schedule constraints.

Late Start date (LS). In the critical path method, the latest possible point in time when the uncompleted portions of a schedule activity can start based on the schedule network logic, the project completion date, and any schedule constraints.

Lead. The amount of time whereby a successor activity can be advanced with respect to a predecessor activity.

Lessons Learned. The knowledge gained during a project which shows how project events were addressed or should be addressed in the future with the purpose of improving future performance.

Lessons Learned Knowledge Base. A store of historical information and lessons learned about both the outcomes of previous project selection decisions and previous project performance.

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Level of Effort (LoE). An activity that does not produce definitive end products and is measured by the passage of time. [Note: Level of effort is one of three earned valued management (EVM) types of activities used to measure work performance.]

Leveling. See resource leveling.

Life cycle. See project life cycle.

Log. A document used to record and describe or denote selected items identified during execution of a process or activity. Usually used with a modifier, such as issue, quality control, action, or defect.

Logical relationship. A dependency between two activities, or between an activity and a milestone.

Majority. Support from more than 50 percent of the members of the group.

Make-or-Buy Analysis. The process of gathering and organizing data about product requirements and analyzing them against available alternatives including the purchase or internal manufacture of the product.

Make-or-Buy decisions. Decisions made regarding the external purchase or internal manufacture of a product.

Manage communications. The process of creating, collecting, distributing, storing, retrieving, and the ultimate disposition of project information in accordance with the communications management plan.

Manage Project team. The process of tracking team member performance, providing feedback, resolving issues, and managing team changes to optimize project performance.

Manage Stakeholder Engagement. The process of communicating and working with stakeholders to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle.

Management reserve. An amount of the project budget withheld for management control purposes. These are budgets reserved for unforeseen work that is within scope of the project. The management reserve is not included in the performance measurement baseline (PMB).

Management Skills. The ability to plan, organize, direct, and control individuals or groups of people to achieve specific goals.

Mandatory dependency. A relationship that is contractually required or inherent in the nature of the work.

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Market research. The process of gathering information at conferences, online reviews, and a variety of sources to identify market capabilities.

Master Schedule. A summary-level project schedule that identifies the major deliverables and work breakdown structure components and key schedule milestones. See also milestone schedule.

Material. The aggregate of things used by an organization in any undertaking, such as equipment, apparatus, tools, machinery, gear, material, and supplies.

Matrix diagrams. A quality management and control tool used to perform data analysis within the organizational structure created in the matrix. The matrix diagram seeks to show the strength of relationships between factors, causes, and objectives that exist between the rows and columns that form the matrix.

Matrix organization. Any organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of persons assigned to the project.

Methodology. A system of practices, techniques, procedures, and rules used by those who work in a discipline.

Milestone. A significant point or event in a project, program, or portfolio.

Milestone List. A list identifying all project milestones and normally indicates whether the milestone is mandatory or optional.

Milestone Schedule. A summary-level schedule that identifies the major schedule milestones. See also master schedule.

Monitor. Collect project performance data with respect to a plan, produce performance measures, and report and disseminate performance information.

Monitor and control Project Work. The process of tracking, reviewing, and reporting the progress to meet the performance objectives defined in the project management plan.

Monitoring and controlling Process Group. Those processes required to track, review, and regulate the progress and performance of the project; identify any areas in which changes to the plan are required; and initiate the corresponding changes.

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Monte carlo Simulation. A process which generates hundreds or thousands of probable performance outcomes based on probability distributions for cost and schedule on individual tasks. The outcomes are then used to generate a probability distribution for the project as a whole.

Most Likely duration. An estimate of the most probable activity duration that takes into account all of the known variables that could affect performance.

Multi-criteria decision Analysis. This technique utilizes a decision matrix to provide a systematic analytical approach for establishing criteria, such as risk levels, uncertainty, and valuation, to evaluate and rank many ideas.

near-critical Activity. A schedule activity that has low total float. The concept of near-critical is equally applicable to a schedule activity or schedule network path. The limit below which total float is considered near critical is subject to expert judgment and varies from project to project.

negotiated Settlements. The process of reaching final equitable settlement of all outstanding issues, claims, and disputes through negotiation.

negotiation. The process and activities to resolving disputes through consultations between involved parties.

network. See project schedule network diagram.

network Analysis. See schedule network analysis.

network Logic. The collection of schedule activity dependencies that makes up a project schedule network diagram.

network Path. Any continuous series of schedule activities connected with logical relationships in a project schedule network diagram.

networking. Establishing connections and relationships with other people from the same or other organizations.

node. One of the defining points of a schedule network; a junction point joined to some or all of the other dependency lines.

nominal Group technique. A technique that enhances brainstorming with a voting process used to rank the most useful ideas for further brainstorming or for prioritization.

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nonconformance Work. In the cost of quality framework, nonconformance work is done to deal with the consequences of errors and failures in doing activities correctly on the first attempt. In efficient quality management systems, the amount of nonconformance work will approach zero.

objective. Something toward which work is to be directed, a strategic position to be attained, a purpose to be achieved, a result to be obtained, a product to be produced, or a service to be performed.

observations. A technique that provides a direct way of viewing individuals in their environment performing their jobs or tasks and carrying out processes.

opportunity. A risk that would have a positive effect on one or more project objectives.

optimistic duration. An estimate of the shortest activity duration that takes into account all of the known variables that could affect performance.

organizational Breakdown Structure (oBS). A hierarchical representation of the project organization that illustrates the relationship between project activities and the organizational units that will perform those activities.

organizational Process Assets. Plans, processes, policies, procedures, and knowledge bases that are specific to and used by the performing organization.

organizational Project Management Maturity. The level of an organization’s ability to deliver the desired strategic outcomes in a predictable, controllable, and reliable manner.

output. A product, result, or service generated by a process. May be an input to a successor process.

Parametric Estimating. An estimating technique in which an algorithm is used to calculate cost or duration based on historical data and project parameters.

Pareto diagram. A histogram, ordered by frequency of occurrence, that shows how many results were generated by each identified cause.

Path convergence. A relationship in which a schedule activity has more than one predecessor.

Path divergence. A relationship in which a schedule activity has more than one successor.

Payment Systems. The system used to provide and track supplier’s invoices and payments for services and products.

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Percent complete. An estimate expressed as a percent of the amount of work that has been completed on an activity or a work breakdown structure component.

Perform Integrated change control. The process of reviewing all change requests; approving changes and managing changes to deliverables, organizational process assets, project documents, and the project management plan; and communicating their disposition.

Perform Qualitative risk Analysis. The process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact.

Perform Quality Assurance. The process of auditing the quality requirements and the results from quality control measurements to ensure that appropriate quality standards and operational definitions are used.

Perform Quantitative risk Analysis. The process of numerically analyzing the effect of identified risks on overall project objectives.

Performance Measurement Baseline. An approved, integrated scope-schedule-cost plan for the project work against which project execution is compared to measure and manage performance. The PMB includes contingency reserve, but excludes management reserve.

Performance reporting. See work performance reports.

Performance reports. See work performance reports.

Performance reviews. A technique that is used to measure, compare, and analyze actual performance of work in progress on the project against the baseline.

Performing organization. An enterprise whose personnel are most directly involved in doing the work of the project or program.

Pessimistic duration. Estimate of the longest activity duration that takes into account all of the known variables that could affect performance.

Phase. See project phase.

Phase Gate. A review at the end of a phase in which a decision is made to continue to the next phase, to continue with modification, or to end a project or program.

Plan communications Management. The process of developing an appropriate approach and plan for project communications based on stakeholder’s information needs and requirements and available organizational assets.

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Plan cost Management. The process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs.

Plan Human resource Management. The process of identifying and documenting project roles, responsibilities, required skills, reporting relationships, and creating a staffing management plan.

Plan Procurement Management. The process of documenting project procurement decisions, specifying the approach, and identifying potential sellers.

Plan Quality Management. The process of identifying quality requirements and/or standards for the project and its deliverables, and documenting how the project will demonstrate compliance with quality requirements.

Plan risk Management. The process of defining how to conduct risk management activities for a project.

Plan risk responses. The process of developing options and actions to enhance opportunities and to reduce threats to project objectives.

Plan Schedule Management. The process of establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule.

Plan Scope Management. The process of creating a scope management plan that documents how the project scope will be defined, validated, and controlled.

Plan Stakeholder Management. The process of developing appropriate management strategies to effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs, interests, and potential impact on project success.

Planned Value (PV). The authorized budget assigned to scheduled work.

Planning Package. A work breakdown structure component below the control account with known work content but without detailed schedule activities. See also control account.

Planning Process Group. Those processes required to establish the scope of the project, refine the objectives, and define the course of action required to attain the objectives that the project was undertaken to achieve.

Plurality. Decisions made by the largest block in a group, even if a majority is not achieved.

Policy. A structured pattern of actions adopted by an organization such that the organization’s policy can be explained as a set of basic principles that govern the organization’s conduct.

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Portfolio. Projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives.

Portfolio Management. The centralized management of one or more portfolios to achieve strategic objectives.

Practice. A specific type of professional or management activity that contributes to the execution of a process and that may employ one or more techniques and tools.

Precedence diagramming Method (PdM). A technique used for constructing a schedule model in which activities are represented by nodes and are graphically linked by one or more logical relationships to show the sequence in which the activities are to be performed.

Precedence relationship. The term used in the precedence diagramming method for a logical relationship. In current usage, however, precedence relationship, logical relationship, and dependency are widely used interchangeably, regardless of the diagramming method used. See also logical relationship.

Precision. Within the quality management system, precision is a measure of exactness.

Predecessor Activity. An activity that logically comes before a dependent activity in a schedule.

Predictive Life cycle. A form of project life cycle in which the project scope, and the time and cost required to deliver that scope, are determined as early in the life cycle as possible.

Preferential Logic. See discretionary dependency.

Preferred Logic. See discretionary dependency.

Preventive Action. An intentional activity that ensures the future performance of the project work is aligned with the project management plan.

Prioritization Matrices. A quality management planning tool used to identify key issues and evaluate suitable alternatives to define a set of implementation priorities.

Probability and Impact Matrix. A grid for mapping the probability of each risk occurrence and its impact on project objectives if that risk occurs.

Procedure. An established method of accomplishing a consistent performance or result, a procedure typically can be described as the sequence of steps that will be used to execute a process.

Process. A systematic series of activities directed towards causing an end result such that one or more inputs will be acted upon to create one or more outputs.

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Process Analysis. A process analysis follows the steps outlined in the process improvement plan to identify needed improvements.

Process decision Program charts (PdPc). The PDPC is used to understand a goal in relation to the steps for getting to the goal.

Process Improvement Plan. A subsidiary plan of the project management plan. It details the steps for analyzing processes to identify activities that enhance their value.

Procurement Audits. The review of contracts and contracting processes for completeness, accuracy, and effectiveness.

Procurement documents. The documents utilized in bid and proposal activities, which include the buyer’s Invitation for Bid, Invitation for Negotiations, Request for Information, Request for Quotation, Request for Proposal, and seller’s responses.

Procurement Management Plan. A component of the project or program management plan that describes how a project team will acquire goods and services from outside the performing organization.

Procurement Performance reviews. A structured review of the seller’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract.

Procurement Statement of Work. Describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results.

Product. An artifact that is produced, is quantifiable, and can be either an end item in itself or a component item. Additional words for products are material and goods. Contrast with result. See also deliverable.

Product Analysis. For projects that have a product as a deliverable, it is a tool to define scope that generally means asking questions about a product and forming answers to describe the use, characteristics, and other the relevant aspects of what is going to be manufactured.

Product Life cycle. The series of phases that represent the evolution of a product, from concept through delivery, growth, maturity, and to retirement.

Product Scope. The features and functions that characterize a product, service, or result.

Product Scope description. The documented narrative description of the product scope.

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Program. A group of related projects, subprograms, and program activities managed in a coordinated way to obtain benefits not available from managing them individually.

Program Evaluation and review technique (PErt). A technique for estimating that applies a weighted average of optimistic, pessimistic, and most likely estimates when there is uncertainty with the individual activity estimates.

Program Management. The application of knowledge, skills, tools, and techniques to a program to meet the program requirements and to obtain benefits and control not available by managing projects individually.

Progressive Elaboration. The iterative process of increasing the level of detail in a project management plan as greater amounts of information and more accurate estimates become available.

Project. A temporary endeavor undertaken to create a unique product, service, or result.

Project-Based organizations (PBos). A variety of organizational forms that involve the creation of temporary systems for the performance of projects. PBOs conduct the majority of their activities as projects and/or provide project over functional approaches.

Project calendar. A calendar that identifies working days and shifts that are available for scheduled activities.

Project charter. A document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities.

Project communications Management. Project Communications Management includes the processes that are required to ensure timely and appropriate planning, collection, creation, distribution, storage, retrieval, management, control, monitoring, and the ultimate disposition of project information.

Project cost Management. Project Cost Management includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget.

Project Funding requirements. Forecast project costs to be paid that are derived from the cost baseline for total or periodic requirements, including projected expenditures plus anticipated liabilities.

Project Governance. The alignment of project objectives with the strategy of the larger organization by the project sponsor and project team. A project’s governance is defined by and is required to fit within the larger context of the program or organization sponsoring it, but is separate from organizational governance.

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Project Human resource Management. Project Human Resource Management includes the processes that organize, manage, and lead the project team.

Project Initiation. Launching a process that can result in the authorization of a new project.

Project Integration Management. Project Integration Management includes the processes and activities needed to identify, define, combine, unify, and coordinate the various processes and project management activities within the Project Management Process Groups.

Project Life cycle. The series of phases that a project passes through from its initiation to its closure.

Project Management. The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.

Project Management Body of Knowledge. An inclusive term that describes the sum of knowledge within the profession of project management. As with other professions, such as law, medicine, and accounting, the body of knowledge rests with the practitioners and academics that apply and advance it. The complete project management body of knowledge includes proven traditional practices that are widely applied and innovative practices that are emerging in the profession. The body of knowledge includes both published and unpublished materials. This body of knowledge is constantly evolving. PMI’s PMBOK® Guide identifies a subset of the project management body of knowledge that is generally recognized as good practice.

Project Management Information System. An information system consisting of the tools and techniques used to gather, integrate, and disseminate the outputs of project management processes. It is used to support all aspects of the project from initiating through closing, and can include both manual and automated systems.

Project Management Knowledge Area. An identified area of project management defined by its knowledge requirements and described in terms of its component processes, practices, inputs, outputs, tools, and techniques.

Project Management office (PMo). An organizational structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques.

Project Management Plan. The document that describes how the project will be executed monitored, and controlled.

Project Management Process Group. A logical grouping of project management inputs, tools and techniques, and outputs. The Project Management Process Groups include initiating processes, planning processes, executing processes, monitoring and controlling processes, and closing processes. Project Management Process Groups are not project phases.

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Project Management Staff. The members of the project team who perform project management activities such as schedule, communications, risk management, etc.

Project Management System. The aggregation of the processes, tools, techniques, methodologies, resources, and procedures to manage a project.

Project Management team. The members of the project team who are directly involved in project management activities. On some smaller projects, the project management team may include virtually all of the project team members.

Project Manager (PM). The person assigned by the performing organization to lead the team that is responsible for achieving the project objectives.

Project organization chart. A document that graphically depicts the project team members and their interrelationships for a specific project.

Project Phase. A collection of logically related project activities that culminates in the completion of one or more deliverables.

Project Procurement Management. Project Procurement Management includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team.

Project Quality Management. Project Quality Management includes the processes and activities of the performing organization that determine quality policies, objectives, and responsibilities so that the project will satisfy the needs for which it was undertaken.

Project risk Management. Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project.

Project Schedule. An output of a schedule model that presents linked activities with planned dates, durations, milestones, and resources.

Project Schedule network diagram. A graphical representation of the logical relationships among the project schedule activities.

Project Scope. The work performed to deliver a product, service, or result with the specified features and functions.

Project Scope Management. Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully.

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Project Scope Statement. The description of the project scope, major deliverables, assumptions, and constraints.

Project Stakeholder Management. Project Stakeholder Management includes the processes required to identify all people or organizations impacted by the project, analyzing stakeholder expectations and impact on the project, and developing appropriate management strategies for effectively engaging stakeholders in project decisions and execution.

Project Statement of Work. See statement of work.

Project team. A set of individuals who support the project manager in performing the work of the project to achieve its objectives.

Project team directory. A documented list of project team members, their project roles, and communication information.

Project time Management. Project Time Management includes the processes required to manage the timely completion of the project.

Projectized organization. Any organizational structure in which the project manager has full authority to assign priorities, apply resources, and direct the work of persons assigned to the project.

Proposal Evaluation techniques. The process of reviewing proposals provided by suppliers to support contract award decisions.

Prototypes. A method of obtaining early feedback on requirements by providing a working model of the expected product before actually building it.

Quality. The degree to which a set of inherent characteristics fulfills requirements.

Quality Audits. A quality audit is a structured, independent process to determine if project activities comply with organizational and project policies, processes, and procedures.

Quality checklists. A structured tool used to verify that a set of required steps has been performed.

Quality control Measurements. The documented results of control quality activities.

Quality Function deployment (QFd). A facilitated workshop technique that helps to determine critical characteristics for new product development.

Quality Management and control tools. They are a type of quality planning tools used to link and sequence the activities identified.

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Quality Management Plan. A component of the project or program management plan that describes how an organization’s quality policies will be implemented.

Quality Management System. The organizational framework whose structure provides the policies, processes, procedures, and resources required to implement the quality management plan. The typical project quality management plan should be compatible to the organization’s quality management system.

Quality Metrics. A description of a project or product attribute and how to measure it.

Quality Policy. A policy specific to the Project Quality Management Knowledge Area, it establishes the basic principles that should govern the organization’s actions as it implements its system for quality management.

Quality requirement. A condition or capability that will be used to assess conformance by validating the acceptability of an attribute for the quality of a result.

Quantitative risk Analysis and Modeling techniques. Commonly used techniques for both event-oriented and project-oriented analysis approaches.

Questionnaires and Surveys. Written sets of questions designed to quickly accumulate information from a large number of respondents.

rAcI. A common type of responsibility assignment matrix that uses responsible, accountable, consult, and inform statuses to define the involvement of stakeholders in project activities.

records Management System. A specific set of processes, related control functions, and tools that are consolidated and combined to record and retain information about the project.

regression Analysis. An analytic technique where a series of input variables are examined in relation to their corresponding output results in order to develop a mathematical or statistical relationship.

regulation. Requirements imposed by a governmental body. These requirements can establish product, process, or service characteristics, including applicable administrative provisions that have government-mandated compliance.

reporting Systems. Facilities, processes, and procedures used to generate or consolidate reports from one or more information management systems and facilitate report distribution to the project stakeholders.

request for Information (rFI). A type of procurement document whereby the buyer requests a potential seller to provide various pieces of information related to a product or service or seller capability.

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request for Proposal (rFP). A type of procurement document used to request proposals from prospective sellers of products or services. In some application areas, it may have a narrower or more specific meaning.

request for Quotation (rFQ). A type of procurement document used to request price quotations from prospective sellers of common or standard products or services. Sometimes used in place of request for proposal and, in some application areas, it may have a narrower or more specific meaning.

requested change. A formally documented change request that is submitted for approval to the integrated change control process.

requirement. A condition or capability that is required to be present in a product, service, or result to satisfy a contract or other formally imposed specification.

requirements documentation. A description of how individual requirements meet the business need for the project.

requirements Management Plan. A component of the project or program management plan that describes how requirements will be analyzed, documented, and managed.

requirements traceability Matrix. A grid that links product requirements from their origin to the deliverables that satisfy them.

reserve. A provision in the project management plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g., management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated.

reserve Analysis. An analytical technique to determine the essential features and relationships of components in the project management plan to establish a reserve for the schedule duration, budget, estimated cost, or funds for a project.

residual risk. A risk that remains after risk responses have been implemented.

resource. Skilled human resources (specific disciplines either individually or in crews or teams), equipment, services, supplies, commodities, material, budgets, or funds.

resource Breakdown Structure. A hierarchical representation of resources by category and type.

resource calendar. A calendar that identifies the working days and shifts on which each specific resource is available.

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resource Histogram. A bar chart showing the amount of time that a resource is scheduled to work over a series of time periods. Resource availability may be depicted as a line for comparison purposes. Contrasting bars may show actual amounts of resources used as the project progresses.

resource Leveling. A technique in which start and finish dates are adjusted based on resource constraints with the goal of balancing demand for resources with the available supply.

resource optimization techniques. A technique that is used to adjust the start and finish dates of activities that adjust planned resource use to be equal to or less than resource availability.

resource Smoothing. A technique which adjusts the activities of a schedule model such that the requirement for resources on the project do not exceed certain predefined resource limits.

responsibility. An assignment that can be delegated within a project management plan such that the assigned resource incurs a duty to perform the requirements of the assignment.

responsibility Assignment Matrix (rAM). A grid that shows the project resources assigned to each work package.

result. An output from performing project management processes and activities. Results include outcomes (e.g., integrated systems, revised process, restructured organization, tests, trained personnel, etc.) and documents (e.g., policies, plans, studies, procedures, specifications, reports, etc.). Contrast with product. See also deliverable.

rework. Action taken to bring a defective or nonconforming component into compliance with requirements or specifications.

risk. An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives.

risk Acceptance. A risk response strategy whereby the project team decides to acknowledge the risk and not take any action unless the risk occurs.

risk Appetite. The degree of uncertainty an entity is willing to take on, in anticipation of a reward.

risk Audits. Examination and documentation of the effectiveness of risk responses in dealing with identified risks and their root causes, as well as the effectiveness of the risk management process.

risk Avoidance. A risk response strategy whereby the project team acts to eliminate the threat or protect the project from its impact.

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risk Breakdown Structure (rBS). A hierarchical representation of risks according to their risk categories.

risk categorization. Organization by sources of risk (e.g., using the RBS), the area of the project affected (e.g., using the WBS), or other useful category (e.g., project phase) to determine the areas of the project most exposed to the effects of uncertainty.

risk category. A group of potential causes of risk.

risk data Quality Assessment. Technique to evaluate the degree to which the data about risks is useful for risk management.

risk Management Plan. A component of the project, program, or portfolio management plan that describes how risk management activities will be structured and performed.

risk Mitigation. A risk response strategy whereby the project team acts to reduce the probability of occurrence or impact of a risk.

risk reassessment. Risk reassessment is the identification of new risks, reassessment of current risks, and the closing of risks that are outdated.

risk register. A document in which the results of risk analysis and risk response planning are recorded.

risk threshold. Measure of the level of uncertainty or the level of impact at which a stakeholder may have a specific interest. Below that risk threshold, the organization will accept the risk. Above that risk threshold, the organization will not tolerate the risk.

risk tolerance. The degree, amount, or volume of risk that an organization or individual will withstand.

risk transference. A risk response strategy whereby the project team shifts the impact of a threat to a third party, together with ownership of the response.

risk urgency Assessment. Review and determination of the timing of actions that may need to occur sooner than other risk items.

role. A defined function to be performed by a project team member, such as testing, filing, inspecting, or coding.

rolling Wave Planning. An iterative planning technique in which the work to be accomplished in the near term is planned in detail, while the work in the future is planned at a higher level.

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root cause Analysis. An analytical technique used to determine the basic underlying reason that causes a variance or a defect or a risk. A root cause may underlie more than one variance or defect or risk.

Scatter diagram. A correlation chart that uses a regression line to explain or to predict how the change in an independent variable will change a dependent variable.

Schedule. See project schedule and see also schedule model.

Schedule Baseline. The approved version of a schedule model that can be changed only through formal change control procedures and is used as a basis for comparison to actual results.

Schedule compression. Techniques used to shorten the schedule duration without reducing the project scope.

Schedule data. The collection of information for describing and controlling the schedule.

Schedule Forecasts. Estimates or predictions of conditions and events in the project’s future based on information and knowledge available at the time the schedule is calculated.

Schedule Management Plan. A component of the project management plan that establishes the criteria and the activities for developing, monitoring, and controlling the schedule.

Schedule Model. A representation of the plan for executing the project’s activities including durations, dependencies, and other planning information, used to produce a project schedule along with other scheduling artifacts.

Schedule network Analysis. The technique of identifying early and late start dates, as well as early and late finish dates, for the uncompleted portions of project schedule activities. See also backward pass, critical path method, critical chain method, and resource leveling.

Schedule network templates. A set of activities and relationships that have been established that can be used repeatedly for a particular application area or an aspect of the project where a prescribed sequence is desired.

Schedule Performance Index (SPI). A measure of schedule efficiency expressed as the ratio of earned value to planned value.

Schedule Variance (SV). A measure of schedule performance expressed as the difference between the earned value and the planned value.

Scheduling tool. A tool that provides schedule component names, definitions, structural relationships, and formats that support the application of a scheduling method.

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Scope. The sum of the products, services, and results to be provided as a project. See also project scope and product scope.

Scope Baseline. The approved version of a scope statement, work breakdown structure (WBS), and its associated WBS dictionary, that can be changed only through formal change control procedures and is used as a basis for comparison.

Scope change. Any change to the project scope. A scope change almost always requires an adjustment to the project cost or schedule.

Scope creep. The uncontrolled expansion to product or project scope without adjustments to time, cost, and resources.

Scope Management Plan. A component of the project or program management plan that describes how the scope will be defined, developed, monitored, controlled, and verified.

Secondary risk. A risk that arises as a direct result of implementing a risk response.

Selected Sellers. The sellers which have been selected to provide a contracted set of services or products.

Seller. A provider or supplier of products, services, or results to an organization.

Seller Proposals. Formal responses from sellers to a request for proposal or other procurement document specifying the price, commercial terms of sale, and technical specifications or capabilities the seller will do for the requesting organization that, if accepted, would bind the seller to perform the resulting agreement.

Sensitivity Analysis. A quantitative risk analysis and modeling technique used to help determine which risks have the most potential impact on the project. It examines the extent to which the uncertainty of each project element affects the objective being examined when all other uncertain elements are held at their baseline values. The typical display of results is in the form of a tornado diagram.

Sequence Activities. The process of identifying and documenting relationships among the project activities.

Seven Basic Quality tools. A standard toolkit used by quality management professionals who are responsible for planning, monitoring, and controlling the issues related to quality in an organization.

Simulation. A simulation uses a project model that translates the uncertainties specified at a detailed level into their potential impact on objectives that are expressed at the level of the total project. Project simulations use computer models and estimates of risk, usually expressed as a probability distribution of possible costs or durations at a detailed work level, and are typically performed using Monte Carlo analysis.

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Soft Logic. See discretionary dependency.

Source Selection criteria. A set of attributes desired by the buyer which a seller is required to meet or exceed to be selected for a contract.

Specification. A document that specifies, in a complete, precise, verifiable manner, the requirements, design, behavior, or other characteristics of a system, component, product, result, or service and the procedures for determining whether these provisions have been satisfied. Examples are: requirement specification, design specification, product specification, and test specification.

Specification Limits. The area, on either side of the centerline, or mean, of data plotted on a control chart that meets the customer’s requirements for a product or service. This area may be greater than or less than the area defined by the control limits. See also control limits.

Sponsor. A person or group who provides resources and support for the project, program, or portfolio and is accountable for enabling success.

Sponsoring organization. The entity responsible for providing the project’s sponsor and a conduit for project funding or other project resources.

Staffing Management Plan. A component of the human resource plan that describes when and how project team members will be acquired and how long they will be needed.

Stakeholder. An individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project.

Stakeholder Analysis. A technique of systematically gathering and analyzing quantitative and qualitative information to determine whose interests should be taken into account throughout the project.

Stakeholder Management Plan. The stakeholder management plan is a subsidiary plan of the project management plan that defines the processes, procedures, tools, and techniques to effectively engage stakeholders in project decisions and execution based on the analysis of their needs, interests, and potential impact.

Stakeholder register. A project document including the identification, assessment, and classification of project stakeholders.

Standard. A document that provides, for common and repeated use, rules, guidelines, or characteristics for activities or their results, aimed at the achievement of the optimum degree of order in a given context.

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Start date. A point in time associated with a schedule activity’s start, usually qualified by one of the following: actual, planned, estimated, scheduled, early, late, target, baseline, or current.

Start-to-Finish (SF). A logical relationship in which a successor activity cannot finish until a predecessor activity has started.

Start-to-Start (SS). A logical relationship in which a successor activity cannot start until a predecessor activity has started.

Statement of Work (SoW). A narrative description of products, services, or results to be delivered by the project.

Statistical Sampling. Choosing part of a population of interest for inspection.

Subnetwork. A subdivision (fragment) of a project schedule network diagram, usually representing a subproject or a work package. Often used to illustrate or study some potential or proposed schedule condition, such as changes in preferential schedule logic or project scope.

Subproject. A smaller portion of the overall project created when a project is subdivided into more manageable components or pieces.

Successor Activity. A dependent activity that logically comes after another activity in a schedule.

Summary Activity. A group of related schedule activities aggregated and displayed as a single activity.

SWot Analysis. Analysis of strengths, weaknesses, opportunities, and threats of an organization, project, or option.

tailor. The act of carefully selecting process and related inputs and outputs contained within the PMBOK® Guide to determine a subset of specific processes that will be included within a project’s overall management approach.

team Members. See project team members.

technique. A defined systematic procedure employed by a human resource to perform an activity to produce a product or result or deliver a service, and that may employ one or more tools.

templates. A partially complete document in a predefined format that provides a defined structure for collecting, organizing, and presenting information and data.

threat. A risk that would have a negative effect on one or more project objectives.

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three-Point Estimate. A technique used to estimate cost or duration by applying an average of optimistic, pessimistic, and most likely estimates when there is uncertainty with the individual activity estimates.

threshold. A cost, time, quality, technical, or resource value used as a parameter, and which may be included in product specifications. Crossing the threshold should trigger some action, such as generating an exception report.

time and Material contract (t&M). A type of contract that is a hybrid contractual arrangement containing aspects of both cost-reimbursable and fixed-price contracts. Time and material contracts resemble cost-reimbursable type arrangements in that they have no definitive end, because the full value of the arrangement is not defined at the time of the award. Thus, time and material contracts can grow in contract value as if they were cost-reimbursable- type arrangements. Conversely, time and material arrangements can also resemble fixed-price arrangements. For example, the unit rates are preset by the buyer and seller, when both parties agree on the rates for the category of senior engineers.

time-Scaled Schedule network diagram. Any project schedule network diagram drawn in such a way that the positioning and length of the schedule activity represents its duration. Essentially, it is a bar chart that includes schedule network logic.

to-complete Performance Index (tcPI). A measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget.

tolerance. The quantified description of acceptable variation for a quality requirement.

tornado diagram. A special type of bar chart used in sensitivity analysis for comparing the relative importance of the variables.

tool. Something tangible, such as a template or software program, used in performing an activity to produce a product or result.

total Float. The amount of time that a schedule activity can be delayed or extended from its early start date without delaying the project finish date or violating a schedule constraint.

tree diagram. A systematic diagram of a decomposition hierarchy used to visualize as parent-to-child relationships a systematic set of rules.

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trend Analysis. An analytical technique that uses mathematical models to forecast future outcomes based on historical results. It is a method of determining the variance from a baseline of a budget, cost, schedule, or scope parameter by using prior progress reporting periods’ data and projecting how much that parameter’s variance from baseline might be at some future point in the project if no changes are made in executing the project.

trigger condition. An event or situation that indicates that a risk is about to occur.

unanimity. Agreement by everyone in the group on a single course of action.

Validate Scope. The process of formalizing acceptance of the completed project deliverables.

Validated deliverables. Deliverables that are result of executing quality control process to determine correctness.

Validation. The assurance that a product, service, or system meets the needs of the customer and other identified stakeholders. It often involves acceptance and suitability with external customers. Contrast with verification.

Value Engineering. An approach used to optimize project life cycle costs, save time, increase profits, improve quality, expand market share, solve problems, and/or use resources more effectively.

Variance. A quantifiable deviation, departure, or divergence away from a known baseline or expected value.

Variance Analysis. A technique for determining the cause and degree of difference between the baseline and actual performance.

Variance at completion (VAc). A projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.

Variation. An actual condition that is different from the expected condition that is contained in the baseline plan.

Velocity. A measure of a team’s productivity rate at which the deliverables are produced, validated, and accepted within a predefined interval. Velocity is a capacity planning approach frequently used to forecast future project work.

Verification. The evaluation of whether or not a product, service, or system complies with a regulation, requirement, specification, or imposed condition. It is often an internal process. Contrast with validation.

Voice of the customer. A planning technique used to provide products, services, and results that truly reflect customer requirements by translating those customer requirements into the appropriate technical requirements for each phase of project product development.

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WBS dictionary. A document that provides detailed deliverable, activity, and scheduling information about each component in the work breakdown structure.

Weighted Milestone Method. An earned value method that divides a work package into measurable segments, each ending with an observable milestone, and then assigns a weighted value to the achievement of each milestone.

What-If Scenario Analysis. The process of evaluating scenarios in order to predict their effect on project objectives.

Work Authorization. A permission and direction, typically written, to begin work on a specific schedule activity or work package or control account. It is a method for sanctioning project work to ensure that the work is done by the identified organization, at the right time, and in the proper sequence.

Work Authorization System. A subsystem of the overall project management system. It is a collection of formal documented procedures that defines how project work will be authorized (committed) to ensure that the work is done by the identified organization, at the right time, and in the proper sequence. It includes the steps, documents, tracking system, and defined approval levels needed to issue work authorizations.

Work Breakdown Structure (WBS). A hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables.

Work Breakdown Structure component. An entry in the work breakdown structure that can be at any level.

Work Package. The work defined at the lowest level of the work breakdown structure for which cost and duration can be estimated and managed.

Work Performance data. The raw observations and measurements identified during activities being performed to carry out the project work.

Work Performance Information. The performance data collected from various controlling processes, analyzed in context and integrated based on relationships across areas.

Work Performance reports. The physical or electronic representation of work performance information compiled in project documents, intended to generate decisions, actions, or awareness

Workaround. A response to a threat that has occurred, for which a prior response had not been planned or was not effective.

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I N D E X

INDEX

A AC. See Actual cost Acceptance criteria, 123, 526 Accepted deliverables. See under Deliverables Accuracy, 228, 526

level of, 148, 162, 170, 171, 175 Acquire Project Team process, 255, 447, 526

inputs, 269 outputs, 272 overview, 267–269 tools and techniques, 270–272

Acquisition, 270, 526 Acquisition activities, 265 Action item tracking, 27, 83, 91 Activity, 526 Activity attributes, 185, 526

as input, 155, 162, 167, 175 as output, 153

Activity code, 526 Activity cost estimates, 526

as input, 163, 210, 322, 361 as output, 207

Activity duration, 526 Activity duration estimate, 170, 527

See also Estimate Activity Durations process as input, 175, 322 range of possible results, 172

Activity identifier (ID), 153, 527 Activity list, 527

as input, 155, 162, 167, 175 as output, 152

Activity network diagrams, 246 See also Project schedule network diagram

Activity on Arrow (AOA), 246 Activity-on-Node (AON), 156, 246

See also Precedence Diagramming Method Activity resource requirements, 185, 527

See also Estimate Activity Resources process as input, 167, 175, 259, 361 as output, 165

Activity sequencing. See Sequence Activities process Actual cost (AC), 218, 219, 527 Actual duration, 527 Adaptive life cycles, 46, 527 Additional quality planning tools, 240, 527 Adjusting leads and lags, 527 ADR. See Alternative dispute resolution Advertising, 376, 527 AE. See Apportioned effort Affinity diagram, 115, 245, 528 Agile approach, 1, 114, 187 Agreements, 70, 528

See also Collective bargaining agreements; Service level agreements as input, 211, 382

as output, 377–378 Alternative analysis, 164, 528 Alternative dispute resolution (ADR), 378, 384, 388 Alternatives generation, 123, 528 American National Standards Institute (ANSI), 418 Analogous estimating, 169–170, 204–205, 528 Analytical techniques, 91–92, 103, 147–148, 198, 315, 376, 528

stakeholder engagement level, 402–403 ANSI. See American National Standards Institute AON. See Activity-On-Node Application area, 528 Applying leads and lags, 528 Apportioned effort (AE), 528 Approved change request, 96, 528

as input, 82, 251, 382 as output, 99

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I N D E X

Approved change request review, 252, 528 Arbitrary total float, 158 Arbitration, 388 Assumption(s), 124, 168, 348, 529 Assumptions analysis, 325, 529 Assumptions log updates, 333, 348 Attribute sampling, 250, 529 Audits, 135. See also Quality audits

configuration verification and, 97 inspections and, 383 procurement, 388 project success or failure, 101 quality, 247, 556 risk, 351, 354, 559

Authority, 264, 529

B BAC. See Budget at completion Backlog, 529 Backward pass, 176, 177, 529 Balanced matrix organization, 23-24 Bar chart, 182, 183, 529 Baseline, 76, 88, 140, 529. See also Cost baseline; Rebaselining; Schedule baseline; Scope baseline Baseline schedule, 218. See also Schedule baseline Basis of estimates, 529

as input, 210 as output, 208

Benchmarking, 116, 239, 529 Best practices

benchmarking and, 116, 239 discretionary dependencies and, 158 meeting types and, 84 quality audits and, 247 systematic achievement of, 7

Beta distribution, 171, 206 Bias, risk attitudes and, 311 Bid(s), 207, 368, 371. See also Proposals Bidder. See Seller(s) Bidder conferences, 375, 529 Bottom-up estimating, 205

definition, 530 description of, 164

Boundaries process, 241 project, 54, 424

Brainstorming, 115, 171, 207, 240 definition, 530 meetings and, 84 risk identification and, 324

Budget, 365, 530 Budget at completion (BAC), 89, 218, 219, 530 Budgeting, 316 Budget reserve analysis, 211 Buffer(s), 178, 189. See also Reserve Buffer management, 178 Business case, 69, 530 Business need, 68 Business partners, 33, 36 Business requirements, 112, 117 Business value, 15–16, 530 Buyer

definition, 530 terms for, 357

Buyer-seller relationship, 357 Buy versus lease decision, 201

C CA. See Control account Calendar, 185. See also Project calendar; Resource calendars Capability Maturity Model Integrated (CMMI®), 229 Causal analysis, 91 Causal influences, 325–326 Cause-and-effect diagram, 236, 325, 530 CCB. See Change control board Central tendency, 530 Certified Associate in Project Management (CAPM)®, 1 Change control, 530. See also Perform Integrated Change Control process

management reserves and, 213 meetings, 99 procedures, 27

Change control board (CCB), 74, 96, 530 change management plan and, 96 meetings and, 99

Change control system, 531. See also Contract change control system

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I N D E X

Change control tools, 99, 531 Change log, 100, 407, 531 Change management plan/system, 138 Change request(s).

See also Approved change request; Requested change approved, 528 approved change requests review, 528 change control board and, 96 constructive change, 384 corrective actions and, 353 definition, 531 as input, 97 as output, 85, 136, 140, 225, 247, 253, 284–285, 307–308, 370, 378, 385, 408, 413 preventive actions and, 191, 353 types of, 92–93 updates, 348

Charter. See Project charter Checklist analysis, 325, 531 Checklist(s), 254. See also Quality checklists Checksheets, 237, 531 Claim, 531 Claims administration, 384, 531 Closed procurements, 389, 531 Close Procurements process, 354, 461, 531

inputs, 388 outputs, 389 overview, 386–387 tools and techniques, 388–389

Close Project or Phase process, 63, 460–461, 531 inputs, 102 outputs, 103–104 overview, 100–101 tools and techniques, 102–103

Closing Process Group, 418 definition, 531 overview, 57–58, 459–460 processes in, 61

CMMI®. See Capability Maturity Model Integrated Code of accounts, 132, 531 Code of Ethics and Professional Conduct, 1 Collaboration

project manager and, 48, 91, 128, 307 virtual collaboration techniques, 25

Collective bargaining agreements, 203, 268 Collect Requirements process, 105, 430, 531

inputs, 113 outputs, 117–119 overview, 110–112 tools and techniques, 114–117

Colocated teams, 25, 277, 532 See also Project team(s); Team

Commercial information, published, 204 Communication

See also Control Communications process activity, dimensions of, 287 channels, 81, 176, 292, 293, 294 constraints, 532 correspondence, 386 diverse stakeholders and, 287 informal, 274, 282 methods, 294–295, 407, 532 models, 293–294, 298, 300, 532 organizational, 20 project, 301, 305 skills, 288 styles, 21 technology, 38, 292–293, 300

Communication planning See also Plan Communications process; Project

Communications Management Communication requirements analysis, 291–292, 532 Communications management plan, 296–297, 532

as input, 299, 406 Communication technologies, 38, 292–293, 300, 532

See also E-mail; Web conferencing Competency, 264 Compliance, 267, 532 Composite organization, 25, 26 Concurrent project phases, 42 Conduct Procurements process, 354, 449, 532

inputs, 373–375 outputs, 377–379 overview, 371–373 tools and techniques, 375–377

Confidentiality, 293 Configuration control, 96

Configuration identification, 96

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I N D E X

Configuration management plan, 138 Configuration management system

change requests and, 96 definition, 532

Configuration status accounting, 97 Configuration verification and audit, 97 Conflict management, 282–283, 532 Conformance, 235, 532 Conformance work, 533 Constraints, 5, 124, 168, 365, 533 Context diagrams, 117, 533 Contingency, 533 Contingency allowance. See Reserve Contingency plan, 348 Contingency reserve, 171, 206, 213, 348, 533

See also Reserve analysis Contingent response strategies, 346, 533 Continuous distributions, 337 Continuous improvement, 229 Contract(s), 533

See also Time and Material Contract (T&M); Union labor/contracts amendments to, 381 closure of, 366, 373, 381 communications and, 386 cost-reimbursable, 363–364, 535 documentation, 389 early termination of, 387 legal implications of, 203, 357, 380, 387 procurement contract, 357 procurement negotiations and, 375 requirements of, 96, 282, 384 termination clause, 378, 380 terms and conditions, 387 types of, 362–363

Contract change control system, 383, 533 Contract management, 355 Contractor. See Seller(s) Contractor conferences. See Bidder conferences Control, 88, 533 Control account (CA), 132, 533 Control chart, 238, 533 Control Communications process, 287, 456–457, 533

inputs, 304–306

outputs, 307–308 overview, 303–304 tools and techniques, 306–307

Control Costs process, 193, 455, 534 inputs, 216–217 outputs, 225–226 overview, 215–216 tools and techniques, 217–225

Control limits, 534. See also Specification limits Control Procurements process, 354, 458, 534

inputs, 381–382 outputs, 384–386 overview, 379–381 tools and techniques, 383–384

Control Quality process, 227, 456, 534 inputs, 250–251 outputs, 252–254 overview, 248–250 tools and techniques, 252

Control Risks process, 309, 457, 534 inputs, 350–351 outputs, 353–354 overview, 349–350 tools and techniques, 351–352

Control Schedule process, 141, 454–455, 534 inputs, 187–188 outputs, 190–192 overview, 184–187 tools and techniques, 188–190

Control Scope process, 105, 454, 534 inputs, 137–138 outputs, 139–140 overview, 136–137 tools and techniques, 139

Control Stakeholder Engagement process, 391, 458–459, 534 inputs, 411–412 outputs, 413–415 overview, 409–410 tools and techniques, 412–413

Control thresholds, 148, 199 COQ. See Cost of quality Corrective action, 81

change request for, 85, 93, 353 definition, 534

Licensed To: Jorge Diego Fuentes Sanchez PMI MemberID: 2399412 This copy is a PMI Member benefit, not for distribution, sale, or reproduction.

I N D E X

Correspondence, 386 Cost(s). See also Actual cost

aggregation of, 211, 534 indirect, 202, 207, 218, 365 and time objectives, 341

Cost aggregation, 211, 534 Cost baseline, 191, 216, 226, 233, 534

as output, 212–214, 385 updates, 347

Cost-benefit analysis, 235, 535 Cost contingency reserve, 207, 349 Cost control. See Control Costs process Cost estimating. See Estimate Costs process Cost forecasts, 89, 225 Cost management. See Project Cost Management Cost management plan, 216, 226, 534

as input, 202, 209, 321, 335 updates, 347

Cost of quality (COQ), 206, 229, 231, 235, 535 Cost performance index (CPI), 89, 219, 535 Cost performance measurements, 222 Cost Plus Award Fee contract (CPAF), 364, 535 Cost-plus contract, 344 Cost Plus Fixed Fee (CPFF) contract, 364, 535 Cost Plus Incentive Fee (CPIF) contract, 364, 535 Cost-reimbursable contracts, 363–364, 535 Cost risk simulation, 340 Cost variance (CV), 89, 218–219, 535 CPAF. See Cost Plus Award Fee contract CPFF. See Cost Plus Fixed Fee CPI. See Cost performance index CPIF. See Cost Plus Incentive Fee (CPIF) contract CPM. See Critical path method Crashing, 181, 190, 535 Create WBS process, 105, 431, 535

inputs, 127 outputs, 131–132 overview, 125–126 tools and techniques, 128–131

Criteria, 536 Critical chain, 178 Critical chain method (CCM), 142, 178, 188, 536 Critical path, 176, 536 Critical path activity, 177, 536

Critical path method (CPM), 142, 176–177, 188, 246, 536 Cultural diversity

cross-cultural considerations, 290 multinational team, 294 projects characterized by, 274 recognition and rewards, 277

Culture. See Organizational culture Customer(s)

definition, 536 external, 70, 380 in project team, 36 request, 9 requirements, 228 users and, 32

Customer satisfaction, 229, 536 CV. See Cost variance

D Data date, 536 Data gathering and representation techniques, 536

interviewing, 336 probability distributions, 337

Decision making business case and, 69 effective, 284 quantitative risk information and, 333, 441

Decision-making skills, 284 Decision tree analysis, 339, 536 Decoding/encoding of messages, 293–294 Decomposition, 112, 536

excessive, 131 into work packages, 120–131, 128

Dedicated project team, 37 Defect(s), 3

definition, 536 identification of, 237 number of, 59, 85, 228 prevention of, 229, 243

Defect repair, 81 change request for, 82, 85, 93, 97, 140 definition, 536 quality audits and, 247

Define Activities process, 141, 432, 536

Licensed To: Jorge Diego Fuentes Sanchez PMI MemberID: 2399412 This copy is a PMI Member benefit, not for distribution, sale, or reproduction.

I N D E X

inputs, 150–151 outputs, 152–153 overview, 149–150 tools and techniques, 151–152

Define Scope process, 105, 430, 537 inputs, 121–122 outputs, 123–124 overview, 120–121 tools and techniques, 122–123

Deliverable(s). See also Result; Verified deliverables accepted, 102, 135, 389, 526 definition, 84, 123, 537 as input, 251 as output, 84 validated, 566 verified, 134, 135

Delphi technique, 171, 207, 324, 537 Dependency. See Logical relationship Dependency determination, 537

discretionary dependencies, 158 external dependencies, 158 internal dependencies, 158 mandatory dependencies, 157, 545

Design of experiments (DOE), 239–240, 537 Determine Budget process, 193, 437, 537

inputs, 209–211 outputs, 212–214 overview, 208–209 tools and techniques, 211–212

Develop Project Charter process, 63, 426, 537 inputs, 68–70 outputs, 71–72 overview, 66–68 tools and techniques, 71

Develop Project Management Plan process, 63, 429, 537 inputs, 74–75 outputs, 76–78 overview, 72–74 tools and techniques, 76

Develop Project Team process, 255, 447, 537 inputs, 274–275 outputs, 278–279 overview, 273–274 tools and techniques, 274–278

Develop Schedule process, 141, 434–435, 537 inputs, 175–176 outputs, 181–184 overview, 172–174 tools and techniques, 176–180

Diagramming techniques, 325–326, 537 Dictatorship, 115, 537 Direct and Manage Project Work process, 63, 445–446, 538

inputs, 82–83 outputs, 84–86 overview, 79–81 tools and techniques, 83–84

Discounted cash flow, 195, 198 Discrete effort, 538 Discretionary dependencies, 158, 538 Diversity. See Cultural diversity Document(s). See also Project documents

analysis of, 117, 538 archival of, 460 management, hard-copy, 300 phase closure, 104

Documentation. See also Requirements documentation lessons learned, 254, 303, 389, 409, 415 reviews, 324, 538 seller performance evaluation, 382 technical, 348 written, 386

DOE. See Design of experiments DU or DUR. See Duration Duration (DU or DUR), 538. See also Most likely duration;

Optimistic duration; Pessimistic duration Duration estimates. See Activity duration estimates;

Estimate Activity Durations process

E EAC. See Estimate at completion EAC forecasts, 220–221 Early Finish date (EF), 538 Early Start date (ES), 538 Earned value (EV), 132, 218, 219, 538

analysis, 224, 351 Earned value management (EVM), 92, 149, 189

cost management plan and, 199

Licensed To: Jorge Diego Fuentes Sanchez PMI MemberID: 2399412 This copy is a PMI Member benefit, not for distribution, sale, or reproduction.

I N D E X

definition, 538 reports, 96 work packages, control accounts and, 217–219

Earned value performance, 223 EF. See Early Finish date Effort, 538 Emotional intelligence, 538 Employees. See also Human resource management plan;

Staffing management plan morale of, 266, 274 motivation of, 273, 447 virtual teams and, 271

EMV. See Expected Monetary Value (EMV) analysis Encoding/decoding of messages, 293–294 Enterprise environmental factors, 29, 127, 539

examples of, 146, 151, 155, 169, 197, 203–204, 234 as input, 70, 74–75, 82, 90, 98, 108, 163, 176, 259, 269, 291, 299, 324, 330, 335, 362, 395, 401 updates, 279, 285

Environmental consideration, 9 ES. See Early Start date Escalation procedures, 259 Estimate, 376, 539. See also Analogous estimating; Basis of

estimates; Independent estimates; Parametric estimating; Three-point estimate

Estimate Activity Durations process, 141, 433–434, 539 inputs, 167–169 outputs, 172 overview, 165–167 tools and techniques, 169–171

Estimate Activity Resources process, 141, 433, 539 inputs, 162–163 outputs, 165 overview, 160–162 tools and techniques, 164

Estimate at completion (EAC), 89, 199, 220–221, 539 Estimate Costs process, 193, 436, 539

inputs, 202–204 outputs, 207–208 overview, 200–202 tools and techniques, 204–207

Estimate to complete (ETC), 89, 219–220, 539 ETC. See Estimate to complete EV. See Earned value

EVM. See Earned value management Execute, 539 Executing Process Group, 418, 444–445

definition, 539 overview, 56 processes in, 61

Expected Monetary Value (EMV) analysis, 339, 539 Expert judgment, 76, 91, 98–99, 109, 122, 128, 147, 152,

164, 169, 198, 204, 211, 263, 306–307, 315, 327, 333, 341, 346, 365, 376, 397–398, 401–402, 412, 539

External dependencies, 158, 540

F Facilitated workshops, 114, 123, 540 Facilitation techniques, 71, 76 Failure costs, 235 Failure mode and effect analysis (FMEA), 92, 540 Fallback plan, 343, 348, 540 Fast tracking techniques, 43, 147, 158, 181, 190, 540 Fault tree analysis (FTA), 92 Fee, 540 Feeding buffers, 178 FF. See Finish-to-finish FFP. See Firm-fixed-price contract Final product, service, or result transition, 103 Finish date, 540 Finish-to-finish (FF), 154, 156, 540 Finish-to-start (FS), 154, 156, 540 Firm Fixed Price contract (FFP), 363, 540 Fishbone diagram, 236, 325. See also Cause-and-effect

diagram Fixed formula method, 540 Fixed-price contracts, 362–363, 540 Fixed Price Incentive Fee contract (FPIF), 363, 541 Fixed Price with Economic Price Adjustment contracts (FP-EPA),

363, 541 Float. See Free float; Total float Flowcharts, 236, 541 FMEA. See Failure mode and effect analysis Focus groups, 114, 278, 402, 412, 541 Force field analysis, 240 Forecast(s)

cost, 89, 225

Licensed To: Jorge Diego Fuentes Sanchez PMI MemberID: 2399412 This copy is a PMI Member benefit, not for distribution, sale, or reproduction.

I N D E X

definition, 541 schedule, 89, 561

Forecasting methods, 92, 220–221 Forming, storming, norming, performing, adjourning, 276 FP-EPA

See Fixed Price with Economic Price Adjustment contract FPIF. See Fixed Price Incentive Fee contract FPP. See Firm Fixed Price contracts Fragment network. See Subnetwork Framework for standard, 418–419 Free float, 177, 541 FS. See Finish-to-start FTA. See Fault tree analysis Fully plan-driven life cycles. See Predictive life cycle Functional manager, 33, 541 Functional organization, 22, 541 Function points, 250 Funding limit reconciliation, 212, 542 Funding requirements, 214

G Gantt chart, 182, 542 Globalization/global environment

cultural diversity and, 274 cultural influences and, 21 international factors, 272

Governance. See also Project governance organizational, 13 project, 34–35, 553

Government jurisdictions, 376. See also Regulatory bodies Government regulations, 68, 267 Grade of products/services, 228, 542 Graphical analysis techniques, 223 Ground rules, project team, 277, 542 Group creativity techniques, 115, 542 Group decision-making techniques, 115–116, 135, 171, 207, 542 Grouping methods, 91

Guideline, 542

H Hammock activity, 182. See also Summary activity Hard logic, 157. See also Mandatory dependency

Hierarchical-type organization charts, 261 High-level plan, 45, 316 High-level project/product description, 72, 108, 121, 314 High-level requirements, 55, 71, 117, 314, 425 High-level vision, 45, 121 High-performance teams, 278 Histograms, 238, 265–266, 340, 542 Historical information, 104, 542 Historical relationships, 212 Human resource management plan, 264–267, 542

as input, 202, 269, 274, 281, 322 roles and responsibilities, 264 updates, 347

Human resource requirements See Staffing management plan

I ID. See Activity identifier Idea/mind mapping, 115, 542 Identified risks, list of, 327 Identify Risks process, 309, 440, 542

inputs, 320–324 outputs, 327 overview, 319–321 tools and techniques, 324–327

Identify Stakeholders process, 391, 426, 543 inputs, 394–395 outputs, 398 overview, 394–395 tools and techniques, 395–398

IFB. See Invitation for bid Imposed date, 543 Incentive fee, 543 Incremental life cycle, 543 Independent estimates, 376, 543 Indirect costs, 202, 207, 218, 365 Inflation allowance, 202, 207 Influence diagram, 325–326, 543 Influence/impact grid, stakeholder analysis, 396 Influencing skills, 284 Information. See also Documentation; Project information

confidentiality/sensitivity of, 293 and report flow, 59

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I N D E X

urgency of need for, 292 Information gathering techniques, 324–325, 543 Information management systems, 300, 306, 412, 543

See also Project management information system Information storage and retrieval

See Corporate knowledge base Initiating Process Group, 418, 543

overview, 54–55, 424–425 processes in, 61 project boundaries and, 54

Input, 543. See also specific process Inspection(s), 135

audits and, 383, 543 description of, 252

Integrated change control See Perform Integrated Change Control process

Interactive communication, 295 Internal dependencies, 158 International Organization for Standardization

(ISO), 228, 418 Interpersonal skills, 17–18, 283–284, 407

communication skills, 288 decision making, 284 definition, 544 influencing, 284 leadership, 284 as “soft skills,” 275

Interrelationship diagraphs, 245, 544 Interviews, 114, 325, 336, 544 Invitation for bid (IFB), 368, 544 IPECC, 231 Ishikawa diagrams, 236, 325 ISO. See International Organization for Standardization Issue, 310, 544 Issue log, 544

as input, 281, 305, 411 as output, 408, 414

Iterative and incremental life cycles, 45–46

Iterative life cycle, 121, 544

J JAD

See Joint Application Development (or Design) (JAD)sessions

Joint Application Development (or Design) (JAD) sessions, 114 Joint venture, 19, 37, 347

Judgment. See Expert judgment

K Key performance indicators (KPIs), 84 Knowledge Areas

mapping of, 422–423 Process Groups and, 61 Project Communications Management, 289–290, 553 Project Cost Management, 192–195, 553 Project Human Resource Management, 255–257, 554 Project Integration Management, 63–65, 554 Project Procurement Management, 355–358, 555 Project Quality Management, 227, 555 Project Risk Management, 309–312, 555 Project Scope Management, 105, 555 Project Time Management, 142, 556 role of, 60

Knowledge base, lessons learned, 151, 544 KPIs. See Key performance indicators

L Lag(s), 180

adjusting, 190, 527 applying, 528 definition, 159, 544 example of, 158

Late finish date (LF), 544 Late start date (LS), 544 Leadership skills, 284 Lead(s), 180

adjusting, 190, 527 applying, 528 definition, 544 example of, 158

Lean Six Sigma, 229 Legal requirements, 9, 31

contractual obligations, 203, 361, 380, 387 Lessons learned, 259

definition, 544 documentation, 254, 303, 389, 409, 415

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I N D E X

knowledge base, 151, 544 Leveling. See Resource leveling Level of accuracy, 148, 199 Level of effort (LOE), 153, 545 Level of precision, 199 LF. See Late finish date Life cycle. See Incremental life cycle; Iterative life cycle;

Predictive life cycle; Product life cycle; Project life cycle LOE. See Level of effort Log, 545. See also Issue log Logical relationship, 154, 159, 545

assignment/project1.docx

Domain Redesign

Description

The project is meant to change the domain from thereliablediamonds.com to the bestjewleries.com, a change from a FTP website to a word press website and the change of the entire homepage content (Biner, 2013).

Purpose

The purpose is to update the website in such a way that it will be able to conform to the new technological aspects. The main purpose is to enhance the ability to handle more traffic, bug fixes and be more users friendly.

Value (benefits)

An easier user interface will have been developed, and more time will be saved navigating the site as compared to the use of the complex interface, with too much information. The modified domain will facilitate and accommodate diverse groups of people interested in using it.

Who it will influence

Stakeholders include the business owner Donald Seward.

How much you guess it will cost (labor and materials).

The entire project will cost approximately $20000. This includes labor and all materials.

Why this project might be important for your organization

This project might be of help to an organization which experiences problems in the website and other common channels (Harold, 2009). Considering the already boosted bug fixing aspects, organization processes will be more secure. Operational effectiveness will be realized and to a large extent, most of the operations in the entity will run faster. Delays and total failure will be completely countered, considering the incorporated systems, good user interface and specifically important requirements.

References

Harold, R. (2009). Project Management: A Systems Approach. London: Rutledge publishers

Bitner, M. (2013). Technology Infusion in Service Encounters. Arizona: Arizona state university.

assignment/project1msproject.mpp

assignment/project2.docx

According to Denning (2013), Boeing has made some mistakes that caused them to fail to deliver improvements to the efficiency of materials and technology on their commercial airplanes. Introducing new technologies produce their own new set of risks, and Boeing has seen their share of fallouts from this. Time and time again Boeing has failed to recognize the risks of introducing new technologies and strategizing ways to assess and mitigate the risks. Coordinating the outsourcing of experienced workers and suppliers for components for the new technologies can be a challenge to avoid affecting the cost, scheduling, quality or safety of everyone involved. However, controlling the risks involved with outsourcing the development of new technology, and the integration on to the aircraft, Boeing will need a system that will help manage and control the risks involved.

This project is to develop a risk management plan to eliminate or mitigate the effects of production risks that can arise from integrating new technology to the development of new aircrafts. The Boeing aircraft company understands that new technology will appease customers, but the risks involved with new technologies can cause financial pressure and strain on relationships with suppliers over the life of the project. The relationship among these risks favor the use of a risk management matrix and continued risk assessment (Kerzner, 2014).

The intended outcome of this project is to develop a risk management matrix that will detail the activities of designing and integrating new technologies and include strategies that will help assess the risks and develop plans to address them. The risk management matrix will assist the production of new technology that Boeing is intending to launch by identifying existing and potential risks, and strategizing ways in which the risks can be eliminated or mitigated.

This project will influence the way in which the manufacturing and maintenance facilities identify and respond to risks on projects to integrate new technologies on to commercial airplanes. This will also influence the market of passengers the commercial airline attracts. If passengers feel safer about the new comforts the company can provide them, the more confident they will feel about traveling on the Boeing commercial airplanes and the company will improve its competitive edge.

The project is estimated to cost around $41,690.37.

Project Significance

The project to develop a commercial airplane technology risk plan is important for the Boeing commercial airline division is important for the organization in that it will provide the organization with the capability to successfully identify and respond to potential risks before a new technology is place in production on commercial airplanes. The risk management plan will enable the company to perform risk assessments during various points of production of new technologies to determine the level of risk involved. Integrating the risk management plan will improve the process in which the company evaluates new technologies on their commercial airplanes.

Any delays in developing the risk management plan will result in postponing the integration of new technologies on commercial airplanes. This will also result the company in potentially losing their competitive edge against other competitors, and lose revenue in sales because the company cannot deliver what their stakeholders are expecting.

The failure of the commercial airplane technology risk plan will result in failure to identify and resolve risks from integrating new technologies on commercial airplanes. The safety of the passengers on the commercial airplanes are top priority, and not carefully analyzing the risk of new technologies can potentially put the lives of the passengers at risk. Also, if the risk plan is not established then the organization may feel that new technologies cannot be introduced onto their commercial airplanes because there is no process in place to identify risks and come up with responses to those risks.

assignment/project2.mpp

assignment/project3.docx

REALITY PROJECT – Due 9/18/2016

Description- The idea is to create a gun safe that not only is made of recycled, hardened plastics instead of steel, but also designed in a new way to be more accessible from the bedside with less noticeable movement. After design, details on manufacturing the needed resources into the product will be determined and sales goals will be decided to begin marketing of product.

Purpose- Protection. There is a lack of close contact gun safes in the market. With this product that is attached to the bedside the consumer can rest easy to know they are safe with their weapon by their side if ever needed.

Value (benefits) –Safety. Current situation is a consumer needs to go to their gun safe buried in the nightstand, behind their bed, or even worse, in a different room. With this product the consumer will be benefited by the proximity of their gun safe for quick access when needed.

Who it will influence – All consumers who want to rest easy knowing they are safe in case of an intrusion.

Cost (labor and materials) - $1.2 million to start. Cost of resources, cost of manufacturing equipment and molds, payment of employees.

Implications of success, delays, and total failure? – Success is implicated by increased sales and increased manufacturing efficiency with reduced costs. Delays by lack of employee base (sickness, vacation days, time off which reduces employee output) and total failure being a lack of market desire for the product which would lead to zero sales and no cash flow, bankruptcy.

assignment/project3.xlsx

Sheet1

Gun Safe Reality Project				18-Sep-16
Labor Services	Tasks	Pay Per Hr	Weekly	Monthly	Annual
CEO	Oversight of company, continuity of vision, employee assistance, meets with PM, Design, HR, Warehouse manager, and accountant for status updates, sets goal and plans	$40	1600	6400	76800	* all amounts pre tax, pre vacation time, pre sick days
Project Manager/Buyer	Project oversight, supervisor of project direction and successional steps, leads team in project operations, assists with design of process, design, and warehouse operations. Buys resources for manufacturing team.	$25	1000	4000	48000
Design/QC	Leads design in product with continual quality control checks to guarentee product quality and safety for consumers.	$20	800	3200	38400
HR/Payroll	Oversight of employee payroll, responsible for compliance to state mandated rules and regulations for company operations, assist employees with needs, wants, concerns, establishes employee schedules for PT/Hourly employees.	$20	800	3200	38400
Warehouse	Responsible for manual labor of creation of product. Cleanliness of warehouse, quality of procedure to create quality product, safety first, operation of machinery to assist with creation of product.	$12	480	1920	23040
Accountant	Works with company PM and HR employees to get purchase receipts and payroll information to keep updated expenditrues and, also, updated sales and income. Accounts for multiple company accounts that help the financial responsibility of the company.	$30	1200	4800	57600
Sales	Sales of the product, creates goals, plans and future progression of sales growth. Works with CEO and accountant to keep sales information updated and to help clients as much as possible.	$20	800	3200	38400
Tasks	Description	Labor	Time (days)	Resources needed (# of employees)	Hours Utilized
Create vision and business plan	Creation of vision for company (future projection) and business plan to explain the dynamics of the business to investors	CEO	10	1	80
Creation of project process	creation of project process to increase efficiency, reduce slack, reduce bottlenecks and assist with overall flow of process.	PM	5	1	40
Initial Design	Creation of product design through CAD design process.	Design	5	2	80
HR payroll, Regulation	initializes payments of initial payroll for employees based upon pay listed above, establishes regulations and rules for company operation and legality.	HR	5	2	80
Manufaturing	Initial manufacturing of product through PM process and in accordance to vision goals. Highest standard of safety and following all regulations set by HR.	Warehouse	5	5	200
Sales	Initiation of outside sales of product to clients both retail and personal consumer	Sales	5	3	150
Accounting	incoming of all costs and profits, creates Tcharts for assets, liabilities, cash flow, financial profitability, does soft future analysis based upon sales and costs.	Accountant	5	1	40
Reevaluation	Sets new goals based upon initiated success of company, new goals, new vision if necessary.	CEO	5	1	40
Update	Update the process of the manufacturing process to further enhance the	PM	5	1	40
Update	Updates design of product to better assist PM and manufacturing to better assist efficiency, flow, and utilization of resources to cut costs	Design	5	2	80
Reestablishment	Reestablishes rules as needed to increase safety and employee satisfaction	HR	5	2	80
Efficiency	efficiency is increased through better process, better movement of employees to reduce manufactuing time and output.	Warehouse	5	5	200
Reallocation	reallocation of assets to multiple accounts to prepare for new sales and increased demand of product. Reestablishes costs and profits and recreates cash flow, asset, liability charts for CEO	Accountant	5	1	40
				TOTAL TIME (HRS) =	1150
				(Days)	143.75

assignment/Project-Management-Practices-Achieving-Excellence3rd-edition.pdf

PROJECT M A N A G E M E N T

BEST PRACTICES

Achieving Global Excellence

T H I R D E D I T I O N

H A R O L D K E R Z N E R , P H . D .

Cover image: Glass Cubes © iStockphoto/Henvry Cover design: Anne-Michele Abbott

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Kerzner, Harold. Project management best practices : achieving global excellence / Harold Kerzner. - Third edition pages cm Includes bibliographical references and index. ISBN 978-1-118-65701-0 (cloth); ISBN 978-1-118-83553-1 (ebk); ISBN 978-1-118-83560-9 (ebk); ISBN 978-1-118-83567-8 (ebk) 1. Project management–Methodology. 2. Project management–Case studies. I. Title. HD69.P75K4715 2013 658.4'04—dc23 2013034142

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To my wife, Jo Ellyn,

who showed me that excellence can be achieved in

marriage, family, and life as well as at work

Contents

Preface xiii

1 UNDERSTANDING BEST PRACTICES 1

1.0 Introduction 1 1.1 Wärtsilä 2 1.2 Project Management Best Practices: 1945–1960 3 1.3 Project Management Best Practices: 1960–1985 5 1.4 Project Management Best Practices: 1985–2014 8 1.5 An Executive’s View of Project Management 13 1.6 Best Practices Process 17 1.7 Step 1: Definition of a Best Practice 18 1.8 Step 2: Seeking Out Best Practices 22 1.9 Dashboards and Scorecards 33 1.10 Key Performance Indicators 36 1.11 Step 3: Validating the Best Practice 41 1.12 Step 4: Levels of Best Practices 44 1.13 Step 5: Management of Best Practices 46 1.14 Step 6: Revalidating Best Practices 46 1.15 Step 7: What to Do with a Best Practice 47 1.16 Step 8: Communicating Best Practices across the Company 48 1.17 Step 9: Ensuring Usage of the Best Practices 51 1.18 Common Beliefs 51 1.19 Best Practices Library 52 1.20 Hewlett-Packard: Best Practices in Action 54 1.21 DTE Energy 57 1.22 A Consultant’s View of Project Management and Best Practices 61

2 FROM BEST PRACTICE TO MIGRAINE HEADACHE 67

2.0 Introduction 67 2.1 Good Intentions Becoming Migraines 67 2.2 Enterprise Project Management Methodology Migraine 69 2.3 Customer Satisfaction Migraine 69 2.4 Migraine Resulting from Responding to Changing Customer

Requirements 70 2.5 Reporting Level of the PMO Migraine 71 2.6 Cash Flow Dilemma Migraine 71 2.7 Scope Change Dilemma Migraine 72 2.8 Outsource or Not Migraine 73 2.9 Determining When to Cancel a Project Migraine 73 2.10 Providing Project Awards Migraine 74 2.11 Migraine from Having the Wrong Culture in Place 75 2.12 Migraines due to Politics 76 2.13 Migraines Caused by the Seven Deadly Sins 83 2.14 Sources of Smaller Migraines 94 2.15 Ten Uglies of Projects 97 References 105

3 JOURNEY TO EXCELLENCE 107

3.0 Introduction 107 3.1 Strategic Planning for Project Management 109 3.2 Hitachi Ltd. 118 3.3 KONE: The Project Management Challenge 130 3.4 The Light at the End of the Tunnel 133 3.5 Goodyear 136 3.6 Managing Assumptions 140 3.7 Managing Assumptions in Conservation Projects—WWF

International 140 3.8 Project Governance 142 3.9 Seven Fallacies That Delay Project Management Maturity 146 3.10 Motorola 148 3.11 Texas Instruments 149 3.12 Hewlett-Packard: Recognizing the Need 152 3.13 Hewlett-Packard: The Journey and the Obstacles 153 3.14 CooperStandard 160 3.15 Naviair: On Time—on Budget 166 3.16 DTE Energy 175 3.17 Key Plastics 176 3.18 ILLUMINAT and the Strategic Business of Project Management 179 3.19 Avalon Power and Light 183 3.20 Roadway Express 184

vi CONTENTS

Contents vii

3.21 Defcon Corporation 185 3.22 Kombs Engineering 187 3.23 Williams Machine Tool Company 188

4 PROJECT MANAGEMENT METHODOLOGIES 191

4.0 Introduction 191 4.1 Excellence Defined 192 4.2 Recognizing the Need for Methodology Development 196 4.3 Enterprise Project Management Methodologies 199 4.4 Benefits of a Standard Methodology 204 4.5 Critical Components 205 4.6 SAP 207 4.7 Cassidian: Integrated Multilevel Schedules 211 4.8 Tecnicas Reunidas 213 4.9 Teradyne: From Myth to Reality 220 4.10 Slalom Consulting: Project Management Functions 224 4.11 Slalom Consulting: Replacing Methodologies with Frameworks 226 4.12 Life-Cycle Phases 228 4.13 Expanding Life-Cycle Phases 230 4.14 Churchill Downs, Incorporated 230 4.15 Indra: The Need for a Methodology 232 4.16 Implementing the Methodology 233 4.17 Implementation Blunders 235 4.18 Overcoming Development and Implementation Barriers 235 4.19 Project Management Tools 236 4.20 Wärtsilä: Recognizing the Need for Supporting Tools 242 4.21 Tech Mahindra Limited: Project Process Monitoring 244 4.22 Tech Mahindra Limited: Customer Delight Index for Projects 247 4.23 General Motors Powertrain Group 251 4.24 Ericsson Telecom AB 252 4.25 Indra: Closing the Project 255 4.26 Repsol: The Repsol E&P GIP© Methodology—The Project Quality

Management Process Applied to Decision Making 258 4.27 Rockwell Automation: Quest for a Common Process 266 4.28 Sherwin-Williams 271 4.29 Medical Mutual 275 4.30 Holcim 278 4.31 Westfield Group 281 4.32 Hewlett-Packard 284 4.33 DTE Energy 286 4.34 ALSTOM 293 4.35 Cassidian: Golden Rules in Project Management 297 4.36 When Traditional Methodologies May Not Work 299

viii CONTENTS

5 INTEGRATED PROCESSES 303

5.0 Introduction 303 5.1 Understanding Integrated Management Processes 304 5.2 Evolution of Complementary Project Management Processes 305 5.3 Zurich America Insurance Company 309 5.4 Total Quality Management 310 5.5 Concurrent Engineering 315 5.6 Risk Management 315 5.7 Wärtsilä: The Need for Proactive Risk Management 318 5.8 ILLUMINAT: Effective Risk Management 321 5.9 Indra: When a Risk Becomes Reality (Issue Management) 325 5.10 The Failure of Risk Management 327 5.11 Defining Maturity Using Risk Management 328 5.12 Boeing Aircraft Company 329 5.13 Change Management 330 5.14 Other Management Processes 331 5.15 Hewlett-Packard 331 5.16 Earned-Value Measurement 333 5.17 DTE Energy 333

6 CULTURE 335

6.0 Introduction 335 6.1 Creation of a Corporate Culture 336 6.2 Corporate Values 338 6.3 Types of Cultures 338 6.4 Corporate Cultures at Work 340 6.5 Indra: Building a Cohesive Culture 343 6.6 maxIT-VCS 346 6.7 DFCU Financial 348 6.8 ILLUMINAT (Trinidad & Tobago) Limited 363 6.9 DTE Energy 365 6.10 Hewlett-Packard 366 6.11 Barriers to Implementing Project Management in Emerging Markets 367

7 MANAGEMENT SUPPORT 375

7.0 Introduction 375 7.1 Visible Support from Senior Managers 375 7.2 Project Sponsorship 376 7.3 Excellence in Project Sponsorship 380 7.4 Hewlett-Packard Sponsorship in Action 381 7.5 Zurich America Insurance Company: Improving Stakeholder

Engagement 382

Contents ix

7.6 Project Governance 383 7.7 Tokio Marine: Excellence in Project Governance 385 7.8 Empowerment of Project Managers 391 7.9 Management Support at Work 392 7.10 Getting Line Management Support 395 7.11 DTE Energy 396 7.12 Initiation Champions and Exit Champions 397

8 TRAINING AND EDUCATION 401

8.0 Introduction 401 8.1 Training for Modern Project Management 401 8.2 Need for Business Education 403 8.3 SAP: Importance of a Project Management Career Path 404 8.4 International Institute for Learning 406 8.5 Identifying the Need for Training 410 8.6 Selecting Students 411 8.7 Fundamentals of Project Management Education 411 8.8 Some Changes in Project Management Education 412 8.9 Designing Courses and Conducting Training 414 8.10 Measuring the Return on Investment on Education 416 8.11 Project Management Is Now a Profession 416 8.12 Competency Models 419 8.13 Harris Corporation 429 8.14 Alcatel-Lucent: Recognizing the Value of a PMP 434 8.15 Integrated Project Management at Tech Mahindra Limited 436 8.16 Hewlett-Packard 439

9 INFORMAL PROJECT MANAGEMENT 441

9.0 Introduction 441 9.1 Informal versus Formal Project Management 441 9.2 Trust 444 9.3 Communication 445 9.4 Cooperation 447 9.5 Teamwork 447 9.6 Color-Coded Status Reporting 448 9.7 Crisis Dashboards 449 9.8 Informal Project Management at Work 452

10 BEHAVIORAL EXCELLENCE 455

10.0 Introduction 455 10.1 Situational Leadership 455

x CONTENTS

10.2 Conflict Resolution 458 10.3 Staffing for Excellence 460 10.4 Virtual Project Teams 462 10.5 Rewarding Project Teams 464 10.6 Keys to Behavioral Excellence 467 10.7 Proactive versus Reactive Management 470

11 MEASURING RETURN ON INVESTMENT ON PROJECT MANAGEMENT TRAINING DOLLARS 475

11.0 Introduction 475 11.1 Project Management Benefits 476 11.2 Growth of ROI Modeling 477 11.3 The ROI Model 478 11.4 Planning Life-Cycle Phase 479 11.5 Data Collection Life-Cycle Phase 480 11.6 Data Analysis Life-Cycle Phase 483 11.7 Reporting Life-Cycle Phase 487 11.8 Conclusions 487

12 THE PROJECT OFFICE 489

12.0 Introduction 489 12.1 Boeing 492 12.2 Philips Healthcare Software Customer Services 493 12.3 maxIT-VCS 500 12.4 Aviva 502 12.5 Churchill Downs Incorporated (CDI):

Establishing a PMO 517 12.6 Churchill Downs Incorporated (CDI): Managing

Scope Changes 518 12.7 Types of Project Offices 522 12.8 Dell Inc. 523 12.9 Computer Sciences Corporation (CSC) 532 12.10 Slalom Consulting: Understanding the

Nature of a PMO 538 12.11 DTE Energy 546 12.12 Chubb 547 12.13 Hewlett-Packard 548 12.14 Star Alliance 550 12.15 Project Audits and the PMO 552 12.16 Project Health Checks 555 12.17 PMO of the Year Award 557

Contents xi

13 SIX SIGMA AND THE PROJECT MANAGEMENT OFFICE 565

13.0 Introduction 565 13.1 Project Management—Six Sigma Relationship 565 13.2 Involving the PMO 568 13.3 Traditional versus Nontraditional Six Sigma 568 13.4 Understanding Six Sigma 571 13.5 Six Sigma Myths 573 13.6 Use of Assessments 575 13.7 Project Selection 577 13.8 Typical PMO Six Sigma Projects 579

14 PROJECT PORTFOLIO MANAGEMENT 581

14.0 Introduction 581 14.1 Why Use Portfolio Management? 582 14.2 Involvement of Senior Management, Stakeholders,

and the PMO 583 14.3 Project Selection Obstacles 588 14.4 Identification of Projects 588 14.5 Preliminary Evaluation 592 14.6 Strategic Selection of Projects 593 14.7 Strategic Timing 596 14.8 Analyzing the Portfolio 596 14.9 Problems with Meeting Expectations 599 14.10 Portfolio Management at Rockwell Automation 601 14.11 World Wildlife Fund (WWF) 602

15 GLOBAL PROJECT MANAGEMENT EXCELLENCE 607

15.0 Introduction 607 15.1 IBM 608 15.2 Computer Associates Technologies (CA): Successful

Project Delivery and Management 634 15.3 Microsoft Corporation 647 15.4 Deloitte: Enterprise Program Management 659 15.5 COMAU 680 15.6 Fluor Corporation: Knowledge Management

for Project Execution 692 15.7 Siemens PLM Software: Developing a Global Project Management

Methodology 705

xii CONTENTS

16 VALUE-DRIVEN PROJECT MANAGEMENT 713

16.0 Introduction 713 16.1 Value over the Years 714 16.2 Values and Leadership 717

17 EFFECT OF MERGERS AND ACQUISITIONS ON PROJECT MANAGEMENT 731

17.0 Introduction 731 17.1 Planning for Growth 731 17.2 Project Management Value-Added Chain 732 17.3 Preacquisition Decision Making 735 17.4 Landlords and Tenants 740 17.5 Best Practices: Case Study on Johnson Controls, Inc. 741 17.6 Integration Results 745 17.7 Value Chain Strategies 747 17.8 Failure and Restructuring 749

INDEX 751

xiii

Preface

For almost 50 years, project management was viewed as a process that might be nice to have but not one that was necessary for the survival of the fi rm. Companies reluctantly invested in some training courses simply to provide their personnel with basic knowledge of planning and scheduling. Project management was viewed as a threat to established lines of authority, and in many companies only partial project management was used. This half-hearted implementation occurred simply to placate lower- and middle-level personnel as well as selected customers.

During this 50-year period, we did everything possible to prevent excellence in proj- ect management from occurring. We provided only lip service to empowerment, team- work, and trust. We hoarded information because the control of information was viewed as power. We placed personal and functional interests ahead of the best interest of the company in the hierarchy of priorities, and we maintained the faulty belief that time was a luxury rather than a constraint.

By the mid-1990s, this mentality began to subside, largely due to two recessions. Companies were under severe competitive pressure to create high-quality products in a shorter period of time. The importance of developing a long-term trusting relationship with the customers had come to the forefront. Businesses were being forced by the stakeholders to change for the better. The survival of the fi rm was now at stake.

Today, businesses have changed for the better. Trust between the customer and con- tractor is at an all-time high. New products are being developed at a faster rate than ever before. Project management has become a competitive weapon during competitive bid- ding. Some companies are receiving sole-source contracts because of the faith that the cus- tomer has in the contractor ’s ability to deliver a continuous stream of successful projects using a project management methodology. All of these factors have allowed a multitude of companies to achieve some degree of excellence in project management. Business deci- sions are now being emphasized ahead of personal decisions.

Words that were commonplace ten years ago have taken on new meanings today. Change is no longer being viewed as being entirely bad. Today, change implies continu- ous improvement. Confl icts are no longer seen as detrimental. Confl icts managed well can

xiv PREFACE

be benefi cial. Project management is no longer viewed as a system entirely internal to the organization. It is now a competitive weapon that brings higher levels of quality and increased value-added opportunities for the customer.

Companies that were considered excellent in management in the past may no longer be regarded as excellent today, especially with regard to project management. Consider the book entitled In Search of Excellence , written by Tom Peters and Robert Waterman in 1982 (published by Harper & Row, New York). How many of those companies identifi ed in their book are still considered excellent today? How many of those companies have won the prestigious Malcolm Baldrige Award? How many of those companies that have won the award are excellent in project management today? Excellence in project management is a never-ending journey. Companies that are reluctant to invest in continuous improvements in project management soon fi nd themselves with low customer satisfaction ratings.

The differentiation between the fi rst fi fty years of project management and the last ten years is in the implementation of project management on a company-wide basis. For more than three decades, we emphasized the quantitative and behavioral tools of project man- agement. Basic knowledge and primary skills were emphasized, and education on project management was provided only to a relatively small group of people. However, within the past ten years, emphasis has been on implementation across the entire company. What was now strategically important was how to put thirty years of basic project management theory in the hands of a few into corporate-wide practice. Today it is the implementa- tion of companywide project management applications that constitutes advanced project management. Subjects such as earned-value analysis, situational leadership, and cost and change control are part of basic project management courses today, whereas fi fteen years ago they were considered advanced topics in project management. So, what constitutes applied project management today? Topics related to project management implementation, enterprise project management methodologies, project management offi ces, and working with stakeholders are advanced project management concepts.

This book covers the advanced project management topics necessary for implementa- tion of and excellence in project management. The book contains numerous quotes from people in the fi eld who have benchmarked best practices in project management and are currently implementing these processes within their own fi rms. Quotes in this book were provided by several CEOs, presidents, COOs, CIOs, CFOs, senior VPs, VPs, global VPs, general managers, PMO directors, and others. The quotes are invaluable because they show the thought process of these leaders and the direction in which their fi rms are heading. These companies have obtained some degree of excellence in project management, and what is truly remarkable is the fact that this happened in less than fi ve or six years. Best practices in implementation will be the future of project management well into the twenty- fi rst century. Companies have created best practices libraries for project management. Many of the libraries are used during competitive bidding for differentiation from other competitors. Best practices in project management are now viewed as intellectual property.

Excellence in project management is not achieved simply by developing a project management methodology. Instead, it is how the methodology is used again and again that creates excellence and a stream of successfully managed projects.

Project management practices and methodologies are built around the culture of com- panies and by determining what it takes to get people to work together, solve problems, and make decisions. Because each company most likely has its own unique culture, it is

Preface xv

understandable that each company can have a different number of lifecycle phases, differ- ent decision points, and different success criteria. No single approach fi ts all companies, which is why this book discusses a variety of companies, in different industries, of differ- ent sizes, and on different continents. Hopefully, after reading this book, you will come up with ideas as to how your project management activities can improve.

Companies that are discussed in this book include:

3M Indra ABB Johnson Controls Alcatel-Lucent Key Plastics ALSTOM Kodak American Greetings KONE AT&T maxIT-VCS Aviva MCI Babcock & Wilcox Medical Mutual Bendix Microsoft Boeing Minnesota Power & Light Cassidian Motorola Chrysler NASA Chubb Neal and Massy Holdings, Ltd. Churchill Downs Nortel Comau NXP Computer Associates Ohio Bell Cooper Standard Orange Switzerland CSC Our Lady of Lourdes Regional Medical Ctr. Dell Philips Deloitte Repsol Department of Defense Roadway Express DFCU Financial Rockwell Automation Dow Chemical SAP DTE Energy Sherwin Williams EDS Siemens Eli Lilly SigmaPM Enakta Slalom Ericsson Star Alliance Fluor Tech Mahindra Limited Ford Tecnicas Reunidas General Motors Teradyne Goodyear Thiokol Harris Tokio Marine Hewlett-Packard Visteon Hitachi Wärtsilä Holcim Westfi eld Group IBM World Wildlife Fund ILLUMINAT Zurich North America

xvi PREFACE

Seminars and webinar courses on project management principles and best practices in project management are available using this text and my text Project Management: A Systems Approach to Planning, Scheduling, and Controlling , 11th edition (Wiley, Hoboken, New Jersey, 2013). Seminars on advanced project management are also avail- able using this text. Information on these courses, e-learning courses, and in-house and public seminars can be obtained by contacting:

Lori Milhaven, Executive Vice President, IIL:

Phone: 800-325-1533 or 212-515-5121 Fax: 212-755-0777 E-mail: [email protected]

Harold Kerzner International Institute for Learning, Inc.

2014

mailto:[email protected]

1 Understanding Best Practices

1.0 INTRODUCTION

Project management has evolved from a set of processes that were once considered “nice” to have to a structured methodology that is considered mandatory for the survival of the fi rm. Companies are now realizing that their entire business, including most of the routine activities, can be regarded as a series of projects. Simply stated, we are managing our business by projects.

Project management is now regarded as both a project management process and a business process. Therefore, project managers are expected to make business decisions as well as project decisions. The necessity for achieving project management excellence is now readily apparent to almost all businesses.

As the relative importance of project management permeates each facet of the business, knowledge is captured on best practices in project management. Some companies view this knowledge as intellectual property to be closely guarded in the vaults of the company. Others share this knowledge in hope of dis- covering other best practices. Companies are now performing strategic planning for project management because of the benefi ts and its contribution to sustainable business value.

One of the benefi ts of performing strategic planning for project management is that it usually identifi es the need for capturing and retaining best practices. Unfortunately, this is easier said than done. One of the reasons for this diffi culty, as will be seen later in the chapter, is that companies today are not in agreement on the defi nition of a best practice, nor do they understand that best practices lead to continuous improve- ment, which in turn leads to the capturing of more best practices. Many companies also do not recognize the value and benefi ts that can come from best practices.

2 UNDERSTANDING BEST PRACTICES

Today, project managers are capturing best practices in both project management activities and busi- ness activities. The reason is simple: The best practices are intellectual property that encourages companies to perform at higher levels. Best practices lead to added business value, greater benefi t realization, and better benefi ts management activities. Project management and business thinking are no longer separate activities.

1.1 WÄRTSILÄ 1

Wärtsilä has a strong tradition in project-based businesses and project management practices. As such, a corporate-wide project management offi ce was established in 2007 to further strengthen the focus on project

management competence within the group and to develop a project management culture, processes, competences and tools.

Today the project management structures and ways of working have become a fundamental part of Wärtsilä’s business thinking. The business process model has gradu- ally shifted from being a somewhat disordered process to a harmonized model enabling the implementation of unifi ed guidelines, targets and terminology. The company has approached this implementation of project management practices from two different but equally important aspects. Firstly, a project management tool providing, inter alia, more effective resource and schedule planning has been introduced and implemented. Secondly, the organization has been encouraged to participate actively in professional project man- agement training and certifi cation paths.

As the project management processes have become well defi ned and gained maturity, the emphasis has gradually shifted towards benefi ts management in operational development projects. The initiative to improve benefi ts management processes stems from the mission of the Wärtsilä PMO for Operational Development, which is to ensure synergies between Wärtsilä’s business units that would help to enable businesses to transform their strategic ambition into daily operations. This would be achieved by providing management and expertise in terms of change management, business processes and application development.

In traditional project management, projects are often measured in terms of budget, schedule, scope or quality. Benefi ts management as a concept, however, focuses more on the actual value that the projects are able to deliver to the end customer. In other words, the project success is not solely measured in terms of time or money. Quite the opposite, measuring the success of a project comes from the end user: Did this solution ful- fi ll the user ’s needs? As the concept of value is rather vague, it is of the utmost importance that the benefi ts have concrete metrics and measurements. This concerns also so-called “soft”, intangible benefi ts. Although they could not be quantifi ed fi nancially, they have to be measured. Another important aspect in benefi ts planning is to create a valid baseline to compare the results with: instead of comparing only to a BAU (business as usual) situ- ation, the results gained from the benefi t realization measurements should be compared to other alternative scenarios (“Could this have been achieved some other way?”).

Benefi ts Management in

Operational Development

Projects in Wärtsilä

Project Management Best Practices: 1945–1960 3

In operational development projects the output of the project can be, for example, an IT tool made to improve resource planning. The most crucial part of the project, however, is to make the output become a project outcome . This means that the project output (in this case an IT tool) should become a part of the end user ’s way of working. In order to make this happen the benefi t planning must take into consideration two important aspects:

1. What does the end user want and need? 2. What has to change in order to make this happen?

With proper end user expectation management and change management the risk of the project output becoming “just another tool in the toolbox” can be avoided.

The benefi ts management system in a nutshell should consist of the following elements:

● Identifying the driver for the project : Do we really need this investment? Who else is going to benefi t from it?

● Identifying the key benefi ts : What are the benefi ts and when will they occur? What is their proximity (How likely are they to happen?).

● Estimating the benefi ts : defi ning a clear baseline for the measurements allows us to defi ne clear metrics (which apply to the entire portfolio of projects) and pro- vides us with consistency throughout all life cycle phases, from project initiation to benefi t realization. The critical question we must ask is, Do these metrics tolerate changes in the business environment?

● Linking the benefi ts with change : How does the organization have to change in order to enable the benefi t realization? How can we enable this change? Plan the deployment and adjust it to (business) environmental changes (organizational changes, market situation changes etc.)

● Who is accountable for the benefi t? Defi ne a person/organization responsible for the benefi t realization

● Monitoring benefi ts: monitor your performance with the established metrics, improve it if needed towards the defi ned goal and acknowledge risks in a proactive way

● Doing a post-project evaluation: ensure a successful deployment by communi- cating about the project output and honestly promoting it. Imagine yourself in the end user ’s position: Would I like to use this tool?

● Learning from your mistakes: ensure that project success points and failures are equally handled. Focus on honest communication and learning, not blaming. Examples should come all the way from the executive level.

1.2 PROJECT MANAGEMENT BEST PRACTICES: 1945–1960

During the 1940s, line managers functioned as project managers and used the concept of over-the-fence management to manage projects. Each line manager, wearing the hat of a project manager, would perform the work necessitated by his or her line organization

4 UNDERSTANDING BEST PRACTICES

and, when that was completed, would throw the “ball” over the fence in hope that some- one would catch it. Once the ball was thrown over the fence, the line managers would wash their hands of any responsibility for the project because the ball was no longer in their yard. If a project failed, blame was placed on whichever line manager had the ball at that time.

The problem with over-the-fence management was that the customer had no single contact point for questions. The fi ltering of information wasted precious time for both the customer and the contractor. Customers who wanted fi rst-hand information had to seek out the manager in possession of the ball. For small projects, this was easy. However, as projects grew in size and complexity, this became more diffi cult.

During this time, very few best practices were identifi ed. If there were best practices, then they would stay within a given functional area never to be shared with the remainder of the company. Suboptimal project management decision making was the norm.

Following World War II, the United States entered into the Cold War. To win a Cold War, one must compete in the arms race and rapidly build weapons of mass destruction. The victor in a Cold War is the one who can retaliate with such force as to obliterate the enemy. Development of weapons of mass destruction comprised very large projects involving potentially thousands of contractors.

The arms race made it clear that the traditional use of over-the-fence management would not be acceptable to the Department of Defense (DoD) for projects such as the B52 bomber, the Minuteman Intercontinental Ballistic Missile, and the Polaris submarine. The government wanted a single point of contact, namely, a project manager who had total accountability through all project phases. In addition, the government wanted the project manager to possess a command of technology rather than just an understanding of technol- ogy, which mandated that the project manager be an engineer preferably with an advanced degree in some branch of technology. The use of project management was then mandated for some of the smaller weapon systems such as jet fi ghters and tanks. The National Aeronautics and Space Administration (NASA) mandated the use of project management for all activities related to the space program.

Projects in the aerospace and defense industries were having cost overruns in excess of 200–300 percent. Blame was erroneously placed upon improper implementation of project management when, in fact, the real problem was the inability to forecast technol- ogy, resulting in numerous scope changes occurring. Forecasting technology is extremely diffi cult for projects that could last 10–20 years.

By the late 1950s and early 1960s, the aerospace and defense industries were using project management on virtually all projects, and they were pressuring their suppliers to use it as well. Project management was growing, but at a relatively slow rate except for aerospace and defense.

Because of the vast number of contractors and subcontractors, the government needed standardization, especially in the planning process and the reporting of information. The government established a life-cycle planning and control model and a cost-monitoring sys- tem and created a group of project management auditors to make sure that the government ’s money was being spent as planned. These practices were to be used on all government pro- grams above a certain dollar value. Private industry viewed these practices as an overman- agement cost and saw no practical value in project management.

Project Management Best Practices: 1960–1985 5

In the early years of project management, because many fi rms saw no practical value in project management, there were misconceptions concerning project management. Some of the misconceptions included:

● Project management is a scheduling tool such as PERT/CPM (program evaluation and review technique/critical-path method) scheduling.

● Project management applies to large projects only. ● Project management is designed for government projects only. ● Project managers must be engineers and preferably with advanced degrees. ● Project managers need a “command of technology” to be successful. ● Project success is measured in technical terms only. (Did it work?)

1.3 PROJECT MANAGEMENT BEST PRACTICES: 1960–1985

During this time period, with a better understanding of project management, the growth of project management had come about more through necessity than through desire, but at a very slow rate. Its slow growth can be attributed mainly to lack of acceptance of the new management techniques necessary for its successful implementation. An inherent fear of the unknown acted as a deterrent for both managers and executives.

Other than aerospace, defense, and construction, the majority of companies in the 1960s maintained an informal method for managing projects. In informal project manage- ment, just as the words imply, the projects were handled on an informal basis whereby the authority of the project manager was minimized. Most projects were handled by func- tional managers and stayed in one or two functional lines, and formal communications were either unnecessary or handled informally because of the good working relationships between line managers. Those individuals that were assigned as project managers soon found that they were functioning more as project leaders or project monitors than as real project managers. Many organizations today, such as low-technology manufacturing, have line managers who have been working side by side for ten or more years. In such situ- ations, informal project management may be effective on capital equipment or facility development projects and project management is not regarded as a profession.

By 1970 and through the early 1980s, more companies departed from informal proj- ect management and restructured to formalize the project management process, mainly because the size and complexity of their activities had grown to a point where they were unmanageable within the current structure.

Not all industries need project management, and executives must determine whether there is an actual need before making a commitment. Several industries with simple tasks, whether in a static or a dynamic environment, do not need project management. Manufacturing industries with slowly changing technology do not need project manage- ment, unless of course they have a requirement for several special projects, such as capital equipment activities, that could interrupt the normal fl ow of work in the routine manu- facturing operations. The slow growth rate and acceptance of project management were related to the fact that the limitations of project management were readily apparent yet

6 UNDERSTANDING BEST PRACTICES

the advantages were not completely recognizable. Project management requires organi- zational restructuring. The question, of course, is “How much restructuring?” Executives have avoided the subject of project management for fear that “revolutionary” changes must be made in the organization.

Project management restructuring has permitted companies to:

● Accomplish tasks that could not be effectively handled by the traditional structure ● Accomplish one-time activities with minimum disruption of routine business

The second item implies that project management is a “temporary” management structure and, therefore, causes minimum organizational disruption. The major problems identifi ed by those managers who endeavored to adapt to the new system all revolved around confl icts in authority and resources.

Another major concern was that project management required upper-level managers to relinquish some of their authority through delegation to middle managers. In several situations, middle managers soon occupied the power positions, even more so than upper- level managers.

Project management became a necessity for many companies as they expanded into multiple product lines, many of which were dissimilar, and organizational complexities grew. This growth can be attributed to:

● Technology increasing at an astounding rate ● More money being invested in research and development (R&D) ● More information being available ● Shortening of project life cycles

To satisfy the requirements imposed by these four factors, management was “forced” into organizational restructuring; the traditional organizational form that had survived for decades was inadequate for integrating activities across functional “empires.”

By 1970, the environment began to change rapidly. Companies in aerospace, defense, and construction pioneered the implementation of project management, and other indus- tries soon followed, some with great reluctance. NASA and the DoD “forced” subcontrac- tors into accepting project management.

Because current organizational structures are unable to accommodate the wide variety of interrelated tasks necessary for successful project completion, the need for project man- agement has become apparent. It is usually fi rst identifi ed by those lower-level and middle managers who fi nd it impossible to control their resources effectively for the diverse activities within their line organization. Quite often middle managers feel the impact of changing environment more than upper-level executives.

Once the need for change is identifi ed, middle management must convince upper-level management that such a change is actually warranted. If top-level executives cannot rec- ognize the problems with resource control, then project management will not be adopted, at least formally. Informal acceptance, however, is another story.

As project management developed, some essential factors in its successful imple- mentation were recognized. The major factor was the role of the project manager, which

Project Management Best Practices: 1960–1985 7

became the focal point for integrative responsibility. The need for integrative responsibility was fi rst identifi ed in complex R&D projects.

The R&D technology has broken down the boundaries that used to exist between industries. Once-stable markets and distribution channels are now in a state of fl ux. The industrial environment is turbulent and increasingly hard to predict. Many complex facts about markets, production methods, costs, and scientifi c potentials are related to invest- ment decisions in R&D.

All of these factors have combined to produce a king-sized managerial headache. There are just too many crucial decisions to have them all processed and resolved at the top of the organization through regular line hierarchy. They must be integrated in some other way.

Providing the project manager with integrative responsibility resulted in:

● Total project accountability being assumed by a single person ● Project rather than functional dedication ● A requirement for coordination across functional interfaces ● Proper utilization of integrated planning and control

Without project management, these four elements have to be accomplished by execu- tives, and it is questionable whether these activities should be part of an executive ’s job description. An executive in a Fortune 500 corporation stated that he was spending 70 hours each week working as both an executive and a project manager, and he did not feel that he was performing either job to the best of his abilities. During a presentation to the staff, the executive stated what he expected of the organization after project management implementation:

● Push decision making down in the organization. ● Eliminate the need for committee solutions. ● Trust the decisions of peers.

Those executives who chose to accept project management soon found the advantages of the new technique:

● Easy adaptation to an ever-changing environment ● Ability to handle a multidisciplinary activity within a specifi ed period of time ● Horizontal as well as vertical work fl ow ● Better orientation toward customer problems ● Easier identifi cation of activity responsibilities ● A multidisciplinary decision-making process ● Innovation in organizational design

As project management evolved, best practices became important. Best practices were learned from both successes and failures. In the early years of project management, private industry focused on learning best practices from successes. The government, how- ever, focused on learning about best practices from failures. When the government fi nally focused on learning from successes, the knowledge of best practices came from their

8 UNDERSTANDING BEST PRACTICES

relationships with both their prime contractors and the subcontractors. Some of these best practices that came out of the government included:

● Use of life-cycle phases ● Standardization and consistency ● Use of templates [e.g., for statement of work (SOW), work breakdown structure

(WBS), and risk management] ● Providing military personnel in project management positions with extended tours

of duty at the same location ● Use of integrated project teams (IPTs) ● Control of contractor-generated scope changes ● Use of earned value measurement

1.4 PROJECT MANAGEMENT BEST PRACTICES: 1985–2014

By the 1990s, companies had begun to realize that implementing project management was a necessity, not a choice. By 2014, project management had spread to virtually every industry and best practices were being captured. In the author ’s opinion, the appearance of best practices from an industry perspective might be:

● 1960–1985: Aerospace, defense, and construction ● 1986–1993: Automotive suppliers ● 1994–1999: Telecommunications ● 2000–2003: Information technology ● 2004–2006: Health care ● 2007–2008: Marketing and sales ● 2009–Present: Government agencies

The question now was not how to implement project management, but how fast could it be done? How quickly can we become mature in project management? Can we use the best practices to accelerate the implementation of project management?

Table 1–1 shows the typical life-cycle phases that an organization goes through to implement project management. In the fi rst phase, the embryonic phase, the organization recognizes the apparent need for project management. This recognition normally takes place at the lower and middle levels of management, where the project activities actually take place. The executives are then informed of the need and assess the situation.

There are six driving forces that lead executives to recognize the need for project management:

● Capital projects ● Customer expectations ● Competitiveness ● Executive understanding ● New project development ● Effi ciency and effectiveness

Project Management Best Practices: 1985–2014 9

Manufacturing companies are driven to project management because of large capital projects or a multitude of simultaneous projects. Executives soon realize the impact on cash fl ow and that slippages in the schedule could end up idling workers.

Companies that sell products or services, including installation, to their clients must have good project management practices. These companies are usually non–project-driven but function as though they were project-driven. These companies now sell solutions to their customers rather than products. It is almost impossible to sell complete solutions to customers without having superior project management practices because what you are actually selling is your project management expertise.

There are two situations where competitiveness becomes the driving force: internal projects and external (outside customer) projects. Internally, companies get into trouble when they realize that much of the work can be outsourced for less than it would cost to perform the work themselves. Externally, companies get into trouble when they are no longer competitive on price or quality or simply cannot increase their market share.

Executive understanding is the driving force in those organizations that have a rigid traditional structure that performs routine, repetitive activities. These organizations are quite resistant to change unless driven by the executives. This driving force can exist in conjunction with any of the other driving forces.

New product development is the driving force for those organizations that are heavily invested in R&D activities. Given that only a small percentage of R&D projects ever make it into commercialization, where the R&D costs can be recovered, project management becomes a necessity. Project management can also be used as an early-warning system that a project should be canceled.

Effi ciency and effectiveness, as driving forces, can exist in conjunction with any other driving forces. Effi ciency and effectiveness take on paramount importance for small compa- nies experiencing growing pains. Project management can be used to help such companies remain competitive during periods of growth and to assist in determining capacity constraints.

Because of the interrelatedness of these driving forces, some people contend that the only true driving force is survival. This is illustrated in Figure 1–1 . When the company

TABLE 1–1. FIVE PHASES OF THE PROJECT MANAGEMENT LIFE CYCLE

Embryonic Executive Management Acceptance

Line Management Acceptance Growth Maturity

Recognize need Get visible executive support

Get line management support

Recognize use of life- cycle phases

Develop a management cost/schedule control system

Recognize benefi ts Achieve executive understanding of project management

Achieve line management commitment

Develop a project management methodology

Integrate cost and schedule control

Recognize applications

Establish project sponsorship at executive levels

Provide line management education

Make the commitment to planning

Develop an educational program to enhance project management skills

Recognize what must be done

Become willing to change way of doing business

Become willing to release employees for project management training

Minimize creeping scope Select a project tracking system

10 UNDERSTANDING BEST PRACTICES

recognizes that survival of the fi rm is at stake, the implementation of project management becomes easier.

Enrique Sevilla Molina, PMP, formerly corporate PMO director, discusses the driving forces at Indra that necessitated the need for excellence in project management:

The internal forces were based on our own history and business experience. We soon found out that the better the project managers, the better the project results. This realization came together with the need to demonstrate in national and international contracts, with both US and European customers, our real capabilities to handle big projects. These big projects required world class project management, and for us managing the project was a greater challenge than just being able to technically execute the project. Summarizing, these big projects set the pace to defi ne precise procedures on how handling stakeholders, big subcon- tractors and becoming a reliable main point of contact for all issues related with the project.

Sandra Kumorowski discusses the driving forces at Enakta: 2

The company was a project-based company and it made sense to turn to project manage- ment as a tool for continuous improvement. The main issues that also drove the company to use project management were reoccurring time/cost/quality management issues, team productivity issues, and client satisfaction issues. Table 1–2 illustrates the necessity:

The speed by which companies reach some degree of maturity in project manage- ment is most often based upon how important they perceive the driving forces to be. This is illustrated generically in Figure 1–2 . Non–project-driven and hybrid organizations move quickly to maturity if increased internal effi ciencies and effectiveness are needed. Competitiveness is the slowest path because these types of organizations do not recognize that project management affects their competitive position directly. For project-driven organizations, the path is reversed. Competitiveness is the name of the game, and the vehicle used is project management.

SURVIVAL

Efficiency and Effectiveness

New Product Development

Executive Understanding

Capital Projects

Customers’ Expectations

Competitiveness

Figure 1–1. The components of survival. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management, Hoboken, NJ: Wiley, 1998, p. 51.

2. Sandra Kumorowski is an assistant professor of marketing communications at Columbia College, Chicago; marketing & communications chair, Christopher & Dana Reeve Foundation, Chicago; she is also chief business advisor and owner, Enakta LLC; P: 1–224-715-5666; E: [email protected], [email protected]

mailto:[email protected]

Project Management Best Practices: 1985–2014 11

Once the organization perceives the need for project management, it enters the sec- ond life-cycle phase of Table 1–1 , executive acceptance. Project management cannot be implemented rapidly in the near term without executive support. Furthermore, the support must be visible to all.

The third life-cycle phase is line management acceptance. It is highly unlikely that any line manager would actively support the implementation of project management without fi rst recognizing the same support coming from above. Even minimal line management support will still cause project management to struggle.

The fourth life-cycle phase is the growth phase, where the organization becomes com- mitted to the development of the corporate tools for project management. This includes the processes and project management methodology for planning, scheduling, and controlling as well as selection of the appropriate supporting software. Portions of this phase can begin during earlier phases.

The fi fth life-cycle phase is maturity. In this phase, the organization begins using the tools developed in the previous phase. Here, the organization must be totally dedicated

TABLE 1–2. THE NECESSITY FOR PROJECT MANAGEMENT

Why? Benefi ts

We are a project-based company. 1. We know how to deliver projects. 2. PM is a tool for successful delivery of actionable insights.

To build credibility, grow, and compete: We should be perceived as a systematic and organized organization. We have to prevent mistakes.

1. Earned reputation for systematic work

2. Focused business strategy

3. PM could be one of our competitive advantages

To control cost, time, resources: We should establish effective project control system

1. Decreased uncertainty 2. Increased product quality

3. Happy people

4. More effective planning (project and company level)

To learn as an organization and individuals

1. PM concepts as part of our continuous education

2. Learning organization is always ahead of time and its competitors

Fast Slow Speed of Maturity

Non–Project-Driven and Hybrid

Organizations

Project-Driven Organizations

Internal Efficiencies and

Effectiveness

C u st

o m

er E

xp ec

ta ti

o n s

Competitiveness

Figure 1–2. Speed of maturity.

12 UNDERSTANDING BEST PRACTICES

to project management. The organization must develop a reasonable project management curriculum to provide the appropriate training and education in support of the tools as well as the expected organizational behavior.

By the 1990s, companies fi nally began to recognize the benefi ts of project manage- ment. Table 1–3 shows the critical success and critical failure factors that have led to changes in our view of project management. Many of these factors were identifi ed through the discovery and implementation of best practices.

Recognizing that the organization can benefi t from the implementation of project management is just the starting point. The question now becomes, “How long will it take us to achieve these benefi ts?” This can be partially answered from Figure 1–3 . In the beginning of the implementation process, there will be added expenses to develop the proj- ect management methodology and establish the support systems for planning, scheduling, and control. Eventually, the cost will level off and become pegged. The question mark in Figure 1–3 is the point at which the benefi ts equal the cost of implementation. This point can be pushed to the left through training and education.

During the fi rst decade of the twenty-fi rst century, the understanding and acceptance of the benefi ts permeated all levels of senior manage rather than just those executives that interfaced with projects on a daily basis. The following three comments from senior man- agement at American Greetings Corporation illustrate this point:

Through project management, we ’ve learned how to make fact-based decisions. Too often in the past we based our decisions on what we thought could happen or what we hoped would happen. Now we can look at the facts, interpret the facts honestly and make sound decisions and set realistic goals based on this information. (Zev Weiss, CEO, American Greetings) 3

TABLE 1–3. CRITICAL FACTORS IN THE PROJECT MANAGEMENT LIFE CYCLE

Critical Success Factors Critical Failure Factors

Executive Management Acceptance Phase Consider employee recommendations Refuse to consider ideas of associates

Recognize that change is necessary Unwilling to admit that change may be necessary

Understand the executive role in project management Believe that project management control belongs at executive levels

Line Management Acceptance Phase Willing to place company interest before personal interest Reluctant to share information

Willing to accept accountability Refuse to accept accountability

Willing to see associates advance Not willing to see associates advance

Growth Phase Recognize the need for a corporate-wide methodology View a standard methodology as a threat rather than as a benefi t

Support uniform status monitoring/reporting Fail to understand the benefi ts of project management

Recognize the importance of effective planning Provide only lip service to planning

Maturity Phase Recognize that cost and schedule are inseparable Believe that project status can be determined from schedule alone

Track actual costs See no need to track actual costs

Develop project management training Believe that growth and success in project management are the same

3. H. Kerzner, Advanced Project Management: Best Practices on Implementation , Hoboken, NJ: Wiley, 2004, p. 273.

An Executive’s View of Project Management 13

The program management offi ce provides the structure and discipline to complete the work that needs to get done. From launch to completion, each project has a roadmap for meeting the objectives that were set. (Jeff Weiss, President and COO, American Greetings) 4

Through project management, we learned the value of defi ning specifi c projects and empowering teams to make them happen. We ’ve embraced the program management philosophy and now we can use it again and again to reach our goals. (Jim Spira, retired president and COO, American Greetings) 5

When all of the executives are in agreement as to the value and benefi ts of project management, continuous improvements in project management occurs at a rapid pace.

1.5 AN EXECUTIVE ’S VIEW OF PROJECT MANAGEMENT

Today ’s executives have a much better understanding and appreciation for project man- agement than did their predecessors. Early on, project management was seen as simply scheduling a project and then managing the project using network-based software. Today, this parochial view has changed signifi cantly. It is now a necessity for survival.

Although there are several drivers for this, three signifi cant reasons seem to stand out. First, as businesses downsize because of poor economic conditions or stiffening competition, the employees remaining in the company are expected to do more with less. Executives expect the employees to become more effi cient and more effective when carry- ing out their duties. Second, business growth today requires the acceptance of signifi cant risks, specifi cally in the development of new products and services for which there may not be reasonable estimating techniques or standards. Simply stated, we are undertaking

4. Ibid. 5. Ibid.

Time?

Cost of Project Management Additional

Profits from Better Project Management

Pegged

Figure 1–3. Project management costs versus benefits.

14 UNDERSTANDING BEST PRACTICES

more jobs that are neither routine nor predictable. Third, and perhaps most important, is that we believe we are managing our business as though it is a series of projects. Projects now make up a signifi cant part of one ’s jobs. As such, all employees are actually project managers to some degree and are expected to make business as well as project decisions.

The new breed of executive seems to have a much broader view of the value of project management, ranging from the benefi ts of project management, to the selection criteria for project managers, to organizational structures that can make companies more effective. This is apparent from the four comments below, which were provided by Tom Lucas, chief information offi cer for the Sherwin-Williams Company:

● We have all managed projects at one time or another, but few of us are capable of being project managers.

● The difference between managing projects and professional project management is like the difference between getting across the lake in a rowboat versus a racing boat. Both will get you across the lake, but the rowboat is a long and painful process. But how do people know until you give them a ride?

● Don ’t be misguided into thinking professional project management is about process. It is about delivering business results.

● If you don ’t appreciate that implementing a PMO is a cultural transition, you are des- tined to fail.

The comments below from other executives clearly indicate their understanding and appreciation of project management:

Our Customers, which are multinational industrial groups, expect from COMAU Project Managers an international, multicultural and global approach. In the meantime our Shareholder is asking us for high projects governance obtained through a global Project Management effective framework. In 2006 we have adopted a world-class Project Management approach (i.e., PMI) which, together with the implementation of the best practices on the global COMAU footprint, allowed us to demonstrate that both Customers and Shareholder goals can be fulfi lled. I am sure that we are on the right tracks and that this continuous improve- ment strategy has to be pursued in the next years with motivation and perseverance. (Riccardo Tarantini, COMAU CEO, Fiat Group )

At Dell, we are committed to delivering technology solutions that help our customers do and achieve more. A key element in our ability to accomplish this is the combination of best practice standards and fl exible, next generation IT solutions that enable our cus- tomers’ business outcomes. Our best practices require standardized project management across integrated, end-to-end, multiservice solutions in order to provide seamless delivery to our customers. An increasing focus on new practice adoption, coupled with our project management people, processes, and tools, allow us to improve project delivery consistency across Dell. Effective project management is crucial to producing predictable, repeatable, high-quality results for our customers. (Suresh Vaswani, president, Dell Services)

Over the past 15 years, ongoing transformation has become a defi ning characteristic of IBM—and a key factor in our success. Effective change in process and IT transforma- tion doesn ’t just happen, it must be enabled by highly skilled Project Managers. Our Project Managers analyze processes, enabled by IT, in a way that allows us to innovate and eliminate unnecessary steps, simplify and automate. They help us become more effi cient and effective by pulling together the right resources to get things done—on time and on

An Executive’s View of Project Management 15

budget. They are invaluable as we continue to make progress in our transformation journey. (Linda S. Sanford, senior vice president, Enterprise Transformation, IBM Corporation) 6

Project managers are a critical element of our end-to-end development and business execution model. Our goal is to have sound project management practices in place to provide better predictability in support of our products and offerings. As a team, you help us see challenges before they become gating issues and ensure we meet our commitments to STG and clients. . . . We continue to focus on project management as a career path for high-potential employees and we strongly encourage our project managers to become certifi ed, not only PMI, but ultimately IBM certifi ed. . . . End-to-end project management must become ingrained in the fabric of our business. (Rod Adkins, senior vice president of IBM ’s System and Technology Group [STG]) 7

At leading IT software services providers, project management has evolved and matured from a complex process of identifying and meeting a customer ’s unique require- ments to applying a core set of proven, second-generation best practices captured and packaged in standard offerings. The standard offerings deliver repeatable success and accelerated time to value for the customer. They also give the customer and the project manager the ability to take a phased approach to building the customer ’s comprehensive IT management vision. (Dave Yusuf, SVP Global PMO, Computer Associates Services)

Successful project management is mission critical to us from two points of view:

● First, as we defi ne and implement PLM (Product Lifecycle Management) solutions, we help customers to streamline their entire product lifecycle across all functional units. This can make any large PLM project an intricate and even complex undertaking. To live up to our company mantra of “we never let a customer fail”, robust and reliable proj- ect management is often the most critical component we provide aside from the PLM platform itself; the combination of the two enables our customers to achieve the business benefi ts they strive for by investing in PLM.

● Second, Siemens itself is one of our largest customers. This is a great opportunity and, at the same time, a great challenge. Keeping a project ’s objectives and scope under control with our “internal” customer is at least as challenging as with external customers; yet it is critical in order to keep our development roadmaps and deployment schedules on track. Our job is to continue to successfully develop and deploy the fi rst and only true end-to-end industry software platform. This comprehensive platform covers the entire product lifecycle from initial requirements, through product development, manufactur- ing planning, controlling the shop fl oor and even managing the maintenance, repair and overhaul of the product in question. As a result, effective project management is vital to our success. (Dr. Helmuth Ludwig, president, Siemens PLM Software)

Project Management is vital to the success of any organization. Whether projects are focused on customer acquisition, loyalty and insight or driven by the need to increase enterprise effi ciency, excellence in Project Management ensures that tangible, meaning- ful results are achieved on time and on budget. (Brad Jackson, CEO, Slalom Consulting)

Projects and Project Management play a vital role in our business of IT Services. While being a key enabler for delighting customers, Project Management also helps in setting the right expectations of stakeholders and more importantly, maintaining a balance

6. Harold Kerzner, Project Management Best Practices: Achieving Global Excellence , 2nd edition, John Wiley and IIL Co-publishers, 2010, p. 13 7. ibid; p. 13

16 UNDERSTANDING BEST PRACTICES

between their expectations. Effective Project Management becomes a strong competitive advantage or differentiator for our delivery capabilities. Excelling in Project Management has allowed us not only to increase the quality of our services, reduce our time-to-market, decrease rework costs and increase staff motivation, but also to create a more integrated and agile organization. (A. S. Murthy, Former CEO and CTO [chief technology offi cer], Tech Mahindra Limited)

The foundation of our brand as a solutions company is the quality and consistency of our project managers, project management approaches and methodologies. At the same time, it is important to understand that one size does not fi t all, as each project has its own requirements, challenges and personality. High-quality project management goes beyond the fundamentals and focuses on working side by side with the client to weave a solution set that meets their needs and puts them on a path to achieve their goals. (Kimberly Parrish, executive vice president solutions, maxIT-VCS)

In this age of instant communications and rapidly evolving networks, Nortel continues to maximize use of its project management discipline to ensure the successful deployment of increasingly complex projects. We foster an environment that maintains a focus on shar- ing best practices and leveraging lessons learned across the organization, largely driven by our project managers. We are also striving to further integrate project management capabili- ties with supply chain management through the introduction of SAP business management software. Project management remains an integral part of Nortel ’s business and strategy as it moves forward in a more services- and solutions-oriented environment. (Sue Spradley, formerly president, Global Operations, Nortel Networks) 8

The PMO process has been essential to the success of several major IS projects within Our Lady of Lourdes Regional Medical Center. This was especially true of our recent con- version from MedCath IS support to Franciscan Missionaries of our Lady Health System (FMOLHS) IS support at our newest physician joint venture: The Heart Hospital of Lafayette. PMO built trust through transparency, accountability and a framework for real- time project assessment. Without this structure I seriously doubt we could have succeeded in bringing the conversion on time and under budget. (W. F. “Bud” Barrow, president and CEO, Our Lady of Lourdes Regional Medical Center)

In the services industry, how we deliver (i.e., the project management methodology) is as important as what we deliver (i.e., the deliverable). Customers expect to maximize their return on IT investments from our collective knowledge and experience when we deliver best-in-class solutions. The collective knowledge and experience of HP (Hewlett-Packard) Services is easily accessible in HP Global Method. This integrated set of methodologies is a fi rst step in enabling HPS to optimize our effi ciency in delivering value to our custom- ers. The next step is to know what is available and learn how and when to apply it when delivering to your customers. HP Global Method is the fi rst step toward a set of best-in- class methodologies to increase the credibility as a trusted partner, refl ecting the collective knowledge and expertise of HP Services. This also improves our cost structures by custom- izing predefi ned proven approaches, using existing checklists to ensure all the bases are covered and share experiences and learning to improve Global Method. (Mike Rigodanzo, formerly senior vice president, HP services operations and information technology) 9

In 1996, we began looking at our business from the viewpoint of its core processes. . . . As you might expect, project management made the short list as one of the vital, core

8. H. Kerzner, Best Practices in Project Management: Achieving Global Excellence , Hoboken, NJ: Wiley, 2006, p. 17 9. Ibid., p. 67.

Best Practices Process 17

processes to which quality principles needed to be applied. (Martin O ’Sullivan, retired vice president, Motorola) 10

The disciplines of project management constitute an essential foundation for all initia- tives toward business or indeed human advancement. I can ’t conceive crossing the vision/ reality chasm without them. (Keith Thomas, chairman, ITC [Information Technology & Communications] Business Unit, Neal & Massy Holdings, Ltd.)

The comments by Keith Thomas clearly indicate that today ’s executives recognize that project management is a strategic or core competency needed for survival because it interfaces with perhaps all other business processes, including quality initiatives.

1.6 BEST PRACTICES PROCESS

“Why capture best practices?” The reasons or objectives for capturing best practices might include:

● Continuous improvements (effi ciencies, accuracy of estimates, waste reduction, etc.) ● Enhanced reputation ● Winning new business ● Survival of the fi rm

Survival of the fi rm has become the most important reason today for capturing best practices. In the last few years, customers have put pressure on contractors in requests for proposals (RFPs) by requesting:

● A listing of the number of PMP ® s in the company and how many will be assigned to this project

● A demonstration that the contractor has an enterprise project management method- ology that is acceptable to the customer or else the contractor must use some other methodology approved by the customer

● Supporting documentation identifying the contractor ’s maturity level in project management, possibly using a project management maturity model for assessments

● A willingness to share lessons learned and best practices discovered on this project and perhaps previous projects for other customers

Recognizing the need for capturing best practices is a lot easier than actually doing it. Companies are developing processes for identifying, evaluating, storing, and dissemi- nating information on best practices. There are nine best practices activities as shown in Figure 1–4 , and most companies that recognize the value of capturing best practices accomplish all of these steps.

10. Ibid., p. 184.

18 UNDERSTANDING BEST PRACTICES

The processes answer the following nine questions:

● What is the defi nition of a best practice? ● Who is responsible for identifying the best practice, and where do we look? ● How do we validate that something is a best practice? ● Are there levels or categories of best practices? ● Who is responsible for the administration of the best practice once approved? ● How often do we reevaluate that something is still a best practice? ● How do companies use best practices once they are validated? ● How do large companies make sure that everyone knows about the existence of the

best practices? ● How do we make sure that the employees are using the best practices and using

them properly?

Each of these questions will be addressed in the next several sections.

1.7 STEP 1: DEFINITION OF A BEST PRACTICE

For more than a decade, companies have become fascinated by the expression “best prac- tices.” But now, after two decades or more of use, we are beginning to scrutinize the term, and perhaps better expressions exist.

A best practice begins with an idea that there is a technique, process, method, or activ- ity that can be more effective at delivering an outcome than any other approach and pro- vides us with the desired outcome with fewer problems and unforeseen complications. As

Definition Validation

Implementation

Publication

Utilization

Management

Revalidation

Discovery

Classification

Figure 1–4. Best practices processes.

Step 1: Defi nition of a Best Practice 19

a result, we supposedly end up with the most effi cient and effective way of accomplishing a task based upon a repeatable process that has been proven over time for a large number of people and/or projects.

But once this idea has been proven to be effective, we normally integrate the best practice into our processes so that it becomes a standard way of doing business. Therefore, after acceptance and proven use of the idea, the better expression possibly should be a “proven practice” rather than a best practice. This is just one argument why a “best prac- tice” may be just a buzzword and should be replaced by “proven practice.”

Another argument is that the identifi cation of a best practice may lead some to believe that we were performing some activities incorrectly in the past, and that may not have been the case. This may simply be a more effi cient and effective way of achieving a deliverable. Another issue is that some people believe that best practices imply that there is one and only one way of accomplishing a task. This also may be a faulty interpretation.

Perhaps in the future the expression “best practices” will be replaced by “proven practices.” However, for the remainder of this text, we will refer to the expression as “best practices,” but the reader must understand that other terms may be more appropri- ate. This interpretation is necessary in this book because most of the companies that have contributed to this book still use the expression “best practices.”

As project management evolved, so did the defi nitions of a best practice. Some defi ni- tions of a best practice are highly complex, while others are relatively simplistic. Yet, they both achieve the same purpose of promoting excellence in project management throughout the company. Companies must decide on the amount of depth to go into the best practice. Should it be generic and at a high level or detailed and at a low level? High-level best practices may not achieve the effi ciencies desired, whereas highly detailed best practices may have limited applicability.

Every company can have its own defi nition of a best practice, and there might even be industry standards on the defi nition of a best practice. Typical defi nitions of a best practice might be:

● Something that works ● Something that works well ● Something that works well on a repetitive basis ● Something that leads to a competitive advantage ● Something that can be identifi ed in a proposal to generate business ● Something the differentiates us from our competitors ● Something that keeps the company out of trouble and, if trouble occurs, the best

practice will assist in getting the company out of trouble

Every company has its own defi nition of a best practice. There appear to be four pri- mary reasons for capturing best practices:

● Improve effi ciency ● Improve effectiveness ● Standardization ● Consistency

20 UNDERSTANDING BEST PRACTICES

In each of the following defi nitions, you should be able to identify which of the four, or combination thereof, the company targets:

● At Orange Switzerland, a best practice is defi ned as an experience based, proven, and published way of proceeding to achieve an objective. 11

● We do have best practices that are detailed in our policies/procedures and work- fl ows. These are guidelines and templates as well as processes that we all (mem- bers of the EPMO—enterprise project management offi ce) have agreed to abide by as well as that they are effective and effi cient methods for all parties involved. In addition, when we wrap up (conclude) a project, we conduct a formal lessons learned session (involving the project manager, sponsors, core team, and other par- ties impacted by the project), which is stored in a collective database and reviewed with the entire team. These lessons learned are in effect what create our best prac- tices. We share these with other health care organizations for those vendors for which we are reference sites. All of our templates, policies/procedures, and work- fl ows are accessible by request and, when necessary, we set meetings to review as well as explain them in detail.(Nani Sadowski, formerly manager of the Enterprise Project Management Offi ce at Halifax Community Health Systems). 12

● Any tool, template or activity used by a project manager that has had a positive impact on the PMBOK ® Guide knowledge and/or process areas and/or the triple constraint. An example of a best practice would be: Performing customer sat- isfaction assessments during each phase of a project allows adjustments during the project life cycle, which improves deliverables to the client, and improves over- all project management. [This would be accompanied by a template for a customer satisfaction survey.] (Spokesperson for AT&T)

● Generally we view a best practice as any activity or process that improves a given situation, eliminates the need of other more cumbersome methods, or signifi cantly enhances an existing process. Each best practice is a living entity and subject to review, amendments, or removal. 13

● For Churchill Downs Incorporated, a best practice is any method or process that has been proven to produce the desired results through practical application. We do not accept “industry” or “professional standards” as best practices until we have validated that the method or process works in our corporate environment.

Examples of some of our best practices include: ● Charter Signatures: One of our best practices is requiring stakeholder signa-

tures on project and program charters. This seems basic, but my experience is that a formal review and approval of a project ’s business objectives and goals is rarely documented. By documenting business objectives and their associ- ated metrics, we have been able to proactively manage expectations and ensure alignment between various stakeholders.

11. H. Kerzner, Project Management Best Practices: Achieving Global Excellence , Hoboken, NJ: Wiley, 2006, p. 12. 12. Ibid., p. 13. 13. Ibid.

Step 1: Defi nition of a Best Practice 21

● Process Defi nition: In addition to defi ning the organization ’s project, program and portfolio management processes, the PMO has also taken an active role in mapping all of the fi nancial processes for Churchill Downs Incorporated, from check requests and employee reimbursement requests to procedures for request- ing capital expenses and purchase orders. This practice has increased corporate- wide awareness of how standardizing processes can enhance effi ciency.

● Access to Information: The PMO developed process maps, procedures and policies for the end-to-end budgeting processes, associated workfl ows and templates. These have been made available company-wide via CCN, the company ’s intranet site. 14

● At Indra, we consider a “best practice” in project management as a management action or activity that usually generates a positive outcome. As such, it is accepted by the management community and eventually becomes a recommended or required way of performing the task. We also consider as a “best practice,” the use of predefi ned indicators, thresholds or metrics to make or facilitate decisions with regard to project management processes. 15

● In the PMO, a best practice is a process, methodology or procedure that is fol- lowed in order to ensure a consistent approach and standard is utilized. Best prac- tices within maxIT-VCS are evaluated for effi ciency (internally and externally) and updated to refl ect the lessons learned and the practical, real-world experience from our project management consulting base working in the fi eld with our customers. 16 We will also be integrating industry best practices from industry and literature as well as our combined company experience and lessons learned from projects. 17

● Sandra Kumorowski believes that a best practice is . . . either a method, tactic, or process that has been proven through implementation and tested use to add spe- cifi c and measurable benefi ts and long-term value in terms of increased project performance outcome like decreased project cost, increased employee productivity, improved client experience (rate of retention), and an increased number of new projects. Best practices add both short-term and long-term value to the organization.

I was responsible for providing Best Practices updates to all employees. Right after each Post Mortem session and after an idea was confi rmed as a best practice, I would send an e-mail update to all employees. Typical best practices included:

● Workload Distribution and Team Leadership: Within a team will be equalized among the project lead (senior consultant) and junior consultant who would usually do the hard work of analysis without participating in the composition of the actual strategy. [Many times, junior people felt left out and did not feel they had contributed to the success of the project. They often felt inferior and that became a big issue that greatly decreased team productivity. The issue was part of the senior strategist job description (they were responsible for 80% of strategic thinking on a project) that could have been interpreted differently by different people.]

14. Comments by Chuck Millhollan, director of program management, Churchill Downs Inc. 15. Comments by Enrique Sevilla Molina, PMP, formerly corporate PMO director, Indra. 16. Comments by Marc Hirshfield, PMP, director, Project Management Office, maxIT-VCS. 17. Comments provided by Heidi Wurtz, VP, Solutions Center, maxIT-VCS.

22 UNDERSTANDING BEST PRACTICES

● Project Kick-Off Meeting: All project stakeholders must be in that meeting to discuss project scope and objectives. A specifi c scope statement format must be followed to clearly defi ne objectives. During the meeting, all milestones dates must be determined and agreed on by all stakeholders.

● Project Milestones Meetings: Must be scheduled (some using GoToMeeting software) and included on all stakeholders’ calendars right after the Kick-Off Meeting.

● Project Post Mortem Meeting: All team members must evaluate the project per- formance, fi ll in the Post Mortem questionnaire and discuss it with other team members. Post Mortem meetings must be scheduled no later than one week after the fi nal client presentation to ensure the project issues and/or successes stay fresh in everyone ’s mind. 18

These defi nitions of a best practice focus more on the private sector than on the pub- lic sector. A comparison of possible incentives for discovery and implementation of best practices in the public and private sectors is shown in Table 1–4 .

1.8 STEP 2: SEEKING OUT BEST PRACTICES

Best practices can be captured either within your organization or external to your organi- zation. Benchmarking is one way to capture external best practices, possibly by using the project management offi ce as the lead for external benchmarking activities. However, there are external sources other than benchmarking for identifying best practices:

● Project Management Institute (PMI) publications ● Forms, guidelines, templates, and checklists that can affect the execution of the

project ● Forms, guidelines, templates, and checklists that can affect our defi nition of suc-

cess on a project

TABLE 1–4. BEST PRACTICES INCENTIVES

Private Sector Public Sector

Profi t Minimization of cost

Competitiveness On-time delivery

Effi ciency Effi ciency

Effectiveness Effectiveness

Customer satisfaction Stakeholder satisfaction

Partnerships Sole-source procurement

18. Comments by Sandra Kumorowski, assistant professor of marketing communications, Columbia College Chicago; marketing & communications chair, Christopher & Dana Reeve Foundation, Chicago; chief business advisor & owner, Enakta LLC P: 1–224-715-5666; E: [email protected], [email protected]

mailto:[email protected]

Step 2: Seeking Out Best Practices 23

● Each of the PMBOK ® Guide areas of knowledge or domain areas ● Within company-wide or isolated business units ● Seminars and symposiums on general project management concepts ● Seminars and symposiums specializing on project management best practices ● Relationships with other professional societies ● Graduate-level theses

With more universities offering masters- and doctorate-level work in project manage- ment, graduate-level theses can provide up-to-date research on best practices.

The problem with external benchmarking is that best practices discovered in one company may not be transferable to another company. In the author ’s opinion, most of the best practices are discovered internally and are specifi cally related to the company ’s use of its project management methodology and processes. Good project management method- ologies allow for the identifi cation and extraction of best practices. However, good ideas can come from benchmarking as well.

Sometimes, the identifi cation of the drivers or metrics that affect each best practice is more readily apparent than the best practice itself. Metrics and drivers can be treated as early indicators that a best practice may have been found. It is possible to have several drivers for each best practice. It is also possible to establish a universal set of drivers for each best practice, such as:

● Reduction in risk by a certain percentage, cost, or time ● Improve estimating accuracy by a certain percentage or dollar value ● Cost savings of a certain percentage or dollar value ● Effi ciency increase by a certain percentage ● Reduction in waste, paperwork, or time by a certain percentage

There are several advantages of this approach for searching for drivers. First, the driv- ers can change over time and new drivers can emerge rapidly. Second, the best practices process is more of a science than an art. And third, we can establish levels of best practices such as shown in Figure 1–5 . In this fi gure, a level 4 best practice, which is the best, would satisfy 60 percent or more of the list of drivers or characteristics of the ideal best practice.

Best practices may not be transferable from company to company, nor will they always be transferable from division to division within the same company. As an example, consider the following best practice discovered by a telecommunications company:

● A company institutionalized a set of values that professed that quality was every- thing. The result was that employees were focusing so much on quality that there was a degradation of customer satisfaction. The company then reprioritized its values with customer satisfaction being the most important, and quality actually improved.

In this company, customer satisfaction emphasis led to improved quality. However, in another company, emphasis on quality could just as easily have led to an improvement in customer satisfaction. Care must be taken during benchmarking activities to make sure that whatever best practices are discovered are in fact directly applicable to your company.

24 UNDERSTANDING BEST PRACTICES

Best practices need not be overly complex. As an example, the following list of best practices is taken from companies discussed in this textbook, and as you can see, some of the best practices were learned from failures rather than successes:

● Changing project managers in midstream is bad even if the project is in trouble. Changing project managers inevitably elongates the project and can make it worse.

● Standardization yields excellent results. The more standardization placed in a proj- ect management methodology, usually the better the results are.

● Maximization of benefi ts occurs with a methodology based upon templates, forms, guidelines, and checklists rather than policies and procedures.

● Methodologies must be updated to include the results of discovering best practices. The more frequently the methodology is updated, the quicker the benefi ts are realized.

As stated previously, best practices need not be complex. Even though some best practices seem simplistic and based on common sense, the constant reminder and use of these best practices lead to excellence and customer satisfaction.

Another way to identify sources of best practices is from the defi nition of project suc- cess, critical success factors (CSFs), and key performance indicators (KPIs). Extracting best practices from the defi nition of success on a project may be diffi cult and misleading, especially if we have a poor defi nition of success.

Over the years, a lot of the changes that have taken place in project management have been the result of the way we defi ne project success. As an example, consider the following chronological events that took place over the past several decades:

● Success is measured by the triple constraints or competing constraints. The triple constraints are time, cost, and performance (which include quality, scope, and technical performance). This was the basis for defi ning success during the birth of project management. Competing constraints can include safety, aesthetic value, benefi ts, safety, level of acceptable risk, etc.

● Customer satisfaction must be considered as well. Managing a project within the triple constraint is always a good idea, but the customer must be satisfi ed with the end result. A contractor can complete a project within the triple constraints and still fi nd that the customer is unhappy with the end result.

● Other (or secondary) factors must be considered as well. These include using the customer ’s name as a reference, corporate reputation and image, compliance with

___________ • ___________ • ___________ • ___________ • ___________ • ___________ • ___________ • ___________ • ___________ • ___________ • ___________ • ___________

Characteristics of the Ideal

Best Practice

Wish list

Level 4: >60% Level 3: 40%–60% Level 2: 20%–40% Level 1: 0%–20%

Figure 1–5. Best practices levels. Each level contains a percentage of the ideal characteristics.

Step 2: Seeking Out Best Practices 25

government regulations, strategic alignment, technical superiority, ethical conduct, and other such factors. The secondary factors may end up being more important than the primary factors of the triple constraints.

● Success must include a business component. Project managers are managing part of a business rather than merely a project and are expected to make sound busi- ness decisions as well as project decisions. There must be a business purpose for each project. Each project is considered as a contribution of business value to the company when completed.

● Prioritization of constraints must occur. Not all project constraints are equal. The prioritization of constraints is done on a project-by-project basis. Sponsorship involvement in this decision is essential.

● The defi nition of success must be agreed upon between the customer and the con- tractor. Each project can have a different defi nition of success. There must be upfront agreement between the customer and the contractor at project initiation or even at the fi rst meeting between them on what constitutes success.

● The defi nition of success must include a “value” component. Why work on a proj- ect that does not provide the correct expected value at completion?

The problem with defi ning success as on time, within cost, and at the desired quality or performance level is that this is an internal defi nition of success only. Bad things can happen on projects when the contractor, customer, and various stakeholders are all focus- ing on different defi nitions of project success. There must be an upfront agreement on what constitutes project success. The ultimate customer or stakeholder should have some say in the defi nition of success, and ultimately there may be numerous best practices discovered that relate to customer/stakeholder interfacing.

Today, we recognize that the customer rather than the contractor defi nes quality. The same holds true for project success. There must be customer and stakeholder acceptance included in any defi nition of project success. You can complete a project internally within your company within time, within cost, and within quality or specifi cation limits and yet fi nd the project is not fully accepted by the customer or stakeholders.

At Enakta, the defi nition of project success is compared against the defi nition of project failure. According to Sandra Kumorowski, 19 the defi nition can appear as shown in Table 1–5 .

Although companies may maintain a defi nition of project success (and even project failure), they may not have a clear defi nition of excellence in project management. This occurs when project management either is fully embedded into all of the company ’s work fl ow processes or is seen as a supportive role. Sandra Kumorowski believes:

At Enakta, we do not have a formal defi nition of what is excellence in project management. However, our company wanted to view project management as a supportive role in creativ- ity. Excellence is then achieved by complete customization to the current organizational structure and full alignment with long-term organizational goals, as shown in Figure 1–6 .

19. Sandra Kumorowski is an assistant professor of marketing communications at Columbia College, Chicago, and marketing & communications chair, Christopher & Dana Reeve Foundation, Chicago; she is also chief busi- ness advisor & owner, Enakta LLC; P: 1–224-715-5666; E: [email protected], [email protected]

mailto:[email protected]

26 UNDERSTANDING BEST PRACTICES

Although some defi nitions of project success seem quite simple, many companies have elaborated on the primary defi nition of project success. At Churchill Downs Incorporated (CDI), success is defi ned more rigorously than in most companies. According to Chuck Millhollan, director of program management:

Project success is defi ned in our PMO charter as follows; Based on input from CDI ’s executive management, the PMO considers a project to

be a success when the following are true:

a. Predefi ned business objectives and project goals were achieved or exceeded. b. A high-quality product is fully implemented and utilized.

TABLE 1–5. COMPARING PROJECT SUCCESS VERSUS FAILURE: A MEASURE OF PM PROJECT SUCCESS

Successful Organizational Level

□ More business from the client □ Clients contacting us □ Client satisfaction during/after the project □ Project team happy

• Ratio of successful to unsuccessful projects per year • Increased number of successful projects per period (ROI) • Everybody is on board accepting changes, no resistance • Effective project portfolio management = balanced use of resources • Increased client satisfaction • Number of returning clients • Number of recommended clients

Unsuccessful Project Level

□ No more business from client □ We have to call clients. □ Client dissatisfaction during/after the project □ Project team not happy

• Reduced project costs (working on more than one project at a time effectively, etc.)

• Well-distributed project time, no nights/weekends per project • Reduced number of unexpected events/changes throughout the project • Good team dynamics, met expectations • Reduced number of negative issues per project

Creativity in Focus

Happy Client

Happy Team

Continuous Growth

Project Management Supportive Role PM supports our organizational system,

so full creativity & continuity could be in focus

Figure 1–6. Project management as a supportive role.

Step 2: Seeking Out Best Practices 27

c. Project delivery met or beat schedule and budget targets. d. There are multiple winners:

i. Project participants have pride of ownership and feel good about their work. ii. The customer ’s (internal and/or external) expectations are met. iii. Management has met its goals.

e. Project results helped build a good reputation. f. Methods are in place for continual monitoring and evaluation (benefi t realization).

We do not use project management “process” indicators to defi ne project success. While schedule and budget targets are part of the criteria, sponsor acceptance, project com- pletion, and ultimately project success, is based on meeting defi ned business objectives.

Enrique Sevilla Molina, PMP, formerly corporate PMO director at Indra, provides us with his company ’s defi nition of project success and program success:

● Project success is based on achieving the proposed project targets in budget, scope, performance and schedule. Many times, the economic criteria appears as the main driv- ing factor to measure project success, but there are other factors just as important such as building a durable relationship with the customer and building strong alliances with selected partners. Another signifi cant criteria for project success measurement is the reliability of the project data forecast. It may be the case that, when the economic results of the project are not as good as they should be, if the fact is pointed out and reported soon enough, the success of the project is equally achieved.

● Program success is based on achieving the Program ’s overall strategic targets defi ned during Program defi nition and, at this level, the success is measured not only by achiev- ing the expected economic outcomes but, most of all, reaching the expected position in the market with regard to a product or a line of products, and establishing a more advantageous position with regard to our competitors. Leadership in a product line con- stitutes the ultimate measure of success in a Program. It is worthwhile to mention that, quite often, the success of a Program is based on the partnership concept developed with our major subcontractors at the Project level.

● Project success is defi ned at a business unit level by the responsible director, in accor- dance with the strategic goals assigned to the project.

● Program success is defi ned at the company level by the Chief Operations management in accordance with the program ’s defi ned mission.

AT&T defi nes project and program success in a similar manner. According to a spokesperson for AT&T:

Project success is defi ned as a Client Satisfaction rating of “Very Satisfi ed” and On-Time Performance of Project Delivery of 98% or greater. The Project Management Organizational Leadership Team sets the objectives, which are tracked to determine project success. Program success is defi ned and tracked the same way as project success.

Excellence [in project management] is defi ned as a consistent Project Management Methodology applied to all projects across the organization, continued recognition by our customers, and high customer satisfaction. Also our project management excellence is a key selling factor for our sales teams. This results in repeat business from our customers. In addition there is internal acknowledgement that project management is value-added and a must have.

Project success can be measured intermittently throughout the phase or gate review meetings that are part of the project management methodology. This allows a company to establish interim metrics for measuring success. An example of this will appear in Chapter 4 (Project Management Methodologies).

28 UNDERSTANDING BEST PRACTICES

Another element that is becoming important in the defi nition of success is the word value. The following information has been provided by Doug Bolzman, Consultant Architect, PMP ® , ITIL service manager at Hewlett-Packard: 20

At one point, customers were measuring project success as being on time and under budget. But if the project provided no real business value, what good is it being on time or under budget? Value for projects is being

transformed within the planning of the project to depict the value to the user or the client of the project.

In most cases within an IT delivery organization, a project is not the end all be all. It is a means to an end, and as such, the project is viewed as an incremental gain. Projects in IT are viewed from the implementation of a new service, which can constitute a bundle of projects (or releases) down to the maintenance projects such as operating system upgrades. The success of the project attaining the objectives, producing the deliverables, and acquiring the desired outcome of the work. Value in IT is measured to how well the IT service enables the business function. Does it with lower manual labor and provide the receiver with a satisfi ed result?

A good project manager would defi ne the success of a project from the perspective of the users or the customers of the project. This may be diffi cult to identify at the start of the project if the project is chartered

from a different perspective. Our management team is always challenging the project managers to explain the value of the release—what is the justifi cation of the cost and the investment of the time? We cannot afford to implement projects because someone identi- fi ed a need or generated an improvement suggestion. Do we need to be at the most current release of a product or application? Does the current one meet our business needs? What is the net gain for us to upgrade? Will the cost of the project be paid for in effi ciency, improved outcomes, increased revenue? If these questions cannot be answered by the project manager (or the sponsor of the project), it is not approved. The executives can determine the overall value of how the projects map to the success of a program or initia- tive, but the users or customers will be the entity to receive the value of the project.

Typically, projects either improve something or reduce something. These improvements come in the form of capability or functionality of the company (through the employees / users). These produce addi-

Understanding Project

Success

Defi ning Project Success

Critical Success Factors

20. Doug Bolzman has been with HP/EDS for more than 25 years and is currently a member of the HP Business Transformation Enablement team focusing on improving their client ’s IT Service Management delivery. Prior to the HP merger, EDS submitted a patent on behalf of Doug ’s processes titled, “System and Method for Identifying and Monitoring Best Practices of an Enterprise.” Since 1995, Doug has architected and delivered an approach for clients to institute the IT Information Library (ITIL © ) into their IT operations environment. Working with clients, Doug utilizes his IT Enterprise Management (ITEM) framework, along with the Project Management Body of Knowledge ( PMBOK ® Guide ) and the IT Service Management (ITSM) life cycle to facilitate the client through the cultural, organizational, business, and operational changes. Doug holds an ITIL Expert Certificate, developed online ITIL Foundation Training for ITIL Version 2 along with the 2007 and 2011 editions. Doug ’s comments are based upon HP ’s relationship with its clients, especially when they are looking at the enterprise management of a business, not simply the management of the piece parts.

Step 2: Seeking Out Best Practices 29

tional productivity either new products and services or more effi ciency for existing prod- ucts. Critical success factors are mapped to the overall business objectives.

Key Performance Indicators for Success

Key performance indicators allow the customer to make a series of measurements to ensure the performance is within the stated thresholds (success factors). This is called “keeping the pulse of the company” by the executives. KPI ’s are determined, measured and communicated through mechanisms such as dashboards or metrics.

The comments by Doug Bolzman indicate that perhaps the single most important cri- terion for defi ning a potential best practice is that it must add value to the company and/or the client. According to a program manager at Hewlett-Packard, the following three best practices are added-value best practices:

● Project Collaboration Portals with standardized PM templates and Integrated tool kits with ability to request additional features by a Support staff.

● Project Retrospectives—very helpful for group learning and eliciting/recognizing/doc- umenting “best practices” but indeed communication beyond the immediate team is the challenge.

● Virtual Projects—given suffi cient infrastructure I feel virtual projects are more produc- tive and effective than burning uptime and money on travel. I think HP utilizes these capabilities internally very well.

The ultimate defi nition of success might very well be when the customer is so pleased with the project that the customer allows you to use his or her name as a reference. This occurred in one company that bid on a project at 40 percent below its cost of doing the work. When asked why the bid was so low, company representatives responded that they knew they were losing money but what was really important was getting the customer ’s name on the corporate resume of clients. Therefore, the secondary factors may be more important than the primary factors.

The defi nition of success can also change based upon whether you are project- or non–project-driven. In a project-driven fi rm, the entire business of the company is projects. But in a non–project-driven fi rm, projects exist to support the ongoing busi- ness of production or services. In a non–project-driven fi rm, the defi nition of success also includes completion of the project without disturbing the ongoing business of this fi rm. It is possible to complete a project within time, within cost, and within quality and at the same time cause irrevocable damage to the organization. This occurs when the project manager does not realize that the project is secondary in importance to the ongoing business.

Some companies defi ne success in terms of CSFs and KPIs. Critical success factors identify those factors necessary to meet the desired deliverables of the customer. CSFs and KPIs do not need to be elaborate or sophisticated metrics. Simple metrics, possibly based upon the triple constraint, can be quite effective. According to a spokesperson from AT&T:

The critical success factors include Time, Scope, Budget and Customer Satisfaction. Key performance indicators include on-time performance for key deliverables. These include customer installation, customer satisfaction and cycle-time for common milestones.

30 UNDERSTANDING BEST PRACTICES

Typical CSFs for most companies include:

● Adherence to schedules ● Adherence to budgets ● Adherence to quality ● Appropriateness and timing of signoffs ● Adherence to the change control process ● Add-ons to the contract

Critical success factors measure the end result usually as seen through the eyes of the customer. KPIs measure the quality of the process to achieve the end results. KPIs are internal measures and can be reviewed on a periodic basis throughout the life cycle of a project. Typical KPIs include:

● Use of the project management methodology ● Establish control processes ● Use of interim metrics ● Quality of resources assigned versus planned for ● Client involvement

Key performance indicators answer such questions as: Did we use the methodol- ogy correctly? Did we keep management informed and how frequently? Were the proper resources assigned, and were they used effectively? Were there lessons learned which could necessitate updating the methodology or its use? Companies that are excellent in project management measure success both internally and externally using KPIs and CSFs. As an example, consider the following remarks provided by a spokesperson from Nortel Networks 21 :

Nortel defi nes project success based on schedule, cost, and quality measurements, as mutually agreed upon by the customer, the project team, and key stakeholders. Examples of key performance indicators may include completion of key project milestones, product installation/integration results, change management results, completion within budget, and so on. Project status and results are closely monitored and jointly reviewed with the cus- tomer and project team on a regular basis throughout a project to ensure consistent expecta- tions and overall success. Project success is ultimately measured by customer satisfaction.

Here are additional defi nitions of CSFs and KPIs:

● CSFs: ● Success factors are defi ned at the initial stages of the project or program, even

before they become actual contracts, and are a direct consequence of the stra- tegic goals allocated to the project or program. Many times these factors are

21. H. Kerzner, Project Management Best Practices: Achieving Global Excellence , Hoboken, NJ: Wiley, 2006, p. 26.

Step 2: Seeking Out Best Practices 31

associated with expanding the market share in a product line or developing new markets, both technically and geographically. (Provided by Enrique Sevilla Molina, PMP, formerly corporate PMO director, Indra)

● Obviously, CSFs vary with projects and intent. Here are some that apply over a large variety of projects:

● Early customer involvement ● High-quality standards ● Defi ned processes and formalized gate reviews ● Cross-functional team organizational structure ● Control of requirements, prevention of scope creep ● Commitment to schedules—disciplined planning to appropriate level of

detail and objective and frequent tracking ● Commitment of resources—right skill level at necessary time ● Communication among internal teams and with customer ● Early risk identifi cation, management, and mitigation—no surprises ● Unequaled technical execution based on rigorous engineering. (Comments

provided by a spokesperson at Motorola) 22 ● KPIs:

● We are implementing an interim quality program to measure [the] quality of all projects and performance of project managers across the company. This program will include project reviews on a regular basis, determined by project scope, timing, and complexity, and will conclude with the customer ’s perspec- tive on the quality delivered by the company and the PM. This may no longer be called an “Assignment Quality Assessment (AQA),” but will still elicit cus- tomer feedback and contribute to the PM ’s performance measurement plan. The QA program is a function of our Solution Center, which supports the integrated companies: maxIT-VCS. (Heidi Wurtz, VP, Solutions Center maxIT-VCS)

● Our most common KPIs are associated to the fi nancial projects results, for instance, project margin compliance with the allocated strategic target, new contracts fi gure for the business development area goals, etc. Success factors are translated into performance indicators so they are periodically checked.

● By default, a fi rst indication of projects health is provided by the schedule and cost performance indices (SPI and CPI) embedded into the PM tools. They are monthly provided by the project management information system and they are also available for historical analysis and review. These indicators are also calculated for each department, so they constitute an indicator of the overall cost and schedule performance of the department or business unit. (Provided by Enrique Sevilla Molina, PMP, formerly corporate PMO director, Indra)

● Postship acceptance indicators: ● Profi t and loss ● Warranty returns

22. Ibid., p. 27.

32 UNDERSTANDING BEST PRACTICES

● Customer reported unique defects ● Satisfaction metrics

● In-process indicators: ● Defect trends against plan ● Stability for each build (part count changes) against plan ● Feature completion against plan ● Schedule plan versus actual performance ● Effort plan versus actual performance ● Manufacturing costs and quality metrics ● Conformance to quality processes and results of quality audits ● System test completion rate and pass/fail against plan ● Defect/issue resolution closure rate ● Accelerated life-testing failure rates against plan ● Prototype defects per hundred units (DPHU) during development against

plan (Provided by a spokesperson at Motorola) 23 ● The SOW provides a checklist of basic indicators for the success of the project,

but client satisfaction is also important. The SOW will indicate what the deliv- erables are and will provide information on costs and timelines that are easily tracked.

Most people seem to understand that CSFs and KPIs can be different from project to project. However, there is a common misbelief that CSFs and KPIs, once established, must not change throughout the project. As projects go through various life-cycle phases, these indicators can change. Carl Manello, PMP, solutions lead—program and project manage- ment, Slalom Consulting, believes that:

Establishing the right Critical Success Factors and Key Performance Indicators is crucial. A project ’s defi ned success (i.e., defi ned success means that . . . all stakeholders are in agreement at the earliest stages of the project as to what the end-state will look like) is identifi ed through the Critical Success Factors. A project ’s selection of the right Key Performance Indicators establishes the measurement metrics for tracking to determine whether the Critical Success Factors will be met. As a starting point, On Time, On Budget and with the agreed upon specifi cations (or within a tolerance for all three metrics) are good basic KPIs. As projects mature in their ability to deliver results, more sophisticated performance indicators may be implemented. For example, instead of using the loosely defi ned “agreed upon specifi cations,” projects may choose to use the formality of a requirements volatility measure and some acceptable variation around a baseline.

In the author ’s experience, more than 90 percent of the best practices that companies identify come from analysis of the KPIs during the debriefi ng sessions at the completion of a project or at selected gate review meetings. Because of the importance of extracting these best practices, some companies are now training professional facilitators capable of debriefi ng project teams and capturing the best practices.

23. Ibid.

Dashboards and Scorecards 33

Before leaving this section, it is necessary to understand who discovers the best prac- tice. Best practices are discovered by the people performing the work, namely the project manager, project team, and possibly the line manager. According to a spokesperson from Motorola 24 :

The decision as to what is termed a best practice is made within the community that performs the practice. Process capabilities are generally known and baselined. To claim best practice status, the practice or process must quantitatively demonstrate signifi cant improvements in quality, effi ciency, cost, and/or cycle time. The management of the organization affected as well as process management must approve the new practice prior to institutionalization.

Generally, the process of identifi cation begins with the appropriate team member. If the team member believes that he or she has discovered a best practice, they then approach their respective line manager and possibly project manager for confi rmation. Once confi rmation is agreed upon, the material is sent to the Project Management Offi ce (PMO) for valida- tion. After validation, the person that identifi ed the best practice is given the title of “Best Practice Owner” and has the responsibility of nurturing and cultivating the best practice.

Some companies use professional facilitators to debrief project teams in order to extract best practices. These facilitators may be assigned to the PMO and are profession- ally trained in how to extract lessons learned and best practices from both successes and failures. Checklists and templates may be used as part of the facilitation process. As an example, consider the following statements from Sandra Kumorowski: 25

After each project, we conduct Post Mortem meetings in order to evaluate the project performance. I have created a standard format—list of questions—and all team members had to prepare their answers ahead of time. If there was an idea, process, or tactic that has added measurable benefi t or long-term value to the organization, the top management would then add it to our Library. I was responsible for an update to all employees when a new best practice has been added to our Best Practices Library.

1.9 DASHBOARDS AND SCORECARDS

In our attempt to go to paperless project management, emphasis is being given to visual displays such as dashboard and scorecards utilizing and displaying CSFs and KPIs. Executives and customers desire a visual display of the most critical project performance information in the least amount of space. Simple dashboard techniques, such as traffi c light reporting, can convey critical performance information. As an example:

● Red traffi c light: A problem exists which may affect time, cost, quality, or scope. Sponsorship involvement is necessary.

24. Ibid., p. 14. 25. Sandra Kumorowski is an assistant professor of marketing communications at Columbia College Chicago, and marketing & communications chair, Christopher & Dana Reeve Foundation, Chicago; she is also chief business advisor & owner, Enakta LLC; P: 1–224-715-5666; E: [email protected], [email protected]

mailto:[email protected]

34 UNDERSTANDING BEST PRACTICES

● Yellow or amber light: This is a caution. A potential problem may exist, perhaps in the future if not monitored. The sponsor is informed but no action by the sponsor is necessary at this time.

● Green light: Work is progressing as planned. No involvement by the sponsor is necessary.

While a traffi c light dashboard with just three colors is most common, some compa- nies use many more colors. The information technology (IT) group of a retailer had an eight-color dashboard for IT projects. An amber color meant that the targeted end date had past and the project was still not complete. A purple color meant that this work package was undergoing a scope change that could have an impact on the triple constraint.

Some people confuse dashboards with scorecards. There is a difference between dash- boards and scorecards. According to Eckerson 26 :

● Dashboards are visual display mechanisms used in an operationally oriented performance measurement system that measure performance against targets and thresholds using right-time data.

● Scorecards are visual displays used in a strategically oriented performance mea- surement system that chart progress towards achieving strategic goals and objec- tives by comparing performance against targets and thresholds.

Both dashboards and scorecards are visual display mechanisms within a performance measurement system that convey critical information. The primary difference between dashboards and scorecards is that dashboards monitor operational processes such as those used in project management, whereas scorecards chart the progress of tactical goals. Table 1–6 and the description following it show how Eckerson compares the features of dash- boards and scorecards. 27

Dashboards: Dashboards are more like automobile dashboards. They let operational specialists and their supervisors monitor events generated by key business processes. But unlike automobiles, most business dashboards do not display events in “real time,” as they occur; they display them in “right time,” as users need to view them. This could be every second, minute, hour, day, week, or month depending on the business process, its volatility, and how critical it is to the business. However, most elements on a dashboard are updated on an intraday basis, with latency measured in either minutes or hours.

Dashboards often display performance visually, using charts or simple graphs, such as gauges and meters. However, dashboard graphs are often updated in place, causing the graph to “fl icker” or change dynamically. Ironically, people who monitor operational processes often fi nd the visual glitz distracting and prefer to view the data in the original form, as numbers or text, perhaps accompanied by visual graphs.

Scorecards: Scorecards, on the other hand, look more like performance charts used to track progress toward achieving goals. Scorecards usually display monthly snapshots of

26. W. W. Eckerson, Performance Dashboards: Measuring, Monitoring and Managing Your Business , Hoboken, NJ: Wiley, 2006, pp. 293, 295. Chapter 12 provides an excellent approach to designing dashboard screens. 27. Ibid., p. 13.

Dashboards and Scorecards 35

summarized data for business executives who track strategic and long-term objectives, or daily and weekly snapshots of data for managers who need to chart the progress of their group of project toward achieving goals. In both cases, the data are fairly summarized so users can view their performance status at a glance.

Like dashboards, scorecards also make use of charts and visual graphs to indicate performance state, trends, and variance against goals. The higher up the users are in the organization, the more they prefer to see performance encoded visually. However, most scorecards also contain (or should contain) a great deal of textual commentary that inter- prets performance results, describes action taken, and forecasts future results.

Summary: In the end, it does not really matter whether you use the term “dashboard” or “scorecard” as long as the tool helps to focus users and organizations on what really matters. Both dashboards and scorecards need to display critical performance information on a single screen so users can monitor results at a glance.

Although the terms are used interchangeably, most project managers prefer to use dashboards and/or dashboard reporting. Eckerson defi nes three types of dashboards, as shown in Table 1–7 and the description that follows. 28

● Operational dashboards monitor core operational processes and are used primarily by front-line workers and their supervisors who deal directly with customers or manage the creation or delivery of organizational products and services. Operational dashboards primarily deliver detailed information that is only lightly summarized. For example, an online Web merchant may track transactions at the product level rather than the customer level. In addition, most metrics in an operational dashboard are updated on an intraday basis, ranging from minutes to hours depending on the application. As a result, operational dashboards emphasize monitoring more than analysis and management.

TABLE 1–6. COMPARING FEATURES

Feature Dashboard Scorecard

Purpose Measures performance Charts progress

Users Supervisors, specialists Executives, managers, and staff

Updates Right-time feeds Periodic snapshots

Data Events Summaries

Display Visual graphs, raw data Visual graphs, comments

28. Ibid., pp. 17–18.

TABLE 1–7. THREE TYPES OF PERFORMANCE DASHBOARDS

Operational Tactical Strategic

Purpose Monitor operations Measure progress Execute strategy Users Supervisors, specialists Managers, analysts Executives, managers, staff Scope Operational Departmental Enterprise

Information Detailed Detailed/summary Detailed/summary Updates Intraday Daily/weekly Monthly/quarterly Emphasis Monitoring Analysis Management

36 UNDERSTANDING BEST PRACTICES

● Tactical dashboards track departmental processes and projects that are of interest to a segment of the organization or a limited group of people. Managers and business ana- lysts use tactical dashboards to compare performance of their areas or projects, to bud- get plans, forecasts, or last period ’s results. For example, a project to reduce the number of errors in a customer database might use a tactical dashboard to display, monitor, and analyze progress during the previous 12 months toward achieving 99.9 percent defect- free customer data by 2007.

● Strategic dashboards monitor the execution of strategic objectives and are frequently implemented using a balanced scorecard approach, although total quality management, Six Sigma, and other methodologies are used as well. The goal of a strategic dashboard is to align the organization around strategic objectives and get every group marching in the same direction. To do this, organizations roll out customized scorecards to every group in the organization and sometimes to every individual as well. These “cascading” scorecards, which are usually updated weekly or monthly, give executives a powerful tool to communicate strategy, gain visibility into operations, and identify the key drivers of performance and business value. Strategic dashboards emphasize management more than monitoring and analysis.

There are three critical steps that must be considered when using dashboards: (1) the target audience for the dashboard, (2) the type of dashboard to be used, and (3) the frequency in which the data will be updated. Some project dashboards focus on the key performance indicators that are part of earned-value measurement. These dashboards may need to be updated daily or weekly. Dashboards related to the fi nancial health of the company may be updated weekly or quarterly. Figures 1–7 and 1–8 show the type of information that would be tracked weekly or quarterly to view corporate fi nancial health. 29

1.10 KEY PERFORMANCE INDICATORS

Most often, the items that appear in the dashboards are elements that both customers and project managers track. These items are referred to as key performance indicators (KPIs) and were discussed previously. According to Eckerson 30 :

A KPI is a metric measuring how well the organization or individual performs an operational, tactical or strategic activity that is critical for the current and future success of the organization.

Some people confuse KPIs with leading indicators. A leading indicator is actually a KPI that measures how the work one is doing now will affect the future.

KPIs are critical components of all earned-value measurement systems. Cost variance, schedule variance, schedule performance index, cost performance index, and time/cost at

29. J. Alexander, Performance Dashboards and Analysis for Value Creation , Hoboken, NJ: Wiley, 2007, pp. 87–88. Reproduced by permission of John Wiley & Sons. 30. W. Eckerson, Performance Dashboards: Measuring, Monitoring and Managing Your Business , Hoboken, NJ: Wiley, 2006, p. 294.

1,150

1,200

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f R

ev en

ue s

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Head Count

R&D EffectivenessRevenue Linearity

% Revenue Growth

% of Sales from New Products

Operating Model Predictability of

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0 Q404

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Q404

$125

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$134

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$106

$90

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$100

Q105 Q205 Q305 Q405

Cost of Revenues Plan

1,225

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1,200 1,200

1,192 1,190

1,175 1,170

1,186

R&D Expense

Acquired Rev. Growth %

Organic Rev. Growth %

SG&A Expense Operating Profit

0% Q404

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20% 22%

24%

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OTD Performance

60% Q404

90%

100%

86%

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73%

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)

Figure 1–7. Typical financial health dashboards.

38 UNDERSTANDING BEST PRACTICES

completion are actually KPIs but are not referred to as such. The need for these KPIs is simple: What gets measured gets done! If the goal of a performance measurement system is to improve effi ciency and effectiveness, then the KPI must refl ect controllable factors. There is no point in measuring an activity if the users cannot change the outcome.

Eckerson identifi es 12 characteristics of effective KPIs 31 :

● Aligned: KPIs are always aligned with corporate [or project] strategy and objec- tives.

● Owned: Every KPI is “owned” by an individual or group on the business [or proj- ect] side that is accountable for its outcome.

● Predictive: KPIs measure drivers of business [or project] value. Thus, they are “leading” indicators of performance desired by the organization.

● Actionable: KPIs are populated with timely, actionable data so users can intervene to improve performance before it is too late.

● Few in number: KPIs should focus users on a few high-value tasks, not scatter their attention and energy on too many things.

$0 1

$10 $20

$30 $40

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Cumulative AR Collections

Actual

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Revenue QTD

Forecast

Other BU4 BU3 BU2 BU1

WeekBookings

XYZ Company Q4’ 05 Week #7 of 13/ 54% of Q4 ($ in Millions)

0.7 — 0.5 0.4 0.0 $0

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$50 $40

$ M

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Other BU4 BU3 BU2 BU1

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15.0 0.9 4.0 1.7 0.1

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50% 89 67 37

$ Required

15.0 0.1 2.0 2.9

(0.1) 41.7 52% $20.01.6 21.7Totals

WeekRevenue

Week Actual Target

1 1.0 4.0

2 5.0 9.0

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Day 1 77%

2 80%

3 81%

4 68%

5 82%Process Yield

2.0 0.4 0.0 2.6 —

Unit

BU 1 BU 2 BU 3 BU 4 Other

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13.0 3.0 3.0 3.0 —

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% Achieved

46% 60 50 43

Backlog

5.0 1.0 2.0 1.0

46.0 48% 9.05.0 22.0Totals

Req’d Fill

10.00 1.00 1.00 3.00

15.0

60% 1

70%

80%

90%

2 3

Day

Process Yield

4 5

Target

Figure 1–8. Typical financial health dashboards.

31. Ibid., p. 201.

Key Performance Indicators 39

● Easy to understand: KPIs should be straightforward and easy to understand, not based upon complex indices that users do not know how to infl uence directly.

● Balanced and linked. KPIs should balance and reinforce each other, not undermine each other and suboptimize processes.

● Trigger changes. The act of measuring a KPI should trigger a chain reaction of positive changes in the organization [or project], especially when it is monitored by the CEO [or customers or sponsors].

● Standardized. KPIs are based upon standard defi nitions, rules, and calculations so they can be integrated across dashboards throughout the organization.

● Context driven. KPIs put performance in context by applying targets and thresh- olds to performance so users can gauge their progress over time.

● Reinforced with incentives. Organizations can magnify the impact of KPIs by attaching compensation or incentives to them. However, they should do this cau- tiously, applying incentives only to well-understood and stable KPIs.

● Relevant. KPIs gradually lose their impact over time, so they must be periodically reviewed and refreshed.

There are several reasons why the use of KPIs often fails on projects, including:

● People believe that the tracking of a KPI ends at the fi rst line manager level. ● The actions needed to regulate unfavorable indications are beyond the control of

the employees doing the monitoring or tracking. ● The KPIs are not related to the actions or work of the employees doing the moni-

toring. ● The rate of change of the KPIs is too slow, thus making them unsuitable for manag-

ing the daily work of the employees. ● Actions needed to correct unfavorable KPIs take too long. ● Measurement of the KPIs does not provide enough meaning or data to make them

useful. ● The company identifi es too many KPIs to the point where confusion reigns among

the people doing the measurements.

Years ago, the only metrics that some companies used were those identifi ed as part of the earned-value measurement system. The metrics generally focused only on time and cost and neglected metrics related to business success as opposed to project success. Therefore, the measurement metrics were the same on each project and the same for each life-cycle phase. Today, metrics can change from phase to phase and from project to project. The hard part is, obviously, deciding upon which metrics to use. Care must be taken that whatever metrics are established do not end up comparing apples and oranges. Fortunately, there are several good books in the marketplace that can assist in identifying proper or meaningful metrics. 32

32. Three books that provide examples of metric identification are P. F. Rad and G. Levin, Metrics for Project Management, Vienna, VA: Management Concepts, 2006; M. Schnapper and S. Rollins, Value-Based Metrics for Improving Results , Ft. lauderdale, FL: J. Ross Publishing, 2006; and D. W. Hubbard, How To Measure Anything ; Hoboken, NJ: Wiley, 2007.

40 UNDERSTANDING BEST PRACTICES

Selecting the right KPIs is critical. Since a KPI is a form of measurement, some people believe that KPIs should be assigned only to those elements that are tangible. Therefore, many intangible elements that should be tracked by KPIs never get looked at because someone believes that measurement is impossible. Anything can be measured regardless of what some people think. According to Hubbard 33 :

● Measurement is a set of observations that reduces uncertainty where the results are expressed as a quantity.

● A mere reduction, not necessarily elimination, of uncertainty will suffi ce for a measurement.

Therefore, KPIs can be established even for intangibles like those discussed later in this book in the chapter on value-driven project management.

Hubbard believes that fi ve questions should be asked before we establish KPIs for measurement 34 :

● What is the decision this [KPI] is supposed to support? ● What really is the thing being measured [by the KPI]? ● Why does this thing [and the KPI] matter to the decision being asked? ● What do you know about it now? ● What is the value to measuring it further?

Hubbard also identifi es four useful measurement assumptions that should be consid- ered when selecting KPIs 35 :

● Your problem [in selecting a KPI] is not as unique as you think ● You have more data than you think ● You need less data than you think ● There is a useful measurement that is much simpler than you think

Selecting the right KPIs is essential. On most projects, only a few KPIs are needed. Sometimes we seem to select too many KPIs and end up with some KPIs that provide us with little or no information value, and the KPI ends up being unnecessary or useless in assisting us in making project decisions.

Sometimes, companies believe that the measures that they have selected are KPIs when, in fact, they are forms of performance measures but not necessarily KPIs. David Parmenter discusses three types of performance measures 36 :

● Key results indicators (KRIs) tell you how you have done in a perspective ● Performance indicators (PIs) tell you what to do ● KPIs tell you what to do to increase performance drastically

33. D. W. Hubbard, How To Measure Anything , Hoboken, NJ: Wiley, 2007, p. 21. 34. Ibid, p. 43. 35. Ibid, p. 31. 36. D. Parmenter, Key Performance Indicators , Hoboken, NJ: Wiley, 2007, p. 1.

Step 3: Validating the Best Practice 41

Parmenter believes that 37 :

The ultimate success of a change strategy depends greatly on how the change is introduced and implemented, rather than on the merit of the strategy itself. Successful development and utilization of key performance indicators (KPIs) in the workplace is determined by the pres- ence or absence of four foundation stones:

● Partnership with the staff, unions, key suppliers, and key customers ● Transfer of power to the front line ● Integration of measurement, reporting, and improvement of performance ● Linkage of performance measures to strategy

In a project environment, the performance measures can change from project to project and phase to phase. The identifi cation of these measures is performed by the proj- ect team, including the project sponsor. Project stakeholders may have an input as well. Corporate performance measures are heavily fi nancially oriented and may undergo very little change over time. The measurements indicate the fi nancial health of the corporation.

Establishing corporate performance measures related to strategic initiatives or other such activities must be treated as a project in itself, and supported by the senior manage- ment team (SMT).

The SMT attitude is critical—any lack of understanding, commitment, and prioritiz- ing of this important process will prevent success. It is common for the project team and the SMT to fi t a KPI project around other competing, less important fi refi ghting activities.

The SMT must be committed to the KPI project, to driving it down through the organi- zation. Properly implemented, the KPI project will create a dynamic environment. Before it can do this, the SMT must be sold on the concept. This will lead to the KPI project ’s being treated as the top priority, which may mean the SMT ’s allowing some of those dis- tracting fi res to “burn themselves out.” 38

1.11 STEP 3: VALIDATING THE BEST PRACTICE

Previously we stated that seeking out of a best practice is done by the project manager, project team, functional manager, and/or possibly a professional facilitator trained in how to debrief a project team and extract best practices. Any or all of these people must believe that what they have discovered is, in fact, a best practice. When project managers are quite active in a project, emphasis is placed upon the project manager for the fi nal decision on what constitutes a best practice. According to a spokesperson for AT&T, the responsibility for determining what is a best practice rests with:

The individual project manager that shows how it had a positive impact on their project.

37. Ibid., p. 19. 38. Ibid., p. 27. Chapter 5 of this book has excellent templates for reporting KPIs.

42 UNDERSTANDING BEST PRACTICES

Although this is quite common, there are other validation methods that may involve a signifi cant number of people. Sometimes, project managers may be removed from where the work is taking place and may not be familiar with activities that could lead to the identifi cation of a best practice. Companies that have a PMO place a heavy reliance on the PMO for support because the approved best practices are later incorporated into the methodology, and the PMO is usually the custodian of the methodology. According to Heidi Wurtz, VP, Solutions Center maxIT-VCS:

The methodology maintenance and update process is being defi ned now as a function of our Solution Center supporting the integrated maxIT-VCS. The vision is to centrally manage and maintain all methodologies, from core skills such as project management, clinician adoption, etc. through specialized methodologies such as ICD-10 and Health Analytics. Implementing new technologies and processes (e.g.ICD-10) can have a fun- damental impact on an organization ’s entire clinical and revenue cycle processes. Project failures can result in compliance issues, delays and denials in claims payments, and signifi cant productivity declines. Now, more than ever, it is imperative that organizations have a strong project structure in place to support this transformation. maxIT-VCS strives to fi ll the gap between the HIT vendors’ deliverable commitments and the existing staff by developing solutions tailored to the organization ’s needs. Our methodology mainte- nance process enables subject matter expert engagement to ensure consistency in updates and methodology change management. The plan is to identify a small group of experts for each methodology, and convene them on a regular basis to review content material, feedback from users, industry best practices, internal lessons learned and contributions of new material. This body will make decisions to update, remove, replace or add to the methodology content including tools. We envision an interactive component of the web- based methodology site to facilitate feedback and contributions from users in the fi eld.

Once the management of the organization affected initially approves the new best practice, it is forwarded to the PMO or process management for validation and then insti- tutionalization. The PMO may have a separate set of checklists to validate the proposed best practice. The PMO must also determine whether or not the best practice is company proprietary because that will determine where the best practice is stored and whether the best practice will be shared with customers.

The best practice may be placed in the company ’s best practice library or, if appropri- ate, incorporated directly into the company ’s stage gate checklist. Based upon the com- plexity of the company ’s stage gate checklist process and enterprise project management methodology, the incorporation process may occur immediately or on a quarterly basis.

According to Chuck Millhollan, director of program management at Churchill Downs, Incorporated:

We do not label our processes or methods as “best practices.” We simply learn from our lessons and ensure that learning is incorporated into our methodology, processes, tem- plates, etc.

Some organizations have committees not affi liated with the PMO that have as their primary function the evaluation of potential best practices. Anyone in the company can provide potential best practices data to the committee, and the committee in turn does the

Step 3: Validating the Best Practice 43

analysis. Project managers may be members of the committee. Other organizations use the PMO to perform this work. These committees and the PMO most often report to the senior levels of management.

The fourth edition of the PMBOK ® Guide emphasizes the importance of stakeholder involvement in projects. This involvement may also include the fi nal decision on whether or not a discovery is a best practice. According to Chuck Millhollan, director of program management, Churchill Downs, Inc.:

Ultimately, the fi nal decision resides with our stakeholders, both internal and external. Another way of putting this is that the PMO does not make the decision if a method or process works. We actively seek feedback from our project stakeholders and use their inputs to determine if our processes are “best practices” for Churchill Downs Incorporated. The specifi c best practices identifi ed previously, among others, have even been accepted outside of the PMO as generally accepted practices.

Another example of stakeholder involvement is provided by Enrique Sevilla Molina, PMP, formerly corporate PMO director, Indra:

The decision is taken by the corporate PMO responsible, the business unit manager, the local PMO authority, or even the cognizant authority, if it is the case. It depends on the subject and the scope of the task. Some of the management best practices have been established at corporate level, and they have been incorporated into the PM methodology. Many of them have also been incorporated into the Project Management Information Systems and the corporate PM tooling.

Evaluating whether or not something is a best practice is not time-consuming, but it is complex. Simply because someone believes that what he or she is doing is a best prac- tice does not mean that it is in fact a best practice. Some PMOs are currently developing templates and criteria for determining that an activity may qualify as a best practice. Some items that are included in the template might be:

● Is transferable to many projects ● Enables effi cient and effective performance that can be measured (i.e., can serve

as a metric) ● Enables measurement of possible profi tability using the best practice ● Allows an activity to be completed in less time and at a lower cost ● Adds value to both the company and the client ● Can differentiate us from everyone else

One company had two unique characteristics in its best practices template:

● Helps to avoid failure ● If a crisis exists, helps us to get out of a critical situation

Executives must realize that these best practices are, in fact, intellectual property that benefi t the entire organization. If the best practice can be quantifi ed, then it is usually easier to convince senior management of its value.

44 UNDERSTANDING BEST PRACTICES

1.12 STEP 4: LEVELS OF BEST PRACTICES

As stated previously, best practices come from knowledge transfer and can be discovered anywhere within or outside of your organization. This is shown in Figure 1–9 .

Companies that maintain best practices libraries that contain a large number of best practices may create levels of best practices. Figure 1–10 shows various levels of best practices. Each level can have categories within the level. The bottom level is the profes- sional standards level, which would include professional standards as defi ned by PMI. The professional standards level contains the greatest number of best practices, but they are more of a general nature than specifi c and have a low level of complexity.

The industry standards level would identify best practices related to performance within the industry. The automotive industry has established standards and best practices specifi c to the auto industry.

As we progress to the individual best practices in Figure 1–10 , the complexity of the best practices goes from general to very specifi c applications and, as expected, the quantity of best practices is less. An example of a best practice at each level might be (from general to specifi c):

● Professional standards: Preparation and use of a risk management plan, including templates, guidelines, forms, and checklists for risk management.

CONTINUOUS IMPROVEMENT

New Knowledge

Internal Knowledge External Knowledge

• Lessons Learned • Experience • History • Internal Data Bases

• Benchmarking • Publications • Seminars and Symposiums • External Data Bases

Figure 1–9. Knowledge transfer.

Professional (PMI) Standards

Industry Standards

Company Specific

Project Specific

Individual

Quantity

C om

pl ex

it y

Low

High

Figure 1–10. Levels of best practices.

Step 4: Levels of Best Practices 45

● Industry specifi c: The risk management plan includes industry best practices such as the best way to transition from engineering to manufacturing.

● Company specifi c: The risk management plan identifi es the roles and interactions of engineering, manufacturing, and quality assurance groups during transition.

● Project specifi c: The risk management plan identifi es the roles and interactions of affected groups as they relate to a specifi c product/service for a customer.

● Individual: The risk management plan identifi es the roles and interactions of af- fected groups based upon their personal tolerance for risk, possibly through the use of a responsibility assignment matrix prepared by the project manager.

Best practices can be extremely useful during strategic planning activities. As shown in Figure 1–11 , the bottom two levels may be more useful for project management strategy formulation whereas the top three levels are more appropriate for the execution or imple- mentation of a strategy.

Not all companies maintain a formal best practices library. In some companies, when a best practice is identifi ed and validated, it is immediately placed into the stage gate process or the project management methodology. In such a case, the methodology itself becomes the best practice. Enrique Sevilla Molina, PMP, formerly corporate PMO director at Indra, states:

In fact, our Project Management methodology constitutes our established library of best practices applicable to every project in the company. There are additional best practices libraries in different business units. There are, for instance, detailed instructions for pro- posal preparation or for cost and schedule estimation purposes, which are appropriate for the specifi c business or operations area.

When asked how many best practices they maintain at Indra, Enrique commented:

● It is hard to say because of the subject itself and the multiplicity of business areas in the company. If we consider our PM methodology as a set of “best practices”, it would be diffi cult to count every best practice included.

● Besides our internally published Indra Project Management Methodology Manual, we have for instance specifi c guides at corporate level for WBS elaboration, project

Professional (PMI) Standards

Industry Standards

Company Specific

Project Specific

Individual

C om

pl ex

it y

Quantity Low

High

Strategy Formulation

Strategy Execution

Figure 1–11. Usefulness of best practices.

46 UNDERSTANDING BEST PRACTICES

risk management, and the project ’s performance measurement based on earned value techniques. We have also specifi c instructions published for proposal preparation, costs estimation, and even detailed WBS preparation rules and formats for different business unit levels.

1.13 STEP 5: MANAGEMENT OF BEST PRACTICES

There are three players involved in the management of the best practices:

● The best practice ’s owner ● The PMO ● The best practices’ library administrator who may reside in the PMO

The best practice ’s owner, who usually resides in the functional area, has the respon- sibility of maintaining the integrity of the best practice. Being a best practice owner is usually an uncompensated, unoffi cial title but is a symbol of prestige. Therefore, the owner of the best practice tries to enhance it and keep the best practice alive as long as possible.

The PMO usually has the fi nal authority over best practices and makes the fi nal deci- sion on where to place the best practice, who should be allowed to see it, how often it should be reviewed or revalidated, and when it should be removed from service.

The library administrator is merely the caretaker of the best practice and may keep track of how often people review the best practice assuming it is readily accessible in the best practices library. The library administrator may not have a good understanding of each of the best practices and may not have any voting rights on when to terminate a best practice.

1.14 STEP 6: REVALIDATING BEST PRACTICES

Best practices do not remain best practices forever. Because best practices are directly related to the company ’s defi nition of project success, the defi nition of a best practice can change and age as the defi nition of success changes. Therefore, best practices must be periodically reviewed. The critical question is, “How often should they be reviewed?” The answer to this question is based upon how many best practices are in the library. Some companies maintain just a few best practices, whereas large, multinational companies may have thousands of clients and maintain hundreds of best practices in their libraries. If the company sells products as well as services, then there can be both product-related and process-related best practices in the library.

The following two examples illustrate the need for reviewing best practices.

● Once a practice has been nominated and approved to be a best practice, it is only sanctioned until the next yearly review cycle. Over time, best practices have the tendency to lose value and become ineffective if they are allowed to age. (EDS)

Step 7: What to Do with a Best Practice 47

● Best practices are reviewed every four months. Input into the review process in- cludes:

● Lessons learned documents from project completed within the past four months ● Feedback from project managers, architects, and consultants ● Knowledge that subject matter experts (i.e., best practices owners) bring to the

table; this includes information gathered externally as well as internally ● Best practices library reporting and activity data (Computer Associates)

There are usually three types of decisions that can be made during the review process:

● Keep the best practice as is until the next review process. ● Update the best practice and continue using it until the next review process. ● Retire the best practice from service.

1.15 STEP 7: WHAT TO DO WITH A BEST PRACTICE

Given the defi nition that a best practice is an activity that leads to a sustained competitive advantage, it is no wonder that some companies have been reluctant to make their best practices known to the general public. Therefore, what should a company do with its best practices if not publicize them? The most common options available include:

● Sharing knowledge internally only: This is accomplished using the company ’s intranet to share information with employees. There may be a separate group within the company responsible for control of the information, perhaps even the PMO. Not all best practices are available to every employee. Some best practices may be password protected, as discussed below.

● Hidden from all but a select few: Some companies spend vast amounts of money on the preparation of forms, guidelines, templates, and checklists for project man- agement. These documents are viewed as both company-proprietary information and best practices and are provided to only a select few on a need-to-know basis. An example of a “restricted” best practice might be specialized forms and tem- plates for project approval where information contained within may be company- sensitive fi nancial data or the company ’s position on profi tability and market share.

● Advertise to the company ’s customers: In this approach, companies may develop a best practices brochure to market their achievements and may also maintain an extensive best practices library that is shared with their customers after contract award. In this case, best practices are viewed as competitive weapons.

Most companies today utilize some form of best practices library. According to a spokesperson from AT&T:

The best practices library is Sharepoint based and very easy to use both from a submission and a search perspective. Any Project Manager can submit a best practice at any time and can search for best practices submitted by others.

48 UNDERSTANDING BEST PRACTICES

Even though companies collect best practices, not all best practices are shared out- side of the company even during benchmarking studies where all parties are expected to share information. Students often ask why textbooks do not include more information on detailed best practices such as forms and templates. One company commented to the author:

We must have spent at least $1 million over the last several years developing an extensive template on how to evaluate the risks associated with transitioning a project from engineer- ing to manufacturing. Our company would not be happy giving this template to everyone who wants to purchase a book for $85. Some best practices templates are common knowl- edge and we would certainly share this information. But we view the transitioning risk template as proprietary knowledge not to be shared.

1.16 STEP 8: COMMUNICATING BEST PRACTICES ACROSS THE COMPANY

Knowledge transfer is one of the greatest challenges facing corporations. The larger the corporation, the greater the challenge of knowledge transfer. The situation is further complicated when corporate locations are dispersed over several continents. Without a structured approach for knowledge transfer, corporations can repeat mistakes as well as missing valuable opportunities. Corporate collaboration methods must be developed. NXP has found a way to overcome several of these barriers. Mark Gray, MBA, PMP, Ph.D., formerly senior project manager at NXP Semiconductor and now CEO of SigmaPM, discusses this approach. Mark calls this: To grow oaks, you need to start with nuts . . .:

One of the biggest problems facing project managers and their organizations today is how best to get knowledge transferred from the experts (or at least experienced) project manag- ers to the rest of the organization. Much has been written on lessons ignored and equally as much has been written on having lessons learned as a value-added component in the toolbox of project management. What seems to be missing is a sound approach for getting the knowledge transmitted (the identifi ed, captured, stored parts are all pretty obvious).

At NXP we noted that there are many lessons that are captured during projects or dur- ing their review but very little evidence that these lessons were even being seen by other project managers. One solution we put in place was to use the model of a Community of Practice (CoP) as described by Wenger 39 in his work on the subject. Using the same basic idea as used by Shell in their off-shore drilling platforms, we established local forums of “experts” with the specifi c mandate to create an arena in which project managers would feel comfortable sharing their fi ndings and learning ’s from their projects.

The process itself is very simple; Lessons are identifi ed by the project managers either from project debriefs or from peer reviews and these are then presented to the forum as a type of “war story”. It ’s important to note here that we look for both good and “less good” incidents to learn from. In general this leads to a good (sometimes spirited) debate on the topic from which the participants can take away a genuine learning experience. The

39. E. Wenger, R. McDermott, and W. M. Snyder, Cultivating Communities of Practice: A Guide to Managing Knowledge , Cambridge, MA: Harvard Business School Press, Cambridge, MA, 2002.

Step 8: Communicating Best Practices across the Company 49

results are of course somewhat qualitative in nature so to say we have clear measurable improvements as a direct result of these sessions would be diffi cult, however we have seen a general improvement in the overall performance of projects since we started this initiative.

Now for the hard part—building, and maintaining the CoP. Wenger gives some very good basics of how to construct CoP ’s, including the need to have a good core team, involvement of executive sponsors, clear outcomes, general house rules etc. He also talks about the need for a high level of energy input from the core team to create and maintain the momentum of the CoP. We have seen this in real life and add our own particular ele- ments to the recipe:

● Start with a nut—You need to have at least one very extroverted and charismatic lead fi gure. We seek out people that are not just experts in the fi eld but are almost fanatical in their dedication to developing and maturing project management.

● Plant it in the right place—You need to ensure the CoP does not interfere too much with either normal work or personal time. We generally hold our sessions around the lunch hour with food provided.

● You need occasionally to prune the CoP branches to promote strong growth. Groups can develop in directions which do not really promote the central theme of the CoP, in which case it ’s a good idea to spin them off to avoid dilution.

● When the members leave, don ’t panic, this is just seasonal. People come and go as their jobs change, their project pressure changes, etc. They ’ll be back . . .

● The CoP needs to produce more nuts which can be planted in other sites and thus grow an interlinked community of communities. In NXP ’s case we created a solid core team over the last few years with active communities sharing and learning in 10 different sites around the world.

There is no point in capturing best practices unless the workers know about it. The problem, as identifi ed above, is how to communicate this information to the workers, espe- cially in large, multinational companies. Some of the techniques include:

● Websites ● Best practices libraries ● Community of practice ● Newsletters ● E-mailings ● Internal seminars ● Transferring people ● Case studies ● Other techniques

Nortel Networks strives to ensure timely and consistent communications to all proj- ect managers worldwide to help drive continued success in the application of the global project management process. Examples of the various communication methods used by Nortel include:

● The PM Newsfl ash is published on a monthly basis to facilitate communications across the project management organization and related functions.

50 UNDERSTANDING BEST PRACTICES

● Project management communications sessions are held regularly, with a strong focus on providing training, metrics reviews, process and template updates, and so on.

● Broadcast bulletins are utilized to communicate time-sensitive information. ● A centralized repository has been established for project managers to facilitate

easy access to and sharing of project management–related information. 40

The comments by Nortel make it clear that best practices in project management can now permeate all business units of a company, especially those companies that are multinational.

One of the reasons for this is that we now view all activities in a company as a series of projects. Therefore, we are managing our business by projects. Given this fact, best practices in project management are now appearing throughout the company.

Publishing best practices in some form seems to be the preferred method of communi- cations. At Indra, Enrique Sevilla Molina, PMP, formerly corporate PMO director, states:

They are published at corporate level and at the corresponding level inside the affected business unit. Regular courses and training is also provided for newly appointed Project Managers, and their use is periodically reviewed and verifi ed by the internal audit teams. Moreover, the PM corporate tools automate the applications of best practices in projects, as PM best practices become requirements to the PM information systems.

According to a spokesperson from AT&T:

We have defi ned a best practice as any tool, template or activity that has had a positive impact on the triple constraint and/or any of the PMBOK ® Guide Process or Knowledge areas. We allow the individual project manager to determine if it is a best practice based on these criteria. We communicate this through a monthly project management newsletter and highlight a best practice of the month for our project management community.

Another strategic importance of best practices in project management can be seen from the comments below by Suzanne Zale, Hewlett-Packard operations director and for- merly global program manager at EDS 41 :

Driven by the world economy, there is a tendency toward an increasing number of large- scale global or international projects. Project managers who do not have global experience tend to treat these global projects as large national projects. However, they are completely different. A more robust project management framework will become more important for such projects. Planning up front with a global perspective becomes extremely important. As an example, establishing a team that has knowledge about geographic regions relevant to the project will be critical to the success of the projects. Project managers must also know how to operate in those geographic areas. It is also essential that all project team members are trained and understand the same overall project management methodology.

Globalization and technology will make sound project management practice even more important.

40. H. Kerzner, Project Management Best Practices: Achieving Global Excellence , Hoboken, NJ: Wiley, 2006, p. 18. 41. Harold Kerzner, Advanced Project Management: Best Practices on Implementation , 2nd edition, Hoboken, NJ: Wiley, 2004; p.21

Common Beliefs 51

Suzanne Zale ’s comments illustrate the importance of extracting best practices from global projects. This could very well be the future of best practices by the end of this decade.

1.17 STEP 9: ENSURING USAGE OF THE BEST PRACTICES

Why go through the complex process of capturing best practices if people are not going to use them? When companies advertise to their clients that they have best practices, it is understood that tracking of the best practices and how they are used must be done. This is normally part of the responsibility of the PMO. The PMO may have the authority to regularly audit projects to ensure the usage of a best practice but may not have the author- ity to enforce the usage. The PMO may need to seek out assistance from the head of the PMO, the project sponsor, or various stakeholders for enforcement.

When best practices are used as competitive weapons and advertised to potential cus- tomers as part of competitive bidding, the marketing and sales force must understand the best practices and explain this usage to the customers. Unlike ten years ago, the marketing and sales force today has a good understanding of project management and the accompa- nying best practices.

1.18 COMMON BELIEFS

There are several common beliefs concerning best practices that companies have found to be valid. A partial list is:

● Because best practices can be interrelated, the identifi cation of one best practice can lead to the discovery of another best practice, especially in the same category or level of best practices. Best practices may be self-perpetuating.

● Because of the dependencies that can exist between best practices, it is often easier to identify categories for best practices rather than individual best practices.

● Best practices may not be transferable. What works well for one company may not work for another company.

● Even though some best practices seem simplistic and based on common sense in most companies, the constant reminder and use of these best practices lead to excellence and customer satisfaction.

● Best practices are not limited exclusively to companies in good fi nancial health. Companies that are cash rich can make a $10 million mistake and write it off. But companies that are cash poor are very careful in how they approve projects, moni- tor performance, and evaluate whether or not to cancel the project.

Care must be taken that the implementation of a best practice does not lead to det- rimental results. One company decided that the organization had to recognize project management as a profession in order to maximize performance and retain qualifi ed people. A project management career path was created and integrated into the corporate reward system.

52 UNDERSTANDING BEST PRACTICES

Unfortunately, the company made a severe mistake. Project managers were given sig- nifi cantly larger salary increases than line managers and workers. People became jealous of the project managers and applied for transfer into project management, thinking that the “grass was greener.” The company ’s technical prowess diminished and some people resigned when not given the opportunity to become a project manager.

Sometimes, the implementation of a best practice is done with the best of intentions, but the fi nal result either does not meet management ’s expectations or may even produce an undesirable effect. The undesirable effect may not be apparent for some time. As an exam- ple, consider the fi rst best practice in Table 1–8 . Several companies are now using traffi c light reporting for their projects. One company streamlined its intranet project management methodology to include “traffi c light” status reporting. Beside every work package in the work breakdown was a traffi c light capable of turning red, yellow, or green. Status reporting was simplifi ed and easy for management to follow. The time spent by executives in status review meetings was signifi cantly reduced and signifi cant cost savings were realized.

Initially, this best practice appeared to be benefi cial for the company. However, after a few months, it became apparent that the status of a work package, as seen by a traffi c light, was not as accurate as the more expensive written reports. There was also some concern as to who would make the decision on the color of the traffi c light. Eventually, the traf- fi c light system was enlarged to include eight colors, and guidelines were established for the decision on the color of the lights. In this case, the company was fortunate enough to identify the disadvantage of the best practice and correct it. Not all disadvantages are easily identifi ed, and those that are may not always be correctable.

There are other reasons why best practices can fail or provide unsatisfactory results. These include:

● Lack of stability, clarity, or understanding of the best practice ● Failure to use best practices correctly ● Identifying a best practice that lacks rigor ● Identifying a best practice based upon erroneous judgment ● Failing to provide value

1.19 BEST PRACTICES LIBRARY

With the premise that project management knowledge and best practices are intellectual properties, how does a company retain this information? The solution is usually the

TABLE 1–8. IMPROPER APPLICATION OF BEST PRACTICES

Type of Best Practice Expected Advantage Potential Disadvantage

Use of traffi c light reporting Speed and simplicity Poor accuracy of information

Use of a risk management template/form Forward looking and accurate Inability to see all possible risks

Highly detailed WBS Control, accuracy, and completeness More control and cost of reporting

Using enterprise project management on Standardization and consistency Too expensive on certain projects all projects

Using specialized software Better decision making Too much reliance on tools

Best Practices Library 53

creation of a best practices library. Figure 1–12 shows the three levels of best practices that seem most appropriate for storage in a best practices library.

Figure 1–13 shows the process of creating a best practices library. The bottom level is the discovery and understanding of what is or is not a “potential” best practice. The sources for potential best practices can originate anywhere within the organization.

The next level is the evaluation level to confi rm that it is a best practice. The evalua- tion process can be done by the PMO or a committee but should have involvement by the senior levels of management. The evaluation process is very diffi cult because a one-time positive occurrence may not refl ect a best practice that will be repetitive. There must exist established criteria for the evaluation of a best practice.

Once a best practice is established, most companies provide a more detailed explana- tion of the best practice as well as providing a means for answering questions concern- ing its use. However, each company may have a different approach to disseminating this critical intellectual property. Most companies prefer to make maximum utilization out of the company ’s intranet websites. However, some companies simply consider their current forms and templates as the ongoing best practices library.

Professional (PMI) Standards

Industry Standards

Company Specific

Project Specific

Individual

C om

pl ex

it y

Quantity Low

High

Best Practices Libraries

Figure 1–12. Levels of best practices.

DISCOVERY AND UNDERSTANDING

EVALUATION

CLASSIFICATION

STORAGE

KNOWLEDGE TRANSFER:

• INTRANET

• SEMINARS

• CASE STUDIES

• OTHERS

Figure 1–13. Creating a best practices library.

54 UNDERSTANDING BEST PRACTICES

Figure 1–12 showed the levels of best practices, but the classifi cation system for storage purposes can be signifi cantly different. Figure 1–14 shows a typical classifi cation system for a best practices library.

The purpose for creating a best practices library is to transfer knowledge to the employees. The knowledge can be transferred through the company intranet, seminars on best practices, and case studies. Some companies require that the project team prepare case studies on lessons learned and best practices before the team is disbanded. These compa- nies then use the case studies in company-sponsored seminars. Best practices and lessons learned must be communicated to the entire organization. The problem is determining how to do it effectively.

Another critical problem is best practices overload. One company started up a best practices library and, after a few years, had amassed what it considered to be hundreds of best practices. Nobody bothered to reevaluate whether or not all of these were still best practices. After reevaluation had taken place, it was determined that less than one-third of these were still regarded as best practices. Some were no longer best practices, others needed to be updated, and others had to be replaced with newer best practices.

1.20 HEWLETT-PACKARD: BEST PRACTICES IN ACTION 42

The focus of our organization within HP is the management of “IT,” or information technology. IT consist of all of the hardware, software, net-

Identifying Specifi c Activities

as Best Practices

42. Material on HP has been provided by Doug Bolzman, consultant architect, PMP ® , ITIL Expert at HP.

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Figure 1–14. Best practices library.

Hewlett-Packard: Best Practices in Action 55

works, facilities that provide information, at the right time, to the right people, to enable the people to perform their jobs or fulfi ll their business obligations/responsibilities. IT depart- ments have matured over the decades to resemble the other business units of an organization especially in the management of IT in the form of services. A best practice for the industry called ITIL ® , which is the short name for IT Infrastructure Library ® , was introduced in the mid-eighties and revolutionized the IT industry by promoting a single set of best practices that have been built by the global IT community. In the 90’s we subscribed to the initial release of ITIL which was a collection of individual publications. At the turn of the century, we subscribed to version 2 which evolved the individual books for a grouping of practices, centered on Service Support and Service Delivery. Then we (along with the rest of the IT community) upgraded to the 2007 and 2011 editions that provided a lifecycle management approach for the management of IT Services. The reason for the history lesson is that we have subscribed to and have matured our practices with the maturity of this best practice.

IT Services are developed to support the functionality of a business unit. So a “bill- ing system” is the IT Service to the Financial Team ’s function for revenue collection. The billing system is broken into IT components such as business applications, fi le servers, network connectivity, facilities etc. ITIL enables companies to manage those components with best practices such as Availability Management, Capacity Management, Problem Management and Change Management. Today, we have identifi ed 28 best practices from ITIL and we developed an additional 6 that enable the implementation and management of an IT Service Lifecycle approach.

Our brief defi nition of best practice is a leveragable capability. ITIL defi nes a capability as the ability of an organization or IT service to carry out an activity. A capability is comprised of three designs, a pro-

cess design (the activities to be followed to produce the result), a people design (the struc- ture and training of the role to equip the person to fulfi ll their responsibilities), and a tool design (the equipment or application used to automate the work).

To illustrate this, let ’s look at something we all understand, a hospital emergency room. The emergency room staff does not know what will come through the emergency doors; they have to be prepared for everything! Once a patient comes through the doors, either on their own or on a gurney the situation is identifi ed and the proper room, tools and personnel are engaged to properly react. If someone is having a heart attack, the emer- gency room personnel have a crash cart prepared with all of the equipment and required drugs in addition to the proper procedures to follow, and doctors with the appropriate skills. If someone comes in with a sprained ankle, they will be sitting in the waiting room for quite a while as higher-priority patients are managed. But the sprained ankle does not wait forever, they are scheduled in.

Much like a hospital, the IT Service Desk does not know who will call with what problem, but they have to be prepared for everything. Once a call comes into the Service Desk, either a phone call or a triggered event, the situation is identifi ed and the proper personnel and tools properly react. If someone has a question or a simple request, which can be handled at the initial call, if a vital business function is down due to an IT error, the appropriate personnel are assembled in a conference call and all emergency actions and escalations are taken until the error is corrected and the business functionality is restored.

Defi nition of a Best Practice

56 UNDERSTANDING BEST PRACTICES

A functional Service Desk with urgent incident response is based on the best prac- tice of a hospital emergency room. The specifi c capabilities for the IT Delivery Teams or Operation Staff to carry out an activity is based on people, process and tool designs.

In order to manage each of the Best Practices consistently, each capability is docu- mented following the Best Practice Profi le template. Some of the information contained within the profi le includes the description of the practice, the type, the value to the com- pany, list of practitioners to use the practice. Each of the practices have documentation of the assets, asset status and the business drivers that have been used to develop the practice.

Final Decision on a Best Practice

In order to understand who has the fi nal decision of what is a best practice, we need to explore how we manage best practices. This is shown in Figure 1–15 . The management of practices starts with establishing the directorate of people that will own and manage the practice. For this example, the best practice is Incident Management. All aspects of the practice will be managed; from the budgets and direction to how it fi ts into the overall service model to ownership and the buy-in of the stakeholders and fi nally to the manage- ment of improvements or design revisions (and de-commissions).

Secondly, is the understanding of how the best practice will be used, the value to be obtained and the drivers that will dictate the required design. This is where many “best practices” fail, when there is a “fi ts all sizes” mentality. We have 3 or 4 Incident Management designs that are the best practice for the 3 or 4 clients they support. Each best practice is designed around a specifi c set of attributes (business drivers) which denotes

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Accountable for direction, development and execution of the component

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All Client Performing Supplier Designs are measured against and will conform to the stated attributes

People (Roles, Qualifications, Training)

Process (Flow charts, Work Instructions)

Tool (Data Model, Applications, Templates)

Component Impacts

Description Capabilities Requirements Standards Metrics Terminology

Figure 1–15. Management of a best practice.

DTE Energy 57

the characteristics of the practice that make it the best fi t for that client. Unless each client shares the same business drivers and standards, there will never be a single best practice that can be applied to meet their needs. Some clients do request a leveraged design and are fl exible to adopt the single set of attributes that they will be restricted to, allowing them a lower-cost, leveraged design that is implemented in many clients.

Thirdly, the designs for the people, process, and tools are built and integrated to support the agreed-upon attributes. This model will support a single best practice for incident, or it can be broken down further to the 25 specifi c capabilities such as logging an incident or determining the incident priority rating. Understanding and managing at the capability level provides us the fl exibility to mix and match capability designs to meet the client ’s needs. If the client has governmental standards, such as Sarbanes-Oxley, or industry stan- dards, such [as ones for the] pharmaceutical [industry], we can then identify the designs that were built to comply with those standards.

The library of our IT Service Management practices are stored in a shared workgroup tool with a meta-data type of sorting. Each practice is under version control and mapped to the company that it was applied

to. This way, if we have two companies in the same industry, we can always start with an existing design, then adjust based on the defi nition of their attributes.

The Number of Best Practices

We have hundreds of best practices in the library since they can be at a component level (Incident Management) or a capability level (25 capabilities of Incident Management). In addition, since each capability is composed of a People, Process and tool designs so the library is best managed in a Confi guration Management database.

The best practices used by our organization are managed by ITSM Consultants and we maintain our service collateral of best practices. Each ITSM consultant service has an owner assigned to oversee the

best practice designs and to apply the correct design as the starting point of a new engage- ment. This is a value add for a client to hire our consultants since they can be assured that we will start with the best applicable practice without having to understand the entire system. They can be the customers, provide us their attributes and we demonstrate the design based on compliance to the attributes.

1.21 DTE ENERGY 43

In 2002, the Information Technology Services (ITS) Organization at DTE Energy initiated an effort to collect and document best practices for project management. Our intent was to publish, communicate, and ensure these best practices were adopted across the culture.

A Library of Best Practices

Getting Support for Best

Practices

43. Material on DTE Energy provided by Joseph C. Thomas, PMP, senior project manager, and Steve Baker, PMP, CCP, principal analyst, Process and Skills Organization.

58 UNDERSTANDING BEST PRACTICES

We believed this approach would lead to continuous improvement opportunities, resulting in higher quality, more timely, and less expensive software-based business solutions.

Rather than describe the ideal state of project management as we could envision it, we decided to describe the current state as it was being practiced by project managers in the organization. The goal was to establish a baseline set of standards that we knew project managers could meet because we were already doing them.

We formed a small team of our most experienced project managers and IT leaders. This team drew upon their recent project experiences to identify a set of best practices. While not every project manager uniformly followed them, the best practices represented the highest common denominator rather than the lowest. We knew that these were feasible since they represented practical experiences of our most successful project managers, and they also characterized the practices we wanted applied consistently across all projects. In this way, the bar was low enough to be achievable but high enough to be a meaningful improvement for most of the projects.

The team agreed to describe the best practices in terms of “what” rather than “how.” We wanted to avoid the diffi cult and time-consuming task of defi ning detailed procedures with formal documentation. Rather, we described what project managers needed to do and the artifacts that project managers needed to produce. This provided the practicing project managers with some degree of fl exibility in the methods (the “how”) they employed to produce the results (the “what”).

We published the best practices in a hundred-page “Project Management Standards and Guidelines” manual (Table of Contents, Table 1.9 ) and also posted them on our Solution Delivery Process Center (SDPC) intranet website (Screen Shot, Figure 1–16 ). We included

TABLE 1–9. PROJECT MANAGEMENT STANDARDS AND GUIDELINES

Software Engineering, Methods, and Staffi ng Project Management Standards and Guidelines

Introduction . . . 1 Target Audience . . . 1 Purpose . . . 1 Content . . . 2 Solution Delivery Process Center . . . 3 Certify Your Application Checklist . . . 3 Document Revisions . . . 3 Document Conventions . . . 4 1. Project Initiating . . . 7 1.1 Customer Relationship . . . 8 1.2 Funding . . . 9 1.3 Registration . . . 10 1.4 Charter . . . 12 2. Project Planning . . . 17 2.1 Scope . . . 18 2.2 Feature/Requirement List . . . 20 2.3 Work Item List . . . 22

DTE Energy 59

TABLE 1–9. PROJECT MANAGEMENT STANDARDS AND GUIDELINES

Software Engineering, Methods, and Staffi ng Project Management Standards and Guidelines

2.4 Schedule . . . 25 2.5 Cost Forecast . . . 28 2.6 IT Environmental Readiness . . . 30 2.7 Staffi ng . . . 31 2.8 Team Roster . . . 33 2.9 Team Capacity/Resource Allocation Plan . . . 35 2.10 Infrastructure Resources . . . 38 2.11 End-User Training Plan . . . 40 2.12 Measurements . . . 41 2.13 External Procurement . . . 43 2.14 Estimates . . . 46 2.15 Quality . . . 49 2.16 Deploying, Transitioning, and Closing . . . 51 2.17 Risk List . . . 52 2.18 Testing . . . 53 2.19 Constraint-Based Commitment . . . 55 2.20 Data Conversion . . . 56 3. Executing and Controlling . . . 59 3.1 Constraint-Based Execution . . . 60 3.2 Risk Management . . . 62 3.3 Issue Management . . . 63 3.4 Performance Reporting . . . 65 3.5 Test Case List . . . 69 3.6 Defect and Enhancement List . . . 71 3.7 Project Kickoff Meeting . . . 73 3.8 Daily Team Meeting . . . 75 3.9 Feature Test-Business-Development (TBD) Meeting . . . 76 3.10 Design Slam Meeting . . . 77 3.11 Retrospective Meeting . . . 78 3.12 Team Member Performance Feedback . . . 81 3.13 Compliance to ITS Standards and Guidelines . . . 83 3.14 Actual Cost Tracking . . . 84 3.15 External Procurement Execution . . . 86 3.16 Production Migration . . . 88 3.17 Application Portfolio Migration . . . 90 3.18 Time Approval . . . 91 4. Project Closing . . . 93 4.1 Project Closeout . . . 94 4.2 After Action Review . . . 95 4.3 Releasing Resources . . . 96 4.4 Administrative Closure . . . 97 Appendix A: Document Revisions . . . 99 Version 1.1 Revisions . . . 99

60 UNDERSTANDING BEST PRACTICES

references to other resources such as standard forms, templates, and procedures that already existed.

The SDPC is our process asset library containing scores of high-level role and process descriptions, easy-to-access templates and examples, and links to various resources from other departments across ITS. We designed our digital library to be usable for a variety of perspectives, including role-based (“I am a . . .”), milestone-based (“We are at . . .”), artifact-based (“I need a . . .”), and so on.

We launched the Standards and Guidelines materials and the SDPC library with a diverse communication strategy, targeting the right message to the right audience at the right time. We included a feedback process to ensure the evolution and applicability of the standards over time. This continuous improvement process includes (a) an inbound email account for receiving comments, suggestions, and ideas; (b) a review and update process including roles and milestones; and (c) timely updates to the SDPC and targeted printings of the Standards and Guidelines manual.

As a way to capture our lessons learned from each project, we adopted the After Action Review (AAR) process. Every project conducts an AAR upon completion, and we seek improvements to, and innovations beyond, our existing processes and templates. We institutionalize these improvements within our evolving Standards and Guidelines and the SDPC library. We solved our lessons learned dilemma (best practices were dutifully archived but rarely referenced) by incorporating each discovery within our Standards and Guidelines.

Figure 1–16. Solution delivery process center screen shot.

A Consultant’s View of Project Management and Best Practices 61

Standards and Guidelines, in and of themselves, are a means to an end. We found that simply publishing and communicating them is not enough to meaningfully impact our cul- ture. To that end, we instituted a Quality Management Group (QMG) staffed with a small, diverse team of experts. The QMG both enables our projects with consulting services and education, and ensures our projects are in compliance with published Standards and Guidelines. With fi ve inspection milestones, the QMG demonstrates our organizational commitment to best practices and continuous improvement.

1.22 A CONSULTANT ’S VIEW OF PROJECT MANAGEMENT AND

BEST PRACTICES

When companies begin their quest for excellence in project management, emphasis is usually placed upon external benchmarking. While benchmarking studies have merit, the information obtained may have limited or no real value for the company conducting the benchmarking even though they started out with the greatest of intentions. Perhaps the better choice is to hire consultants that can bring to the table expertise from a variety of companies, both large and small. The remainder of this section has been provided by Sandra Kumorowski. 44

Generally, in the small business environment, small business owners are more inclined to use project management practices—sometimes not intentionally and mostly through common sense—than anywhere

else. I have seen quite sophisticated project estimating, budgeting, and scheduling prac- tices in the small business environment as small business owners consider it the number one skill to master because their livelihood relies on that skill. Scope and objectives are very well defi ned and expectations set at the beginning of the project. That can, however, vary by industry. Let me start with two examples from construction and health care.

My husband has owned his painting (residential and commercial paint- ing) business for over a decade now. Over so many years, there was not a single project on which he had lost money. His precise estimating

skills, communication style, and managerial experience enable him to create quite seamless and timely project experiences. When he works with a general contractor, where the success of the construction project lies in the precise alignment of all subcontracting services, accu- rate project scheduling is critical. When he works with direct clients, precision and time are even more important as clients’ lives can be directly impacted by the painting project.

The number one success factor in his business is a very intensive and continuous training of his employees . When he hires someone new, the employee goes through an intensive training. All employees are continuously updated and trained on new innovations and techniques in painting.

Project Management in the

Small Business Environment

Project Management in

Construction

44. Sandra Kumorowski is an assistant professor of marketing communications at Columbia College Chicago and marketing & communications chair, Christopher & Dana Reeve Foundation, Chicago; she is also chief business advisor & owner, Enakta LLC; P: 1–224-715-5666; E: [email protected], [email protected]

mailto:[email protected]

62 UNDERSTANDING BEST PRACTICES

The number two success factor is managed team autonomy . Each team has a team leader who is fully responsible for the project performance and is required to update my husband every day on project progress. My husband progressed to this managed team autonomy system from the previous system where he personally almost fully controlled each project (which took up too much of his time and was not necessarily more profi table) and found it very effective. The new system was met with very positive response from the employees who felt more empowered and actually started performing better, especially in terms of time. Now, they fi nish projects in shorter periods of time keeping up the same if not better quality standards.

My husband ’s natural project management skills are well refi ned and he has never used any formal project management concepts or project management software. He has developed his own project management system that has been working well for him. However, there are many project management challenges in the construction industry. Therefore, I believe there is a great opportunity for these small business owners to be intro- duced to and educated about project management methodology from which they could benefi t to a great extent. When surveyed, most of them considered it too time-consuming. But this opinion comes mainly from limited knowledge about project management and often limited computer skills.

Based on my 7-year experience in a periodontal specialty practice, I have to admit that the project and patient management practices were quite advanced. The practice was run by one doctor and his incredibly

time-effi cient and advanced surgical skills allowed for a large number of patients to be seen every day. In one day, the practice could see up to 60 patients divided between the doctor, the hygienist, and the postoperative assistant. That required quite sophisticated scheduling and time-monitoring practices. We used dental practice software Eagelsoft, which, although somewhat limited in reports capability, provided effective tracking and monitoring tools. On average, a patient would see us four to six times a year. To avoid cancellations and disrup- tions in the schedule, we attempted to schedule all appointments in advance for each patient and established a strict cancellation policy—something quite unusual in the dental category.

Each patient was like a miniproject and without the software and methodical sched- uling, we would not be able to manage them successfully. The practice, thanks to its meticulous approach to operations management and scheduling in particular, has enjoyed continuous growth.

Project work could be quite challenging for many college students. In higher education, most of the time, projects represent 50 percent of the fi nal grade, but there is not enough attention paid to project management directions.

I did a survey in my class and, out of 44 students, only 2 were familiar with project management. About 70 percent of students perceived project work as a big challenge mainly because of the project management and team management issues.

So I have taken a proactive approach and dedicated about 10 percent of the total semester class time to project management practices and methods to make their project work more effective and successful.

Project Management in

Health Care/Dental Category

Project Management in Higher

Education

A Consultant’s View of Project Management and Best Practices 63

Working in the marketing and advertising category for years now [has] enabled me to study and analyze how project management was under- stood in the agency environment. Based on my experience, fi rst of all,

there is not enough awareness about project management practices and proven benefi ts. People do not believe in it and, most of the time, project management is perceived as a deterrent to creativity. But it is important to state that the way client accounts and projects are managed is quite consistent with a project management methodology. The problem, however, is that account planners do not reach out to the project management discipline to improve upon processes and make projects perform better. There is no formal relationship between project management and account management in marketing/advertising category.

When I introduced project management to my company of advertising executives as a way to improve our business, it took me some time to make them believe in it.

The story of how I did it follows.

About the Company My company was a small (22 employees) but high-profi le successful marketing strategy consultancy. Founded in 2003 by an advertising executive, it focuses on delivery of research

insights and related actionable strategy based on the analysis of online conversations. It caters to Fortune 500 companies and earned its reputation on coming up with the “big idea” in each project and helping the brands in building their long-term brand equity.

Need for a Project Management Initiative? Due to the project-based nature of the company, I was approached by the top management to evaluate current project manage- ment practices and establish a more formal project management system. As the company grew, the need for a consistent system for our project planning and execution became very apparent.

Our projects ranged from two-week turnaround projects to eight-week research stud- ies and there was a need to create a project portfolio management system to better control our future planning.

In addition, some more serious human issues began to surface. Most of the problems were in the initiation and planning phases where communication got lost mainly due to too many people being involved. Scopes were sometimes out of control and the team would fi nd out at the end of the project that they were working on something different than what the client wanted. Main message (scope/objectives) would get lost.

Later in the project, the scoping mistakes would exponentially amplify into sometimes barely controllable situations where team members would have to stay late into the night and on weekends trying to bring the project to the satisfactory completion stage. The stress levels were sometimes very high.

Another issue that kept disturbing our projects was team dynamics. Each team con- sisted of two members—a senior strategist who was the project lead and a junior strategist. The role of the senior strategist on a project was defi ned as 80 percent strategy develop- ment and 20 percent data gathering and analysis. The junior strategist had to do 80 percent data gathering and was contributing only 20 percent to the strategy development. That led to some strong feelings of unfairness, and some team members refused to work together. That needed to be changed.

Project Management in the

Marketing and Advertising

Sponsors

Establish the release management “environment” for the Company

Release management directorate

Transition

Execute / utilize the release management environment for their projects / programs

Company programs

Utilize

Planning Integration Deployment Operations

158 JOURNEY TO EXCELLENCE

In order to enhance the opportunities for people who are currently assigned a project manager role, we have identified additional roles that the project manager can perform while meeting their commitments. We have identified various roles for IT service devel- opment, such as the component manager as illustrated in the Component Structure figure. A component manager role includes project management, but also includes a designer role, such as process design. An employee that can perform multiple roles simultaneously will provide more value to the organization than an employee that can perform only a single role. This dual role assignment will also provide the manager other opportunities or apply other skills than the routine scope management, resource management, and communication management etc. This approach also supports an environment of resource balancing. If the PMO has staff with other leveragable skills such as process design, courseware design, role design, they can be assigned other types of work, where the orga- nization does not need to onboard new talent. This also helps when there are reductions in project management work and the staff can be re-allocated and not released.

When I was contemplating my career and opportunities for advancement were made available, such as being a team leader or a program leader, I listened to my manager and chief mentor who gave me this advice. You have one or two skills under your belt and can start being promoted. But without a broad base of skills, your advancement will be severely limited. If you are contemplating being an executive or business unit lead, think about all of the challenges that they will face and aggressively seek those types of assign- ments, from financial, to disaster recovery, to security so that you can fall back on your experiences when challenged with those situations. The bottom line, you do not want to be learning on the job after you are promoted and the outcome of your inexperience will impact many people and the business you are in charge of. I never forgot that advice and saw that it came true when my peers advanced rapidly, then hit a plateau in their careers as they made basic mistakes and were held back due to their experience.

Project Management provides a magnitude of experience for a person in their career path since it touches many business aspects that need to be formally managed. Project managers also have an opportunity to experience many different business situations since they can be assigned to most any project. A company would be wise to formally manage these types of skills, make opportunities available for their people’s skill growth, then promote from their PMO as these people demonstrate the skills for more challenging business needs. Then as they take the reins, they will be more valuable in setting direction if they have experience in process design, data modeling, courseware development or risk management since they will be able to visualize and communicate their direction and assist in removing the roadblocks.

As for project management job descriptions, Doug Bolzman continues:

The project management role is baked into other functional roles of our resource model. The project manager role is part of our role design for release manager, component manager, master release controller, and ITSM consultant. We have won new business due the fact that our ITSM Consultants could roll up their sleeves and perform project management func- tions. We sell our ITSM Consulting services with the caveat that we can step in and fulfill the immediate business needs while we define the overall environment along with training and mentoring your staff to take it over. The following is an excerpt from the role design for a component manager:

Agent Rational. The component manager is required to lead all resources and activi- ties for any modifications to the design or direction of an ITSM component

Hewlett-Packard: The Journey and the Obstacles 159

Agent Description. The component manager manages all aspect of the compo- nent for each new release including the release matrix, release plan, scope, release schedule, budget, resources, and communications. They work directly with the release manager and coordinate the activities of the design team, ensuring the release plan is followed and the design direction is completed for implementation.

Overall Responsibilities. Support the component owner in a project man- agement capacity for one or more ITSM component, ensuring the design of the component is meeting the intended client needs, business drivers and business justifications

Support the release manager as the component is bundled into a larger bundle of components

Provide the planning and oversight for the management and control of release tasks, deliverables, work plans, budgets, staffing, issues, and milestones

Estimate and manage resource and financial needs, make work assignments, set priorities and establish the release schedule

Maintain the project workbook repository

Description: This section will detail the responsibilities that the agent encounters for each impacted component.

Service Strategy Determine the specific impacts that a new IT release will have on their component in terms of process, tool, role, and training design impacts. Determine the required skillets and experience of the component design team for a specific release. Lead the component design team in defining the component test cases, plans and pass/fail conditions.

Service Design Lead the component design team in developing and testing all required installation, operations or training materials that will be required by the deployment or operations teams Oversee the release test team during the validation of the component designs

Service Transition Provide support to the transition team if the component installation is not proceeding at the customer site as designed.

Description: This section will detail the deliverables or work products that are produced by this role.

Deliverable Description

Release Plans The purpose of this document is to accurately document and communicate the scope, intent, plan, schedule for each version of the component

Component Inventory (tools & processes)

The purpose for conducting this inventory is to provide the information required to understand the current component environment. This inventory provides a single location to identify all the processes, tools, metrics, resources, and decision makers that currently make up the component

Description: This section will detail the specific courses that are required for this role.

Course ID Name Description Location

SMLC-Aware SMLC Overview Awareness

ITSM-Library ITSM Library Structure

Component-Specific

Responsibilities

Work Products

Required Training

160 JOURNEY TO EXCELLENCE

Description: This section will detail the tools that this role will require access in the delivery of their obligations.

Tool Name Access Level

Every person filling the role of the component manager will be inter- viewed and will be able to demonstrate his/her qualifications to meet the needs of each version release.

● ITIL service lifecycle practitioner trained (ITIL foundation certification pre- ferred—or obtained in first 3 months)

● 2–3 years project/program management experience or equivalent team leading experience or PMI certified

● Self-motivator and self-starter must be able to work without direct supervision.

● Strong communicator, both oral and written. Communicate appro- priate information to all levels of the organization. Deliver execu- tive presentations.

This list is used by multiple organizations to manage the overall resource needs, resource balancing, and resource recruiting. As every organization uses the same listing, managing resources becomes more efficient and accurate.

3.14 COOPER STANDARD11

Bill Pumphrey (Cooper Standard President NA - PMP) identified Project Management as a critical need for the success of the company. He began a project of implementation including PM Best Practices. To

execute this, he brought in Dave Kandt to develop a People, Process and Structure strategy and implement Project Management in the organization. Bill’s role was Project Sponsor.

Dave Kandt brought with him three decades of Project Management experience and was formerly Group Vice President of Program Management, Continuous Improvement and Quality at Johnson Controls. Dave had been responsible for Project Management in all product and customer groups globally with businesses, plant and product launches in all regions including Europe, China, South East Asia, Japan, Korea, the Americas and expansion regions including Russia and Turkey. Dave managed eight PMOs (Program Management Offices) in the various product and customer groups.

Tool Access

Qualifications

Skills

Best Practices at Cooper

Standard

Cooper Standard 161

Dave had been responsible for Project Management systems, organization and people, including:

● The JCI Project Management System (PLUS). ● The Project Management Academy. ● Program Management hiring and career pathing. ● The PMLDP (Program Management Leadership Development Program). ● Guidelines and procedures on the management global projects. ● Project Management Skills Assessment. ● Work Force Planning process for Simultaneous Development Teams. ● Standardized global project reporting and KPI system. ● Project Management Continuous Improvement Process (Excellence in Project

Execution).

1. Establishing PM as a separate department with Senior Project Managers running Project Management for the four Business Units. This effectively clarified that the Project Manager was ultimately

responsible for project success, ran the Project Teams, and had the authority to drive team decisions and commitments to customers.

2. Selection of Project Managers based on a written Skills Assessment tool that resulted in numerical ratings for each individual. This methodology added clarity to the requirements for Project Managers which included 9 basic areas: Leadership/Program Team Management /Scope Management/Launch Planning/Financial Management/Timing Management/Product Knowledge/Customer Satisfaction/Global Project Management Skills. The last area was necessary because many of the automotive projects are now man- aged and manufactured in multiple regions.

3. Modification of the existing PM process to simplify and clarify the Gate require- ments based on industry standard Deliverables. Along with the basic gate system, other project management standards were released globally, to facilitate the global nature of the business, and allow Project Teams to function across multiple regions. A Six Gate standard was adopted as shown in Figure 3–14.

1. Company-wide training in PM with focus on CLAUS. Special focus on Engineering, Purchasing and Operations ensured alignment within all departments.

2. Implementation of a global PMO responsible for People, Process, Metrics, and Training. This allowed a global focus for the Project Managers and a clear organization.

3. Requirements for the PMs to take the IIL PMP certification material, as well as pass the PMP exam. This formalized the profession of project management in the company.

4. Collocation of the Project Teams including PMs, Account Managers, Engineering and CAD experts. Once this was done, Cost Analysts and Process Engineers were added to allow true cross functional collaboration in the Project Teams.

5. A formal Start On Time focus for future business opportunities with standardized block timing to ensure adequate development and tooling time for new products. Significant focus was added to the future business opportunities well before the timing and projects

Key Elements of the Strategy

Accomplished in 2012:

Production Release

Equipment & Tools In Plant

PPAP Start of

Production Post Launch

Report

Gates

Quote Start Program

Start Prototype

Release Testing Start

Customer Events

Phases Phase 6

Product and Process

Optimization ProductionQuote

Design and Development

Prototype Tools & Equipment

DV Testing Production Tools &

Equipment PV Testing

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

G4 G5G3 G6G2G1G0

Prototype Shipments to Customers

Production Shipments to Customers

Cooper LAUnch Standard

Figure 3–14. Cooper launch standard.

162

Cooper Standard 163

became critical. This also allowed better budgeting for resources, corporate expenses, capi- tal investments and plant loading.

6. Formalization of the Project Team roles via standardized Position Descriptions. This, combined with the CLAUS gate structure and the standard deliverables allowed com- mon understanding of Who was responsible for What Deliverables and by When across all 25 plants in NA and around the world.

7. Implementation of standard Executive Project Reviews and Launch Readiness Reviews managed by the Operations team at plant facilities for new projects. This increased the focus on project execution and put the executive team squarely in the middle of the launch process and in position to make critical decisions early in the project.

8. Implementation of a Risk Assessment process for all new business quotes. This allowed the executive team to determine clearly the skills and quantity of the project team, as well as plan for special support for challenging products or manufacturing processes.

9. Implementation of Project Charters by Gate 1 for all projects with focus on financial targets, timing, Project Team staffing and Risk Assessment for Engineering, Manufacturing, Quality, Finance and Supplier Performance. The key element of the Charter was the clos- ing document – a standard Risk and Mitigation form with Red/Yellow/Green risk ratings and required Mitigation Strategies for each (there were no Green risks, by definition). The Project Teams at this stage of the project would request specific help from the executive team where support was needed.

10. Scope Change approval and control documents. If the scope changed based on either Cooper Standard decisions or customer requests, a revised Project Charter was required with new sign off by the executive team.

Limiting Innovation In Cycle for new business opportunities.

1. Organizational development of the Project Teams at the 24 plant facilities in North America. This will be led by the PMO with greater focus on skill development and placement of project team members in

the operations. 2. Training in formalized problem solving for all Project Team members. Cooper Standard

has established Problem Solving as a core part of their Continuous Improvement process and will formalize the approach globally.

3. Implementation of a PM Dashboard that tracks critical Timing, Financial and Customer Satisfaction metrics. This will be provided monthly to the executive staff to allow focus on timing, financial performance, quality and customer satisfaction where needed.

Sponsor The critical enabler of this initiative was Bill Pumphrey’s role as sponsor and his extensive understanding of Project Management resulting from his PMP and personal background in Project Management. The most

important Best Practice at work here is the importance of the leader having true PM back- ground, knowledge and experience. It isn’t enough to have an executive who believes in PM and supports the initiative. For true improvement with high acceleration, the leader has to have

Additional Improvements

Targeted for 2013:

Enablers

164 JOURNEY TO EXCELLENCE

been a PM. This should be considered as a prerequisite for company presidents and leaders everywhere.

Project Environment and Scope

As the appreciation for Project Management grew in the executive team, it became clearer that the main drivers for success were the decisions made by the executive team during the business planning process and during quoting. The key decisions that “set up the project for success” were:

1. Adequate time to execute the project. 2. Adequate staffing with team members with the right skills sets. 3. Selection of plants for production with adequate resources and capacity. 4. Accepting financial targets from the customers that are reasonable and achievable,

with the appropriate focus on roadmaps and planning by the Project Manager and Project Teams.

5. Accepting reasonable product and manufacturing process scope and difficulty, with avoidance of risky “first time in the industry” innovation in a project’s life cycle. This kind of innovation should be (and IS at Cooper Standard) done in a separate department, where new innovations can mature and develop in a controlled way.

6. Selection of suppliers with the appropriate level of technical and manufacturing competence, based on the product specifications and requirements.

These basic parameters are normally beyond the authority level of the project teams and are “given” to them when the project is “won.” Cooper Standard’s executive team became much more sensitized to the need to establish an achievable scope at the very beginning of the project, and avoid high risk projects.

Cooper Standard is projected to grow significantly during the 2013 through 2018 time period. Project Management is expected to be a driver for that growth which will be fueled by improved Customer

Satisfaction resulting from excellence in new product launches. Further, Cooper Standard expects a reduction in new product launch cost, a reduction in working capital resulting from better control over timing and deliverables, better use of existing resources as a result of collocation and improved integration of our global projects and Project Teams.

“My responsibility at Cooper is the North America region, currently $1.5B in annual revenue. From my perspective, I run two businesses at Cooper, both worth $1.5B+. One is already in production and one will be

in production in the future (currently in development). We can work intensely to improve the business currently in production, but if we don’t pay attention to the future, we will have to fix the business over and over again. It was clear when I began that we had good people, processes and structure to handle the current business, but that other one was, well, not so clear. Our future business is going to be bigger than the current business – growth is good! But we had to act fast to get ahead of the wave that was coming.

First, we needed to improve the process to become crystal clear on deliverables, tim- ing, RASIC, etc.—accountability was needed! Then we needed a structure that supported the process and highlighted the importance of program management. It had to be a separate

Expectations for the Future

Verbatims

Cooper Standard 165

function, reporting directly to me. Finally, we needed people, the right people, which we could train and deploy who could identify and mitigate risk, manage complex priorities, deal effectively with people/customers and never, never, never be afraid to ask for help. We have more to do, but the organization is seeing the benefit and feeling the support that the people, process and structure can bring. As the new business starts to launch, the histori- cal ‘waste’ costs (cost of poor quality, premium freight, attrition, etc.) will be noticeably improved. Customers already see the benefit and are beginning to value our competencies. We can see that already from the expanding order book. In the end, that is what it is all about—profitable growth which benefits all of us at Cooper Standard Automotive.”

Bill Pumphrey Cooper Standard President, North America

“Program Management is not simply a tool or group of individuals that reside in a func- tional department; rather, it is a culture that needs to be embraced from the top down, and aligned with your customers and vendors. At Cooper Standard, we have integrated the Program Management tools within our supply base to reduce risk associated with new program launches, speed up the development of new technologies and sustain long term relationships with strategic vendors.”

Ed Kiell, Director Global Product Line Purchasing

“Program Management boils down to creating an effective system within an organization which drives the right people around conducting the right conversation at the right time. It also means creating an environment that drives success around what I call the 4 P’s”:

1. People 2. Processes 3. Procedures 4. Purchases

Kevin Kreiner Director, Engineering Product Development

“As we know, Cooper is now fully engaged in a Program Management system that is ‘program requirement date’ dependant vs. the Cooper of yesteryear that was ‘sales kickoff date’ dependant. Meaning . . . if our sales group does not yet have all of our full approvals from the customer lined up, but the program must go to avoid expedites, our management will approve us to proceed.

However, the initial improvements seen are:

● Programs are reviewed prior to Gate 1 at monthly staff meetings to ensure kickoffs are on time.

● The charter process enforces the need to understand the program, start to finish. Detailed program timing, gate dates, team resources, financials, noted and risks are identified.

● Management engagement is the key to remove the roadblocks to keep programs on track. This is seen weekly in Critical Issues meetings, monthly at Executive Reviews, and quarterly at the plant Launch Readiness Reviews.

These actions will assist our teams in reaching their Charter commitments and will greatly improve program success.”

Chuck Eisel Senior Manager, Program Management

166 JOURNEY TO EXCELLENCE

3.15 NAVIAIR: ON TIME—ON BUDGET12

Recognise the setting

Air navigation service provision in Europe is one of the last market segments that has not been liberalised to any larger extent. Air navi-

gation is—with the exception of the tower-area—still a monopoly for the 37 air naviga- tion service providers and as Siim Kallas, Vice President of the European Commission expressed it in his opening speech at the “Single European Sky—the time for Action” conference, in Limassol on the 10th October 2012: “We are moving towards a regulatory environment which is more streamlined, coherent and based on a market economy.”

In parallel this industry has been heavily regulated in the same way as the railway and the medical sectors. New demands are scoped as EU regulations, national legislation and new or updated ICAO standards are continuously rolled out with tight target dates to be met. Significant investments are made in order to meet the regulatory requirements. At the same time traffic is stagnating and even decreasing in the Danish airspace due to the fifth year of consecutive recession reported in the first quarter of 2013. In other words limited resources are available from a service provider point of view to meet the on-going complex and demanding nature of the aviation sector.

Based on the growing number of EU regulations provided by the European Commission there is an expectation that the air navigation service provision in Europe shall develop more efficient ways to perform air traffic control. In this context Naviair has formed a cooperation called COOPANS in cooperation with the Swedish, Irish, Austrian and Croatian air navigation service providers and the French supplier Thales. This coop- eration shares the necessary costs and resources for the development, implementation and maintenance of a state of the art Air Traffic Management (ATM) System which is compli- ant with existent and future EU regulations. So far the COOPANS programme has been very successful and is today operational in four countries and in six air traffic control cen- trals. The seventh control central located in Zagreb will go operational next year (2014).

In this setting there is a strong need for success. Scarce resources and external pres- sure make this endeavour challenging. However, when we benchmarked ourselves with other similar market segments, we were proud of how successful we actually performed our programmes and projects. There is no room for failures and in Naviair we have a hit rate of nearly 100% when talking about delivering on time and—on budget.

Naviair’s ability to cope with the setting and at the same time delivering on time and on budget is based on six main principles (see Figure 3–16):

● Build confidence ● Plan for success ● Manage performance and culture ● Tailor processes ● Organise and Report ● Communicate everywhere

How to Make Big and

Complex Programs a

Success

12. ©2013 by Naviair. reproduced by permission. All rights reserved. Material on Naviair is provided by Mikael Ericsson, Director ATM Projects & Engineering, Steen Myhre Taschner Erichsen, Director/Manager Project Office, ATM Projects & Engineering (B.Sc.E.E.) and Michael Wibelius, Tactical Management. (M. Sc. Planning and Management)

Naviair: On Time—On Budget 167

Since the main principles are not strictly interrelated and since the success does not necessarily rely on a full roll-out of every principle, the user level of the principles can be tailored to the organisation in question as some parameters may be more useful in some organisations as opposed to others. Therefore the senior management and the project/ programme managers specifically (as they are the target audience of this essay) are free to pick and choose from the ideas contained in the description of each of the principles. However, one should bear in mind that it is recommended to maximise the use of each of the principles as described in this essay.

Build Confidence

Change management is too often not prioritized or not taken in account when a big pro- gramme is performed. Many companies have had a negative experience from previous projects and therefore the management simply do not expect that their internal organisa- tions to be able to run a big program smoothly. In Denmark analyses of IT projects per- formed by the Government revealed that as many as 75% of the projects did not deliver on time. Furthermore, a significant amount of the projects did not deliver on budget and 40% of these where heavily overspending.

When a programme is initiated in Naviair we start up by ensuring that the organisa- tion attend to the changes that are about to come. Questions as to why the changes are necessary are welcome as well as discussions concerning alternatives. This supports a demystification of the changes in the organisation and is an important initial step towards avoiding that time has to be invested in this at a later stage where things either cannot be changed or are accompanied by great difficulties and/or expenses.

Figure 3–15. How to make big and complex programs a success.

168 JOURNEY TO EXCELLENCE

Key for a have to be identified while at the same time recognising the fact that these may be populated by people with different backgrounds and concerns. In this context it is important to avoid reacting protectively and allowing groups with different professions to express their opinions. It is our experience that this makes the change process smoother and allows for fine-tuning of the direction in order to mitigate different risks that otherwise might turn into problems. You should make sure that you listen to all parts of the organisa- tion and make a common view even if this will change the scope slightly. It is very easy to change the scope at this stage compared to doing it at later stages of the programme/ project. In order to ensure that all involved internal stakeholders have the same understand- ing of the changes, a high-level project frame forming the main benefits and measurable objectives should be agreed upon as the first thing and before any actual project preinves- tigations are performed.

The governance structure must also allow the different stakeholders to discuss and to get the appropriate level of information during all phases of the programme/project. Naviair performed a very large programme containing more than 50 interrelated projects that went into operation at the end of 2007, and led to a complete new air traffic manage- ment system in Denmark. The responsibility for integrating all technical solutions from many different suppliers was put on our shoulders. Although the technological challenges

Build Confidence

Plan for Success

Manage performance and Culture

Tailor Processes

Communicate everywhere

Organise and Report

Recognise the Setting

Figure 3–16. On time—on budget framework (Naviair).

Naviair: On Time—On Budget 169

where great, the change management was even greater. In fact it is a mental challenge to pull through such a programme if you expect to meet the targets spot on. Naviair managed to do so but we had to invest a lot of time and concerns in order to implement this gover- nance structure and to secure that all stakeholders, internally as well as externally, were involved. We also had to perform regularly surveys to make sure that everybody supported the changes and sometimes certain groups had concerns that had to be addressed imme- diately. The mantra in this context is that such concerns are very useful in the process of making the programme successful. We never tried to defend ourselves, or to make difficult comments go away and this has become a permanent practice in Naviair today.

Plan for Success

A golden rule in Naviair is to define a date for going operational with the new system as soon as possible. If possible we even set an exact time and in the above mentioned programme, we also had a countdown clock on the Naviair intranet front page. It is much easier if you have the courage to define a very visible target for the organisation. The pitfall is, however, that the date cannot be changed. A professional tennis player like Roger Federer does not think about a possible failure when he enters the tennis court and you must do the same: be a professional each and every day with one focus—On time and on budget.

If you succeed in getting your organisation behind such a date, which is an achiev- able goal, you can start to plan backwards. If you have a gate-driven approach, which is strongly recommendable, you will immediately find yourself and your teams very busy even if you have a multiyear programme. You should always remember that in the begin- ning the time schedule is a qualified guess. The schedule will gradually improve and be more detailed as the programme moves onwards. A programme manager who is able to follow the time schedule has a lot to gain and all work related to revision of the schedule is avoided. When the programme is ready the time schedule will be a perfect plan. However, you should never use this argument to fool yourself into postponing planning. As long as the operational date is not changed, milestones can be adjusted if necessary which is often the case with most programmes.

The expected outcome from late activities such as verification and validation, training or live tests must be addressed early. Your organisation, if not mature, will as an example most probably argue that the training cannot be planned before the system is physically in place. Such arguments should be taken seriously due to the fact that they express that the stakeholders do not know how to proceed in this early phase of the programme. Once the different parts of the organisation learn to address the topics on the right level, the work can be initiated early and the targets can be met. Inexperienced members of the programme must be supported by a PMO or similar in order to learn how to plan the activities before they enter the solution mode.

You have to communicate the plan in your governance structure repeatedly. The key to success is to obtain buy-ins from all stakeholders and some facts must be spelled out. At the same time all fora should be taken into consideration as described in the principle: “Build confidence” above. Different governance parties must be addressed at the appropri- ate level and some external stakeholders might be satisfied with the going-operational date if they are not affected by your tests etc.

170 JOURNEY TO EXCELLENCE

One of the most important key messages from Naviair is never to operate with a plan B including an alternative date for operation of the system. You are allowed and advised to implement mitigate actions in relation to the risk of missing the “O-Date”, e.g., by having a well-tested roll-back plan and other similar action plans. However, only one plan should be available and the management and internal stakeholders would have to agree upon this plan and communicate the following: We will make it!

Manage Performance and Culture

A team is not automatically stronger than the individuals but with a high-performance team culture the outcome can be fantastic. A common method used by sport teams, special forces or the similar is seldom used in programme management. When a SWAT (Special Weapons And Tactics) team is gathered for the first time or when the team is changed they usually spend eleven weeks getting to know each other. At this point the task to solve as such is not even on the agenda. What is then the purpose for such a social event?

When a task is performed by a SWAT team the participants are totally depending on each other. In order to be able to trust each other 100% it takes much more than just a number of professional individuals. You also have to know the persons behind, the social factors and parts of their life histories. In a SWAT team you are about to put your life in another person’s hands and that would not work with a total stranger. The same goes for a challenging programme that might affect your night sleep, your family life and leisure activities. When a programme is pulled through successfully, most of the participants would say the same: “it has been hard work but an experience for life!”

The process of building a high-performance team, as shown in Figure 3–17, should start with the social interaction in an environment that is protected from the daily interfer- ence from the office or the factory floor. In this environment the first step would be asking Why this change? At the same [time] the team members should get acquainted [with] each

Why Explain, Discuss

Who Build trust

What Scope

How Org, ToR

Who Make results

Wow! HPT

Why Boost

Figure 3–17. High-performance teams.

other. Many different methods could be used when socialising; one used in Naviair is to ask every participant to bring along a very important personal item and make a speech about this. You will find new sides of your colleagues that you never thought existed. You are now at the second step called: Who. At this stage you build up the trust between the team members.

Stay at step 1 and/or 2 as long as you can, at least during a seminar and at a follow-up meeting. Now you can go on to step 3 which is What. At this step you scope the changes and the task. This step and step 4: How, is straightforward for a programme organisation where you have established governance, terms of reference etc. In most organisations What and How are the starting points. Using What and How will work but will, how- ever, only bring a mediocre performance. If you start at step 3 or 4 the process cannot be reversed due to the fact that it is very hard for most people (and at least a couple in your team) to leave the “solution mode” once it is initiated.

The next step is starting to work with your scope and your team and if you did start out the right way, it is very likely that you will experience the WOW step where the team is high performing. This must be maintained so that the last step will repeat the first step WHY again which you have to go through at least once a year or immediately after you have replaced one of your team members. If you replace one of your team members you will by definition have a new team so do not be misled to think that a high-performance culture will continue forever.

In multicultural teams, as most teams are today, you must as programme manager hold skills concerning cultural differences. Some knowledge regarding home countries, history, religion, political scenario and culture (e.g., a male- or female-dominant culture) will bring about a successful team building and support the achievement of a high perfor- mance team (HPT).

Tailor Processes

The position as programme manager is like “being between the devil and the deep blue sea.” Though you are on the top of your own governance, you have many people and instances to refer to. You have to cope with the environment as the programme moves along. Your target will be affected economically, technologically and by market fluctua- tions but often your programme may also be affected politically due to cooperation or alliances that your company may be a part of. These factors may add further complexity to the programme.

The Naviair project model, which contains the project processes and the templates that are used for initiating, executing, delivering and closing projects, is based on the PRINCE2 principles. However, it is tailored to the organisational setup, nature and setting of our projects. As such the Naviair project model is pragmatic in its nature with a lean paper flow and a simple-phase structure with a very clear go/no-go decision to be made by the steering group (please refer to the principle “Organise and report”) between two phases. The project processes are clearly linked to the surrounding company processes such as the annual budget process, maintenance procedures etc.

The Naviair project model focuses on the initial phases in order to ascertain that the project is justified and that the right decision is made concerning the product speci- fications and the scope of the programme/projects before proceeding to the execution

Naviair: On Time—On Budget 171

172 JOURNEY TO EXCELLENCE

phase. The project initiation phase is based on a high-level project frame compiled by the project owner forming the main reference of the programme/project with clearly stated measurable objectives. The project manager is assigned to analyse possible solutions—if any—within the scope of the project frame. In this context and as a final step of the initial phases, the project manager makes a relatively detailed project assessment containing estimates concerning budget, resources, time, and main risks etc. to form the basis for a recommendable solution. Based on this analysis the steering group decides whether or not the project should continue into the execution phase where the progress is continuously monitored (please refer to the principle: Organise and Report). If the project is no longer justifiable, it can be terminated at any time during the project lifecycle. Once the project deliveries are complete the project handover phase is carried out before the actual closure and the lessons-learned phase is initiated. The latter phase provides for knowledge shar- ing and benefit realisation which in turn may lead into a new project being initiated. This approach has been very successful with a very good track record of being on time and on budget with every investment made throughout the process.

The phase for the realisation of the project is a lean one with focus on monitoring the progress and to mitigate risks and problems.

The portfolio prioritisation is performed in accordance with the Naviair prioritisation standards and these standards were implemented in order to make sure that we only realize programmes and projects that will support and strengthen our business values.

Your governance is very important and a rule of thumb is to place the sponsorship fairly high in the organisation. This person should be a member of the executive management and on the business value side,

such as the COO or the CEO. If the sponsorship is held by the CFO or the CTI, it normally brings another type of focus on the programme, either a very strong focus on the financial side or on the technological side.

The sponsor should be the chairman of the programme steering group which should be manned by management representatives from each organisational key area in order to ascertain that decisions concerning prioritisation and programme/project phase shifts are holistic and aligned within the whole organisation. The programme steering group should meet regularly. The frequency of the steering-group meetings very much depends on the programme, but it can be an advantage to meet more frequently as the date of going operational approaches. If your organisational setup allows for forming one steering group for all programme and project, this would be advantageous as you can prioritise the full portfolio at once and thus benefit from one holistic view.

A complex programme should be manned with its own administrative and planning support. Richard Branson, the entrepreneur and founder of the brand Virgin, stated “I prefer a brilliant assistant.” We are of the same opinion and as to Naviair’s most complex pro- gramme, COOPANS; we do have such an organisation and support.

The subgroups in the programme organisation should be balanced in such a way that it reflects the different internal stakeholders in a positive way and be equipped with suf- ficient competencies to make the decisions related to their area of expertise in order to ensure progress. External stakeholders can be part of the organisation, but it is more likely that they are part of a group of interest or a user group. It is not important what kind of

Organise and Report

subgroups you define but how the subgroups interact with each other and with you as a programme manager.

In Naviair we prefer a pragmatic view on reporting. Our template used for status reporting is made as a simple excel tool and is based on traditional traffic light reporting. The report itself consists of six parameters where some of them represents business KPIs linked to Naviair’s overall balanced scorecard. Depending on the complexity of the portfo- lio the reporting frequency varies from once a week to once a month. The most important thing is, however, not your present traffic lights status. That is all history and old informa- tion. The programme risks and problems, and the proactivity to mitigate for these are much more important. If you have a large portfolio with many programmes and projects, you will need more complex tools and risk management. In Naviair we use pragmatic tools for risk management, experienced and certified managers and a lot physical meetings to inter- act in relation to the risks and problems. If you hold the experience and have performed many projects previously, you can use your gut feeling to decide where to use your efforts. Therefore, we prioritise physical one-to-one meetings, discussions and interactions rather than extensive reporting.

In Naviair we have learnt that it is very hard for an organisation to decide whether the results of a programme are satisfactory. Often an organisation turns shaky and too detail-oriented before finally going operational with a new system—often with delays as a consequence. In Naviair we have developed an accept-criteria matrix to decide whether a programme is satisfactory to be put into operation. We have two levels: one with detailed milestones and descriptions per criteria and one steering group level which can make a quick report on a two-slide PowerPoint presentation. When all criteria are met, we are ready to go into operation. There will be no hassles or discussions as to whether we are ready or not.

Successful communication concerning a programme is not performed without a communication plan. The communication plan should be based on a stakeholder analysis, a SWOT analysis and/or similar in order to get

a clear picture of the target audience and how this audience may react to certain statements. The communication plan based on the above mentioned analyses will provide a more targeted communication which in the end will see to that you achieve the result you were looking for.

You should consider any possible media as well as the frequency and timing of addressing the different internal and external stakeholders and at which level of informa- tion. The key message must be clear, consistent and easy to understand and relate to when addressing the different stakeholders. Use the producers of great beverages, cars or service companies and how they communicate their product values as prominent examples. You should address your business values and not the technological advantages which to most people are useless and only seem expensive. You should repeat the business values and key messages, until the programme has been executed.

You can target your communication towards the different key fora in many different ways and you should not confine yourself only to use well-known traditional communica- tion tools. A successful programme manager will have to use nearly half of his working hours just to communicate and lobby in order to ensure the success of his programme. A programme manager who prioritises communication correctly will never refuse a possibil- ity to present his programme and the related business values.

Communicate Everywhere

Naviair: On Time—On Budget 173

174 JOURNEY TO EXCELLENCE

It is good practise in communication to submit articles in magazines, define a project portal to which the internal organisation will have access, publish news on both the internet and intranet, arrange kick-off meetings and open-house events and of course provide phys- ical presentations whenever a possibility occurs. One of the keys of effective communica- tion is to vary the means of communication and to find new creative ways of addressing the stakeholders, e.g., arrangements for merchandisers where the key message is displayed, involving the canteen, broadcast interviews with key persons of the programme/project on the news portal or display banners with key messages at often visited places, for instance by the coffee machine. The latter also provides for a more informal way of communica- tion, since the coffee machine and/or similar places represent “safe zones” where the com- munication flows freely between employees. A banner with a positive message may lead the conversation into a more positive direction or simply provide for more “airtime” and visibility among the employees. Informal ways of communicating have been utilised with success in Naviair. An example is among others the weekly breakfast meetings chaired by the project manager on Fridays where employees meet and discuss the progress of the programme/project while enjoying a Danish pastry and a cup of coffee/tea. Since no high- level management is present at these meetings worries and information which would not otherwise have been discussed may occur. The same could be the case concerning rumours which the project manager will have the opportunity to spot and react upon in order to avoid that progress and key business values of the programme/project is undermined. The project manager may follow up on the breakfast meetings with an informal status e-mail to keep the people who were not present at the breakfast meeting in question up to date on the programme/project and invite people to come up with their comments if they possess any other or contradicting information.

Lack of communication and information will make people develop their own informa- tion when meeting at the coffee machine. This will lead to rumours and worries that have to be handled seriously, since rumours can take over facts. The simple cure is to attack all rumours when these are heard and they should be challenged in order to see if there are any facts behind these rumours. Often there are no facts behind occurring rumours. However, if the rumours are based on facts a solution has to be found.

You should not forget to celebrate any important milestone which has been achieved. Celebrate in an acceptable way which is compatible with the company culture. Some com- pany cultures have no problems in providing free dinners or tickets to the opera whereas others cannot accept this for tax reasons or simply because it is not “comme il faut.” An inex- pensive toy race car for an achieved site acceptance test could be a tool to signal gratefulness from the organisation. In Naviair we have programme managers who have nice collections of Ferraris and Lamborghinis that are proudly displayed at very visible places in their offices.

The most important and effective thing you could do in relation to projects is to praise, give credit and recognition to the staff who are involved in the project. The most powerful recognition you could give, is the one you communicate to a person from another department.

The six main principles presented in this essay are continuously fine- tuned based on lessons learned, external inputs and as the industry for air navigation service provision in Europe develops in order to maximise

Sum Up

DTE Energy 175

Naviair’s project performance and ability to deliver on time and—on budget. The key mes- sage here is that we have to recognise the setting and adopt to it and realise that we are living in a dynamic world—no matter how good your best practices may be they may become yesterday’s news if focus is not put on continuous development with a willingness to change and adapt. Finally, as the late Irish playwright, socialist, and a co-founder of the London School of Economic, George Bernard Shaw, put it: “Those who cannot change their minds cannot change anything.”

3.16 DTE ENERGY

Several maturity models are available in the marketplace to assist companies in their quest for growth, excellence, and success in project management. Table 1-1 from Chapter is one such model. The purpose of the model is simply to provide some sort of structure to the maturity process. Tim Menke, PMP, senior continuous improvement expert, DO Performance Management, describes the growth process at DTE Energy:

DTE Energy embraces project management to achieve timely and cost effective delivery of high quality products and services for our diversified utility customers. Our applica- tion of project management to engineering and construction efforts dates back decades. Expanding project management to areas other than major projects has been increasing in recent years. For example, our Information Technology organization started a formal drive to increase project management maturity in 2000. Individual mastery of project management skills was encouraged through training, practical experience, and formal certification. Job codes and a career progression model were created. Simultaneously, a cross-functional group of IT leaders, representing all areas of IT, was established to man- age the portfolio of IT projects. Over time, other departments have migrated to a similar model including the use of formal job codes and progression paths in an effort to increase control of their projects.

A focus on project management continues in our company. For example, we recently created a new department—Major Enterprise Projects—headed by a Senior Vice President, reporting directly to the CEO. This department was created to oversee major projects and their interactions. An example of one such project is the potential build of a Nuclear Power Generator.

Our motivation to increase project management maturity was previously internally driven (Year 2000 IT Remediation, Merger with MichCon, Enterprise Resource Planning System Implementation, CMMI Certification, etc.). However, the recent economic shock- wave being felt both nationally and internationally has resonated loudly in Southeast Michigan. We are using Lean Six Sigma continuous improvement to drive waste out of our processes and further streamline our operations. Project management is crucial to bringing our continuous improvement projects to fruition quickly and efficiently. We have revised our Continuous Improvement Project Management methodology to include a feedback mechanism to allow for placing on hold or canceling projects without losing sight of them in the future(Project Identification and Project Selection Phases). We have provided for scalability in our approach by recognizing a range of project types and corresponding requirements. All of these efforts have been championed by senior levels of DTE Energy leadership.

176 JOURNEY TO EXCELLENCE

3.17 KEY PLASTICS

The journey to excellence usually begins with the creation of a project management bro- ken down according to life-cycle phases. Methodologies and life-cycle phases need not be complex. They form the basis for standardization and repeatable success, regardless of the size of the company.

Key Plastics has a strong legacy as a Tier 1 automotive supplier provid- ing complete design, engineering, manufacturing, and assembly opera- tions for injection-molded interior trim components, exterior handles

and under hood components. Key has been consistently recognized by OEMs globally for the ability to successfully deliver an excellent value, high-quality, on-time product.

Historically, Key has leveraged regional program management processes and tools. The North America process is heavily focused on tracking advanced product quality plan- ning (APQP) requirements and with a strong design phase. The Asia Pacific team leverages the proven processes and tools of the joint venture partner. The European team follows two different processes. One process has a focus on manufacturing and a strong cost estimating and quote phase. A second European process is a balanced process containing commercial, design and manufacturing elements timed around customer build phases. See Figure 3–18.

In an effort to leverage best practices globally, Key recently kicked off the effort to create one global Key Product Realization Process (KPRP) and deploy a single global program management collaboration tool, enterProj. A steering committee was formed with the global program management leaders as well as functional team members to ensure all areas of the business were represented in the new process development.

The team agreed to use the balanced EU process as a baseline for the new KPRP (See Figure 3–19). The team shared regional things-gone- right and things-gone-wrong to determine the best practices to be

captured from each of the regional processes and incorporated into the new process. Some highlights of the newly proposed KPRP include:

● “Business Planning” phase: kicks off the project into the corporate portfolio pro- viding early global visibility into pursuits

● “Acquisition” phase: focused on detailed cost estimating to provide the best value in the product via early engagement of functional team members

● “Development and Planning” phase: centered around strong design review gates with an option for a specialized version of this phase used only for build-to-print projects

● “Industrialization” phase: containing “mini” phases managing the development of—injection molding tooling, equipment, facilities, packaging, purchased parts and resin as well as the manufacturing staffing plan

● “Serialization” phase: focused on delivery of the final product

Key Plastics Background13

The Process (KPRP)

13. Material on Key Plastics has been provided by Darlene Taylor, Director IT and Global Business Practices. Reproduced by permission

Milestones

Project Kick Off

Acquisition Series0-SeriesPre -Series Building of Tools and

Equipment Development

Logistics & Supply

Sales

Development

Tools & Equipment

Quality & Test

Project Management & Controlling

3 4 51 2 6

Order of Tools and Equipment

First Off -Tool Parts Release Product and

Process SOP

Production

90 days after SOP

Version 10, dated 01.04.10

Macro -phases

Porsche ConsultingKey Plastics Löhne Sales (VT)

PlantProject management (PM) Tool purchasing (WZBS)

Development (ENT) Product optimizing/Testing (PO/T)

Involvement Lessons Learned

Guiding price of bought-in- parts calculated

Invest for measuring equipment and part testing cost calculated

Part concept issued

Requirement specifications

verified

Feasibility (process) confirmed

Production concept issued

Negotiation finished

Enquiry documents available

Classification of enquiry Project calculation accomplished and

released

External logistics concept (external) issued

Equipment cost calculated

Tool cost calculated

SAP -Planning + Start - PEP

Requirement specifications

issued

Part concept determined

Change management created

Design Review 1

Design Review 2

Design Review 3

Design Review 4

Released customer data

available

Definition SC/CC characteristics

D-FMEA accomplished

Enquiry purchasing parts and material

Review feasibility hand sample

Pre -series production control and testing plan issued

Measuring and test concept determined

DVP issued

Serial Tools enquired

Production process specifications determined

Cost Review 1

Serial equipment ordered

Customer data release

Serial tools ordered

Pre -series samples of purchasing parts

available

Cost Review 2

Gate Review 2

Planning of quantities for pre- series completed

Packaging and logistic concept for purchasing

parts issued

Release measuring and testing concept

Order Pre -series purchasing parts

and material

Order Measuring and testing equipment

Finish of testing jigs

Cost Review 3

Pre -series production control plan and control

plan released

DVP released

Serial tool status aligned

Serial equipment status aligned

Pre -series purchasing parts

and material available

Serial tools available

Serial equipment available

Gate Review 3

101100

Lessons Learned accomplished

Proof of long -term ability provided

Time studies recorded

Post -calculation accomplished

Gate Review 5

Project volume invoiced

Project handover to series accomplished

Handover of disposition of material and

purchasing parts

Sampling accomplished

Employee introduced /

trained

Gate Review 4

Internal 2 -days production

Internal release of component

8786

Release testing

equipment

Optimization and matching of tools completed

Optimization and matching of equipment completed

Delivery of pre -serial parts to customer

Purchasing parts and material available

Serial production control plan and

testing plan released

Cost Review 4 Cost Review 5

Logistic concept confirmed

Production planning completed

Status component tests aligned

Work and testing instructions

issued

Packaging coordinated

Temporary measuring and testing equipment

released

Determination supplier for series/order

purchasing parts and material

Special departments

informed

Load carrier ordered

Prototype tools ordered

Preliminary part list issued

Serial Tools enquired

Prototype tools available

P -FMEA accomplished

Customer order for series

2-days production (with customer)

Prototype parts available

Testing jigs ordered

Start -up team plant and supplier defined

Tool data released

Controlling (CO)

Purchasing (EK) Materials logistic (MaWi) Management (GF)

Quality Engineer (QE) Production (PROD)

Feasibility confirmed

First Off -Tool parts assembled

Pre -series parts assembled

Customer schedule available

Order (LOI) confirmed

Gate Review 1 (Kick Off-Meeting)

102

Version: 11 / Status: 17.12.2012

Offer submitted

899 98

Figure 3–18. German process.

177

178 JOURNEY TO EXCELLENCE

To ensure flexibility and to allow for a “build based” process, the customer build phases are purposely held separately. These phases are focused solely on the logical tasks required for the build. This approach allows for flexibility to deliver as few or as many prototype or production builds needed by the customer. These phases are timed separately from the core phases listed above.

“Engagement of the program management experts globally, as well as the functional team members, yielded excellent discussion and debate on the critical tasks required to deliver a high value, quality product for Key and our customers” said Darlene Taylor, Director IT and Global Business Practices. “This global input resulted in an optimized, unique process focused on all areas of the project”

Regionally, the Key program teams leverage different localized tool- sets to effectively manage project plans and documentation. Along

with the development of the global process, the team is implementing enterProj-a web- based cloud solution designed for project collaboration for both product and IT projects. See Figure 3–20.

Key is initially focused on the deployment of core enterProj including the ability to manage:

The Tool (enterProj)

Figure 3–19. Global Product Realization Process (KPRP).

PHASE 0

In enterProj Award

DR4 Prod Ready

Design Prod ready

Process (Ready for

PPAP)

SOP +90

Customer Dates

PHASE 1

W104 W96 W50

Proto Build Phase

Build Phase

Business Planning

Acquisition & Quote Planning & Development

Industrialization & Pilot

Serialization & Launch

SOP

W20

W-12

W58

CAD PPAP

DR3

MRD MRDMRD

GLOBAL PRODUCT REALIZATION PROCESS (KPRP)

PHASE 3

PHASE 4

PHASE 2

W66

DR3

Focused on the Customer…Focused on Results

BET Review

ILLUMINAT and the Strategic Business of Project Management 179

● Project Summary: description, key dates, measurables, product photos, summary financials

● Team: including all cross functional team members, custom project security for desired members, ability to add supplier team members and ability to easily reas- sign tasks to team members

● Risk, Issue and Opportunity (RIO): collaborative approach to managing risks, issues and opportunities with the ability to add multiple actions on each RIO

● Parts, Tooling and Equipment, Suppliers: tracks key information on this project data as well as, the ability to create specific timing tied into the master project tim- ing plan and forming baseline master data for the project financials

● Timing: creates custom project plan based on the global KPRP process and the cus- tomer build requirements. Ability to highlight specific tasks to reveal in customer plan and also export to MS Project

● Change Management: creates project based change request and change notice functionality, which allows the teams to program manage the change based [on] action templates as well as build custom action templates. These changes can also be linked to the financial models of the project.

● Financial Management: online financial model calculates the financial metrics of the project and is augmented by the ability to upload any detailed costing models.

“With the implementation of enterProj, I now have real-time visibility into the status of all of programs globally” said Terry Gohl, CEO Key Plastics “My executive team has imme- diate access to each project summary and detailed information from the enterProj dashboard”

3.18 ILLUMINAT AND THE STRATEGIC BUSINESS OF PROJECT MANAGEMENT

Throughout this chapter, we have discussed the journey to excellence. When companies are able to integrate together project management processes, business processes and stra- tegic planning activities, project management maturity, and eventually excellence can and

Figure 3–20. An example of an enterProj screenshot.

180 JOURNEY TO EXCELLENCE

will be achieved. ILLUMINAT is an excellent example of a company that has achieved excellence in project management.

According to Owen Field, Regional Manager, Project Management Services at ILLUMINAT, there must be a strategic business purpose why a firm desires to become excellent in project management. Looking at the traditional strategic element, namely the products

offered–markets served, excellence in project management should allow a firm the oppor- tunity to develop more products and serve more markets than without having project management. ILLUMINAT recognized this years ago and began a journey to achieve excellence in project management.

ILLUMINAT is an industry-leading IT and telecommunications solutions provider for major organizations across the Caribbean servicing all industries, sectors and enter- prises; from office equipment and supplies to enterprise applications in asset management, records management, [and] financial and human resource management; also from net- working and telecommunications to technical support and project management services. Project management practices now affects all areas of our business.

The benefits of achieving excellence in project management are quite apparent. ILLUMINAT’s PM Services Unit is an elite team of Professionals with expertise and certification in various methodologies to provide business, project and IT consulting solu- tions, enabling our clients ROI by leveraging our expertise to deliver value realization. We have created a precision set of consulting services from the project, business and informa- tion and communications technology domains providing our clients with expert delivery and guided excellence. We execute projects, manage business transformation and deliver results for our clients.

We can now return to the strategic element of products offered and markets served. ILLUMINAT provides the following services:

● Project & Program Management ● Project Management Office Consulting & Implementation ● Business Implementation & Support ● Business Solutions for IT ● Project Management & Business Solutions for IT Training

ILLUMINAT provides services:

● To Private and Public Sector ● Across Industries in Energy, Financial, Government and National Agencies, Retail

and Hospitality, Utilities and Manufacturing ● Across the Caribbean from the Bahamas to Guyana ● Satisfying stakeholders from India, Europe, UK, North America and South America.

ILLUMINAT Project

Management Services:

The Pursuit of Project

Management Excellence14

ILLUMINAT and the Strategic Business of Project Management 181

We constantly:

● Monitor the Competitive Market ● Respond to Changing Market Demands ● Identify Performance Gaps in Organizations and Develop Services Solutions to

Optimize Client Performance and Value Realization for Their Investments ● Satisfy Client Needs ● Commit to Professional Development

Our clients’ feedback from Client Satisfaction Surveys and Impact Assessments indicate that our best practices and deliverables are being adopted within their business to optimize their business processes.

Our journey in pursuit of excellence in project management is based on the philoso- phy that, “We are what we repeatedly do. Excellence therefore is not an act but a habit.” —Aristotle

ILLUMINAT PM Services in its current form has been operating and growing for the last 7 years.

We have striven towards excellence by being at the forefront of the profession:

● Committed to Professional Development ● Recognized at Various Award Ceremonies for Our Projects, People and Service

Excellence ● Recognized by Our Clients and Stakeholders for Improving Their Business

Processes through the Adoption of Our Project Management Best Practices and Deliverables

● Recognized by Various Authors for Excellence in Project Management ● Authored White Papers ● Served as Panelists in Industry Meetings ● Pioneered Research in Project Management in the Region ● Accredited as a Global Registered Education Provider by the Project Management

Institute (PMI). ● Served on the Boards of Professional Societies ● Invested in National and Regional Development ● Focused towards a Global Perspective, Export Ready ● Transformed from a Cost Centre, [with] One Service Line, Internally Focused

and Unknown Entity—to a Profit Centre, [with] Five Service Lines, External and Export Focused, Internationally Published and Recognized Entity for Best Practices Winning Awards for Excellence.

We achieve this by building Excellence in all that we do including;

● PMO Management Strategy and Capability ● PM Employees Competency, Certification and Business Acumen ● PM Methods, Procedures, Tools and Templates development and refinement

aligned with Industry Standards, Best Practices and Regulations

182 JOURNEY TO EXCELLENCE

● Passionate Leadership and Culture of Commitment to Service and Relationship Management

● Strategic Networks and Knowledge Repositories ● Continuous Evolution and Improvement

The PMO’s contribution to the organization is an overall improvement in the following;

● Image of ILLUMINAT ● Employee Morale ● Employee Productivity ● Customer Service & Quality ● Good Business Practices increasing revenue and profitability ● Expense Management ● Receivables & Inventory Management ● Operational Efficiency

Overall impact of the PMO over a sustained period

● Customer Satisfaction – Delivering to standards and expectations with profes- sionalism.

● Employee Satisfaction – Eliminating inter-unit conflict for resources via an enter- prise PMO clearing the path for employees to deliver. The PMO is ranked as a leading department in the organization.

● Productivity – Significantly improved due to professional development and culture to achieve superior results.

● Efficiency – Developed capability through methodology and tools to do more with less. ● Utilization – Improved the standardization of professional services billable time

tracking and management. ● PMO Employee Performance – Consistently above target. ● Erosion – Significantly reduced revenue leakage due to poor estimating and effort

not invoiced due to poor change management. Improvements in estimating and the application of project change control enabled a 100% reduction in revenue Erosion.

● Revenue – Developed new revenue channel and revenue recovery capability. PMO moved from a cost centre to a revenue/profit generator.

● Brand reputation – Excellence in project delivery, formal and informal industry recognition.

● Organization integration – Uniform processes and standards, organizational capa- bility advancement.

● Regional integration – Benchmarking and standards. The Regional PMO Integration is providing synergies across the Caribbean where PM expertise from one territory can be applied in another, as well as the cross-cultural innovations and learnings are shared and applied across territories.

● Knowledge assets – Employee certifications, project information, lessons learned and best practices repository continue to provide intellectual capital appreciation, yielding additional business benefits.

Avalon Power and Light 183

3.19 AVALON POWER AND LIGHT

Avalon Power and Light (a disguised case) is a mountain states utility company that, for decades, had functioned as a regional monopoly. All of this changed in 1995 with the beginning of deregulation in public utilities. Emphasis was now being placed on cost cut- ting and competitiveness.

The Information Systems Division of Avalon was always regarded as a “thorn in the side” of the company. The employees acted like prima donnas and refused to accept any of the principles of project management. Cost-cutting efforts at Avalon brought to the surface the problem that the majority of the work in the Information Systems Division could be outsourced at a significantly cheaper price than performing the work internally. Management believed project management could make the division more competitive, but would employees now be willing to accept the project management approach?

According to a spokesperson for Avalon Power and Light:

Two prior attempts to implement a standard application-development methodology had failed. Although our new director of information systems aggressively supported this third effort by mandating the use of a standard methodology and standard tools, significant obstacles were still present.

The learning curve for the project management methodology was high, resulting in a tendency of the leads to impose their own interpretations on methodology tasks rather than learning the documented explanations. This resulted in an inconsistent interpretation of the methodology, which in turn produced inconsistencies when we tried to use previous estimates in estimating new projects.

The necessity to update project plans in a timely manner was still not universally accepted. Inconsistency in reporting actual hours and finish dates resulted in inaccurate avail- abilities. Resources were not actually available when indicated on the departmental plan.

Many team leads had not embraced the philosophy behind project management and did not really subscribe to its benefits. They were going through the motions, producing the correct deliverables, but managing their projects intuitively in parallel to the project plan rather than using the project plan to run their projects.

Information systems management did not ask questions that required use of proj- ect management in reporting project status. Standard project management metrics were ignored in project status reports in favor of subjective assessments.

The Information Systems Division realized that its existence could very well be based upon how well and how fast it would be able to develop a mature project management system. By 1997, the sense of urgency for maturity in project management had permeated the entire Information Systems Division. When asked what benefits were achieved, the spokesperson remarked:

The perception of structure and the ability to document proposals using techniques rec- ognized outside of our organization has allowed Information Systems to successfully compete against external organizations for application development projects.

Better resource management through elimination of the practice of “hoarding” pre- ferred resources until another project needs staffing has allowed Information Systems to actually do more work with less people.

184 JOURNEY TO EXCELLENCE

We are currently defining requirements for a follow-on project to the original proj- ect management implementation project. This project will address the lessons learned from our first two years. Training in project management concepts (as opposed to tools training) will be added to the existing curriculum. Increased emphasis will be placed on why it is necessary to accurately record time and task status. An attempt will be made to extend the use of project management to non–application-development areas, such as network communications and technical support. The applicability of our existing methodology to client-server development and Internet application development will be tested. We will also explore additional efficiencies such as direct input of task status by individual team members.

We now offer project management services as an option in our service-level agree- ments with our corporate “customers.” One success story involved a project to implement a new corporate identity in which various components across the corporation were brought together. The project was able to cross department boundaries and maintain an aggressive schedule. The process of defining tasks and estimating their durations resulted in a better understanding of the requirements of the project. This in turn provided accurate estimates that drove significant decisions regarding the scope of the project in light of severe budget pressures. Project decisions tended to be based on sound business alternatives rather than raw intuition.

3.20 ROADWAY EXPRESS

In the spring of 1992, Roadway Express realized that its support systems (specifically information systems) had to be upgraded in order for Roadway Express to be well posi- tioned for the twenty-first century. Mike Wickham, then president of Roadway Express, was a strong believer in continuous change. This was a necessity for his firm, because the rapid changes in technology mandated that reengineering efforts be an ongoing process. Several of the projects to be undertaken required a significantly larger number of resources than past projects had needed. Stronger interfacing between functional departments would also be required.

At the working levels of Roadway Express, knowledge of the principles and tools of project management was minimal at best in 1992. However, at the executive levels, knowledge of project management was excellent. This would prove to be highly beneficial. Roadway Express recognized the need to use project management on a two-year project that had executive visibility and support and that was deemed strategically critical to the company. Although the project required a full-time project manager, the company chose to appoint a line manager who was instructed to manage his line and the project at the same time for two years. The company did not use project management continuously, and the understanding of project management was extremely weak.

After three months, the line manager resigned his appointment as a project manager, citing too much stress and being unable to manage his line effectively while performing project duties. A second line manager was appointed on a part-time basis and, like his predecessor, he found it necessary to resign as project manager.

The company then assigned a third line manager, but this time released her from all line responsibility while managing the project. The project team and selected company

Defcon Corporation 185

personnel were provided with project management training. The president of the company realized the dangers of quick implementation, especially on a project of this magnitude, but was willing to accept the risk.

After three months, the project manager complained that some of her team members were very unhappy with the pressures of project management and were threatening to resign from the company if necessary simply to get away from project management. But when asked about the project’s status, the project manager stated that the project had met every deliverable and milestone thus far. It was quickly apparent to the president, Mike Wickham, and other officers of the company that project management was functioning as expected. The emphasis now was how to “stroke” the disgruntled employees and convince them of the importance of their work and how much the company appreciated their efforts.

To quell the fears of the employees, the president assumed the role of the project sponsor and made it quite apparent that project management was here to stay at Roadway Express. The president brought in training programs on project management and appeared at each training program.

The reinforcement by the president and his visible support permeated all levels of the company. By June of 1993, less than eight months after the first official use of project management, Roadway Express had climbed further along the ladder to maturity in project management than most other companies accomplish in two to three years due to the visible support of senior management.

Senior management quickly realized that project management and information systems management could be effectively integrated into a single methodology. Mike Wickham correctly recognized that the quicker he could convince his line managers to support the project management methodology, the quicker they would achieve maturity. According to Mike Wickham, President of Roadway Express at that time (and later chair- man of the board):

Project management, no matter how sophisticated or how well trained, cannot func- tion effectively unless all management is committed to a successful project outcome. Before we put our current process in place, we actively involved all those line manag- ers who thought it was their job to figure out all of the reasons a system would never work! Now, the steering committee says, “This is the project. Get behind it and see that it works.” It is a much more efficient use of resources when everyone is focused on the same goal.

3.21 DEFCON CORPORATION

A defense contractor that wishes to remain nameless (we call it Defcon Corporation) had survived for almost 20 years on fixed-price, lump-sum government contracts. A character- istic of a fixed-price contract is that the customer does not audit your books, costs, or per- haps even your project management system. As a result, the company managed its projects rather loosely between 1967 and 1987. As long as deliveries were on time, the capabilities of the project management system were never questioned.

186 JOURNEY TO EXCELLENCE

By 1987, the government-subcontracting environment had changed. There were sev- eral reasons for this:

● The DoD was undergoing restructuring. ● There were cutbacks in DoD spending, and the cutbacks were predicted to get

worse. ● The DoD was giving out more and more cost-reimbursable contracts. ● The DoD was pressuring contractors to restructure from a traditional to a product-

oriented organizational form. ● The DoD was pressuring contractors to reduce costs, especially the overhead rates. ● The DoD was demanding higher-quality products. ● The DoD was now requiring in its proposals that companies demonstrate higher-

quality project management practices.

Simply to survive, Defcon had to bid on cost-reimbursable contracts. Internally, this mandated two critical changes. First, the organization had to go to more formal rather than informal project management. Second, the organization had to learn how to use and report earned-value measurement. In order to be looked upon favorably by the government for the award of a cost-reimbursable contract, a company must have its earned-value cost control/ reporting system validated by the government.

A manager within one such company that was struggling made the following com- ments on how “survival” had forced the organization to climb the ladder to maturity over the past 10 years:

Formal project management began with the award of the first major government program. There was a requirement to report costs by contract line item and to report variances at specific contract levels. A validated system was obtained to give us the flexibility to submit proposals on government programs where cost schedule reporting was a requirement of the RFP (request for proposal).

We have previous experience in PERT (program evaluation and review technique) networking, work breakdown structures, and program office organizations. Management was also used to working in a structured format because of our customer’s requirements for program reviews. After system validation in 1987, it took six months to a year to properly train and develop the skills needed by cost account managers and work package supervisors. As you move along in a program, there is the need to retrain and review proj- ect management requirements with the entire organization.

We visited other companies and divisions of our own company that had prior experi- ence in project management. We sent people to seminars and classes held by experts in the field. We conducted internal training classes and wrote policies and procedures to assist employees with the process of project management. Later we purchased canned reporting packages to reduce the cost of internal programming of systems.

We established dedicated teams to a contract/program. We have program office organizations for large programs to follow through and coordinate information to internal management and our customer. We adjusted our systems and reports to meet both our internal and external customers’ needs.

Implementation of integrated systems will provide data on a timelier basis. These data will allow management to react quickly to solve the problem and minimize the cost impact.

Kombs Engineering 187

Project management has allowed us to better understand costs and variances by contract/program. It provides us with timely data and makes tracking of schedule issues, budget issues, and earned values more manageable. Project management has given us visibility into the programs that is useful in implementing cost reductions and process improvements. Having a validated system allows us to remain competitive for bidding on those programs that require formal cost schedule control systems.

3.22 KOMBS ENGINEERING

The company described in the last section was very fortunate to have identified the crises and taken the time to react properly. Some companies are not so fortunate. Although the next two companies appear to be outdated, there are valuable lessons that can be learned about what not to do when embarking on the path to maturity. Consider the Michigan- based Kombs Engineering (name of the company is disguised at company’s request).

In June 1993, Kombs Engineering had grown to a company with $25 million in sales. The business base consisted of two contracts with the Department of Energy (DoE), one for $15 million and one for $8 million. The remaining $2 million consisted of a variety of smaller jobs for $15,000 to $50,000 each.

The larger contract with the DoE was a five-year contract for $15 million per year. The contract was awarded in 1988 and was up for renewal in 1993. The DoE had made it clear that, although it was very pleased with the technical performance of Kombs, the follow-on contract must go through competitive bidding by law. Marketing intelligence indicated that the DoE intended to spend $10 million per year for five years on the follow-on con- tract with a tentative award date of October 1993. On June 21, 1993, the solicitation for proposal was received at Kombs. The technical requirements of the proposal request were not considered to be a problem for Kombs. There was no question in anyone’s mind that on technical merit alone Kombs would win the contract. The more serious problem was that the DoE required a separate section in the proposal on how Kombs would manage the $10 million/year project as well as a complete description of how the project management system at Kombs functioned.

When Kombs won the original bid in 1988, there had been no project management requirement. All projects at Kombs were accomplished through the traditional organiza- tional structure. Only line managers acted as project leaders.

In July 1993, Kombs hired a consultant to train the entire organization in project management. The consultant also worked closely with the proposal team in responding to the DoE project management requirements. The proposal was submitted to the DoE during the second week of August. In September 1993, the DoE provided Kombs with a list of questions concerning its proposal. More than 95 percent of the questions involved project management. Kombs responded to all questions.

In October 1993, Kombs received notification that it would not be granted the con- tract. During a postaward conference, the DoE stated that it had no “faith” in the Kombs project management system. Kombs Engineering is no longer in business.

Kombs Engineering is an excellent case study to give students in project management classes. It shows what happens when a subcontractor does not recognize how smart the

188 JOURNEY TO EXCELLENCE

customer has become in project management. Had Kombs been in close contact with its customers, the company would have had five years rather than one month to develop a mature project management system.

3.23 WILLIAMS MACHINE TOOL COMPANY

The strength of a culture can not only prevent a firm from recognizing that a change is necessary but also block the implementation of the change even after need for it is finally realized. Such was the situation at Williams Machine Tool Company (another disguised case).

For 75 years, the Williams Machine Tool Company had provided quality products to its clients, becoming the third largest U.S.-based machine tool company by 1980. The company was highly profitable and had an extremely low employee turnover rate. Pay and benefits were excellent.

Between 1970 and 1980, the company’s profits soared to record levels. The company’s success was due to one product line of standard manufacturing machine tools. Williams spent most of its time and effort looking for ways to improve its “bread and butter” prod- uct line rather than to develop new products. The product line was so successful that other companies were willing to modify their production lines around these machine tools, rather than asking Williams for major modifications to the machine tools.

By 1980, Williams Company was extremely complacent, expecting this phenomenal success with one product line to continue for 20 to 25 more years. The recession of 1979– 1983 forced management to realign its thinking. Cutbacks in production had decreased the demand for the standard machine tools. More and more customers were asking either for major modifications to the standard machine tools or for a completely new product design.

The marketplace was changing and senior management recognized that a new strate- gic focus was necessary. However, attempts to convince lower-level management and the workforce, especially engineering, of this need were meeting strong resistance. The com- pany’s employees, many of them with over 20 years of employment at Williams Company, refused to recognize this change, believing that the glory days of yore would return at the end of the recession.

In 1986, the company was sold to Crock Engineering. Crock had an experienced machine tool division of its own and understood the machine tool business. Williams Company was allowed to operate as a separate entity from 1985 to 1986. By 1986, red ink had appeared on the Williams Company balance sheet. Crock replaced all of the Williams senior managers with its own personnel. Crock then announced to all employees that Williams would become a specialty machine tool manufacturer and the “good old days” would never return. Customer demand for specialty products had increased threefold in just the last 12 months alone. Crock made it clear that employees who would not support this new direction would be replaced.

The new senior management at Williams Company recognized that 85 years of traditional management had come to an end for a company now committed to specialty products. The company culture was about to change, spearheaded by project management, concurrent engineering, and total quality management.

Williams Machine Tool Company 189

Senior management’s commitment to project management was apparent by the time and money spent in educating the employees. Unfortunately, the seasoned 20+ year vet- erans still would not support the new culture. Recognizing the problems, management provided continuous and visible support for project management in addition to hiring a project management consultant to work with the people. The consultant worked with Williams from 1986 to 1991.

From 1986 to 1991, the Williams Division of Crock Engineering experienced losses in 24 consecutive quarters. The quarter ending March 31, 1992, was the first profitable quarter in over six years. Much of the credit was given to the performance and maturity of the project management system. In May 1992, the Williams Division was sold. More than 80 percent of the employees lost their jobs when the company was relocated over 1500 miles away.

Williams Machine Tool Company did not realize until too late that the business base had changed from production-driven to project-driven. Living in the past is acceptable only if you want to be a historian. But for businesses to survive, especially in a highly competitive environment, they must look ahead and recognize that change is inevitable.

191

4 Project Management Methodologies

4.0 INTRODUCTION

In Chapter 1 we described the life-cycle phases for achieving maturity in project management. The fourth phase was the growth phase, which included the following:

● Establish life-cycle phases. ● Develop a project management methodology. ● Base the methodology upon effective planning. ● Minimize scope changes and scope creep. ● Select the appropriate software to support the methodology.

The importance of a good methodology cannot be understated. Not only will it improve your perfor- mance during project execution, but it will also allow for better customer relations and customer confi- dence. Good methodologies can also lead to sole-source or single-source procurement contracts.

Creating a workable methodology for project management is no easy task. One of the biggest mistakes made is developing a different methodology for each type of project. Another is failing to integrate the project management methodology and project management tools into a single process, if possible. When companies develop project management methodologies and tools in tandem, two benefits emerge. First, the work is accomplished with fewer scope changes. Second, the processes are designed to create minimal disturbance to ongoing business operations.

192 PROJECT MANAGEMENT METHODOLOGIES

This chapter discusses the components of a project management methodology and some of the most widely used project management tools. Detailed examples of methodologies at work are also included.

4.1 EXCELLENCE DEFINED

Excellence in project management is often regarded as a continuous stream of successfully managed projects. Without a project management methodology, repetitive successfully com- pleted projects may be difficult to achieve.

Today, everyone seems to agree somewhat on the necessity for a project management methodology. However, there is still disagreement on the definition of excellence in project management, the same way that companies have different definitions for project success. In this section, we will discuss some of the different definitions of excellence in project management.

Some definitions of excellence can be quite simple and achieve the same purpose as complex definitions. According to a spokesperson from Motorola1:

Excellence in project management can be defined as:

● Strict adherence to scheduling practices ● Regular senior management oversight ● Formal requirements change control ● Formal issue and risk tracking ● Formal resource tracking ● Formal cost tracking

A spokesperson from AT&T defined excellence at AT&T as:

Excellence [in project management] is defined as a consistent Project Management Methodology applied to all projects across the organization, continued recognition by our customers, and high customer satisfaction. Also our project management excellence is a key selling factor for our sales teams. This results in repeat business from our customers. In addition there is internal acknowledgement that project management is value-added and a must have.

Doug Bolzman, Consultant Architect, PMP®, ITIL expert at Hewlett-Packard, dis- cusses his view of excellence in project management:

Excellence is rated, not by managing the pieces, but by understanding how the pieces fit together, support each other’s dependencies, and provide value to the business. If project management only does what it is asked to do, such as manage 300 individual projects in the next quarter, it is providing a low value-added function that basically is

1. H. Kerzner, Project Management Best Practices: Achieving Global Excellence, Wiley, Hoboken, NJ, 2006, p. 136.

Excellence Defined 193

the “pack mule” that is needed, but only does what it is asked—and no more. Figures 4–1 and 4–2 demonstrate that if mapping project management to a company’s overall release management framework, each project is managed independently with the char- acteristics shown

Using the same release framework and the same client requests, project management disciplines can understand the nature of the requirements and provide a valuable service to bundle the same types of requests (projects) to generate a forecast of the work, which will assist the company in balancing its financials, expectations, and resources. This function can be done within the PMO.

Project 1

Planning Design/Test Deployment Operations

CLIENT REQUESTS

Project 2

Project 3

Project 4

Project 5

Project 6

Project 7

Project 8

Project 400

Characteristics All projects managed independently Single-shot approach produces small gains Very costly to manage all of these independent releases to operations Costly to test and certify each release independently No overall control Little planning, mostly reacting and order taking

Figure 4–1. Release management stages.

Planning Design/Test Deployment Operations

CLIENT REQUESTS

Characteristics All projects grouped by similar infrastructure impacts Bundles planned, designed, tested, and deployed as a group Reduced cost to consolidate efforts Reduction in risk with understanding total impact to operations Bundles are planned and forecast; results in strategic, not reactive, management

Bundle One

Bundle Two

Figure 4–2. Release management stages: bundling requests.

194 PROJECT MANAGEMENT METHODOLOGIES

At DTE Energy, excellence in project management is defined using the project man- agement methodology. According to Jason Schulist, manager—continuous improvement, Operating Systems Strategy Group:

DTE Energy leverages a four-gate/nine-step project management model for continuous improvement. (See Figures 4–3 and 4–4.) In gate1 the project lead clearly defines the metric that will measure the success in the project. In gate 2 of the project, after the ideal state has been defined, the project lead gains approval from the champion confirming not only the appropriate metrics but also the target.

This target for success is maintained throughout the project and the project does not close (gate 4) unless the target is achieved. If the project does not achieve the target through the committed actions, the project reverts to gate 2 where the ideal state is revis- ited and further actions are determined.

Allan Dutch, PMP®, senior project manager, software engineering, methods and staff- ing at DTE Energy, believes that:

A DTE Energy information technology (IT) project exhibiting success and excellence in project management is one where the project manager directs her or his team much like a

Gate 4: Results

Gate 1: Assessment

Gate 3: Implementation

Gate 2: Design

Figure 4–3. Four-gate/nine-step project management model.

Excellence Defined 195

Keys to Suceess: 1. Discipline to the Project Management Model 2. Use the Right Tool at the Right Time

Problem Examples - Boller tube failures - 3

rd party pipe hits

- Transformer failures - Accounting errors - Meter read errors

GATE: 4

Specific Tools - Pareto Charts - Process Capability/ Variation Analysis* - Regression Analysis* - Reliablity Analysis* - Hypothesis Testing* - DOE*

- Process is failing to meet internal or external requirements

Specific Tools - Pareto Charts - Histograms* - Process Capability/ Variation Analysis* - FMEA* - Scatter Diagram/ Regression Analysis* - Reliability Analysis* - Design of Experiments

Problem Identified

Specific Tools - Pareto Charts - Control Charts* - Hypothesis Testing*

Problem Identified

Specific Tools - Set-up time reduction - 5S - Visual Factory - One piece flow

Improvement Opportunity Identified

Specific Tools - Time reduction analysis - Cost reduction analysis - Visual Factory

Improvement Opportunity Identified

Identify Potential Project

Form Team & Refine Scope - Establish team lead sponsor, leader, and members - Project charter - Affinity Diagrams - Kano Model/CTQ Tree* - SIPOC*

Common Tools - Process Mapping - Root Cause Analysis/ Cause & Affect Diagrams - Run Charts* - Check Sheets - Customer Satisfaction

Assess & Analyze Current Reality

- VOC - Benchmarking - SWOT - Business Plan

Define Desired Outcome/ Ideal State

- Decision Analysis Matrix - Master Planning - Change Management

Create Master Plan for implementing Solutions

- Pilot Testing - Change Management Process - AAR’s

Test Refine & Implement Project Solutions

- AAR’s - Balanced Metrics - Celebration

Acknowledge Team, Reflect, and Communicate Results

- Voice of Customer - SWOT Analysis - Waste Walks - Integrated Planning Process* - Environmental Scan* - Benchmarking

Project Selection Criteria - Results or Business Benefits - Feasibility - Organizational Impact

Common Tools - Error Proofing - Ideal State Mapping - SWI

Identify Project Gaps and Countermeasures

Measure Project Progress & Sustain Goals

Common Tools - Customer Satisfaction - Run Charts* - SWI - Check Sheets - Control Point Audits

- Process could be done faster, cheaper, better

Specific Tools - 5S Workshops - Waste Identification - Overproduction - Inventory - Defects - Work in Progress - Motion - Transportation - Waiting

Improvement Opportunity Identified

- Reduce the cost of staking - Increase speed of bill collection - Reduce overtime

Improvement Opportunity Examples

GATE: 1

GATE: 3

GATE: 2

Figure 4–4. Four-gate/nine-step model and tool selection process map.

196 PROJECT MANAGEMENT METHODOLOGIES

conductor directs her or his orchestra. Business value is demonstrable and recognized by the business unit while interactions with support organizations and infrastructure require- ments are coordinated smoothly and according to plan.

4.2 RECOGNIZING THE NEED FOR METHODOLOGY DEVELOPMENT

Simply having a project management methodology and following it do not lead to suc- cess and excellence in project management. The need for improvements in the system may be critical. External factors can have a strong influence on the success or failure of a company’s project management methodology. Change is a given in the current business climate, and there is no sign that the future will be any different. The rapid changes in technology that have driven changes in project management over the past two decades are not likely to subside. Another trend, the increasing sophistication of consumers and clients, is likely to continue, not go away. Cost and quality control have become virtually the same issue in many industries. Other external factors include rapid mergers and acquisitions and real-time communications.

Project management methodologies are organic processes and need to change as the organization changes in response to the ever-evolving business climate. Such changes, however, require that managers on all levels be committed to the changes and develop a vision that calls for the development of project management systems along with the rest of the organization’s other business systems.

Today, companies are managing their business by projects. This is true for both non– project-driven and project-driven organizations. Virtually all activities in an organization can be treated as some sort of project. Therefore, it is only fitting that well-managed companies regard a project management methodology as a way to manage the entire busi- ness rather than just projects. Business processes and project management processes will be merged together as the project manager is viewed as the manager of part of a business rather than just the manager of a project.

Developing a standard project management methodology is not for every company. For companies with small or short-term projects, such formal systems may not be cost- effective or appropriate. However, for companies with large or ongoing projects, develop- ing a workable project management system is mandatory.

For example, a company that manufactures home fixtures had several project development protocols in place. When they decided to begin using project management systematically, the complexity of the company’s current methods became apparent. The company had multiple system development methodologies based on the type of project. This became awkward for employees who had to struggle with a different methodology for each project. The company then opted to create a general, all-purpose methodology for all projects. The new methodology had flexibility built into it. According to one spokesman for the company:

Our project management approach, by design, is not linked to a specific systems develop- ment methodology. Because we believe that it is better to use a (standard) systems devel- opment methodology than to decide which one to use, we have begun development of a

Recognizing the Need for Methodology Development 197

guideline systems development methodology specific for our organization. We have now developed prerequisites for project success. These include:

● A well-patterned methodology ● A clear set of objectives ● Well-understood expectations ● Thorough problem definition

During the late 1980s, merger mania hit the banking community. With the lowering of costs due to economies of scale and the resulting increased competitiveness, the bank- ing community recognized the importance of using project management for mergers and acquisitions. The quicker the combined cultures became one, the less the impact on the corporation’s bottom line.

The need for a good methodology became apparent, according to a spokesperson at one bank:

The intent of this methodology is to make the process of managing projects more effective: from proposal to prioritization to approval through implementation. This methodology is not tailored to specific types or classifications of projects, such as system development efforts or hardware installations. Instead, it is a commonsense approach to assist in priori- tizing and implementing successful efforts of any jurisdiction.

In 1996, the information services (IS) division of one bank formed an IS reengineer- ing team to focus on developing and deploying processes and tools associated with project management and system development. The mission of the IS reengineering team was to improve performance of IS projects, resulting in increased productivity, and improved cycle time, quality, and satisfaction of the projects’ customers.

According to a spokesperson at the bank, the process began as follows:

Information from both current and previous methodologies used by the bank was reviewed, and the best practices of all these previous efforts were incorporated into this document. Regardless of the source, project methodology phases are somewhat standard fare. All projects follow the same steps, with the complexity, size, and type of project dictating to what extent the methodology must be followed. What this methodology emphasizes are project controls and the tie of deliverables and controls to accomplishing the goals.

To determine the weaknesses associated with past project management methodolo- gies, the IS reengineering team conducted various focus groups. These focus groups con- cluded that there was:

● Lack of management commitment ● Lack of a feedback mechanism for project managers to determine the updates and

revisions needed to the methodology ● Lack of adaptable methodologies for the organization ● Lack of training curriculum for project managers on the methodology ● Lack of focus on consistent and periodic communication on the methodology

deployment progress ● Lack of focus on the project management tools and techniques

198 PROJECT MANAGEMENT METHODOLOGIES

Based on this feedback, the IS reengineering team successfully developed and deployed a project management and system development methodology. Beginning June 1996 through December 1996, the target audience of 300 project managers became aware and applied a project management methodology and standard tool (MS Project).

The bank did an outstanding job of creating a methodology that reflects guidelines rather than policies and provides procedures that can easily be adapted on any project in the bank. Below the selected components of the project management methodology are discussed.

With any project, you need to define what needs to be accomplished and decide how the project is going to achieve those objectives. Each project begins with an idea, vision, or business opportunity, a starting

point that must be tied to the organization’s business objectives. The project charter is the foundation of the project and forms the contract with the parties involved. It includes a statement of business needs, an agreement of what the project is committed to deliver, an identification of project dependencies, the roles and responsibilities of the team members involved, and the standards for how project budget and project management should be approached. The project charter defines the boundaries of the project.

Once the project boundaries are defined, sufficient information must be gathered to support the goals and objectives and to limit risk and minimize issues. This component of project management should generate sufficient

information to clearly establish the deliverables that need to be completed, define the specific tasks that will ensure completion of these deliverables, and outline the proper level of resources. Each deliverable affects whether or not each phase of the project will meet its goals, budget, quality, and schedule. For simplicity’s sake, some projects take a four-phase approach:

● Proposal: Project initiation and definition. ● Planning: Project planning and requirements definition. ● Development: Requirement development, testing, and training. ● Implementation: Rollout of developed requirements for daily operation.

Each phase contains review points to help ensure that project expectations and quality deliverables are achieved. It is important to identify the reviewers for the project as early as possible to ensure the proper balance of involvement from subject matter experts and management.

Throughout the project, management and control of the process must be maintained. This is the opportunity for the project manager and team to evaluate the project, assess project performance, and control

the development of the deliverables. During the project, the following areas should be managed and controlled:

● Evaluate daily progress of project tasks and deliverables by measuring budget, quality, and cycle time.

● Adjust day-to-day project assignments and deliverables in reaction to immediate variances, issues, and problems.

Organizing

Planning

Managing

Enterprise Project Management Methodologies 199

● Proactively resolve project issues and changes to control scope creep. ● Aim for client satisfaction. ● Set up periodic and structured reviews of the deliverables. ● Establish a centralized project control file.

Two essential mechanisms for successfully managing projects are solid status- reporting procedures and issues and change management procedures. Status reporting is necessary for keeping the project on course and in good health. The status report should include the following:

● Major accomplishment to date ● Planned accomplishments for the next period ● Project progress summary:

● Percent of effort hours consumed ● Percent of budget costs consumed ● Percent of project schedule consumed

● Project cost summary (budget versus actual) ● Project issues and concerns ● Impact to project quality ● Management action items

Issues-and-change management protects project momentum while providing flexibil- ity. Project issues are matters that require decisions to be made by the project manager, project team, or management. Management of project issues needs to be defined and properly communicated to the project team to ensure the appropriate level of issue tracking and monitoring. This same principle relates to change management because inevitably the scope of a project will be subject to some type of change. Any change management on the project that impacts the cost, schedule, deliverables, and dependent projects is reported to management. Reporting of issue and change management should be summarized in the status report denoting the number of open and closed items of each. This assists manage- ment in evaluating the project health.

Simply having a project management methodology and using it does not lead to maturity and excellence in project management. There must exist a “need” for improving the system so it moves toward maturity. Project management systems can change as the organization changes. However, management must be committed to the change and have the vision to let project management systems evolve with the organization.

4.3 ENTERPRISE PROJECT MANAGEMENT METHODOLOGIES

Most companies today seem to recognize the need for one or more project management methodologies but either create the wrong methodologies or misuse the methodologies that have been created. Many times, companies rush into the development or purchasing

200 PROJECT MANAGEMENT METHODOLOGIES

of a methodology without any understanding of the need for one other than the fact that their competitors have a methodology. Jason Charvat states2:

Using project management methodologies is a business strategy allowing companies to maximize the project’s value to the organization. The methodologies must evolve and be “tweaked” to accommodate a company’s changing focus or direction. It is almost a mind- set, a way that reshapes entire organizational processes: sales and marketing, product design, planning, deployment, recruitment, finance, and operations support. It presents a radical cultural shift for many organizations. As industries and companies change, so must their methodologies. If not, they’re losing the point.

Methodologies are a set of forms, guidelines, templates, and checklists that can be applied to a specific project or situation. It may not be possible to create a single enterprise- wide methodology that can be applied to each and every project. Some companies have been successful doing this, but there are still many companies that successfully maintain more than one methodology. Unless the project manager is capable of tailoring the enterprise project management methodology to his or her needs, more than one methodology may be necessary.

There are several reasons why good intentions often go astray. At the executive levels, methodologies can fail if the executives have a poor understanding of what a methodology is and believe that a methodology is:

● A quick fix ● A silver bullet ● A temporary solution ● A cookbook approach for project success3

At the working levels, methodologies can also fail if they:

● Are abstract and high level ● Contain insufficient narratives to support these methodologies ● Are not functional or do not address crucial areas ● Ignore the industry standards and best practices ● Look impressive but lack real integration into the business ● Use nonstandard project conventions and terminology ● Compete for similar resources without addressing this problem ● Don’t have any performance metrics ● Take too long to complete because of bureaucracy and administration4

Deciding on the type of methodology is not an easy task. There are many factors to consider, such as:

● The overall company strategy—how competitive are we as a company? ● The size of the project team and/or scope to be managed

3 . Ibid., p. 4.

4 . Ibid., p. 5.

2 . J. Charvat, Project Management Methodologies, Hoboken, NJ: Wiley, 2003, p. 2.

Enterprise Project Management Methodologies 201

● The priority of the project ● How critical the project is to the company ● How flexible the methodology and its components are5

Project management methodologies are created around the project management matu- rity level of the company and the corporate culture. If the company is reasonably mature in project management and has a culture that fosters cooperation, effective communica- tions, teamwork, and trust, then a highly flexible methodology can be created based upon guidelines, forms, checklists, and templates. Project managers can pick and choose the parts of the methodology that are appropriate for a particular client. Organizations that do not possess either of these two characteristics rely heavily upon methodologies constructed with rigid policies and procedures, thus creating significant paperwork requirements with accompanying cost increases and removing the flexibility that the project manager needs for adapting the methodology to the needs of a specific client.

Jason Charvat describes these two types as light methodologies and heavy methodologies.6

Ever-increasing technological complexities, project delays, and chang- ing client requirements brought about a small revolution in the world of development methodologies. A totally new breed of methodology—

which is agile and adaptive and involves the client every part of the way—is starting to emerge. Many of the heavyweight methodologists were resistant to the introduction of these “lightweight” or “agile” methodologies (Fowler, 20017). These methodologies use an informal communication style. Unlike heavyweight methodologies, lightweight projects have only a few rules, practices, and documents. Projects are designed and built on face- to-face discussions, meetings, and the flow of information to the clients. The immediate difference of using light methodologies is that they are much less documentation oriented, usually emphasizing a smaller amount of documentation for the project.

The traditional project management methodologies (i.e., SDLC approach) are considered bureaucratic or “predictive” in nature and have resulted in many unsuccessful projects. These heavy methodologies are becoming

less popular. These methodologies are so laborious that the whole pace of design, develop- ment, and deployment slows down—and nothing gets done. Project managers tend to predict every milestone because they want to foresee every technical detail (i.e., software code or engineering detail). This leads managers to start demanding many types of specifications, plans, reports, checkpoints, and schedules. Heavy methodologies attempt to plan a large part of a project in great detail over a long span of time. This works well until things start chang- ing, and the project managers inherently try to resist change.

Enterprise project management methodologies can enhance the project planning process as well as providing some degree of standardization and consistency. Companies

Light Methodologies

Heavy Methodologies

5 . Ibid., p. 66. 6 . Ibid., pp. 102–104.

7 . M. Fowler, The New Methodology, Thought Works, 2001. Available: www.martinfowler.com/articles.

http://www.martinfowler.com/articles

202 PROJECT MANAGEMENT METHODOLOGIES

have come to the realization that enterprise project management methodologies work best if the methodology is based upon templates rather than rigid policies and proce- dures. The International Institute for Learning has created a Unified Project Management Methodology (UPMM™) with templates categorized according to the PMBOK® Guide, 4th edition, Areas of Knowledge8:

Communication: Project Charter Project Procedures Document Project Change Requests Log Project Status Report PM Quality Assurance Report Procurement Management Summary Project Issues Log Project Management Plan Project Performance Report

Cost: Project Schedule Risk Response Plan and Register Work Breakdown Structure (WBS) Work Package Cost Estimates Document Project Budget Project Budget Checklist

Human Resources: Project Charter Work Breakdown Structure (WBS) Communications Management Plan Project Organization Chart Project Team Directory Responsibility Assignment Matrix (RAM) Project Management Plan Project Procedures Document Kick-Off Meeting Checklist Project Team Performance Assessment Project Manager Performance Assessment

Integration: Project Procedures Overview Project Proposal Communications Management Plan

Enterprise Project Management Methodologies 203

Procurement Plan Project Budget Project Procedures Document Project Schedule Responsibility Assignment Matrix (RAM) Risk Response Plan and Register Scope Statement Work Breakdown Structure (WBS) Project Management Plan Project Change Requests Log Project Issues Log Project Management Plan Changes Log Project Performance Report Lessons Learned Document Project Performance Feedback Product Acceptance Document Project Charter Closing Process Assessment Checklist Project Archives Report

Procurement: Project Charter Scope Statement Work Breakdown Structure (WBS) Procurement Plan Procurement Planning Checklist Procurement Statement of Work (SOW) Request for Proposal Document Outline Project Change Requests Log Contract Formation Checklist Procurement Management Summary

Quality: Project Charter Project Procedures Overview Work Quality Plan Project Management Plan Work Breakdown Structure (WBS) PM Quality Assurance Report Lessons Learned Document Project Performance Feedback Project Team Performance Assessment PM Process Improvement Document

Risk: Procurement Plan Project Charter

204 PROJECT MANAGEMENT METHODOLOGIES

Project Procedures Document Work Breakdown Structure (WBS) Risk Response Plan and Register

Scope: Project Scope Statement Work Breakdown Structure (WBS) Work Package Project Charter

Time: Activity Duration Estimating Worksheet Cost Estimates Document Risk Response Plan and Register Medium Work Breakdown Structure (WBS) Work Package Project Schedule Project Schedule Review Checklist

4.4 BENEFITS OF A STANDARD METHODOLOGY

For companies that understand the importance of a standard methodology, the benefits are numerous. These benefits can be classified as both short- and long-term benefits. Short- term benefits were described by one company as:

● Decreased cycle time and lower costs ● Realistic plans with greater possibilities of meeting time frames ● Better communications as to “what” is expected from groups and “when” ● Feedback: lessons learned

These short-term benefits focus on KPIs or, simply stated, the execution of project management. Long-term benefits seem to focus more upon critical success factors (CSFs) and customer satisfaction. Long-term benefits of development and execution of a world- class methodology include:

● Faster “time to market” through better scope control ● Lower overall program risk ● Better risk management, which leads to better decision-making ● Greater customer satisfaction and trust, which lead to increased business and

expanded responsibilities for the tier 1 suppliers ● Emphasis on customer satisfaction and value-added rather than internal competi-

tion between functional groups ● Customer treating the contractor as a “partner” rather than as a commodity ● Contractor assisting the customer during strategic planning activities

Critical Components 205

Perhaps the largest benefit of a world-class methodology is the acceptance and recog- nition by your customers. If one of your critically important customers develops its own methodology, that customer could “force” you to accept it and use it in order to remain a supplier. But if you can show that your methodology is superior or equal to the customer’s, your methodology will be accepted, and an atmosphere of trust will prevail.

One contractor recently found that its customer had so much faith in and respect for its methodology that the contractor was invited to participate in the customer’s strategic planning activities. The contractor found itself treated as a partner rather than as a com- modity or just another supplier. This resulted in sole-source procurement contracts for the contractor.

Developing a standard methodology that encompasses the majority of a company’s projects and is accepted by the entire organization is a difficult undertaking. The hardest part might very well be making sure that the methodology supports both the corporate culture and the goals and objectives set forth by management. Methodologies that require changes to a corporate culture may not be well accepted by the organization. Nonsupportive cultures can destroy even seemingly good project management methodologies.

During the 1980s and 1990s, several consulting companies developed their own project management methodologies, most frequently for information systems projects, and then pressured their clients into purchasing the methodology rather than helping their clients develop a methodology more suited to the clients’ needs. Although there may have been some successes, there appeared to be significantly more failures than successes. A hospital purchased a $130,000 project management methodology with the belief that this would be the solution to its information system needs. Unfortunately, senior management made the purchasing decision without consulting the workers who would be using the system. In the end, the package was never used.

Another company purchased a similar package, discovering too late that the pack- age was inflexible and the organization, specifically the corporate culture, would need to change to use the project management methodology effectively. The vendor later admitted that the best results would occur if no changes were made to the methodology.

These types of methodologies are extremely rigid and based on policies and proce- dures. The ability to custom design the methodology to specific projects and cultures was nonexistent, and eventually these methodologies fell by the wayside—but after the vendors made significant profits. Good methodologies must be flexible.

4.5 CRITICAL COMPONENTS

It is almost impossible to become a world-class company with regard to project manage- ment without having a world-class methodology. Years ago, perhaps only a few companies really had world-class methodologies. Today, because of the need for survival and stiffen- ing competition, there are numerous companies with good methodologies.

The characteristics of a world-class methodology include:

● Maximum of six life-cycle phases ● Life-cycle phases overlap

206 PROJECT MANAGEMENT METHODOLOGIES

● End-of-phase gate reviews ● Integration with other processes ● Continuous improvement (i.e., hear the voice of the customer) ● Customer oriented (interface with customer’s methodology) ● Companywide acceptance ● Use of templates (level 3 WBS) ● Critical path scheduling (level 3 WBS) ● Simplistic, standard bar chart reporting (standard software) ● Minimization of paperwork

Generally speaking, each life-cycle phase of a project management methodology requires paperwork, control points, and perhaps special administrative requirements. Having too few life-cycle phases is an invitation for disaster, and having too many life- cycle phases may drive up administrative and control costs. Most companies prefer a maximum of six life-cycle phases.

Historically, life-cycle phases were sequential in nature. However, because of the necessity for schedule compression, life-cycle phases today will overlap. The amount of overlap will be dependent upon the magnitude of the risks the project manager will take. The more the overlap, the greater the risk. Mistakes made during overlapping activities are usually more costly to correct than mistakes during sequential activities. Overlapping life-cycle phases requires excellent upfront planning.

End-of-phase gate reviews are critical for control purposes and verification of interim milestones. With overlapping life-cycle phases, there are still gate reviews at the end of each phase, but they are supported by intermediate reviews during the life-cycle phases.

World-class project management methodologies are integrated with other manage- ment processes such as change management, risk management, total quality management, and concurrent engineering. This produces a synergistic effect, which minimizes paper- work, minimizes the total number of resources committed to the project, and allows the organization to perform capacity planning to determine the maximum workload that the organization can endure.

World-class methodologies are continuously enhanced through KPI reviews, lessons- learned updates, benchmarking, and customer recommendations. The methodology itself could become the channel of communication between the customer and contractor. Effective methodologies foster customer trust and minimize customer interference in the project.

Project management methodologies must be easy for workers to use as well as cover- ing most of the situations that can arise on a project. Perhaps the best way is to have the methodology placed in a manual that is user friendly.

Excellent methodologies try to make it easier to plan and schedule projects. This is accomplished by using templates for the top three levels of the WBS. Simply stated, using WBS level 3 templates, standardized reporting with standardized terminology exists. The differences between projects will appear at the lower levels (i.e., levels 4–6) of the WBS. This also leads to a minimization of paperwork.

Today, companies seem to be promoting the use of the project charter concept as a component of a methodology, but not all companies create the project charter at the same

SAP 207

point in the project life cycle, as shown in Figure 4–5. The three triangles in Figure 4–5 show possible locations where the charter can be prepared:

● In the first triangle, the charter is prepared immediately after the feasibility study is completed. At this point, the charter contains the results of the feasibility study as well as documentation of any assumptions and constraints that were considered. The charter is then revisited and updated once this project is selected.

● In the second triangle, which seems to be the preferred method, the charter is pre- pared after the project is selected and the project manager has been assigned. The charter includes the authority granted to the project manager, but for this project only.

● In the third method, the charter is prepared after detail planning is completed. The charter contains the detailed plan. Management will not sign the charter until after detail planning is approved by senior management. Then, and only then, does the company officially sanction the project. Once management signs the charter, the charter becomes a legal agreement between the project manager and all involved line managers as to what deliverables will be met and when.

4.6 SAP9

Project quality is paramount in delivery of SAP projects; this fact is reflected in structured approach to quality management for SAP solu- tion delivery—Quality Built In. The staple of the quality approach in

SAP projects is the execution of formal project quality gates. The quality gates are defined in the ASAP project delivery methodology that SAP and its customers and partners use for project planning, management and delivery. Each project type has predetermined number of quality gates executed at key milestones of the project as shown in Figure 4–6.

SAP believes that the quality gates are essential for success of any project regardless of deployment strategy—like traditional or agile. The Q-Gates are integrated not only into our delivery methodology, but they are also coded into our delivery policies and internal

Project Quality Gates—

Structured Approach to

Ensure Project success

Timeline

Idea Generation

Project Selection Criteria

Project Manager Selection

Detail Planning

Feasibility Study

Project Selection

Benefit–Cost Analysis

1 2 3

Figure 4–5. When to prepare the charter.

9 . ©2013 by SAP. All rights reserved. Reproduced by permission. Material in this section has been provided by Jan Musil, Global Lead of Project Management Practice, SAP Field Services, SAP America, Inc.

208 PROJECT MANAGEMENT METHODOLOGIES

systems. The results of each quality gate are recorded in the corporate project management information system and they are regularly reviewed and reported on. Dedicated quality team in SAP has accountability for management of the quality gates, review of project health and follow-up with project manager, stakeholders and leadership.

The project quality gates in the ASAP methodology provide clear guidance to project managers, stakeholders and project teams on how to structure and perform the quality gate review. During each quality gate the QA manager assesses completeness and quality of each deliverable produced in the project according to predefined quality gate checklist that includes not only deliverable name, but also detailed acceptance criteria. Each deliverable in the Q-Gate checklist is marked as either mandatory or optional for completion of the quality gate. Upon completion of the Q-Gate the QA manager assesses pass/fail score for the Q-Gate and proposes follow-up plan to take corrective actions addressing the deficien- cies identified in this process.

The formal quality built in process has been shown to have positive impact on cus- tomer satisfaction, improved overall project portfolio health and positively impacted revenue.

SAP delivery projects follow structured, repeatable and prescriptive methodology for implementation ASAP. The ASAP Methodology for Implementation is SAP’s content rich methodology for assisting with the implementation and/or upgrade of SAP solutions across industries and customer environments. Built on experience from

thousands of SAP projects, ASAP provides content, tools, and best practices that help consultants to deliver consistent and successful results across industries and customer environments.

ASAP Methodology –

Structured, Repeatable,

Prescriptive Way to Deliver

SAP Projects and Innovate

Project Delivery

Four quality gates are mandatory:

Project Preparation Phase

Blueprint Phase

Realization Phase

Final Preparation

Other 3 gates are optional as agreed with the customer.

Q-Gate 1 Project Prep Phase Assessment

Q-Gate 2 Blueprint Phase Assessment

Q-Gate 3 Baseline Configuration Assessment

Q-Gate 4 Final Configuration Assessment

Q-Gate 5 Realization Phase Assessment

Q-Gate 6 Final Preparation Assessment

Q-Gate 7 Completed Project Assessment

Post Go-Live check

Project Preparation Blueprint Realization

Final Preparation

Go-Live Support

Operations

ASAP Q-Gates21 3 4

Figure 4–6. Project quality gates are defined in the Project Management Plan and are set at critical stages in the project lifecycle.

SAP 209

The six phases of ASAP provide support throughout the life cycle of SAP solutions. Underlying these phases is a series of value delivery checks to make sure that the solution, as implemented, delivers the expected value. Figure 4–7 illustrates the phases of ASAP.

The methodology covers key aspects of SAP implementation from Project Management guidance structured around PMI PMBOK® Guide through business process design, busi- ness value management, application lifecycle management, organizational change man- agement, technical solution management, data management and other topics important for delivery of SAP solutions.

The ASAP methodology is not pure Project Management methodology, but instead it combines all key elements the project team needs to cover in order to deliver successful projects. This is shown below in Figure 4–8.

The ASAP methodology is designed in a way that enables flexibility and scalability from smaller projects like single consulting services delivery to more complex delivery of global deployments in multinational corporations. This flexible design allows us to use the methodology as a foundation for creation of all consulting services. Each engineered service leverages the common WBS of the ASAP methodology to define clearly the work that is performed, roles and skills that are required to deliver service and also detail about sourcing of the roles from within the organization.

Project Preparation

1 2 3

5 6

Blueprint Realization Final Preparation

Go Live Support

Operate

Figure 4–7. The phases of ASAP.

Conduct initial planning and preparation; define project goals, scope, and objectives; identify and train team members

Map value drivers to implementation scope; refine business requirements; document the to-be processes; define functional solution design; identify added functional, technical requirements; get business sign-off on requirements/design

Build and test a complete test and business environment; develop training material and user manuals; obtain business approval

Prepare system for production release; migrate/cut over data; execute training; and prepare the organization internal/external) for Go-Live

Execute new systems and processes; monitor business process results, and monitor the production environment; build Center of Excellence for support and enhancements

Run the new system; apply additional SAP operations standards to optimize system operation

RunProject Preparation

1 Blueprint

2 Final Preparation

4 Realization

3 Go-Live Support

5 6

Ensure the delivery of value throughout the solution life cycle (“Value Delivery”)

Figure 4–8. The ASAP methodology elements.

210 PROJECT MANAGEMENT METHODOLOGIES

This approach helps us achieve commonality between the services in areas that are not core expertise of service owners (like project management), it lowers the cost of service creation and simplifies the adoption process.

Thanks to the use of common taxonomy based on ASAP in creation of services the SAP projects can be assembled from individual engineered services and delivered in “assembled-to-order” approach rather than designed from scratch. SAP has been rec- ognized by Technology Services Industry Association (TSIA) in 2012 for its innovative approach in services delivery with the SAP Advanced Delivery Management approach that is built on principles of common modular services that can be assembled and reused in different projects. See Figure 4–9.

With this approach SAP customers take advantage of prebuild services and content and lower the cost of deployment [and] complexity of projects and minimize the risk of deployment projects. The engineered services and rapid deployment solutions are used in early stages of the project to establish a baseline solution that is later enhanced in series of iterative incremental builds using the agile techniques. This innovative approach to project delivery has significantly changed the delivery of projects and requires our project manag- ers to adopt their skills to this innovative way of project execution. One example is that project managers needed to learn how to structure and run projects with the iterative agile techniques to design, configure or develop customer-specific extensions, which is substan- tially different from traditional management of projects where solution is built from scratch.

… ensure the most predictable and fastest time to business value

With New Delivery Approach we … The How …

START four variants with high effort of creation

RESULT any number of variants possible with minimal effort

MODULARIZATION two configurable parts (modules)

… deliver the integration the business demands to start and grow without compromises

… choose from a modular ready to use portfolio of solution, deployment and pricing options

… innovate faster than competitors and leverage the full potential of the game changers

2 3 4

Figure 4–9.

Cassidian: Integrated Multilevel Schedules 211

The common methodology and its taxonomy is not only great enabler for project delivery, but it also helped SAP innovate the way solutions are delivered and deployed.

4.7 CASSIDIAN: INTEGRATED MULTILEVEL SCHEDULES

Perhaps the single most important benefit of a good methodology is the ability to create integrated multilevel schedules for all stakeholders. The remainder of this section has been provided by Cassidian: ©2013 by Cassidian. Reproduced by permission. All rights reserved.

The Integrated Multilevel Scheduling practice is aimed at providing each level of management of the project, from the Customer and/or the Company management, down to the Project Management, and down to

the Work Package management, with consistent schedule baselines, consistent progress measurement and consistent estimates to completion.

This practice is widely used for large and complex projects.

Definition of Integrated Multilevel Schedules

Project Integrated Multilevel Scheduling is aimed divided into three levels of management:

● Master Schedule (Level 1): Customer and/or the Company management, ● Project Summary Schedule (Level 2): Project management, and ● Detailed Schedule (Level 3): Work Package management

By default, the different levels of schedules are self-sufficient, reflecting the delega- tion of management responsibility in the project:

● Master Schedule is owned by the Project Manager ● Project Summary Schedule is owned by the Project Manager (for large project, the

project manager may be supported by the Project Management Office) ● Detailed Schedules are owned by Work Package Managers

In addition, to deliver and maintain a multilevel project schedule, links shall be per- formed between the different levels to provide an Integrated Multilevel Project Schedule.

Prerequisites to Prepare and to Deliver Integrated Multilevel Schedules

Before developing Integrated Multilevel Schedules, the following deliverables shall be completed and performed:

Define the project scope through ● Collect the requirements, ● Define the Product Breakdown Structure with all internal and external deliverables, ● Develop the Work Breakdown Structure—think DELIVERABLES.

Why Integrated Multilevel

Schedules?

212 PROJECT MANAGEMENT METHODOLOGIES

● Specify Work Packages with a special focus on inputs needed and outputs expected including acceptance criteria of the deliverables, and

● Plan a review of all the Work Packages descriptions with all main stakeholders of the project, the objective is to share and control the consistency between inputs and outputs of the different Work Packages.

● Estimate target duration, work, cost and skills for each Work Package, ● Manage risks and opportunities to define and plan mitigation actions and to iden-

tify where buffers shall be added in the plans.

Principles of Integrated Multilevel Schedules

The following principles shall be followed to ensure a success Integrated Multilevel Schedules:

● The Master Schedule (also called Level 1 Plan) shall deliver a synthetic view (one page) on the project schedule reflecting the major milestones (contractual milestones, major customer furnished Items or equipments (CFI / CFE) with critical impact on contractual deliverables), the dependencies between major milestones and summaries of the main phases, the contractual dates (contract commitments) and the current contract status (major milestones passed and current progress with forecasted dates).

● The Project Summary Schedule (also called Level 2 Plan) shall cover the complete WBS of the project and shall be organised according to the WBS structure. It shall provide the dependencies between all the WP of the project and the dependencies between the WP deliverables and the major milestones of the project.

● The Detailed Schedule (also called Level 3 Plan) shall deliver the detailed sched- ule of each work package, which shall be broken-down in activities, each activity shall conduct to a deliverable and shall be broken down in elementary tasks with resource assigned.

In addition, between the different levels, Multilevel Schedule Links shall be imple- mented (See Figure 4–10):

● Between the Level 1 Plan and the Level 2 Plan, links should be defined to follow the adherence to the contractual milestones dates (customer commitments) and other key milestones dates. Thereof, all major milestones (MM) reported in the Level 1 Plan shall be linked to corresponding MM in the Level 2 Plan,

● Between the Level 2 Plan and the Level 3 Plan, links should be defined to fol- low the adherence to the project dates (project target dates), where each WP, the input(s) and output(s) defined in the Level 2 Plan should be linked to correspond- ing input(s) and output(s) of the Level 3 Plan.

● Two types of links should be used: ● Hard links (also called driving links) for inputs in order to align automatically the

date of availability of the corresponding input in the lower level ● Soft links for outputs to inform on the forecasted date in the lower level of the

output without impacting automatically the date defined in the upper level

Monitor and Control of Integrated Multilevel Schedules

The monitoring and controlling of the different levels of schedule, including the consis- tency, checking should be performed within one month according to the following scheme:

Tecnicas Reunidas 213

1. Update of Level 3 schedules by each Work Package Manager based on current actual and new forecast according to ongoing Work Package progress.

2. Multi level consistency checking by the Project Management Office including the deviations and the identification of the impact over Key milestones.

3. Schedule Review among Project Management Office, Engineering Authority and Work Package Managers in order to identify actions plan to recover target dates

Validation by the Project Manager with the update of Level 3 and Level 2 schedules based on the decisions taken and update performance baseline if needed.

4.8 TECNICAS REUNIDAS10

Introduction

As a result of the projected rate of energy demand growth, the oil and gas industry has a wide range of challenges and opportunities across differ- ent areas. Due to that the sector is proceeding since several years ago for

the development of new facilities which in many cases are megaprojects.

Open Book Estimate (OBE)

as a Successful Contract

Alternative to Execute Projects

in the Oil & Gas Sector

10. ©2013 Tecnicas Reunidas. Reproduced by permission. All rights reserved. Material has been provided by Felipe Revenga López. Felipe Revenga López is the Chief Operations Officer of Tecnicas Reunidas since September 2008. He joined TR in 2002 as Project Director and then as Project Sponsor of a group of international strategic projects. He has large experience in EPC-LSTK and OBE-LSTK projects in the Oil & Gas Production Units, Refining, Petrochemical and Power Sector worldwide. He is an Industrial Engineer (Specialty Chemicals) by the School of Industrial Engineers (ETSIIM) and cur- rently finishing the Doctoral Program Engineering of Chemical and Biochemical Processes at the Polytechnic University of Madrid (ETSIIM).

Master Schedule–Level 1 plan with contractual milestones and key milestones

Execution Schedule–Level 2 plan with all WP and dependencies between WP Key milestone 1

Key milestone 2

WP 2

WP 1 WP 2

WP 3 Output

Output

Hard links for inputs (Previous WP deliverables or CFE) Soft links for outputs (WP deliverables)

Output Output

Internal Output

Input Input

WP 3 WP 1

WP needed to reach the KM 1 with dependencies

WP needed to reach the KM 2 with dependencies

Detailed Schedule – L3 Detailed Schedule – L3 Detailed Schedule – L3

Figure 4–10. Example of Integrated Multilevel Schedule

214 PROJECT MANAGEMENT METHODOLOGIES

The typical complete life cycle of a capital project in the Oil & Gas sector is focused in the overall stages that are showed in Figure 4–11. Understanding and managing these stages is crucial on the long-term success of the project.

LSTK and Cost Plus contracting are both very prevalent types of contracts within projects in the Oil & Gas industry. Depending upon the level of risk the Client of a project is willing to accept, budget constraints, and the Client’s organization core competencies, will determine which method is best for their project.

A large amount of projects in this sector are performed under EPC-LSTK contracts; TECNICAS REUNIDAS major experience is based mainly in this type of projects that in general implies to manage the whole project and carry out the detailed engineering (in some cases is included the basic engineering or FEED in the scope of work), procure all the equipment and materials required, and then construct, precommission and start-up to deliver a functioning facility ready to operate. LSTK contracting tends to be riskiest, and all risks are assumed by EPC Contractor.

The Open Book Estimate (OBE) or Open Book Cost Estimate (OBCE) is an alterna- tive to execute EPC Projects. With this type of contract the final purpose of the work is to define the total price of the Project in collaboration with the Client; the global costs of the Project are established in a transparent manner (Open Book).

The Open Book Estimate (OBE)

The main purpose of this methodology is to build up an accurate EPC Price by applying some parameters previously agreed (between Client and the Contractor), the base cost through an OBE, the development of an extended front-end engineering and in some cases the placement of purchase orders for selected long lead and critical items to ensure the overall schedule of the project. The OBE will fix the project base cost and will become the basis for determining the lump sum EPC price for the project.

During an OBE Phase, Contractor develops a FEED and/or part of the detailed engi- neering under a reimbursable basis or lump sum price or alternatives, including a complete and open cost estimate of the plant. After an agreed period (usually between 6–12 months mainly dependent of accuracy grade, schedule and an others factors required by client) of engineering development and a Client and Contractor agreement on the base cost, the contract is changed or converted to an EPC LSTK Contract applying previously agreed multiplying factors.

Principal Cost Elements and Pricing Categories:

The OBE usually is based on sufficient engineering development in accordance with the deliverables identified in OBE contract. These deliverables have the greatest degree of development that is possible

under the normal progress of the project. Required deliverables are prepared and submitted to client prior completion of conversion phase.

The principal cost elements, as seen in Figure 4–12, that will comprise the OBE are addressed below. The OBE cost estimate shall include the total Scope of Work:

Cost Estimate Methodology

215

Design Basis

Project Proposal

Fund Approve Capital

FEED + Detail Design

Procurement Purchasing, expediting, fabrication, transport

Construction

MCC Mechanical completion

Conceptual Project Definition

EPC Phase

Operations

Commissioning Start-up

Figure 4–11. Typical life-cycle phases.

216 PROJECT MANAGEMENT METHODOLOGIES

1. Detailed engineering, procurement and construction services 2. Supply of equipment, bulk materials and spare parts 3. Transport to construction site 4. Customs clearance 5. Construction and erection at site 6. Provision of subcontractors temporary construction facilities and services 7. Construction and precommissioning services 8. Commissioning and start-up services 9. Training services and vendor’s assistance

10. Bonds, insurances, hedging charges 11. Other costs including third-party inspection and contractor insurance 12. Other . . .

Cost Base

● An OBE procedure is developed during contract stage and implemented during project’s OBE phase. All details on how to prepare an OBE have to be agreed and included as an annex in the Contract.

● Preagreement of allowances, growth, conditioning, technical design allowances, surplus and cut and waste.

● MTOs based on PDS, measured in P&ID and plot plans and estimates. All details on procedures to be agreed before OBE contract signature.

In executing projects under convertible basis, TR develops the OBE in parallel with the normal project execution ensuring that both activities can flow smoothly without interferences. During the OBE phase, in particular cases and if so agreed with client, TR can advance the procurement of main equipment and initiate negotiations for construction

O B

E C

O S T

Civil Works

Steel Structure Supply

Main Subcontractor (i.e. Mechanical, Electrical, Instrument, etc) Others

Equipment

Materials

Piping

Instruments

Electrical

Engineering

Constr. Sup. Manag.

Temporary Facilities

Others

Indirect

Direct

Construction Subcontracts

Supplies

TRANSPORT

Figure 4–12. Typical cost elements.

subcontractors. The execution of these activities in advance facilitates the fulfillment of project schedule requirements.

This OBE phase of the project is jointly developed between client and TR. The OBE is fully transparent to client and the conversion to LSTK is easily agreed once the risk/ reward element is fixed.

In Figure 4–13, we see the main steps and activities that are developed to achieve OBE goals and to convert to next phase of the project:

During OBE phase, cost saving ideas are developed in order to adjust the final cost estimation, for that, a special team of engineering specialist is appointed to work with both the Engineering Manager and the Estimating Manager, with the purpose to detect those areas where potential savings can be achieved by optimizing the design, without jeopardis- ing Safety, Quality or Schedule. Any of these changes that could lead to cost saving are carefully evaluated from a technical point of view and, if the feasibility of the potential change is proven, the alternative solution, together with the cost saving impact evaluation will be forwarded to the CLIENTS for consideration of approval.

The EPC contract price is the result of the base cost multiplied by fixed percentages for fee and mark-ups related with equipment, bulk materials, construction and ancillary cost that are agreed between Client and Contractor. This price during the conversion phase is converted to lump sum price and thereafter remains fixed during the EPC-LSTK phase.

Contracts

The typical models of contracts under this OBE alternative are:

● One Contract, two parts, OBE and EPC. Price for EPC part to be included at conversion

● Two Contracts, one OBE and other EPC: Both may be signed at the beginning or one at the beginning and the other at conversion.

Steps to Achieve OBE Target

Obtain quotations for all equipment (for procurement)

OBE COMPLETED CONVERSION PHASE

Figure 4–13. Steps to achieve OBE target.

Tecnicas Reunidas 217

218 PROJECT MANAGEMENT METHODOLOGIES

The methodology of open book estimate is included in the contract. In case of no conversion:

I. Contractual relationship disappears and both client and contractor break their commitment. Client may break if not interested. Consequences:

● Six months new LSTK offer. 2-3 months plus evaluating the offers ● Repeat FEED with different contractor

II. Contract provides mechanisms in the case of no agreement. ● Continue contract on a service base (better LS Contract) ● Agreement on partial conversion ● Others as per contract agreement

Advantages

An OBE + LSTK could optimize all project execution especially in cost and schedule. ● In terms of cost, Client and Contractor could together determine the project

cost through an open book cost estimate because an estimation methodology, conversion conditions like multiplying factors are agreed, etc. also, transpar- ency and mutual agreement and trust is share between clients and contractors. This model results in an accurate cost because unnecessary contingencies are avoided.

● On the other hand, this model results in schedule advantage because the bid- ding period is shortened or replaced by a conversion negotiation phase; an EPC stage is shortened because all the works developed during the extended feed and conversion stage. A representation of the schedule advantage is shown in Figure 4–14:

LSTK

OBE + LSTK (CONVERTIBLE) Schedule Advantage

FEED EPC LSTK

Contract AwardContract Award

FEED + EPC LSTK

Contract Award Conversion Phase

Fair Price Contingencies minimized

Price Definition: Better accuracy on the costs

Project Life

Figure 4–14. Typical schedule advantage.

In summary, the advantages in cost and schedule are:

Cost Schedule Reduction

Develops and EPC estimate during 6 to 12 months. This provides a much better accuracy on the costs. Accurate prices based in real offers + an agreed conversion factor assures a fair juice to Client and Contractor. Time enough to develop the project and to avoid unnecessary contingencies. Application of cost saving to match project cost to Clients budget. Facilitates the possibility of funding, because a more accurate estimation. Risk are reduced and better controlled for common benefits both Client and Contractor

Short bidding period, as cost estimate does not need to be as detailed Shorten of the overall schedule of the project as time for Extended FEED and EPC bidding is shortened dramatically. Contract award procedure much easier and shorter Some long lead Items and critical equipment could be awarded or negotiated

Close-out

Open Book Estimate (OBE) has been demonstrated to be a successful contract alternative for executing projects in the Oil & Gas Sector because it aligns Client and Contractor with the project’s goals. Both are motivated to pursue the best cost estimation or project target cost and at the same time the schedule is optimized.

As was mentioned in the introduction, in the Oil & Gas Sector most of the current projects can be catalogued as megaprojects, where there are many risk associated also in a hot market with a high workload from suppliers, contractors, subcontractors, etc. Through an OBE alternative, the clients can better manage its risks through a more cooperative and agreed approach, where the risks are reduced during an accurate estimation, and then embraced rather than totally transferred to Contractors, and in this way project outcomes could be improved.

Técnicas Reunidas has developed and converted successfully 100% from OBE to LSTK-EPC projects.

Acronyms

● Client: means the owner of the Oil & Gas Company ● Contractor: affiliated company responsible for performing the engineering, pro-

curement and construction services ● EPC: Engineering, Procurement & Construction. Type of contract typical of

industrial plant construction sector, comprising the provision of engineering ser- vices, procurement of materials and construction.

● FEED: Front-End Engineering Design means Basic Engineering which is con- ducted after completion of Conceptual Design or Feasibility Study. At this stage, before start of E.P.C (Engineering, Procurement and Construction), various studies take place to figure out technical issues and estimate rough investment cost.

● LS Contract: Lump Sum Contract implies that the Contractor agrees to do an specific project for a fixed price

Tecnicas Reunidas 219

220 PROJECT MANAGEMENT METHODOLOGIES

● LSTK Contract: Lump Sum Contract + all systems are delivered to the client ready for operations.

● MTOS: Material take-offs of: Piping, Electrical, Instrumentation ● OBE: The Open Book Estimate (OBE) or Open Book Cost Estimate (OBCE) ● PDS: Software used for designing industrial plants through a multidisciplinary

engineering activity ● P&ID: Process & Instrument Diagrams ● TR: Tecnicas Reunidas

4.9 TERADYNE: FROM MYTH TO REALITY

Sooner or later, all companies recognize the need for a project management methodol- ogy, perhaps even an enterprise-wide project management methodology (EPM). While recognition is easy, the actual development and ultimately implementation can be difficult if the company bases its decisions on myths rather than reality. In Table 4–1 are some of the characteristics of well-developed methodologies, at least in the author’s opinion. The second column illustrates the myth, whereas the third column identifies what mature companies seem to do.

TABLE 4–1. DESIGN CHARACTERISTICS OF A GOOD METHODOLOGY

Characteristic Myth Reality

Description of the Methodology

Excessive details are needed, perhaps hundreds of pages with illustrations, graphs, and tables

Description is a high-level framework, short and easy to read and understand; perhaps 25 pages or less

Readability Excessive details and complex illustrations Narrative descriptions supported mainly by flowcharts

Applicability Need multiple methodologies based upon the types of programs, projects, deliverables, and functional areas

One high-level methodology can be used for both projects and programs

Alignment Methodology should be aligned to the deliverables of the project or programs

Methodology should be aligned to the business and applicable to both projects and programs

Adaptability Methodology must be based upon rigid policies and procedures

Methodology should have flexibility so that it can be adapted to all programs and projects and also be readily adaptable to necessary changes

PMBOK® Guide mapping

Methodologies have unique characteristics and are based upon rigid policies and procedures

The basic structure of the methodology should be mapped against the PMBOK® Guide

Role delineation The methodology should clearly delineate the roles of all players; project managers, line managers, executives, and customers

Because of the need for flexibility and adaptability, only the role of the project manager needs to be delineated, specifically integration responsibility

Lessons learned Methodology usage ends when the deliverables are met

Methodologies should have a final step to capture best practices and lessons learned

Teradyne: From Myth to Reality 221

A capital equipment producer for the electronics industry has developed a methodol- ogy that follows most of these reality characteristics. For example, the opening paragraph in the Teradyne’s methodology states11:

One purpose of this document is to present a high level description of the Program/ Project Manager’s function within the product development cycle. A Program Manager is responsible for multiple related product aligned projects culminating in a major prod- uct deliverable where a Project Manager will focus on a single major product level deliv- erable. The purpose of the Program/Project Manager is to: “Partner with design leads in directing and integrating cross-functional project teams to ensure stakeholders objectives are met and deliver products in accordance with the approved project plan”. . . . The value proposition for program management could be stated: A Program/Project Manager (PM) provides the organized, industry-aligned disciplined framework to integrate functional engineering and operational groups in driving product-based projects or programs to completion on-time and on-budget, while meeting market demands/needs/requirements. Another purpose of this document will be to present a high level description of the work instruction framework that Program Management uses in managing product develop- ment projects/programs. . . . Given the unique integrative role of the PM, this document will also attempt to link tie points with functional groups such as: marketing, engineering and operations.

The document also goes on to describe the role of the project and program managers, as well as the fact that the methodology applies to both programs and projects. In addition, the methodology also identifies the fact that the entire methodology may not be required on certain projects. This fact alone provides considerable flexibility in its use and illus- trates the company’s faith in the ability of their project/program managers.

This document will pertain to all Programs and Projects managed by the Division Program Management Office (PMO). A Project Manager will focus on a single major product level deliverable where a Program Manager is responsible for multiple related product aligned projects culminating in a major product deliverable. Hereafter in this document the title Project Manager and Program Manager will be referenced using the acronym, PM, with the meaning taken from the context of the passage. There will be variation in the level of effort that project or program managers will expend for any one project or program depending on multiple factors such as: project/program budget size, technical or schedule complexity.

The PMO has established the criteria to determine when a Project should be consid- ered a Program. On the other end of the spectrum, it has also established criteria to define which project should use the “PM Lite” process, which does not require use of the PM tools & techniques identified in this document. Both definitions can be found in the “PM Lite” process document available on the PMO web page. This document will assume a situation where there is a need for a PM and the full range of standardized project tools/ techniques available would be in use.

11. The remaining quotes in this section were provided by Dr. Steve Lyons, Applications Project Manager at Teradyne, a capital equipment manufacturer in the electronics industry and adapted from their methodology for managing projects and programs. The material is reproduced with permission of Teradyne.

222 PROJECT MANAGEMENT METHODOLOGIES

As mentioned previously, good methodologies focus on flowcharting that is easy to understand. Documents with complex charts and exhibits are not only difficult to fol- low but also make it difficult for the employees to follow and use. Complex or poorly constructed flowcharts can severely limit the project manager’s flexibility. An excellent example of an easy-to-follow flowchart can be shown from the statement below taken from the Teradyne’s methodology:

Figure 4–15 shows the alignment between product development and program man- agement and the fact that heaviest PM involvement is in Path II, Phases 1 through 4. The company’s functional groups and the program managers operate in a matrix, com- posite organization (PMBOK® Guide 2004, Figure 2.12). The program managers are responsible for the scope, schedule, and cost of a project but do not directly manage human resources. The program manager(s) generally work closely with a design lead(s) (the “two in a box” concept) in controlling the project’s “triple-constraints” of scope, schedule, and cost. Note that path II, phase 1 can be divided into optional A and B segments. This would typically be recommended for large platform projects. Phase 2 is also divided into seg- ments A & B on all projects.

The two circles in Figure 4–15 represent Dr. Deming’s cycle of continuous improve- ment. This shows that quality is embedded in the process flow and the company’s commit- ment to quality and the total quality management processes.

Funnel

Step 0

Division Business Strategy

Goals and

Objs.

Product Line

Architect.

Aggregate Project Plan

Step 1 Step 2 Step 3

Enabling Technology

Step 4

Concept Develop.

Phase 1

Project Assessment

Project Execution Strategy Principles Process Structure

Project and Product

Planning

Detailed Design and Develop.

Product Test

Product Release/ Ramp

Phase 2 Phase 3 Phase 4 Phase 5

Path 1 “Doing the Right Thing”

Path 2 “Doing Things Right”

A A

B B

Project Portfolio

Project Execution

P D

A C

P D

A C

Figure 4–15. Alignment of product development and program management.

Teradyne: From Myth to Reality 223

Another characteristic of many companies is the alignment of their methodology to the PMBOK® Guide processes. According to Teradyne’s methodology:

Table 4–2 shows the mapping of the phase deliverables to PMBOK® Guide processes. Phase 2 (planning) may require the use of all 9 process knowledge areas and is generally considered to be the phase requiring the largest time commitment from the PM because of the amount of actual “pick and shovel” work. For example, during Phase 2 the PM creates the detailed schedule, budget, resource plan, and risk management plans. Phases 3 and 4 require continued PM effort because in Phase 2 the work is planned but in Phases 3 and 4 you work the plan. In reality no project ever goes according to plan so the PM role of monitoring, adjusting, and re-planning (within the scope, schedule, and cost constraints) is challenging. PM involvement with Phase 5 is minimal at this time although end of project assessments do prove invaluable in a capturing the “lessons learned.”

Finally, methodologies undergo changes and enhancements. Just like with configura- tion management and scope change control, the revisions are tracked for traceability. This is shown below in Table 4–3 which has been adapted from Teradyne’s methodology.

TABLE 4–2. MAPPING OF PHASE DELIVERABLES TO PMBOK® GUIDE PROCESSES

Description PMBOK® Guide Process Groups PMBOK® Guide Process Knowledge Areas

Concept development Initiation Planning

Integration Scope Cost Human resources

Project and product planning Planning Monitoring and control

Integration Scope Time Cost Quality Human resources Communications Risk Procurement

Detail design and development Execute Monitor and control

Integration Scope Time Cost Quality Human resources Communications Risk

Product test and verification Execute Monitor and control

Integration Scope Time Cost Quality Human resources Communications Risk

Product release and ramp Closing Integration Procurement

224 PROJECT MANAGEMENT METHODOLOGIES

4.10 SLALOM CONSULTING: PROJECT MANAGEMENT FUNCTIONS

Over the years, companies have come to accept the PMBOK® Guide as the gospel of project management. But we must remember that the PMBOK® Guide is still just a guide and not necessarily the actual body of knowledge. Creating a perfect body of knowledge would have to be based upon the size, nature, and complexity of a firm’s projects; the type of industry in which they compete; and the percentage of work within the firm that must utilize project management. Some project management educators argue that there are three ways to manage projects: the right way, the wrong way, and the PMBOK® Guide way. Although companies create project management methodologies based upon the PMBOK®

Guide, the methodologies rarely follow it exactly. A large percentage of the areas of knowledge may be used, but the focus could be more heavily aligned to the domain areas rather than the areas of knowledge. Processes may be more important than knowledge areas. As an example, consider the following comments from Carl Manello, PMP, practice director—delivery effectiveness, Slalom Consulting:

For all that project managers are responsible for, depending on their role (e.g., small or large projects, business focused programs, corporate mergers/acquisitions), there are several models for representing what each needs to know to become an expert in the practice of project man- agement. One model, the PMBOK® Guide, breaks this tacit knowledge into nine basic knowl- edge areas. A model that I developed has further dissected the knowledge areas into twelve project management functions (PMf). There are scores of other models crowding the internet. Whether nine or twelve areas, the models help us to define what we as project managers do.

In my experience, all project managers should know about and be experienced in the project management functions defined in my model. The basic PMf (see Figure 4–16) rep- resents the functions as I have defined them for a project/program manager. The PMf are robust and change as the project management focus changes (i.e., project managers’ func- tions are different from those of an Enterprise Program Office).12 If we leverage the PMf

TABLE 4–3. HISTORY OF REVISIONS

Date Page(s) Section Comments Rev.

3/15/2009 6–8 2.13 Expansion of Roles and Responsibilities

1.0

12. For more information on the PMf, readers are referred to C. Manello’s forthcoming book, Value Project Management.

Slalom Consulting: Project Management Functions 225

model, these functions can be established as standard practices for project managers, but may have to be customized or adapted to a specific project or client. In my dealings with corporations—both large and small—I specifically avoid the term best practice, which has always been puzzling to me. If each company determines their own “best practices,” then the term itself is diluted and loses its meaning. As an industry, project management cannot have hundreds of best practices. While it is certainly possible that the practices adopted within one enterprise may be best, it has been my experience that these are more often the “preferred practices” of the implementing organization or key leader at the time of implementation.

If we release ourselves from a focus on preferred, best or super-stupendous as a quali- fier, the project management functional areas can be seen as key practice areas that project managers should be able to rally around. Each company must choose which functional areas are most important to them, define the right level or maturity to strive for, put plans in place to achieve mastery, reassess and continue on the never-ending path of evolving capabilities. Each organization will implement project management to the best of their ability and whether or not that is a true level of “best”—for which there is no globally defined standard—it will be the level most appropriate for that time and place.

Unfortunately, in my discussions with corporations, there appears to be an equal- ity in the mind of many senior managers that the implementation of standard practices can only be realized with the implementation of project management tools (e.g., Clarity, PlanView, MS/Project). It has been my observation that companies that try to short-cut

Impact Management

Issue Management Project Change

Control

Scope Management Scope Definition Charter Resource Planning Org. Definition Project Approach

Expectations Management

Customer Acceptance Strategy

Communications Plan

Delivery Assurance Project Quality Reviews

Business Approvals and Check Points

Acceptance

Implementation Management

Business Process Change Workflow/Activities

Support/Training Technology Data

Roles and Responsibilities

Project Justification

Business Case Cost–Benefit Analysis

Resource Management

Vendors Contractors Internal Resources Team

Development

Risk Management

Identification Triggers

Actions

Monitor and Reporting

Progress Boards Metrics Reporting

Project Planning/Tracking WBS development Utilization Estimating Cost Management

Procurement Management Contract Administration Source Selection Procurement PlanningProject

Management Functions

Project Admin.

Project File Document

Collection Configuration

Management

Figure 4–16. Project management functions.

226 PROJECT MANAGEMENT METHODOLOGIES

the establishment of process first and instead chase a tool to solve their project manage- ment challenges typically do not succeed with the implementation of any good practices, at least in a reasonable period of time. While I’m certain that this is not the case for all organizations—otherwise the tool vendors would be out of business—it should be clear that process cannot be ignored or substituted with a tool.

I have worked with a variety of industries. Within each industry I have seen companies that have spent millions of dollars on the acquisition, customization, implementation, edu- cation, and administration of project management tools. Each has had less than adequate results. A common reason for poor performance can be attributed to:

● Believing that the implementation of project management software is the same as the implementation of project management

There is certainly a need for software in project management. But the critical question is as follows: Should we select a project management software tool and then design our project management methodology around that tool, or should we design our methodology first and then select the appropriate tool to fit our methodology? The latter is certainly the better choice. Software is simply a tool. Projects are managed by people, not tools. People manage tools; tools do not manage people. A proper understanding of software and its capability is essential at the onset of project management implementation but should not be viewed as a replacement for good processes. Carl Manello states:

As a consultant, I have had the opportunity [to] work with many companies and to observe multiple examples of tool implementations to support project management: both successes and failures. The life-cycle phases of the successful project management tool implementa- tion projects are usually the same, but I do not think one can easily apply a repeatable time frame to a chronology to this effort. For example, the national implementation of a well- known software package as the tool of record for the financial replacement program for a major airline manufacturer—spanning several years and including over 800 full and part time resources—was not the same as the implementation within the engineering division of a major cell phone manufacturer. Each implementation is different. What is extensible, however, is the process by which an organization approaches the attainment of standard practices. One should begin by assessing where the organization is at in its capabilities (leveraging the PMf), determine where the definition, construction and implementation of process will support growth, select supporting toolsets, analyze, customize, and imple- ment. It is crucial that process precede the tools.

4.11 SLALOM CONSULTING: REPLACING METHODOLOGIES

WITH FRAMEWORKS

While project management methodologies seem to be in favor today, there is a growing trend toward replacing methodologies with framework models. Methodologies do have disadvantages and companies that see one and only one methodology, namely their own, may have a difficult time recognizing the pitfalls. But management consultants that have had the exposure to a variety of methodologies in various industries often have a much

Slalom Consulting: Replacing Methodologies with Frameworks 227

better understanding of the limitations. Carl Manello, PMP, practice director—delivery effectiveness, Slalom Consulting, states that:

In the past twenty years I have seen a fair share of detailed methodologies. There are of course great success stories around methodologies, especially when hordes of highly trained consultants are brought in to run enormous enterprise-wide initiatives. However, for the small garden variety project or those instances when training an entire project team on how to use the methodology is unrealistic, methodologies can cause as many problems as they solve.

While working at a large manufacturing company in the late 80’s I had the privilege of working with a team of folks from the Technology Center and the Enterprise Program Office (of which I was a member). We leveraged a vendor framework, adopted it to our needs and put it in place for both IT and R&D projects. In my first stint as a Solution Lead for Program and Project Management with a different consultancy, I had the opportunity to take the approach of frameworks to other clients. Now, at Slalom, I am continuing to advocate frameworks over detailed methodologies. Slalom Consulting does not have a proprietary PM methodology. Instead we leverage frameworks.

The difference is that methodologies tend to be defined as a series of inflexible steps that must be completed, usually in sequential order. “Frameworks” on the other hand, outline steps that may be followed. The difference is that the steps of a framework may be implemented differently per project, may be passed over, or may be implemented at varying degrees of detail. At one of my prior employers, I created a PM life-cycle frame- work and gave it an internal marketing tag of “Flexibly Applying a Rigor Process.” The marketing phrase was developed not only to help sell the concept of a new process but also to help illustrate the key difference between a framework and a methodological tome. The framework’s process was designed and built with a significant amount of detail (e.g., project steps, deliverables, metrics, approval processes). However the implementation rigor varied depending on the type of project, size, criticality, etc. Large projects had to adhere to the PM life-cycle with exacting detail, while small projects had the flexibility to omit specific portions of the approach. Not all projects are created equally.

At one of my former clients, there is an exhaustive methodology defined and in place, which employs scores of templates, numerous processes and multiple governance teams that each own different pieces of the process. The challenge of this implementation of methodology is its inflexibility. Project managers spend too much time trying to navigate the process and are distracted or prevented from focusing on their PM activities. They spend more time doing project management process related work than adding value to their projects as project managers. This in turn forces the client to hire more people to do “project management” activities (having some project managers to project manage and some to do methodology compliance), thereby increasing the time spent on proj- ect management. This extra time spent cannot be shown to have a direct impact on the project or the financial benefits, and in fact erodes whatever initial benefits the programs claimed to be able to realize. Similarly, there is insufficient training, coaching, documen- tation or other support available to help project managers navigate their way through the rigorous process. Not only do project managers spend an inordinate amount of time complying with what they understand, they must also chase around the organization looking for the right governance office to provide them help on what to do. If the current enterprise-wide system replacement program should not do well, the project management methodology itself (which should have been enabling success) will certainly be one of the key elements in the downfall.

228 PROJECT MANAGEMENT METHODOLOGIES

4.12 LIFE-CYCLE PHASES

Determining the best number of life-cycle phases can be difficult when developing a project management methodology. As an example, let’s consider IT. During the 1980s, with the explosion in software, many IT consulting companies came on the scene with the development of IT methodologies using systems development life-cycle (SDLC) phases. The consultants promise their client phenomenal results if the client purchases the package along with the accompanying training and consulting efforts. Then, after spending hun- dreds of thousands of dollars, the client reads the fine print that states that the methodol- ogy must be used as is, and no customization of the methodology will take place. In other words, the client must change their company to fit the methodology rather than vice versa. Most of the IT consultancies that adopted this approach no longer exist.

For an individual company, agreeing on the number of life-cycle phases may be difficult at first. But when an agreement is finally reached, all employees should live by the same phases. However, for today’s IT consulting companies, the concept of one-package-fits-all will not work. Whatever methodology they create must have flexibility in it so that client customization is possible. In doing so, it may be better to focus on processes rather than phases, or possibly a framework approach that combines the best features of each. Carl Manello, PMP, practice director, delivery effectiveness, Slalom Consulting, states that:

While a project management life-cycle parallels an SDLC, they are separate and distinct (especially because many projects have nothing to do with IT or “systems”). With some special client-specific exceptions, the standard phases are:

1. Project Conceptualization—where the project begins to take form (usually an informal unstructured process)

2. Project Initiation—an approved initiative begins its journey and begins to complete the rigor of the life-cycle

3. Analysis & Design—begin to decompose project scope into the meat of what is to be accomplished

4. Development/Test /Implement—standard SDLC phases, but tailored to meet non-IT projects as needed

5. Close Down/Turn Over—ending the “project” and initiation of the “ongoing maintenance” (as needed)

6. Benefits Realization Tracking—the woefully neglected phase where we prove the realization of benefits claimed back in conceptualization

During one of my corporate lives, I helped define a project management life cycle that built upon these six core phases (see Figure 4–17). As a framework, phases should be malleable to the needs of the situation. Our Project Management Office was part of the IT Governance function, which was primarily the financial arm for IT. The equivalent of the IT CFO wanted to ensure we allowed sufficiently detailed processes to enable the activa- tion (or administrative start-up) of a project. Activation represented setting up the right time tracking buckets, financial buckets and establishing service level agreements. Similarly, we added the Quality Assurance and Testing phase because there was a newly formed organiza- tion that focused on these functions and IT wanted to ensure their prominence in the minds of project teams. Lastly, to help erase the years of short-comings at implementation, I cre- ated a separate phase for implementation. This late phase detailed the roles, responsibilities,

ActivateAnalysis and DesignProject Initiation Project

Conceptualization (Bus. Partner

Process)

Development Quality

Assurance and Testing

Implementation

Business Partner

Arch. Committee

Financial Network Subcommittee

Prioritization Committee

Arch. Committee

ISP/ASP Impact Assessment

IT Governance Review

Business Partner

Project Governance

Demand Management

Group IT

Close Down/ Turn Over

Assessment

Benefit Realization Tracking

(Corp. Finance Process)

Figure 4–17. Extended PM framework.

229

230 PROJECT MANAGEMENT METHODOLOGIES

deliverables and associated check-points that would enable us to manage a project past the “go live” date. As discussed above, each initiative flowed through this framework in a “flex- ible” way, leveraging the parts that made sense given the nature of the project.

4.13 EXPANDING LIFE-CYCLE PHASES13

Historically, we defined the first phase of a project as the Initiation Phase. This phase included bringing the project manager on board, handing him/her a budget and a schedule, and telling them to being project execution. Today, there is a preinitiation phase which Russ Archibald and his colleagues refer to as the Project Incubation/Feasibility Phase. In this phase, we look at the benefits of the project, the value expected at completion, whether sufficient and qualified resources are available, and the relative importance of the project compared to other projects that may be in the queue. It is possible that the project may never reach the Initiation Phase.

In the past, project management was expected to commence at the Initiation Phase because it was in this phase that the project manager was assigned. Today, project manag- ers are expected to possess a much greater understanding of the business as a whole and companies have found it as beneficial to bring the project manager on board earlier than the Initiation Phase to assist in making business decisions rather than purely project decisions.

In the same context, we traditionally viewed the last life cycle phase as Project Closure. This includes the implementation of contractual closure, administrative closure and finan- cial closure. After closure, the project manager would be reassigned to another project.

Today, we are including a Post-Project Evaluation Phase. Some companies refer to this as a Customer Satisfaction Management Phase. In this phase, selected members of the proj- ect team and sales/marketing personnel, as well as members from the governance commit- tee, meet with the client to see what changes can be made to the methodology or processes used to execute the project, and what can be done differently on future projects for this client to improve even further the working relationship between client-contractor-stakeholders.

4.14 CHURCHILL DOWNS, INCORPORATED

Churchill Downs, Incorporated has created a project management methodology that clearly reflects its organization. According to Chuck Millhollan, director of program management:

While we based our methodology on professional standards, we developed a graphic (and used terminology) understood by our industry to help with understanding and acceptance. For example, we have a structured investment request, approval and prioritization process. (See Figure 4–18). We used the analogy of bringing the thoroughbred into the paddock prior to race and then into the starting gate. The project, or race, is not run until the thor- oughbred has entered the starting gate (approved business case and project prioritization).

13. Russell D. Archibald, Ivano Di Filippo, and Daniele Di Filippo have written an excellent paper on this topic, “The Six-Phase Comprehensive Project Life Cycle Model Including the Project Incubation/Feasibility Phase and the Post-Project Evaluation Phase.” The paper is published in the PM World Journal, December, 2012.

Figure 4–18. The Churchill Downs, Incorporated methodology.

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232 PROJECT MANAGEMENT METHODOLOGIES

4.15 INDRA: THE NEED FOR A METHODOLOGY

As mentioned previously in Chapter 3, the quest for excellence in project management is almost always accompanied by the development of a project management methodology. Such was the case at Indra. Indra defines excellence in project management as follows: “Excellence in project management is achieved by being able of repeatedly reaching the project targets, creating business opportunities, and improving the management process itself when managing the assigned projects.” Enrique Sevilla Molina, PMP, formerly cor- porate PMO director, discusses the journey to excellence:

A project management methodology was formally defined in the mid 90’s based upon the experience gained in our major international contracts. The main problems we faced were related to the definition of the scope, the limits of the methodology, and the adoption of the correct strategy to spread this knowledge throughout the company. To solve these issues, our management chose to hire an external consulting company to act as a dynamic factor that boosted and drove the cultural change.

Yes, the process was carefully sponsored from the beginning by senior executives and closely followed-up until its complete deployment in all areas of the company.

The major milestones of the process have roughly been:

● Project management strategy decision.............................................................mid 90’s ● Methodology definition and documentation.............................................mid-late 90’s ● Tools definition and preparation.......................................................................late 90’s ● Training process start.............................................................................................2000 ● Risk management at department level...................................................................2002 ● PMP certification training start..............................................................................2004 ● Risk management process defined at corporate level............................................2007 ● Program and portfolio management processes definition start..............................2008

A PM methodology was developed in the early 90’s and formalized during that decade. It has been eventually updated to cope with the company and the industry evolu- tion. It is being used as a framework to develop and maintain the PMIS, and to train the PMs throughout the company.

It is based on the project lifecycle and structured in the following two stages and six phases as shown in Figure 4–19:

Precontractual stage Phase 1. Initiation Phase 2. Concept development, creation of offers and proposals Phase 3. Offer negotiation

Contractual stage Phase 4. Project planning Phase 5. Execution, Monitoring and Control Phase 6. Closure

The precontractual and contractual stages are both part of the project and its lifecycle. Most problems that appear during a project’s lifespan originate during its definition and in the negotiation of its objectives, contents and scope with the customers. A proper manage- ment of the precontractual stage is the best way to prevent problems later on.

Implementing the Methodology 233

At the end of each phase there is a specific result that will allow a key decision to be made, focusing and directing the actions of the next phase and thereby reducing the initial risks and uncertainties of the project.

The decision on the stages and phases was a decision mainly based upon the needs of our standard cycle of a project conception and development, and based on the most significant types of projects we were involved with.

Risk management processes are integrated into the methodology and into the corpo- rate PM tools. An initial risk identification process is performed during the proposal phase, followed by a full risk management plan during the planning phase of the contract stage, and the subsequent monitoring processes during the execution phase of the project. QA and change control processes are considered main support processes in the methodology.

4.16 IMPLEMENTING THE METHODOLOGY

The physical existence of a methodology does not convert itself into a world-class meth- odology. Methodologies are nothing more than pieces of paper. What converts a standard

Phase 1 Phase 2 Phase 3 Phase 5Phase 4

Contract stagePrecontract stage

Proposal preparation

Initiation Project

planning

Monitoring and Control

Execution

Proposal negotiation

DE 3

Phase 6

ClosureDE 1 DE 4 DE 5DE 2

Figure 4–19. Project management life cycle.

234 PROJECT MANAGEMENT METHODOLOGIES

methodology into a world-class methodology is the culture of the organization and the way the methodology is implemented.

The existence of a world-class methodology does not by itself constitute excellence in project management. The corporate-wide acceptance and use of it do lead to excellence. It is through excellence in execution that an average methodology becomes a world-class methodology.

One company developed an outstanding methodology for project management. About one-third of the company used the methodology and recognized its true long-term benefits. The other two-thirds of the company would not support the methodology. The president eventually restructured the organization and mandated the use of the methodology.

The importance of execution cannot be overestimated. One characteristic of compa- nies with world-class project management methodologies is that they have world-class managers throughout their organization.

Rapid development of a world-class methodology mandates an executive champion, not merely an executive sponsor. Executive sponsors are predominantly on an as-needed basis. Executive champions, on the other hand, are hands-on executives who drive the development and implementation of the methodology from the top down. Most com- panies recognize the need for the executive champion. However, many companies fail to recognize that the executive champion position is a life-long experience. One Detroit company reassigned its executive champion after a few successes were realized using the methodology. As a result, no one was promoting continuous improvement to the methodology.

Good project management methodologies allow you to manage your customers and their expectations. If customers believe in your methodology, then they usually understand it when you tell them that no further scope changes are possible once you enter a specific life-cycle phase. One automotive subcontractor carried the concept of trust to its extreme. The contractor invited the customers to attend the contractor’s end-of-phase review meet- ings. This fostered extreme trust between the customer and the contractor. However, the customer was asked to leave during the last 15 minutes of the end-of-phase review meet- ings when project finances were being discussed.

Project management methodologies are an “organic” process, which implies that they are subject to changes and improvements. Typical areas of methodology improvement might include:

● Improved interfacing with suppliers ● Improved interfacing with customers ● Better explanation of subprocesses ● Clearer definition of milestones ● Clearer role delineation of senior management ● Recognition of need for additional templates ● Recognition of need for additional metrics ● Template development for steering committee involvement ● Enhancement of the project management guidebook ● Ways to educate customers on how the methodology works ● Ways of shortening baseline review meetings

Overcoming Development and Implementation Barriers 235

4.17 IMPLEMENTATION BLUNDERS

Even though companies recognize the driving forces which indicate a need for project man- agement improvement, the actual decision to make an investment to do it may not happen until some crisis occurs or a significant amount of red ink appears on the company’s balance sheet. Recognizing a need is a lot easier than doing something about it because doing it requires time and money. Too often, executives procrastinate giving the go-ahead in hopes that a miracle will occur and project management improvements will not be necessary. And while they procrastinate, the situation often deteriorates further. Consider the following com- ments from Carl Manello, PMP, practice director delivery effectiveness, Slalom Consulting:

I find that the greatest motivation for my clients to invest in improvements is how they view the impact of project management on their initiatives. When their track record at driving large scale business initiatives is less than stellar (lacking sufficient pro- cess, methods, tools or skills), they begin to understand the need to invest. Unrealized project implementations, blown budgets and poor quality all speak loudly and capture the attention of senior executive management. The challenge is instead to arrest executive attention before millions of dollars are squandered.

At first, many corporations are unlikely to want to invest in improving PM infrastructure like the PMf. “There are real projects with hard-core benefits to be realized instead.” However, after these same organizations begin to struggle, understand their weaknesses and the need for improvement in basic project management, they begin to focus on those improvements.

Delayed investment in project management capabilities is just one of many blunders. Another common blunder, which can occur in even the best companies, is the failure to treat project management as a profession. In some companies, project management is a part-time activity to be accomplished in addition to one’s primary role. The career path opportunities come from the primary role, not through project management. In other com- panies, project management may be regarded merely as a specialized skill in the use of scheduling tools. Carl Manello continues:

While the PMI has done a super job, especially in the last 10 years, advocating project management as a specialized skill that should be left to the professionals, I find that many companies still believe project management is a skill, not a profession. Whether in marketing or engineering organizations, someone is often randomly assigned to be the project manager, regardless of their training, demonstrated skill level or capabilities as a project manager. This lack of attention to project management as a profession may be one of the contributing fac- tors to projects around the world which continue to perform poorly. Too many projects do not have qualified experienced project managers at the helm.

4.18 OVERCOMING DEVELOPMENT AND IMPLEMENTATION BARRIERS

Making the decision that the company needs a project management methodology is a lot easier than actually implementing it. There are several barriers and problems that surface

236 PROJECT MANAGEMENT METHODOLOGIES

well after the design and implementation team begins their quest. Typical problem areas include:

● Should we develop our own methodology or benchmark best practices from other companies and try to use their methodology in our company?

● Can we get the entire organization to agree upon a singular methodology for all types of projects or must we have multiple methodologies?

● If we develop multiple methodologies, how easy or difficult will it be for continu- ous improvement efforts to take place?

● How should we handle a situation where only part of the company sees a benefit in using this methodology and the rest of the company wants to do its own thing?

● How do we convince the employees that project management is a strategic compe- tency and the project management methodology is a process to support this strate- gic competency?

● For multinational companies, how do we get all worldwide organizations to use the same methodology? Must it be intranet based?

These are typical questions that plague companies during the methodology develop- ment process. These challenges can be overcome, and with great success, as illustrated by the companies identified in the following sections.

4.19 PROJECT MANAGEMENT TOOLS

Project management methodologies require software support systems. As little as five years ago, many of the companies described in this book had virtually no or limited project man- agement capabilities. How did these companies implement project management so fast? The answer came with the explosion of personal computer-based software for project planning, estimating, scheduling, and control. These were critical for methodology development.

Until the late 1980s, the project management tools in use were software packages designed for project scheduling only. The most prominent were:

● Program evaluation and review technique (PERT) ● Arrow diagramming method (ADM) ● Precedence diagramming method (PDM)

These three networking and scheduling techniques provided project managers with computer capabilities that far surpassed the bar charts and milestone charts that had been in use. The three software programs proved invaluable at the time:

● They formed the basis for all planning and prediction and provided management with the ability to plan for the best possible use of resources to achieve a given goal within schedule and budget constraints.

● They provided visibility and enabled management to control one-of-a-kind programs.

Project Management Tools 237

● They helped management handle the uncertainties involved in programs by answer- ing such questions as how time delays influence project completion, where slack exists among elements, and which elements are crucial to meeting the completion date. This feature gave managers a means for evaluating alternatives.

● They provided a basis for obtaining the necessary facts for decision making. ● They utilized a so-called time network analysis as the basic method of determin-

ing manpower, material, and capital requirements as well as providing a means for checking progress.

● They provided the basic structure for reporting information.

Unfortunately, scheduling techniques cannot replace planning. And scheduling tech- niques are only as good as the quality of the information that goes into the plan. Criticisms of the three scheduling techniques in the 1980s included the following:

● Time, labor, and intensive effort were required to use them. ● The ability of upper-level management to contribute to decision making may have

been reduced. ● Functional ownership of the estimates was reduced. ● Historical data for estimating time and cost were lost. ● The assumption of uninvited resources was inappropriate. ● The amount of detail required made full use of the scheduling tools inappropriate.

Advancements in the memory capabilities of mainframe computer systems during the 1990s eventually made it possible to overcome many of the deficiencies in the three scheduling techniques being used in project management in the 1970s and 1980s. There emerged an abundance of mainframe software that combined scheduling techniques with both planning and estimating capabilities. Estimating then could include historical data- bases, which were stored in the mainframe memory files. Computer programs also proved useful in resource allocation. The lessons learned from previous projects could also be stored in historical files. This improved future planning as well as estimating processes.

The drawback was that mainframe project management software packages were very expensive and user unfriendly. The mainframe packages were deemed more appropriate for large projects in aerospace, defense, and large construction. For small and medium- sized companies, the benefits did not warrant the investment.

The effective use of project management software of any kind requires that project teams and managers first understand the principles of project management. All too often, an organization purchases a mainframe package without training its employees in how to use it in the context of project management.

For example, in 1986, a large, nationally recognized hospital purchased a $130,000 mainframe software package. The employees in the hospital’s information systems depart- ment were told to use the package for planning and reporting the status of all projects. Less than 10 percent of the organization’s employees were given any training in proj- ect management. Training people in the use of software without first training them in project management principles proved disastrous. The morale of the organization hit an all-time low point, and eventually no one even used the expensive software.

238 PROJECT MANAGEMENT METHODOLOGIES

Generally speaking, mainframe software packages are more difficult to implement and use than smaller personal computer–based packages. The reason? Mainframe pack- ages require that everyone use the same package, often in the same way. A postmortem study conducted at the hospital identified the following common difficulties during the implementation of its mainframe package:

● Upper-level managers sometimes did not like the reality of the results. ● Upper-level managers did not use the packages for planning, budgeting, and decision

making. ● Day-to-day project planners sometimes did not use the packages for their own

projects. ● Some upper-level managers sometimes did not demonstrate support and commit-

ment to training. ● Clear, concise reports were lacking. ● Mainframe packages did not always provide for immediate turnaround of information. ● The hospital had no project management standards in place prior to the implemen-

tation of the new software. ● Implementation highlighted the inexperience of some middle managers in project

planning and in applying organizational skills. ● Neither the business environment nor the organization’s structure supported the

hospital project management/planning needs. ● Sufficient/extensive resources (staff, equipment, etc.) were required. ● The business entity did not determine the extent of and appropriate use of the sys-

tems within the organization. ● Some employees viewed the system as a substitute for the extensive interpersonal

skills required of the project manager. ● Software implementation did not succeed because the hospital’s employees did not

have sufficient training in project management principles.

Today, project managers have a large array of personal computer–based software available for planning, scheduling, and controlling projects. Packages such as Microsoft Project have almost the same capabilities as mainframe packages. Microsoft Project can import data from other programs for planning and estimating and then facilitate the dif- ficult tasks of tracking and controlling multiple projects.

The simplicity of personal computer–based packages and their user friendliness have been especially valuable in small and medium-sized companies. The packages are so affordable that even the smallest of companies can master project management and adopt a goal of reaching project management excellence.

Clearly, even the most sophisticated software package can never be a substitute for competent project leadership. By themselves, such packages cannot identify or correct task-related problems. But they can be terrific tools for the project manager to use in track- ing the many interrelated variables and tasks that come into play in contemporary project management. Specific examples of such capabilities include the following:

● Project data summary; expenditure, timing, and activity data ● Project management and business graphics capabilities

Project Management Tools 239

● Data management and reporting capabilities ● Critical-path analyses ● Customized as well as standardized reporting formats ● Multiproject tracking ● Subnetworking ● Impact analysis ● Early-warning systems ● Online analyses of recovering alternatives ● Graphical presentations of cost, time, and activity data ● Resource planning and analyses ● Cost and variance analyses ● Multiple calendars ● Resource leveling

Figure 4–20 shows that right now approximately 95 percent of the project manage- ment software focus on planning, scheduling, and controlling projects. In the future, we can expect more software to be created for the initiation of a project and the closure of a project.

Perhaps the biggest problems today with methodologies are that companies are not taking advantage of the full capabilities of the tools they are purchasing. A perfect example of this is with the earned-value measurement (EVM) system. Companies appear reluctant to use EVM probably for fear of the financial reality that the EVM numbers will show.

The intent behind EVM is to make sure that the person leading the project is func- tioning as a project manager rather than a project monitor. Project monitors simply record numbers and report them to a higher authority for decision making. The project manager, on the other hand, measures the variances from the baselines, develops contingency plans, gets the plans approved, implements the plans, and measures the new variances to see if the improvements worked. Without full use of an EVM system, it may be difficult to fully manage a project.

INITIATION PLANNING EXECUTION CONTROLLING CLOSURE

95% of Today’s Software

Feasibility Studies Benefit–Cost Analyses Criteria Definition Assumptions Defined Evaluation Criteria Risk Management Behavioral Software

Lessons Learned Best Practices

Library Failure Analyses

Areas of Deficiency

Figure 4–20. Project management software.

240 PROJECT MANAGEMENT METHODOLOGIES

Enrique Sevilla Molina, PMP, formerly corporate PMO director at Indra, states:

Earned valued techniques are used during project execution. Earned value measurement is performed regularly by the project manager making use of the corporate tool.

Variances are analyzed monthly at a work package level and also at the project level.

If corrective action is necessary, it is initiated by the project manager who analyses a set of project indicators (risk status, overall cost, schedule and margin deviations, project cash flow, . . .), and it is followed by the expert judgment by the area controller who also considers the analysis of the information provided by the project team. If it is the case, a specific Executive report can be requested from the PM for providing more detailed information on deviations by work package and the status of the program. Once the overall picture of the project is clear, a decision is taken on the need for corrective actions.

Perhaps EVM is the best approach for determining progress, status, and eventually forecasts of where we will end up. The critical component of EVM is earned value, which is the amount of work that has physically been completed and measured in either hours or dollars. All too often, companies accept EVM as a way of life without understanding the complexities in using EVM. Memorizing the 12–15 equations necessary to use EVM is easy. The hard part is capturing the data that go into the equations. Carl Manello, PMP, practice director, delivery effectiveness, Slalom Consulting, states that:

Earned Value (EV) is not for the beginner. Conceptually a straightforward measure of work done/remaining to be done, the effort needed to collect the necessary data and to make the calculations is no simple undertaking. Many of my clients have done such a poor job getting a handle on their time capture, and don’t have sufficient enough project plans, that capturing information at required levels for EV is almost impossible. After working with numerous Fortune 250 companies, I have found only one that tracked SPI/CPI.14 The overhead required to collect data on that project, perform quality assurance and maintain the information accurately in a project management tool required significant overhead (the program employed more than a dozen people on the program whose sole accountability was data entry, data accuracy and reporting through the project tool).

For the less mature projects, I have often used a variation of earned value. This method is based on the completion of deliverables. Using simple spreadsheets, I am able to track deliverables (assigned different values for draft or final), milestones and key activi- ties. The spreadsheet generates graphs that represent how much work has been delivered, the cost associated with the scheduled time spent, and the earned value actuals compared to the plan (see Figures 4–21 through 4–23). Each deliverable is set against a planned schedule for completion and credit is only realized with any delivered value when it is complete (i.e., something 90% complete gets a big fat zero in this model. There are many

14. SPI is the schedule performance index and CPI is the cost performance index. SPI and CPI identify the trends or direction in which cost and schedule are heading. During executive briefings on project status, it is often the case that SPI and CPI are the first two numbers discussed.

Project Management Tools 241

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Costs Incurred

Completed Work

Time Spent

Percent Complete

Actual

Total

Figure 4–21. Actual versus total costs.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Weeks

P er

ce nt

C om

pl et

Baseline

Plan

Actual

Figure 4–22. Earned-value actuals compared to the plan.

circumstances where this over-simplistic approach is not appropriate and a partially com- pleted deliverable is of value. In this implementation, however, the choice is all or none). While this tool also requires some overhead to create the initial list based on the WBS, track completion and update status to reflect progress, the overhead is in the order of hours instead of multiple full-time equivalents.

242 PROJECT MANAGEMENT METHODOLOGIES

4.20 WÄRTSILÄ: RECOGNIZING THE NEED FOR

SUPPORTING TOOLS15

Although we have always had a strong passion for engines at Wärtsilä, we are now much more than an engine company. Today, professional project management has become essen- tial for our continuing success due to the bigger and more complex marine and power plant projects we deliver.

The Wärtsilä Project Management Office (WPMO) was established in 2007 to develop a project management culture, processes, compe- tences and tools that would guarantee our customers receive the satis-

faction they deserve. One of the first things we did was to conduct a detailed project management analysis

in order to identify improvement areas. At that time, we didn’t have any software avail- able for project and portfolio management. Therefore one of the first actions the WPMO took was to initiate a global improvement program called Gateway” to develop and implement a set of project and project portfolio management processes with a supporting application.

According to the Program Owner Antti Kämi, the starting point for Gateway and the reason why Wärtsilä needed to improve project management even further was as follows: “Professional project management was seen as truly essential for our profitability, com- petitiveness and for providing value to our Customers.”

Excellent Project

Management—A Prerequisite

to Customer Satisfaction

Figure 4–23. Status and indicator directions.

15. Material has been provided by Wärtsilä Project Management Office (WPMO). Copyright to Wärtsilä Corporation 2013. Reproduced by permission.

Wärtsilä: Recognizing the Need for Supporting Tools 243

Projects Divided into Three Categories

To achieve as many of the expected benefits as possible, it was decided that relevant parts of the unified processes of the new tool should be used in all divisions and in all three project categories in the company:

● Customer delivery projects ● Operational development projects ● Product and solution development projects

Using this new approach meant that thousands of projects could be managed with the new tool, involving approximately 2,000 people in project management.

Good Project Management Practices

Today we have unified business processes (gate models) in use throughout Wärtsilä with harmonised guidelines and terminology. Additionally, we maintain this resource through a professional training and certification path for project management.

As with all projects of this magnitude, there have been challenges to face on the way, especially when developing both the way-of-working and the software in parallel. The varying project management maturity levels within the company have also proven to be challenging. On the upside, a continuous and active dialogue around project management is now in place, experiences are openly exchanged between divisions and project catego- ries, and the work gives a true feeling of “One Wärtsilä.”

In several project management areas we can already see improvements and benefits, especially in Portfolio Management and Resource Management.

Currently we use the new application as a project database for our Research & Development portfolio planning. This enables the projects to be arranged in portfolios, which means that there is a more structured follow-up process. This in turn leads to better transparency and visibility in projects, easier and quicker responses to stakeholder enqui- ries and more efficient project reporting on the whole.

First-class resource management is important today since Information Management resources are used in operational development projects throughout the company. Having a shared software tool ensures good resource availability, transparency for managing and monitoring the workload as well as reliable facts for good planning.

Further benefits with a common project and portfolio management tool include the possibility to record and utilize lessons learned, the ability to collaborate and to have infor- mation easily available for all project team members.

Tools Really Make a Difference in Project Management

In a nut shell, this is what Gateway at Wärtsilä is all about: to work out and apply a more effective way to plan and run projects and a common tool to help us gather, handle and share project-related information. And by doing this, ensure that both internal and external customers are satisfied.

244 PROJECT MANAGEMENT METHODOLOGIES

4.21 TECH MAHINDRA LIMITED: PROJECT

PROCESS MONITORING

In the previous section we discussed some of the tools that are used with project manage- ment methodologies. EVM and scheduling tools are common to most methodologies. Some companies design tools that are unique to their organization and then capitalize on their expected benefits. Such is the situation with Tech Mahindra Limited. The remainder of the information in this section has been provided by Krishna Gali, Quality Group, Tech Mahindra Limited, and Anu Khendry, Tech Mahindra Limited Learning World, Tech Mahindra Limited.

Tech Mahindra Limited is a software services company that conducts its business through software projects. These projects need to comply with critical product and process parameters as defined by the customers. Project process monitoring (PPM) is an assurance activity that enables project managers, their teams, and senior management to understand these critical parameters and the related compliance levels of the project. PPM is a man- datory activity for all fixed-bid and high-impact/critical projects, which are defined based on certain criteria of size, effort, and customer focus. (See Figures 4–24 and 4–25, which contain two parts of PPM.)

The objectives of PPM are to: ● Provide early alerts on potential project problems with suggestions for corrective

and preventive measures ● Identify and accelerate process improvements in projects ● Identify best practices and share them across the company

The unique features of the PPM process include: ● Assessment on 12 key project focus areas with predefined parameters ● Quantitative rating of the project on a scale of 100 ● Automation and integration with other project management tools at Tech Mahindra

Limited. ● Process assessment aligned to CMMI and International Organization for

Standardization (ISO) 9001

The PPM process includes: ● Self-assessment by the project manager on all focus areas and parameters that are

applicable to the project. ● Review and validation by quality assurance on project compliance. This is done

by assessing project artifacts against applicable product/process requirements. At the end of this step the project has a compliance rating on a scale of 100 and a red/ amber/green status based on this rating.

● Reports of project ratings to senior management. ● The deficiencies observed during PPM are followed up in the subsequent month.

The PPM process has enabled identification of right project issues at the right time for immediate resolution. PPM reports depict real-time data on project performance. Process

Tech Mahindra Limited: Project Process Monitoring 245

Project Phases Pro jec

t F ocu

s A rea

Proj ect G

oals

Figure 4–24. Project process monitoring.

Business Unit

Project Team

Process Followed by Project Team

Customer Requirements

Customer Delivery

Satyam Corporate

SSU Quality – Total Quality Assurance (TQA)PPM Report

Monitor/Review and Report Project Process Compliance and Support Project Teams for Improvements/ Customer Delivery

Review and Support

Context diagram on PPMs…

Clarifications/ Responses

Figure 4–25. Project process monitoring.

246 PROJECT MANAGEMENT METHODOLOGIES

automation has also helped in conducting aging analysis on project issues and their track- ing toward closure.

The PPM reviews highlight the impact of noncompliance on the three basic project parameters: quality, cost, and time. The success of this process is evident and it has become a key input supporting all business performance reviews at the corporate level with quan- titative project issue reporting, month after month.

In the life cycle of a software project in Tech Mahindra Limited, soft- ware work products are created, reviewed, and tested in multiple phases, such as unit testing, integration testing, and system testing. The

focus during these phases is on the detection of defects and fulfillment of customer requirements.

The final phase of testing prior to delivery is user acceptance testing (UAT). During this phase, project teams review, inspect, and test the final deliverable from the customer perspective. Any oversight at this time can lead to defect leakage to the customer, result- ing in rework and customer dissatisfaction. This not only impacts efficient and effective project delivery but also impacts the overall relationship with the customer. The Customer One (C1) process in Tech Mahindra Limited ensures that the final deliverables are as per the expectations of the customer and will lead to customer delight. (See Figure 4–26.)

The objectives of the C1 process are: ● External validation of the final project deliverables from the perspective of the

customer ● Go/no-go decision on the release of project deliverables to the customer

Customer One

Solution Frameworks

Delivery Methodology

Technology Frameworks

Figure 4–26. C1: assessment components driving contractual commitments.

Tech Mahindra Limited: Customer Delight Index for Projects 247

The focus of C1 assessment is to validate that the project deliverables not only meet the customer’s explicit specifications and requirements but also conform to the implied requirements and intended business value. C1 thus helps to prevent any unpleasant sur- prises for the customer and subsequent escalations on the quality of delivery.

Projects are selected for C1 assessment based on project criticality to the customer, pricing model, and project type. The assessment is conducted by a team of experts with relevant competencies/skills. The C1 assessment team is supported with detailed guide- lines on multiple focus areas, ranging from requirements, technology/tools and technical architecture, delivery methodology, testing, and predeployment activities.

The C1 assessments for any projects are broadly categorized into two components:

1. Assessment of solution effectiveness against SOW/requirements 2. Assessment of project deliverables against business requirements and specifications

The assessment involves: ● Performing pseudo-customer role ● Bringing customers’ view in the assessment of solution/product/services ● Focusing on contractual commitments (SOW) ● Unearthing potential risks

The C1 assessment process is automated and integrated with other project manage- ment tools in Tech Mahindra Limited. The success of this process has been seen through a significant increase in customer appreciations on quality of deliverables.

4.22 TECH MAHINDRA LIMITED: CUSTOMER

DELIGHT INDEX FOR PROJECTS

What’s more important to the average company: maintaining alliances with existing clients or seeking out new clients? We could argue that both are equally important. However, because of the competitive forces in the marketplace, the edge goes to customer manage- ment and customer relations efforts. There is a tendency today to add in a life-cycle phase after contract closure entitled “customer satisfaction management” or “customer relations management.” The purpose of this phase is to review how well satisfied the customer was throughout the project, with the end results, and with the flow of information provided by your project management methodology. In this phase, you are basically asking the cus- tomer, “What improvements would you like us to make prior to the next project we per- form for you?” The customer may request more involvement in scope changes, a different format for status reporting or even better ways to track the status of their project through your project management methodology.

While this approach of having a life-cycle phase called customer satisfaction management has merit, it does have a downside risk that customer satisfaction is looked at only at the end of the project. Good companies track customer satisfaction throughout the project, not merely at the end. Tech Mahindra Limited has found a

248 PROJECT MANAGEMENT METHODOLOGIES

rather interesting way to do this. The remaining information has been provided by Hirdesh Singhal and Anu Khendry, School of Program and Project Management, Tech Mahindra Limited.

Tech Mahindra Limited is a software services company that manages projects that have been outsourced to it by its customers. Customer satisfaction or delight plays a criti- cal role in getting repeat business from customers and this is important for the sustenance of Tech Mahindra Limited. Also, retaining a customer costs significantly less than acquir- ing a new customer. The customer delight index (CDI) framework has been developed in Tech Mahindra Limited to continuously measure and improve customer delight.

The CDI is measured for each project in Tech Mahindra Limited. (See Figure 4–27.) CDI is essentially the project manager’s perspective on what he or she perceives about customer perception for the services provided depending on the communications and interactions with the stakeholders at the customer place. It helps senior management or investors of projects to proactively take actions and support the projects if required. For project managers, it helps in sending right signals proactively to the management that they need their support and intervention.

The goals of CDI: ● Assess the health of projects and take proactive steps to avoid customer escalations. ● Track project critical issues that directly affect customer delight to closure. ● Identify and record reasons for customer delight.

The CDI value is entered based on the perspective of the project manager on “how the customer is feeling about the project.” It is arrived at based on customer feedback and interactions. Project managers need to enter the CDI, project issues, and/or reasons for delight on an agreed time frequency. Program managers review the status of the CDI on the same frequency.

There are four types of status for CDI (See Figure 4–28): If the CDI status is delighted, the project is expected to have one or more reasons for

customer delight. Project managers need to record the reason(s) and save the same. If a project manager fails to enter the CDI within the specified period of one week, then

the status is recorded as “Data Not Entered” (represented by “gray” color) for the week. If the CDI status is dissatisfied, the project is expected to have a minimum of one open

issue that reflects the reason for customer dissatisfaction. Project managers need to record the issue and save the issue.

After having updated the issues/reasons for delight for the project, the appropriate CDI rating is selected and the CDI status is saved (Figure 4–29).

Project issues need to be mapped against the predefined set of cate- gories and subcategories. When the CDI status is other than delighted, project managers need to specify the project issues using

the categories and subcategories. It is mandatory for a project to have a minimum of one open issue that is the likely

cause for customer dissatisfaction when the CDI status of the project is dissatisfied.

Project Issues

Figure 4–27. Customer delight index process.

249

250 PROJECT MANAGEMENT METHODOLOGIES

Projects where the CDI status is satisfied or delighted can also have issues that either have a potential to impact customer delight or are internal issues that need to be tracked to closure.

A project that has the CDI status as dissatisfied will not be allowed to move to satisfied or delighted without all the open issues being closed (Figure 4–30).

In cases where the CDI status is delighted and/or satisfied, project managers need to enter the project reasons that have helped them delight the customers. In the same screen as Customer Delight, the

project manager needs to enter the project reasons against the options that are listed. Based on the selection, the reason field will be enabled.

Project Reasons

Delighted Satisfied Dissatisfied

Scope Fulfill scope with higher business value solution/ service

Fulfill scope with in acceptable levels of solution/service performance

Scope not fulfilled

Quality

Zero-defect products/ services delivered

Products/services delivered with in customer acceptable level of defects

Products/services delivered with defects beyond customer acceptable level of defects

Schedule Ahead of schedule/ turnaround time

On time/mutually acceptable delay

Delayed

CDI rating for the project can be selected based on a combination of the above factors. CDI rating shall be the lowest of the interpretations of all the above parameters put together. For example, if the interpretation for Scope for a given project is “Delighted” while that of “Quality” and “Schedule” is “Satisfied”, the overall CDI rating for the project shall be “Satisfied”.

Parameter\ Interpretation

Figure 4–29. Guidelines for CDI rating selection.

Delighted

Satisfied

Dissatisfied

Not Entered

Figure 4–28. Summary categories of satisfaction.

General Motors Powertrain Group 251

4.23 GENERAL MOTORS POWERTRAIN GROUP

For companies with small or short-term projects, project management methodologies may not be cost-effective or appropriate. For companies with large projects, however, a work- able methodology is mandatory. General Motors Powertrain Group is another example of a large company achieving excellence in project management. The company’s business is based primarily on internal projects, although some contract projects are taken on for external customers. The size of the group’s projects ranges from $100 million to $1.5 bil- lion. Based in Pontiac, Michigan, the GM Powertrain Group developed and implemented a four-phase project management methodology that has become the core process for its business. The company decided to go to project management in order to get its products out to the market faster. According to Michael Mutchler, former vice president and group executive:

The primary expectation I have from a product-focused organization is effective execution. This comprehends disciplined and effective product program development, implementation, and day-to-day operations. Product teams were formed to create an environment in which leaders could gain a better understanding of market and customer needs, to foster systems thinking and cross-functional, interdependent behavior, and to

Category Sub category Category Sub category

Customer Communication Competency

Attrition

Productivity

Motivation

Attitude

Teaming

Resource Availability

Domain Knowledge

Equipment

Office Space

Communication Facilities

Network Connectivity and Bandwidth

Travel and Boarding

Immigration

Project Contract

PO/SOW

Invoicing

Project Cost

Project Profitability

Scope

Customer Style

Customer Escalations

Customer Sign-off

Customer Expectation

Project Schedule

Estimation

Collaboration

Communication

Process Compliance

Project Ownership

Risks

Project Tracking and Control

Project Planning

Requirements

Design

Coding

Testing

Delivery

Deployment

Technology

Software Quality

Configuration Management

Environment (Development, Testing,...)

1. Customer Management

2. Project Management

3. Software Engineering

6. Financial

5. Infrastructure and Services

4. Human Resources

Figure 4–30. Detailed categories of satisfaction.

252 PROJECT MANAGEMENT METHODOLOGIES

enable all employees to understand their role in executing GM Powertrain strategies and delivering outstanding products. This organizational strategy is aimed at enabling a large organization to be responsive and to deliver quality products that customers want and can afford.

The program management process at GM Powertrain is based upon common tem- plates, checklists, and systems. The following lists several elements that were common across all GM Powertrain programs during the 1990s:

● Charter and contract ● Program team organizational structure with defined roles and responsibilities ● Program plans, timing schedules, and logic networks ● Program-level and part-level tracking systems ● Four-phase product development process ● Change management process

Two critical elements of the GM Powertrain methodology are the program charter and program contract. The program charter defines the scope of the program with measurable objectives, including:

● Business purpose ● Strategic objective ● Results sought from the program ● Engineering and capital budget ● Program timing

The program contract specifies how the program will fulfill the charter. The contract becomes a shared understanding of what the program team will deliver and what the GM Powertrain staff will provide to the team in terms of resources, support, and so on.

Although the information here on GM Powertrain may appear somewhat dated, it does show that GM was several years ahead of most companies in the development of an enter- prise project management methodology. GM has made significant changes to its methodol- ogy since then. What GM accomplished more than a decade ago many companies are just beginning to develop. Today, GM uses the above-mentioned methodology for new product development and has a second methodology for software projects.

4.24 ERICSSON TELECOM AB

General Motors Corporation and the bank were examples of project management meth- odologies that were internal to the organization (i.e., internal customers). For Ericsson Telecom AB, the problem is more complicated. The majority of Ericsson’s projects are for external customers, and Ericsson has divisions all over the world. Can a methodology be developed to satisfy these worldwide constraints?

Ericsson Telecom AB 253

In 1989, Ericsson Telecom AB developed a project management methodology called PROPS.16 Although it was initially intended for use at Business Area Public Telecommunications for technical development projects, it has been applied and appre- ciated throughout Ericsson worldwide, in all kinds of projects. In the author’s opinion, PROPS is one of the most successful methodologies in the world.

New users and new fields of applications have increased the demands on PROPS. Users provide lessons-learned feedback so that their shared experiences can be used to update PROPS. In 1994, a second generation of PROPS was developed, including applica- tions for small projects, concurrent engineering projects, and cross-functional projects and featuring improvements intended to increase quality on projects.

PROPS is generic in nature and can be used in all types of organizations, which strengthens Ericsson’s ability to run projects successfully throughout the world. PROPS can be used on all types of projects, including product development, organizational development, construction, marketing, single projects, large and small projects, and cross- functional projects.

PROPS focuses on business, which means devoting all operative activities to customer satisfaction and securing profitability through effective use of company resources. PROPS uses a tollgate concept and project sponsorship to ensure that projects are initiated and procured in a business-oriented manner and that the benefits for the customer as well as for Ericsson are considered.

The PROPS model is extremely generic, which adds flexibility to its application to each project. The four cornerstones of the generic project model are:

● Tollgates ● The project model ● The work models ● Milestones

Tollgates are superordinate decision points in a project at which formal decisions are made concerning the aims and execution of the project, according to a concept held in common throughout the company. In PROPS, five tollgates constitute the backbone of the model. The function and position of the tollgates are standardized for all types of proj- ects. Thus, the use of PROPS will ensure that the corporate tollgate model for Ericsson is implemented and applied.

The project sponsor makes the tollgate decision and takes the overall business respon- sibility for the entire project and its outcome. A tollgate decision must be well prepared. The tollgate decision procedure includes assessment and preparation of an executive sum- mary, which provides the project sponsor with a basis for the decision. The project and its outcome must be evaluated from different aspects: the project’s status, its use of resources,

16. The definition of the acronym PROPS is in Swedish. For simplicity sake, it is referred to as PROPS through- out this book.

254 PROJECT MANAGEMENT METHODOLOGIES

and the expected benefit to the customer and to Ericsson. At the five tollgates, the follow- ing decisions are made:

● Decision on start of project feasibility study ● Decision on execution of the project ● Decision on continued execution, confirmation of the project or revision of limits,

implementation of design ● Decision on making use of the final project results, handover to customer, limited

introduction on the market ● Decision on project conclusion

The project model describes which project management activities to perform and which project documents to prepare from the initiation of a prestudy to the project’s con- clusion. The project sponsor orders the project and makes the tollgate decisions while most of the other activities described in the project model are the responsibility of the project manager. The project model is divided into four phases: prestudy, feasibility study, execu- tion, and conclusion phases.

The purpose of the prestudy phase is to assess feasibility from technical and com- mercial viewpoints based on the expressed and unexpressed requirements and needs of external and internal customers. During the prestudy phase a set of alternative solutions is formulated. A rough estimate is made of the time schedule and amount of work needed for the project’s various implementation alternatives.

The purpose of the feasibility study phase is to form a good basis for the future proj- ect and prepare for the successful execution of the project. During the feasibility study, different realization alternatives and their potential consequences are analyzed, as well as their potential capacity to fulfill requirements. The project goals and strategies are defined, project plans are prepared, and the risks involved are assessed. Contract negotiations are initiated, and the project organization is defined at the comprehensive level.

The purpose of the execution phase is to execute the project as planned with respect to time, costs, and characteristics in order to attain the project goals and meet the cus- tomer’s requirements. Technical work is executed by the line organization according to the processes and working methods that have been decided on. Project work is actively controlled; that is, the project’s progress is continuously checked and the necessary action taken to keep the project on track.

The purpose of the conclusion phase is to break up the project organization, to com- pile a record of the experiences gained, and to see to it that all outstanding matters are taken care of. During the conclusion phase, the resources placed at the project’s disposal are phased out, and measures are suggested for improving the project model, the work models, and the processes.

Besides describing the activities that will be performed to arrive at a specific result, the work model also includes definitions of the milestones. However, to get a complete description of the work in a specific project, one or more work models should be defined and linked to the general project model. A work model combined with the general project model is a PROPS application. If there are no suitable work models described for a proj- ect, it is the project manager’s responsibility to define activities and milestones so that the project plan can be followed and the project actively controlled.

Indra: Closing the Project 255

A milestone is an intermediate objective that defines an important, measurable event in the project and represents a result that must be achieved at that point. Milestones link the work models to the project model. Clearly defined milestones are essential for moni- toring progress, especially in large and/or long-term projects. Besides providing a way of structuring the time schedule, milestones will give early warning of potential delays. Milestones also help to make the project’s progress visible to the project members and the project sponsor. Before each milestone is reached, a milestone review is performed within the project in order to check the results achieved against the milestone criteria. The project manager is responsible for the milestone review.

Ericsson’s worldwide success can be partially attributed to the acceptance and use of the PROPS model. Ericsson has shown that success can be achieved with even the simplest of models and without the development of rigid policies and procedures.

4.25 INDRA: CLOSING THE PROJECT17

In a technological company like Indra, with projects being managed to develop, manufacture and maintain complex hardware and software systems, an immature project closure can be, if not well treated, a

cause of great losses on efficiency. Projects usually require a curve of effort with its peak at the beginning and half of

its project life cycle. See Figure 4–31. Or in other words, from the project manager point of view, planning and monitoring and control are the phases that require more of her attention.

During planning stage, project manager works toward clear goals. At the same time planning depends on established commitments either with the sponsor or the customer. While in monitoring and control project manager’s attention is focused on coordinating team efforts to achieve project milestones, identifying variances to baselines and protect- ing the project from changes, which really take most of her time.

This is not the case at the end of the project: when commitments are fulfilled most of the pressure on PM is released. This occasionally makes that the last of the milestones (project closure) is not properly achieved, as PM attention and effort has dropped and even it is possible that a new assignment be waiting for the project manager, so she is released to start the new responsibility without properly closing the previous one.

In the context of an organization like Indra, whose main business is delivering project results to its customers, we intend to organize our resources in the most efficient manner, giving effective response to all commitments with our customers in a business improve- ment framework.

Performing a good project closure may be a little motivator and can be rated by PMs as a simple and administrative task. Therefore it could be forgotten that if we don’t pay atten- tion to it the opportunity to consolidate the efficiencies that were got in the project, that

Closing the Project

Phase 1 Phase 2 Phase 3 Phase 5Phase 4

Precontract stage Contract stage

Proposal preparation

Initiation Project

planning

Monitoring and Control

Execution

Proposal negotiation

DE 3

Phase 6

ClosureDE 4 DE 5DE 2

Execution and Monitoring & Control

Closing

PM effort over time (Indra’s project management life cycle)

Planning Proposal support

DE 1

Figure 4–31. Indra’s project management life cycle.

256

Indra: Closing the Project 257

benefit can be lost for the organization, particularly in the management of the scope and resources (which, by the way, are the main values used in the calculation of productivity).

If we focus on management of the scope, if project closure is not well done there is a risk that acceptance agreements of the deliverables may tend to be diluted, reopened or reinterpreted by the customer. This happens if the project end is not well settled and con- fused and mixed with warranty period.

Let me show this: customer’s needs after a new system is implanted may be chang- ing, and that can make the interpretation of the requirements to evolve, losing trace- ability with the initial project scope and its former conditions of validation. The person at the client that performs the requirements validation on deliverables may change her perception as time passes without a formal closure. That way, the customer may try to relocate new needs back on the project instead of placing them in a project extension, as it should be.

Especially advisable is paying particular attention to the efforts dedicated to customer requirements acceptance when managing a project based on agile models, that are so fash- ionable today. The dynamic constant of micro delivery -validation can place the problem of poorly executed project closure in dimensions hardly treatable.

If we focus on management of resources, several organizational roadblocks can hap- pen, being the most frequent the prevention of resources being released from our project to others. It also happens that not released resources lower the productivity gained during the project. Another negative effect is the lack of methodological focus during a not properly executed project closure, being carried away by the reaction of change events and inci- dents. This nonpreventive approach is a like a Trojan horse with respect to the assumption of changes, scope, improvements and responsibilities that were properly negotiated by the project manager during other stages of the project, and that at project closure could be put again at stake.

This concern has led Indra to improve project closure practices by implementing in the PMIS of a group of facilitators:

● Possibility of early beginning of project closure activities, by overlapping this phase with the previous (e.g., in cases where scope is cut or there is a planned closure date)

● Use the information that the PMIS has accumulated from the project along its life to help identify situations that could prevent formal closure

● Indicators and reporting associated with project closure, offering at the same time the project closure status

● Linking lessons learned which allow search in previous experiential knowledge; this could affect closing process (and to others)

The Spanish saying “close the door [or] the cat will escape” shows with ease the risks that the organization faces if project closure is not properly done. If we don’t close the door (the project) the cat escapes, or in other words, risks that were controlled have an ultimate chance to happen. If the project manager doesn’t carefully perform project closure, she may be adding great risks to the project that had had under control during earlier phases in which her effort and attention were high.

258 PROJECT MANAGEMENT METHODOLOGIES

QUALITY MANAGEMENT PROCESS APPLIED TO DECISION MAKING18

The “Gestión Integrada de Proyectos” (GIP©) is the integrated project management meth- odology in Repsol Exploration and Production general direction (Repsol E&P). The GIP©

is based on the stage gated concept. The GIP© establishes a set of deliverables for each of the disciplines involved in an

E&P project; in total there are 330 deliverables to cover from the Exploration Phase to Development Project handover. Each derivable is described in a “card,” that includes its description, a guideline and a best in class example. The GIP© is available to all employees via the GIP Space© in the Repsol intranet through an interactive deliverables map.

The GIP© considers four phases. See Figure 4–32. The phases are in fact four projects in sequence where the PMI PMBOK® Guide project process groups; namely initiating, planning, executing, planning, monitoring and control and closing are applied. At the end of each phase there is a closing process and the initiation of the next phase.

The main deliverable of the Visualization Phase is a list of integrated development options, technical and economically feasible. These options include production profiles and the associated facilities wells. The Visualization Phase is a period of high creativity where all technically feasible options should be detected, to be analyzed and prioritize in the next phase. The phrase that defines the effort during the Visualization phase is “When a man has put a limit on what he will do, he has put a limit on what he can do.” (Charles M. Schwab).

18. ©2013 by Repsol. Reproduced by permission. All rights reserved. The material on Repsol has been provided by Jose Manuel Boccardo, Technical Development Executive Management Division, Repsol Exploration and Production Executive Managing Division

HSE Management

Risk Management

Visualization

Gate 1

“Identify a business opportunity”

“ Select & mature the optimum concept”

“Complete scope and the Project management Plan [PMP]”

“Execute the Project Management Plan [PMP]”

Gate 2 Gate 3/FID Go/ No Go

Value Creation

A risk based decision driven process: “No more, no less, at the right time”

Value Materialization

Project Close Out &Lessons Learned

Conceptualization Definition Execution

During the Conceptualization Phase the previously detected development options are analyzed and new options may appear. Then they are prioritized and only one option is selected. Once selected, the option is matured until the information is [great] enough to produce a Cost Estimate Class 4 according to AACEi. This is the phase where maximum value can be captured in a project. The phrase that defines best the philosophy behind the conceptualization effort is “Dress me slowly as I’m in a hurry.” (Napoleon Bonaparte)

If the Conceptualization Phase is key because it is the period that captures the maximum project value, the Definition phase is also key because it is the phase that sets project scope and baseline and where the Project Management Plan (PMP) is completed. In this case the phrase that defines the philosophy behind the Definition activities is “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” (Abraham Lincoln)

The Execution Phase includes all the activities planned and included in the PMP. The phase’s final product is the project infrastructure: wells, facilities, buildings, etc. The phase is complete and closed when the infrastructure is handover to the “client” who is the Asset Manager. In this case the phrase that defines the activities is “Success is depen- dent on effort.” (Sophocles)

The GIP© manages the risks associated with uncertainties along the project lifecycle, administering commitments and expenditures. These uncertainties may be related to reser- voir modeling maturity, drilling and facilities scope to name a few. The level of uncertainty through a project life cycle can be visualized by mapping the Development Project Cost Estimate Class according to AACEi at each phase. See Figure 4–33. These uncertainty levels depend on the scope of the development options to develop a specific crude or gas reservoir. These cost estimate uncertainties do not cover the uncertainties associated to the reservoir knowledge, that will have to be assessed and considered in the surface facilities and wells’ configuration and designs.

Like most of the stage gate methodology, The GIP©, establishes four possible deci- sions at each gate. See Figure 4–34. The possible decision outcomes are:

● continue to next phase ● recycle back because level of uncertainty is too high for the next commitment and

more analysis, modeling, engineering, etc., is required. ● cancel ● shelve until conditions favor the development of the project

Decisions at each gate are made by gatekeepers’ committees that will endorse or approve commitments and funds according their delegations levels in the company. Each gate is fed by Technical Review performed by a multidiscipline and integrated team of experts, where all E&P disciplines are represented. This integrated team reviews all deliv- erables developed during the evaluated stage according to the map in the GIP Space©. Other experts such as Fiscal and Legal, also assess the project. The assessment is made available to the gatekeepers in an integrated document and presentation called the Decision Support Document or DSD.

The Technical Reviews made at the end of each phase are, in fact, Quality Control events, where the level of maturity and completeness of main deliverables are checked and deviations identified. See Figure 4–35.

260 PROJECT MANAGEMENT METHODOLOGIES

Class 5 Capacity factored, parametric models,

judgment or analogy

Class 4 Equipment factored or parametric

models

Class 3 Semi-detailed unit cost with assembly

level line items

Class 2 Detailed unit cost

with forced detailed take-off

Class 1 Detailed unit cost with

detailed take-off

Cost estimate classification

P re

ci si

on r

an ge

( %

)

–60

–40

–20

100

D E

Visualization

Gate 1 Gate 2 Gate 3/FID Go/ No Go

Recycle Back

Continue

Cancel/Shelve

Value Creation

A risk based decision driven process: “No more, no less, at the right time”

Value Materialization

Project Close Out &Lessons Learned

Conceptualization Definition Execution

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Gate 1 Gate 2 Gate 3/FID Go/ No Go

DEFINITION “Complete

scope and PMP”

EXECUTION Implement Project Management Plan

VISUALIZATION

“Identify a business

Opportunity”

CONCEPTUALIZATION

“Select & mature

the optimum concept”

Project Close Out

Handover

Project

ControlAssurePlan

Technical ReviewsPeer Reviews/ Peer AssistsQuality Plan

Integrated Project Management

Value Creation Value Materialization

Technical Quality Management

262 PROJECT MANAGEMENT METHODOLOGIES

At the beginning a project, officially after Gate 1, a Quality Events Map is established and agreed to between the Project Manager and the E&P Project Management Office. This map is incorporated in the Project Quality Plan and its milestones integrated in the Project Master Schedule. The Quality Events Map l identifies the Quality Control milestones associated to the decision making an also Quality Assurance events.

The Quality Events Map is project specific, meaning that it will depend on the invest- ment level, complexity, company exposure or a combination. This Quality Events Map include the Quality Assurance events that provide confidence that the Quality Control events will be successful.

The Quality in Repsol E&P can be represented by a four-level pyramid. The first level corresponds to contractors and suppliers, the second to project teams, the third to the deci- sion making and the fourth to corporate policies and norms. See Figure 4–36.

To better understand the philosophy behind this pyramid, it is important to consider that in an Exploration and Production Project most of the activities are contracted and goods are always supplied by third parties. The project teams literally plan and supervise the work executed by others.

The contractors and suppliers will execute the quality process to guaranty that services and goods are delivered according to the contracted requirements.

At the project team level, the execution of the quality process is less intense and requires less resources than the quality activities performed by contractors and suppli- ers. Quality Assurance activities are aimed to provide confidence that the contractors and suppliers are following or using the agreed specifications, procedures having the proper people profiles, etc., and will deliver services and goods according to offered requirements. Examples of this are shop inspections during fabrication and auditing to engineering

Level 0: Corporate

Level 1: Decision Making (operator and its partners)

Level 2: Project (Project team)

Level 3: Contractors/ Suppliers

Quality Assurance

Technical Quality

Management

Policies and norms

P.Quality Planning

P. Quality Planning

P. Quality Assurance

Quality Control

P. Quality Control

Gate 1 Gate 2 Gate 3 FID

Go/ No go

DEFINITION

Cost estimation Class 3–2

EXECUTION

VISUALIZATION

Cost estimation Class 5

CONCEPTUALIZATION

Cost estimation Class 4

Project Close Out

Handover

+ Uncertainty

–Definition

–Uncertainty

+ Definition

Maturity

Technical Review Report

Business alignment

Risk assessment results

Technical / economical analysis results (VPN/ IRR)

Quality control (TR1, TR2, TR3)

Gates (1, 2, 3)

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Gate 1 Gate 2 FID

Go/ No go

Gate 3 FID

Go/ No go

DEFINITION

Cost estimation Class 2

EXECUTION

VISUALIZATION

Cost estimation Class 5

CONCEPTUALIZATION

Cost estimation Class 4

Project Close Out

Handover

+ Uncertainty

–Definition

–Uncertainty

+ Definition

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Technical / economical analysis results (VPN/ IRR)

Quality control (Technical Reviews)

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products while being developed. Quality Control activities are associated to determine if delivered products are to be accepted or rejected.

During the preparation of the Project Quality plan the project team, establishes the deliverable requirements, assess the criticality of each project area and its deliverables, their associated contracts, materials and equipment, and establishes the number, timing and depth of the audits and inspections associated to both Quality Assurance and Control.

The third level of the pyramid corresponds to the quality associated to the inputs to the decision makers or gatekeepers. The “main clients” of the outcome of the third-level Quality Process are the gatekeepers that will use the results of the Technical Reviews, to assess the project value and its risks at the decision point; and then decide to proceed or not to the next phase. See Figure 4–37. The other client that is benefited with the third level Quality Process is the project team, because quality events will detect deviations that, once corrected, will assure or improve the project value. It is important to understand that the third-level Quality Process does not replace the Quality Process at the Project Teams level, it complements it.

The GIP© allows controlled flexibility in the decision-making process. For example, in certain cases, there are benefits in taking final investments decisions earlier than the gate 3. This means that certain parts of the project may not be mature enough to have the information to produce a Class 2 Cost Estimate according to AACEi. See Figure 4–38.

In this case an analysis is performed an analysis to assess the risks produced by the uncertainties associated to the low maturity, then plan and sometimes immediately perform response actions. The residual probability and impacts are reflected in the project main variables and considered in its value analysis.

When the Project Team and the project sponsor detect an opportunity to be exploited by taking a decision in an early stage with a low maturity project, as seen in Figure 4–39, the results of the risk analysis are discussed at the Technical Review and response actions confirmed. During the Technical Review additional risks could be detected and response actions be established and incorporated in the PMP. The Decision Support Document is submitted to the gatekeepers for approval after the endorsement of the multidiscipline integrated team of experts. See Figure 4–40.

Positive:

earlier

d t

Negative:

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4.27 ROCKWELL AUTOMATION: QUEST FOR A COMMON PROCESS19

Rockwell Automation was formed by bringing two major automation companies together in the late 1980s. These two companies, Allen-Bradley and Reliance Electric, were the foundation of what is now Rockwell Automation. Over the years, Rockwell Automation has continued to acquire leading automation suppliers as a growth strategy and also as a way to bring new advanced automation technologies into the company. In 2005, as Rockwell Automation was planning the rollout of a new SAP business system, we recognized the need for a new “common” product development process that would be defined based on company best practices combined with what was considered the industry’s best practices for product development. This effort resulted in a “common product development” (CPD) process that was defined in a way to allow for enterprisewide adoption. This is shown in Figure 4–41. This means that 16 different product businesses ranging from high-volume component suppliers to complex continuous process control systems solution suppliers all use the same high-level process framework for their new product developments.

The resulting process is made up of six phases with a stage-gate review after each phase. The six phases are:

19. This section on Rockwell Automation was provided by James C. Brown, PgMP, PMP, OPM3 AC, MPM, CIPM, CSP, CSSMBB, Formerly Director, A&S Enterprise Program Management Office; Karen Wojala, Manager, Business Planning; and Matt Stibora, Lean Enterprise Manager.

Project

Multidiscipline integrated team of experts

Gatekeepers

Technical (Specifications, Research, Production, etc.)

Legal Fiscal Political Context Cost estimate and schedule Project Plan Value analysis

Technical Reviews

Approval

Incorporation of additional response actions in the PMP

Response actions Opportunities,

uncertainties and risk analysis

Review and endorse

Gatekeepers presentation

Rockwell Automation: Quest for a Common Process 267

Consideration ● To develop a high-level business case and project proposal to justify AR1 funding

for the execution of initiation and feasibility phase activities.

Initiation ● To refine the high-level business case document (BCD) created in the consideration

phase into a set of customer requirements sufficient for the project team to create solution concepts, product requirement, and functional requirement documents in the feasibility phase. (See Figure 4–42.)

Feasibility ● To evaluate solution concepts to address the customer requirements from the initia-

tion phase. ● To define the product requirements and functional requirements. ● To complete all project planning and scheduling to update the project plan for all

activities and resources required to complete the execution, release, and closeout phases of the project.

● To develop a BCD that justifies the investment required to execute the project plan for the solution concept chosen. (See Figure 4–43.)

The CPD Process includes:

CONSIDERATION INITIATION FEASIBILITY EXECUTION RELEASE CLOSEOUT

AR2 OOE AFC TECO CLSD

CONSIDERATION

AR1

1 2 3 4 5

FUNDING EVENTS

AR1, AR2 = APPROPRIATION REQUESTS FOR PHASES

TECO = TECHNICALLY COMPLETE CLSD = PROJECT CLOSED

ORDER ENTRY EVENTS

OOE = OPEN FOR ORDER ENTRY AFC = AVAILABLE FOR CUSTOMER

Figure 4–41. CPD process: basic concepts.

268 PROJECT MANAGEMENT METHODOLOGIES

Major Inputs Major Deliverables (sampling)

)

Major Activities (sampling)

Purpose: To refine the opportunity identified in the CONSIDERATION phase through the creation of a customer requirements document (CRD).

Outputs (Inputs into FEASIBILITY if ‘GO’)

Figure 4–42. Initiation phase summary.

Major Inputs

Milestone 1 Go decision

Major Deliverables (sampling)

Major Activities (sampling)

Purpose: To generate and baseline the Product

Requirements, Functional Requirements, Project Plan and Schedule, and

the Business Case in order to secure funding for the remainder of the project and proceed into the EXECUTION phase.

Outputs (Inputs into EXECUTION if ‘GO’)

AR2

Figure 4–43. Feasibility phase summary.

Execution ● To develop the product or service according to the baselined functional requirement

specification (FRS) from the feasibility phase; performing the necessary reviews; making approved requirement and/or design changes as the project progresses.

Release ● To finalize all test, certification, and other product verification documentation. ● To build and validate pilot production. ● To open for order entry and execute the commercial launch.

Close ● To position the product for transition to continuation/sustaining engineering; docu-

mentation cleanup, postmortems, lessons learned, record retention, and complete all financial transactions.

Our goal was to achieve a rapid, repeatable framework that consistently results in high-quality output. A major focus of the team that produced this new process was to drive the product businesses to be more disciplined in how innovation was embraced when deciding what projects proposals were funded and which ones were not. There were too many examples of projects receiving management support and funding without meeting a set of minimum criteria that would result in a higher probability of commercial success. Investment proposals were not always based on an ideation process that was driven by our customers.

We found examples of funded projects enjoying support and funding without any customer-driven commercial basis. The justification for these projects was based on new interesting technologies, investing in product family coverage for the sake of coverage without real market demand, providing niche solutions with limited potential driven by a single customer, etc.

To solve this problem the team’s original focus was on two aspects of what was defined as best practice. There are numerous theories that attempt to describe the best way to capture customer needs and use them as the basis for creating effective new product concepts. Our goal was to understand the customer problems before we produced solution concepts and product solutions. We accomplished this goal by breaking apart an existing tool called the Marketing Requirements Document (MRD) and process used by Product Management into two tools.

We wanted the product owners to understand the market and target customer’s prob- lems before they considered solutions. By breaking the MRD into two deliverables, the first (Customer Requirements Document) focused on the market need and customer prob- lems and the second (Product Requirements Document) focused on the solution concepts and product requirements, and locating these tools and activities in separate phases divided by a management stage gate review, we forced our product managers to break away from the “continuously evolve the product death march” that we were on.

Of course, accepted practice and company culture is hard to break so governance is critical in driving change. This simple step is the beginning of what will be a significant improvement in the new product development practices of this company.

Rockwell Automation: Quest for a Common Process 269

270 PROJECT MANAGEMENT METHODOLOGIES

The driving force behind management’s commitment to implement this new process and to drive the cultural change was the vision of a common consistent methodology for new product development across the enterprise. This consistency was prioritized from the top (direct management involvement in the stage-gate reviews) down, in order to realize benefit as soon as possible.

All too often, businesses were forced to deny funding for strategic projects due to the never ending incremental product improvements that just kept coming. By forcing business management to approve each project’s passage from one phase to the next, we pushed the visibility of every project, every resource and every dollar up to the decision makers who wrestled with trying to find dollars to fund the real game changers. This vis- ibility made it easier for the business owners to kill projects with questionable returns, or to delay a project in order to free up critical resources. Once management began to see the returns from these decisions in the form of product introductions that really moved the needle, we began to focus on the fine tuning of the process and methodologies employed. (See Figure 4–44.)

The stage-gate review is the most important event of a project. Previously, under the old way of executing a project, these reviews were informal and haphazard. Teams were able to continue spending and even overspending without any real fear of cancel- lation. This new process ensures that every dependent organization is represented at the appropriate review and given the chance to agree or disagree with the project manager that all deliverables are available. The intent is to have the go/no-go decision made by both the primary organization responsible for the deliverables during the previous phase and the primary organization responsible for the deliverables in the subsequent phase. Both these organizations are required at each stage-gate review. If done cor- rectly, we will be able to avoid surprises during the later phases by ensuring transpar- ency during the earlier phases.

Once a project manager is assigned and a project team is formed, the importance of well-defined deliverables that are easy to locate and use became evident. The 12 months following the original launch of the new process was spent continuously improving the phase definitions, procedure documents, deliverable templates, and governance policies. There is a fine line between rigor and burden; the trick is to push this line hard to ensure rigorous implementation without slowing the progress of the project team down.

At the end of the feasibility phase, as the project enters the execution phase with requested funding secured, the project plan becomes the bible. The project plan drives all

Milestone Checklist Team Recommendation

Attendance TBD (Based upon Project Type, Size, etc.)

Entry Criteria Review Decision GO

NO GO

Go Back

Figure 4–44. The decision-making process.

Sherwin-Williams 271

activities through the execution phase, release phase, and finally project close. Any issue that the project team is faced with that requires a change in course must be recognized in an updated project plan. At the conclusion of the project, the plan must represent what actually occurred.

Prior to any new product being released for customer shipment, all impacted stake- holders must agree that the product is ready before giving the final approval.

There is a dimension of introducing an end-to-end process that has been assumed but must be mentioned. The company is built from many related but very different product businesses. Each business segment was at a different maturity level relative to all aspects of product development, even the existence of a formal project management organization.

Project managers are instrumental in the execution of a product development process. If consistency, transparency, and risk mitigation are important to a business, and they are to Rockwell Automation, then a formal well-recognized and managed project management entity is paramount.

Rockwell Automation is pursuing the discipline of project management at all levels in its organization.

4.28 SHERWIN-WILLIAMS

There are several ways that a company can develop a methodology for project manage- ment. Outsourcing the development process to another company can be beneficial. Some companies have template methodologies that can be used as a basis for developing their own methodology. This can be beneficial if the template methodology has enough flexibil- ity to be adaptable to their organization. The downside is that this approach may have the disadvantage that the end result may not fit the needs of the organization or the company’s culture. Hiring outside consultants may improve the situation a little, but the end result may still be the same unfavorable result as well as being more costly. This approach may require keeping contractors on the payroll for a long time such that they can fully under- stand the company’s culture and the way it does business.

Benchmarking may be effective, but by the time the benchmarking is completed, the company could have begun the development of its own methodology. Another downside risk of benchmarking is that the company may not be able to get all of the needed informa- tion or the supporting information to make the methodology work.

Companies that develop their own methodology internally seem to have greater suc- cess, especially if they incorporate their own best practices and lessons learned from other activities. This occurred in most of the companies in this book.

The information below was provided by The Sherwin-Williams Company.

The Sherwin-Williams Company engages in the development, manu- facture, distribution, and sale of paints, coatings, and related prod- ucts to professional, industrial, commercial, and retail customers in

North and South America, the United Kingdom, Europe, China, and India. It operates in four segments: paint stores, consumer, Latin America, and global finishes. The paint

Company Background

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stores segment sells paint, coatings, and related products to end-use customers. This segment markets and sells Sherwin-Williams branded architectural paints and coatings, industrial and marine products, and original equipment manufacturer product finishes and related items. As of December 31, 2008, it operated 3346 paint stores. The consumer segment engages in the development, manufacture, and distribution of paints, coatings, and related products to third-party customers and the paint stores segment. The Latin American and global finishes segments develop, license, manufacture, distribute, and sell architectural paint and coatings, industrial and marine products, automotive finishes and refinish products, and original equipment manufacturer coatings and related prod- ucts. These segments also license certain technology and trade names as well as distrib- ute Sherwin-Williams branded products through a network of 541 company-operated branches, direct sales staff, and outside sales representatives to retailers, dealers, job- bers, licensees, and various third-party distributors. The company was founded in 1866 and is headquartered in Cleveland, Ohio.

The Corporate Information Technology (IT) Department for The Sherwin-Williams Company provides shared services support for the three operating divisions, described above, that make up the organization.

During the summer of 2002, the Corporate IT Department engaged in activities surrounding the conversion of international, interstate, intra- state, and local telecommunications services from the company’s pres-

ent voice telecommunications carrier to a new carrier. Project management disciplines and best practices, using a structured project management methodology, were utilized on this project, ultimately leading to a successful project outcome.

The project was implemented using a phased approach consisting of the major phases as described below. The phases were established to include many of the principles stated in the PMBOK® Guide and also included many of the best practices that had been devel- oped previously at The Sherwin-Williams Company. The phases could overlap, if neces- sary, allowing for a gradual evolvement from one phase to the next. The overlapping also allowed the company to accelerate schedules, if need be, but possibly at an additional risk. Project reviews were held at the end of each phase to determine the feasibility of moving forward into the next phase, to make “go/no-go” decisions, to evaluate existing and future risks, and to determine if course corrections are needed.

● Initiate: The first phase is the initiate phase where the project team is formed, a project kickoff meeting is held, needs and requirements are identified, and roles and responsibilities are defined.

● Planning: The planning phase is the next phase and is regarded by most project managers as the most important phase. Most of the project’s effort is expended in the planning phase, and it is believed that the appropriate time and effort in- vested in this phase ensure the development of a solid foundation for the project. Management wholeheartedly supports the efforts put forth in this phase because this is where many of the best practices have occurred. Also, a solid foundation in this phase allows for remaining phases of the project to be accomplished more

Case Study Background

Sherwin-Williams 273

efficiently, giving senior management a higher degree of confidence in the abil- ity of project managers to produce the desired deliverables and meet customer expectations.

A series of meetings are typically held throughout this phase to identify at the low- est level the project needs, requirements, expectations, processes, and activities/steps for the processes. The results of these meetings are several deliverables, including a needs and requirements document, a project plan, a risk management plan, an issue log, and an action item list. Additional documents maintained include quality management and change management plans. Together these documents provide management with an overview of the entire project and the effort involved to accomplish the goal of transitioning services by the target date established by management.

● Execution: The third phase in implementation is execution. This phase is evolved into gradually once the majority of planning has been completed. All activities outlined in the processes during the planning phase come to fruition at this time as actual communication line orders begin to take place as well as the installation of equipment where necessary. Services begin to be transitioned by the division/ segment and implementation moves forward aggressively for this project due to a stringent timeframe. It is of vital importance that activities in this phase be moni- tored closely in order to facilitate the proactive identification of issues that may negatively impact the timeline, cost, quality, or resources of the project.

To facilitate monitoring and control of the project, weekly status meetings were held with the vendor and the project team, as well as short internal daily meetings to review activities planned for each day. Ad hoc meetings also occurred as necessary.

● Closure: The final phase of the project is closure. In this phase, there is typically a closure meeting to identify any remaining open issues and to determine the level of client satisfaction. This phase also included any “clean-up” from the project, administrative closeout, the communication of postimplementation support proce- dures, and a review of lessons learned.

Best practices that worked notably well for The Sherwin-Williams Company included the establishment of success criteria, consisting of project objectives and a needs/ requirements analysis, regular communications both within the project team and with stakeholders, dedicated resources, defined roles and responsibilities, knowledge transfer between cross-functional teams, teamwork, the development of a fun, synergistic working environment, and a review of lessons learned.

One of the best practices in project management is that maturity and excellence in project management can occur quickly when senior management not only actively sup- ports project management but also articulates to the organization their vision of where they expect project management to be in the future. This vision can motivate the organization to excel, and best practices improvements to a project management methodology seem to

274 PROJECT MANAGEMENT METHODOLOGIES

occur at a rapid rate. Such was the case at The Sherwin-Williams Company. Tom Lucas, chief information officer at The Sherwin-Williams Company, comments on his vision for The Sherwin-Williams Company:

The future of project management at The Sherwin-Williams Company includes the inte- gration of project management disciplines and best practices, combined with portfolio management techniques, to deliver high value project results on a consistent basis. The Sherwin-Williams Company anticipates that the use of a PMO will not only instill the best practices of project management as core competencies, but also aid in the growth of the organization’s project management maturity.

One goal has been to unify the goals and objectives of individual departments by applying a universal yet flexible project management framework in pursuit of better across-the-board results. We have made significant strides in this regard. The Sherwin- Williams Company desires to learn from past successes, as well as mistakes, make pro- cesses more efficient, and develop people’s skills and talents to work more effectively through the establishment of standardized procedures within the company. Above all, we must demonstrate real business value in using professional project management.

While project management professionals may reside in multiple operating units, so as to be as close as possible to our internal clients, our intent is to have a core group of project management professionals that would be the standards setting body and provide for best practices identification and sharing.

We have all managed projects at one time or another, but few of us are capable of being Project Managers. Herein lies one of the biggest impediments to implementing pro- fessional project management. We can have the best-trained project managers, we can have all the right process in place, we can use all the right words, yet the PMO will either fail or be only a shell of what it can be. Staff and management have a hard time appreciating the power, and improved results, of a professionally managed project. Until staff and manage- ment become involved themselves, until they feel it, until they personally see the results, the distinction between managing a project and project management is just semantics.

The difference between managing projects and professional project management is like the difference between getting across the lake in a rowboat versus a racing boat. Both will get you across the lake but the rowboat is a long and painful process. But how do people know until you give them a ride?

The 2002 telecom case study was just such a ride. While the focus of the case study discussion was to articulate the mechanics of the PMO process, the real story is the direct per share profitability improvement resulting from this successful initiative. In addition, there was legitimate concern from the business on the potential impact this change may have on our internal clients and external customers should something go wrong during the transition. The professional project management that was used gave everyone the cautious optimism to proceed and the results made the staff and management “believers” in the process.

Project by project, success by success, a cultural transition is in process. As we demonstrate improved business results because of professional project management we are able to offer services to a wider audience and are able to take on projects outside of IT where the PMO got its start.

By staying focused on business results, by staying close to our clients so we under- stand their needs well, and by constantly challenging ourselves to improve our underlying processes our PMO services are maturing more and more every day. It becomes a fun ride for everybody.

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4.29 MEDICAL MUTUAL20

Some companies have found that some of the readily available methodologies that can be purchased or leased have enough flexibility to satisfy their needs. This is particularly true in the IT area. The following information was provided by Dan Halicki, IT Administration Coordinator at Medical Mutual.

Industry analysts believe that a quarter of all IT projects are delivered on time, and fewer are within budget. In response to this problem, various project management approaches have emerged with the pri-

mary objective of ensuring project success. With the advent of healthcare reform Medical Mutual sought to reinforce its strategy

to deliver the appropriate combination of benefit design, health management and other services to optimize the value of their dollars spent on healthcare. To help achieve this goal we have adjusted our IT project management philosophy to find the proper balance between rigorous methodology requirements and the realities of containing administrative project overhead.

Systems development at Medical Mutual has followed traditional project manage- ment principles for over twenty years, including a commitment to the Project Management Institute’s (PMI) standards for project management. In 2005, a Project Management Practices Team was established to provide governance and ensure the project management methodol- ogy and standards have kept pace with subsequent iterations of the PMBOK®. The use of traditional project management principles, PMI concepts and this governance team has con- tributed to overall project success and helped the IT Division fulfill our mission to be the best provider of information technology to Medical Mutual through the delivery of solutions with exceptional value.

What, then, are the best practices that Medical Mutual follows to establish project priorities, infuse flexibility and bring the right amount of discipline to its information technology project management approach? The following discusses the techniques and deliverables that constitute the standard project management elements of initiation, plan- ning, execution, controlling and monitoring, and closing. Additionally, it is important to look beyond the elements of the methodology itself to include the support system that makes it all work, such as, executive management buy-in, training and follow-up activity.

The Executive IT Steering Committee provides a Demand Management process and ensures that IT project initiatives are aligned with the strategic objectives of the organization.

Medical Mutual uses a demand management process that requires collaboration between business area management and IT planning to effectively align business vision with technical solutions. Corporate Strategic Planning establishes the Company goals that guide our IT strategy. To achieve the desired goals, related project proposals are drafted

Introduction

20. The material in this section was taken from A. Wallen and D. Halicki, Medical Mutual – Project Management Meets Healthcare Reform: Bringing the Right Amount of Discipline to a Project. © 2013 Medical Mutual. All rights reserved. Reproduced by permission.

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using a standardized project charter format that identifies how the proposed project aligns with specific value business drivers and strategic business drivers to warrant consideration. The long-standing business model of health insurance is undergoing significant change and it is imperative now more than ever that scarce IT resources are utilized on the most strategic projects.

Provide On-Going Project Management Training throughout the Enterprise

The term “project management” can mean different things to different people. An instructor-led class explains how Information Technology applies their improved “Project Management Methodology” to ensure that all project participants, including the customer community, have a common understanding of the process, especially stakeholder partici- pation and joint ownership. With duration of 24 hours over three days, the class provides instruction and a hands-on workshop on the major components of the project management process, e.g. project initiation, planning, execution, monitoring and control, and project closure. A project management handbook (PM Handbook) will be deployed in 2013 to help coach existing employees and instruct new ones on the project management philoso- phy in use at Medical Mutual.

Structure Every Project in a Consistent Manner, Including Scope,

Responsibilities, Risks, and High-Level Milestones

Central to the project management process is the creation of the project charter, which documents and formalizes the agreement of all concerned parties, including business sponsors, project manager and project team members. The charter spells out what will be accomplished and when, who is responsible for getting it done, known risks and the course of action to mitigate the risk, quality assurance measures, quantifiable measures of success and the major milestones to be met.

Communicate and Update Project Plans and Status on an On-Going

Basis, Using On-Line Tools When Appropriate

Once an approved project charter is in place, the project plan becomes the next focus of attention. The plan and the regular status reports that document progress versus the plan are the primary communication vehicles for keeping management and staff informed. Medical Mutual built and maintains a SharePoint-based an online real-time project status center to keep project planning, issues, change control and project information current and readily available throughout the organization. Key Performance information is also maintained and available on this system as an ongoing source of IT service level measures.

Maintain an Official Project Issues List, Including Who Is Responsible,

What Are the Potential Impacts, and How the Issue Was Resolved

As problems arise during the execution of a project, it is vital to maintain an accurate issues log to properly document the problems and what is being done about them. In project meetings, the issues log serves as a meaningful tool to prevent unproductively rehashing old information and assures concerned areas that their problems have not been

forgotten. Along with the charter and the regular progress reports, the issues log can be accessed via the project status center and critical issues are highlighted in the project’s status reporting dashboard.

Use a Formal Change Control Process, Including an Executive

Steering Committee to Resolve Major Changes

As issues arise that could require additional resources, the nemesis known as “scope creep” can begin to surface and impede a smooth-running project. A formal change con- trol process is essential to help the project manager with the predicament of pleasing the customer or going over budget or missing milestones. The Medical Mutual change control process (request and assessment) can be accessed via the project status center and critical change control is highlighted in the project’s status reporting dashboard.

Institute Governance to Periodically Review the Project Management

Process and Selected Projects to Determine How Well the Methodology

Is Working and to Identify Opportunities for Improvement

With the establishment of project management standards and the sizeable investment in training, it makes sense to step back occasionally and assess if the overall objectives are being met. Where projects ran into difficulty, would a different approach have helped? Where projects went well, what aspects of the project execution ought to be shared by other projects? These are the kinds of questions that our IT Project Management Practices team is positioned to address. Benchmark efforts are also valuable to assess progress over time.

Conclude Every Major Project with an Open Lessons Learned Presentation

of the Results to Share Knowledge Gained, Demonstrate New Technology,

and Gain Official Closure

Many organizations rush through the project conclusion phase in order to get on with the next assignment. However, taking the time to fully document accomplishments, outstand- ing issues, deferred deliverables, and lessons learned is a worthwhile exercise that gives proper credit for successful completions, reduces misunderstandings over omissions and facilitates transitions to follow-up projects. On a quarterly basis, utilizing webcast technol- ogy, IT management and lead staff meet to hear presentations on the Lessons Learned in recent projects and those presentations are retained for future reference as needed.

Adapt to Meet the Business Needs of the Customer

Now more than ever, the rapidly evolving healthcare insurance environment dictates that Medical Mutual use more flexible software development methodologies to fulfill business requirements. Methodologies may include development models (sequential, incremen- tal and iterative) used in conjunction with one or more techniques (agile, prototyping, object-oriented). Website development appears to be particularly well suited to an agile methodology where time to market is a key concern. Regardless of the model or technique used in the development effort, delivery of a successful project is dependent on the project

Medical Mutual 277

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management framework of common processes, e.g. initiation, planning, execution, moni- tor and control, and closure. This framework provides common vocabulary for project managers and allows all stakeholders to understand the project phases more clearly.

One of the major reasons projects lose control is because project man- agers operate reactively rather than anticipating possible stumbling blocks. When the stumbling block finally appears, they are hesitant to

make effective decisions, which often results in situations that can kill a project. Medical Mutual’ experience has been that the aforementioned best practices help foster a more proactive environment in partnership with the customer, resulting in successful project delivery more consistently. Moreover, the outlined approach strikes a balance that requires minimum project overhead while obtaining maximum benefit.

4.30 HOLCIM21

Holcim is one of the world’s leading suppliers of cement and aggregates (crushed stone, gravel and sand) as well as further activities such as ready-mix concrete and asphalt including services. The Holcim Group holds majority and minority interests in more than 70 countries on all continents. The cement industry is a capital-intensive, long term invest- ment business. Executing projects safely, within expected costs, time targets and quality targets is crucial for the long term financial success of such companies. Due to the struc- ture of the company and limited available resources, projects are initiated and executed locally with a central support organization that provides the know-how in technology concepts, planning and quality control.

The Project Management Approach (PMA) is the Holcim standard methodology for all projects, and is based on PMI standards.

In the late ‘90s, Holcim decided to develop a standard and struc- tured methodology in managing projects and it was introduced across the company for developing and executing all types of projects. This methodology consists of 5 phases and 25 steps covering the entire Project Management Life Cycle. It includes most of the 10 Knowledge areas of PMI’s PMBOK® Guide, and it is supported by a series of project tem- plates. Special emphasis is put on the definition, closing and evaluation phases, to enable knowledge sharing within the Holcim Group.

Holcim has Specific Project Management Standards for investment projects (CAPEX projects)

In order to maintain and improve its business results, over the last decade Holcim has been investing on average 50% of its cash flow from operations in so-called CAPEX projects; projects to maintain, improve and expand Holcim’s production facilities. As a

Conclusion

Project Management

Methodologies

21. ©2013 by Holcim. Reproduced by permission. All rights reserved. Material in this section has been provided by Roberto Nores, Head of CAPEX Project Management Office, Holcim Technology Ltd. - Holcim Group

Holcim 279

further step in standardization, Holcim decided to expand PMA for application on CAPEX Projects, incorporating the most important and crucial tasks and deliverables. Four new methodologies were developed and implemented. They consist of the same 5 phases of PMA, but the number of steps has been extended to between 50 and 200; each one is sup- ported by tools and guidelines. The new methodologies are:

● ProMap: Methodology for CAPEX projects in the Cement business. It is divided in 2 sub methodologies, ProMap for Small projects (investments below 2 million CHF) and ProMap for Medium and Large projects (investments above 2 million CHF)

● AggPro: Methodology for CAPEX projects in the Aggregates business. ● RMXPro: Methodology for CAPEX projects in the Ready-mixed Concrete business. ● AsphPro: Methodology for CAPEX projects in the Asphalt business.

Since most Project Managers know PMA, they can apply the CAPEX-specific meth- odologies and work steps with limited additional training.

As a consequence of its efforts in Project Management, Holcim recog- nized the need to establish clear links between its yearly, high-level planning (business planning and budgeting processes) and the daily,

operational execution of projects. An average the Holcim Group Company runs between 100 and 300 projects each year. There was a need to optimize project prioritization, cash flows, resource allocation and portfolio monitoring. Consequently, a Project Portfolio Management methodology was established that supports top management in each country to manage its annual Project Portfolio.

The Project Portfolio Management activities are supported by a common software that supports most of the Project Portfolio Management processes. So far this software is in place 60% of the Holcim operations, and it has good acceptance from employees and management.

Throughout the years, Holcim has established a series of Project Management training programs to increase the level of competency of Project Managers. Currently Holcim works with a 3-level project man-

agement training concept as follows:

Local training programs PMA: this training aims at ensuring that project managers and teams understand the

standard PMA and the basic Project Management principles behind it. ProMap: this training aims at ensuring CAPEX project managers understand the addi-

tional steps and tools of this approach.

Regional training programs: PM seminars and certification programs: these programs are designed for Project

Managers dealing with the most important and complex projects in each country. The programs cover both hard Project Management skills (scheduling, Earned

Project Portfolio Management

Project Management

Training in Holcim

280 PROJECT MANAGEMENT METHODOLOGIES

Value Management, etc.) as well as soft competencies (leadership, stakeholder engagement, etc.). The courses include several pre- and post-seminar activities to maximize the impact of the new skills on their projects. The courses also facili- tate the creation of networks of Project Managers in geographical regions (Asia, Europe, Latin America, etc.).

Global training: Large CAPEX Project Management Seminar: this training serves as an exchange plat-

form where Project Managers and key stakeholders of largest CAPEX projects get together to exchange experiences and discuss best practices. The training is held at a construction site of the largest and most complex projects of Holcim.

Throughout the years, Holcim has been establishing Project Man- agement Offices (PMOs) to support its efforts in Project Management. Back in 1999, the first global Project Management Office was put in

place to develop project management methodologies and competencies. It focused on developing and implementing the standard Project Management Approach, providing a set of standard tools, developing competencies of personnel, provide mentoring/coaching for project managers and promoting Project Management within the organization.

In the late 2000s Holcim began setting up global, functional PMOs in the areas with the largest quantity and investments in projects: IT and CAPEX. These PMOs focus on:

● Monitoring & controlling project performance: reporting project status to upper management, monitoring project Key Performance Indicators, etc.

● Multiproject Management: coordinating between projects, identifying, selecting and prioritizing new projects, allocating resources between projects, etc.

● Organizational Learning: Managing archives of project documentation, conduct- ing post-project reviews and project audits, documenting and implementing les- sons learned, documenting and implementing risk management processes

The last PMO set up at group level focuses on strategic aspects of the business, in particular supporting the implementation of the key performance improvement program of Holcim, the so-called Holcim Leadership Journey, that aims at adding CHF 1.5 billion in profits by 2014 in order to improve the Return On Invested Capital after tax to at least 8%. The Holcim Leadership Journey PMO focuses on providing advice to upper manage- ment, participating in strategic and financial planning, monitoring achievement of project benefits and financial targets, etc.

Back in 1999, the Holcim Executive Committee made PMA a world- wide standard for its operations. Today, PMA and the CAPEX specific Project Management methodologies are the common language for

Project Management within the Group. The majority of the 5000+ Project Managers around the world make use of these approaches, adapting it to the nature of each individual project.

Project Management Offices

at Holcim

Results Achieved

Westfield Group 281

The application of these methodologies helped to: ● reduce time to execute projects. ● reduce cost overruns as well as costs for investments ● improve capability to execute projects ● improve collaboration and team work

These efforts in Project Management are helping the Holcim Group to maintain its posi- tion as one of the leaders in manufacturing cement and in the construction materials sector.

4.31 WESTFIELD GROUP

Developing a project management methodology may not be as complicated as one believes. There are activities that a company can do to make the process of methodology development easier. The information in this section has been provided by Janet Kungl, PMP, program manager, Westfield Group.

There are four essential building blocks that, if present, allow for the development of an effective project management methodology in a reasonably short period of time:

● Recognition and support at the executive level of the need for project management expertise

● Establishment of a project-focused organization with a vision of how the project management discipline will be integrated in the organization

● Leveraging the PMBOK® Guide for methodology development ● Commitment to developing and/or hiring skilled project managers

Westfield Insurance (westfieldinsurance.com), an insurance, banking and related financial services group of businesses headquartered in Westfield Center, Ohio, recognized in the late 1990s that the needs of the business had changed with regard to information technology and information systems projects. In order to meet those needs, senior man- agement recognized that project management capabilities were required as well as an organization that was designed to “partner” with the business and specialize in providing high-quality business and technology solutions. Westfield reorganized its information systems department to include a delivery unit focused on project delivery via the use of “virtual teams” comprised of technology and business team members.

In order to build the project management capability, one of Westfield’s project man- agers was assigned the project of developing the project management methodology. The approach was to use the PMBOK® Guide as a starting point and customize the processes to reflect Westfield’s culture and organizational structure. A key component of the ongoing support for the methodology was having the other project managers assigned to work on developing the processes.

The methodology starts with an explanation of the project phases (see Figure 4–45). Within each of these phases, the activities to be performed are defined and cross-refer- enced according to the nine knowledge areas of the PMBOK® Guide. An example of this

http://westfieldinsurance.com

282 PROJECT MANAGEMENT METHODOLOGIES

Project

Plan Accomplish

Initiation Conceive

Planning Define

Closure Finish

Execution Execute

Project Commitment

Funds Approved

Plans Approved

Major Go/No- Go Decision

Made

Product Accepted

Figure 4–45. Life-cycle phases.

Human Resource

Management

Project Manager Sourcing and Onboarding

Procurement Management

Communications Management

Risk Management

Scope Management

Quality Management

Cost Management

Time Management

Integration Management

Steering Committee

Selection Process

Project Set-up

High-Level Comm Plan

High-Level Resourcing

High-Level Scoping

High-Level Risk

Assessment

High-Level Cost/Benefit

Analysis

High-Level Scheduling

Project Charter

Initiate Customer Satisfaction

Form for Team

Collect Lessons Learned

Time

Project Startup Process

Corporate Prioritization

Process

Project Presentation

Process

In it

ia ti

on P

h as

Figure 4–46. Initiation phase activities.

Westfield Group 283

is shown in Figure 4–46. Each of the activities in Figure 4–47 can then be exploded into a flowchart showing the detailed activities needed for accomplishment of the deliverables for this activity. For example, the “Project Startup Process” activity in Figure 4–46 is cross-listed under Human Resource Management. The detailed activities are shown by the flowchart in Figure 4–47 Artifact templates and examples were also developed and are accessible in an electronic standard project folder. A continuous improvement process for the methodology was also implemented. Process improvements include the development of project success metrics, formalized project reviews, and defining the integration points with other processes [e.g., software development life cycle (SDLC), architecture gover- nance, and portfolio planning]. Over time, experienced project managers were recruited from other organizations to supplement internally developed project managers. To support their professional development, a project manager forum was established in 2006. This biweekly meeting allows the project managers to share best practices and lessons learned with their peers. A project management experience path was documented in 2007 to iden- tify key experiences and competencies that influence a project manager’s career trajectory and define the path into, through, and out of the project management career track (see Figure 4–48).

The project management function gained acceptance by successfully delivering proj- ects. Increased support from all levels of the organization is evident as more business cus- tomers request partnerships with teams led by project managers. Putting the right building

(1)

PM Formally Assigned to

Project

(4)

Review Project Start-up Results

w/PGM

(3)

Execute Project Start-up Process

Activities

(5)

Proceed to Formal Project

Planning Activities

(2)

PGM Schedules Kick-off Meeting

Figure 4–47. Project startup process.

“Feeder Roles”

Key Competencies

Technical Skills

Key Experiences

Project Management Track

IT Management Track

Figure 4–48. The project manager experience path.

284 PROJECT MANAGEMENT METHODOLOGIES

blocks in place created the foundation necessary for moving ahead. Currently, Westfield is experiencing increased success in delivery and improved overall results with key business initiatives. These results validate the value of project management. Building toward excel- lence in project management continues at Westfield Insurance.

4.32 HEWLETT-PACKARD

Doug Bolzman, Consultant Architect, PMP®, ITIL expert at Hewlett-Packard, discusses the foundation for a project management methodology:

Many clients have a project management methodology and in addition, most compa- nies have several methodologies that include project management disciplines. HP has been successful to integrate the definitive PM method into the other methodologies to allow for leveraging of PM standards and tools without duplication.

For the management of an enterprise IT environment, we have developed a client fac- ing framework titled the Information Technology Enterprise Management (ITEM). This framework assists the client to map their strategic direction into feasible releases. ITEM is a preintegrated framework of three models and a methodology as illustrated in Figure 4–49.

Prior to the Release of ITIL the 2007 edition, we identified a gap for managing the lifecycle of a service and developed what we called back then, the Release Management Methodology which consisted of 4 Stages (Planning, Integration, Deployment and Operations). Each Stage consists of Phases - Activities - Tasks. This is shown in Table 4–4.

Client I II III IV V

“WHAT”

The Infrastructure Management Model (IMM) systematically describes everything in the IT environment that needs to be managed.

“HOW”

The Release Management Methodology (RMM) describes how to release any type of modification into a

production IT environment in a structured, predictable manner.

“WHO” The IT Governance

Model. . .

Defines a collaborative

governance matrix that includes

all the roles required in an enterprise

IT environment.

“WHEN” The IT Maturity Model. . .

Measures the progress clients are making in setting and achieving goals related to the maturity of their IT environment.

Figure 4–49. An integrated approach to an integrated solution Activity phase mapping.

Hewlett-Packard 285

Since then, ITIL has introduced the lifecycle approach in the 2007 and 2011 editions. Their stages, Service Strategy, Service Design, Service Transition, Service Operation and Continual Service Operation are almost an exact match to our RMM stages. Since the rollout of 2007, we have maintained much of our collateral, since the new ITIL editions

TABLE 4–4. RELEASE METHODOLOGY STAGES

Stage Description

Planning The environment that is used to establish and manage the vision and strategic direction of the enterprise IT environment and proactively define the content and schedule of all IT releases. To provide a common means for the client and service providers to clearly and accurately plan the enterprise IT environment and manage all aspects of planning, estimating a release, and setting appropriate client expectations as to what each release will deliver.

Integration The environment that is used to finalize the design of a planned infrastructure release and perform all of the required testing and client validation, preparing the release to be deployed to the user community. To provide a common means for the client, EDS, and service providers to clearly and accurately validate the accuracy, security, and content of each release and to finalize all development. To provide the client a clear and accurate portrait of the outcome of the release and to set proper expectations of the deployment and operations activities, costs, and schedules.

Deployment The process that is used by the organization to implement new releases of the enterprise IT design (business, support, and technical components) to a target environment. To provide a common means for the client, EDS, and service providers to clearly and accurately schedule, deploy, and turn over to production the updated environment.

Operations The production environment that is used to sustain and maintain the IT components and configurable items that are part of the enterprise IT environment. To provide a stable IT environment that is required by the IT users to support their business roles and responsibilities.

PHASES Description: The sequential hierarchy of events should there be no need to deviate. This demonstrates the highest percentage of occurrence when the process is executed. Main intent for this chart is to expose the tasks subordinate to each activity.

Value: • Each work element can be identified and mapped internal or external to the component • All activities divided into tasks (justified) • All work is represented once (even if executed many times)

Structure: • All work elements have a unique identifier – Phase numbered by the thousands – Activity numbered by the thousands – Task numbered by the tens • All work elements preceded by Component Name Identifier (PL_1000; PL_1100) • Activity and Task Names kept relatively short; descriptive of work complete, not sentences • All tasks make up the scope of the activity • This is NOT a relationship model

A C T

IV IT

IE S

PL_1100 Activity Name

PL_3100 Activity Name

PL_2100 Activity Name

PL_1400 Activity Name

PL_3400 Activity Name

PL_2400 Activity Name

PL_1300 Activity Name

PL_3300 Activity Name

PL_2300 Activity Name

PL_1200 Activity Name

PL_3200 Activity Name

PL_2200 Activity Name

PL_1410 Task Name PL_1420 Task Name

PL_2000 Phase Name

PL_1000 Phase Name

PL_3000 Phase Name

Figure 4–50. Activity phase mapping.

286 PROJECT MANAGEMENT METHODOLOGIES

did not provide a comprehensive work breakdown structure. We simply matched our WBS to the overall goals and contents of the ITIL lifecycle framework. That is an illustration of how we continually evolve our practices and continually apply industry advances.

Basically we used the 9x9 rule as shown in Figure 4–50. If there are more than 9 phases across a stage and more than 9 activities to each phase (81 total units of work), then the scope will become too large, and our numbering scheme will become unstable.

4.33 DTE ENERGY

Henry Campbell, principal analyst, Customer Service Project Management Office and Time Menke, PMP, senior continuous improvement expert, DO Performance Management at DTE Energy, discusses the growth of project management at DTE Energy:

DTE Energy has created a common approach to ensure projects are implemented in a consistent manner. In the past, multiple project management methodologies were used throughout the enterprise. Several business units (specifically, the Customer Service (CS), Distribution Operations (DO), Gas Operations (GO), Operating Systems Strategy Group (OSSG), and Information Technology Services (ITS) groups) agreed that a “common” approach was needed.

The “CI Project Portfolio Management Process” (Figure 4–51) was developed utiliz- ing internal and external best practices. This approach was developed to provide a common framework for Continuous Improvement projects, however other types of projects (capital, ad-hoc, etc.) have also benefited from its structure. The process contains seven project management phases:

I. Identification

Potential projects are identified from a variety of sources including (but not limited to):

● Corrective Action Requests ● After Action Reviews ● Benchmarking ● Swarms

Projects deemed “Just Do It (JDI)” move past the Selection phase, directly into Initiation.

II. Selection

Potential projects are then ranked according to established Project Selection Criteria, business cases are created if applicable, the project is registered with the appropriate orga- nization and work is started on the project charter.

III. Initiation

The Initiation phase includes an assessment of the current state of business and why a change is needed. The Project Charter is refined and a decision to proceed is made. (Figure 4–52).

Figure 4–51. CI project portfolio management process.

287

Figure 4–52. Project charter template.

288

DTE Energy 289

The Project Charter contains:

● Project Description and Purpose ● Team Members and Roles ● Timeline ● Case for Change ● Assumptions, Risks and Challenges ● Current State Identification ● Ideal State Identification ● Gaps Assessment (Current and Ideal States) ● Major Milestones ● Metrics (Baseline and Target)

IV. Planning

The Planning phase establishes the desired state of the change with an emphasis on pro- cess, technical and cultural (re)design. Project managers are given several tools to assist with the overall project planning. One of the tools is the “Project Plan Template” (Figure 4–53). The template contains a standard planning methodology for Customer Service Projects. It also provides project managers with standard lag and lead times for certain resource intensive tasks. Each project manager customizes the template respective to their initiative.

The Project Plan Template contains:

● Key Project Activities ● Project Plan Elements (Common Activities, Start and Finish Dates, and Assigned

Resources) ● High Level Milestones

V. V/VI.Execution/Controlling

The actual process and procedural changes, technical coding, training, and necessary “course corrections” take place during the “Executing and Controlling” phases. If a project change is required that is related to scope, time, or financial resources, the project manager completes a “Change Request” (Figure 4–54) form. In addition, the project manager pro- vides a bi-weekly status, used to populate the “Project Performance Board” (Figure 4–55).

The Project Performance Board tracks:

● Project Information ● Project Name and ID ● Project Manager Name ● Percent Complete ● Phase Completion (Gate Approvals) ● Issues

VI.Closeout

During the “Closeout” phase, the project manager qualifies the actual project deliverables against the plan. The project is formally closed when the desired targets are attained. The project manager completes the “Project Closeout Report” as part of the closeout process.

290 PROJECT MANAGEMENT METHODOLOGIES

Figure 4–53. Project plan template.

DTE Energy 291

Figure 4–54. Project change template.

Figure 4–55. Project performance board.

292

ALSTOM 293

The Closeout Report contains:

● Project Summary ● Objectives Achieved ● Objectives Not Met ● Measures/Metrics ● Lessons Learned ● Further Actions

Every phase of the Common Project Management Process ends with a “Gate Approval” from the project sponsor. If approval is granted, the project formally moves to the next phase. Where appropriate, each business unit agrees to implement projects utilizing this common approach. While the process is the same across DTE Energy, the project management procedures are tailored to the needs of each specific department or organization.

4.34 ALSTOM22

The context and environment of integrated system projects have become increasingly challenging due to the global and complex struc- ture of these projects. Project integration is a key process assisting to

align stakeholders and to efficiently manage a project through various dimensions. In modern project management, these dimensions include, in addition to quality, costs, and deadline (QCD); financial, environmental, political, health and safety aspects.

The V-cycle is an operational methodology of project integration. This chapter describes how this methodology can be applied to large and complex industrial projects.

Customer Focus

V-cycle methodologies are increasingly used in project management to ensure an effec- tive realization of projects. Military and aerospace industries were the initiators of the implementation of this management model, building complex integrated systems based on innovative products and technologies.

The project cycle (see Figure 4–56) assists with the process of transforming customer requirements (Input) into expected values/deliverables (Output). This corresponds also to the project cycle of industrial projects building integrated systems. This project cycle can be supported by a V-cycle methodology.

The implementation of the V-Cycle reinforces the role of the customer in a project cycle by continuously recalling both, the initial requirements and the expected final value. Monitoring check points, called gates, increases customer visibility and involvement

Introduction

V-cycle Methodology in Project

Management of Industrial

Integrated Systems:

294 PROJECT MANAGEMENT METHODOLOGIES

during the project execution and validation. Consequently, the application of the V-cycle methodology helps project teams and organizations to be more customer focused.

Alignment of Project and Product Cycles

The generic steps of a product development cycle and the generic phases of a project man- agement cycle are shown on the V-cycle (See Figure 4–57). The alignment of the cycles, steps and phases ensures a controlled execution of a project. Therefore, the V-cycle assists project stakeholders and project managers to have a common understanding of the various stages of their projects and of the key check points to assess the physical progress, the risks and the deliverables.

Input (Customer

Requirements)

Output (Customer

Expected Value)

Transformation Process (Provider Added Value)

V-Cycle

Project Cycle

Output = Input Transformtion

Process +

Figure 4–56. V-cycle is a customer-to-customer process (C2C).

Initiation Execution Validation Handover Closeout

Procurement Manufacturing Assembly Testing Delivery

M1 M2 M3

Project Timeline

Project cycle phases

M4 M5 M6

Design

Product Cycles Steps

M1: Design start; M2: Procurement /Manufacturing start; M3: Assembly start; M4: Testing start; M5: Delivery start; M6: Closeout

Figure 4–57. Alignment of Project Management Phase and product steps.

Monitoring of Milestones and Key Dates

Milestones and key dates of industrial projects are generally related to major events of the project, such as notice to proceed (NTP), delivery on site, start of revenue service or commercial operations, but can also be related to physical progress, like design validation, main purchase orders approval, factory tests report acceptance. Some of these milestones and key dates are used to declare revenues or, as payment milestones with customers or suppliers.

The milestones M1 to M6 shown in Figure 4–57 correspond to critical events where key decisions need to be taken. These milestones are generally included in the critical path of the project. The monitoring of V-cycle milestones improves the solidity and the consistency of the physical progress.

Gate Reviews

V-cycle gates represent check points to assess the progress of the project. This is shown in Figure 4–58. These gates are implemented through formal project reviews with the participation of key stakeholders. They are monitored by an independent decision board (assessors) deciding on the Go/No Go. For enhanced transparency and alignment of key stakeholders, the gate review process is generally open to external stakeholders.

The gate reviews use the risk management process through assessment of all project activities against checklists. Critical risks or deliverables of a gate are assessed by KO questions; if declared no OK, the gate will be declared No Go.

Technology and Product Freeze Risks

The V-cycle model can be applied to technology, products and systems cycles. A technol- ogy V-cycle ends with the technology fully validated and mature to be used in a product. A product V-cycle ends with the product fully validated and mature to be used in an inte- grated system cycle. Both Technology and Product cycles are managed, generally, within R&D projects or programs. See Figure 4–59.

Initiation Execution Validation Handover Closeout

COGR

SGR VGR

PGR

QGR

Procurement Manufacturing

CGR

Assembly Testing Delivery

LEGEND

SGR: specification gate review

PGR: preliminary gate review

CGR: critical gate review

QGR: quality gate review

VGR: validation gate review

COGR: close out gate review

M1 M2 M3 M4 M5 M6

Design

6 Gates

Figure 4–58. V-cycle introduces gates at key events of the project.

ALSTOM 295

296 PROJECT MANAGEMENT METHODOLOGIES

The freeze (the upper portion of Figure 4–59) of a technology or a product is con- sidered the close out of the cycle. This close out specifies and validates the performance level, the costs, and the implementation limits as well as associated risks related to the technology or product. This freeze is, therefore, a crucial decision to perform a controlled system project. Generally, the lack of a technology or product cycle close out introduces high level of uncertainties in the scope definition, the time line and the risk management of system projects.

Most of industrial integrated system projects or programs using immature and not frozen technologies or products (the lower portion of Figure 4–59) are out of control from a planning, cost and risk point of view. Their baselines are difficult to establish and to validate by stakeholders during the project initiation phase. In addition, margin and/or schedule slippages often occur as consequence, leading to contractual claims and disputes between stakeholders. In some cases, these disputes can only be resolved through arbitra- tion or termination of the contract.

Gates Synchronization

The management of interfaces is one of the key challenges in project integration manage- ment. In large and complex projects usually several interfaces need to be managed due to the large number of work packages allocated to project stakeholders. A top-down synchro- nization applies to specification/requirement gates (left leg of the V-cycle), a bottom-up approach applies to assembly and validation gates (right leg of the V-cycle).

Project specifications have to be frozen with the customer in a specification gate review (SGRP) before freezing the work package specifications with stakeholders

Freeze Freeze

Technology cycle

Technology, Product and System Cycle

Product cycle System cycle (project)

The transition between-V-cycles must have a maturity freeze

Not frozen technology

Not frozen product

Technology cycle Product cycle System cycle (project)

Overlaps of V-cycles leading to project instability

Figure 4–59. Technology, product and system cycle.

Cassidian: Golden Rules in Project Management 297

(SGRsub). The sub-system work package is validated (VGRsub) before its integration to system project and validation (VGRp). See Figure 4–60.

The synchronization of V-cycles gates allows the alignment of stakeholders in terms of physical progress and interface management at all stages of the project.

4.35 CASSIDIAN: GOLDEN RULES IN PROJECT MANAGEMENT23

All of the companies discussed in this chapter have excellent methodologies for proj- ect management. When a company captures best practices in project management and relates it to the methodology, then the company can develop “Golden Rules in Project Management.” The remainder of this section has been provided by Cassidian. Cassidian provides excellent examples of how project management should work for the benefits and value to be achieved. This material is also representative of what the outcome may be from the journey to excellence in project management as discussed in Chapter 3.

The Golden Rules for Project Management are the top-level element of the Programme Management over project life cycle. They are devel- oped under the requirement to be easily understandable and applicable

for every project/programme. The system of having Golden Rules for Programme Management provides a set of rules which are common for all projects and programmes.

They form a basic body of regulations which have to be followed without exception. They are written in a way that they fit both the highly complex, high-volume, high-risk projects [and] the low-budget [ones] as such resource limited projects.

Why Golden Rules for Project

Management?

Project (system)

VGRp

VGRsub

VGRcomp

SGRcomp

SGRsub

SGRp

Work package (Sub-system)

Work package ( Component)

Figure 4–60. Synchronization process of V-cycles through gates alignment.

298 PROJECT MANAGEMENT METHODOLOGIES

They describe the major areas where all projects have to cover the same level of performance in order to increase the quality of the projects/programmes. Following these rules shall lead to a common basic quality standard which in the end shall help to avoid any critical deficiencies.

Finally, these Golden Rules shall help to increase the overall project/programme excellence with respect to “time – cost – quality” requirements and are the backbone of the process “Program & Project Management.”

Golden Rule: The Project Manager is fully responsible for the project in terms of cost, cash, time and quality (as indicated in the Project

Charter) and is actively supported by his/her sponsor in the line management. Target: Empowerment of Project Manager and clear definition of responsibilities

within Proposal and Execution Team against other functional areas, but also obliging the Project Manager to fulfill his responsibility.

Golden Rule: An adequately qualified Project Manager shall be assigned by the Organization, actively involved during proposal preparation and contract negotiation.

Target: Foster active co-operation of proposal and project execution responsible in order to increase transparency and lossless transfer from initiating to planning phase.

Golden Rule: Project Management responsibility, based on the contract related baselines and project charter (e.g., cost, scope and schedule, prefunding agreements, final project categorization), shall be handed over officially from the bid team to the project team within maximum 10 working days after contract signature.

Target: Fast transfer, full set of documents available, long-term target is fixed time period. By being within these 10 days, proof is gained that proposal team provided adequate quality

Golden Rule: The Project Manager shall establish a formal, realistic and measureable integrated project plan during the project planning phase not later than three months after contract signature. A performance measurement baseline (cost, scope and schedule) shall be established, against which the project progress is measured and reported on a monthly basis.

Target: Ensure integrated planning including project schedule, major & minor mile- stones, milestone/dependencies, cost planning, resource planning and baselines. Establish Earned Value Management as the basis to monitor and to track project planning based on an initial baseline.

Golden Rule: The Proposal Manager (before contract signature) and afterwards the Project Manager (in the Project Execution) own the risks and opportunities of the project and ensure they are managed proactively. The Chief Engineer supports in that task by tak- ing responsibility for the technical risks and opportunities.

Target: Ensure proper risk and opportunity management within the projects following defined rules and regulations from project initiation.

Golden Rule: The project scope and targets shall be managed with focus on customer requirements, and a dedicated Requirements Management shall be established in order to avoid scope creep. In addition change & configuration management shall be fully in place prior to Project Execution

Target: Increase of Requirements Management both against gold-plated and non- compliances. Strong focus on customer requirements necessary as well as definition of

Golden Rules for Project

Management

When Traditional Methodologies May Not Work 299

project scope and targets through complete project life cycle. Enhance of early customer acceptance of project requirements in order to avoid future misunderstanding.

Golden Rule: The Project Manager shall establish communications (formalized within Project Communication Plan) to facilitate working as an Integrated Project Team and ensure an optimum information flow within the team.

Target: Everyone within project team knows their ways of communication and their internal or external interfaces. Reporting is clearly establish and for any project stakeholders.

4.36 WHEN TRADITIONAL METHODOLOGIES MAY NOT WORK

While methodologies serve a viable purpose, traditional methodologies may not work well when projects become distressed and rapid action is required to save a failing project. In such a case, other factors may become more important than following the traditional life- cycle phases.

Today’s projects and programs have become so complex that, on a daily basis, effective project recovery techniques may be required regardless of the country you are in or the business base of your com-

pany. We must be willing to face different or unforeseen situations that are not related to citizenship, the language we speak, or the experiences we all have. We are affected by a multitude of internal and external risks that can become real issues during project execu- tion.

Below some insights from Dr. Alexandre Sörensen Ghisolfi, who for many years has collaborated with the International Institute for Learning and faced these challenges in the global project management community. Following are some of his best practices and things to think about.

Project recovery can be source of many ideas and lessons learned. When projects require recovery, they are normally accompanied by conflicts, disagreements and even fights.

When projects are in trouble, you will probably get a better understanding of who the people really are, and whether they are truly committed to the organization. In other words, when things go well we can easily see smiles and we often know the best side of people. When things go bad, a different individual usually emerges.

In this kind of environment we learned that recovery usually requires a team of experts and effective project management leadership for recovery to be successful. Not all project managers have skills in recovery project management techniques. Trust in both the proj- ect manager and the solution is probably the most essential criteria for recovery to work. Furthermore, dedicated project management teams are usually essential.

When conditions indicate that failure may be imminent, we must to be able to clearly change the cultural aspects where bad feelings can and will surface. In this way, we may be able to create a new culture conducive to recovery.

Recovery project management teams are composed of senior people, professional experts, young people with new ideas, new talent that recognizes that successful

Insights about Recovering

Troubled Projects and

Programs

300 PROJECT MANAGEMENT METHODOLOGIES

recovery may benefit their career goals, and recovery project managers with leadership skills. They must all work together such that we can convert a bad feeling environment to an environment where people believe we can still bring back the project and deliver what is required. If the team succeeds successfully, this will, even more, make the team proud of their accomplishments. This can develop a great buy-in feeling that remains over a lifetime.

During recovery, we must consider two different environments:

● Human behaviors ● Application of technical expertise

Each project that is in trouble has very different scenarios and alterna- tives. The recovery process depends about your experience and ability to find solutions. It also depends on how well you can influence the

different stakeholders to bring them to an agreed upon vision where they recognize that the game can be won. For successful solutions that are based upon the different contributions of the team members, the project manager needs to know how to extract the best from them or influence them to achieve what is expected by the leader.

But before you start to identify and evaluate different alternatives, it would be good to consider some different aspects related to human behaviors which strongly influences the output. For simplicity sake, we will not talk about politics, hierarchy, knowledge and other aspects that influence human behaviors, but we suggest you at least clearly understand what kind of company and team you have. We can try to understand it through the study of organizational maturity.

Do you have a mature team? Is the company likewise mature in project management?

Some best practices you should always try to put in place: ● The organizational maturity of a company and/or team will directly affect the out-

comes, so the more mature and professional team you have, the better the capabil- ity to recover failing programs. The best practice is to first deeply analyze company and team member maturity; having results at your disposal, you will be able to identify gaps, issues and conditions that may require change. After the maturity analysis, and having maturity reports in your hands, it will be necessary to prepare a recovery plan and show the project sponsors justification why some important actions must urgently take place. When working in matrix organizations, we can face important difficulties related to resources that are not directly part of our proj- ect organizational structure and which may have different interests in the outcome of the project.

Additional best practices would certainly be: ● Remind people about the necessity for change. If required, let’s remind people

every day about our mission and daily tasks. ● Give training to people as appropriate and act as a role model for the attitudes

that are necessary. It is probably the best way to improve team and organizational maturity.

Human Behaviors

When Traditional Methodologies May Not Work 301

● Empower team members; make our challenge, their challenge. ● Make sure the entire team is deeply committed to the challenge of bringing back

good results.

Ensure that the communications processes are effective. You can communicate less or even more, but at the end of the day communication must be effective. It depends again about your company and team maturity and about how much we are committed to the project. Truly committed team members will focus on communication. Communication must naturally flow.

When talking about processes and work, flexibility is important. But on other side, discipline to delivery key critical activities must be in place. Again, here the team organi- zational structure, departments, and suppliers interests can have a huge impact for good and bad things to happen.

Human behavior is probably more challenging than the application of the required technical expertise.

The study of organizational and team maturity can point use to a more secure way of proceeding. Since faster and better performance needs to be in place quickly, you cannot fail again; actions must be effective.

On the technical side, when recovering projects, it is may be even more important to clearly know or define priorities.

You will probably put emphasis on the quality criteria (i.e., quality acceptance crite- ria) of the products you need to delivery; undoubtedly you cannot sacrifice quality. The equilibrium of constraints will depend upon your negotiation abilities, as well the contrac- tual conditions you may have with your customers.

You may not be able to delivery everything that is required by the project because sacrifices must be made. Perhaps you will delivery results differently when compared to the project baselines. A recovery plan needs to be in place immediately.

What to sacrifice? Costs? Project costs? Product costs? Timing? Downgrade speci- fications? Change product/project delivery strategies? Communication downgrading? Documentation writing, presentations?

Many factors can significantly impact success and increase the issues when having trouble projects. Here are some additional best practices you may try to put in place:

● You will probably be secure that emphasis in risk management is a must have condition. In troubled projects, risk management becomes even more important. When you encourage the team to perform a plan driven by risk management, the team is already defining priorities, which are the ones resulting from risk analysis. Risk management, as a holistic vision, can drive everything else around, such as: scope, time, team organization, skills, communications, etc.

● Put the best people you have on the most difficult activities first. ● Put emphasis on critical activities to shorten their respective durations.

Application of Technical

Expertise

302 PROJECT MANAGEMENT METHODOLOGIES

● Avoid bringing new people on board that lack sufficient experience; but on the other hand, you could bring on board new people where you need to change the cultural aspects and/or interests in place.

● Avoid conflict of interests; we cannot lose time or waste resources solving unnec- essary issues. Work even harder with your sponsor to gain their support.

● Adaptation of best practices available in the project scenario is a key point also. You must find out a way, often “out of the box,” to make your team perform things that possibly never have been in practice before. Challenge your team members; ask them what they think and how we can start to work in different ways. In this way you are developing the buy-in feeling.

● You will probably look for quick wins. You will soon observe that some best practices the team tried to apply have been useful and some other ones not so well received. Replace or adopt best practices with no previous adoption and not necessarily applicable to your project, by other ones where you can quickly have satisfactory results. Fast identification of what is working and what is not working is crucial to recover the time lost.

Successfully recovering bad projects can be an amazing experience, and when you have a team with the proper mindset in place, it can significantly contribute to increasing enterprise and team project management maturity. Great results can be achieved on future projects by preventing them from entering into critical situations that can lead to failure.

303

5 Integrated Processes

5.0 INTRODUCTION

Companies that have become extremely successful in project management have done so by performing strategic planning for project management. These companies are not happy with just matching the compe- tition. Instead, they opt to exceed the performance of their competitors. To do this on a continuous basis requires processes and methodologies that promote continuous rather than sporadic success.

Figure 5–1 identifies the hexagon of excellence. The six components identified in the hexagon of excellence are the areas where the companies excellent in project management exceed their competitors. Each of these six areas is discussed in Chapters 5 – 10 . We begin with integrated processes.

Figure 5–1. Six components of excellence. Source: Reprinted from H. Kerzner: In Search of Excellence in Project Management, Hoboken, NJ: Wiley, 1998, p. 14.

Integrated Processes

Informal Project Management

Behavorial Excellence

Culture

Management SupportTraining

and Education

304 INTEGRATED PROCESSES

5.1 UNDERSTANDING INTEGRATED MANAGEMENT PROCESSES

As we discussed in Chapter 1 , since 1985 several new management processes (e.g., con- current engineering) have supported the acceptance of project management. The most important complementary management processes and the years they were introduced are listed below:

● 1985: Total quality management (TQM) ● 1990: Concurrent engineering ● 1992: Employee empowerment and self-directed teams ● 1993: Reengineering ● 1994: Life-cycle costing ● 1995: Change management ● 1996: Risk management ● 1997: 1998: Project offi ces and centers of excellence ● 1999: Co-located teams ● 2000: Multinational teams ● 2001: Maturity models ● 2002: Strategic planning for project management ● 2003: Intranet status reporting ● 2004: Capacity-planning models ● 2005: Six Sigma integration with project management ● 2006: Virtual project management teams ● 2007: Lean/agile project management ● 2008: Best practices libraries ● 2009: Project management business process certifi cation ● 2010: Managing complex projects ● 2011: Governance by committees ● 2012: Competing constraints using a value component ● 2013: Advances in metrics management

The integration of project management with these other management processes is key to achieving sustainable excellence. Not every company uses every process all the time. Companies choose the processes that work the best for them. However, whichever processes are selected, they are combined and integrated into the project management methodology. Previously, we stated that companies with world-class methodologies try to employ a single, standard methodology based upon integrated processes. This includes business processes as well as project management–related processes.

The ability to integrate processes is based on which processes the company decides to implement. For example, if a company implemented a stage gate model for project management, the company might fi nd it an easy task to integrate new processes such as concurrent engineering. The only precondition would be that the new processes were not treated as independent functions but were designed from the onset to be part of a project management system already in place. The four-phase model used by the General Motors Powertrain Group and the PROPS model used at Ericsson Telecom AB readily allow for the assimilation of additional business and management processes.

Evolution of Complementary Project Management Processes 305

Previously, we stated that project managers today are viewed as managing part of a business rather than just a project. Therefore, project managers must understand the busi- ness and the processes to support the business as well as the processes to support the proj- ect. Companies such as Visteon and Johnson Controls understand this quite well and have integrated business processes either into or with their project management methodology.

This chapter discusses each of the management processes listed and how the processes enhance project management. We then look at how some of the integrated management processes have succeeded using actual case studies.

5.2 EVOLUTION OF COMPLEMENTARY PROJECT

MANAGEMENT PROCESSES

Since 1985, several new management processes have evolved in parallel with project management. Of these processes, TQM and concurrent engineering are the most relevant. Companies that reach excellence are the quickest to recognize the synergy among the many management options available today. Companies that reach maturity and excellence the quickest are those that recognize that certain processes feed on one another. As an example, consider the seven points listed below. Are these seven concepts part of a project management methodology?

● Teamwork ● Strategic integration ● Continuous improvement ● Respect for people ● Customer focus ● Management by fact ● Structured problem solving

These seven concepts are actually the basis of Sprint ’s TQM process. They could just as easily have been facets of a project management methodology.

During the 1990s, Kodak taught a course entitled Quality Leadership. The fi ve prin- ciples of Kodak ’s quality leadership program included:

Customer Focus “We will focus on our customers, both internal and external, whose inputs drive

the design of products and services. The quality of our products and services is deter- mined solely by these customers.”

Management Leadership “We will demonstrate, at all levels, visible leadership in managing by these

principles.”

Teamwork “We will work together, combining our ideas and skills to improve the quality of

our work. We will reinforce and reward quality improvement contributions.”

306 INTEGRATED PROCESSES

Analytical Approach “We will use statistical methods to control and improve our processes. Data-based

analyses will direct our decisions.”

Continuous Improvement “We will actively pursue quality improvement through a continuous cycle that

focuses on planning, implementing, and verifying of improvements in key processes.”

Had we looked at just the left column, we could argue that these are the principles of project management as well.

Figure 5–2 shows what happens when an organization does not integrate its processes. The result is totally uncoupled processes. Companies with separate methodologies for each process may end up with duplication of effort, possibly duplication of resources, and even duplication of facilities. Although there are several processes in Figure 5–2 , we will focus on project management, TQM, and concurrent engineering only.

As companies begin recognizing the synergistic effects of putting several of these processes under a single methodology, the fi rst two processes to become partially coupled are project management and TQM, as shown in Figure 5–3 . As the benefi ts of synergy and integration become apparent, organizations choose to integrate all of these processes, as shown in Figure 5–4 .

Figure 5–2. Totally uncoupled processes.

Project Management

Total Quality Management

Concurrent Engineering

PMBOK®

Processes

Other Business Processes De

cis ion

Su pp

ort Pr

oc ess

Figure 5–3. Partially integrated processes.

Concurrent Engineering

Other Processes

Total Quality Management

Project Management

Evolution of Complementary Project Management Processes 307

Excellent companies are able to recognize the need for new processes and integrate them quickly into existing management structures. During the early 1990s, integrating project management with TQM and concurrent engineering was emphasized. Since the middle 1990s, two other processes have become important in addition: risk manage- ment and change management. Neither of these processes is new; it ’s the emphasis that ’s new.

During the late 1990s, Steve Gregerson, formerly vice president for product devel- opment at Metzeler Automotive Profi le System, described the integrated processes in its methodology 1 :

Our organization has developed a standard methodology based on global best practices within our organization and on customer requirements and expectations. This methodol- ogy also meets the requirements of ISO 9000. Our process incorporates seven gateways that require specific deliverables listed on a single sheet of paper. Some of these deliver- ables have a procedure and in many cases a defined format. These guidelines, checklists, forms, and procedures are the backbone of our project management structure and also serve to capture lessons learned for the next program. This methodology is incorporated into all aspects of our business systems, including risk management, concurrent engineer- ing, advanced quality planning, feasibility analysis, design review process, and so on.

Clearly, Metzeler sees the integration and compatibility of project management sys- tems and business systems. Another example of integrated processes is the methodology employed by Nortel. During the late 1990s, Bob Mansbridge, then vice president, supply chain management at Nortel Networks, believed 2 :

Nortel Networks project management is integrated with the supply chain. Project manage- ment ’s role in managing projects is now well understood as a series of integrated pro- cesses within the total supply chain pipeline. Total quality management (TQM) in Nortel Networks is defined by pipeline metrics. These metrics have resulted from customer and external views of “best-in-class” achievements. These metrics are layered and provide con- nected indicators to both the executive and the working levels. The project manager ’s role is to work with all areas of the supply chain and to optimize the results to the benefit of the project at hand. With a standard process implemented globally, including the monthly

1. H. Kerzner, Advanced Project Management: Best Practices on Implementation , Hoboken, NJ: Wiley, 2000, p. 188.

2. Ibid.

Figure 5–4. Totally integrated processes.

Concurrent Engineering

Other Processes

Total Quality Management

Project Management

308 INTEGRATED PROCESSES

review of pipeline metrics by project management and business units, the implementation of “best practices” becomes more controlled, measurable, and meaningful.

The importance of integrating risk management is fi nally being recognized. According to Frank T. Anbari, professor of project management, Drexel University:

By definition, projects are risky endeavors. They aim to create new and unique products, services, and processes that did not exist in the past. Therefore, careful management of project risk is imperative to repeatable success. Quantitative methods play an important role in risk management. There is no substitute for profound knowledge of these tools.

Risk management has been a primary focus among health-care organizations for decades, for obvious reasons, as well as fi nancial institutions and the legal profession. Today, in organizations of all kinds, risk management keeps us from pushing our problems downstream in the hope of fi nding an easy solution later on or of the problem simply going away by itself. Change management as a complement to project management is used to control the adverse effects of scope creep: increased costs (sometimes double or triple the original budget) and delayed schedules. With change management processes in place as part of the overall project management system, changes in the scope of the original proj- ect can be treated as separate projects or subprojects so that the objectives of the original project are not lost.

Today, excellent companies integrate fi ve main management processes (see Figure 5–5 ):

● Project management ● Total quality management ● Risk management ● Concurrent engineering ● Change management

Self-managed work teams, employee empowerment, reengineering, and life-cycle costing are also combined with project management in some companies. We briefl y discuss these less widely used processes after we have discussed the more commonly used ones.

Figure 5–5. Integrated processes for twenty-first century.

Project Management

Total Quality Management

Risk Management

Change Management

Concurrent Engineering

Zurich America Insurance Company 309

5.3 ZURICH AMERICA INSURANCE COMPANY 3

One of the benefi ts of having integrated processes is that it allows for more comprehensive and realistic contingency planning. Kathleen Cavanaugh states:

As we know, simply put, the goal of all PMOs is to deliver projects on time and on bud- get. There is increased scrutiny placed on projects these days and many companies have enacted a protective governance gauntlet to help ensure the right projects come to fruition. With the time to market push/shove, it is easy for projects budgets and end dates to be estimated, even “promised” too soon much to the unease of the Project Manager. To help alleviate this potential heartbreak, the IT PMO at Zurich American Insurance Company has implemented a project contingency process for both duration and dollars.

The contingency process helps to mitigate the risk of known unknowns within the scope of a project. Since we are part of the global Zurich Financial Services Group we have a rather strict governance process that takes time and money to navigate. Once you make it through the gauntlet you don ’t really want to go back for re-approvals, date exten- sion authorizations, etc., so, proper planning for risks and project changes is imperative.

The contingency process uses a determination matrix that considers particular risk factors such as resources and technology complexity just to name a couple. It is designed to help the PM assign the appropriate amount of contingency needed for both dollars and duration. The concept is nothing new but is still not widely accepted as a necessity.

The goal is not only to protect us from time consuming project governance submis- sions, but also to move away from padding individual estimates. Before this contingency approach was introduced, some Project Managers buried contingency within their esti- mates. The major disadvantage of this is that because the contingency is “hidden,” there is no systematic process to release funds back into the project funding pool as risks lessen throughout the project. Now, contingency is kept separate in the project plan so that we can have better insight into where and why original estimates were off. Only then can we fi nd the root cause and improve upon the estimating approach.

One important thing to note is that the customer takes part in determining the need for contingency so they have a good understanding of why it is so critical to the success of the project. The process makes contingency transparent and once the customer understands that contingency dollars cannot be used without their acknowledgement, they are more open to understanding the inherent changes that occur during the life of a project.

Contingency should be actively managed as the project progresses. Each month when project risks are re-assessed and risk probability decreases, the amount of contingency should be adjusted accordingly in both budget and schedule. It is expected that contingency would be released from the project if it is determined to no longer be needed based on the updated risk assessment. This allows money to be available for other efforts in the company.

To summarize, the bullet points below are an outline of the steps taken to effectively use the contingency process.

Plan: The IT Project Manager works with the Business Project Manager and project team using the determination matrix to calculate the appropriate contingency percent when the project is ready to go for full funding.

Document/Communicate: PM updates the project plan and Usage Log to document and communicate the contingency fi gures.

Approve: The Sponsor is responsible for providing sign-off before contingency is used.

3. Material provided by Kathleen Cavanaugh, PMP, Zurich—ZNA PMO Lead

310 INTEGRATED PROCESSES

Manage: The Project Manager maintains the Usage Log as contingency is consumed and other contingency data is updated each month along with the risk assessment.

Release: Contingency funds are released back into project funding pool as risks decrease. Overall, this process addresses the age old problem of project work starting before

everything that needs to be known is known and gives PMs a fi ghting chance to deliver on- time and on-budget in this ever changing environment. Because after all, change happens.

5.4 TOTAL QUALITY MANAGEMENT

During the past decade, the concept of TQM has revolutionized the operations and manu- facturing functions of many companies. Companies have learned quickly that project management principles and systems can be used to support and administer TQM pro- grams and vice versa. Ultimately excellent companies have completely integrated the two complementary systems.

The emphasis in TQM is on addressing quality issues in total systems. Quality, however, is never an end goal. Total quality management systems run continuously and concurrently in every area in which a company does business. Their goal is to bring to market products of better and better quality and not just of the same quality as last year or the year before.

Total quality management was founded on the principles advocated by W. Edwards Deming, Joseph M. Juran, and Phillip B. Crosby. Deming is famous for his role in turn- ing postwar Japan into a dominant force in the world economy. Total quality management processes are based on Deming ’s simple plan–do–check–act cycle.

The cycle fi ts completely with project management principles. To fulfi ll the goals of any project, fi rst you plan what you ’re going to do, then you do it. Next, you check on what you did. You fi x what didn ’t work, and then you execute what you set out to do. But the cycle doesn ’t end with the output. Deming ’s cycle works as a continuous-improvement system, too. When the project is complete, you examine the lessons learned in its planning and execution. Then you incorporate those lessons into the process and begin the plan–do– check–act cycle all over again on a new project.

Total quality management also is based on three other important elements: customer focus, process thinking, and variation reduction. Does that remind you of project manage- ment principles? It should. The plan–do–check–act cycle can be used to identify, validate, and implement best practices in project management.

One of the characteristics of companies that have won the prestigious Malcolm Baldrige Award is that each has an excellent project management system. Companies such as Motorola, Armstrong World Industries, General Motors, Kodak, Xerox, and IBM use integrated TQM and project management systems.

In the mid-1990s, during a live videoconference on the subject, “How to Achieve Maturity in Project Management,” Dave Kandt, Group vice president for quality and program management at Johnson Controls during the time of the videoconference, com- mented on the reasons behind Johnson Controls’ astounding success:

We came into project management a little differently than some companies. We have combined project management and TQC (total quality control) or total quality manage- ment. Our first design and development projects in the mid-1980s led us to believe that

Total Quality Management 311

our functional departments were working pretty well separately, but we needed to have some systems to bring them together. And, of course, a lot of what project management is about is getting work to flow horizontally through the company. What we did first was to contact Dr. Norman Feigenbaum, who is the granddaddy of TQC in North America, who helped us establish some systems that linked together the whole company. Dr. Feigenbaum looked at quality in the broadest sense: quality of products, quality of systems, quality of deliverables, and, of course, the quality of projects and new product launches. A key part of these systems included project management systems that addressed product introduc- tion and the product introduction process. Integral to this was project management train- ing, which was required to deliver these systems.

We began with our executive offi ce, and once we had explained the principles and philosophies of project management to these people, we moved to the management of plants, engineering managers, analysts, purchasing people, and of course project manag- ers. Only once the foundation was laid did we proceed with actual project management and with defi ning the role and responsibility so that the entire company would understand their role in project management once these people began to work. Just the understand- ing allowed us to move to a matrix organization and eventually to a stand-alone project management department. So how well did that work? Subsequently, since the mid-1980s, we have grown from 2 or 3 projects to roughly 50 in North America and Europe. We have grown from 2 or 3 project managers to 35. I don ’t believe it would have been possible to manage this growth or bring home this many projects without project management sys- tems and procedures and people with understanding at the highest levels of the company.

In the early 1990s we found that we were having some success in Europe, and we won our fi rst design and development project there. And with that project, we carried to Europe not only project managers and engineering managers who understood these prin- ciples but also the systems and training we incorporated in North America. So we had a company-wide integrated approach to project management. What we ’ve learned in these last 10 years that is the most important to us, I believe, is that you begin with the systems and the understanding of what you want the various people to do in the company across all functional barriers, then bring in project management training, and last implement project management.

Of course, the people we selected for project management were absolutely critical, and we selected the right people. You mentioned the importance of project managers understanding business, and the people that we put in these positions are very carefully chosen. Typically, they have a technical background, a marketing background, and a business and fi nancial background. It is very hard to fi nd these people, but we fi nd that they have the necessary cross-functional understanding to be able to be successful in this business.

At Johnson Controls, project management and TQM were developed concurrently. Dave Kandt was asked during the same videoconference whether companies must have a solid TQM culture in place before they attempt the development of a project management program. He said:

I don ’t think that is necessary. The reason why I say that is that companies like Johnson Controls are more the exception than the rule of implementing TQM and project manage- ment together. I know companies that were reasonably mature in project management and then ISO 9000 came along, and because they had project management in place in a reasonably mature fashion, it was an easier process for them to implement ISO 9000

312 INTEGRATED PROCESSES

and TQM. There is no question that having TQM in place at the same time or even first would make it a little easier, but what we ’ve learned during the recession is that if you want to compete in Europe and you want to follow ISO 9000 guidelines, TQM must be implemented. And using project management as the vehicle for that implementation quite often works quite well.

There is also the question of whether or not successful project management can exist within the ISO 9000 environment. According to Dave Kandt:

Not only is project management consistent with ISO 9000, a lot of the systems that ISO 9000 require are crucial to project management ’s success. If you don ’t have a good quality system, engineering change system, and other things that ISO requires, the project man- ager is going to struggle in trying to accomplish and execute that project. Further, I think it ’s interesting that companies that are working to install and deploy ISO 9000, if they are being successful, are probably utilizing project management techniques. Each of the different elements of ISO requires training, and sometimes the creation of systems inside the company that can all be scheduled, teams that can be assigned, deliverables that can be established, tracked, and monitored, and reports that go to senior management. That ’s exactly how we installed TQC at Johnson Controls, and I see ISO 9000 as having a very similar thrust and intent.

While the principles of TQM still exist, the importance of Six Sigma concepts has grown. According to Eric Alan Johnson and Jeffrey Alan Neal 4 :

Total Quality Management

In addition to the TQM PDCA cycle, the continuous improvement DMAIC (Define, Measure, Analyze, Improve, and Control) model can be used to improve the effectiveness of project management. This model has been successfully employed for Six Sigma and Lean Enterprise process improvement, but the basic tenets of its structured, data enabled problem solving methodology can also be employed to improve the success of project management.

By assessing data collected on both project successes and root cause of project failures, the DMAIC model can be used to improve and refi ne both the management of projects and the ultimate quality of products produced.

In the defi ne phase, specifi c project defi nition and requirements are based on data gathered from the customer and on historical project performance. Gathering as much information as possible in these areas allows the project manager to concentrate on what is truly important to the customer while reviewing past performance in order to avoid the problems of and continue to propagate the successes of past projects. In the defi ne stage, available data on the people, processes, and suppliers is reviewed to determine their abil- ity to meet the cost, quality and schedule requirements of the project. The defi ne phase, in short, should assess not only the requirements of the customer, but should also assess the capability of your system to meet those requirements. Both of these assessments must

4. Eric Alan Johnson, Satellite Control Network Contract Deputy Program Director, AFSCN, and the winner of the 2006 Kerzner Project Manager of the Year Award; and Jeffrey Alan Neal, Blackbelt/Lean Expert and Lecturer, Quantitative Methods, University of Colorado, Colorado Springs.

Total Quality Management 313

be based on data gathered by a dedicated measurement system. Additionally, the defi ne stage should establish the metrics to be used during projects execution to monitor and control project progress. These metrics will be continually evaluated during the measure and analysis phase (these DMAIC phase are concurrent with the PMI phases of project management).

The next phase of the DMAIC model, measure, data (the metrics identifi ed in the defi ne stage) from the measurement system is continually reviewed during project execu- tion to ensure that the project is being effectively managed. The same data metrics used in the defi ne stage should be updated with specifi c project data to determine how well the project is progressing. The continual assessment of project performance, based on data gathered during the execution phase, is the key to data enabled project management.

During the continual measurement of the progress of the project, it is likely that some of these key metrics will indicate problems either occurring (present issues) or likely to occur (leading indicators). These issues must be addressed if the project is to execute on time, and on budget to meeting requirements. This is where the analysis aspect of the DMAIC model becomes a critical aspect of project management. The analysis of data is an entire fi eld onto itself. Numerous books and articles have addressed the problem of how to assess data, but the main objective remains. The objective of data analysis is to turn data into usable information from which to base project decisions.

The methods of data analysis are specifi c to the data type and to the specifi c questions to be answered. The fi rst step (after the data have been gathered) is to use descriptive tech- niques to get an overall picture of the data. This overall picture should include a measure of central tendency (i.e., mean), and a measure of variation such as standard deviation. Additionally, graphical tools such as histograms and Pareto charts are useful in summariz- ing and displaying information. Tests of signifi cance and confi dence interval development are useful in determining if the results of the analysis are statistically signifi cant and for estimating the likelihood of obtaining a similar result.

In the continual monitoring of processes, control charts are commonly used tools to assess the state of stability of processes and to determine if the variation is signifi cant enough to warrant additional investigation. In addition, control charts provide a basis for determining if the type of variation is special cause or common cause. This distinction is critical in the determination of the appropriate corrective actions that may need to be taken.

To provide a basis for the identifi cation of potential root causes for project per- formance issues, tools such Failure Modes and Effects Analysis and the Fishbone (also known as the Ishkawa) diagram can be used to initiate and document the organized thought process needed to separate main causes of non-conformities from contributing causes.

If the data meets the statistical condition required, such tests as Analysis of Variance (ANOVA) and regression analysis can be extremely useful in quantifying and forecasting process and project performance. Because ANOVA (the General Linear Model) can be used to test for mean differences of two or more factors or levels, ANOVA can be used to identify important independent variables for various project dependent variables. Various regression models (simple linear, multiple linear and binary) can be used to quantify the different effects of independent variable on critical dependent variable that are key to project success.

In short, this phase uses the data to conduct an in-depth and exhaustive root cause investigation to fi nd the critical issue that was responsible for the project execution prob- lem and effects upon the project if left uncorrected.

The next phase involves the process correction and improvement that addressed the root cause identifi ed in the previous phase. This is corrective action (fi x the problem you are facing) and preventive action (make sure it or one like it doesn ’t come back). So, once

314 INTEGRATED PROCESSES

the root cause has been identifi ed, both corrective and preventive process improvement actions can be taken to address current project execution and to prevent the reoccurrence of that particular issue in future projects. To ensure that current projects do not fall victim to that problem recently identifi ed and that future projects avoid the mistakes of the past, a control plan is implemented to monitor and control projects. The cycle is repeated for all project management issues.

The continuing monitoring of project status and metrics along with their continual analysis and correction is an ongoing process and constitutes the control phase of the project. During this phase, the key measurements instituted during the initiation phase are used to track project performance against requirements. When the root cause of each project problem is analyzed, this root cause and the subsequent corrective and preventive action are entered into a “lessons learned” database. This allows for consistent problem resolution actions to be taken. The database is also then used to identify potential project risks and institute a priori mitigation actions.

Risk/Opportunity Management is one of the critical, if not the most, tools in a project or program managers tool box—regardless of contract type. Typically projects/programs focus on the potential impact and/or probabil- ity of a risk occurrence. While these are very critical factors to developing

a good risk mitigation plan, the adroit ability of the project team to detect the risk will have the greatest impact on successful project execution. If you can ’t detect the risk, then your ability to manage it, will always be reactive. The undetectable risk is a greater threat to execution, than the high-probability or high-impact factors. This is where using one of the six sigma tools Failure Modes and Effects Analysis (FMEA) can be very effective. The FMEA tool can help a project team evaluate—risk detection. Focusing on risk detection will help the team think “out of the box” in proposing, planning or executing a successful project.

Example: If your project/program has a risk that has a signifi cant probability of occurrence, then it is probably not really a risk —it is an issue/problem. If the impact is great and the probability is low, then you will keep an eye on this, but not usually spend Management Reserve (MR) to mitigate. However, if the risk has a high impact or prob- ability, but has a low level of detectability, the results could be devastating.

The other side of managing a project/program is the lack of focus on opportunity identifi cation and management. If a project team is only risk management focused, they may miss looking at the projects potential opportunities. Opportunities need to be evalu- ated with the same rigor as risks. The same level of focus in the areas of impact, probability AND the ability to recognize the opportunity must occur for a project team. The FMEA is also. . . . very useful for opportunity recognition and management. Sometimes undetect- able risks will occur, but the ability to recognize and realize opportunities can counter this risk impacts. The use of opportunity recognition can have the greatest impacts on Fixed- Price projects where saving costs can increase the projects profi t margin.

If a project has risk schedule, how can we quantify that risk? One method is through the use probabilistic modeling. Probabilistic modeling of your schedule can help you fore- cast the likelihood of achieving all your milestones within your period of performance. If the risk of achieving your schedule is too high, you can use these models to perform “what if” analysis until the risk factors, can be brought to acceptable levels. This analysis should be done BEFORE the project is baselined or (ideally) during the proposal phase.

The key to successful implementation of this strategy is a relational database of information which will allow you to build the most realistic probabilistic model possible. This information must be gathered on a wide variety of projects so that information on

Risk/Opportunity Management

Using Six Sigma Tools and

Probabilistic Models

Risk Management 315

projects of similar size and scope/complexity can be evaluated. It must be integrated with “lessons learned” from these other projects in order to build the best probabilistic model to mitigate your schedule risks. Always remember that a model is only as good as the information used to build it.

5.5 CONCURRENT ENGINEERING

The need to shorten product development time has always plagued U.S. companies. During favorable economic conditions, corporations have deployed massive amounts of resources to address the problem of long development times. During economic downturns, however, not only are resources scarce, but time becomes a critical constraint. Today, the principles of concurrent engineering have been almost universally adopted as the ideal solution to the problem.

Concurrent engineering requires performing the various steps and processes in man- aging a project in tandem rather than in sequence. This means that engineering, research and development, production, and marketing all are involved at the beginning of a project, before any work has been done. That is not always easy, and it can create risks as the proj- ect is carried through. Superior project planning is needed to avoid increasing the level of risk later in the project. The most serious risks are delays in bringing product to market and costs when rework is needed as a result of poor planning. Improved planning is essential to project management, so it is no surprise that excellent companies integrate concurrent engineering and project management systems.

Chrysler (now DaimlerChrysler) Motors used concurrent engineering with project management to go from concept to market with the Viper sports car in less than three years. Concurrent engineering may well be the strongest driving force behind the increased acceptance of modem project management.

5.6 RISK MANAGEMENT

Risk management is an organized means of identifying and measuring risk and develop- ing, selecting, and managing options for handling those risks. Throughout this book, I have emphasized that tomorrow ’s project managers will need superior business skills in assessing and managing risk. This includes both project risks and business risks. Project managers in the past were not equipped to quantify risks, respond to risks, develop con- tingency plans, or keep lessons-learned records. They were forced to go to senior manag- ers for advice on what to do when risky situations developed. Now senior managers are empowering project managers to make risk-related decisions, and that requires a project manager with solid business skills as well as technical knowledge.

Preparing a project plan is based on history. Simply stated: What have we learned from the past? Risk management encourages us to look at the future and anticipate what can go wrong and then to develop contingency strategies to mitigate these risks.

We have performed risk management in the past, but only fi nancial and schedul- ing risk management. To mitigate a fi nancial risk, we increased the project ’s budget.

316 INTEGRATED PROCESSES

To mitigate a scheduling risk, we added more time to the schedule. But in the 1990s, technical risks became critical. Simply adding into the plan more time and money is not the solution to mitigate technical risks. Technical risk management addresses two primary questions:

● Can we develop the technology within the imposed constraints? ● If we do develop the technology, what is the risk of obsolescence, and when might

we expect it to occur?

To address these technical risks, effective risk management strategies are needed based upon technical forecasting. On the surface, it might seem that making risk man- agement an integral part of project planning should be relatively easy. Just identify and address risk factors before they get out of hand. Unfortunately, the reverse is likely to be the norm, at least for the foreseeable future.

For years, companies provided lip service to risk management and adopted the attitude that we should simply live with it. Very little was published on how to develop a structure risk management process. The disaster with the Space Shuttle Challenger in January 1986 created a great awakening on the importance of effective risk management. 5

Risk management today has become so important that companies are establishing separate risk management organizations within the company. However, many companies have been using risk management functional units for years, and yet this concept has gone unnoticed. The following is an overview of the program management methodology of the risk management department of an international manufacturer headquartered in Ohio. This department has been in operation for approximately 25 years.

The risk management department is part of the financial discipline of the company and ultimately reports to the treasurer, who reports to the chief financial officer. The over- all objective of the department is to coordinate the protection of the company ’s assets. The primary means of meeting that objective is eliminating or reducing potential losses through loss prevention programs. The department works very closely with the internal environmental health and safety department. Additionally, it utilizes outside loss control experts to assist the company ’s divisions in loss prevention.

One method employed by the company to insure the entire corporation ’s involvement in the risk management process is to hold its divisions responsible for any specifi c losses up to a designated self-insured retention level. If there is a signifi cant loss, the division must absorb it and its impact on their bottom-line profi t margin. This directly involves the divisions in both loss prevention and claims management. When a claim does occur, risk management maintains regular contact with division personnel to establish protocol on the claim and reserves and ultimate resolution.

The company does purchase insurance above designated retention levels. As with the direct claims, the insurance premiums are allocated to its divisions. These premiums are calculated based upon sales volume and claim loss history, with the most signifi cant percentage being allocated to claim loss history.

Each of the company ’s locations must maintain a business continuity plan for its site. This plan is reviewed by risk management and is audited by the internal audit and envi- ronmental health and safety department.

5. The case study “The Space Shuttle Challenger Disaster” appears in H. Kerzner, Project Management Case Studies,, 4th ed. Hoboken, NJ: Wiley, 2013, p. 447.

Risk Management 317

Risk management is an integral part of the corporation ’s operations as evidenced by its involvement in the due diligence process for acquisitions or divestitures. It is involved at the onset of the process, not at the end, and provides a detailed written report of fi ndings as well as an oral presentation to group management.

Customer service is part of the company ’s corporate charter. Customers served by risk management are the company ’s divisions. The department ’s management style with its customers is one of consensus building and not one of mandating. This is exemplifi ed by the company ’s use of several worker ’s compensation third-party administrators (TPAs) in states where it is self-insured. Administratively, it would be much easier to utilize one nationwide TPA. However, using strong regional TPAs with offi ces in states where divi- sions operate provides knowledgeable assistance with specifi c state laws to the divisions. This approach has worked very well for this company that recognizes the need for the individual state expertise.

The importance of risk management is now apparent worldwide. The principles of risk management can be applied to all aspects of a business, not just projects. Once a company begins using risk management practices, the company can always identify other applica- tions for the risk management processes.

For multinational companies that are project-driven, risk management takes on paramount importance. Not all companies, especially in undeveloped countries, have an understanding of risk management or its importance. These countries sometimes view risk management as an overmanagement expense on a project.

Consider the following scenario. As your organization gets better and better at project management, your customers begin giving you more and more work. You ’re now getting contracts for turnkey projects, or complete-solution projects. Before, all you had to do was deliver the product on time and you were through. Now you are responsible for project installation and startup as well, sometimes even for ongoing customer service. Because the customers no longer use their own resources on the project, they worry less about how you ’re handling your project management system.

Alternatively, you could be working for third-world clients who haven ’t yet developed their own systems. One hundred percent of the risk for such projects is yours, especially as projects grow more complex (see Figure 5–6 ). Welcome to the twenty-fi rst century!

One subcontractor received a contract to install components in a customer ’s new plant. The construction of the plant would be completed by a specifi c date. After construction was completed, the contractor would install the equipment, perform testing, and then start

Figure 5–6. Future risks.

Inexperienced

Experienced

Simple Complex Contract Type

Inc rea

sin gCustomer’s

Knowledge

318 INTEGRATED PROCESSES

up. The subcontractor would not be allowed to bill for products or services until after a successful startup. There was also a penalty clause for late delivery.

The contractor delivered the components to the customer on time, but the components were placed in a warehouse because plant construction had been delayed. The contractor now had a cash fl ow problem and potential penalty payments because of external depen- dencies that sat on the critical path. In other words, the contractor ’s schedule was being controlled by actions of others. Had the project manager performed business risk manage- ment rather than just technical risk management, these risks could have been reduced.

For the global project manager, risk management takes on a new dimension. What happens if the culture in the country with which you are working neither understands risk management nor has any risk management process? What happens if employees are afraid to surface bad news or identify potential problems? What happens if the project ’s constraints of time, cost, and quality/performance are meaningless to the local workers?

5.7 WÄRTSILÄ: THE NEED FOR PROACTIVE RISK MANAGEMENT 6

At Wärtsilä, project risk management has traditionally been much about identifying and planning. We have seen that this now needs to be expanded to cover reflection and proactive action-taking in today ’s com-

plex projects. Risks need to be tackled upfront before they occur and potentially jeopardize the objectives of projects. We will now briefly present what we have done in this respect.

How uncertainty and risk are handled in projects very much depends on experience. It can be said that many project managers only deal with risk and uncertainty as a result of what they are actually experiencing in their projects. Experienced project managers, how- ever, can recognize risks far ahead before they become issues. Likewise, opportunities and positive uncertainties can be recognized easier by experienced project managers. However, the recognition of opportunities is not only restricted to experience, since a willingness to take risks is also required. In many cases, a change of mindset is required from project managers to be able to accomplish this.

As large projects are becoming increasingly complex to manage today, it is essential that the project manager has enough experience to have an accurate perception of what is involved. Besides the project itself, it is of huge importance to know about the location, the customer and the environment. Failure to have the knowledge or experience about these issues in advance will cause major problems, making the project more complex and chal- lenging than necessary. In order to avoid such pitfalls, it is important to use the combined knowledge, experience and creativity of the whole project team. Although risk manage- ment is the project manager ’s responsibility, it is not solely his/her task. The whole project team needs to share this responsibility.

This brings us to the importance of having a lessons learned database with information that has been shared among the project teams. Such a database is an important resource for

Proactive Project Risk

Management in Wärtsilä Power

Plant Projects

6. Material has been provided by Wärtsilä Project Management Office (WPMO). Copyright to Wärtsilä Corporation 2013. Reproduced by permission.

Wärtsilä: The Need for Proactive Risk Management 319

a new project manager or other team member joining the force. Likewise, when a project team accepts a new project type, or a project in a totally new location, it is benefi cial to be able to access the knowledge about similar cases. In light of this, a lessons learned database is being implemented where all this knowledge and experience can be shared.

We have seen that knowledge and experience play an important role in managing risk, uncertainty and other factors in projects. However, proactive risk management is something that is not always easy to implement, since it depends on so many people ’s different perceptions of it. A lot of communication is needed in order to gain a common understanding of what the organization needs regarding risk and uncertainty, as well as a clear understanding of the potential benefi ts they bring into the organization. Proactive risk management is not only about identifying, qualifying and quantifying the risks; it is much more. The utilization of the risk management process is all about having the maturity to use the previously learned experience and knowledge to prevent risks from occurring in the fi rst place, as well as the confi dence to take the necessary actions to be able to encourage positive opportunities to develop.

A project team needs a tool for project risk management where upcoming events, both foreseen and unforeseen, can be continuously followed. A risk management process tool does not need to be complex. The most important aspect is the way it is utilized in the organization. We see that in this case the statement: “ the simpler the better ” describes quite well what is needed.

The proactive risk management process taken into use at Wärtsilä consists of three different phases (Figure 5–7 ). Firstly a project classifi cation should be done to defi ne the complexity of the project. Thereafter, the risk process itself will be managed as a continu- ous process throughout the whole project lifecycle. In addition, lessons learned should be recorded on risks where the actions taken signifi cantly differed from the planned response. At Wärtsilä we have implemented this entire process in one common PM tool used by all PM teams and management.

The classifi cation process will provide important information for the risk identifi ca- tion steps. The intention of the process is to encourage project managers to think about the project and defi ne both where the complexity of the project is situated as well as provide an input for the risk management process identifi cation. It must describe the project from an objective point of view. One of the core added values that project classifi cation brings to project management is by defi ning the needed resources for resource allocation.

The risk management process basically also relies on it being one continuous process. All the same elements that were used in the classifi cation process are implemented in this process. The traditional risk management process described in PMBOK ® Guide (2008) has been used as the basis for the new risk management process.

In order for a proactive risk management process to become successful, it is vital that the project team makes full use of it. Ignorance of risks and uncertainties will cause large problems within project management when they materialize unexpectedly and become harmful issues.

A good communication system needs to be created in order to implement a uniform risk management process among the project teams. In addition, training should be given on how to use the risk management process in order to improve the understanding of how the proactive risk process can be utilized and to gain an appreciation as to why it is so important.

1. Project

classification

3. Lessons

Learned

Project Manager fills in the project classification (ABC).

One-time process

Risk Management Plan

Risk Response Plan

Continuous process

Risk Identification

Risk Analysis

• Uses the project class as a time base for risk plan.

• The project team identifies the risks by using the risk template.

• Identification of risk size based on chossing the risk possibility and impact.

• For high and medium risks a response plan should be though

The project teams do lessons learned for risks which have had significant changes from what was planned

2. Risk

Management

Figure 5–7. Proactive project risk management process in Wärtsilä power plants.

320

ILLUMINAT: Effective Risk Management 321

5.8 ILLUMINAT: EFFECTIVE RISK MANAGEMENT 7

ILLUMINAT (Trinidad & Tobago) Limited (ILLUMINAT) is one of the leading providers of Information, Communications and Technology (ICT) products and services in Trinidad and Tobago (T&T) and the wider Caribbean Region. ILLUMINAT is part of the Neal and Massy Group of companies, a conglomerate operating in the majority of English-speaking countries in the Caribbean. Much of ILLUMINAT ’s business with its external clients is managed through projects using a standardised project management methodology, where a Project Management Offi ce (PMO) has been established and the use of the PMO ’s meth- odology, templates, tools and processes are strongly encouraged across the organisation. According to KPMG (1997) and Nieto-Rodriguez and Evrard (2004), organisational proj- ect management capability is increasingly being seen as a key to competitive advantage and therefore worthy of investment in its development. Risk Management (RM) is a key component of effective project management and as such, it is one of the approaches used to support the strategic goals of the organisation.

Figure 5–8 represents the business context in which ILLUMINAT operates and which impacts the strategy used to integrate the portfolio, programme and project risk management approaches with the overall

organizational strategy: The concept of RM is embedded within ILLUMINAT where its application is evi-

denced at the portfolio, programme and project management levels throughout the organ- isation. The governance structures in place for effective RM include the following key dimensions as shown in Figure 5–9 :

Business Context

7. Information has been provided by Ms. Kerdell Brereton, Manager, Project Management Services Unit, ILLUMINAT(Trinidad & Tobago) Limited

Stakeholders

Organisational Strategy & Objectives

Governance Systems

Industry Context

(ICT/PM)

External Environment

Figure 5–8. ILLUMINAT ’s business context.

322 INTEGRATED PROCESSES

These key dimensions are used to assess the risks in business opportunities for proj- ects from inception. The evaluation includes risks to commercial viability, technical fea- sibility and organisational capacity to name a few. The external and internal environments are also taken into consideration and all risks are aggregated and reviewed holistically in order to inform the fi nal decisions for ILLUMINAT ’s portfolio.

Figure 5–10 is a high-level view of the risk management governance structure in place to manage risk within ILLUMINAT where it is man- aged in three (3) stages:

Stage: Preprogramme/ Project Award (Request for Proposal)

● Assemble team including Sales resources, Technical Subject Matter Experts, Project Management resource, Executive/Senior Manager.

● Defi ne Technical solution and degree of integration (single or multiple suppliers) required to put solution together.

Risk Management Approach

Figure 5–9. ILLUMINAT ’s key risk management dimensions.

• Programmes • Projects

PORTFOLIO

• Systems • Infrastructure • Business Continuity Plan (human and physical resources)

PROCESSES

• ILLUMINAT resources • Clients • Suppliers • Strategic Alliances (Business Partnerships, Industry affiliations etc.)

PEOPLE

Figure 5–10. Stages of risk management in ILLUMINAT.

Request for Proposal

Implementation Post-

Implementation

ILLUMINAT: Effective Risk Management 323

● Review all aspects of programme/project inclusive of customer and supplier profi les, timeframe for delivery (milestone dates), currency to be used, logistics required (e.g. single or multiple countries involved), storage, potential causes for delay and the impact on the project etc.

● Identify and assess each risk and defi ne feasible mitigation actions that can be taken to eliminate or reduce the impact of the risks (if they materialise). These actions plans are integrated into the contractual agreements (client and supplier), commer- cial agreements, the project implementation plan and other working arrangements (e.g., insurance) which are encapsulated within the fi nal proposal.

● Review the proposal and once approved by Executive Management, release to the client for signoff.

Stage: Implementation of Programme/Project

Once the business is won and the programme/project initiated, RM is actively managed at these levels as follows:

● Create plan to define governance approaches for RM taking into consideration the specific nuances of the programme/project.

● Conduct deeper RM analysis to identify risks that may impact the project at all stages (internal and external factors).

● Evaluate each risk using relevant data and expert knowledge to defi ne and imple- ment effective mitigation (and contingency) plans as well as prioritise the risks.

● Continuously monitor risks and implement corrective action and/ or contingency plans where applicable.

● Include risk analysis of risks with the priority of “Very High” and “High” in regu- lar reports to key stakeholders.

Risk analysis is performed from three main perspectives: strategic, commercial and technical. In order to conduct this activity effi ciently and effectively, Programme/Project Owners are assigned who are charged with the responsibility of ensuring that all arrange- ments are in place to make certain that the goals and objectives of the programme/project are achieved while signifi cantly minimizing any negative impacts. The Programme/Project Owner is typically a senior resource with the authority to make requisite decisions and is a key escalation point to address issues as they arise.

Stage: Post Programme/Project

Upon completion of the programme/project, clients are polled to identify their overall satisfaction with ILLUMINAT ’s services as well as any areas for improvement. This is done through Customer Satisfaction Surveys and Project Impact Assessment Surveys. The feedback from these surveys is then analysed and where applicable and feasible, used by the organisation to improve the relevant areas identifi ed.

At the portfolio management level a Risk Profile for each opportunity is created and this is done through two (2) stages at the time of proposal:

Risk Management

Reporting

323

324 INTEGRATED PROCESSES

● Using the organisation ’s “ Delegation of Authority” policy, all proposals are reviewed and signed off depending on value of project within the organisation [Business Unit (BU) Head, Chief Executive Officer (CEO), Chairman, Group CEO). This is to ensure that the level of scrutiny (which increases with value of project) required to comprehensively assess the inherent risks is in place.

● A document is produced (Project Outline) which details the risks involved, the internal and external factors that can have an impact, the mitigating strategies to be used and an evaluation of the likelihood of winning the business. If the risk profile of the opportunity is deemed acceptable, the decision will be made to proceed. The inverse may occur if the risk profile is deemed unacceptable and the organisation may choose not to bid for the opportunity.

Once the business is won, the risk profi le is taken into consideration in the overall planning of the projects where reporting on projects that meet specifi c criteria is done on a monthly basis. These reports are reviewed by Executive Management in monthly meetings of the Board of Directors where the status of the projects and the risks in particular, are reviewed.

At the program/ project levels , risk reporting is done on a more frequent basis where risks are reviewed at various stage gates, particularly when moving from one phase to another:

● Initiation – further identification and in-depth analysis of risks ● Planning – development and ratifi cation of Risk Management Plan ● Execution – implementation of risk response plans ● Monitoring and Control – implementation of corrective action if required ● Close-out – retiring of risks

Reporting is done during project team meetings and if required, meetings are convened specifi cally to focus on risks at critical stages in the programme/project. Reporting is also included in formal status reports which are distributed to key stakeholders at the frequency documented within the programme/project ’s Communication Plan (at a minimum monthly). Additionally, for those programmes/projects that meet specifi c criteria, Summary Reports are submitted to the Board of Directors for monthly review (as noted above).

ILLUMINAT is a knowledge-based organisation where one of the goals is to assist customers in making their businesses successful. As such, effective risk management and the application of risk-related lessons

learned in the implementation of programmes and projects in the portfolio are key compo- nents to achieving this.

Consequently, as part of the overall risk management governance, programmes/proj- ects are reviewed and common denominators are noted in the approaches used and the effectiveness of the outcomes. These are then used for process improvements within the organisation (e.g., defi nition of robust standardized processes and criteria for evaluating strategic business partners).

Risk Management is entrenched into the organisational culture at ILLUMINAT and has been recognized as one of the key strategies in

Lessons Learned

Conclusion

Indra: When a Risk Becomes Reality (Issue Management) 325

ensuring the completion of successful programmes/projects. This is demonstrated by the thoughts expressed by ILLUMINAT ’s CEO, Mr. David Belgrave:

I think it (Risk Management) is a very positive thing. It ensures that we give sufficient thought to a project before we enter it, including the fact that we may decide not to enter the project itself in the worst case. But at the very least, we assess the risk of the project, we propose mitigating actions, we ensure that we place the degree of attention and the degree of rigour that ’s required to ensure success on the project. This action impacts on time, on money, on the number and type of resources required and ultimately customer service. The whole process of Risk Assessment in approaching projects allows for a more professional job and a more profitable job in the end. Through techniques that we have utilised in project management, we were able to anticipate some of the issues well before they occurred and take corrective action to keep programme/project on track and that ’s a major benefit to the organization.

As such, the risk management approaches used at ILLUMINAT have been seen to add value to the effi cient and effective management of the portfolio of projects and through continuous learning, enhancement of these approaches can be done in order to achieve the organisation ’s strategic goals and ensure growth performance.

5.9 INDRA: WHEN A RISK BECOMES REALITY (ISSUE MANAGEMENT) 8

In a company like Indra, with thousands of active projects geographically distributed, a solid and continuous risk management practice is vital. This is shown in Figure 5–11 . Actions that might contain the impact that risks can have on the results of the project are planned and monitored throughout the project life cycle.

The percentage of projects with risk plans and risk registers is very high in Indra. However we at Corporate PMO noted that these high fi gures didn ’t prevent some risks from happening and even worse, that other unknowns-unknowns risks showed up as issues that project managers haven ’t been able to identify in their plans.

However an issue is not in the future, it is now already affecting project milestones or schedule, or certain WBS elements, or the committed budget or the quality level of the proj- ect. For that reason an issue usually demands immediate response and its resolution must be addressed as quickly and effectively as possible to avoid affecting other areas of the project.

We think that analyzing the relationship between risks and issues is essential for an integrated approach to risk management. By a pre-mortem review of risks and their related issues, their sorting and classifi cation, and by analyzing why those risks were not well addressed in earlier planning stages, we seek to understand the causes that originated them and to determine earlier risk screening criteria.

In a second stage we need to know their actual effects on the project and whether the solutions proposed to contain the effects have been effective. That will allow us to create a database and to identify some lessons learned to help us to early identify issue-prone risks and prevent them from appearing in future projects.

8. Material provided by Alfredo Vázquez Díaz, PMP, Director, Corporate Project Management Office.

326 INTEGRATED PROCESSES

Not all issues are equal or affect the organization the same way. Their impact depend on the project size or volume, its internal or external visibility, complexity, variances on initial economic forecast, time needed to put it on track or their impact on the image of the company.

Having all those considerations up front, we have decided to focus our efforts on the projects with more critic issues. Those are considered projects that require close surveillance, and for those projects identifying which is the source of the issue, its immediate effects and the follow-up of the action plan are key. To allow this we created a new functionality in our PMIS called Issue Registry. This is embedded within our PMIS Issue Management module.

The Issue Registry works like this: When a PMO or a user responsible for project control analyzes a project and detects it is having serious problems, the project manager is required to complete detailed information in the Issue Registry module. This can be trig- gered automatically through a red alert in the PMIS (See Figure 5–12 .)

The project manager must describe the existing issues in her project, the action plans to cope with them and the recovery target that must be obtained to get the project back on track. Once fulfi lled, and to avoid this being a static snapshot of the project, the project manager is expected to update the information every reporting period from that moment on, indicating action plan updates and project status with regards to the initial targets.

What we intend to achieve with the Issue Registry? We want to focus our attention and our efforts on:

● Detecting which problems and issues have emerged from previously identified risks and which not

● Get an homogeneous classifi cation and typifi cation of projects that had become seriously affected by issues

● Track the effectiveness of the issue action plans ● Automated and systematic reporting to business management on those issues and

their projects from different perspectives (business unit, solution, type of project, geographic location. . .)

Figure 5–11. Indra ’s project risk management process.

Initial risk identification

Initial risk evaluation

Risk description

and evaluation

Risk prioritization

Response and

contingency planning

Residual risk evaluation

Risk identification

Risk status review

New risk identification

Risk plan update

At proposal preparation phase:

At planning phase:

At monitoring and control phase:

The Failure of Risk Management 327

Historically the efforts of our organization had been focused on the management of risks, leaving the management of issues and problems as a secondary process, not con- nected with risk management. Issue management was more dependent on the involve- ment and proactiveness of the project manager, for that reason it was heterogeneously approached, usually in an internal project context and without a close monitoring and follow-up by the organization, as it was the case with risk management.

With this new feature, the ICU Registry, the registration and follow-up of ICU projects and the traceability between risks and issues can be made from the PMIS. To reverse actual dynamics we will take a fi rst step by learning from already occurred issues and problems, and based on that, and in a second stage we will focus on prevention of recurrent issues, those that have been registered, diagnosed and solved by other projects managers, obtain- ing a invaluable information for other project managers to learn from other ’s experience in their own future similar projects.

Inside the problem is the solution and only knowing the problem, we can solve and avoid it.

5.10 THE FAILURE OF RISK MANAGEMENT

There are numerous reasons why risk management can fail. Typical reasons might include:

● The inability to perform risk management effectively ● Not being able to identify the risks ● Not being able to measure the uncertainty of occurrence

Figure 5–12. Indra ’s project risk monitoring in the PMIS.

328 INTEGRATED PROCESSES

● Not being able to predict the impact, whether favorable or unfavorable ● Having an insuffi cient budget for risk management work ● Having team members that do not understand the importance of risk management ● Fear that identifi cation of the true risks could result in the cancellation of the project ● Fear that whoever identifi es critical risks will get unfavorable recognition ● Peer pressure from colleagues and superiors that want to see this project com-

pleted regardless of the risks

All of these failures occur during the execution of the project. These failures we seem to understand and can correct with proper education and budget allocations for risk management activities. But perhaps the worst failures occur when people refuse to even consider risk management because of some preconceived notion about its usefulness of importance to the project. David Dunham discusses some of the reasons why people avoid risk management on new product development (NPD) projects 9

Discussing risk in new product development certainly seems to be a diffi cult thing to do. Despite the fact that the high-risk nature of new product development is built into the corporate psyche, many corporations still take a fatalistic approach toward managing the risk. Reasons for not being anxious to dwell on risk differ depending on the chair in which you are sitting.

● Spending time on risk assessment and management is counter to the action culture of many corporations. “Risk management does not create an asset,” to quote one executive.

● Management feels that the learning can/should be done in the market.

● There is a natural aversion among developers to focus on the downside. ● Highlighting risk is counterintuitive for development teams who

want to promote the opportunity when competing for NPD funding.

5.11 DEFINING MATURITY USING RISK MANAGEMENT

For years, project management maturity was measured by how frequently we were able to meet the project ’s triple constraints of time, cost, and performance or scope. Today, we are beginning to measure maturity in components, such as the areas of knowledge in the PMBOK ® Guide . Maturity is now measured in stages and components, such as how well we perform scope management, time management, risk management, and other areas of knowledge. Gregory Githens believes that the way we handle risk management can be an indicator of organizational maturity 10 :

Program Manager

9. D. J. Dunham, “Risk Management: The Program Manager ’s Perspective,” in P. Belliveau, A. Griffin, and S. Somermeyer, The PDMA Toolbook for New Product Development , Hoboken, NJ: Wiley, 2002, p. 382.

10. G. D. Githens, “How to Assess and Manage Risk in NPD: A Team-Based Approach,” in P. Belliveau, A. Griffin, and S. Somermeyer, The PDMA Toolbook for New Product Development , Hoboken, NJ: Wiley, 2002, p. 208.

Boeing Aircraft Company 329

Some firms have more capability to manage risk well, and these firms are the most consistent in their growth and profitability. Perhaps the simplest test for examining risk management maturity is to examine the level of authority given to the [New Product Development] NPD program [project] manager: If authority is high, then the organization is probably positioning itself well to manage risks, but if authority is low, then the blinders may be on. Another test is the use of checklists: if ticking off a checklist is the sole company response to risk, then organizational maturity is low. Risk management provides. . . [an] excellent lens by which to evaluate a firm ’s ability to integrate and balance strategic intent with operations.

Many fi rms ignore risk management because they have not seen the need for it. They perceive their industry as stable and mostly focus on their competitive rivals and opera- tional challenges. . . . By addressing risk at the project level, you encourage the organiza- tion to surface additional strategic concerns.

Top NPD fi rms have a sophisticated capability for risk management, and they will “book” a project plan, pay attention to the details of product scope and project scope, use risk management tools such as computer simulations and principle-based negotiation, and document their plans and assumptions. These more mature fi rms are the ones that will consider risk in establishing project baselines and contracts. For example, Nortel uses a concept called “out of bounds” that provides the NPD program managers with the freedom to make trade-offs in time, performance, cost and other factors. Risk analysis and manage- ment is an important tool.

Less mature fi rms typically establish a due date and pay attention to little else (and in my experience, this is the majority of fi rms). Firms that use the decision rule “Hit the launch date” default to passive acceptance—hiding the risk instead of managing it. Firefi ghting and crisis management characterize their organizational culture, and their strategic performance is inconsistent. These fi rms are like the mythological character Icarus: They fl y high but come crashing down because they ignored easily recognizable risk events.

5.12 BOEING AIRCRAFT COMPANY

As companies become successful in project management, risk management becomes a structured process that is performed continuously throughout the life cycle of the project. The two most common factors supporting the need for continuous risk management is how long the project lasts and how much money is at stake. For example, consider Boeing ’s air- craft projects. Designing and delivering a new plane might require 10 years and a fi nancial investment of more than $15 billion.

From an academic perspective, Table 5–1 shows the characteristics of risks at the Boeing Aircraft Company. (The table does not mean to imply that risks are mutually exclu- sive of each other, nor does it imply that these are the only risks.) New technologies can appease customers, but production risks increase because the learning curve is lengthened with new technology compared to accepted technology. The learning curve can be length- ened further when features are custom designed for individual customers. In addition, the loss of suppliers over the life of a plane can affect the level of technical and production risk. The relationships among these risks require the use of a risk management matrix and continued risk assessment.

330 INTEGRATED PROCESSES

5.13 CHANGE MANAGEMENT

Companies use change management to control both internally generated changes and cus- tomer-driven changes in the scope of projects. Most companies establish a confi guration control board or change control board to regulate changes. For customer-driven changes, the customer participates as a member of the confi guration control board. The confi gura- tion control board addresses the following four questions at a minimum:

● What is the cost of the change? ● What is the impact of the change on project schedules? ● What added value does the change represent for the customer or end user? ● What are the risks?

The benefi t of developing a change management process is that it allows you to manage your customer. When your customer initiates a change request, you must be able to predict immediately the impact of the change on schedule, safety, cost, and technical performance. This information must be transmitted to the customer immediately, especially if your meth- odology is such that no further changes are possible because of the life-cycle phase you have entered. Educating your customer as to how your methodology works is critical in getting customer buy-in for your recommendations during the scope change process.

Risk management and change management function together. Risks generate changes that, in turn, create new risks. For example, consider a company in which the project manager is given the responsibility for developing a new product. Management usually establishes a launch date even before the project is started. Management wants the income stream from the project to begin on a certain date to offset the development costs. Project managers view

TABLE 5–1. RISK CATEGORIES AT BOEING 11

Type of Risk Risk Description Risk Mitigation Strategy

Financial Upfront funding and payback period based upon number of planes sold

Funding by life-cycle phases Continuous fi nancial risk management Sharing risks with subcontractors Risk reevaluation based upon sales commitments

Market Forecasting customers’ expectations on cost, confi guration, and amenities based upon a 30- to 40-year life of a plane

Close customer contact and input Willingness to custom design per customer Development of a baseline design that allows for

customization

Technical Because of the long lifetime for a plane, must forecast technology and its impact on cost, safety, reliability, and maintainability

A structured change management process Use of proven technology rather than high-risk

technology Parallel product improvement and new product

development processes

Production Coordination of manufacturing and assembly of a large number of subcontractors without impacting cost, schedule, quality, or safety

Close working relationships with subcontractors A structured change management process Lessons learned from other new airplane programs Use of learning curves

11. The information in this section on how Boeing might characterize risks on a new airplane project is the author ’s opinion and not necessarily Boeing ’s official opinion.

Hewlett-Packard 331

executives as their customers during new project development, but the executives view their customers as the stockholders who expect a revenue stream from the new product. When the launch date is not met, surprises result in heads rolling, usually executive heads fi rst.

In the previous edition of the book, we stated that Asea, Brown and Boveri had developed excellent processes for risk management, so it is understandable that it also has structured change management processes. In companies excellent in project management, risk management and change management occur continuously throughout the life cycle of the project. The impact on product quality, cost, and timing is continuously updated and reported to management as quickly as possible. The goal is always to minimize the number and extent of surprises.

5.14 OTHER MANAGEMENT PROCESSES

Employee empowerment and self-directed work teams took the business world by storm during the early 1990s. With growing emphasis on customer satisfaction, it made sense to empower those closest to the customer—the order service people, nurses, clerks, and so on—to take action in resolving customers’ complaints. A logical extension of employee empowerment is the self-managed work team. A self-directed work team is a group of employees with given day-to-day responsibility for managing themselves and the work they perform. This includes the responsibility for handling resources and solv- ing problems.

Some call empowerment a basis for the next industrial revolution, and it is true that many internationally known corporations have established self-directed work teams. Such corporations include Esso, Lockheed-Martin, Honeywell, and Weyerhauser. Time will tell whether these concepts turn out to be a trend or only a fad.

Reengineering a corporation is another term for downsizing the organization with the (often unfortunate) belief that the same amount of work can be performed with fewer people, at lower cost, and in a shorter period of time. Because project management pro- poses getting more done in less time with fewer people, it seems only practical to imple- ment project management as part of reengineering. It still is not certain that downsizing executed at the same time as the implementation of project management works, but project-driven organizations seem to consider it successful.

Life-cycle costing was fi rst used in military organizations. Simply stated, life-cycle costing requires that decisions made during the R&D process be evaluated against the total life-cycle cost of the system. Life-cycle costs are the total cost of the organization for the ownership and acquisition of the product over its full life.

5.15 HEWLETT-PACKARD

Information technology enterprise management (ITEM) integrates all of the project man- agement disciplines along with other IT disciplines such as engineering, testing, and model offi ce. Many projects start with a charter and scope that make a project manager view the work with a defi nitive start and defi nitive end. (See Figure 5–13 .) If this is applied to the relative stages of a release, they simply stretch the project management process groups across

332 INTEGRATED PROCESSES

all of the release. That makes the suppliers of the project try to understand if designing and building are part of execution or if deployment of the project is the execution of the project.

As stated in the PMBOK ® Guide , project management process groups should be repeated for each release stage. This promotes other project management strategies, such as roll wave planning and resource balancing. With this framework view, other capabilities can be applied to each stage, along with the project management capabilities (Figure 5–14 ).

Figure 5–13. Typical application of the PMBOK ® Guide.

Release Management Stages:

Project Management Process Groups:

Cannot Stretch the Project Disciplines across the Stages of a Release

Controlling Processes

Executing Processes

OperationsDeploymentIntegrationPlanning

Closing Processes

Planning Processes

Initiating Processes

Project 6 Project 9

Project 28 Project 32

Project 66

Figure 5–14. Correct application of the PMBOK ® Guide.

Release Management Stages:

Control

Initiate Initiate Initiate Initiate

Execute Execute

• Strategic Planning • Release Forecasting • Release Impact Analysis • Client Feasibility Study • Client Stage Gate

• Hardware Design • Application Design • Unit/System Tests • Model Office • Client Stage Gate

• Site Assessments • Procurement • Hardware Installation • User Acceptance Test • Client Stage Gate

• Service Desk • Incident Handling • Change Management • Configuration Management • Problem Management

Additional “Integrated” Capabilities:

Execute Execute

Close Close Close ClosePlan Plan Plan Plan

Project Management Process Groups:

OperationsDeploymentIntegrationPlanning

Project 6 Project 9

Project 28 Project 32

Project 66

DTE Energy 333

5.16 EARNED-VALUE MEASUREMENT

An integral part of most project management methodologies is the ability to perform earned-value measurement. Earned-value measurement was created so that project managers would manage projects rather than merely monitor results. Even though some companies do not use earned-value measurement on a formal basis, core concepts such as variance analysis and reporting are being used. As an example, Keith Kingston, PMP ® , Manager of Program Management at Motorola, states:

Variances to schedule performance are analyzed weekly or biweekly but not as part of a formal earned value approach. Greater than three days of schedule variation on any inter- nal deliverable requires analysis and a mitigation plan. Any variances that impact meeting a customer-required date requires analysis and a mitigation plan.

5.17 DTE ENERGY

One of the characteristics of integrated processes is that it must include an integration with a project management information system capable of reporting earned-value measure- ment. Kizzmett Collins, PMP, senior project manager, software engineering, methods, and staffi ng at DTE Energy, describes the integration with earned-value measurement:

Getting Started Beginning in 2001, the Information Technology Services’ (ITS) project management offi ce (PMO) sponsored several projects that helped to advance and develop earned-value analysis (EVA) understanding and knowledge among management and project managers.

The implementation of the Primavera Teamplay project management suite easily enabled the tracking of EVA metrics for individual projects and project portfolios. Among other sources of education, TeamPlay product training introduced ITS project managers and management to EVA metrics. The PMO developed processes and reports to aid project managers and management in the analysis and reporting of EVA metrics. ITS contracted Quentin W. Flemming to conduct EVA courses, which increased project managers’ and ITS management ’s understanding of EVA.

Reporting EVA Metrics EVA metrics (such as SPI, CPI, CV, SV, and EAC) are reported weekly in project status reports and in the ITS proj- ect portfolio. The project manager provides additional status commen-

tary for variances from target that exceed ± 10%. During the ITS planning and management table (PMT) meetings, project mangers

report project status, usually on a monthly basis. The PMT reviews EVA metrics and dis- cusses variances and indicators as warranted. Other triggers that may necessitate a review of the projects’ EVA metrics include:

● A project is at 20 percent of original estimated duration. ● A signifi cant phase has ended. ● The project manager presents issues, risks, or changes.

DTE Energy ’s ITS

Earned-Value Analysis

Journey

334 INTEGRATED PROCESSES

Linking Rewards to EVA CPI Metric In 2003, the ITS Organization began linking rewards to the CPI metric. The CPI metric results are now included in both project man- ager performance reviews and the ITS Organizational Scorecard.

The ITS Organizational Scorecard is tied to the corporate Rewarding Employee Plan (REP). REP pays employees bonuses that are based on achieving the corporate and orga- nizational goals. The ITS Organization ’s CPI metric is the aggregate of the CPI of each project in the project portfolio. As a result, all ITS employees have a monetary stake in the success of each project.

Project manager performance goals include the CPI metric for all projects within their area of responsibility. CPI results greater than 0.95 and less than 1.05 exceed performance expectations. Each project manager ’s performance review is linked to their merit increase.

Opportunities for Improvement The ITS Organization introduced EVA to the cor- poration through the ITS scorecard. Both within ITS and across the corporation, further training is needed to expand our shared understanding of EVA. Internally, ITS can take the next step in further understanding what the EVA metrics indicate. For example, we have an opportunity to be more deliberate in allocating dollars elsewhere when a project ’s CPI indicates cost issues or problems.

335

6 Culture

6.0 INTRODUCTION

Perhaps the most significant characteristic of companies that are excellent in project management is their culture. Successful implementation of project management creates an organization and culture that can change rapidly because of the demands of each project and yet adapt quickly to a constantly changing dynamic environment, perhaps at the same time. Successful companies have to cope with change in real time and live with the potential disorder that comes with it.

Change is inevitable in project-driven organizations. As such, excellent companies have come to the realization that competitive success can be achieved only if the organization has achieved a culture that promotes the necessary behavior. Corporate cultures cannot be changed overnight. The time frame is nor- mally years. Also, if as few as one executive refuses to support a potentially good project management culture, disaster can result.

In the early days of project management, a small aerospace company had to develop a project manage- ment culture in order to survive. The change was rapid. Unfortunately, the vice president for engineering refused to buy into the new culture. Prior to the acceptance of project management, the power base in the organization had been engineering. All decisions were either instigated or approved by engineering. How could the organization get the vice president to buy into the new culture?

The president realized the problem but was stymied for a practical solution. Getting rid of the vice president was one alternative, but not practical because of his previous successes and technical know-how. The corporation was awarded a two-year project that was strategically important to the company. The vice

336 CULTURE

president was then temporarily assigned as the project manager and removed from his position as vice president for engineering. At the completion of the project, the vice president was assigned to fill the newly created position of vice president of project management.

6.1 CREATION OF A CORPORATE CULTURE

Corporate cultures may take a long time to create and put into place but can be torn down overnight. Corporate cultures for project management are based upon organizational behavior, not processes. Corporate cultures reflect the goals, beliefs, and aspirations of senior management. It may take years for the building blocks to be in place for a good culture to exist, but it can be torn down quickly through the personal whims of one execu- tive who refuses to support project management.

Project management cultures can exist within any organizational structure. The speed at which the culture matures, however, may be based upon the size of the company, the size and nature of the projects, and the type of customer, whether it be internal or external. Project management is a culture, not policies and procedures. As a result, it may not be possible to benchmark a project management culture. What works well in one company may not work equally well in another.

Good corporate cultures can also foster better relations with the customer, especially external clients. As an example, one company developed a culture of always being honest in reporting the results of testing accomplished for external customers. The customers, in turn, began treating the contractor as a partner and routinely shared proprietary informa- tion so that the customers and the contractor could help each other.

Within the excellent companies, the process of project management evolves into a behavioral culture based upon multiple-boss reporting. The significance of multiple-boss reporting cannot be overstated. There is a mistaken belief that project management can be benchmarked from one company to another. Benchmarking is the process of continuously comparing and measuring against an organization anywhere in the world in order to gain information that will help your organization improve its performance and competitive position. Competitive benchmarking is where one benchmarks organizational performance against the performance of competing organizations. Process benchmarking is the bench- marking of discrete processes against organizations with performance leadership in these processes.

Since a project management culture is a behavioral culture, benchmarking works best if we benchmark best practices, which are leadership, management, or operational methods that lead to superior performance. Because of the strong behavioral influence, it is almost impossible to transpose a project management culture from one company to another. As mentioned earlier, what works well in one company may not be appropriate or cost-effective in another company.

Strong cultures can form when project management is viewed as a profession and sup- ported by senior management. A strong culture can also be viewed as a primary business differentiator. Strong cultures can focus on either a formal or informal project management approach. However, with the formation of any culture, there are always some barriers that must be overcome.

Creation of a Corporate Culture 337

According to a spokesperson from AT&T:

Project Management is supported from the perspective that the PM is seen as a profes- sional with specific job skills and responsibilities to perform as part of the project team. Does the PM get to pick and choose the team and have complete control over budget allo- cation? No. This is not practical in a large company with many projects competing for funding and subject matter experts in various functional organizations.

A formal Project Charter naming an individual as a PM is not always done, however, being designated with the role of Project Manager confers the power that comes with that role. In our movement from informal to more formal, it usually started with Project Planning and Time Management, and Scope Management came in a little bit later.

In recent memory PM has been supported, but there were barriers. The biggest barrier has been in convincing management that they do not have to continue managing all the projects. They can manage the project managers and let the PMs manage the projects. One thing that helps this is to move the PMs so that they are in the same work group, rather than scattered throughout the teams across the company, and have them be supervised by a strong proponent of PM. Another thing that has helped has been the PMCOE’s execution of their mission to improve PM capabilities throughout the company, including impacting the corporate culture supporting PM.

Our success is attributable to a leadership view that led to creating a dedicated project management organization and culture that acknowledges the value of Project Management to the business. Our vision: Establish a global best in class Project Management discipline designed to maximize the customer experience and increase profitability for AT&T.

In good cultures, the role and responsibilities of the project manager is clearly identified. It is also supported by executive management and understood by everyone in the company. According to Enrique Sevilla Molina, formerly corporate PMO director at Indra:

Based on the historical background of our company and the practices we set in place to manage our projects, we found out that the project manager role constitutes a key factor for project success. Our project management theory and practice has been built to provide full support to the project manager when making decisions and, consequently, to give him (or her) full responsibility for project definition and execution.

We believe that he or she is not just the one that runs the project or the one that handles the budget or the schedule, but the one that “understand and look at their projects as if they were running their own business,” as our CEO used to say, with an integrated approach to his/her job.

Our culture sets the priority on supporting the project managers in their job, helping them in the decision-making processes, and providing them with the needed tools and training to do their job. This approach allow for a certain degree of a not so strict formal processes. This allows the Project manager’s responsibility and initiative to be displayed, but always under compliance with the framework and set of rules that allows for a solid accounting and results reporting.

We can say that project management has always been supported throughout the dif- ferent stages of evolution of the company, and throughout the different business units, although some areas have been more reluctant in implementing changes in their estab- lished way of performing the job. One of the main barriers or drawbacks is the ability to use the same project management concepts for the different types of projects and products.

338 CULTURE

It is still a major concern in our training programs to try to explain how the framework and the methodology is applied to projects with a high degree of definition in scope and to projects with a lesser degree of definition (fuzzy projects).

6.2 CORPORATE VALUES

An important part of the culture in excellent companies is an established set of values that all employees abide by. The values go beyond the normal “standard practice” manuals and morality and ethics in dealing with customers. Ensuring that company values and project management are congruent is vital to the success of any project. In order to ensure this congruence of values, it is important that company goals, objectives, and values be well understood by all members of the project team.

Successful project management can flourish within any structure, no matter how ter- rible the structure looks on paper, but the culture within the organization must support the four basic values of project management:

● Cooperation ● Teamwork ● Trust ● Effective communication

6.3 TYPES OF CULTURES

There are different types of project management cultures, which vary according to the nature of the business, the amount of trust and cooperation, and the competitive environ- ment. Typical types of cultures include:

● Cooperative cultures: These are based upon trust and effective communication, not only internally but externally as well.

● Noncooperative cultures: In these cultures, mistrust prevails. Employees worry more about themselves and their personal interests than what is best for the team, company, or customer.

● Competitive cultures: These cultures force project teams to compete with one another for valuable corporate resources. In these cultures, project managers often demand that the employees demonstrate more loyalty to the project than to their line manager. This can be disastrous when employees are working on multiple projects at the same time.

● Isolated cultures: These occur when a large organization allows functional units to develop their own project management cultures. This could also result in a culture- within-a-culture environment. This occurs within strategic business units.

● Fragmented cultures: Projects where part of the team is geographically separated from the rest of the team may result in a fragmented culture. Fragmented cultures

Types of Cultures 339

also occur on multinational projects, where the home office or corporate team may have a strong culture for project management, but the foreign team has no sustain- able project management culture.

Cooperative cultures thrive on effective communications, trust, and cooperation. Decisions are made based upon the best interest of all of the stakeholders. Executive sponsorship is more passive than active, and very few problems ever go up to the execu- tive levels for resolution. Projects are managed more informally than formally, with mini- mum documentation, and often with meetings held only as needed. This type of project management culture takes years to achieve and functions well during both favorable and unfavorable economic conditions.

Noncooperative cultures are reflections of senior management’s inability to cooperate among themselves and possibly their inability to cooperate with the workforce. Respect is nonexistent. Noncooperative cultures can produce a good deliverable for the customer if one believes that the end justifies the means. However, this culture does not generate the number of project successes achievable with the cooperative culture.

Competitive cultures can be healthy in the short term, especially if there exists an abundance of work. Long-term effects are usually not favorable. An electronics firm would continuously bid on projects that required the cooperation of three departments. Management then implemented the unhealthy decision of allowing each of the three departments to bid on every job. Whichever department would be awarded the contract, the other two departments would be treated as subcontractors.

Management believed that this competitiveness was healthy. Unfortunately, the long- term results were disastrous. The three departments refused to talk to one another and the sharing of information stopped. In order to get the job done for the price quoted, the departments began outsourcing small amounts of work rather than using the other depart- ments, which were more expensive. As more and more work was being outsourced, layoffs occurred. Management now realized the disadvantages of a competitive culture.

The type of culture can be impacted by the industry and the size and nature of the business. According to Eric Alan Johnson and Jeffrey Alan Neal1:

Data-orientated culture: The data-orientated culture (also known as the data driven culture and knowledge-based management) is characterized by leadership and project managers basing critical business actions on the results of quantitative methods. These methods include various tools and techniques such as descriptive and inferential statistics, hypothesis testing and modeling. This type of management culture is critically dependent on a consistent and accurate data collection system specifically designed to provide key performance measurements (metrics). A robust measurement system analysis program is needed to insure the accuracy and ultimate usability of the data.

This type of culture also employs visual management techniques to display key busi- ness and program objects to the entire work population. The intent of a visual management program is not only to display the progress and performance of the project, but to instill a

1. Eric Alan Johnson, Satellite Control Network Contract Deputy Program Director, AFSCN, and the winner of the 2006 Kerzner Project Manager of the Year Award; and Jeffrey Alan Neal, Blackbelt/Lean Expert and Lecturer, Quantitative Methods. University of Colorado, Colorado Springs.

340 CULTURE

sense of pride and ownership in the results with those who are ultimately responsible for project and program success . . . the employees themselves.

Also critical to the success of this type of management culture is the training required to implement the more technical aspects of such a system. In order to accurately collect, assess and enable accurate decision making the diverse types of data (both nominal and interval data), the organization needs specialists skilled in various data analysis and inter- pretation techniques.

6.4 CORPORATE CULTURES AT WORK

Cooperative cultures are based upon trust, communication, cooperation, and teamwork. As a result, the structure of the organization becomes unimportant. Restructuring a company simply to bring in project management will lead to disaster. Companies should be restruc- tured for other reasons, such as getting closer to the customer.

Successful project management can occur within any structure, no matter how bad the structure appears on paper, if the culture within the organization promotes teamwork, cooperation, trust, and effective communications.

In the early years of project management, the aerospace and defense contractors set up customer-focused project offices for specific cus- tomers such as the Air Force, Army, and Navy. One of the benefits of

these project offices was the ability to create a specific working relationship and culture for that customer.

Developing a specific relationship or culture was justified because the projects often lasted for decades. It was like having a culture within a culture. When the projects disap- peared and the project office was no longer needed, the culture within that project office might very well disappear as well.

Sometimes, one large project can require a permanent cultural change within a com- pany. Such was the case at Boeing with the decision to design and build the Boeing 777 airplane. The Boeing 777 project would require new technology and a radical change in the way that people would be required to work together. The cultural change would per- meate all levels of management, from the highest levels down to the workers on the shop floor. Table 6–1 shows some of the changes that took place.2 The intent of Table 6–1 is to show that on large, long term projects, cultural change may be necessary.

As project management matures and the project manager is given more and more responsibility, project managers may be given the responsibility for wage and salary administration. However, even excellent companies are still struggling with this new approach. The first problem is that the project manager may not be on the management pay scale in the company but is being given the right to sign performance evaluations.

Boeing

2. The Boeing 777 case study, “Phil Condit and the Boeing 777: From Design and Development to Production and Sales”, appears in H. Kerzner, Project Management Case Studies, 4th Edition, Hoboken, NJ: Wiley, 2013, p. 97. The information presented in Table 6–1 is Harold Kerzner’s interpretation of some of the changes that occurred, not necessarily Boeing’s official opinion.

Corporate Cultures at Work 341

The second problem is determining what method of evaluation should be used for union employees. This is probably the most serious problem, and the jury hasn’t come in yet on what will and will not work. One reason why executives are a little reluctant to imple- ment wage and salary administration that affects project management is because of the union involvement. This dramatically changes the picture, especially if a person on a project team decides that a union worker is considered to be promotable when in fact his or her line manager says, “No, that has to be based upon a union criterion.” There is no black-and- white answer for the issue, and most companies have not even addressed the problem yet.

The larger the company, the more difficult it is to establish a uniform project management culture across the entire company. Large companies have “pockets” of project management, each of which can mature at a

different rate. A large Midwest corporation had one division that was outstanding in project management. The culture was strong, and everyone supported project management. This division won awards and recognition on its ability to manage projects successfully. Yet at the same time, a sister division was approximately five years behind the excellent division in maturity. During an audit of the sister division, the following problem areas were identified:

● Continuous process changes due to new technology ● Not enough time allocated for effort ● Too much outside interference (meetings, delays, etc.) ● Schedules laid out based upon assumptions that eventually change during execu-

tion of the project ● Imbalance of workforce ● Differing objectives among groups ● Use of a process that allows for no flexibility to “freelance”

Midwest Corporation

(Disguised Company)

TABLE 6–1. CHANGES DUE TO BOEING 777 NEW AIRPLANE PROJECT

Situation Previous New Airplane Projects Boeing 777

Executive communications Secretive Open

Communication flow Vertical Horizontal

Thinking process Two dimensional Three dimensional

Decision-making Centralized Decentralized

Empowerment Managers Down to factory workers

Project managers Managers Down to nonmanagers

Problem solving Individual Team

Performance reviews (of managers) One way Three ways

Human resources problem focus Weak Strong

Meetings style Secretive Open

Customer involvement Very low Very high

Core values End result/quality Leadership/participation/customer satisfaction

Speed of decisions Slow Fast

Life-cycle costing Minimal Extensive

Design flexibility Minimal Extensive

342 CULTURE

● Inability to openly discuss issues without some people taking technical criticism as personal criticism

● Lack of quality planning, scheduling, and progress tracking ● No resource tracking ● Inheriting someone else’s project and finding little or no supporting documentation ● Dealing with contract or agency management ● Changing or expanding project expectations ● Constantly changing deadlines ● Last-minute requirements changes ● People on projects having hidden agendas ● Scope of the project is unclear right from the beginning ● Dependence on resources without having control over them ● Finger pointing: “It’s not my problem” ● No formal cost-estimating process ● Lack of understanding of a work breakdown structure ● Little or no customer focus ● Duplication of efforts ● Poor or lack of “voice of the customer” input on needs/wants ● Limited abilities of support people ● Lack of management direction ● No product/project champion ● Poorly run meetings ● People do not cooperate easily ● People taking offense at being asked to do the job they are expected to do, while

their managers seek only to develop a high-quality product ● Some tasks without a known duration ● People who want to be involved but do not have the skills needed to solve the problem ● Dependencies: making sure that when specs change, other things that depend on

it also change ● Dealing with daily fires without jeopardizing the scheduled work ● Overlapping assignments (three releases at once) ● Not having the right personnel assigned to the teams ● Disappearance of management support ● Work being started in “days from due date” mode, rather than in “as soon as pos-

sible” mode ● Turf protection among nonmanagement employees ● Risk management nonexistent ● Project scope creep (incremental changes that are viewed as “small” at the time but

that add up to large increments) ● Ineffective communications with overseas activities ● Vague/changing responsibilities (who is driving the bus?)

Large companies tend to favor pockets of project management rather than a company- wide culture. However, there are situations in which a company must develop a companywide culture to remain competitive. Sometimes it is simply to remain a major competitor; other times it is to become a global company.

Indra: Building a Cohesive Culture 343

6.5 INDRA: BUILDING A COHESIVE CULTURE3

At Indra, the project manager role constitutes a key factor for project success. This is because running projects is a core part of our business. As such, company policies and practices are oriented to provide full support to project managers and to give them full responsibility on the project definition and execution. In the words of our former CEO: “Project managers must look at their projects as if they were running their own business.”

This sentence distils the basis of the PM culture at Indra. It implies that a project man- ager must have an integrated approach to their job, not only focusing on main objectives tied to the triple constraint, taking care of schedule and cost baselines, but also having a business perspective and pushing to deliver results that will fulfill their business unit objec- tives (profitability, cost efficiency, development of resources, productivity, etc.) The PM foundations are shown in Figure 6–1.

The Corporate PMO provides support to around 3,300 project managers needing clear directions, missions, strategies, methodologies and a set of common tools and procedures to develop their job. We are responsible to develop and update IPMM, the Corporate PM Methodology. Based on that development, requirements for upgrading the company PMIS are defined and deployed. Ongoing support is provided both to business units and PM individuals, in terms of training and education, informal networking and participation in

3. Material provided by Alfredo Vázquez Díaz, PMP, Director, Corporate Project Management Office, Indra

Development and update of the Corporate PM Methodology

Project Management Methodology and

standards

Indra Project Management Methodology (IPMM) and

Instructions

PMIS: Negocia-

GEP/Gestiona

Corporate Project Management Informations

Systems

Corporate Project Management

Office

PM culture Defines requirements

for PMIS upgrading

Provides PM training and education at corporate level

Provides PM support to the business units

Figure 6–1. PM foundations.

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different initiatives related to PM that are required by the business units. Our final objec- tive is building and consolidating a strong and recognizable PM culture within Indra, whatever the performing unit, geography or business sector.

In 2005 we started an internal PMP certification program for a small group of senior program and project managers and business unit managers. This certification program has been carried out yearly since then, and has become one of the most required training initiatives by project managers. Business managers carefully select the candidates that participate in the program.

In total more than 950 professionals have been through the PMP training process. We achieved the objective of counting on 500 certified PMPs by the end of 2012. As of today (May 2013), we count on 558 PMPs and have around 40 people more pending to run the test.

These figures wouldn’t mean nothing without a context. For us achieving these figures mean that an important proportion of the most experienced and talented profes- sionals at Indra are well trained in PM best practices. Taking into account that our PM methodology, IPMM, is aligned with the PMBOK Guide, then we could intuit that a certified PMP could easily spread out the knowledge and experience in PM best practices in her area of influence, be this her program, project or business unit. This is a way that works when it comes to settle a strong PM culture in all branches within the company. (See Figure 6–2.)

We started in 2008 having PMPs collaborating as internal trainers by delivering con- tent of the course “Project Management at Indra,” created by the Corporate PMO. This course explains IPMM Methodology and PM information systems. Thanks to this initia- tive, we are training our people in the PMBOK standard, and at the same time, the expe- rience of the PMP trainer is used to provide a fitted project management context, using

PMP certification program

Internal std courses

+550 certified PMPs 40 PMs pending of running the

test +70 PMs starting their training

process +950 PMs trained

PMP program

Support to local companies

Spreading of PM knowledge

PMOs PM Communities

PM Culture

PMP

Yearly Since 2005 Selected by PMO Also R.E.P.s

Figure 6–2. People: Internal trainers.

Indra: Building a Cohesive Culture 345

projects and services that Indra provides to its customers as training examples. In fact, this collaboration has been a success, having win-win result for all participants:

● PMPs contribute to create a better PM culture, spreading best practices within the company and also getting PDUs to maintain their certification.

● Trainees connect directly with the content, without any interpretation that an exter- nal trainer could provide, as the teacher is a PMP who knows well which issues must be handled when it comes to manage a project in our company.

● HR training departments also win, because they can invest money in other areas that could need external trainers.

● Corporate PMO, which is supervising and supporting the consistency of the mes- sage being delivered in the training process

At the end is Indra as whole who benefits, because this PM course content has been put into e-learning format, was translated to English and Portuguese languages, and it has been included as a mandatory content in the PM training paths of every Indra company, wherever in the world this might be. (See Figure 6–3.)

In addition to this, at 2010, HR department made available to all employees one platform accessed from the intranet aimed to let people connect, share and learn from each other. This platform (named ‘Sharing knowledge’) has the look and feel of a social network and aims to support the informal exchange of knowledge and experiences between professionals. Its scope is corporate and local, and it helps to fast and easily deliver content on best practices and methodologies, management and technical issues, business information and has the possibil- ity of creating groups and communities, and even broadcasting digital content and courses.

For us, Sharing Knowledge has been a powerful tool to get our PMs on the loop and in touch with the Corporate PMO and also to keep building PM culture. We created PMPnet,

Figure 6–3. “Project Management at Indra” course in e-learning platform.

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(See Figure 6–4) for certified professionals at Indra who want to be in touch, be updated with any interesting initiative, activity or simply contribute with experiences and ideas.

Also a community of methodologies where all employees of the company have access include information relative to IPMM and its associated MIDAS libraries as seen in Figure 6–5. MIDAS is the Indra framework for different project life cycles (consulting, engineer- ing, development, integration and services)

6.6 maxIT-VCS

When you work within your own company, you often have the luxury of time for chang- ing the culture to be more supportive of project management. But when you work as a consultant and must perform miracles at a client that has a culture that refuses to support project management, life can be quite difficult. Marc Hirshfield, PMP, director, Project Management Office at maxIT-VCS, states:

As a project management consultant working at a client site, the culture of the company many times does not typically support project management. Usually, the initial reaction to a PM is skepticism until they have a PM lead a project team and implement a successful project. Once they realize the importance of project management, including a well defined workplan, status reports, issues list, etc., their opinions change. In most cases, the culture allows proj- ect management to work on an informal basis. However, a PM can be successful by slowly introducing more formal methodologies to a project that create standards for future projects.

Figure 6–4. “PMPnet” in Sharing Knowledge tool.

maxIT-VCS 347

One specific cultural barrier to an organization’s acceptance of the project manage- ment function is the perception that project management is too time-consuming, requires too much detail, and that use of the project management tool methodologies overwhelm the project. With too much emphasis on the tool, this perception can become a reality. Projects work best, and are better accepted by management, if the PM focuses on com- munication as the goal, with the tool used as simply a way to keep large amounts of tasks organized and tracked into manageable pieces.

Another large cultural challenge in our industry is scope creep. Key stakeholders, including the management staff, may request new scope to the project, which puts the proj- ect at risk. One way to overcome this challenge is to have a scope document prepared and approved before the project begins. If anyone attempts to add scope, the PM can remind the group of the original plan (scope statement) and how adding new work would impact the budget and the timeline.

Lack of commitment by key stakeholders is also a cultural challenge in our industry. Sometimes people want to be included in the decision making process, but do not wish to attend the meetings. This causes unnecessary delays, which can impact the project’s completion. One way to overcome this challenge is to meet with the key stakeholder(s) and personally ask them to attend the meeting, check their schedules in advance to ensure they are available or arrange to meet with them weekly to review all decisions and obtain

Quality Engineering

3.3. Validation and Delivery

3.2. Migration, Implementation Deployment and on Milestone Implementation

3.1. Deployment Start Up

Technology and Support

S co

pe M

an ag

em en

P ro

du ct

M an

ag em

en t

C on

fi gu

ra ti

Validation Milestone

Start up Milestone

Capability Management

Change Management

Scope, Technical Solution, Agreements ans SLA analyzed and structured

Focused on solutions and products development and acquisition

Focused on services developed as: guarantees, maintenances or pure services

SLA

MIND Need and Demand

MIDO Development-Adaptation

MITO Transformation

MISO Services

LISTINGS ROLES-PROFILES PLANNINGS TOOLS STANDARDS RESOURCES

MIDAS stands for methodology for development, tailoring and services used by Indra

START NOWMIDAS GDM ten revision

Focused on implementation, integration, validation and product delivery

Figure 6–5. MIDAS framework.

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their approval before proceeding with the project. Although, this may be additional work on the PM, it will ensure that unnecessary delays are avoided and support is provided.

We find some organizations that employ us have an expectation today for project manager certification, implying greater awareness of and desire for the professional project manager. This documentation is often requested as part of an RFP.

As project professionals, we realize the importance of managing a client’s project with consideration of their culture: taking into account their decision-making processes, formal versus informal governance and meeting management, culture of communication, etc. A good project manager is able to adapt project management tools and techniques to fit the organizational culture of the client environment.

Internally, within the context of integrating two successful consulting firms with yet a third, we have embraced a strong commitment to a culture that supports and expects project management excellence. We are integrating project management and other methodologies among the companies, selecting the “best of the best” as our standards for tools and tem- plates. We will then train consultants on those defined methodologies. We are developing our quality program based on specific expectations, so project managers have incentives to deliver to consistent standards. We recognize that projects often succeed or fail based on compliance to a solid project management foundation, and have resolved to provide the structure of methodologies, training and QA to support our consultants and our clients.

6.7 DFCU FINANCIAL4

At $3.4 billion in assets, DFCU Financial is the largest credit union in Michigan and among the top 40 largest in the nation. With a 318.7% increase in net income since 2000, DFCU Financial has never done better, and effective project implementation has played a key role. At the root of this success story is a lesson in how to leverage what is best about your corporate culture. The story is also proof that staying true to core values is a sure way to sustain success over the long haul.

Rolling back the clock to late 1997, I had just volunteered to be the Y2K project manager—the potential scope, scale and risk associated with this project scared most folks away. And with some justifica-

tion—this was not a company known for its project successes. We made it through very well, however, and it taught me a lot about the DFCU Financial culture. We did not have a fancy methodology. We did not have business unit managers who were used to being formally and actively involved in projects. We did not even have many IT resources who were used to being personally responsible for specific deliverables. What we did have, however, was a shared core value to outstanding service—to doing whatever was necessary to get the job done well. It was amazing to me how effective that value was when combined with a well-chosen sampling of formal project management techniques.

Having tasted project management success, we attempted to establish a formal project management methodology—the theory being that if a little formal project management

1997–2005: Overcoming

the Past

DFCU Financial 349

worked well, lots more would be better. In spite of its bureaucratic beauty, this methodol- ogy did not ensure a successful core system conversion in mid-2000. We were back to the drawing board concerning project management and were facing a daunting list of required projects.

With the appointment of a new president in late 2000, DFCU Financial’s executive team began to change. It did not take long for the new team to assess the cultural balance sheet. On the debit side, we faced several cultural challenges directly affecting project success:

● Lack of accountability for project execution ● Poor strategic planning and tactical prioritization ● Projects controlled almost exclusively by IT ● Project management overly bureaucratic ● Limited empowerment

On the plus side, our greatest strength was still our strong service culture. Tasked with analyzing the company’s value proposition in the market place, former senior vice presi- dent of marketing, Lee Ann Mares, made the following observations:

Through the stories that surfaced in focus groups with members and employees, it became very clear that this organization’s legacy was extraordinary service. Confirming that the DFCU brand was all about service was the easy part. Making that generality accessible and actionable was tough. How do you break a high-minded concept like outstanding service into things that people can relate to in their day-to-day jobs? We came up with three crisp, clear Guiding Principles: Make Their Day; Make It Easy; and Be An Expert. Interestingly enough, these simple rules have not only given us a common language, but have helped us to keep moving the bar higher in so many ways. We then worked with line employees from across the organization to elaborate further on the Principles. The result was a list of 13 Brand Actions—things each of us can do to provide outstanding service (Table 6–2).

While we were busy defining our brand, we were also, of course, executing proj- ects. Since 2000, we had improved our operational efficiency through countless process improvement projects. We replaced several key sub-systems. We launched new products and services and opened new branches. We also got better and better at project execution, due in large part to several specific changes we made in how we handled projects. When we looked closer at what these changes were, it was striking how remarkably congruent they were with our Guiding Principles and Brand Actions. As simple as it may sound, we got better at project management by truly living our brand.

Brand Action—Responsibility

Project control was one of the first things changed. Historically, the IT department exclu- sively controlled most projects. The company’s project managers even reported to the CIO. As former chief financial officer, Eric Schornhorst commented, “Most projects had weak or missing sponsorship on the business side. To better establish project responsibility, we moved the project managers out of IT, and we now assign them to work with a business unit manager for large-scale projects only. The project managers play more of an admin- istrative and facilitating role, with the business unit manager actually providing project

350 CULTURE

leadership.” We updated our leadership curriculum, which all managers must complete, to include a very basic project management course, laying the foundation for further profes- sional development in this area.

Guiding Principle—Make It Easy

With project ownership more clearly established, we also simplified our project plan- ning and tracking process. We began tracking all large corporate and divisional projects on a single spreadsheet that was reviewed by the executive team monthly (see Table 6–3 for the report headers). Project priority was tied directly to our strategic initiatives. Our limited resources were then applied to the most impactful and most critical projects. Eric Schornhorst commented, “Simplifying project management forms and processes has enabled us to focus more on identifying potential roadblocks and issues. We are much better at managing project risk.”

Brand Action—Goals

Chief information officer Vince Pittiglio recalled the legacy issue of IT over-commitment. “Without effective strategic and tactical planning, we used to manage more of a project

TABLE 6–2. DFCU FINANCIAL BRAND ACTIONS

Voice We recognize team members as the key to the company’s success, and each team member’s role, contributions and voice are valued.

Promise Our brand promise and its guiding principles are the foundation of DFCU Financial’s uncompromising level of service. The promise and principles are the common goals we share and must be known and owned by all of us.

Goals We communicate company objectives and key initiatives to all team members, and it is everyone’s responsibility to know them.

Clarity To create a participative working environment, we each have the right to clearly defined job expectations, training and resources to support job function and a voice in the planning and implementation of our work.

Teamwork We have the responsibility to create a teamwork environment, supporting each other to meet the needs of our members.

Protect We have the responsibility to protect the assets and information of the company and our members.

Respect We are team members serving members, and as professionals, we treat our members and each other with respect.

Responsibility We take responsibility to own issues and complaints until they are resolved or we find an appropriate resource to own them.

Empowerment We are empowered with defined expectations for addressing and resolving member issues.

Attitude We will bring a positive, “can do” attitude to work each day—it is my job!

Quality We will use service quality standards in every interaction with our members or other departments to ensure satisfaction, loyalty and retention.

Image We take pride in and support our professional image by following dress code guidelines.

Pride We will be ambassadors for DFCU Financial by speaking positively about the company and communicate comments and concerns to the appropriate source.

DFCU Financial 351

wish list than a true portfolio of key projects. We in IT would put our list of key infrastruc- ture projects together each year. As the year progressed, individual managers would add new projects to our list. Often, many of these projects had little to do with what we were really trying to achieve strategically. We had more projects than we could do effectively, and to be honest, we often prioritized projects based on IT’s convenience, rather than on what was best for the organization and our members.” Focusing on key initiatives made it possible to say “no” to low priority projects that were non-value-added or simply not in our members’ best interest. And the new measuring stick for project success was not merely whether the IT portion of the project was completed, but rather that the project met its larger objectives and contributed to the company’s success as a whole.

Brand Action—Teamwork

Historically, DFCU Financial was a strong functional organization. Cross-departmental col- laboration was rare and occurred only under very specific conditions. This cultural dynamic did not provide an optimal environment for projects. The monthly project review meeting brought together the entire executive team to discuss all current and upcoming projects. The team decided which projects were in the best interest of the organization as a whole. This critical collaboration contributed to building much more effective, cross-functional project teams. We began to develop a good sense of when a specific team or department needed to get involved in a project. We also gained a much better understanding of the concept that we will succeed or fail together and began working together better than ever.

Brand Action—Empowerment

As now retired chief operating officer Jerry Brandman pointed out, “our employees have always been positive and pleasant. But our employees were never encouraged to speak their minds, especially to management. This often had a direct negative impact on

TABLE 6–3. DFCU FINANCIAL CORPORATE PROJECTS LIST REPORT HEADERS

Column Label Column Contents

Priority 1 = Board reported and/or top priority 2 = High priority 3 = Corporate priority, but can be delayed 4 = Business unit focused or completed as time permits

Project Project Name Description Brief entry, especially for new initiatives RequirementsDocument Status R = Required

Y = Received N/A = Not needed

Status Phase (Discovery, Development, Implementation) and percentage completed for current phase

Business Owner Business unit manager who owns the project Project Manager Person assigned to this role

Projected Delivery Time The year/quarter targeted for delivery Resources Functional areas or specific staff involved Project Notes Brief narrative on major upcoming milestones or issues

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projects—people foresaw issues, but felt it was not their place to sound the alarm. A lot of the fear related to not wanting to get others ‘in trouble.’ We have been trying to make it comfortable for people to raise issues. If the emperor is naked, we want to hear about it! To make people visualize the obligation they have to speak up, I ask them to imagine they are riding on a train and that they believe they know something that could put the trip in jeopardy. They have an obligation to pull the cord and stop the train. This has not been easy for people, but we are making headway every day.”

Brand Action—Quality

At DFCU Financial project implementation in the past followed more of the big bang approach—implement everything all at once to everyone. When the planets aligned, suc- cess was possible. More often than not, however, things were not so smooth. Commented Jerry Brandman, “You have to have a process for rolling things out to your public. You also need to test the waters with a small-scale pilot whenever possible. This allows you to tweak and adjust your project in light of real feedback.” Most employees have accounts at DFCU Financial, so we found we had a convenient pilot audience for major projects such as ATM to debit card conversions and the introduction of eStatements to ensure everything functioned correctly prior to launching to the entire membership.

Bottom line, the most significant best practice at DFCU Financial has been to be true to our core cultural value of providing extraordinary service. As we were working on defining this value and finding ways to make it actionable, we were also making changes to the way we approach project management that were very well aligned with our values. Our commitment to living our brand helped us:

● Move project responsibility from IT to the business units ● Simplify project management forms and processes ● Use project review meetings to set priorities and allocate resources more effectively ● Break down organizational barriers and encourage input on projects from individu-

als across the organization ● Improve project success through pilots and feedback

As president and CEO, Mark Shobe summarized back in 2005, “good things happen when you have integrity, when you do what you say you are going to do. The improve- ments we have made in handling projects have rather naturally come out of our collective commitment to really live up to our brand promise. Have we made a lot of progress in how we manage projects? Yes. Is everything where we want it to be? Not yet. Are we moving in the right direction? You bet. And we have a real good road map to get there.”

So, how good was that road map? The preceding material was written in early 2005. By objective measures, fiscal years 2005 through 2008 were good ones for DFCU Financial (see Table 6–4). With over $2 bil-

lion in assets in late 2008, the credit union was ranking in the top 10 among its peers in the most important key measures.

So, from a purely financial perspective, DFCU was doing very well, especially given the global economic climate as 2009 began and the fact that DFCU was largely serving

2005–2009: Poised

for Growth

DFCU Financial 353

members associated with the auto industry sector that is so much a part of the notoriously troubled Michigan economy.

The solid financials were the result of the current administration’s efforts over an eight-year period to streamline and improve operations, clarify DFCU’s brand and value proposition and initiate effective project selection and execution processes.

While these efforts were underway, the executive team and board of directors were evaluating a troubling metric – one that could undermine the company’s ability to sustain its recent successes: DFCU’s membership has been nearly flat for many years – a trend affect- ing nearly all U.S. credit unions. They therefore were focused on the critical, strategic issue of growth. And again DFCU’s brand and guiding principles were helping shape the results.

Brand Actions—Voice and Quality; Guiding Principle—Make Their Day

While DFCU’s executive team and board of directors explored several growth options, work on selection of a new core processing system began in mid-2005. The core system conversion project was viewed as a strategic imperative for growth, regardless of DFCU’s operating structure. The prior system conversion in 2000 suffered from poor execution that left behind lingering data and process issues that needed to be addressed. At the start of the conversion project, which began formally in January 2006, the conversion was targeted for October of that same year. From the outset, however, we ran into difficulties with the system vendor. The vendor was going through one of its largest client expansions ever and was having a hard time satisfying all of the demands of the conversion projects in its pipeline. The impact to us was noticeable – high turnover in key vendor project team members, poor quality deliverables and lack of responsiveness to conversion issues. Due to the poor quality of the data cuts, the project conversion date was at serious risk by June.

Due to its scope, the system conversion project was the only corporate project com- missioned in 2006, and all attention was on it. It was not an easy task, therefore, to deliver the message that the project was in trouble. “Mark was well aware that we were having difficulties when we sat down to discuss whether we would have a smooth October con- version,” commented chief information officer, Vince Pittiglio. “I have had to deliver bad news before to other bosses, but the talk I had with Mark was a lot different than those I had before.” Our stated objective of this conversion was basically to do no harm. We all

TABLE 6–4. DFCU FINANCIAL RESULTS FOR QUARTER ENDING SEPTEMBER 30, 2008

Result Ranking

Metric DFCU National Peer1

Average Regional Peer2

Average National Peers Regional Peers

Return on Assets 1.94% 0.42% 0.77% 1 1

Return on Equity 13.98% 4.23% 7.19% 2 2

Efficiency Ratio 49.57% 65.41% 69.31% 5 3

Capital/Assets 13.91% 9.82% 10.69% 2 9

Total Assets $2.0B $3.4B $1.0B 39 5

150 largest credit unions as measured by total assets. 2Credit unions with at least $500 million in total assets in the states of Michigan, Pennsylvania, Ohio, Indiana, Illinois, Wisconsin and Minnesota.

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agreed that we could not put our members or our employees through the same type of conversion we experienced in July 2000. It had to be as close to a non-event as possible. According to Pittiglio, “I laid out the key issues we were facing and the fact that none of us on the project believed they could be resolved by the October date. If we kept to the original date, we believed we would negatively impact member experience.” But our CEO Mark Shobe was very clear – he insisted that this project be a quality experience for both members and employees, as we all had agreed at the outset, and he was willing to go to the board to bump the date and to put other key initiatives on hold to ensure the conversion’s success. The project team agreed upon a revised conversion date in early June 2007. According to conversion project manager and senior vice president, Martha Peters, “Though the team continued to face difficulties with the vendor, we worked hard and got it done without any major issues. It made a real difference to know that the chiefs and the board took our feedback seriously. In the end, it really was a non-event for most of our members and employees, exactly as we all wanted it to be. It was a tough decision to postpone the conversion, one that many companies are not willing to make. But it was the right decision to make – we really try to live our brand.”

Brand Action—Clarity and Teamwork

By the time the system conversion was completed in June 2007, we had really only engaged one project in the previous two years, albeit a large-scale project of strategic importance – which was consciously delayed by eight months. This project drained our resources, so little else was accomplished in those two years. “Coming out of the system conversion was this huge, pent-up project demand. And everyone thought that the issues facing their division were, of course, the most pressing,” commented former chief finan- cial officer, Eric Schornhorst. “We found out very quickly that our handy project tracking list and monthly corporate project meeting were insufficient tools for prioritizing how to deploy our scarce project resources.” A small team was quickly assembled to put together a process for initiating and approving projects more effectively and consistently. A key objective for this team was to minimize bureaucracy, while trying to establish some useful structure, including a preliminary review of all new requests by the IT division. The output was a simple flow diagram that made the steps in the request and approval process clear to everyone (see Figure 6–6) and a form that integrated the instructions for each section. As the senior vice president of human resources related at the time, “My group was one of the first to use the new process. It was surprisingly well put together and easy to use. We made the pitch to replace our learning management system with a more robust, outsourced solution. It was one of the projects that made it on the 2008 list. To be honest, we were really at the point in our company’s history where we needed a bit more discipline in this process. In years past, we independently advocated for our projects at budget time with our division heads. If we received budgetary approval, we viewed our project as ‘on the list.’ When it came time to actually execute, however, we often had trouble lining up the resources from all the different areas that needed to be involved, especially those in IT.”

The new process contributed not only to clarity regarding corporate projects, but to teamwork as well. As Schornhorst had reflected in late 2008, “We reviewed the projects requested for 2009 using the new process. While we haven’t completely addressed the backlog of projects created by the system conversion, we also have another project likely

DFCU Financial 355

to take over the majority of resources in 2009. This is not good news for areas that have not yet seen their projects addressed. What’s interesting though is how little contention there was as we reviewed the docket for 2009 – and we had to put many important things on the back burner. I think that when you have everyone review the facts together in lock step, it’s easier to get to a set of priorities that make sense for the organization and are mutually supported regardless of personal interest. It helps to bring the best out in all of us.”

So Where Was the Road Headed?

In early 2009, DFCU Financial was poised for membership growth. After a review of charter options, the board and executive team decided to remain a credit union, but to pursue other avenues for growth. To that end, as 2009 began, the board put forth for vote a proposal to DFCU’s membership for a merger CapCom Credit Union that had 9 branch locations in the lower central and western areas of Michigan. According to former chief operating officer, Jerry Brandman, “We considered many different options to address our strategic vision for growth and expansion in membership – from mergers to various internal growth strategies. While we in the credit union industry currently face the same challenges as other financial institutions, we also are an industry known for service. And here at DFCU Financial we not only talk about service – we deliver. Our employees are

Yes

Phase 1

Phase 2

Phase 3

Coorporate Project Coordinator

Places Project on Coorporate Project

List

Business Owner Completes Project

Requirements

Go To PM Process

Corporate Project Coordinator

Places Project on Pending List

Corporate Projects Team Reviews

New or Pending Request

Request Disposition? Denied End

Corporate Project Team identifies

team, PM, timing, priority

Corporate Project Coordinator (CPC)

Adds Project to Meeting Agenda

Start

Business Owner Identifies Project

Need

Business Owner Completes the

Project Request Form

Business Owner Emails Request to Corporate Projects

Team & IM&D Project Review

Possible IT Solution?

Yes

Business Owner to Call Meeting with

Requested Attendees

IT Requests Initial Meeting?

IM&D Updates Work Estimate

Request is Complete?

CPC & IM&D Agree to

Proceed? No

Phase 4

Approved Pending

Approved

Yes

Figure 6–6. DFCU Financial’s project initiation process.

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happy and enthusiastic. They treat our members very well. We have been rated in the top 101 companies to work for in southeastern Michigan for 5 years in a row, based on feed- back from our employees. And we have a member shops program that shows us how our service stacks up to industry benchmarks. We have consistently performed at the highest level of service relative to our peers. Merging with CapCom and shifting to a community charter will provide us the growth we need to ensure a bright future for our members and our employees. It will allow us to spread the DFCU brand to other geographic areas. We believe this proposal will be appealing to our members and will be successful. We believe that people want to be a part of our organization.”

And for good reason. Also in early 2009, DFCU Financial paid out a $17 million patronage dividend to its members for the third consecutive year, for a total of more than $50 million being paid out since inception, during one of the worst economic times to hit the Motor City in decades. According to Keri Boyd, senior vice president of marketing at the time, “Since we are committed to remaining a credit union, we have looked at ways we could improve our value proposition to existing members and attract new members. The patronage dividend is the cornerstone of our approach to growing the business as a credit union.” As Mark Shobe summed it up, “The board and I did not want to begin the payout until we were confident that we could sustain it over the years. It took hard work, some tough decisions, excellent project execution and diligence in our day-to-day operations to be in the position to share our success with our membership. The simple truth is that the driving force behind our success is our collective commitment to our brand.” So, with a 2009 schedule of agreed-upon projects, a potential merger in the offing and some very, very satisfied members, how is the DFCU road map working? “Quite well, thank you!” replied Mark.

During this most recent period in DFCU Financial’s history, we have made good progress on our strategic goal of growth. We completed the CapCom merger in late 2009, the same year we began due diligence

for another merger with MidWest Financial Credit Union, based in Ann Arbor, Michigan. The MidWest merger was completed in early 2011. In January 2012 we opened a new branch we built in Novi, Michigan, and at the time of this writing we are building a new branch for the Ann Arbor market that is expected to open in May 2013. Table 6–5 sum- marizes the key growth metrics for the last four years.

Just as we set out to do, we have indeed grown the business through merger and new branch projects. But growth is not the only measure of success. If managed poorly, growth can have a deleterious effect on core financials, service and employee morale. So, how have we done?

During this same period of time, we have maintained a strong position financially when compared with our peers. Our financial strength has allowed us to continue to pay out an annual Patronage Dividend to our membership. In January 2013, we paid out our 7th dividend totaling $21.8 million, accounting for an accumulated total of $133.4 million since 2006. Member satisfaction has never been higher as measured through our member shops program, and in 2012 we were again in the top ranks on this element when bench- marked against our peers.

Not least importantly, we have continued to receive awards that recognize DFCU Financial as a premier employer – awards that are based solely on employee feedback

2009–2013: Paying

Dividends in More Ways

Than One

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– such as the 101 Best and Brightest Companies to Work For and the Detroit Free Press “Top Workplace” awards.

We have also been recognized for our growth and geographic expansion over the last few years by being named a Michigan Economic “Bright Spot” by Corp! Magazine. These successes are summarized in Table 6–6.

Brand Is Still How We Do It

When we grow by building new branches, the DFCU Financial brand extends rather natu- rally. In new branch projects, all elements of brand are well controlled – from the look and feel of the facility, to the training and on boarding of new employees, to even the project methodology we use. Growth by merger is not as organic. Ensuring that brand is protected through these projects is no small feat. According to president and CEO Mark Shobe, “In seeking potential merger partners, we look for organizations that are not only a good fit strategically, but which also ostensibly share our core values. But no matter how well suited the match appears to be, the biggest challenge in any merger project is culture.”

TABLE 6–5. DFCU FINANCIAL GROWTH METRICS

2000 2008 2009 2010 2011 2012

Number of Members 170,812 167,910 201,329 218,374 213,869 214,454 Number of Branches 6 12 12 21 22 23

409 336 434 426 408 413

Assets in Billions $1.2 $1.9 $2.4 $2.7 $3.0 $3.2

TABLE 6–6. DFCU FINANCIAL SUCCESS METRICS

2000 2008 2009 2010 2011 2012

Key Financial Metrics1

Return on Assets 1.01% 1.69% 1.25% 1.23% 1.38% 1.55% 13.08% 12.06% 9.52% 9.53% 11.11% 12.36%

77.50% 50.84% 52.90% 54.73% 57.56% 52.26%

Capital/Assets 7.66% 14.00% 13.12% 12.94% 12.70% 12.49% Special Patronage Dividend

Total Payout in Millions - $17.5 $19.3 $18.9 $21.1 $21.8 Member Satisfaction

Member Shops 0 – 5 scale - 4.80 4.86 4.89 4.96 4.972

Best & Brightest – Metro Detroit3 - ✓ ✓ ✓ ✓ ✓ - - - - - ✓

Best & Brightest – National - - - - - ✓

1Compared to our top 50 national peers, DFCU ranked 8th in ROA, 15th in ROE, 5th in efficiency and 5th in C/A as of 12/31/12. 2Versus a peer compare score of 4.82 for 2012. Note: Shops began in 2002 with a baseline of 4.05. 3DFCU has received the 101 Best & Brightest Companies to Work For-Metro Detroit for 8 consecutive years.

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Brand Action—Goals and Clarity

CapCom was the first merger DFCU Financial completed during this period. It provided us access to two new geographical markets, but most importantly, it presented us with an opportunity for charter change. Originally a federally chartered credit union, DFCU Financial is now a state chartered, community credit union that has growth access to all counties in Michigan’s lower peninsula. To change the charter required a vote of the membership. The membership charter vote was one of the most important tasks within the scope of the CapCom merger project. According senior vice president for strategic marketing and operations, Martha Peters, who was the CapCom merger project manager:

For us to achieve what we set out to with this merger, we not only needed to successfully integrate systems and functional areas, we also needed to make a compelling argument to our existing membership base to change our business structure. In making both things hap- pen, we leveraged our brand. We needed to assure our existing members that we would be the same DFCU they had relied upon – only better, while at the same time we had to dem- onstrate to our new CapCom colleagues how they and the members they historically served would benefit by adopting the DFCU Financial culture. To facilitate our success on this project, we were very careful about how we structured the project and communicated our goals. We established a steering committee, comprised of DFCU and CapCom executives, which was responsible for making all major project decisions and assessing and commu- nicating the member and staff impact of these decisions. This structure helped us to keep a pulse on employee and member feedback and to address project risk very effectively.

All key objectives of this project were met – the charter change, the functional inte- gration, the legal merger and the system integration – and, more importantly, the DFCU Financial brand came out a winner.

Brand Actions—Respect and Responsibility; Guiding Principle—Make It Easy

As the CapCom merger was successfully wrapping up, I was assigned as project manager for the MidWest Financial merger. While charter change figured heavily in the CapCom merger, it was also a project where we learned a lot about how to do mergers. Since we conducted a formal lessons learned exercise coming out of the CapCom merger, I was able to re-use the elements that worked and focus on the areas that needed strengthening.

Being a small company, we do not have dedicated project management resources. Front-line and back office business unit managers and their teams are expected to partici- pate as project team members, and often serve as project managers. In our merger projects, all managers are responsible for all functional integration tasks that relate to their business unit. They are essentially the project manager for their functional area. Managers whose operations are tightly coupled with the core computer system have even greater responsi- bility to ensure that data from the relinquishing system is safely and correctly converted into the surviving system. It is a daunting set of responsibilities.

One of the lessons learned from the CapCom merger is that these responsibilities were not clear to everyone, so we had varying degrees of compliance with project methodology. By the same token, we all learned together on that first merger what the big pieces were and how they fit together. To build on what we learned from CapCom, I worked with the executive team to develop a project charter that explained project scope, goals, structure

DFCU Financial 359

and participant responsibilities and featured the review of this document at the kick off meeting. Then, to make this large-scale project more manageable for the business unit managers, I pulled together the small set of tools that everyone was required to use - our usual project database in Lotus Notes, a simple task list template in Excel and a simple status reporting template - and clearly articulated the rules of engagement: 1) the tools had to be proactively used, 2) tasks lists and status reports posted by deadline to the database and 3) the project manager for each area had to review their written, posted status report at each project meeting with the entire project team. I made myself readily available to anyone who needed help using the tools and was happy to see the extent to which we increased our project management competency through this project.

The methodology requirements and tool set we insisted upon project leads and par- ticipants using for the MidWest project paid big dividends for us, and not just for that merger project.

Brand Actions—Empowerment, Responsibility, and Quality

With two mergers happening back to back and the first occurring not too long after our major core system conversion in 2007, our project backlog was growing by the day. A real moment of reckoning occurred in October 2010 when the MidWest merger was still in full swing. One of the issues that had arisen during the CapCom merger related to cash dispenser machines (CDMs). All original DFCU branches had CDMs serving each teller window. CapCom’s branches did not. Rather than purchasing CDMs for CapCom, we re- wrote dozens of cash operations procedures to accommodate branches with and without CDMs. While this solved the immediate issue, branch senior management did not like the complexity this inserted in operations. Also having other, more technical concerns about CDMs, the management team decided to evaluate de-implementing CDMs. They quietly worked on a pilot in one of the busier branches. They liked the result, and decided to move immediately to de-implementation system-wide. In short order, we had another project happening somewhat under the radar in the midst of a merger. It was time to pull the brake on the train. According to Steven Schulman, senior vice president of branch development, “There I was, recently promoted to SVP and my first big task was to get rid of our CDMs. No big deal, right? All of a sudden, I’m facing lots of questions from other managers – Have you thought about the impact to procedures? Are the units fully amor- tized? Is Facilties going to patch the teller cabinetry – do they have budget for that? Do we need to remove the CDM cash boxes from the system? And so on. I felt I was doing the right thing, but it became clear to me that to do it right way, I needed to follow our normal project management protocols. Lessons learned!”

The CDM de-implementation project was a watershed moment for us on a number of levels. It was absolutely the right thing to do and was probably not wise to put off for much longer. At that same time, all of us business unit managers had numerous projects of both large and small scale on our to do lists, and some of them, just like this one, really needed to proceed – in spite of the merger. So, for the benefit of all parties concerned, we really needed to push out our project methodology and tool set to a much broader audience. So, we got Steven the tools he needed to get his project done, and then spent 2011 not only finishing the MidWest merger, but also putting into place some improvements in how we manage projects and communicate about them. Though we still use dedicated databases for large scale projects

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like mergers, we rolled out the Corporate Projects database in Lotus Notes that contains proj- ect templates and provides a place to post documents for all active projects (see Figure 6–7).

In late 2011 we also introduced a formal Business Change Process designed to ensure that we avoid another surprise project like CDM de-implementation. The process is light on bureaucracy and requires business unit managers to start the conversation by putting in a quick ticket to a support database that describes the problem they need to solve or the project they believe needs to be engaged. We have a small business change committee, comprised of representatives from each division, that reviews the tickets each week to better understand the scope of each initiative and to determine which areas need to be involved. In some cases, business change tickets move on to corporate project stature, subject to our formal project management protocols. In most cases, however, the business change initiatives proceed as small-scale projects that are worked on as time permits, in deference to the approved corpo- rate projects and the required recurring projects like core system updates and tax reporting.

Along with this process change, we created a new project list that summarizes all proj- ects in play at any given point in time and allows management to understand not only project priorities, but where the resources across the company are currently committed (see Figure 6–8). The list is released monthly to all management who are encouraged to take the time to review what is on the list and to share what they feel is appropriate with their teams. The intent of new project list is to ensure better transparency on how resources are being deployed on projects and to build awareness on initiatives that will eventually impact staff and/or members.

And the Brand Lives On

We have had significant financial success over the last several years, and the executive team is very focused on sustaining that success over the long haul. The DFCU Financial brand guides us in what we need to do, and in many cases, how and when we need to do it. Our brand has had a lot to do with shaping how we approach projects because it reflects how we think about ourselves and what we want to achieve. We will continue to make progress as we can on our strategy of managed growth. Our recently completed branch expansion study will inform our decisions for building new branches, and though the envi- ronment is changing, we continue to look for merger opportunities. At the same time, we are looking carefully for ways to improve, to take our products, services and processes to the next level. So, as we start 2013, we have plenty of projects and initiatives in the works that found their starting point in brand.

Figure 6–7. DFCU Finanical’s corporate projects database.

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Brand Action—Protect

Like other financial services organizations, DFCU Financial has been facing lower net interest revenue due to the repricing of our loan and investment portfolios caused by the protracted low rate environment and increasing pressure on fee income from what is described as ‘consumer protection.’ This has translated into a loss about about $6 million annually for DFCU over the last several years. Chief financial officer, Marv Elenbaas has been keeping the management team focused on a couple of key metrics that are extremely important to watch during times of tight margin compression: core net operating revenue growth and core non-interest expense growth. He also demonstrates the impact the environment is having on us by including in the monthly financials the average earning asset yield for the past five quarters, which went from 3.34% at the end of the 4th

quarter 2011 to 2.66% at the end of the 4th quarter 2012. By building awareness about the impact the environment was having on our core financials, Marv was able to make the case and gain support for a project to perform a thorough review and analysis of our fee structures. But feeing members is a topic about which different areas in the credit union have very passionate, and often diametrically opposed, views. And these views are solidly rationalized against our brand. To ensure a productive, collaborative analysis and decision making process, Marv looked to an objective third party to facilitate the review. The key project deliverable was a set of fee change recommendations. According to Marv, “The fee changes agreed upon through this project are well supported and well understood by all par- ties and, most importantly, reflect a balance of our brand principles. The plan addresses the critical need for increasing our revenue stream over the next few years. At the same time, it ensures that DFCU continues to offer a solid value proposition to members. Not only have

Figure 6–8. DFCU Finanical’s resource planning document.

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members benefited from the downward repricing of loan rates, we are still positioned as less aggressive on fees when benchmarked with our peers, allowing us to maintain our ‘make their day’ claim in the marketplace. It is not often that stakeholders from finance, customer service and marketing agree on a topic like fees, but we came pretty close.”

Guiding Principles—Make Their Day and Make It Easy

One of the major infrastructure projects engaged as we wrapped up the recent mergers was the implementation of a new, robust enterprise content management system. While the initial phases of this multiyear initiative are unremarkable, though foundational – replacing the existing document archive and converting content – the later phases are expected to delight employees and members by capturing signatures electronically on account paper- work, eliminating the handling and movement of paper, providing expanded self-service eDocuments to members and moving from paper vouchers and receipts on the teller line to eReceipts – things our employees and members have been requesting for a while as more and more businesses go green.

Brand Action—Voice

To ensure that we sustain our position as a preferred employer and to strengthen employee retention, which is sure to be challenged as the Michigan economy improves, human resources launched a new and improved employee suggestion process at our annual employee meeting in January 2013. This solid commitment to listening to employee feed- back will no doubt be the starting point for projects and initiatives designed to attract and retain the talent DFCU will need to take our business to the next level.

Brand Action—Promise

2013 is also a year in which we will focus on assessing and improving internal customer service. According to Keri Boyd, executive vice president for corporate development, “Our front line staff who provide direct member service have been shopped for years – and their scores are impressive. But we have been asking ourselves: can we be even better? This questioning has led us to look more broadly at the service delivery process. When front line team members need help, they seek it from our back office areas – whether IT, opera- tions, underwriting, collections. We want to ensure that those interactions are as support- ive, positive and effective as possible. We are all part of the service value chain. Looking closely at internal service, we will be able to identify areas for improvement.”

Guiding Principle—Be an Expert

A critical component of outstanding member service is competence, hence the call to ‘be an expert.’ When we were going through our core system conversion, everything was new for every area, so documenting detailed procedures was an imperative component of that project. Policy and procedure loomed large in the merger projects as well since we needed to ensure new team members were clear on the DFCU way. According to delivery channel support supervisor, Kelly Kidwell, “We now have a very seasoned team, yet we are seeing some evidence of a literal reliance on our written knowledge base which sometimes gets in the way of effective problem solving and decision making when providing member service. This is a big concern for me as my area writes and maintains all operational policies and procedures

ILLUMINAT (Trinidad & Tobago) Limited 363

and provides phone support to front line team members on operational matters.” To begin to address this trend, Kelly initiated a “solve the right problem” campaign with her team and is coaching them to improve their listening and facilitation skills when providing support to the front line and is encouraging internal discussion about what is working and what is not. This initiative has already helped identify the need to overhaul our service delivery processes for deceased and fiduciary accounts, a project that will get underway in mid-2013.

Guiding Principle—Make It Easy

While we were focused on system conversion and mergers, we did not have the band width to address our delivery channels. As Martha Peters, senior vice president for strate- gic marketing and operations, notes, “We had to keep some things constant. Mergers and conversions present huge changes by themselves. We could not risk also making channel changes, which are always disruptive to our members. So, needless to say, the last couple of years have been all about the channels. In 2012, I led projects to switch out our ATM terminal driving platform, replace our IVR and launch our mobile banking application. We are currently going through the RFP process to replace our internet banking channel. We are targeting that change for 2014. A key strategic requirement for all of these initia- tives is to simplify our solutions and make it easier for us to change and improve. To do so, we need to move from our currently highly customized platforms to solutions that will allow us to adapt more rapidly to changes in technology and in the market place.”

As DFCU Financial embarks on the next leg of its journey, the road map is more about honing expertise, improving the quality of service delivery and being successful and nimble in an increasingly wired world. And, as usual, the ‘how’ of our journey will be guided by our interest in sustaining and building upon our success and leveraging our brand to do so.

6.8 ILLUMINAT (TRINIDAD & TOBAGO) LIMITED

On paper, the merger of two or more companies may look easy. But if the companies have different cultures, and each culture has a different view of the benefits of project manage- ment, the actual merger may not produce the benefits expected. The remainder of this section has been provided by Cynthia James-Cramer, EMBA, PMP, Consultant, Project Management Services, ILLUMINAT (Trinidad & Tobago) Limited.

A merger of companies always brings some inherent challenges to the newly formed organization. The methods employed in rising to these challenges would determine not only the success of the merger but also

how soon the operations can reach a level of efficient operations. When three entities of the ITC group (Information Technology & Communications) of

the Neal & Massy Holdings company merged in the year 2001, September 11, the then CEO of ILLUMINAT, Mr. Keith Thomas, embarked on a thrust to introduce the organization to a Professional Services Methodology (Profserv) in which a project management methodol- ogy was embedded along with organizational learning and organizational adoption.

Of the three entities, only one company previously had a culture that supported project management because of its IT focus and had introduced the concept of a project office

Managing the PM Culture

in a Merger

364 CULTURE

just prior to the merger. The tasks before the CEO were now to not only implement the Profserv methodology but also to institutionalize a project management culture. This was essential as the new company’s mission was now focused on providing solutions which spanned the offerings of all three entities distinct from their previous undertakings of pro- viding products and services.

The CEO issued a mandate for adoption of the Profserv methodology to all employees inclusive of senior management who was held respon- sible for the success of its execution. A similar mandate was extended

to a companywide adoption of a standard approach to project management.

First all managers, team leaders, and key department resources were sensitized to a project management culture and also shown what fall- outs can emerge when such a culture does not exist. The evidence was

apparent from a research done on a sample of key projects, which were executed without a project management methodology that clearly demonstrated where things went wrong and the impact on the success of these projects. The response and feedback from the employees were tremendous, which resulted in some employees’ eagerness on the training up ahead. The organization itself was restructured to a team-based approach to services delivery and, where relevant, the supervisor and manager roles were renamed team leader.

The project office was now refocused to a project management office (PMO) with a mandate to establish and roll out a common project management methodology and to act as a repository for disseminating project management information as well as for maturing the culture in the short and long term. The organization’s leadership showed its commit- ment by investing in staff training and complementing the existing staff with suitable, experienced project management recruitment.

The merger challenges of mixed cultures, merged departments, merged functions, and varying levels of project management maturity or the absence of it were now bridged and tackled as a single test. The emerg-

ing success has been rewarding as the team approach has taken off. There is now a stan- dardized approach to the whole services delivery cycle from winning the opportunity to implementing the solution. There has also been evidence of an increase in repeat business from existing customers and the opportunity for sole tendering.

Recently another research was done with a similar sample of projects to the first research, this time with projects executed using the project management methodology. The results spoke myriads to improved project success.

Top management is continuing its investment in the project manage- ment culture by supporting the ongoing development of the PMO staff

and its endeavors. The PMO, in keeping its visibility in the organization, has launched a team-based annual recognition award program and has started a quarterly newsletter, which is circulated through the entire organization. The newsletter reports on project inventory, project successes, and project management–focused tidbits. Along with these

The Mandate

The Approach

The Success

Sustaining the PM Culture

DTE Energy 365

efforts, staff with a specific interest in the discipline are encouraged to pursue the basic project management certification, some have already done so, and others are taking up the challenge. In addition, new employees are introduced to the PMO through the new- employee orientation program. Yet another thrust is planned internal training for all key delivery personnel to reinforce the project management methodology.

Adopting a PM culture in a merger may look insurmountable at first, but by following best business practices of top management buy-in,

involvement, and support, half of the job gets done. The rest lies with the PMO to stay visible by mentoring, teaching, and providing the necessary information and support to all arms of the organization until the transfer of the culture has been embedded.

In the words of the then CEO:

Getting started! The approach to adoption is perhaps the most critical aspect of any change process. Arguably more critical than the change itself, it must be very carefully thought through and implemented. What follows is the result of due deliberation on the part of management and feedback from staff focus groups.

Some believe that Adults accept new approaches best when they understand why. Therefore, we would begin with organization-wide sessions on the WHY.

This would be followed by the HOW.

6.9 DTE ENERGY

Tim Menke, PMP®, Senior Continuous Improvement Expert, DO Performance Management at DTE Energy, describes the culture at DTE Energy:

While the level of support for project management varies across departments, generally it is increasing overall. Several years ago it was common to find experienced practitioners managing large, high visibility projects using both internal and external methodologies. Today practitioners can be found across the company applying the tools and techniques to a variety of projects. In some cases this is a result of stakeholder expectations. In other cases, this is driven by the person managing the project. The Continuous Improvement Project Management Methodology is used by all Lean Six Sigma Black Belt Candidates at DTE Energy as it is. . . . required of all projects submitted in support of certification.

Both formal and informal project management approaches are used. Projects report- ing progress to governance boards or stakeholder committees tend to be managed more formally. Most departments have implemented progress reporting templates to drive con- sistency. Projects managed within a Director’s organization or below tend to be managed less formally. Recognizing all projects do not require the same level of project manage- ment rigor, our Continuous Improvement Project Management Methodology has been revised to “scale” to the particular project and stakeholder needs.

Challenges to implementing project and program management we have experienced include:

● Stakeholders driving scope creep ● Project Managers with varied experience levels ● Team members struggling to balancing operational and project needs

Conclusion

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Ways we have overcome these barriers include:

● Peer-to-peer mentoring by experienced practitioners ● Employee development plan activities to improve proficiency ● Increased focus on managing the matrix reporting relationship

6.10 HEWLETT-PACKARD

Doug Bolzman, Consultant Architect, PMP®, ITIL Expert at HP, believes that: In many cases, instituting project management an enabling is part of the cultural

change required by an organization. When major improvements are needed, the culture is improved by instituting PM and PM cannot depend on the culture being there.

Implementing Enterprise wide releases/projects requires the culture to move the organization from a functional to matrix management, move the delivery from project centric to component centric and move the planning from tactical (emotional) to strategic (analytical) planning. This level of cultural change needs to be identified, designed and implemented.

We recently worked with a PMO for an organization that was primarily managing individual projects, had the typical dashboard in place to communicate status, and was basically an administrative function for the organization. We offered them the opportunity to be a “premier PMO” and that we could help them implement a number of best practices to allow them to:

1. Direct the IT Service Roadmap in terms of releases to the client

a. In relationship to the timing of business needs b. In relationship to the compatibility / integration of the services/architectures

2. Manage/Integrate IT Service Releases

a. For each Service/Delivery Team b. Utilizing the Service Management Lifecycle c. Manage integration and dependencies for each release

3. Own the Design & Implementation of Non-Standard Service Requests

a. Projects, Onboarding, Applications, Employee Moves b. Establish a quarterly forecast and open Purchase Order to bill requests

4. Communicate to the IT Service Owner and/or Client on Service Status 5. Establish and Measure IT Service Lifecycles / Policies

a. Establish the overall Service Management Lifecycle and continually improve b. Institute consistency for how services are delivered (i.e. Change Policy) c. Onboard Leveraged Service Providers to proper client & pharmaceutical standards

Since the PMO did not formally “recognize” ITIL as a best practice, they declined the opportunity to advance or mature their project management services and kept to their

Barriers to Implementing Project Management in Emerging Markets 367

administrative practices. They had the opportunity to be a significant driving force for their company and provide value in the management of the overall IT direction but did not want to change, they desired status quo.

The next client we worked with had a PMO established with the same basic param- eters of providing project support. As we presented this opportunity, they jumped for joy over the fact that someone was willing to help them be more valuable to the business and to get the out of “administration mode”. So the moral to the story is, the opportunities are available (through the leveraging of best practices) and the people who will take advantage of the best practices are the ones who desire to provide service excellence.

6.11 BARRIERS TO IMPLEMENTING PROJECT

MANAGEMENT IN EMERGING MARKETS

Growth in computer technology and virtual teams has made the world smaller. First world nations are flocking to emerging market nations to get access to the abundance of highly qualified human capital that is relatively inexpensive and want to participate in virtual project management teams. There is no question that there exists an ample supply of talent in these emerging market nations. These talented folks have a reasonable understanding of project management and some consider it an honor to work on virtual project teams.

But working on virtual project management teams may come with headaches. While the relative acceptance of project management appears at the working levels where the team members operate, further up in the hierarchy there might be resistance to the implementa- tion and acceptance of project management. Because of the growth of project management worldwide, many executives openly provide “lip service” to its acceptance yet, behind the scenes, create significant barriers to prevent it from working properly. This creates significant hardships for those portions of the virtual teams in first world nations that must rely upon their other team members for support. The ultimate result might be frustrations stemming from poor information flow, extremely long decision-making processes, poor cost control, and an abundance of external dependencies that elongate schedules beyond the buyer’s con- tractual dates. Simply stated, there are strong cultural issues that need to be considered. In this section, we will typically use the United States as an example of the first world nations.

Barriers to effective project management implementation exist worldwide, not merely in emerging market nations. But in emerging market nations, the barriers are more appar- ent. For simplicity sake, the barriers can be classified into four categories:

● Cultural barriers ● Status and political barriers ● Project management barriers ● Other barriers

A culture is a set of beliefs that people follow. Every company could have its own culture. Some companies may even have multiple cul- tures. Some cultures are strong while others are weak. In some emerg-

Culture

368 CULTURE

ing market nations, there exist national cultures that can be so strong that they dictate the corporate cultures. There are numerous factors that can influence the culture of an organi- zation. Only those factors that can have an impact on the implementation and acceptance of project management are discussed here and include:

● Bureaucratic centralization of authority in the hands of a few ● Lack of meaningful or real executive sponsorship ● Importance of the organizational hierarchy ● Improper legal laws ● The potential for corruption

Centralization of Authority: Many countries maintain a culture in which very few peo- ple have the authority to make decisions. Decision-making rests in the hands of a few and it serves as a source of vast power. This factor exists in both privately held companies and governmental organizations. Project management advocates decentralization of authority and decision-making. In many countries, the senior-most level of management will never surrender their authority, power, or right to make decisions to project managers. In these countries an appointment to the senior levels of management is not necessarily based upon performance. Instead, it is based upon age, belonging to the right political party, and personal contacts within the government. The result can be executives that possess little knowledge of their own business or who lack the leadership capacity.

Executive Sponsorship: Project sponsorship might exist somewhere in the company but most certainly not at the executive levels. There are two reasons for this. First, senior managers know their limitations and may have absolutely no knowledge about the project. Therefore, they could be prone to making serious blunders that could become visible to the people that put them into these power positions. Second, and possibly most important, acting as an executive sponsor on a project that could fail could signal the end of the executive’s political career. Therefore, sponsorship, if it exists at all, may be at a low level in the organizational hierarchy, and at a level where people are expendable if the project fails. The result is that project managers end up with sponsors who either cannot or will not help them in time of trouble.

Organizational Hierarchy: In the United States, project managers generally have the right to talk to anyone in the company to get information relative to the project. The intent is to get work to flow horizontally as well as vertically. In some emerging market nations, the project manager must follow the chain of command. The organizational hierarchy is sacred. Following the chain of command certainly elongates the decision-making process to the point where the project manager has no idea how long it will take to get access to needed information or for a decision to be made even though a sponsor exists. There is no mature infrastructure in place to support project management. The infrastructure exists to filter bad news from the executive levels and to justify the existence of each functional manager.

In the United States, the “buck” stops at the sponsor. Sponsors have ultimate decision- making authority and are expected to assist the project managers during a crisis. The role of the sponsor is clearly defined and may be described in detail in the enterprise project management methodology. But in some emerging market countries, even the sponsor might not be authorized to make a decision. Some decisions may need to go as high as a govern- ment minister. Simply stated, one does not know where and when the decision needs to be

Barriers to Implementing Project Management in Emerging Markets 369

made and where it will be made. Also, in the United States reporting bad news ends up in the hands of the project sponsor. In some nations, the news may go as high as government ministers. Simply stated, you cannot be sure where project information will end up.

Improper Legal Laws: Not all laws in emerging market nations are viewed by other nations as being legal laws. Yet American project managers, partnering with these nations, must abide by these laws. As an example, procurement contracts may be awarded not to the most qualified supplier or to the lowest bidder but to any bidder that resides in a city that has a high unemployment level. As another example, some nations have laws that imply that bribes are an acceptable practice when awarding contracts. Some contracts might also be awarded to relatives and friends rather than the best qualified supplier.

Potential for Corruption: Corruption can and does exist in some countries and plays havoc on project managers that focus on the triple constraint. Project managers tradition- ally lay out a plan to meet the objectives and the triple constraint. Project managers also assume that everything will be done systematically and in an orderly manner, which assumes no corruption. But in some nations, there are potentially corrupt individuals or organizations that will do everything possible to stop or slow down the project, until they could benefit personally.

Status and politics are prevalent everywhere and can have a negative impact on project management. In some emerging market nations, status and politics actually sabotage project management and prevent

it from working correctly. Factors that can affect project management include:

● Legal formalities and government constraints ● Insecurity at the executive levels ● Status consciousness ● Social obligations ● Internal politics ● Unemployment and poverty ● Attitude toward workers ● Inefficiencies ● Lack of dedication al all levels ● Lack of honesty

Legal Formalities and Government Constraints: Here in the United States, we believe that employees that perform poorly can be removed from the project or even fired. But in some emerging market nations, employees have the right to hold a job even if their per- formance is substandard. Having a job and a regular paycheck is a luxury. There are laws that clearly state under what conditions a worker can be fired, if at all.

There are also laws on the use of overtime. Overtime may not be allowed because paying someone to work overtime could eventually end up creating a new social class. Therefore, overtime may not be used as a means to maintain or accelerate a schedule that is in trouble.

Insecurity: Executives often feel insecurity more so than the managers beneath them because their positions may be the result of political appointments. As such project man- agers may be seen as the stars of the future and may be viewed as a threat to executives.

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Allowing project managers who are working on highly successful projects to make pre- sentations to the senior-most levels of management in the government could be mired. If the project is in trouble, then the project manager may be forced to make the presentation. Executives are afraid of project managers.

Status Consciousness: Corporate officers in emerging market nations are highly status conscious. They have a very real fear that the implementation of project management may force them to lose their status, yet they refuse to function as active project sponsors. Status often is accompanied by fringe benefits such as a company car and other special privileges.

Social Obligations: In emerging market nations, social obligations due to religious beliefs (and possibly superstitious beliefs) and politics may be more important than in first world nations. Social obligations are ways of maintaining alliances with those people that have put an executive or a project manager in power. As such, project managers may not be allowed to interface socially with certain groups. This could also be viewed as a threat to project management implementation.

Internal Politics: Internal politics exist in every company in the world. Before execu- tives consider throwing their support behind a new approach such as project management, they worry about whether they will become stronger or weaker, have more or less author- ity, and have a greater or lesser chance for advancement. This is one of the reasons why only a small percentage of emerging market companies have PMOs. Whichever executive gets control of the PMO could become more powerful than other executives. In the United States, we have solved this problem by allowing several executives to have their own PMO. But in the emerging markets, this is viewed as excessive headcount.

Unemployment and Government Constraints: Virtually all executives understand proj- ect management and the accompanying benefits, yet they remain silent rather than visibly showing their support. One of the benefits of project management implementation is that it can make organizations more efficient to the point where fewer resources are needed to perform the required work. This can be a threat to an executive because, unless additional business can be found, efficiency can result in downsizing the company, reducing the executive’s power and authority, increasing the unemployment level, and possibly increas- ing poverty in the community. Therefore, the increased efficiencies of project management could be looked upon unfavorably.

Attitude toward Employees: In some nations, employees might be viewed as stepping- stones to building an empire. Hiring three below-average workers to do the same work as two average workers is better for empire building, yet possibly at the expense of the proj- ect’s budget and schedule. It is true, however, that finding adequate human resources may be difficult, but sometimes companies simply do not put forth a good effort in their search. Friends and family members may be hired first regardless of their qualifications. The prob- lem is further complicated when one must find people with project management expertise.

Inefficiencies: Previously, we stated that companies might find it difficult to hire highly efficient people in project management. Not all people are efficient. Some people simply are not committed to their work even though they understand project management. Other people may get frustrated when they realize that they do not have the power, author- ity, or responsibility of their colleagues in first world countries. Sometimes, new hirers that want to be efficient workers are pressured by the culture to remain inefficient or else the individual’s colleagues will be identified as poor workers. Peer pressure exists and can prevent people from demonstrating their true potential.

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Lack of Dedication: It is hard to get people motivated when they believe they cannot lose their job. People are simply not dedicated to the triple constraint. Some people prefer to see schedules slip because it provides some degree of security for a longer period of time. There is also a lack of dedication for project closure. As a project begins to wind down, employees will begin looking for a home on some other project. They might even leave their current project prematurely, before the work is finished, to guarantee employ- ment elsewhere.

Honesty: People working in emerging market countries have a tendency to hide things from fellow workers and project managers, especially bad news, either to keep their pres- tige or to retain their power and authority. This creates a huge barrier for project managers that rely upon timely information, whether good or bad, in order to manage the project successfully. Delays in reporting could waste valuable time when corrective action could have been taken.

While culture, status, and politics can create barriers for any new man- agement philosophy, there are other barriers that are directly related to project management, including:

● Cost of project management implementation ● Risks of implementation failure ● Cost of training and training limitations ● Need for sophistication ● Lack of closure on projects ● Work ethic ● Poor planning

Cost of Implementation: There is a cost associated with the implementation of proj- ect management. The company must purchase hardware and software, create a project management methodology, and develop project performance reporting techniques. This requires a significant financial expenditure, which the company might not be able to afford, and also requires significant resources to be tied up in implementation for an extended period of time. With limited resources, and the fact that the better resources would be required for implementation and removed from ongoing work, companies shy away from project management even though they know the benefits.

Risk of Failure: Even if a company is willing to invest the time and money for project management implementation, there is a significant risk that implementation will fail. And even if implementation is successful but projects begin to fail for any number of reasons, blame will be placed upon faulty implementation. Executives may find that their position in the hierarchy is now insecure once they have to explain the time and money expended for no real results. This is why some executives either refuse to accept or visibly support project management.

Training Limitations: Implementation of project management is difficult without training programs for the workers. This creates three additional problems. First, how much money must be allocated for training? Second, who will provide the training and what are the credentials of the trainers? Third, should people be released from project work to

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attend training classes? It is time consuming and expensive to train people in project man- agement, whether it is project managers or team members that need to be trained. Adding together the cost of implementation and the cost of training might frighten executives from accepting project management.

Need for Sophistication: Project management requires sophistication, not only with the limited technology or tools that may be available but also in the ability of people to work together. This teamwork sophistication is generally lacking in emerging market countries. People may see no benefit in teamwork because others may be able to recognize their lack of competencies and mistakes. They have not been trained to work properly in teams and are not rewarded for their contribution to the team.

Lack of Closure on Projects: Employees are often afraid to be attached to the project at closure when lessons learned and best practices are captured. Lessons learned and best practices can be based upon what we did well and what we did poorly. Employees may not want to see anything in writing that indicates that best practices were discovered from their mistakes.

Work Ethic: In some nations, the inability to fire people creates a relatively poor work ethic which is contrary to effective project management practices. There is a lack of punctuality in coming to work and attending meetings. When people do show up at meetings, only good news is discussed in a group whereas bad news is discussed one-on- one. Communication skills are weak as is report writing. There is a lack of accountability because accountability means explaining your actions if things go bad.

Poor Planning: Poor planning is paramount in emerging market nations. There exists a lack of commitment to the planning process. Because of a lack of standards, perhaps attributed to the poor work ethic, estimating duration, effort, and cost is very difficult. The ultimate result of poor planning is an elongation of the schedule. For workers that are unsure about their next assignment, this can be viewed as job security at least for the short term.

There are other barriers that are too numerous to mention. However, some of the more important ones are shown below. These barriers are

not necessarily universal in emerging market nations, and many of these barriers can be overcome.

● Currency conversion inefficiencies ● Inability to receive timely payments ● Superstitious beliefs ● Laws against importing and exporting intellectual property ● Lack of tolerance for the religious beliefs of virtual team partners ● Risk of sanctions by partners’ governments ● Use of poor or outdated technologies

Although we have painted a rather bleak picture, there are great future opportunities in these nations. Emerging market nations have an abun-

dance of talent that is yet to be fully harvested. The true capabilities of these workers are still unknown. Virtual project management teams might be the starting point for the full implementation of project management.

Other Barriers

Recommendations

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As project management begins to grow, senior officers will recognize and accept the benefits of project management and see their business base increase. Partnerships and joint ventures using virtual teams will become more prevalent. The barriers that impede successful project management implementation will still exist, but we will begin to excel in how to live and work within the barriers and constraints imposed on the continually emerging virtual teams.

Greater opportunities are seen for the big emerging market economies. They are beginning to see more of the value of project management and have taken strides to expand its use. Some of the rapidly developing economies are even much more aggressive in providing the support needed for breaking many of the barriers addressed above. As more success stories emerge, the various economies will strengthen, become more connected, and start to fully utilize project management for what it really is.

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7 Management Support

7.0 INTRODUCTION

As we saw in Chapter 6, senior managers are the architects of corporate culture. They are charged with making sure that their companies’ cultures, once accepted, do not come apart. Visible management support is essential to maintaining a project management culture. And above all, the support must be continuous rather than sporadic.

This chapter examines the importance of management support in the creation and maintenance of project management cultures. Case studies illustrate the vital importance of employee empowerment and the project sponsor’s role in the project management system.

7.1 VISIBLE SUPPORT FROM SENIOR MANAGERS

As project sponsors, senior managers provide support and encouragement to the project managers and the rest of the project team. Companies excellent in project management have the following characteristics:

● Senior managers maintain a hands-off approach, but they are available when prob- lems come up.

● Senior managers expect to be supplied with concise project status reports. ● Senior managers practice empowerment.

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● Senior managers decentralize project authority and decision-making. ● Senior managers expect project managers and their teams to suggest both alterna-

tives and recommendations for solving problems, not just to identify the problems.

However, there is a fine line between effective sponsorship and overbearing sponsor- ship. Robert Hershock, former vice president at 3M, said it best during a videoconference on excellence in project management:

Probably the most important thing is that they have to buy in from the top. There has to be leadership from the top, and the top has to be 100 percent supportive of this whole pro- cess. If you’re a control freak, if you’re someone who has high organizational skills and likes to dot all the i’s and cross all the t’s, this is going to be an uncomfortable process, because basically it’s a messy process; you have to have a lot of fault tolerance here. But what management has to do is project the confidence that it has in the teams. It has to set the strategy and the guidelines and then give the teams the empowerment that they need in order to finish their job. The best thing that management can do after training the team is get out of the way.

To ensure their visibility, senior managers need to believe in walk-the-halls manage- ment. In this way, every employee will come to recognize the sponsor and realize that it is appropriate to approach the sponsor with questions. Walk-the-halls management also means that executive sponsors keep their doors open. It is important that everyone, includ- ing line managers and their employees, feels supported by the sponsor. Keeping an open door can occasionally lead to problems if employees attempt to go around lower-level managers by seeking a higher level of authority. But such instances are infrequent, and the sponsor can easily deflect the problems back to the appropriate manager.

7.2 PROJECT SPONSORSHIP

Executive project sponsors provide guidance for project managers and project teams. They are also responsible for making sure that the line managers who lead functional depart- ments fulfill their commitments of resources to the projects underway. In addition, execu- tive project sponsors maintain communication with customers.

The project sponsor usually is an upper-level manager who, in addition to his or her regular responsibilities, provides ongoing guidance to assigned projects. An executive might take on sponsorship for several concurrent projects. Sometimes, on lower-priority or maintenance projects, a middle-level manager may take on the project sponsor role. One organization I know of even prefers to assign middle managers instead of executives. The company believes this avoids the common problem of lack of line manager buy-in to projects (see Figure 7–1).

In some large, diversified corporations, senior managers do not have adequate time to invest in project sponsorship. In such cases, project sponsorship falls to the level below corporate senior management or to a committee.

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Some projects do not need project sponsors. Generally, sponsorship is required on large, complex projects involving a heavy commitment of resources. Large, complex projects also require a sponsor to integrate the activities of the functional lines, to dispel disruptive conflicts, and to maintain strong customer relations.

Consider one example of a project sponsor’s support for a project. A project manager who was handling a project in an organization within the federal government decided that another position would be needed on his team if the project were to meet its completion deadline. He had already identified a young woman in the company who fit the qualifica- tions he had outlined. But adding another full-time-equivalent position seemed impossible. The size of the government project office was constrained by a unit-manning document that dictated the number of positions available.

The project manager went to the project’s executive sponsor for help. The executive sponsor worked with the organization’s human resources and personnel management department to add the position requested. Within 30 days, the addition of the new position was approved. Without the sponsor’s intervention, it would have taken the organization’s bureaucracy months to approve the position, too late to affect the deadline.

In another example, the president of a medium-sized manufacturing company wanted to fill the role of sponsor on a special project. The project manager decided to use the presi- dent to the project’s best advantage. He asked the president/sponsor to handle a critical situation. The president/sponsor flew to the company’s headquarters and returned two days later with an authorization for a new tooling the project manager needed. The company ended up saving time on the project, and the project was completed four months earlier than originally scheduled.

Project Sponsor: Lower/middle management

Project Sponsor: Senior management

Project Sponsor

Project TeamProject Team

Project Manager

Objective setting Up-front planning Project organization Key staffing Master plan Policies Monitoring execution Priority setting Conflict resolution Executive–client contact

Priority Projects

Maintenance Projects

Figure 7–1. Roles of project sponsor. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management, Hoboken, NJ: Wiley, 1998, p. 159.

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As companies grow, it sometimes becomes impossible to assign a senior manager to every project, and so committees act in the place of individual project sponsors. In fact, the recent trend has been toward

committee sponsorship in many kinds of organizations. A project sponsorship committee usually is made up of a representative from every function of the company: engineering, marketing, and production. Committees may be temporary, when a committee is brought together to sponsor one time-limited project, or permanent, when a standing committee takes on the ongoing project sponsorship of new projects.

For example, General Motors Powertrain had achieved excellence in using committee sponsorship. Two key executives, the vice president of engineering and the vice president of operations, led the Office of Products and Operations, a group formed to oversee the management of all product programs. This group demonstrated visible executive-level program support and commitment to the entire organization. Their roles and responsibili- ties were to:

● Appoint the project manager and team as part of the charter process ● Address strategic issues ● Approve the program contract and test for sufficiency ● Assure program execution through regularly scheduled reviews with program

managers

The role of the project sponsor changes over the life cycle of a project. During the planning and initiation phases, the sponsor plays an active role in the following activities:

● Helping the project manager establish the objectives of the project ● Providing guidance to the project manager during the organization and staffing

phases ● Explaining to the project manager what environmental or political factors might

influence the project’s execution ● Establishing the project’s priority (working alone or with other company execu-

tives) and then informing the project manager about the project’s priority in the company and the reason that priority was assigned

● Providing guidance to the project manager in establishing the policies and proce- dures for the project

● Functioning as the contact point for customers and clients

During the execution phase of a project, the sponsor must be very careful in deciding which problems require his or her guidance. Trying to get involved with every problem that comes up on a project will result in micromanagement. It will also undermine the project manager’s authority and make it difficult for the executive to perform his or her regular responsibilities.

For short-term projects of two years or less, it is usually best that the project sponsor assignment is not changed over the duration of the project. For long-term projects of five years, more or less, different sponsors could be assigned for every phase of the project, if

Sponsorship by Committee

Phases of Project

Sponsorship

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necessary. Choosing sponsors from among executives at the same corporate level works best, since sponsorship at the same level creates a “level” playing field, whereas at differ- ent levels, favoritism can occur.

Project sponsors need not come from the functional area where the majority of the project work will be completed. Some companies even go so far as assigning sponsors from line functions that have no vested interest in the project. Theoretically, this system promotes impartial decision making.

The role of executive project sponsors in customer relations depends on the type of organization (entirely project-driven or partially project- driven) and the type of customer (external or internal). Contractors

working on large projects for external customers usually depend on executive project spon- sors to keep the clients fully informed of progress on their projects. Customers with mul- timillion-dollar projects often keep an active eye on how their money is being spent. They are relieved to have an executive sponsor they can turn to for answers.

It is common practice for contractors heavily involved in competitive bidding for con- tracts to include both the project manager’s and the executive project sponsor’s resumes in proposals. All things being equal, the resumes may give one contractor a competitive advantage over another.

Customers prefer to have a direct path of communication open to their contractors’ executive managers. One contractor identified the functions of the executive project spon- sor as:

● Actively participating in the preliminary sales effort and contract negotiations ● Establishing and maintaining high-level client relationships ● Assisting project managers in getting the project underway (planning, staffing, and

so forth) ● Maintaining current knowledge of major project activities ● Handling major contractual matters ● Interpreting company policies for project managers ● Helping project managers identify and solve significant problems ● Keeping general managers and client managers advised of significant problems

with projects

Imagine that project management is like car racing. A yellow flag is a warning to watch out for a problem. Yellow flags require action by the project manager or the line manager. There is nothing wrong with

informing an executive about a yellow-flag problem as long as the project manager is not looking for the sponsor to solve the problem. Red flags, however, usually do require the sponsor’s direct involvement. Red flags indicate problems that may affect the time, cost, and performance parameters of the project. So red flags need to be taken seriously and decisions need to be made collaboratively by the project manager and the project sponsor.

Serious problems sometimes result in serious conflicts. Disagreements between project managers and line managers are not unusual, and they require the thoughtful

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intervention of the executive project sponsor. First, the sponsor should make sure that the disagreement could not be solved without his or her help. Second, the sponsor needs to gather information from all sides and consider the alternatives being considered. Then, the sponsor must decide whether he or she is qualified to settle the dispute. Often, disputes are of a technical nature and require someone with the appropriate knowledge base to solve them. If the sponsor is unable to solve the problem, he or she will need to identify another source of authority that has the needed technical knowledge. Ultimately, a fair and appro- priate solution can be shared by everyone involved. If there were no executive sponsor on the project, the disputing parties would be forced to go up the line of authority until they found a common superior to help them. Having executive project sponsors minimizes the number of people and the amount of time required to settle work disputes.

Executives are responsible for performing the company’s strategic plan- ning, and project managers are responsible for the operational planning on their assigned projects. Although the thought processes and time

frames are different for the two types of planning, the strategic planning skills of executive sponsors can be useful to project managers. For projects that involve process or product development, sponsors can offer a special kind of market surveillance to identify new opportunities that might influence the long-term profitability of the organization. Furthermore, sponsors can gain a lot of strategically important knowledge from lower-level managers and employees. Who else knows better when the organization lacks the skill and knowledge base it needs to take on a new type of product? When the company needs to hire more technically skilled labor? What technical changes are likely to affect their industry?

7.3 EXCELLENCE IN PROJECT SPONSORSHIP

In excellent companies, the role of the sponsor is not to supervise the project manager but to make sure that the best interests of both the customer and the company are recognized. However, as the next two examples reveal, it is seldom possible to make executive deci- sions that appease everyone.

Franklin Engineering (a pseudonym) had a reputation for developing high-quality, innovative products. Unfortunately, the company paid a high price for its reputation: a large R&D budget. Fewer than 15 percent of the projects initiated by R&D led to the full commercialization of a product and the recovery of the research costs.

The company’s senior managers decided to implement a policy that mandated that all R&D project sponsors periodically perform cost–benefit analyses on their projects. When a project’s cost–benefit ratio failed to reach the levels prescribed in the policy, the project was canceled for the benefit of the whole company.

Initially, R&D personnel were unhappy to see their projects canceled, but they soon realized that early cancellation was better than investing large amounts in projects that were likely to fail. Eventually, the project managers and team members came to agree that it made no sense to waste resources that could be better used on more successful projects.

Strategic Planning

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Within two years, the organization found itself working on more projects with a higher success rate but no addition to the R&D budget.

Another disguised case involves a California-based firm that designs and manufac- tures computer equipment. Let’s call the company Design Solutions. The R&D group and the design group were loaded with talented individuals who believed that they could do the impossible and often did. These two powerful groups had little respect for the project managers and resented schedules because they thought schedules limited their creativity.

In June 1997, the company introduced two new products that made it onto the market barely ahead of the competition. The company had initially planned to introduce them by the end of 1996. The reason for the late releases: Projects had been delayed because of the project teams’ desire to exceed the specifications required and not just meet them.

To help the company avoid similar delays in the future, the company decided to assign executive sponsors to every R&D project to make sure that the project teams adhered to standard management practices in the future. Some members of the teams tried to hide their successes with the rationale that they could do better. But the sponsor threatened to dismiss the employees, and they eventually relented.

The lessons in both cases are clear. Executive sponsorship actually can improve existing project management systems to better serve the interests of the company and its customers.

7.4 HEWLETT-PACKARD SPONSORSHIP IN ACTION

According to Doug Bolzman, consultant architect, PMP®, ITIL Expert at HP:

Management supports the results of project management and if the PMO is in a position to understand the current environment and how to improve the results, management will listen. If management is given a problem statement regarding how projects are not being managed effectively, then they will be of little value.

We share a story of when a fellow business associate came to us and asked why our Release Management Methodology was not formally implemented across the organization as a corporate method. This sponsor of ours had connections and scheduled a meeting with the CIO of our company (this was a few years after the turn of the century). We presented the overall methodology, the value to the organization, the success stories of what we achieved. His response was, “This is all fine and good, but what do you want me to do?” The sponsor of this meeting fell back into his chair and replied; “we are looking for ‘man- agement commitment’ for this methodology”. As the meeting concluded, I realized that if it were not for the good meal we had the night before after we flew into headquarters, the meeting would have been a total loss. The point to be made here is that we did not define what specifically we were looking for from the management team. Now when we are in the same situation, we explain the investments, the funding, the resource needs, the cultural change and the policies that they need to sanction and enforce. We describe their role and responsibilities for supporting the project, the practice, the PMO, or whatever we are looking for them to support.

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7.5 ZURICH AMERICA INSURANCE COMPANY:

IMPROVING STAKEHOLDER ENGAGEMENT

Kathleen Cavanaugh, PMP, Zurich—ZNA PMO lead, provides us with an insight of spon- sors may help improve stakeholder engagement. Project lessons learned offer valuable insights into what’s working and not working well within projects/programs. When lessons learned are rolled up to the portfolio level, the common problems faced by these projects/ programs are revealed and trends appear that may otherwise have been overlooked.

One of the improvements opportunities identified from project lessons learned reviews in recent years at Zurich in North America (ZNA) was the need for a new project leadership role called the Business Lead. The aggregated project feedback showed that on large, transformational projects/programs stronger business engagement was a “must have” from the beginning of the effort all the way through post-implementation. It was also noted that middle layers of management can often pose the biggest alignment challenges for these types of large process and/or people related change projects/programs. The need was clear. Stakeholders at all levels must be kept informed, aligned with project goals and involved in the project/program throughout the life cycle. Without stakeholder commit- ment and ownership, the project/program will suffer from low acceptance/adoption rates or, worse, may be canceled altogether.

So, to help solve this problem, leaders from across the business worked to define the responsibilities in order to bring the Business Lead role to life. The role was first piloted to help prove the concept and to gain agreement prior to rollout. Guidelines were provided to help clarify the Business Lead responsibilities which originally included: aligning stake- holders, ensuring project goals continually support the business strategy, utilizing change management to prepare stakeholders for project impacts, ensuring post implementation support and benefits realization. However, the actual duties of the Business Lead are ulti- mately determined by the Project Sponsor and may vary from project to project.

The role itself was designed to complement and collaborate with the Project Sponsor and Project Lead roles creating a Project Leadership Team triangle. Together they form a strong partnership and join forces to make key decisions for the project/program. The Project Lead and Business Lead often work closely together throughout the project/pro- gram connecting the Business and IT worlds. To help ensure stakeholders stay engaged a variety of methods may be used, including focus group meetings, user councils, and multiple feedback mechanisms. Middle management should be a focal point for project/ program communications since these are the people who can ensure end users hear and understand key messages. The Sponsor provides continual oversight and guidance for the project/program. If the project/program hits a roadblock, the escalation path usually goes straight to the Sponsor and/or Steering Committee for resolution.

To be effective, the person filling the Business Lead role needs to be someone at a fairly high level in the organization, and they must possess a unique blend of skills . . . skills that include cross-functional knowledge, the ability to challenge the status quo, and break down barriers and unite stakeholders. The role itself inherently calls for the chosen one to be strong in the art of change management and communication. But for this person to be truly successful, he/she must be allowed to devote himself/herself to the project/pro- gram especially on large, cross-functional efforts. We often find the role requires heavy

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involvement in the day-to-day activities of the project/program. So, in many cases the selected Business Lead relinquishes their current duties for at least 12 to 18 months in order to become officially 100% dedicated to this key project/program role. Convincing leadership to take someone out of a role and to dedicate them to a large transformational effort for this amount of time is not always an easy task. But, if the project/program is truly important to the organization then it’s a small price to pay to help ensure a suc- cessful implementation. It is a big decision to make and one that is usually driven by the Sponsor who has the organizational awareness and knowledge to identify the right person for the role.

The value of the Business Lead role has grown significantly over the past couple of years and a community of practice is being formed so that Business Leads can share their experiences and lessons learned in order to continue improving their capabilities. The role is becoming a solid cornerstone of the Project Leadership Team for large, transformational projects/programs at ZNA. The collaboration and synergy between the Project Sponsor, Project Lead and Business Lead roles is the key to their success. This project leadership structure is proving to be a viable model to help ensure stakeholder engagement and align- ment throughout the project/program life cycle, which translates to more successful results and improved end user satisfaction.

7.6 PROJECT GOVERNANCE

All projects have the potential of getting into trouble but, in general, project management can work well as long as the project’s requirements do not impose severe pressure upon the project manager, and a project sponsor exists as an ally to assist the project manager when trouble does appear. Unfortunately, in today’s chaotic environment, this pressure appears to be increasing because:

● Companies are accepting high risk and highly complex projects as a necessity for survival

● Customers are demanding low volume, high quality products with some degree of customization

● Project life cycles and new product development times are being compressed ● Enterprise environmental factors are having a greater impact on project execution ● Customers and stakeholders want to be more actively involved in the execution of

projects ● Companies are developing strategic partnerships with suppliers, and each supplier

can be at a different level of project management maturity ● Global competition has forced companies to accept projects from customers that

are all at a different level of project management maturity and with different re- porting requirements

These pressures tend to slow down the decision-making processes at a time when stakeholders want the projects and processes to be accelerated. One person, while acting

384 MANAGEMENT SUPPORT

as the project sponsor, may have neither the time nor capability to address all of these additional issues. The result will be a project slowdown and can occur because of:

● The project manager being expected to make decisions in areas where he/she has limited knowledge

● The project manager hesitating to accept full accountability and ownership for the projects

● Excessive layers of management being superimposed on top of the project man- agement organization

● Risk management being pushed up to higher levels in the organization hierarchy resulting in delayed decisions

● The project manager demonstrating questionable leadership ability on some of the nontraditional projects

The problems resulting from these pressures may not be able to be resolved, at least easily and in a timely manner, by a single project sponsor. These problems can be resolved using effective project governance. Project governance is actually a framework by which decisions are made. Governance relates to decisions that define expectations, account- ability, responsibility, the granting of power or verifying performance. Governance relates to consistent management, cohesive policies, processes and decision-making rights for a given area of responsibility. Governance enables efficient and effective decision making to take place.

Every project can have different governance even if each project uses the same enterprise project management methodology. The governance function can operate as a separate process or as part of project management leadership. Governance is not designed to replace project decision making, but to prevent undesirable decisions from being made.

Historically, governance was provided by a single project sponsor. Today, governance is a committee and can include representatives from each stakeholder’s organization. Table 7–1 shows various governance approaches based upon the type of project team. The membership of the committee can change from project to project and industry to industry.

TABLE 7–1. TYPES OF PROJECT GOVERNANCE

Structure Description Governance

Dispersed locally Team members can be full time or part time. They are still attached administratively to their functional area.

Usually a single person is acting as the sponsor but may be an internal committee based upon the project’s complexity.

Dispersed geographically This is a virtual team. The project manager may never see some of the team members. Team members can be full time or part time.

Usually governance by committee and can include stakeholder membership.

Co-located All of the team members are physically located in close proximity to the project manager. The project manager does not have any responsibility for wage and salary administration.

Usually a single person acting as the sponsor.

Projectized This is similar to a co-located team but the project manager generally functions as a line manager and may have wage and salary responsibilities.

May be governance by committee based upon the size of the project and the number of strategic partners.

Tokio Marine: Excellence in Project Governance 385

The membership may also vary based upon the number of stakeholders and whether the project is for an internal or external client. On long term projects, membership can change throughout the project.

Governance on projects and programs sometimes fails because people confuse project governance with corporate governance. The result is that members of the committee are not sure what their role should be. Some of the major differences include:

● Alignment: Corporate governance focuses on how well the portfolio of projects is aligned to and satisfies overall business objectives. Project governance focuses on ways to keep a project on track.

● Direction: Corporate governance provides strategic direction with a focus on how project success will satisfy corporate objectives. Project governance is more oper- ation direction with decisions based upon the predefined parameters on project scope, time, cost and functionality.

● Dashboards: Corporate governance dashboards are based upon financial, market- ing and sales metrics. Project governance dashboards have operations metrics on time, cost, scope, quality, action items, risks, and deliverables.

● Membership: Corporate governance committees are composed of the senior most levels of management. Project government membership may include some mem- bership from middle management.

Another reason why failure may occur is [that] members of the project or program governance group do not understand project or program management. This can lead to micromanagement by the governance committee. There is always the question of what decisions must be made by the governance committee and what decisions the project manager can make. In general, the project manager should have the authority for decisions related to actions necessary to maintain the baselines. Governance committees must have the authority to approve scope changes above a certain dollar value, and to make decisions necessary to align the project to corporate objectives and strategy.

7.7 TOKIO MARINE: EXCELLENCE IN PROJECT GOVERNANCE

By: Yuichi (Rich) Inaba, CISA, and Hiroyuki Shibuya1

Tokio Marine Group is a global corporate group engaged in a wide variety of insurance businesses. It consists of about 70 companies on five continents, including Tokio Marine and Nichido Fire Insurance (Japan), Philadelphia Insurance (US), Kiln (UK), and Tokio Marine Asia (Singapore).

In addition to Tokio Marine and Nichido Fire Insurance, which is the largest property and casualty insurance company in Japan, Tokio Marine Group has several other domestic companies in Japan, such as Tokio Marine and Nichido Life Insurance Co. Ltd, as well as service providers, such as Tokio Marine and Nichido Medical Service Co Ltd. and Tokio Marine and Nachido Facilities Inc.

Executive Management Must

Establish IT Governance:

Tokio Marine Group

386 MANAGEMENT SUPPORT

Implementing IT Governance at Tokio Marine Group

Tokio Marine Holdings, which is responsible for establishing the group’s IT governance approach, observed that the executive management of Tokio Marine Group companies believes that IT is an essential infrastructure for business management, and it hoped to strengthen company management by utilizing IT. However, some directors and executives had a negative impression of IT—that IT is difficult to understand, costs too much, and results in frequent system troubles and system development failures.

It is common for an organization’s executive management to recognize the importance of system development but to put its development solely on the shoulders of the IT department. Other executives go even further, saying that the management or governance of IT is not anyone’s business but the IT department’s or chief information officers (CIO’s). This line of thinking around IT is similar to the thought process that accounting is the job of the account- ing department and handling personnel affairs is the role of the human resources department.

These are typical behaviors of organizations that fail to implement IT governance systems. Tokio Marine Holdings’ executive management recognized that IT is not for IT’s sake alone, but is a tool to strengthen business.

Tokio Marine Holdings’ management recognized that there were various types of sys- tem development failures (e.g., development delays for the service-in date, projects being over budget). Even more frequently, the organization was finding requirement gaps—for instance, where after building a system, the business people say, “This is not the system that we asked you to build” or “The system that you built is not easy to use. It is useless for the business.”

Why the Requirement Gaps Occur

The process of system development is similar to that of a buildings construction. However, there is a distinct difference between the two: system development is not visible, whereas building construction is. Therefore, in system development, it is inevitable that there are recognition and communication gaps between business and IT.

Tokio Marine Group’s Solution for System Development Success

To fill these gaps, business and IT must communicate enough to minimize the gaps [between] A and C in Figure 7–2 and maximize a common understanding of B. The road to success for system development is to improve the quality of communication between business and IT.

Such communication cannot be reached or maintained in a one-sided relationship. Ideal communication is enabled only with as equal partnership between business and IT with appropriate roles and responsibilities mutually allocated.

This is the core concept of Tokio Marine Group’s Application Owner System.

Implementing the Application Owner System

Tokio Marine Holdings decided to implement the Application Owner System as a core concept of the Group It Governance System. Tokio Marine Holdings believes it is essen- tial for the group companies to succeed in system development and to achieve the group’s growth in the current business environment.

Tokio Marine: Excellence in Project Governance 387

The basic idea of the Application Owner System (Figure 7–3) is:

● Mutual cooperation between business and IT with proper check-and-balance func- tions, appropriately allocated responsibilities and shared objectives.

● Close communication between business and IT, each taking their own respective roles and responsibilities into account.

Early Success in Tokio Marine and Nichido Fire Insurance

Tokio Marine and Nichido Fire Insurance Co. Ltd., the largest group company, implemented the Application Owner System in 2000. Implementation of the Application Owner System immediately reduced system troubles and problems by 80 percent. (See Figure 7–4.)

Mind-Set of IT

Tokio Marine’s mind-set is that only executive management can establish the enterprise’s IT governance system. Thus, IT governance is the responsibility of executive management.

The Requirements That Business Wants to Convey

The Requirements That IT Recognizes

A B C

Figure 7–2. The Requirements Gap.

E xtern

al V en

d ors

7. Education and development of manuals

2. Advice for technical and cost-related issues, suggestion of optimized requirement

1. Request for system implementation

3. Finalization of requirement definition, determination of cost-benefit analysis

6. Performance test, server set-up, etc.

Roles and Responsibilities of Application Owners

Roles and Responsibilities of IT

5. User acceptance test (developing test cases)

Proper Check-and-Balance

Relationship

4. Coding, system test

C u

stom er, A

gen cy, F

ron t-lin

e u sers

Cooperative Relationship With

Common Objectives

Figure 7–3. The Application Owner System in Tokio Marine Group.

388 MANAGEMENT SUPPORT

Furthermore, the organization is of the mind-set that all employees, not only executive management, should understand the principle that strong IT systems cannot be realized by the IT department alone but require cooperation between business and IT. It is important that all employees recognize IT matters as their own, not as the matter of the IT function.

Establishing such a mind-set within the enterprise is a role of the executive management.

Tokio Marine Group’s IT Governance System

Characterized by the Application Owner System, Tokio Marine Holdings has introduced an IT governance framework, focused on the COBIT 4.1 framework, specifically the Plan and Organize (PO) domain.

The main goals of the IT Governance Framework are: ● Establishing basic policies for IT governance—Tokio Marine Holdings estab-

lished the Basic Policies for IT Governance as the policies for the group’s IT governance framework.

● Establishing guiding principles for IT governance—Tokio Marine Holdings defines seven principles as the guiding principles. (See Table 7–2.) These cover the five focus areas defined in the Board Briefing on IT Governance, particu- larly focusing on strategic alignment and value delivery. The seven principles are included in the Basic Policies for IT Governance. Tokio Marine Holdings thinks that the most important principle is the Application Owner System, which is stated as follows:

In implementing the plan, it is important for the IT unit and the application owner units to cooperate with each other with proper checks and balance functions. Management shall clearly determine the appropriate sharing of roles between the IT unit and application owner units, secure human resources of adequate quality in both units, and establish a management system to assure that each unit will execute the plan according to its responsibilities.

● Establishing a governance and management system for Tokio Marine Group— Tokio Marine Holdings defines the governance and management system to be

492

29 63

83 84 51 40

116

55 38

100

200

300

400

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Figure 7–4. Number of system troubles.

Tokio Marine: Excellence in Project Governance 389

implemented in the group companies. It covers five domains and consists of three major components: establishment of the organizational structure, establishment of policies and standards, and execution of the plan, do, check, and act (PCDA) cycle for improvement. The governance and management system required for Tokio Marine Group companies is detailed in the Group IT Governance Standard.

● Establishing an IT governance standard (the definition of Tokio Marine’s priority processes)—Tokio Marine Holdings has decided to utilize COBIT 4.1 to define the management system. However, the organization recognizes that it is difficult for relatively small group companies to implement matured processes for all COBIT 4.1 processes. To handle this concern, the organization focused on the minimal set and processes or more detailed control on objectives, which are essential for its group business in terms of IT governance and the most important controls for Tokio Marine Group.

In the IT Governance Standard, Tokio Marine Holdings defined the IT controls out- lined in Figure 7–5 as priority for the Tokio Marine Group. The priority IT controls are defined as five domains, 14 processes, and 39 control objectives, which are selected pro- cesses from the 210 control objectives of COBIT 4.1. See Table 7–3.

The group companies are required to improve the priority controls to reach a maturity level 3, according to the COBIT Maturity Model, and report the progress of improvements of Tokio Marine Holdings.

Toward the Future

Since the establishment of the IT governance system for Tokio Marine Group, Tokio Marine Holdings has extensively communicated not only with CIOs but also with CEOs

TABLE 7–2. SEVEN GUIDING PRINCIPLES

No. Guiding Principles Focus Area

1 Establish an IT strategic plan that enables management to achieve its business strategic plan, build the business processes for it, and develop an execution plan.

Strategic Alignment

2 In executing the plan, ensure that the IT unit and the application owner units cooperate with each other with proper check-and-balance functions.

Strategic Alignment

3 In the development or implementation of information systems, ensure that management scrutinizes the validity of the project plan from the standpoint of quality assurance, usability, commitment to service-in date, appropriate cost estimation and matching to the human resources availability.

Value Delivery

4 Ensure that the information systems are fully utilized by all staff in the company in order to achieve the objectives for the development or implementation of the information systems.

Value Delivery

5 Conduct appropriate IT resource management, including computer capacity management and human resources management.

Resource Management

6 Conduct appropriate risk management and information security management, and establish contingency plans for system faults in consideration of the accumulation of various risk factors in IT, such as high dependency of business processes on IT, centralization of important information and threats from wider use of the Internet.

Risk Management

7 Encourage the transparency of IT operations to be improved, and monitor their progress, which includes, for example, the progress of projects, the usage of IT resources and utilization of information systems.

Performance Measurement

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and executive management of the group companies to ensure that they understand, agree on and take leadership for IT governance implementation.

Through these activities, the organization is confident that the core concept of IT gov- ernance has become better understood by management and good progress is being made as a result of the implementation of the application owner system in group companies. Tokio Marine Holdings will continue its evangelist mission to the group companies, realizing the benefit for the group business and giving value to stakeholders.

Yuichi (Rich) Inaba, CISA

Is a senior consultant specialist in the area of IT governance, IT risk management and IT information security in the Tokio Marine and Nichido Systems Co. Ltd. (TMNS), a Tokio Marine Group company. Before transferring to TMNS, he had worked in the IT Planning Dept. of Tokio Marine Holdings Inc. and had engaged in establishing Tokio Marine Group’s IT governance framework based on COBIT 4.1. His current responsibility is to implement and practice Tokio Marine Group’s IT governance at TMNS. Inaba is a member of the ISACA Tokyo Chapter’s Standards Committee and is currently engaged in translat- ing COBIT 5 publications in Japanese.

COBIT 4.1 controls

(34 Processes, 210 COs)

Group Priority Controls (14 processes, 39 COs)

Figure 7–5. Tokio Marine group’s priority controls.

TABLE 7–3. TOKIO MARINE GROUP’S PRIORITY CONTROLS.

Domain name Id Process Name

a. Planning and a1 Annual IT planning

organization a2 Definitions of roles and responsibilities of the IT unit and application owner units

a3 Establishment of an IT steering committee

b. Projects management b1 Management of development and implementation projects

c. Change management c1 Change control

d. Operations d1 Incident/problem management

Management d2 Vendor management

d3 Security management

d4 IT asset management

d5 Computer capacity management

d6 Disaster recovery and backup/restore

e. Monitoring e1 Annual IT review

performance and e2 Monitoring the IT steering committee

return on investment e3 Monitoring project management, change management, and systems operation management

Empowerment of Project Managers 391

Hiroyuki Shibuya

Is an executive officer in charge of IT at Tokio Marine Holdings Inc. From 2000–2005, he led the innovation project from the IT side, which has totally reconstructed the insurance product lines, their business processes and the information systems of Tokio Marine and Nichido Fire Insurance Co. Ltd. To leverage his experience from this project as well as remediate other troubled development projects of group companies, he was named the gen- eral manager of the newly established IT planning department at Tokio Marine Holdings in July 2010. Since then, he has been leading the efforts to establish IT governance basic policies and standards to strengthen IT governance throughout the Tokio Marine Group.

7.8 EMPOWERMENT OF PROJECT MANAGERS

One of the biggest problems with assigning executive sponsors to work beside line man- agers and project managers is the possibility that the lower-ranking managers will feel threatened with a loss of authority. This problem is real and must be dealt with at the executive level. Frank Jackson, formerly a senior manager at MCI, believes in the idea that information is power:

We did an audit of the teams to see if we were really making the progress that we thought or were kidding ourselves, and we got a surprising result. When we looked at the audit, we found out that 50 percent of middle management’s time was spent in filtering informa- tion up and down the organization. When we had a sponsor, the information went from the team to the sponsor to the operating committee, and this created a real crisis in our middle management area.

MCI has found its solution to this problem. If there is anyone who believes that just going and dropping into a team approach environment is an easy way to move, it’s defi- nitely not. Even within the companies that I’m involved with, it’s very difficult for manag- ers to give up the authoritative responsibilities that they have had. You just have to move into it, and we’ve got a system where we communicate within MCI, which is MCI mail. It’s an electronic mail system. What it has enabled us to do as a company is bypass levels of management. Sometimes you get bogged down in communications, but it allows you to communicate throughout the ranks without anyone holding back information.

Not only do executives have the ability to drive project management to success, they also have the ability to create an environment that leads to project failure. According to Robert Hershock, former vice president at 3M:

Most of the experiences that I had where projects failed, they failed because of manage- ment meddling. Either management wasn’t 100 percent committed to the process, or man- agement just bogged the whole process down with reports and a lot of other innuendos. The biggest failures I’ve seen anytime have been really because of management. Basically, there are two experiences where projects have failed to be successful. One is the man- agement meddling where management cannot give up its decision-making capabilities, constantly going back to the team and saying you’re doing this wrong or you’re doing that wrong. The other side of it is when the team can’t communicate its own objective. When it can’t be focused, the scope continuously expands, and you get into project creep. The team just falls apart because it has lost its focus.

392 MANAGEMENT SUPPORT

Project failure can often be a matter of false perceptions. Most executives believe that they have risen to the top of their organizations as solo performers. It is very difficult for them to change without feeling that they are giving up a tremendous amount of power, which traditionally is vested in the highest level of the company. To change this situation, it may be best to start small. As one executive observed:

There are so many occasions where senior executives won’t go to training and won’t listen, but I think the proof is in the pudding. If you want to instill project management teams in your organizations, start small. If the company won’t allow you to do it using the Nike theory of just jumping in and doing it, start small and prove to them one step at a time that they can gain success. Hold the team accountable for results—it proves itself.

It is also important for us to remember that executives can have valid reasons for micromanaging. One executive commented on why project management might not be working as planned in his company:

We, the executives, wanted to empower the project managers and they, in turn, would empower their team members to make decisions as they relate to their project or function. Unfortunately, I do not feel that we (the executives) totally support decentralization of decision-making due to political concerns that stem from the lack of confidence we have in our project managers, who are not proactive and who have not demonstrated leadership capabilities.

In most organizations, senior managers start at a point where they trust only their fellow managers. As the project management system improves and a project management culture develops, senior managers come to trust project managers, even though they do not occupy positions high on the organizational chart. Empowerment does not happen overnight. It takes time and, unfortunately, a lot of companies never make it to full project manager empowerment.

7.9 MANAGEMENT SUPPORT AT WORK

Visible executive support is necessary for successful project management and the stability of a project management culture. But there is such a thing as too much visibility for senior managers. Take the following case example, for instance.

Midline Bank (a pseudonym) is a medium-sized bank doing business in a large city in the Northwest. Executives at Midline realized that growth in the banking industry in the near future would be based on

mergers and acquisitions and that Midline would need to take an aggressive stance to remain competitive. Financially, Midline was well prepared to acquire other small- and medium-sized banks to grow its organization.

The bank’s information technology group was given the responsibility of developing an extensive and sophisticated software package to be used in evaluating the financial

Midline Bank

Management Support at Work 393

health of the banks targeted for acquisition. The software package required input from virtually every functional division of Midline. Coordination of the project was expected to be difficult.

Midline’s culture was dominated by large, functional empires surrounded by impen- etrable walls. The software project was the first in the bank’s history to require cooperation and integration among the functional groups. A full-time project manager was assigned to direct the project.

Unfortunately, Midline’s executives, managers, and employees knew little about the principles of project management. The executives did, however, recognize the need for executive sponsorship. A steering committee of five executives was assigned to provide support and guidance for the project manager, but none of the five understood project management. As a result, the steering committee interpreted its role as one of continuous daily direction of the project.

Each of the five executive sponsors asked for weekly personal briefings from the project manager, and each sponsor gave conflicting directions. Each executive had his or her own agenda for the project.

By the end of the project’s second month, chaos took over. The project manager spent most of his time preparing status reports instead of managing the project. The executives changed the project’s requirements frequently, and the organization had no change control process other than the steering committee’s approval.

At the end of the fourth month, the project manager resigned and sought employment outside the company. One of the executives from the steering committee then took over the project manager’s role, but only on a part-time basis. Ultimately, the project was taken over by two more project managers before it was complete, one year later than planned. The company learned a vital lesson: More sponsorship is not necessarily better than less.

Another disguised case involves a Kentucky-based company I’ll call Contractco. Contractco is in the business of nuclear fusion testing. The company was in the process of bidding on a contract with the U.S.

Department of Energy. The department required that the project manager be identified as part of the company’s proposal and that a list of the project manager’s duties and respon- sibilities be included. To impress the Department of Energy, the company assigned both the executive vice president and the vice president of engineering as cosponsors.

The DoE questioned the idea of dual sponsorship. It was apparent to the department that the company did not understand the concept of project sponsorship, because the roles and responsibilities of the two sponsors appeared to overlap. The department also ques- tioned the necessity of having the executive vice president serve as a sponsor.

The contract was eventually awarded to another company. Contractco learned that a company should never underestimate the customer’s knowledge of project management or project sponsorship.

Health Care Associates (another pseudonym) provides health-care management services to both large and small companies in New England. The company partners with a chain of 23 hospitals in New

England. More than 600 physicians are part of the professional team, and many of the

Contractco

Health Care Associates

394 MANAGEMENT SUPPORT

physicians also serve as line managers at the company’s branch offices. The physician- managers maintain their own private clinical practices as well.

It was the company’s practice to use boilerplate proposals prepared by the market- ing department to solicit new business. If a client were seriously interested in Health Care Associates’ services, a customized proposal based on the client’s needs would be prepared. Typically, the custom-designed process took as long as six months or even a full year.

Health Care Associates wanted to speed up the custom-designed proposal process and decided to adopt project management processes to accomplish that goal. In January 1994, the company decided that it could get a step ahead of its competition if it assigned a physician-manager as the project sponsor for every new proposal. The rationale was that the clients would be favorably impressed.

The pilot project for this approach was Sinco Energy (another pseudonym), a Boston- based company with 8600 employees working in 12 cities in New England. Health Care Associates promised Sinco that the health care package would be ready for implementa- tion no later than June 1994.

The project was completed almost 60 days late and substantially over budget. Health Care Associates’ senior managers privately interviewed each of the employees on the Sinco project to identify the cause of the project’s failure. The employees had the follow- ing observations:

● Although the physicians had been given management training, they had a great deal of difficulty applying the principles of project management. As a result, the physicians ended up playing the role of invisible sponsor instead of actively par- ticipating in the project.

● Because they were practicing physicians, the physician sponsors were not fully committed to their role as project sponsors.

● Without strong sponsorship, there was no effective process in place to control scope creep.

● The physicians had not had authority over the line managers, who supplied the resources needed to complete a project successfully.

Health Care Associates’ senior managers learned two lessons. First, not every manager is qualified to act as a project sponsor. Second, the project sponsors should be assigned on the basis of their ability to drive the project to success. Impressing the cus- tomer is not everything.

There are various levels of support from management regarding project management methodologies [at maxIT-VCS]. Initially, management may not appreciate the value until they have a PM identify the deliverables,

track the progress, provide real-time status reports, identify issues and risks and have someone actively oversee the project and maintain momentum.

Management support of project management in our industry is growing as the formal role of a project manager is becoming more important to meeting the needs of complex projects, but managers still need to embrace and empower the PM’s. There are times the PM is not asked when changes occur (resource allocation as an example) or in some cases not supported as the person in charge of the initiative. Obviously culture and politics plays

maxIT-VCS

Getting Line Management Support 395

a factor in every industry, but in order for healthcare to meet the demands of the industry, management must continue to further invest and support the growth of their PMs.

At VCS, the entire leadership team (including our C-suite) is very supportive and actively involved in helping grow the PMO. The PMO resides as the central “hub” for providing our customer base a full service consulting service offering. This includes the ability to run a complex healthcare IT initiative with a project manager who has subject matter expertise on both the operations and technical side of the house along with a pub- lished methodology and process to follow. For VCS, this is a very big market differentiator and offers our customers great value in comparison to our competition. (Marc Hirshfield, Director, Project Management Office, maxIT-VCS)

In the wake of integrating two companies under yet a third, the PMO will remain a cadre of experienced (and for the most part certified) project managers. This group is our “go to” band of PMs who can manage complex healthcare projects. This core also contrib- utes to the project management methodology maintenance and training.

We currently are a Registered Education Provider with PMI. We plan to develop additional internal training for all levels of project managers, as

well as an internal company certification for attainment of specific skills in project man- agement. (Heidi Wurtz, VP, Solution Center, maxIT-VCS)

Executive management [at Indra] is highly motivated to support project management development within the company. They regularly insist upon improving our training programs for project managers as well as focusing

on the need that the best project management methods are in place. Sometimes the success of a project constitutes a significant step in the development of

a new technology, in the launch in a new market, or for the establishment of a new partner- ship, and, in those cases, the managing directorate usually plays an especially active role as sponsors during the project or program execution. They participate with the customer in steering committees for the project or the program, and help in the decision making or risk management processes.

For a similar reason, due to the significance of a specific project but at a lower level, it is not uncommon to see middle level management carefully watching its execution and providing, for instance, additional support to negotiate with the customer the resolution of a particular issue.

Getting middle level management support has been accomplished using the same set of corporate tools for project management at all levels and for all kind of projects in the company. No project is recognized if it is not in the corporate system, and to do that, the line managers must follow the same basic rules and methods, no matter if it is a recur- ring, a non-recurring effort, or other type of project. A well developed WBS, a complete foreseen schedule, a risk management plan and a tailored set of earned value methods, may be applied to any kind of projects. (Enrique Sevilla Molina, PMP, formerly Corporate PMO Director, Indra.)

7.10 GETTING LINE MANAGEMENT SUPPORT

Management support is not restricted exclusively to senior management, as was shown in the previous section. Line management support is equally crucial for project management to work effectively. Line managers are usually more resistant to project management and often demand proof that project management provides value to the organization before

Indra

396 MANAGEMENT SUPPORT

they support the new processes. This problem was identified previously in the journey to excellence in project management. It also appeared at Motorola. According to a spokes- person at Motorola2:

This (getting line management support) was tough at first. It took years of having PMs provide value to the organization.

When organizations become mature in project management, sponsorship at the executive levels and at middle management levels becomes minimal and integrated project teams are formed where the integrated or core team is empowered to manage the project with minimal sponsorship other than for critical decisions. These integrated or core teams may or may not include line management. The concept of core teams became a best practice at Motorola3:

Most project decisions and authority resides in the project core team. The core team is made up of middle- to low-level managers for the different functional areas (marketing, software, electrical, mechanical, manufacturing, system test, program management, qual- ity, etc.) and has the project ownership responsibility. This core team is responsible for reviewing and approving product requirements and committing resources and schedule dates. It also acts as the project change control board and can approve or reject project scope change requests. However, any ship acceptance date changes must be approved by senior management.

7.11 DTE ENERGY

Jason Schulist, Manager, Continuous Improvement, Operating Systems Strategy Group at DTE Energy, comments on project sponsorship:

The champions of continuous improvement projects that use the 4-Gate/9-Step methodol- ogy [Previously discussed in Chapter 4] are primarily Vice Presidents and Directors of DTE Energy. These champions sign off at every gate to approve the results of the process. In some business units, a Master Black Belt also signs off at every gate to ensure that rigor- ous analysis and the DTE Energy Operating System methodology is followed.

The importance of this statement is that senior management should be the champions of the methodology in addition to becoming project champions. In one auto supplier, senior management undertook the role of champion for the development of a project management methodology. After the methodology was developed, the executive took on a different role in the company. Three years later, the company realized that there were no continuous improvement efforts on the methodology because there was no executive champion in place. The executive then returned to championing the methodology and continuous improvement efforts occurred.

2. H. Kerzner, Project Management Best Practices: Achieving Global Excellence, Wiley, 2006, p. 307. 3. Ibid., p. 308.

Initiation Champions and Exit Champions 397

7.12 INITIATION CHAMPIONS AND EXIT CHAMPIONS

As project management evolved, so did the role of the executive in project management. Today, there are three roles that the executive plays:

● The project sponsor ● The project (initiation) champion ● The exit champion

The role of the executive in project management as a project sponsor has become rea- sonably mature. Most textbooks on project management have sections that are dedicated to the role of the project sponsor.4 The role of the project champion however, is just coming of age. Stephen Markham defines the role of the champion:

Champions are informal leaders who emerge in a somewhat erratic fashion. Championing is a voluntary act by an individual to promote a particular project. In the act of champion- ing, individuals rarely refer to themselves as champions; rather, they describe themselves as trying to do the right thing for the right company. A champion rarely makes a single decision to champion a project. Instead, he or she begins in a simple fashion and develops increasing enthusiasm for the project. A champion becomes passionate about a project and ultimately engages others based upon personal conviction that the project is the right thing for the entire organization. The champion affects the way other people think of the project by spreading positive information across the organization. Without official power or responsibility, a champion contributes to new product development by moving projects forward. Thus, champions are informal leaders who (1) adopt projects as their own in a personal way, (2) take on risk by promoting the projects beyond what is expected of people in their position, and (3) promote the project by getting other individuals to support it.5

With regard to new product development (NPD) projects, champions are needed to overcome the obstacles in the “valley of death,” as seen in Figure 7–6.6 The valley of death is the area in NPD where recognition of the idea/invention and efforts to commercialize the product come together. In this area, good projects often fall by the wayside and projects with less value often get added into the portfolio of projects. According to Markham7,

Many reasons exist for the Valley of Death. Technical personnel (left side of Figure 7–6) often do not understand the concerns of commercialization personnel (right side) and vice versa. The cultural gap between these two types of personnel manifests itself in the results prized by one side and devalued by the other. Networking and contact management may be important to sales people but seen as shallow and self-aggrandizing by technical

4. H. Kerzner, Project Management: A Systems Approach to Planning, Scheduling and Controlling, 11th ed., Hoboken, NJ: Wiley, 2013, Chapter 10. Also, H. Kerzner and F. Saladis, What Executives Need to Know About Project Management, Hoboken, NJ: Wiley and New York: IIL, 2009. 5. S. K. Markham, “Product Champions: Crossing the Valley of Death,” in P. Belliveau, A. Griffin, and S. Somermeyer (Eds.), The PDMA Toolbook for New Product Development, Hoboken, NJ: Wiley, 2002, p. 119. 6. Ibid., p. 120. 7. Ibid., p. 120.

398 MANAGEMENT SUPPORT

people. Technical people find value in discovery and pushing the frontiers of knowledge. Commercialization people need a product that will sell in the market and often consider the value of discovery as merely theoretical and therefore useless. Both technical and commercialization people need help translating research findings into superior product offerings.

As seen in Figure 7–6, the valley of death seems to originate somewhere near the fuzzy front end (FFE).

[FFE is] the messy “getting started” period of product development, which comes before the formal and well-structured product development process, when the product concept is still very fuzzy. It generally consists of the first three tasks (strategic planning, concept generation, and, especially, pretechnical evaluation) of the product development process. These activities are often chaotic, unpredictable, and unstructured. In comparison, the new product development process is typically structured and formal, with a prescribed set of activities, questions to be answered, and decisions to be made.8

Project champions are usually neither project managers nor project sponsors. The role of the champion is to sell the idea or concept until it finally becomes a project. The champion may not even understand project management and may not have the necessary skills to manage a project. Champions may reside much higher up in the orga- nizational hierarchy than the project manager.

Idea Research Fuzzy Front End Product Development Commercialization

Level of Development

Existing Research Resources (Technical and Market)

Existing Commercialization Resources

R e s o u r c e s

Valley of Death

Figure 7–6. Valley of death.

8. P. Belliveau, A. Griffin, and S. Somermeyer, The PDMA Toolbook for New Product Development, Hoboken, NJ: Wiley, 2002, p. 444.

Initiation Champions and Exit Champions 399

Allowing the project champion to function as the project sponsor can be equally as bad as allowing them to function as the project manager. When the project champion and the project sponsor are the same person, projects never get canceled. There is a tendency to prolong the pain of continuing on with a project that should have been canceled.

Some projects, especially very long-term projects where the champion is actively involved, often mandate that a collective belief exist. The collective belief is a fervent, and perhaps blind, desire to achieve that can permeate the entire team, the project sponsor, and even the most senior levels of management. The collective belief can make a rational organization act in an irrational manner. This is particularly true if the project sponsor spearheads the collective belief.

When a collective belief exists, people are selected based upon their support for the collective belief. Champions may prevent talented employees from working on the project unless they possess the same fervent belief as the champion does. Nonbelievers are pres- sured into supporting the collective belief and team members are not allowed to challenge the results. As the collective belief grows, both advocates and nonbelievers are trampled. The pressure of the collective belief can outweigh the reality of the results.

There are several characteristics of the collective belief, which is why some large, high-technology projects are often difficult to kill:

● Inability or refusing to recognize failure ● Refusing to see the warning signs ● Seeing only what you want to see ● Fearful of exposing mistakes ● Viewing bad news as a personal failure ● Viewing failure as a sign of weakness ● Viewing failure as damage to one’s career ● Viewing failure as damage to one’s reputation

Project sponsors and project champions do everything possible to make their project successful. But what if the project champion, as well as the project team and sponsor, have blind faith in the success of the project? What happens if the strongly held convictions and the collective belief disregard the early warning signs of imminent danger? What happens if the collective belief drowns out dissent?

In such cases, an exit champion must be assigned. The exit champion sometimes needs to have some direct involvement in the project in order to have credibility, but direct involvement is not always a necessity. Exit champions must be willing to put their reputa- tion on the line and possibly face the likelihood of being cast out from the project team. According to Isabelle Royer9:

Sometimes it takes an individual, rather than growing evidence, to shake the collective belief of a project team. If the problem with unbridled enthusiasm starts as an unintended consequence of the legitimate work of a project champion, then what may be needed is

400 MANAGEMENT SUPPORT

a countervailing force—an exit champion. These people are more than devil’s advocates. Instead of simply raising questions about a project, they seek objective evidence show- ing that problems in fact exist. This allows them to challenge—or, given the ambiguity of existing data, conceivably even to confirm—the viability of a project. They then take action based on the data.

The larger the project and the greater the financial risk to the firm, the higher up the exit champion should reside. If the project champion just happens to be the CEO, then someone on the board of directors or even the entire board of directors should assume the role of the exit champion. Unfortunately, there are situations where the collective belief permeates the entire board of directors. In this case, the collective belief can force the board of directors to shirk their responsibility for oversight.

Large projects incur large cost overruns and schedule slippages. Making the decision to cancel such a project, once it has started, is very difficult, according to David Davis10:

The difficulty of abandoning a project after several million dollars have been committed to it tends to prevent objective review and recosting. For this reason, ideally an independent management team—one not involved in the projects development—should do the recost- ing and, if possible, the entire review. . . . If the numbers do not holdup in the review and recosting, the company should abandon the project. The number of bad projects that make it to the operational stage serves as proof that their supporters often balk at this decision.

. . . Senior managers need to create an environment that rewards honesty and courage and provides for more decision making on the part of project managers. Companies must have an atmosphere that encourages projects to succeed, but executives must allow them to fail.

The longer the project, the greater the necessity for the exit champions and project sponsors to make sure that the business plan has “exit ramps” such that the project can be terminated before massive resources are committed and consumed. Unfortunately, when a collective belief exists, exit ramps are purposefully omitted from the project and business plans. Another reason for having exit champions is so that the project closure process can occur as quickly as possible. As projects approach their completion, team members often have apprehension about their next assignment and try to stretch out the existing project until they are ready to leave. In this case, the role of the exit champion is to accelerate the closure process without impacting the integrity of the project.

Some organizations use members of a portfolio review board to function as exit cham- pions. Portfolio review boards have the final say in project selection. They also have the final say as to whether or not a project should be terminated. Usually, one member of the board functions as the exit champion and makes the final presentation to the remainder of the board.

401

8 Training and Education

8.0 INTRODUCTION

Establishing project management training programs is one of the greatest challenges facing training directors because project management involves numerous complex and interrelated skills (qualitative/ behavioral, organizational, and quantitative). In the early days of project management, project managers learned by their own mistakes rather than from the experience of others. Today, companies excellent in project management are offering a corporate curriculum in project management. Effective training sup- ports project management as a profession.

Some large corporations offer more internal courses related to project management than most colleges and universities do. Such companies treat education almost as a religion. Smaller companies have more modest internal training programs and usually send their people to publicly offered training programs.

This chapter discusses processes for identifying the need for training, selecting the students who need training, designing and conducting the training, and measuring training’s return on dollars invested.

8.1 TRAINING FOR MODERN PROJECT MANAGEMENT

During the early days of project management, in the late 1950s and throughout the 1960s, training courses concentrated on the advantages and disadvantages of various

402 TRAINING AND EDUCATION

organizational forms (e.g., matrix, traditional, projectized, and functional). Executives learned quickly, however, that any organizational structure could be made to work effec- tively and efficiently when basic project management is applied. Project management skills based in trust, teamwork, cooperation, and communication can solve the worst structural problems.

Starting in the 1970s, emphasis turned away from organizational structures for project management. The old training programs were replaced with two basic programs:

● Basic project management, which stresses behavioral topics such as multiple reporting relationships, time management, leadership, conflict resolution, negotia- tion, team building, motivation, and basic management areas such as planning and controlling.

● Advanced project management, which stresses scheduling techniques and soft- ware packages used for planning and controlling projects.

Today’s project management training programs include courses on behavioral as well as quantitative subjects. The most important problem facing training managers is how to achieve a workable balance between the two parts of the coursework—behav- ioral and quantitative (see Figure 8–1). For publicly sponsored training programs, the seminar leaders determine their own comfort levels in the “discretionary zone” between technical and behavioral subject matter. For in-house trainers, however, the balance must be preestablished by the training director on the basis of factors such as which students will be assigned to manage projects, types of projects, and average lengths of projects (see Table 8–1).

• Planning

People to Be Trained

Technical Experts

Line Managers

Employees

• Motivation

• Conflict D

isc re

tio na

ry Z

on e

• Leadership

• Team building

• Time management

• Scheduling • Cost control

• Software

T ec

hn ic

al (

Q ua

nt it

at iv

Behaviorial (Qualitative)

Figure 8–1. Types of project management training. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management, Hoboken, NJ: Wiley, 1998, p. 174.

Need for Business Education 403

8.2 NEED FOR BUSINESS EDUCATION

In the previous section, we discussed the importance of determining the right balance between quantitative skills and behavioral skills. That balance is now changing because of how we view the role of a project manager. Today, we have a new breed of project manager. Years ago, virtually all project managers were engineers with advanced degrees. These people had a command of technology rather than merely an understanding of tech- nology. If the line manager believed that the project manager did in fact possess a com- mand of technology, then the line manager would allow the assigned functional employees to take direction from the project manager. The result was that project managers were expected to manage people and provide technical direction.

Most project managers today have an understanding of technology rather than a com- mand of technology. As a result, the accountability for the success of the project is now viewed as shared accountability between the project manager and all affected line manag- ers. With shared accountability, the line managers must now have a good understanding of project management, which is why more line managers are now becoming PMP®s. Project managers are now expected to manage deliverables rather than people. Management of the assigned resources is more often than not a line function.

Another important fact is that project managers are treated as though they are managing part of a business rather than simply a project, and therefore they are expected to make sound business decisions as well as project decisions. Project managers must understand business principles. In the future, project managers may be expected to become externally certified by PMI® and internally certified by their company on the organization’s business processes.

Now, when designing training courses, we determine the correct balance between quantitative skills, behavioral skills, and business skills. Soft skills and business acumen are crucial elements for a flawless project execution, says Benny Nyberg, formerly group assistant VP with responsibility for PM Methodologies and Talent Development at ABB:

After implementing the ABB PM Process as a common high level process throughout the company’s project sales organizations as well as several product development orga-

TABLE 8–1. EMPHASES IN VARIOUS TRAINING PROGRAMS

Training Program Emphasis

Type of Person Assigned for PM Training (PM Source) Quantitative/Technology Skills Behavior Skills

Training Needed to Function as a Project Manager Technical expert on short-term projects High Low

Technical expert on long-term projects High High

Line manager acting as a part-time project manager High Low

Line manager acting as a full-time project manager High Average to high

Employees experienced in cooperative operations High Average to high

Employees inexperienced in cooperative operations High Average to high

Training Needed for General Knowledge Any employees or managers Average Average

Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management, Hoboken, NJ: Wiley, 1998, p. 175.

404 TRAINING AND EDUCATION

nizations, one thing was very clear. In a technical company employing large numbers of highly skilled engineers, some of which are promoted to project management, the technical aspects of project management such as planning, scheduling and cost control are the least difficult to implement. Junior employees do need training in this area but the real challenge for reaching operational excellence in project management, a flawless project execution, desirable projects result and a high level of customer satisfaction lies in identifying and developing project managers with the right business acumen. Project management is a management position requiring excellent commercial, communications and leadership skills. A project manager must be very business minded, be able to com- municate effectively with a variety of different stake holders and possess the ability to lead and motivate people. For delivery projects, a precise understanding of the contract, i.e. terms and conditions, scope and any promises made is crucial for being able to deliver just that, meet customer expectations and as such assure customer satisfaction and project success. Contract understanding is further a requisite for maximizing financial outcome and recognizing up-selling opportunities as they occur.

The role of a project manager, especially for big contracts that take many months or several years to complete, is very close to the role of a key account manager. The following skills/abilities are among the most important for success; business mind, communication, negotiation, leadership, risk management, salesmanship.

In order to indentify and address training and other development activities required for the wide variety of competencies and skills, ABB have implemented a competency model. The model includes a definition of required competencies, questionnaires for self-assessment, interview questionnaires plus development guides and last but not least a number of selectable training modules leading to appropriate level of certification.

8.3 SAP: IMPORTANCE OF A PROJECT MANAGEMENT

CAREER PATH1

In SAP Services we have established a clear project management development path for anyone supporting our customer delivery projects (or internal transformation projects). The project management career path spans from entry-level position of PM Associate through various levels of Project Managers all the way to the role of Program Manager or Delivery Executive. (See Figure 8–2)

Each role has a clearly defined skillset profile, including precise definition of required job skills and expected proficiency level for each skill that is required in the job. Each profile is also associated with the category of project that the person on this career level is expected to manage—the dimensions of this assignment includes project size, complexity, risk exposure, revenue, etc.

Each profile is tightly linked with HR job profile and respective personal development path that clearly specifies recommended training classes for each skill in the profile. The training offerings for the PM practice specify target roles for the training and the training learning objectives are tied to specific skills from the profile. The training catalogue covers

1. ©2013 by SAP. All rights reserved. Reproduced by permission. Material in this section has been provided by Jan Musil, Global Lead of Project Management Practice, SAP Field Services, SAP America, Inc.

Associate

PM Associate

The PM Assistant is a junior position

on the project management

career path and is responsible for performing a

basic function in the PMO.

Specialist

PM Specialist

The PM Specialist is the entry

position on the project

management career path.

Role may include such project roles as Project Team

Lead.

Senior

Project Manager

Project Managers are responsible for end-to-end management of category A and

lower complexity category B projects.

Expert

Principal Project Manager

Principal Project Managers are

responsible for end-to-end

management of category B and

lower complexity category C projects.

Chief Expert

Program Manager/ Delivery Executive

Program Managers/ Delivery Executives are responsible for

end-to-end management of

category C and D projects and programs.

Project Management and Program Management Development Path

Figure 8–2. Project management and program management development path.

405

406 TRAINING AND EDUCATION

broad range of skills from core project management skills based on PMI standards like PMI PMBOK® Guide project management fundamentals; SAP specific knowledge (like SAP solution knowledge, SAP implementation methodology, Agile delivery, delivery and internal PM tools, etc.) to leadership and interpersonal skills.

Through structured career path the project managers grow their knowledge, expertise and experiences, which allows them to move along the PM career path. The PM career path is interlinked with other job profiles in SAP so that project managers can make career choices that allow them to move to different career paths like management, sales roles or remain in the PM career.

8.4 INTERNATIONAL INSTITUTE FOR LEARNING

Given the importance of project management now and in the future, there will be a con- tinuing need for project management education. E. LaVerne Johnson (founder, president and CEO of the International Institute for Learning) comments on the growth of project management training. (For more information about IIL, please visit www.iil.com.)

In IIL’s more than twenty-year history, we’ve worked with thousands of organizations around the world, designing and delivering training in project, program, and portfolio management. Our clients range across all industries and include large global companies as well as smaller organizations trying to gain an edge through effective programs. With IIL serving our clients’ day-to-day needs as well as those just emerging on the horizon, we’ve been in a unique position to participate in and observe project management’s growth into a full-fledged profession. We have been “on the scene” as project management has transi- tioned from an area of interest to an organizational imperative.

From our perspective, courses that were sufficient just a few years ago now fall short—and that’s a real sign of progress. The global market and expanding importance of project management has dictated whole new families of courses, richer content, and a flexible range of delivery methods that allow students to learn when and where they need to—in live and virtual classrooms, alone at their desks whether at home or in the office, self-paced or instructor-led. It seems that learning and technology have come together to offer the project management profession extremely useful tools to keep on building the future. IIL takes pride in its Many Methods of Learning™ brand, which ensures that the education it provides serves a diversity of needs, styles, and interests.

Training courses during the 1980s were mostly geared to advancing the project manager’s skills. The focus of training was on the basics:

the fundamental methodology and the know-how required to pass PMI®’s Project Management Professional (PMP®) Certification exam. In response, IIL launched train- ing courses in project management fundamentals and established a comprehensive certification program that allowed individuals to prepare for and successfully pass PMI’s PMP® exam. A small variety of books, classroom courses, and software products were made available to those individuals responsible for managing projects in their companies.

Evolutionary Years: Learning

Trends

http://www.iil.com

International Institute for Learning 407

In recent years, a far greater variety of companies and industries have recognized the importance of managing projects more effectively and analyzing the ways in which projects meet overall corporate goals.

Compared to previous years, a revolution is emerging. This has become evident in a num- ber of trends.

● The volume of projects is increasing as more and more companies run their busi- nesses via projects. Indeed some leading organizations undertake hundreds of thousands of individual projects each year—some small and simple, others huge and complex.

● The ability to effectively manage projects has become critically important to busi- ness, and good project management skills have become a competitive advantage for leading companies.

● As a result of this revolutionary growth, the status and value of the project manager has grown in importance—having this know-how allows a company to complete projects faster, at lower cost, with greater customer satisfaction, and with more desirable project outcomes.

● Knowledge that was once deemed “nice to have” is now considered mandatory. A company’s economic success and survival depend on its ability to determine which projects support its overall strategic objectives, and to enable it to sequence them in ways to achieve that success.

● Today, employees with project management skills expand beyond project manag- ers. Team members and middle and top management are developing expertise in the subject.

● The complexity and scope of project management methodologies has grown to include new skills and applications.

● Process development and improvement through direct, hands-on support or knowl- edge management solutions have become a requirement for economic survival in the most challenging of times. IIL’s Unified Project Management® Methodology (UPMM™) Software Suite was developed to support consistency and quality in project, program, and portfolio management implementation.

● A large number of project management-related software programs have been developed to help manage projects (such as Microsoft® Project and Project Server, SharePoint, Primavera, and dozens of others including a wide range of open-source software).

● Project management certification has become an even more valuable asset to an individual’s career path. As a result, there were more than 520,000 active PMPs and more than 411,000 PMI members as of early 2013 (the latter, an 8.8% increase over the previous year).

● Heretofore, the project manager’s skill set has remained mostly technical. But today we are seeing project managers embrace additional knowledge areas such as leadership and interpersonal skills.

● Strategic planning for project management has taken on importance. Organizations are now seeking systematic ways to better align project management with business objectives.

● More and more companies are establishing project and portfolio management offices.

Revolutionary Years:

Marketplace Trends

408 TRAINING AND EDUCATION

● Approaches to project management within an organization remain relatively varied and nonstandardized. Companies need to work toward a more matured and com- mon methodology for more repeatable and predictable success.

● Companies and their project management offices are placing stronger emphasis on quality services, quality products, and improved processes using management tools such as Lean Six Sigma, Earned Valued, and Business Analysis.

In response to these trends, a greater variety of courses are available to a broadening number of industries. New methods of learning have been introduced to meet the growing diversity of client needs. Here are some

examples of how IIL has responded to these needs and established best practices in train- ing and education for project managers:

● IIL has dozens of different course titles in advanced areas of knowledge to increase the scope, application, and sophistication of the project manager. Such courses include advanced concepts in risk management, complex project management, requirements management, the design and development of a project office, and Agile project management.

● Courses addressing the “softer” side of project management are designed to hone facilitation skills, interpersonal skills, leadership skills, and other nontechnical areas.

● As organizations are increasing in their levels of project management maturity, there is a need for training in the effective use of enterprise project management software.

● More and more universities are recognizing project management as a part of their degree programs. IIL has partnered with the New York University School of Continuing and Professional Studies (NYU-SCPS) and the University of Southern California’s Marshall School of Business to offer project management certificate programs.

● The way we learn is changing. Employees have less time to devote to classroom study. As a result, in addition to traditional classroom training, IIL offers delivery methods such as on-demand, virtual, mobile apps, and video.

It’s always a challenge to try and predict the future, but there are some emerging trends that allow us to take a reasonable stab at this. For each of these trends, there will be the need to develop the appropriate learn- ing responses.

● A key competitive factor in companies will be their ability to undertake and effec- tively manage multiple projects—projects to develop new products and services, get to market faster, reduce costs, improve customer satisfaction, increase sales, and so on. The more well-chosen projects are, the more competitive a company

Revolutionary Years: Learning

Trends

A Look into the Crystal

Ball: Trends and Learning

Responses

International Institute for Learning 409

will be in the marketplace (particularly regarding projects to improve products, processes, and customer satisfaction).

● We anticipate a blending of project management methodologies with other proven business strategies (such as Six Sigma, Agile, quality management, risk manage- ment, and business analysis). Training in these subjects will similarly become blended.

● Project, program, and portfolio management will continue to grow in importance and become a strategic differentiating factor for organizations to remain competi- tive. Portfolio management software is now a requirement.

● Senior management will become more knowledgeable and involved in project management efforts. This will require project management training that meets the unique needs of executives.

● Strategic planning for project management will become a way of life for lead- ing organizations. The role of the project office/portfolio office will increase and become commonplace and vital in companies. Membership will include the high- est levels of executive management. Senior management will take leadership of the company’s project portfolio management efforts.

● IIL will continue to partner with companies to offer dual certification for project managers. Project managers will be required to be certified in project management as well as in their internal business operations and processes.

● Executives will be increasingly involved in activities such as capacity planning, portfolio management, prioritization, process improvement, supply chain manage- ment, and strategic planning specifically for project management. In fact, more and more executives are earning project management certifications.

● Participation of upper managers will be obstructed by their limited experience and training in project, program, and portfolio management. An essential element will be to provide these managers with experience and training in how to manage proj- ect activities within their companies. This training must be tailored to the unique needs and responsibilities of upper management.

● The company’s reward and recognition systems will change to stimulate and rein- force project management goals and objectives.

● Training in project management will be expanded to include all levels of the com- pany hierarchy, including the non–project manager. Training will become respon- sive to an array of job functions, levels, and responsibilities.

● The status of the certified project manager will grow significantly and the project manager’s skills will be both technical and managerial.

● We will witness the establishment of a corporate-level project management execu- tive (chief project management officer).

● Project benchmarking and continuous project improvement will become essential for leading organizations. The project management maturity models will play an important role in this regard, as they will help companies identify their strengths, weaknesses, and specific opportunities for improvement.

● The expanding importance of project, program, and portfolio management will require more individuals who are trained in project management. This in turn will necessitate the development of new and improved methods of delivery. Online training will play an increasingly important role.

410 TRAINING AND EDUCATION

● We will see an order-of-magnitude increase in the number of organizations reach- ing the higher levels of project management maturity.

● More colleges and universities will offer degree programs in project management and seek to align their courses with international standards and best practices.

● Project management will focus on providing the knowledge and best practices to support sustainable initiatives. Project sustainability in the global economy through values, leadership, and professional responsibility will be the mandate of all project, program, and portfolio managers and sponsors.

8.5 IDENTIFYING THE NEED FOR TRAINING

Identifying the need for training requires that line managers and senior managers rec- ognize two critical factors: first, that training is one of the fastest ways to build project management knowledge in a company and, second, that training should be conducted for the benefit of the corporate bottom line through enhanced efficiency and effectiveness.

Identifying the need for training has become somewhat easier in the past 10 years because of published case studies on the benefits of project management training. The benefits can be classified according to quantitative and qualitative benefits. The quantita- tive results include:

● Shorter product development time ● Faster, higher-quality decisions ● Lower costs ● Higher profit margins ● Fewer people needed ● Reduction in paperwork ● Improved quality and reliability ● Lower turnover of personnel ● Quicker “best practices” implementation

Qualitative results include:

● Better visibility and focus on results ● Better coordination ● Higher morale ● Accelerated development of managers ● Better control ● Better customer relations ● Better functional support ● Fewer conflicts requiring senior management involvement

Companies are finally realizing that the speed at which the benefits of project manage- ment can be achieved is accelerated through proper training.

Fundamentals of Project Management Education 411

8.6 SELECTING STUDENTS

Selecting the people to be trained is critical. As we have already seen in a number of case studies, it is usually a mistake to train only the project managers. A thorough under- standing of project management and project management skills is needed throughout the organization if project management is to be successful. For example, one automobile subcontractor invested months in training its project managers. Six months later, projects were still coming in late and over budget. The executive vice president finally realized that project management was a team effort rather than an individual responsibility. After that revelation, training was provided for all of the employees who had anything to do with the projects. Virtually overnight, project results improved.

Dave Kandt, retired group vice president, quality, program management and continu- ous improvement at Johnson Controls, explained how his company’s training plan was laid out to achieve excellence in project management:

We began with our executive office, and once we had explained the principles and philoso- phies of project management to these people, we moved to the managers of plants, engineer- ing managers, cost analysts, purchasing people, and, of course, project managers. Only once the foundation was laid did we proceed with actual project management and with defining the roles and responsibilities so that the entire company would understand its role in project management once these people began to work. Just the understanding allowed us to move to a matrix organization and eventually to a stand-alone project management department.

8.7 FUNDAMENTALS OF PROJECT MANAGEMENT EDUCATION

Twenty years ago, we were somewhat limited as to availability of project management training and education. Emphasis surrounded on-the-job training in hopes that fewer mis- takes would be made. Today, we have other types of programs, including:

● University courses ● University seminars ● In-house seminars ● In-house curriculums ● Distance teaming (e-learning) ● Computer-based training (CBT)

With the quantity of literature available today, we have numerous ways to deliver the knowledge. Typical delivery systems include:

● Lectures ● Lectures with discussion ● Exams ● Case studies on external companies ● Case studies on internal projects ● Simulation and role playing

412 TRAINING AND EDUCATION

Training managers are currently experimenting with “when to train.” The most com- mon choices include:

● Just-in-time training: This includes training employees immediately prior to assigning them to projects.

● Exposure training: This includes training employees on the core principles just to give them enough knowledge so that they will understand what is happening in project management within the firm.

● Continuous learning: This is training first on basic, then on advanced, topics so that people will continue to grow and mature in project management.

● Self-confidence training: This is similar to continuous learning but on current state-of-the-art knowledge. This is to reinforce employees’ belief that their skills are comparable to those in companies with excellent reputations for project man- agement.

8.8 SOME CHANGES IN PROJECT MANAGEMENT EDUCATION

In the early years of project management, almost all project managers came from the engi- neering disciplines. The project managers were expected to possess a command of tech- nology rather than just an understanding of technology. When earned value management (EVM) principles were developed, project management coursework emphasized cost and schedule control. Seminars appeared in the marketplace entitled “Project Management,” but the content for these two- or three-day courses was almost entirely PERT and EVM. In all but a few industries, project management was viewed as part-time work, and an add-on to one’s primary job. The need to fully understand the skills and competencies to be effec- tive as a project management was not considered to be that important.

Today, project management is a career path position in almost all companies. Colleges and universities are now offering master’s and doctorate degrees in project management. Typical coursework is such programs include:

Core coursework: ● Principles of Project Management ● Project Scheduling Techniques ● Project Estimating Techniques ● Project Financing Techniques ● Creativity and Brainstorming ● Problem Solving and Decision Making ● Global Project Management ● Managing Multiple Projects ● Project Management Leadership ● Managing Virtual Teams ● Project Portfolio Management

Some Changes in Project Management Education 413

Electives: ● Advanced Project Management ● Project Quality Management ● Project Procurement and Contracting ● Project Ethics and the Code of Professional Conduct ● Project Monitoring and Control Techniques ● Project Reporting Practices ● Stakeholder Relations Management ● Conducting Project Health Checks ● Managing Troubled Projects ● Capturing Best Practices ● Managing Cultural Differences

Some educational institutions also offer the students specialized training for certification in various project management areas. The knowledge needed to pass the certification exams can come from specialized coursework or from the traditional core requirements and electives. A partial list of some certification programs related to project management might include:

● Project Management ● Program Management ● Project Risk Management ● Agile Project Management ● Business Analyst ● Managing Complex Projects ● Other Project Management Certifications ● Specialized or Customized Certifications

The greatest change in project management education appears to be in the softer skills requirements. This is understandable since projects require people working together. Emphasis in the behavioral areas is now being placed upon:

● Problem-Solving Skills ● Decision-Making Skills ● Conceptualization Skills ● Creativity/Brainstorming Skills ● Process Skills ● Coping with Stress/Pressure ● Leadership without Authority ● Multiple Boss Reporting ● Counseling and Facilitation ● Mentorship Skills ● Negotiating Skills ● Conflict Resolution Skills ● Presentation Skills

In the future, it is possible that social networking skills may be added to the list.

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8.9 DESIGNING COURSES AND CONDUCTING TRAINING

Many companies have come to realize that on-the-job training may be less effective than more formal training. On-the-job training virtually forces people to make mistakes as a learning experience, but what are they learning? How to make mistakes? It seems much more efficient to train people to do their jobs the right way from the start.

Project management has become a career path. More and more companies today allow or even require that their employees get project management certification. One company informed its employees that project management certification would be treated the same as a master’s degree in the salary and career path structure. The cost of the training behind the certification process is only 5 or 10 percent of the cost of a typical master’s degree in a business administration program. And certification promises a quicker return on invest- ment (ROI) for the company. Project management certification can also be useful for employees without college degrees; it gives them the opportunity for a second career path within the company.

Linda Zaval, formerly a trainer with the International Institute for Learning, explained what type of project management training worked best in her experience during the early 1990s:

In our experience, we have found that training ahead of time is definitely the better route to go. We have done it the other way with people learning on the job, and that has been a rather terrifying situation at times. When we talk about training, we are not just talking about training. We want our project managers to be certified through the Project Management Institute. We have given our people two years to certify. To that end there is quite a bit of personal study required. I do believe that training from the formal training end is great, and then you can modify that to whatever the need is in-house.

There is also the question of which are better: internally based or publicly held train- ing programs. The answer depends on the nature of the individual company and how many employees need to be trained, how big the training budget is, and how deep the company’s internal knowledge base is. If only a few employees at a time need training, it might be effective to send them to a publicly sponsored training course, but if large numbers of employees need training on an ongoing basis, designing and conducting a customized internal training program might be the way to go.

In general, custom-designed courses are the most effective. In excellent companies, course content surveys are conducted at all levels of management. For example, the R&D group of Babcock and Wilcox in Alliance, Ohio, needed a project management training program for 200 engineers. The head of the training department knew that she was not qualified to select core content, so she sent questionnaires out to executive managers, line managers, and professionals in the organization. The information from the questionnaires was used to develop three separate courses for the audience. At Ford Motor Company, training was broken down into a two-hour session for executives, a three-day program for project personnel, and a half-day session for overhead personnel.

For internal training courses, choosing the right trainers and speakers is crucial. A company can use trainers currently on staff if they have a solid knowledge of project man- agement, or the trainers can be trained by outside consultants who offer train-the-trainer

Designing Courses and Conducting Training 415

programs. Either way, trainers from within the company must have the expertise the com- pany needs. Some problems with using internal trainers include the following:

● Internal trainers may not be experienced in all areas of project management. ● Internal trainers may not have up-to-date knowledge of the project management

techniques practiced by other companies. ● Internal trainers may have other responsibilities in the company and so may not

have adequate time for preparation. ● Internal trainers may not be as dedicated to project management or as skillful as

external trainers.

But the knowledge base of internal trainers can be augmented by outside trainers as necessary. In fact, most companies use external speakers and trainers for their internal educational offerings. The best way to select speakers is to seek out recommendations from training directors in other companies and teachers of university-level courses in project management. Another method is contacting speakers’ bureaus, but the quality of the speaker’s program may not be as high as needed. The most common method for find- ing speakers is reviewing the brochures of publicly sponsored seminars. Of course, the brochures were created as sales materials, and so the best way to evaluate the seminars is to attend them.

After a potential speaker has been selected, the next step is to check his or her rec- ommendations. Table 8–2 outlines many of the pitfalls involved in choosing speakers for internal training programs and how you can avoid them.

TABLE 8–2. COMMON PITFALLS IN HIRING EXTERNAL TRAINERS AND SPEAKERS

Warning Sign Preventive Step

Speaker professes to be an expert in several different areas. Verify speaker’s credentials. Very few people are experts in several areas. Talk to other companies that have used the speaker.

Speaker’s résumé identifies several well-known and highly regarded client organizations.

See whether the speaker has done consulting for any of these companies more than once. Sometimes a speaker does a good job selling himself or herself the first time, but the company refuses to rehire him or her after viewing the first presentation.

Speaker makes a very dramatic first impression and sells himself or herself well. Brief classroom observation confirms your impression.

Being a dynamic speaker does not guarantee that quality information will be presented. Some speakers are so dynamic that the trainees do not realize until too late that “The guy was nice but the information was marginal.”

Speaker’s résumé shows 10–20 years or more experience as a project manager.

Ten to 20 years of experience in a specific industry or company does not mean that the speaker’s knowledge is transferable to your company’s specific needs or industry. Ask the speaker what types of projects he or she has managed.

Marketing personnel from the speaker’s company aggressively show the quality of their company, rather than the quality of the speaker. The client list presented is the company’s client list.

You are hiring the speaker, not the marketing representative. Ask to speak or meet with the speaker personally and look at the speaker’s client list rather than the parent company’s client list.

Speaker promises to custom design his or her materials to your company’s needs.

Demand to see the speaker’s custom-designed material at least two weeks before the training program. Also verify the quality and professionalism of view graphs and other materials.

416 TRAINING AND EDUCATION

The final step is to evaluate the training materials and presentation the external trainer will use in the classes. The following questions can serve as a checklist:

● Does the speaker use a lot of slides in his or her presentation? Slides can be a problem when students do not have enough light to take notes.

● Does the instructor use transparencies? Have they been prepared professionally? Will the students be given copies of the transparencies?

● Does the speaker make heavy use of chalkboards? Too much chalkboard work usually means too much note taking for the trainees and not enough audiovisual preparation from the speaker.

● Does the speaker use case studies? If he or she does, are the case studies factual? It is best for the company to develop its own case studies and ask the speaker to use those so that the cases will have relevance to the company’s business.

● Are role playing and laboratory experiences planned? They can be valuable aids to learning, but they can also limit class size.

● Are homework and required reading a part of the class? If so, can they be com- pleted before the seminar?

8.10 MEASURING THE RETURN ON INVESTMENT ON EDUCATION

The last area of project management training is the determination of the value earned on the dollars invested in training. It is crucial to remember that training should not be performed unless there is a continuous return on dollars for the company. Keep in mind, also, that the speaker’s fee is only part of the cost of training. The cost to the company of having employees away from their work during training must be included in the calcula- tion. Some excellent companies hire outside consultants to determine ROI. The consultants base their evaluations on personal interviews, on-the-job assessments, and written surveys.

One company tests trainees before and after training to learn how much knowledge the trainees really gained. Another company hires outside consultants to prepare and interpret post-training surveys on the value of the specific training received.

The amount of training needed at any one company depends on two factors: whether the company is project-driven and whether it has practiced project management long enough to have developed a mature project management system. Figure 8–3 shows the amount of project management training offered (including refresher courses) against the number of years in project management. Project-driven organizations offer the most project management training courses, and organizations that have just started implement- ing project management offer the fewest. That’s no surprise. Companies with more than 15 years of experience in applying project management principles show the most variance.

8.11 PROJECT MANAGEMENT IS NOW A PROFESSION

For several years, project management was viewed as a part-time occupation and, there- fore, all training was designed for one’s primary job description, whatever that may

Project Management Is Now a Profession 417

be, rather than project management. Because of this, there was no need to develop job descriptions for project and program managers. Today, these job descriptions exist, project management is viewed as a profession, and training programs are provided based upon the job descriptions. When asked if AT&T had job descriptions, a spokesperson for AT&T responded “yes” to both project and program management:

Project Manager

Provides end-to-end project management throughout the lifecycle of a project by directing the efforts of project team(s) using dotted-line authority to deliver a completed product and/or service. Has full accountability for managing larger low complexity to high com- plexity projects, or projects within programs which may span multiple regions and/or multiple functions; multiple concurrent projects may be managed. Includes estimating, scheduling, coordinating, assigning resources, ensuring that project funding is secured, and assisting in recommending business solutions/alternatives for projects. Assesses, plans for, and manages project risks, issues, jeopardies, escalations and problem resolutions. Manages project scope, project budgeting and cost reporting, and ensures completion of projects while meeting quality, schedule and cost objectives using the organization’s

Non–project-driven industries (mostly immature)

Maturing industries (mostly project-driven)

No growth (follow the leader)

Stars of tomorrow

Slow growth (barriers)

L ow

M ed

iu m

P ro

je ct

M an

ag em

en t

T ra

in in

Years of Project Management Experience

H ig

6 –151– 5 More than 15

Figure 8–3. Amount of training by type of industry and year of project management experi- ence. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management, Hoboken, NJ: Wiley, 1998, p. 185.

418 TRAINING AND EDUCATION

standard processes. Acts as project liaison between IT partners, client organizations and IT leadership. May assist in supplier management of existing vendors. May direct Associate Project Managers to provide support with project communications and tracking project progress. Does not include the management of extremely large and complex programs, with multiple sub-programs, requiring senior level oversight and extensive executive com- munications. Must spend 80% or more of time performing the project management duties described above.

Program Manager

Provides end-to-end project management and/or program management throughout the lifecycle of a project/program by directing the efforts of project/program team(s) using dotted-line authority to deliver a completed project and/or service. Has full accountability for managing concurrent high complexity projects and/or programs which may span mul- tiple regions, functions and/or business units. Responsible for detailed planning including program/project structure & staffing, estimating, resource allocation and assignment, detailed scheduling, critical path analysis, consolidating project plans into an overall program plan and negotiating any sequencing conflicts. Directs project and/or program activities utilizing the organization’s standard processes to ensure the timely delivery of stated business benefits, comparing actuals to plans and adjusting plans as necessary. Assesses, plans for, and manages project/program risks including mitigation & contin- gency plans; manages issues, jeopardies, escalations and problem resolutions. Defines project/program scope and ensures changes to scope and deliverables are managed using the change control process. Manages large program or project budgets and cost reporting. Acts as liaison with client and IT leadership, providing communication and status regard- ing the progress of the project/program. May assist with RFP development, evaluation, and supplier selection, as well as ongoing relationships with suppliers or consultants. Utilizes knowledge of business, industry and technology to incorporate business process improvements into the organization and/or to develop business strategies and functional/ business/technical architectures. May direct the efforts of project managers when they manage a project or sub-program over which the Senior Project/Program Manager has authority. May include the management of extremely large and complex programs, with multiple sub-programs, requiring senior level oversight and extensive executive commu- nications. Must spend 80% or more of time performing the project management duties described above.

The recognition of project management as a profession has spread worldwide. According to Enrique Sevilla Molina, formerly PMO director, Indra:

Project management is considered the result of a specific blend of knowledge and expe- rience, gained through dedication to achieve success in the projects under the project manager responsibility.

We have a set of management roles associated to the different levels of responsibili- ties and expertise to manage projects, programs and portfolios, and to develop business opportunities (i.e. Project Managers, Program Directors, etc). For each role, a specific set of skills in a certain degree is defined, so performance and achievement may be assessed. The yearly evaluation of personal performance is done based on the job descriptions, the role maturity achieved so far, the expected performance for the role and the actual perfor- mance, so the evolution in personal development may also be assessed.

Competency Models 419

8.12 COMPETENCY MODELS

Twenty years ago, companies prepared job descriptions for project managers to explain roles and responsibilities. Unfortunately, the job descriptions were usually abbreviated and pro- vided very little guidance on what was required for promotion or salary increases. Ten years ago we still emphasized the job description, but it was now supported by coursework, which was often mandatory. By the late 1990s, companies began emphasizing core competency models, which clearly depicted the skill levels needed to be effective as a project manager. Training programs were instituted to support the core competency models. Unfortunately, establishing a core competency model and the accompanying training is no easy task.

Eli Lilly has perhaps one of the most comprehensive and effective competency mod- els in industry today. Martin D. Hynes, III, director, pharmaceutical projects management (PPM), was the key sponsor of the initiative to develop the competency model. Thomas J. Konechnik, operations manager, pharmaceutical projects management, was responsible for the implementation and integration of the competency model with other processes within the PPM group. The basis for the competency model is described here.

Lilly Research Laboratories project management competencies are classified under three major areas:

Scientific/Technical Expertise ● Knows the Business: Brings an understanding of the drug development process and

organizational realities to bear on decisions. ● Initiates Action: Takes proactive steps to address needs or problems before the

situation requires it. ● Thinks Critically: Seeks facts, data, or expert opinion to guide a decision or course

of action. ● Manages Risks: Anticipates and allows for changes in priorities, schedules, and

resources and changes due to scientific/technical issues.

Process Skills ● Communicates Clearly: Listens well and provides information that is easily under-

stood and useful to others. ● Attention to Details: Maintains complete and detailed records of plans, meeting

minutes, agreements. ● Structures the Process: Constructs, adapts, or follows a logical process to ensure

achievement of objectives and goals.

Leadership ● Focuses on Results: Continually focuses own and others’ attention on realistic

milestones and deliverables. ● Builds a Team: Creates an environment of cooperation and mutual accountability

within and across functions to achieve common objectives. ● Manages Complexity: Organizes, plans, and monitors multiple activities, people,

and resources.

420 TRAINING AND EDUCATION

● Makes Tough Decisions: Demonstrates assurance in own abilities, judgments, and capabilities; assumes accountability for actions.

● Builds Strategic Support: Gets the support and level of effort needed from senior management and others to keep project on track.

We examine each of these competencies in more detail below.

1. Knows the Business: Brings an understanding of the drug development process and organizational realities to bear on decisions.

Project managers/associates who demonstrate this competency will:

● Recognize how other functions in Eli Lilly impact the success of a development effort. ● Use knowledge of what activities are taking place in the project as a whole to

establish credibility. ● Know when team members in own and other functions will need additional support

to complete an assignment/activity. ● Generate questions based on understanding of nonobvious interactions of different

parts of the project. ● Focus attention on the issues and assumptions that have the greatest impact on the

success of a particular project activity or task. ● Understand/recognize political issues/structures of the organization. ● Use understanding of competing functional and business priorities to reality test proj-

ect plans, assumptions, time estimates, and commitments from the functions. ● Pinpoint consequences to the project of decisions and events in other parts of the

organization. ● Recognize and respond to the different perspectives and operating realities of dif-

ferent parts of the organization. ● Consider the long-term implications (pro and con) of decisions. ● Understand the financial implications of different choices.

Project managers/associates who do not demonstrate this competency will:

● Rely on resource and time estimates from those responsible for an activity or task. ● Make decisions based on what ideally should happen. ● Build plans and timelines by rolling up individual timelines and so on. ● Perceive delays as conscious acts on the part of other parts of the organization. ● Assume that team members understand how their activities impact other parts of

the project. ● Focus attention on providing accurate accounts of what has happened. ● Avoid changing plans until forced to do so. ● Wait for team members to ask for assistance.

Selected consequences for projects/business of not demonstrating this compe- tency are:

● Project manager or associate may rely on senior management to resolve issues and obtain resources.

Competency Models 421

● Proposed project timelines may be significantly reworked to meet current guide- lines.

● Attention may be focused on secondary issues rather than central business or tech- nical issues.

● Current commitments, suppliers, and so on, may be continued regardless of reli- ability and value.

● Project deliverables may be compromised by changes in other parts of Lilly. ● Project plans may have adverse impact on other parts of the organization.

2. Initiates Action: Takes proactive steps to address needs or problems before the situation requires it.

Project managers/associates who demonstrate this competency will:

● Follow up immediately when unanticipated events occur. ● Push for immediate action to resolve issues and make choices. ● Frame decisions and options for project team, not simply facilitate discussions. ● Take on responsibility for dealing with issues for which no one else is taking

responsibility. ● Formulate proposals and action plans when a need or gap is identified. ● Quickly surface and raise issues with project team and others. ● Let others know early on when issues have major implications for project. ● Take action to ensure that relevant players are included by others in critical pro-

cesses or discussions.

Project managers/associates who do not demonstrate this competency will:

● Focus efforts on ensuring that all sides of issues are explored. ● Ask others to formulate initial responses or plans to issues or emerging events. ● Let functional areas resolve resource issues on their own. ● Raise difficult issues or potential problems after their impact is fully understood. ● Avoid interfering or intervening in areas outside own area of expertise. ● Assume team members and others will respond as soon as they can. ● Defer to more experienced team members on how to handle an issue.

Selected consequences for projects/business of not demonstrating this competency are:

● Senior management may be surprised by project-related events. ● Project activities may be delayed due to “miscommunications” or to waiting for

functions to respond. ● Effort and resources may be wasted or underutilized. ● Multiple approaches may be pursued in parallel. ● Difficult issues may be left unresolved.

3. Thinks Critically: Seeks facts, data, or expert opinion to guide a decision or course of action.

Project managers/associates who demonstrate this competency will:

● Seek input from people with expertise or first-hand knowledge of issues and so on.

422 TRAINING AND EDUCATION

● Ask tough, incisive questions to clarify time estimates or to challenge assumptions and be able to understand the answers.

● Immerse self in project information to quickly gain a thorough understanding of a project’s status and key issues.

● Focus attention on key assumptions and root causes when problems or issues arise. ● Quickly and succinctly summarize lengthy discussions. ● Gather data on past projects, and so on, to help determine best future options for

a project. ● Push to get sufficient facts and data in order to make a sound judgment. ● Assimilate large volumes of information from many different sources. ● Use formal decision tools when appropriate to evaluate alternatives and identify

risks and issues.

Project managers/associates who do not demonstrate this competency will:

● Accept traditional assumptions regarding resource requirements and time estimates. ● Rely on team members to provide information needed. ● Push for a new milestone without determining the reason previous milestone was

missed. ● Summarize details of discussions and arguments without drawing conclusions. ● Limit inquiries to standard sources of information. ● Use procedures and tools that are readily available. ● Define role narrowly as facilitating and documenting team members’ discussions.

Selected consequences for projects/business of not demonstrating this competency are:

● Commitments may be made to unrealistic or untested dates. ● High-risk approaches may be adopted without explicit acknowledgment. ● Projects may take longer to complete than necessary. ● New findings and results may be incorporated slowly only into current Lilly practices. ● Major problems may arise unexpectedly. ● Same issues may be revisited. ● Project plan may remain unchanged despite major shifts in resources, people, and

priorities.

4. Manages Risks: Anticipates and allows for changes in priorities, schedules, resources, and changes due to scientific/technical issues.

Project managers/associates who demonstrate this competency will:

● Double-check validity of key data and assumptions before making controversial or potentially risky decisions.

● Create a contingency plan when pursuing options that have clear risks associated with them.

● Maintain ongoing direct contact with “risky” or critical path activities to under- stand progress.

● Push team members to identify all the assumptions implicit in their estimates and commitments.

● Stay in regular contact with those whose decisions impact the project.

Competency Models 423

● Let management and others know early on the risks associated with a particular plan of action.

● Argue for level of resources and time estimates that allow for predictable “unex- pected” events.

● Pinpoint major sources of scientific risks.

Project managers/associates who do not demonstrate this competency will:

● Remain optimistic regardless of progress. ● Agree to project timelines despite serious reservations. ● Value innovation and new ideas despite attendant risks. ● Accept less experienced team members in key areas. ● Give individuals freedom to explore different options. ● Accept estimates and assessments with minimal discussion.

Selected consequences for projects/business of not demonstrating this competency are:

● Projects may take longer to complete than necessary. ● Project may have difficulty responding to shifts in organizational priorities. ● Major delays could occur if proposed innovative approach proves inappropriate. ● Known problem areas may remain sources of difficulties. ● Project plans may be subject to dramatic revisions.

5. Communicates Clearly: Listens well and provides information that is easily understood and useful to others.

Project managers/associates who demonstrate this competency will:

● Present technical and other complex issues in a concise, clear, and compelling manner.

● Target or position communication to address needs or level of understanding of recipient(s) (e.g., medical, senior management).

● Filter data to provide the most relevant information (e.g., does not go over all details but knows when and how to provide an overall view).

● Keep others informed in a timely manner about decision or issues that may impact them.

● Facilitate and encourage open communication among team members. ● Set up mechanisms for regular communications with team members in remote

locations. ● Accurately capture key points of complex or extended discussions. ● Spend the time necessary to prepare presentations for management. ● Effectively communicate and represent technical arguments outside own area of

expertise.

Project managers/associates who do not demonstrate this competency will:

● Provide all the available details. ● See multiple reminders or messages as inefficient. ● Expect team members to understand technical terms of each other’s specialties. ● Reuse communication and briefing materials with different audiences.

424 TRAINING AND EDUCATION

● Limit communications to periodic updates. ● Invite to meetings only those who (are presumed to) need to be there or who have

something to contribute. ● Rely on technical experts to provide briefings in specialized, technical areas.

Selected consequences for projects/business of not demonstrating this competency are:

● Individuals outside of the immediate team may have little understanding of the project.

● Other projects may be disrupted by “fire drills” or last-minute changes in plan. ● Key decisions and discussions may be inadequately documented. ● Management briefings may be experienced as ordeals by team and management. ● Resources/effort may be wasted or misapplied.

6. Pays Attention to Details: Systematically documents, tracks, and organizes project details.

Project managers/associates who demonstrate this competency will:

● Remind individuals of due dates and other requirements. ● Ensure that all relevant parties are informed of meetings and decisions. ● Prepare timely, accurate, and complete minutes of meetings. ● Continually update or adjust project documents to reflect decisions and changes. ● Check the validity of key assumptions in building the plan. ● Follow up to ensure that commitments are understood.

Project managers/associates who do not demonstrate this competency will:

● Assume that others are tracking the details. ● See formal reviews as intrusions and waste of time. ● Choose procedures that are least demanding in terms of tracking details. ● Only sporadically review and update or adjust project documents to reflect deci-

sions and other changes. ● Limit project documentation to those formally required. ● Rely on meeting notes as adequate documentation of meetings.

Selected consequences for projects/business of not demonstrating this competency are:

● Coordination with other parts of the organization may be lacking. ● Documentation may be incomplete or difficult to use to review project issues. ● Disagreements may arise as to what was committed to. ● Project may be excessively dependent on the physical presence of manager or

associate.

7. Structures the Process: Constructs, adapts, or follows a logical process to ensure achievement of objectives and goals.

Project managers/associates who demonstrate this competency will:

● Choose milestones that the team can use for assessing progress. ● Structure meetings to ensure agenda items are covered. ● Identify sequence of steps needed to execute project management process.

Competency Models 425

● Maintain up-to-date documentation that maps expectations for individual team members.

● Use available planning tools to standardize procedures and structure activities. ● Create simple tools to help team members track, organize, and communicate

information. ● Build a process that efficiently uses team members’ time, while allowing them to

participate in project decision; all team members should not attend all meetings. ● Review implications of discussion or decisions for the project plan as mechanism

for summarizing and clarifying discussions. ● Keep discussions moving by noting disagreements rather than trying to resolve

them there and then. ● Create and use a process to ensure priorities are established and project strategy is

defined.

Project managers/associates who do not demonstrate this competency will:

● Trust that experienced team members know what they are doing. ● Treat complex sequences of activities as a whole. ● Share responsibility for running meetings, formulating agendas, and so on. ● Create plans and documents that are as complete and detailed as possible. ● Provide written documentation only when asked for. ● Allow team members to have their say.

Selected consequences for projects/business of not demonstrating this competency are:

● Projects may receive significantly different levels of attention. ● Project may lack a single direction or focus. ● Planning documents may be incomplete or out of date. ● Presentations and briefings may require large amounts of additional work. ● Meetings may be seen as unproductive. ● Key issues may be left unresolved. ● Other parts of the organization may be unclear about what is expected and when.

8. Focuses on Results: Continually focuses own and others’ attention on realistic project milestones and deliverables.

Project managers/associates who demonstrate this competency will:

● Stress need to keep project-related activities moving forward. ● Continually focus on ultimate deliverables (e.g., product to market, affirm/discon-

firm merits of compound, value of product/program to Lilly) (manager). ● Choose actions in terms of what needs to be accomplished rather than seeking

optimal solutions or answers. ● Remind project team members of key project milestones and schedules. ● Keep key milestones visible to the team. ● Use fundamental objective of project as means of evaluating option driving deci-

sions in a timely fashion. ● Push team members to make explicit and public commitments to deliverables. ● Terminate projects or low-value activities in timely fashion.

426 TRAINING AND EDUCATION

Project managers/associates who do not demonstrate this competency will:

● Assume that team members have a clear understanding of project deliverables and milestones.

● Approach tasks and issues only when they become absolutely critical. ● Downplay or overlook negative results or outcomes. ● Keep pushing to meet original objectives in spite of new data/major changes. ● Pursue activities unrelated to original project requirements. ● Trust that definite plans will be agreed to once team members are involved in the

project. ● Allow unqualified individuals to remain on tasks. ● Make attendance at project planning meetings discretionary.

Selected consequences for projects/business of not demonstrating this competency are:

● Milestones may be missed without adequate explanation. ● Functional areas may be surprised at demand for key resources. ● Commitments may be made to unreasonable or unrealistic goals or schedules. ● Projects may take longer to complete than necessary. ● Objectives and priorities may differ significantly from one team member to another.

9. Builds a Team: Creates an environment of cooperation and mutual accountability within and across functions to achieve common objectives.

Project managers/associates who demonstrate this competency will:

● Openly acknowledge different viewpoints and disagreements. ● Actively encourage all team members to participate regardless of their functional

background or level in the organization. ● Devote time and resources explicitly to building a team identity and a set of shared

objectives. ● Maintain objectivity; avoid personalizing issues and disagreements. ● Establish one-on-one relationship with team members. ● Encourage team members to contribute input in areas outside functional areas. ● Involve team members in the planning process from beginning to end. ● Recognize and tap into the experience and expertise that each team member possesses. ● Solicit input and involvement from different functions prior to their major

involvement. ● Once a decision is made, insist that team accept it until additional data become

available. ● Push for explicit commitment from team members when resolving controversial

issues.

Project managers/associates who do not demonstrate this competency will:

● State what can and cannot be done. ● Assume that mature professionals need little support or team recognition. ● Limit contacts with team members to formal meetings and discussions. ● Treat issues that impact a team member’s performance as the responsibility of

functional line management.

Competency Models 427

● Help others only when explicitly asked to do so. ● Be openly critical about other team members’ contributions or attitudes. ● Revisit decisions when team members resurface issues.

Selected consequences for projects/business of not demonstrating this competency are:

● Team members may be unclear as to their responsibilities. ● Key individuals may move onto other projects. ● Obstacles and setbacks may undermine overall effort. ● Conflicts over priorities within project team may get escalated to senior manage-

ment. ● Responsibility for project may get diffused. ● Team members may be reluctant to provide each other with support or accommo-

date special requests.

10. Manages Complexity: Organizes, plans, and monitors multiple activities, people, and resources.

Project managers/associates who demonstrate this competency will:

● Remain calm when under personal attack or extreme pressure. ● Monitor progress on frequent and consistent basis. ● Focus personal efforts on most critical tasks: apply 80–20 rule. ● Carefully document commitments and responsibilities. ● Define tasks and activities to all for monitoring and a sense of progress. ● Break activities and assignments into components that appear doable. ● Balance and optimize workloads among different groups and individuals. ● Quickly pull together special teams or use outside experts in order to address emer-

gencies or unusual circumstances. ● Debrief to capture “best practices” and “lessons learned.”

Project managers/associates who do not demonstrate this competency will:

● Limit the number of reviews to maximize time available to team members. ● Stay on top of all the details. ● Depend on team members to keep track of their own progress. ● Let others know how they feel about an issue or individual. ● Rely on the team to address issues. ● Assume individuals recognize and learn from their own mistakes.

Selected consequences for projects/business of not demonstrating this competency are:

● Projects may receive significantly different levels of attention. ● Projects may take on a life of their own with no clear direction or attainable outcome. ● Responsibility for decisions may be diffused among team members. ● Exact status of projects may be difficult to determine. ● Major issues can become unmanageable. ● Activities of different parts of the business may be uncoordinated. ● Conflicts may continually surface between project leadership and other parts of

Lilly.

428 TRAINING AND EDUCATION

11. Makes Tough Decisions: Demonstrates assurance in own abilities, judgments, and capabilities; assumes accountability for actions.

Project managers/associates who demonstrate this competency will:

● Challenge the way things are done and make decisions about how things will get done. ● Force others to deal with the unpleasant realities of a situation. ● Push for reassessment of controversial decisions by management when new infor-

mation/data become available. ● Bring issues with significant impact to the attention of others. ● Consciously use past experience and historical data to persuade others. ● Confront individuals who are not meeting their commitments. ● Push line management to replace individuals who fail to meet expectations. ● Challenge continued investment in a project if data suggest it will not succeed. ● Pursue or adopt innovative procedures that offer significant potential benefits even

where limited prior experience is available.

Project managers/associates who do not demonstrate this competency will:

● Defer to the ideas of more experienced team members. ● Give others the benefit of the doubt around missed commitments. ● Hold off making decisions until the last possible moment. ● Pursue multiple options rather than halt work on alternative approaches. ● Wait for explicit support from others before raising difficult issues. ● Accept senior managers’ decisions as “nonnegotiable.” ● Rely on the team to make controversial decisions. ● Provide problematic performers with additional resources and time.

Selected consequences for projects/business of not demonstrating this competency are:

● Projects may take longer to complete than necessary. ● Failing projects may be allowed to linger. ● Decisions may be delegated upward. ● Morale of team may be undermined by nonperformance of certain team members. ● “Bad news” may not be communicated until the last minute. ● Key individuals may “bum out” in effort to play catch-up.

12. Builds Strategic Support: Gets the support and level of effort needed from senior management and others to keep projects on track.

Project managers/associates who demonstrate this competency will:

● Assume responsibility for championing the projects while demonstrating a balance between passion and objectivity.

● Tailor arguments and presentations to address key concerns of influential decision makers.

● Familiarize self with operational and business concerns of major functions within Lilly. ● Use network of contacts to determine best way to surface an issue or make a proposal. ● Push for active involvement of individuals with the experience and influence

needed to make things happen.

Harris Corporation 429

● Pinpoint the distribution of influence in conflict situations. ● Presell controversial ideas or information. ● Select presenter to ensure appropriate message is sent. ● Ask senior management to help position issues with other senior managers.

Project managers/associates who do not demonstrate this competency will:

● Meet senior management and project sponsors only in formal settings. ● Propose major shifts in direction in group meetings. ● Make contact with key decision makers when faced with obstacles or problems. ● Limit number of face-to-face contacts with “global” partners. ● Treat individuals as equally important. ● Avoid the appearance of “politicking.” ● Depend on other team members to communicate to senior managers in unfamiliar

parts of Lilly.

Selected consequences for projects/business of not demonstrating this competency are:

● Viable projects may be killed without clear articulation of benefits. ● “Cultural differences” may limit success of global projects. ● Decisions may be made without the input of key individuals. ● Resistance to changes in project scope or direction may become entrenched before

merits of proposals are understood. ● Key individuals/organizations may never buy in to a project’s direction or scope. ● Minor conflicts may escalate and drag on.

8.13 HARRIS CORPORATION

All too often, people attend seminars and courses leading to certification as a PMP and are overwhelmed with the knowledge presented in the course. They wonder how any why any corporation would perform all of the activities covered in the information presented in the course and why they must learn all of this information.

While it is true that many companies do not need or perform all of the activities that are covered, aerospace and defense contractors are required to perform all of these activi- ties. Aerospace and defense contractors survive on how well they perform the project man- agement processes. When companies like Harris Corporation become exceptionally good in project management and undergo continuous improvement in project management, they outperform their competitors. Harris Corporation has a history of success in project man- agement. The remaining material in this section was provided by Alex Sadowski at Harris Corporation.2 Perhaps after reading the remainder of this section, the reader will have a

2. Alex Sadowski, PMP, is a program manager with the Government Communications Systems Division of Harris Corporation. He has over 30 years of experience in a large, diverse customer base including various civilian government and military organizations. His project management activities are concentrated in the Aerospace and Defense Contractor business arena. He is also involved with initiatives for the Harris Division Process Group and the Division Training Steering Committee.

430 TRAINING AND EDUCATION

better understanding and appreciation of why this material is being taught and the com- plexities of performing in an industry whose life blood and survival rest upon maintaining superior project management capability.

1. The basic philosophy for Project Management applies to all projects no matter what size and what industry is involved. However, each industry has its own unique environment and culture and the application of Project Management philosophy can take different forms based upon this uniqueness. The Aerospace and Defense Contractor industry’s unique environment can be characterized as follows:

● The environment is dynamic ● The schedule is most often aggressive ● Changing mission scenarios result in requirements changes ● Effective change management is absolutely necessary ● This is the first time a project of this type is being done ● In most cases the technology envelope is stretched ● To complete the project, the development of new technologies is often required. ● New methodologies have to be developed ● Risk management is of paramount importance ● Proprietary and/or classified information is involved ● This hampers open communication ● Security considerations affect all aspects of the project ● Being overly focused on new and challenging technologies can cause problems with

managing the entire project ● The demands of applying new and developing technologies can be very much overwhelming ● The trick is to meet the technological challenge without losing control of cost and

schedule

2. As an Aerospace and Defense Contractor, Harris Corporation, has over the years developed detailed processes and procedures that cover all phases of project management from the identification of an opportunity all the way through to final completion, sell- off, and closure.

3. These processes and procedures are documented in great detail in the command media, and are regularly promulgated via seminars, courses, and general meetings as appropriate.

4. This process involves many gates (e.g., Pursue/No-Pursue Reviews, Bid/No-Bid Meetings, Proposal Red Teams, Pricing Reviews, Job Start-up Reviews, Regular Program Reviews, Systems Requirements Reviews, Preliminary Design Reviews, Critical Design Reviews, Peer Reviews, Production Readiness Reviews, Test Readiness Reviews, Final Customer Reviews, Contract Closure, etc.)

5. The processes and methodologies are quite extensive, but there are a few key aspects of this methodology that make everything fall into place and facilitate project success.

6. Through much experience, sometimes quite painful, we have found that detailed up- front planning is the best approach to achieving project success.

7. All too often there is the danger that the overexuberance of the project team and the impatience of the customer results in the short circuiting of upfront planning. This is a recipe for disaster!

8. Proper planning has to be based upon understanding what the customer has contracted for, the price they have agreed to pay, and the date they expect to see completion.

Harris Corporation 431

9. A comprehensive Project Plan has to be developed before the full project team is engaged.

10. Effective planning depends on the following (see Figure 8–4):

● Work Breakdown Structure (WBS) ● Integrated Project Schedule (IPS) ● Earned Value Management System (EVMS) ● Change Management Planning ● Risk Management Planning

11. Both the Statement of Work (SOW) and the Systems Requirements Document (SRD) are used to develop the Work Breakdown Structure (WBS).

● The SOW identifies what is to be done, any constraints, any special customer gates, the deliverables and the timeframe for the project.

● The SRD is the official requirements definition upon which the technical aspects of the project are based. This is used to make certain that the required functionality is achieved.

12. The WBS documents the details of what needs to be accomplished.

● It breaks down the project into its essential parts. ● It provides the basis for assigning tasks and responsibilities. ● It is a hierarchical structure that shows how each of the individual tasks contribute

to the major task. ● These individual tasks are essential in defining the schedule and in setting up the

EVMS for the project. ● A WBS dictionary is developed that defines each task, and who is responsible for

that task.

13. Change Management

● Change is inevitable in any project. ● Some changes have no overall impact on the project. ● Some changes can have a dramatic effect on either the cost, schedule, or technical

integrity of the effort. There are times when all three of these will be affected. ● A plan has to developed that allows

Risk Management

PlanStatement of Work (SOW)

Work Breakdown Structure (WBS)

Change Management

Plan

Requirements Definition

Integrated Project

Schedule (IPS)

Earned-Value Management

System (EVMS)

Project Statusing

and Control

Figure 8–4. Effective planning steps.

432 TRAINING AND EDUCATION

● for the identification of change ● the impact of the change ● how such changes should be addressed (accepted or rejected) ● how changes are negotiated with the customer ● how changes to the contract are made and by whom

14. Risk Management

● All projects have risks ● A risk is anything that can affect the successful outcome of a program

● A risk can impact ● Cost ● Schedule ● Technical integrity (e.g., Functionality, Reliability, etc.)

● If a risk is not resolved, it then becomes a problem. ● At the very initial planning stages of a project the risks have to be identified. ● A plan has to be developed that addresses

● Identification of risks ● Definition of their severity ● Definition of the probability of occurrence ● Definition of the impact to project success (i.e., cost, schedule, etc.) ● Risk ranking ● Risk mitigation ● Risk retirement

15. The Integrated Project Schedule

● Details the schedule of activities of the project from beginning to end ● Shows the start and stop times of the discrete individual activities ● Shows the interrelationships of all the individual activities ● Identifies the critical path ● Identifies all critical milestones

16. Earned Value Management System

● Facilitates the tracking of the progress of individual activities with respect to sched- ule and cost adherence

● Objectively shows which tasks are on schedule and whether they are within budget ● Provides a means of continually assessing whether or not a project is on schedule

and within budget

17. Project Statusing & Control

● For any project to succeed, continual statusing and control is essential. ● Generally, reports from EVMS should be generated and reviewed every month. For

problem projects or those of high risk, weekly statusing via EVMS would be most beneficial.

● EVMS provides a convenient, accurate and ongoing methodology for determining the progress of a project.

● The better the effort on the WBS and the IPS, the more accurate the information obtained from EVMS.

Harris Corporation 433

● Realistic and meaningful milestones, sufficiently covering all tasks, are key to the successful use of EVMS.

● Milestones must be tracked regularly (i.e., usually monthly, but as often as weekly if necessary).

● Once milestone accomplishments are accounted for then schedule and cost statusing can be accomplished.

● Generation of the Schedule Performance Index (SPI) provides an objective measure of whether or not the project is on schedule.

● Generation of the Cost Performance Index (CPI) provides an objective measure of whether or not the project is within budget.

● A new Estimate to Complete (ETC) should be generated regularly (i.e., at monthly statusing) and compared with the project’s Budgeted-cost at Completion (BAC).

● Discrepancies between the ETC and BAC must be analyzed and reconciled. A result should be implementing a plan to get the program back on track.

A well-implemented EVMS is a most powerful management tool for the project manager.

● By considering the value of the SPI, the Project Manager knows if the project will meet schedule.

● If the value is less than 1, then the PM knows that the project is behind schedule, and must determine what tasks are falling behind and why, so that appropriate corrective action can be taken.

● If the value is greater than 1, then it indicates that the project is ahead of schedule. Too much joy should not be taken at this time since this could be only a temporary situation. If the value is much greater than 1, then that could indicate a problem in the original estimation and planning. This requires detailed analysis.

● By considering the value of the CPI, the Project Manager knows if the project will stay within budget.

● If the value is less than 1, then the PM knows that the project is over-running the budget, and must determine which tasks are exceeding cost and why, so that appro- priate corrective action can be taken.

● If the value is greater than 1, then it means that the project is under budget. Caution must be taken here since this can be only a temporary situation. If the value is much greater than 1, then there is likely a problem with the original estimation and plan- ning, and a detailed analysis must be done to determine why the discrepancy.

● When the project is planned, a budget is established. The budgeted cost of the proj- ect is what is expected to be expended at the conclusion of the project and is the BAC. As the project proceeds, actual costs are incurred. By reviewing the actual costs, and considering what still needs to be done, the PM can then arrive at an Estimate to Complete (ETC).

● By comparing the ETC and BAC, the Variance at Completion (VAC) can be calcu- lated. The VAC indicates whether the project will over-run or under-run.

● If the VAC indicates an overrun, then an investigation and analysis must be accom- plished to identify the problem. Then a course of action can be taken to mitigate the problem.

18. In the demanding and dynamic environment of Aerospace and Government projects, the use of a well defined and fully implemented Earned Value Management System can provide the necessary methodology to keep the project on schedule and within budget.

434 TRAINING AND EDUCATION

8.14 ALCATEL-LUCENT: RECOGNIZING THE VALUE OF A PMP

All too often, companies fail to capitalize on the intellectual property retained by PMPs and likewise cannot recognize the contribution they can make to the company. Some companies treat the PMP credentials as just something to put at the end of one’s name on a business card or something to put into a proposal as part of competitive bidding efforts. Some companies even provide funding for training programs to obtain the credentials for fear that the workers will seek employment in other firms that provide employees with more opportunities for project management education.

But when companies like Alcatel-Lucent recognize the value that a PMP can make to the company, there can be a huge return-on-investment (ROI) on the PMPs. The ROI can be seen in the form of mentorship for project managers who aspire to become PMPs or wish to recertify their credentials, an advisory council or hotline for projects that are in trouble, or simply by establishing a global project management information network so that all employees worldwide understand current company developments and best prac- tices with regard to project management.

Good things happen to companies like Alcatel-Lucent that recognizes the value of a PMP. According to Rich Maltzman, PMP, senior manager, Alcatel-Lucent Global PMO:

Alcatel-Lucent has sought to increase PM maturity by establishing and deploying an inte- grated PM Development Framework including a dedicated career path where job descrip- tions are interlocked with a resource and skills management system connected directly to development options such as dedicated PM courseware. The company has also provided its PMs with a sophisticated Delivery Framework to help them implement and govern proj- ects, measure and manage risk and to manage project financials. These frameworks pro- vide the fundamental platform for achieving PM maturity. In particular, one focus group of PMPs has taken on a dynamic role to support soon-to-be PMPs and existing PMPs to facilitate the credentialing of PMs and to help existing PMPs not only to retain their PMP but to do so in a highly productive manner for their peers.

The team, which gave itself the name PM-CERT for PM-Continuing Education and Recertification Team, meets weekly and focuses on several efforts to meet the goals spelled out in its title. Although an ad-hoc team, it works in concert with the Global PMO and Alcatel-Lucent University (a Registered Education Provider of the PMI), both of which are represented on the team. Here are some of PM-CERT’s main activities.

PMP Study Groups

Since the inception of this initiative, about 30 PMP Study groups have been established. These are time-zone based groups, each with about 10 members, who study collabora- tively for the PMP exam under the tutelage of an instructor. This instructor is typically a recently credentialed PMP. Meeting at a frequency established by the team, and working in the language in which the majority of members expect to take the test, the Study Groups use the same materials and drill together on subject matter per a model syllabus established by the PM-CERT team, but adapted for the needs of the particular group. A special PMP Study Hall website has been established specifically for these teams to ask questions, share findings and, of course, post the fact that they have passed the exam! Students receive 30 hours of contact time which contributes the majority of what is needed for the exam application, and the instructor is able to claim valuable PDUs by virtue of their service as

Alcatel-Lucent: Recognizing the Value of a PMP 435

an instructor. Instructors and students have both reported that this has been an enriching experience, stating, for example, that the Study Groups, “allowed me to meet and learn experiences from other PMs with a background in different areas. This helped me become a stronger PM by using the knowledge gained from these various backgrounds.”

Newsletter

For several years, the PM-CERT team has published a newsletter periodically, but at least quarterly, with featured stories about project management, news of upcoming PDU opportunities, profiles of projects, and announcements of PM-related events around the world. It had build up about 500 subscribers. Now the PM-CERT team uses a corporate blog based on Alcatel-Lucent’s Engage corporate social media platform to distribute news and information.

International PM Day Symposium

Alcatel-Lucent has decided to celebrate International PM Day by running an International PM Day Symposium. This is a web-based conference with connectivity by telephone and web-based video. It has been held since 2007, with attendance around 1,000 people at each. A theme is given to the Symposium and presenters submit proposals from which a PM-CERT committee selects for use at the session. Past themes have included “Project Management that Matters,” and “Project Management—a World of Difference.” Presenters from about 6–8 different countries share lessons learned or tackle a project management knowledge area such as Risk Management. In addition, guest speakers, such as noted authors Dr. Harold Kerzner and Jean Binder (winner of PMI’s David Cleland Award), Dr. Charlie Pellerin from NASA, or officials of PMI are featured. The Symposium has been registered with Alcatel-Lucent University, and students collect 6 PDUs for their verified attendance. These sessions are archived and are continuously available for replay through Alcatel-Lucent University.

Making PDUs Available—Learning Center

Again working with Alcatel-Lucent University, the PM-CERT has helped established a PM Learning Center—a resource-rich website with tips on how to apply for the PMP exam, how to keep your credential once earned, suggested readings and courses, and links to the appro- priate PM Community Engage groups and to the established curricula of PM courseware.

Roundtables

PM-CERT sponsors bimonthly “Discussion Roundtables,” 1-hour lunchtime telephone conversations focused on a particular topic and led by a subject-matter expert from inside or outside of Alcatel-Lucent. The sessions are casual and provide the student with 1 PDU.

Inspiration from PMP-CERT

The PM-CERT team has also inspired other PM activities. Based partially on the success of PM-CERT, Alcatel-Lucent’s PM Community Engage Group is very active, covering general-interest PM topics, and has risen in the ranks to become one of the most popular

436 TRAINING AND EDUCATION

corporate Engage groups. Based on this success, the company is now starting to use this as a model for other disciplines and job profiles in the company as a way to promote com- munity learning and knowledge sharing.

8.15 INTEGRATED PROJECT MANAGEMENT AT TECH

MAHINDRA LIMITED

The term “integration” has several meanings whether it is used with regard to IT, engineer- ing, sociology, or economics. Integration is a process of combining various elements and also includes management and control principles as well to assemble all of the compo- nents. Tech Mahindra Limited has found an interesting use of integration for assembling all of the necessary elements to train and educate project managers. The remaining mate- rial in this section has been provided by Hirdesh Singhal, Tech Mahindra Limited Learning World, Tech Mahindra Limited.

Tech Mahindra Limited manages IT service projects for customers around the globe. To manage the rapid growth and fill the demand–supply gap for skilled human resources in the organization, it was critical that Tech Mahindra Limited rapidly grow project managers internally who could manage projects effectively and profitably meeting the expectations of various stakeholders.

A Project Management Competency Development Framework was available in Tech Mahindra Limited that focused on making each of role holders in the delivery effective and preparing them to take up the next role. This was aligned to the Project Manager Competency Development Framework from PMI, USA.

With this background, the Integrated Project Management (IPM) practice was developed for senior Project Leads, aligned with Project Manager Competency Development Framework so that they are quickly prepared to take up the role of PM.

The practice was developed with following goals:

● Create project managers faster than competition ● Save cost by reducing external hiring of PMs ● Leverage the knowledge and skills of existing project leads to create PMs ● Reduce the cycle time to get a PM on board ● Make new PMs effective from day one in their job ● Prepare existing associates to take higher level responsibilities ● Motivate associates to stay with the company for longer duration

Some of the differentiators of Integrated Project Management practice include:

● Holistic learning to aspiring PMs which not only includes project management pro- cesses and tools but also, management and behavior, culture and languages and leader- ship also

● Certification from the User Community—Delivery Units leaders, Delivery Integrators/Program Managers are involved through the cycle and assess and certify participants on their readiness to take up PM role

Integrated Project Management at Tech Mahindra Limited 437

● Action Learning Projects during the course provides deep understanding of delivery issues

● Daily Learning Log Book leading to Personal Development Plan after the completion of the program

The design process is shown in Figure 8–5

Selection of Participants:

● Having more than 8 years of project experience ● Must have managed a team of at least 10 people ● Indication of abilities to take higher level responsibilities—a feedback from perfor-

mance management system

We had ascertained that Project Management learning experience needs to be blended with behavioral, management and leadership learning experience to produce world class project managers. Participants could clearly understand the processes they need to follow, tools they need to use and various management techniques that can help them manage the project better. To improve the behavior, they did role plays and simulations to practice and demonstrate the change in behavior during the duration of the program. The practice lever- aged various training programs and content that existed within the corporate university.

Tech Mahindra Limited integrated the data in Tables 8–3 and 8–4.

Launch of Program with High-Impact

Introduction

Conduct the 15-day Program Graduation

Ceremony

Certification Including Action Learning

Project SPMP Assessment

Collect Inputs on PM Competencies

Design Course Content for Program

Incorporate Feedback and Finalize the

Collateral

Validate Course Content and Assessment Criteria with Senior Leaders in

Delivery (Delivery Integrators/PgMs)

Figure 8–5. The design process.

438 TRAINING AND EDUCATION

One of the important facets of delivery excellence is to make the project managers produc- tive from day one. They were not only learning during the day, but at the end of the day they were also filling their Learning Log Books, indicating what they could learn well and what they need to work on or practice more. This also helped them develop their long term development plan.

The structure of the company is based on one key premise of collaboration. There was strong collaboration between the different functions of the company. See Figure 8–6.

● Various schools of the corporate university came together to design and deliver the program covering Project Management, General Management, Behavioral and Leadership components.

● Real Time Leadership Center helped with insights on measures and attributes that a PM needs to focus on while managing projects.

● The Quality function provided insights on the PM processes and tools in the organiza- tion.

● The Resource Fulfillment Team deployed the participants by matching the demand and supply of PMs throughout the company.

Collaboration of Tech Mahindra Limited Learning World with Other Functions of the Organization:

Key lessons:

1. Success of the practice is largely dependent on the selection of right participants for the program. Involvement of users and business units is crucial to right outcome.

2. This program helped participants learn all the aspects required to perform the role of PM.

TABLE 8–3. PROJECT MANAGEMENT TRAINING PROGRAMS

S No Name of the Course Duration Delivery Mode

1 Tech Mahindra Limited Project Management Practices 3 Days ILT

2 PM Processes & Tools 2 Days ILT

3 Software Estimations using Function Points 2 Days ILT

4 Risk Management 5.5 hours V-learning

5 Basic Concepts & Techniques of Estimation 6.5 hours V-learning

6 Software Project Measurement & Metrics 4 hours V-learning

7 Managing Project Full Lifecycle Businesses 1 Day ILT

TABLE 8–4. MANAGEMENT, BEHAVIORAL, AND LEADERSHIP PROGRAMS

S No Name of the course Duration Delivery Mode

1 Business Challenge Simulation 2 days ILT

2 Executive Presence 1 day ILT

3 Conflict management Tools 1 day ILT

4 Client Facing Skills 1 day ILT

Hewlett-Packard 439

3. Create a holistic program that prepares for all-around stakeholder management. Thus, include management, behavioral and leadership aspects.

4. Validation of the design and content of the program by the users helped us make the program effective from day one.

5. Action Learning Projects focused on ground-level issues in the delivery of the projects. Issues that were not significant were removed. These topics were identified through a survey with the senior delivery leaders.

6. Strong support and sponsorship from senior executives for the practice is one of the key elements for the success.

7. Having prerequisite programs before participants come for the program increases the effectiveness of the program and provides more time for the participants to practice together in the classroom and learn for each others.

8.16 HEWLETT-PACKARD

The quality of the project management training and education a company’s employees receive is, along with executive buy-in, one of the most important factors in achieving success and ultimately excellence in project management. The training could be for both the employees of the company as well as for its suppliers who must interface with the customer’s project management methodology. Let’s look at some case examples of effec- tive training programs.

Learning World • Project Management • Behavioral • Management • Leadership

Quality • Processes • Tools • Estimation

Integrated Project Management

Real-Time Leadership Center • Governance • Measures

Resource Fulfillment • Selection • Deployment

Figure 8–6. Integrated project management.

440 TRAINING AND EDUCATION

Hewlett-Packard is clearly committed to program and project management develop- ment. According to Jim Crotty, Americas Program Management Profession Leader:

PM Development

HP Services has a comprehensive Program Management Development Program (PMDP) with courses that cover all aspects of program and project management training. A stan- dard curriculum with over 100 courses is implemented throughout the world covering program/project leadership, management, communication, risk management, contracting, managing business performance, scheduling and cost control, and quality. The courses are based on PMI’s Project Management Body of Knowledge (PMBOK® Guide). The curricu- lum also encompasses specialized courses on key HP internal topics, such as the Program Methodology, as well as essential business and financial management aspects of projects.

All courses taught in HP’s PMDP curriculum are registered in PMI’s Registered Education Provider (REP) Program to ensure a consistent basis and oversight. PMDP won an Excellence in Practice award in career development and organizational learning from the American Society for Training & Development (ASTD), the world’s leading resource on workplace learning and performance issues.

Even the most experienced HP PMs continue development activities to strengthen their knowledge and skills. HP Services sponsors the Project Management University (PMU) Program. PMU consists of five day symposiums in each major geography (Americas, Asia/Pacific and Europe) and one day events held in HP offices. These events provide project managers with an opportunity to devote concentrated time to study and to exchange knowledge and ideas with other HP project managers from around the world and in their local geography. PMU has been recognized for excellence by both ASTD and PMI.

PMP Certification

HP has a well-established program to encourage and support our project managers to achieve certification. HP Services has over 5000 individuals who have earned the PMP®

(Project Management Professional) certification from PMI®.

PMI Support

HP actively supports the Project Management Institute (PMI®), a nonprofit organization with more than 265,000 members. PMI® has set standards for Project Management excel- lence that are recognized by the industry and our customers worldwide.

HP employees participate on a number of PMI® boards and committees, including the Global Corporate Council. Global Accreditation Center, Research Program Membership Advisory Group, development of the Certified Associate in Project Management (CAPM), development of Certificates of Added Qualification (CAQ) in IT Systems, IT Networks, and Project Management Office, PMBOK® Guide review, and PMBOK® Guide Update Teams. Many HP employees hold leadership positions in PMI® Chapters and SIGs throughout the world.

441

9 Informal Project Management

9.0 INTRODUCTION

Over the past 25 years, one of the most significant changes in project management has been the idea that informal project management does work. In the 1950s and 1960s, the aerospace, defense, and large con- struction industries were the primary users of project management tools and techniques. Because project management was a relatively new management process, customers of the contractors and subcontractors wanted evidence that the system worked. Documentation of the policies and procedures to be used became part of the written proposal. Formal project management, supported by hundreds of policies, procedures, and forms, became the norm. After all, why would a potential customer be willing to sign a $10 million contract for a project to be managed informally?

This chapter clarifies the difference between informal and formal project management, then discusses the four critical elements of informal project management.

9.1 INFORMAL VERSUS FORMAL PROJECT MANAGEMENT

Formal project management has always been expensive. In the early years, the time and resources spent on preparing written policies and procedures had a purpose: They placated the customer. As project management became established, formal documentation was created mostly for the customer. Contractors began managing more informally, while the customer was still paying for formal project management documentation. Table 9–1 shows the major differences between formal and informal project management. As you can see, the most relevant difference is the amount of paperwork.

442 INFORMAL PROJECT MANAGEMENT

Paperwork is expensive. Even a routine handout for a team meeting can cost $500– $2,000 per page to prepare. Executives in excellent companies know that paperwork is expensive. They encourage project teams to communicate without excessive amounts of paper. However, some people are still operating under the mistaken belief that ISO 9000 certifi cation requires massive paperwork.

Figure 9–1 shows the changes in paperwork requirements in project management. The early 1980s marked the heyday for lovers of paper documentation. At that time, the average policies and procedures manual probably cost between $3 million and $5 million to prepare initially and $1 million to $2 million to update yearly over the lifetime of the development project. Project managers were buried in forms to complete to the extent that they had very little time left for actually managing the projects. Customers began to complain about the high cost of subcontracting, and the paperwork boom started to fade.

Real cost savings did not materialize until the early 1990s with the growth of concur- rent engineering. Concurrent engineering shortened product development times by taking activities that had been done in series and performing them in parallel instead. This change increased the level of risk in each project, which required that project management back away from some of its previous practices. Formal guidelines were replaced by less detailed and more generic checklists.

Policies and procedures represent formality. Checklists represent informality. But infor- mality does not eliminate project paperwork altogether. It reduces paperwork requirements to

TABLE 9–1. FORMAL VERSUS INFORMAL PROJECT MANAGEMENT

Factor Formal Project Management Informal Project Management

Project manager ’s level High Low to middle

Project manager ’s authority Documented Implied

Paperwork Exorbitant Minimal

Conventional Project Management Project Management

with Concurrent Engineering

1970s

Life-Cycle Phases

Policy and Procedure Manuals

Guidelines per Life-Cycle

Phase

General Project

Guidelines

Checklists with Periodic Review

Points

Early 1980s Mid-1980s Late 1980s 1990s

Figure 9–1. Evolution of policies, procedures, and guidelines. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management , Hoboken, NJ: Wiley, 1998, p. 196.

Informal versus Formal Project Management 443

minimally acceptable levels. To move from formality to informality demands a change in orga- nizational culture (see Figure 9–2 ). The four basic elements of an informal culture are these:

● Trust ● Communication ● Cooperation ● Teamwork

Large companies quite often cannot manage projects on an informal basis although they want to. The larger the company, the greater the tendency for formal project manage- ment to take hold. A former vice president of IOC sales operations and customer service at Nortel Networks, believes that 1 :

The introduction of enterprise-wide project process and tools standards in Nortel Networks and the use of pipeline metrics (customer-defined, industry standard measures) provides a

Formal Project Management

Relative Magnitude of Documentation

General Maturity Path

Critical Issues

• High-intensity conflicts • Resistance to multiple boss reporting • Reliance on policies/procedures • Invisible sponsors • Power/authority problems • Continuous meetings

Informal Project

Management

Policies and Procedures Manuals

• Continuous competition for resources • Constantly changing priorities • Poor motivation

Guidelines per Life- Cycle Phase

• Protection memos • Schedule slippages • Creeping scope

Guidelines per Project

• Trust • Communication • Cooperation • Teamwork • Development of a methodology • Life-cycle phases • Core skills training

Checklists for End-of-Phase Reviews

Figure 9–2. Evolution of paperwork and change of formality levels. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management , Hoboken, NJ. Wiley, 1998, p. 198.

1. H. Kerzner, Project Management Best Practices: Achieving Global Excellence , Hoboken, NJ: Wiley, 2006, p. 329.

444 INFORMAL PROJECT MANAGEMENT

framework for formal project management. This is necessary given the complexity of tele- com projects we undertake and the need for an integrated solution in a short time frame. The Nortel Networks project manager crosses many organizational boundaries to achieve the results demanded by customers in a dynamic environment.

Most companies manage either formally or informally. However, if your company is project-driven and has a very strong culture for project management, you may have to manage either formally or informally based upon the needs of your customers.

9.2 TRUST

Trusting everyone involved in executing a project is critical. You wake up in the morn- ing, get dressed, and climb into your car to go to work. On a typical morning, you oper- ate the foot pedal for your brakes maybe 50 times. You have never met the people who designed the brakes, manufactured the brakes, or installed the brakes. Yet you still give no thought to whether the brakes will work when you need them. No one broadsides you on the way to work. You do not run over anyone. Then you arrive at work and push the button for the elevator. You have never met the people who designed the elevator, manufactured it, installed it, or inspected it. But again you feel perfectly comfortable riding the elevator up to your fl oor. By the time you get to your offi ce at 8 a.m. , you have trusted your life to uncounted numbers of people whom you have never even met. Still, you sit down in your offi ce and refuse to trust the person in the next offi ce to make a $50 decision.

Trust is the key to the successful implementation of informal project management. Without it, project managers and project sponsors would need all that paperwork just to make sure that everyone working on their projects was doing the work just as he or she had been instructed. Trust is also key in building a successful relationship between the contractor/subcontractor and the client. Let ’s look at an example.

Perhaps the best application of informal project management that I have seen occurred several years ago in the Heavy Vehicle Systems Group of Bendix Corporation. Bendix hired a consultant to conduct a three-day training program. The program was custom designed, and during the design phase the consultant asked the vice president and general manager of the division whether he wanted to be trained in formal or informal project man- agement. The vice president opted for informal project management. What was the reason for his decision? The culture of the division was already based on trust. Line managers were not hired solely based on technical expertise. Hiring and promotions were based on how well the new manager would communicate and cooperate with the other line manag- ers and project managers in making decisions in the best interests of both the company and the project.

When the relationship between a customer and a contractor is based on trust, numer- ous benefi ts accrue to both parties. The benefi ts are apparent in companies such as Hewlett-Packard, Computer Associates, and various automobile subcontractors. Table 9–2 shows the benefi ts.

Communication 445

9.3 COMMUNICATION

In traditional, formal organizations, employees usually claim that communication is poor. Senior managers, however, usually think that communication in their company is just fi ne. Why the disparity? In most companies, executives are inundated with information com- municated to them through frequent meetings and dozens of weekly status reports coming from every functional area of the business. The quality and frequency of information mov- ing down the organizational chart are less consistent, especially in more formal companies. But whether it is a problem with the information fl owing up to the executive level or down to the staff, the problem usually originates somewhere upstairs. Senior managers are the usual suspects when it comes to requiring reports and meetings. And many of those reports and meetings are unnecessary and redundant.

Most project managers prefer to communicate verbally and informally. The cost of formal communication can be high. Project communication includes dispensing informa- tion on decisions made, work authorizations, negotiations, and project reports. Project managers in excellent companies believe that they spend as much as 90 percent of their time on internal interpersonal communication with their teams. Figure 9–3 illustrates the communication channels used by a typical project manager. In project-driven organiza- tions, project managers may spend most of their time communicating externally to cus- tomers and regulatory agencies.

Good project management methodologies promote not only informal project manage- ment but also effective communications laterally as well as vertically. The methodology itself functions as a channel of communication. A senior executive at a large fi nancial insti- tution commented on his organization ’s project management methodology, called Project Management Standards (PMS):

The PMS guides the project manager through every step of the project. The PMS not only controls the reporting structure but also sets the guidelines for who should be involved in the project itself and the various levels of review. This creates an excellent communication flow between the right people. The communication of a project is one of the most impor- tant factors for success. A great plan can only go so far if it is not communicated well.

Most companies believe that a good project management methodology will lead to effective communications, which will allow the fi rm to manage more informally than formally. The question, of course, is how long it will take to achieve effective communi- cations. With all employees housed under a single roof, the time frame can be short. For

TABLE 9–2. BENEFITS OF TRUST IN CUSTOMER–CONTRACTOR WORKING RELATIONSHIPS

Without Trust With Trust

Continuous competitive bidding Long-term contracts, repeat business, and sole-source contracts

Massive documentation Minimal documentation

Excessive customer–contractor team meetings Minimal number of team meetings

Team meetings with documentation Team meetings without documentation

Sponsorship at executive levels Sponsorship at middle-management levels

446 INFORMAL PROJECT MANAGEMENT

global projects, geographical dispersion and cultural differences may mandate decades before effective communication will occur. Even then, there is no guarantee that global projects will ever be managed informally.

Suzanne Zale, Hewlett-Packard operations director, emphasized 2 :

With any global project, communications becomes more complex. It will require much more planning up front. All constituents for buy-in need to be identified early on. In order to leverage existing subject matter, experts conversant with local culture, and suppliers, the need for virtual teams becomes more obvious. This increases the difficulty for effective communications.

The mechanism for communication may also change drastically. Face-to-face conver- sations or meetings will become more diffi cult. We tend to rely heavily on electronic com- munications, such as video and telephone conferencing and electronic mail. The format for communications needs to be standardized and understood up front so that information can be sent out quickly. Communications will also take longer and require more effort because of cultural and time differences.

One of the implied assumptions for informal project management to exist is that the employees understand their organizational structure and their roles and responsibilities within both the organizational and project structure. Forms such as the linear responsibility chart and the responsibility assignment matrix are helpful. Communication tools are not used today with the same frequency as in the 1970s and 1980s.

For multinational projects, the organizational structure, roles, and responsibilities must be clearly delineated. Effective communications is of paramount importance and probably must be accomplished more formally than informally.

Suzanne Zale, Hewlett-Packard operations director stated:

For any global project, the organizational structure must be clearly defined to minimize any potential misunderstandings. It is best to have a clearcut definition of the organizational

Upward Communication

to Sponsors and Executives

Lateral Communication

to Customers and Peer Groups

Lateral Communication

to Formal and Informal Organizations

Lateral Communication

to Project Team

Project Manager

Figure 9–3. Internal and external communication channels for project management. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management , Hoboken, NJ: Wiley, 1998, p. 200.

2. Ibid., p. 332.

Teamwork 447

chart and roles and responsibilities. Any motivation incentives must also contemplate cultural differences. The drivers and values for different cultures can vary substantially.

The two major communication obstacles that must be overcome when a company truly wants to cultivate an informal culture are what I like to call hernia reports and forensic meet- ings. Hernia reports result from senior management ’s belief that that which has not been writ- ten has not been said. Although there is some truth to such a belief, the written word comes with a high price tag. We need to consider more than just the time consumed in the preparation of reports and formal memos. There is all the time that recipients spend reading them as well as all the support time taken up in processing, copying, distributing, and fi ling them.

Status reports written for management are too long if they need a staple or a paper clip. Project reports greater than 5 or 10 pages often are not even read. In companies excellent in project management, internal project reports answer these three questions as simply as possible:

● Where are we today? ● Where will we end up? ● Are there any problems that require management ’s involvement?

All of these questions can be answered on one sheet of paper. The second obstacle is the forensic team meeting. A forensic team meeting is a meet-

ing scheduled to last 30 minutes that actually lasts for more than 3 hours. Forensic meet- ings are created when senior managers meddle in routine work activities. Even project managers fall into this trap when they present information to management that manage- ment should not be dealing with. Such situations are an invitation to disaster.

9.4 COOPERATION

Cooperation is the willingness of individuals to work with others for the benefi t of all. It includes the voluntary actions of a team working together toward a favorable result. In companies excellent in project management, cooperation is the norm and takes place without the formal intervention of authority. The team members know the right thing to do, and they do it.

In the average company (or the average group of any kind, for that matter), people learn to cooperate as they get to know each other. That takes time, something usually in short supply for project teams. But companies such as Ericsson Telecom AB, the General Motors Powertrain Group, and Hewlett-Packard create cultures that promote cooperation to the benefi t of everyone.

9.5 TEAMWORK

Teamwork is the work performed by people acting together with a spirit of cooperation under the limits of coordination. Some people confuse teamwork with morale, but morale

448 INFORMAL PROJECT MANAGEMENT

has more to do with attitudes toward work than it has to do with the work itself. Obviously, however, good morale is benefi cial to teamwork.

In excellent companies, teamwork has these characteristics:

● Employees and managers share ideas with each other and establish high levels of innovation and creativity in work groups.

● Employees and managers trust each other and are loyal to each other and the company. ● Employees and managers are committed to the work they do and the promises they

make. ● Employees and managers share information freely. ● Employees and managers are consistently open and honest with each other.

Making people feel that they are part of a team does not necessarily require a great deal of effort. Consider the situation at the Engineering and Construction Services Division of Dow Chemical Corporation several years ago. Dow Chemical had requested a trainer to develop a project management training course. The trainer interviewed several of the semi- nar participants before the training program to identify potential problem areas. The biggest problem appeared to be a lack of teamwork. This shortcoming was particularly evident in the drafting department. The drafting department personnel complained that too many changes were being made to the drawings. They simply could not understand the reasons behind all the changes.

The second problem identifi ed, and perhaps the more critical one, was that project managers did not communicate with the drafting department once the drawings were complete. The drafting people had no idea of the status of the projects they were working on, and they did not feel as though they were part of the project team.

During the training program, one of the project managers, who was responsible for constructing a large chemical plant, was asked to explain why so many changes were being made to the drawings on his project. He said, “There are three reasons for the changes. First, the customers don ’t always know what they want up front. Second, once we have the preliminary drawings to work with, we build a plastic model of the plant. The model often shows us that equipment needs to be moved for maintenance or safety reasons. Third, sometimes we have to rush into construction well before we have fi nal approval from the Environmental Protection Agency. When the agency fi nally gives its approval, that approval is often made contingent on making major structural changes to the work already complete.” One veteran employee at Dow commented that in his 15 years with the company no one had ever before explained the reasons behind drafting changes.

The solution to the problem of insuffi cient communication was also easy to repair once it was out in the open. The project managers promised to take monthly snapshots of the progress on building projects and share them with the drafting department. The draft- ing personnel were delighted and felt more like a part of the project team.

9.6 COLOR-CODED STATUS REPORTING

The use of colors for status reporting, whether it be for printed reports or intranet-based visual presentations, has grown signifi cantly. Color-coded reports encourage informal

Crisis Dashboards 449

project management to take place. Colors can reduce risks by alerting management quickly that a potential problem exists. One company prepared complex status reports but color coded the right-hand margins of each page designed for specifi c audiences and levels of management. One executive commented that he now reads only those pages that are color-coded for him specifi cally rather than having to search through the entire report. In another company, senior management discovered that color-coded intranet status report- ing allowed senior management to review more information in a timely manner just by focusing on those colors that indicated potential problems. Colors can be used to indicate:

● Status has not been addressed. ● Status is addressed, but no problems exist. ● Project is on course. ● A potential problem might exist in the future. ● A problem defi nitely exists and is critical. ● No action is to be taken on this problem. ● Activity has been completed. ● Activity is still active and completion date has passed.

9.7 CRISIS DASHBOARDS

Over the past several years, dashboards have become commonplace for presenting project status information to the project team, clients, and stakeholders. The purpose of a dash- board is to convert raw data into meaningful information that can easily be understood and used for informed decision making. The dashboard provides the viewer with “situational awareness” of what the information means now and what it might mean in the future if the existing trends continue. Dashboards function as communication tools that allow us to go to paperless project management, fewer meetings, and eliminate waste.

Projects in today ’s environment are signifi cantly more complex than many of the projects managed in the past. With today ’s projects, governance is performed by a gov- ernance committee rather than just a single project sponsor. Each stakeholder or member of the governance committee may very well require different metrics and KPIs. If each stakeholder wishes to view twenty to thirty metrics, the costs of metric measurement and reporting can be signifi cant and defeat the purpose of going to paperless project management.

The solution to effective communications with stakeholders and governance groups is to show them that they can most likely get all of the critical data they need for informed decision making with six to ten metrics or KPIs that can be displayed on one computer screen. This is not always the case and drill down to other screens may be necessary. But in general, one computer screen shot should be suffi cient.

If an out of tolerance condition or crisis situation exists with any of the metrics or KPIs on the dashboard screen, then the situation should be readily apparent to the viewer. But what if the crisis occurs due to metrics that do not appear on the screen? In this case, the viewer will be immediately directed to a crisis dashboard which shows all of the metrics that are out of tolerance. The out-of-tolerance metrics will remain on the crisis

450 INFORMAL PROJECT MANAGEMENT

dashboard until such time when the crisis or out-of-tolerance conditions are corrected. Each stakeholder will now see the regular screen shot and then be instructed to look at the crisis screen shot.

A crisis can be defined as any event, whether or not expected, that can lead to an unstable or dangerous situation affecting the outcome of the project. Crises imply negative consequences that can harm the organi-

zation, its stakeholders, and the general public. The crisis can result in changes to the firm ’s business strategy, how it interfaces with the enterprise environmental factors, how the firm ’s social consciousness is exhibited, and the way it maintains customer satisfac- tion. A crisis does not necessarily mean that the project will fail nor does it mean that the project should be terminated. The crisis could simply be that the project ’s outcome will not occur as expected.

Some crises may appear gradually and can be preceded by early warning signs. These can be referred to as smoldering crises. The intent of metrics and dashboards is to identify trends that could indicate that a crisis may be approaching and provide the project manager with suffi cient time to develop contingency plans. The earlier you know about the impend- ing crisis, the more options you may have available as a remedy.

How do we determine whether the out of tolerance condition is just a problem or a crisis? The answer is in the potential damage that can occur. If any of the following can occur, then the situation would most likely be treated as a crisis:

● There is a significant threat to the outcome of the project ● There is a signifi cant threat to the organization as a whole, its stakeholders and

possibly the general public ● There is a signifi cant threat to the fi rm ’s business model and strategy ● There is a signifi cant threat to worker health and safety ● There is a signifi cant threat to consumers, such as with product tampering ● There is a possibility for loss of life ● There is the possibility of work delays because systems are being redesigned ● There is the possibility of work delays due to necessary organizational changes ● There is a signifi cant chance that the fi rm ’s image or reputation will be damaged ● There is a significant chance that the deterioration in customer satisfaction could

result in present and future loss of significant revenue

It is important to understand the difference between risk management and crisis man- agement. According to Wikipedia, the free encyclopedia,

In contrast to risk management, which involves assessing potential threats and finding the best ways to avoid those threats, crisis management involves dealing with threats before, during, and after they have occurred. That is, crisis management is proactive, not merely reactive. It is a discipline within the broader context of management consist- ing of skills and techniques required to identify, assess, understand, and cope with a serious situation, especially from the moment it first occurs to the point that recovery procedures start.

Defi ning a Crisis

Crisis Dashboards 451

Crises often require that immediate decisions be made. Effective decision making requires information. If one metric appear to be in a crisis mode and shows up on the crisis dashboard, the viewers may fi nd it necessary to look at several other metrics, which may not be in a crisis mode and may not appear on the crisis dashboard but are possible causes of the crisis. Looking at metrics on dashboards is a lot easier than reading reports.

The differentiation between a problem and a crisis is like beauty; it is in the eyes of the beholder. What one stakeholder sees as a problem, another stakeholder may see it as a crisis. Table 9–3 shows how diffi cult it is to make the differentiation.

We can now draw the following conclusions about crisis dashboards:

● The definition of what is or is not a crisis is not always clear to the viewers ● Not all problems are crises ● Sometimes unfavorable trends are treated as a crisis and appear on the crisis dash-

boards ● The crisis dashboard may contain a mixture of crisis metrics and metrics that are

treated as just problems

TABLE 9–3. DIFFERENTIATING BETWEEN A PROBLEM AND A CRISIS

Metric/KPI Problem Crisis

Time The project will be late but still acceptable to the client.

The project will be late and client is considering cancellation.

Cost Costs are being overrun but client can provide additional funding.

Costs are being overrun and no additional funding is available. Cancellation is highly probable.

Quality The customer is unhappy with the quality but can live with it.

Quality of the deliverables is unacceptable, personal injury is possible, the client may cancel the contract and no further work may come from this client.

Resources The project is either understaffed or the resources assigned have marginal skills to do the job. A schedule delay is probably.

The quality or lack of resources will cause a serious delay in the schedule and the quality of workmanship may be unacceptable such that the project may be cancelled.

Scope There are numerous scope changes, which cause changes to the baselines. Delays and cost overruns are happening but are acceptable to the client for now.

The number of scope changes has led the client to believe that the planning is not correct and more scope changes will occur. The benefi ts of the project no longer outweigh the cost and project termination is likely.

Action Items The client is unhappy with the amount of time taken to close out action items, but the impact on the project is small.

The client is unhappy with the amount of time taken to close out action items and the impact on the project is signifi cant. Governance decisions are being delayed because of the open action items and the impact on the project may be severe.

Risks Signifi cant risk levels exist, but the team may be able to mitigate some of the risks.

The potential damage that can occur because of the severity of the risks is unacceptable to the client.

Assumptions and Constraints

New assumptions and constraints have appeared and may adversely affect the project.

New assumptions and constraints have appeared such that signifi cant project replanning will be necessary. The value of the project may no longer be there.

Enterprise Environmental Factors

The enterprise environmental factors have changes and may adversely affect the project.

The new enterprise environmental factors will greatly reduce the value and expected benefi ts of the project.

452 INFORMAL PROJECT MANAGEMENT

● The metrics that appear on a traditional dashboard reporting system may have to be redrawn when placed on a crisis dashboard to make sure that the metrics are easily understood

● Crisis metrics generally imply that either this situation must be monitored closely or that some decisions must be made.

9.8 INFORMAL PROJECT MANAGEMENT AT WORK

Let ’s review two case studies that illustrate informal project management in action.

Polk Lighting (a pseudonym) is a $35 million company located in Jacksonville, Florida. The company manufactures lamps, flashlights, and a variety of other lighting instruments. Its business is entirely

based in products and services, and the company does not take on contract projects from outside customers. The majority of the company ’s stock is publicly traded. The president of Polk Lighting has held his position since the company ’s startup in 1985.

In 1994, activities at Polk centered on the R&D group, which the president oversaw personally, refusing to hire an R&D director. The president believed in informal manage- ment for all aspects of the business, but he had a hidden agenda for wanting to use informal project management. Most companies use informal project management to keep costs down as far as possible, but the president of Polk favored informal project management so that he could maintain control of the R&D group. However, if the company were to grow, the president would need to add more management structure, establish tight project budgets, and possibly make project management more formal than it had been. Also, the president would probably be forced to hire an R&D director.

Pressure from the company ’s stockholders eventually forced the president to allow the company to grow. When growth made it necessary for the president to take on heavier administrative duties, he fi nally hired a vice president of R&D.

Within a few years, the company ’s sales doubled, but informal project management was still in place. Although budgets and schedules were established as the company grew, the actual management of the projects and the way teams worked together remained informal.

Several decades ago, Boeing was the prime contractor for the U.S. Air Force ’s new short-range attack missile (SRAM) and awarded a subcontract for developing the missile ’s propulsion system to the Thiokol Corporation.

It is generally assumed that communication between large customers and contrac- tors must be formal because of the potential for distrust when contracts are complex and involve billions of dollars. The use of on-site representatives, however, can change a potentially contentious relationship into one of trust and cooperation when informality is introduced into the relationship.

Two employees from Boeing were carefully chosen to be on-site representatives at the Thiokol Corporation to supervise the development of the SRAM ’s propulsion system. The working relationship between Thiokol ’s project management offi ce and Boeing ’s on-site

Polk Lighting

Boeing Aerospace (1970s)

Informal Project Management at Work 453

representatives quickly developed into shared trust. Team meetings were held without the exchange of excessive documentation. And each party agreed to cooperate with the other. The Thiokol project manager trusted Boeing ’s representatives well enough to give them raw data from test results even before Thiokol ’s engineers could formulate their own opin- ions on the data. Boeing ’s representatives in turn promised that they would not relay the raw data to Boeing until Thiokol ’s engineers were ready to share their results with their own executive sponsors.

The Thiokol–Boeing relationship on this project clearly indicates that informal project management can work between customers and contractors. Large construction contractors have had the same positive results in using informal project management and on-site rep- resentatives to rebuild trust and cooperation. Informality is not a replacement for formal project management activities. Rather, it simply means that some activities can be done more informally rather than formally. Formal and informal communications can exist simultaneously.

455

10 Behavioral Excellence

10.0 INTRODUCTION

Previously, we saw that companies excellent in project management strongly emphasize training for behav- ioral skills. In the past it was thought that project failures were due primarily to poor planning, inaccurate estimating, inefficient scheduling, and lack of cost control. Today, excellent companies realize that project failures have more to do with behavioral shortcomings—poor employee morale, negative human relations, low productivity, and lack of commitment.

This chapter discusses these human factors in the context of situational leadership and conflict reso- lution. It also provides information on staffing issues in project management. Finally, the chapter offers advice on how to achieve behavioral excellence.

10.1 SITUATIONAL LEADERSHIP

As project management has begun to emphasize behavioral management over technical management, situational leadership has also received more attention. The average size of projects has grown, and so has the size of project teams. Process integration and effective interpersonal relations have also taken on more importance as project teams have gotten larger. Project managers now need to be able to talk with many different functions and departments. There is a contemporary project management proverb that goes something like this: “When researcher talks to researcher, there is 100 percent understanding. When researcher talks to manufacturing, there is 50 percent understanding. When researcher talks to sales, there is zero percent understanding. But the project manager talks to all of them.”

456 BEHAVIORAL EXCELLENCE

Randy Coleman, former senior vice president of the Federal Reserve Bank of Cleveland, emphasizes the importance of tolerance:

The single most important characteristic necessary in successful project management is tolerance: tolerance of external events and tolerance of people’s personalities. Generally, there are two groups here at the Fed—lifers and drifters. You have to handle the two groups differently, but at the same time you have to treat them similarly. You have to bend some- what for the independents (younger drifters) who have good creative ideas and whom you want to keep, particularly those who take risks. You have to acknowledge that you have some trade-offs to deal with.

A senior project manager in an international accounting firm states how his own lead- ership style has changed from a traditional to a situational leadership style since becoming a project manager:

I used to think that there was a certain approach that was best for leadership, but experi- ence has taught me that leadership and personality go together. What works for one person won’t work for others. So you must understand enough about the structure of projects and people and then adopt a leadership style that suits your personality so that it comes across as being natural and genuine. It’s a blending of a person’s experience and personality with his or her style of leadership.

Many companies start applying project management without understanding the funda- mental behavioral differences between project managers and line managers. If we assume that the line manager is not also functioning as the project manager, here are the behavioral differences:

● Project managers have to deal with multiple reporting relationships. Line manag- ers report up a single chain of command.

● Project managers have very little real authority. Line managers hold a great deal of authority by virtue of their titles.

● Project managers often provide no input into employee performance reviews. Line managers provide formal input into the performance reviews of their direct reports.

● Project managers are not always on the management compensation ladder. Line managers always are.

● The project manager’s position may be temporary. The line manager’s position is permanent.

● Project managers sometimes are a lower grade level than the project team mem- bers. Line managers usually are paid at a higher grade level than their subordinates.

Several years ago, when Ohio Bell was still a subsidiary of American Telephone and Telegraph, a trainer was hired to conduct a three-day course on project management. During the customization process, the trainer was asked to emphasize planning, scheduling, and controlling and not to bother with the behavioral aspects of project management. At that time, AT&T offered a course on how to become a line supervisor that all of the seminar par- ticipants had already taken. In the discussion that followed between the trainer and the course

Situational Leadership 457

content designers, it became apparent that leadership, motivation, and conflict resolution were being taught from a superior-to-subordinate point of view in AT&T’s course. When the course content designers realized from the discussion that project managers provide leader- ship, motivation, and conflict resolution to employees who do not report directly to them, the trainer was allowed to include project management–related behavioral topics in the seminar.

Organizations must recognize the importance of behavioral factors in working rela- tionships. When they do, they come to understand that project managers should be hired for their overall project management competency, not for their technical knowledge alone. Brian Vannoni, formerly site training manager and principal process engineer at GE Plastics, described his organization’s approach to selecting project managers:

The selection process for getting people involved as project managers is based primarily on their behavioral skills and their skills and abilities as leaders with regard to the other aspects of project management. Some of the professional and full-time project managers have taken senior engineers under their wing, coached and mentored them, so that they learn and pick up the other aspects of project management. But the primary skills that we are looking for are, in fact, the leadership skills.

Project managers who have strong behavioral skills are more likely to involve their teams in decision making, and shared decision making is one of the hallmarks of success- ful project management. Today, project managers are more managers of people than they are managers of technology. According to Robert Hershock, former vice president at 3M:

The trust, respect, and especially the communications are very, very important. But I think one thing that we have to keep in mind is that a team leader isn’t managing technology; he or she is managing people. If you manage the people correctly, the people will manage the technology.

In addition, behaviorally oriented project managers are more likely to delegate responsibility to team members than technically strong project managers. In 1996, Frank Jackson, formerly a senior manager at MCI, said that:

Team leaders need to have a focus and a commitment to an ultimate objective. You defi- nitely have to have accountability for your team and the outcome of your team. You’ve got to be able to share the decision-making. You can’t single out yourself as the exclusive holder of the right to make decisions. You have got to be able to share that. And lastly again, just to harp on it one more time, is communications. Clear and concise communication throughout the team and both up and down a chain of command is very, very important.

Some organizations prefer to have a project manager with strong behavioral skills acting as the project manager, with technical expertise residing with the project engineer. Other organizations have found the reverse to be effective. Rose Russett, formerly the program management process manager for General Motors Powertrain, stated:

We usually appoint an individual with a technical background as the program manager and an individual with a business and/or systems background as the program administrator. This combination of skills seems to complement one another. The various line managers

458 BEHAVIORAL EXCELLENCE

are ultimately responsible for the technical portions of the program, while the key respon- sibility of the program manager is to provide the integration of all functional deliverables to achieve the objectives of the program. With that in mind, it helps for the program man- ager to understand the technical issues, but they add their value not by solving specific technical problems but by leading the team through a process that will result in the best solutions for the overall program, not just for the specific functional area. The program administrator, with input from all team members, develops the program plans, identifies the critical path, and regularly communicates this information to the team throughout the life of the program. This information is used to assist with problem solving, decision- making, and risk management.

10.2 CONFLICT RESOLUTION

Opponents of project management claim that the primary reason why some companies avoid changing over to a project management culture is that they fear the conflicts that inevitably accompany change. Conflicts are a way of life in companies with project management cul- tures. Conflict can occur on any level of the organization, and conflict is usually the result of conflicting objectives. The project manager is a conflict manager. In many organizations, the project managers continually fight fires and handle crises arising from interpersonal and interdepartmental conflicts. They are so busy handling conflicts that they delegate the day-to- day responsibility for running their projects to the project teams. Although this arrangement is not the most effective, it is sometimes necessary, especially after organizational restructur- ing or after a new project demanding new resources has been initiated.

The ability to handle conflicts requires an understanding of why conflicts occur. We can ask four questions, the answers to which are usually helpful in handling, and possibly preventing, conflicts in a project management environment:

● Do the project’s objectives conflict with the objectives of other projects currently in development?

● Why do conflicts occur? ● How can we resolve conflicts? ● Is there anything we can do to anticipate and resolve conflicts before they become

serious?

Although conflicts are inevitable, they can be planned for. For example, conflicts can easily develop in a team in which the members do not understand each other’s roles and responsibilities. Responsibility charts can be drawn to map out graphically who is respon- sible for doing what on the project. With the ambiguity of roles and responsibilities gone, the conflict is resolved or future conflict averted.

Resolution means collaboration, and collaboration means that people are willing to rely on each other. Without collaboration, mistrust prevails and progress documentation increases.

The most common types of conflict involve the following:

● Manpower resources ● Equipment and facilities

Conflict Resolution 459

● Capital expenditures ● Costs ● Technical opinions and trade-offs ● Priorities ● Administrative procedures ● Schedules ● Responsibilities ● Personality clashes

Each of these types of conflict can vary in intensity over the life of the project. The relative intensity can vary as a function of:

● Getting closer to project constraints ● Having met only two constraints instead of three (e.g., time and performance but

not cost) ● The project life cycle itself ● The individuals who are in conflict

Conflict can be meaningful in that it results in beneficial outcomes. These meaning- ful conflicts should be allowed to continue as long as project constraints are not violated and beneficial results accrue. An example of a meaningful conflict might be two technical specialists arguing that each has a better way of solving a problem. The beneficial result would be that each tries to find additional information to support his or her hypothesis.

Some conflicts are inevitable and occur over and over again. For example, consider a raw material and finished goods inventory. Manufacturing wants the largest possible inven- tory of raw materials on hand to avoid possible production shutdowns. Sales and marketing wants the largest finished goods inventory so that the books look favorable and no cash flow problems are possible.

Consider five methods that project managers can use to resolve conflicts:

● Confrontation ● Compromise ● Facilitation (or smoothing) ● Force (or forcing) ● Withdrawal

Confrontation is probably the most common method used by project managers to resolve conflict. Using confrontation, the project manager faces the conflict directly. With the help of the project manager, the parties in disagreement attempt to persuade one another that their solution to the problem is the most appropriate.

When confrontation does not work, the next approach project managers usually try is compromise. In compromise, each of the parties in conflict agrees to trade-offs or makes concessions until a solution is arrived at that everyone involved can live with. This give- and-take-approach can easily lead to a win–win solution to the conflict.

The third approach to conflict resolution is facilitation. Using facilitation skills, the project manager emphasizes areas of agreement and deemphasizes areas of disagreement.

460 BEHAVIORAL EXCELLENCE

For example, suppose that a project manager said, “We’ve been arguing about five points, and so far we’ve reached agreement on the first three. There’s no reason why we can’t agree on the last two points, is there?” Facilitation of a disagreement does not resolve the conflict. Facilitation downplays the emotional context in which conflicts occur.

Force is also a method of conflict resolution. A project manager uses force when he or she tries to resolve a disagreement by exerting his or her own opinion at the expense of the other people involved. Often, forcing a solution onto the parties in conflict results in a win–lose outcome. Calling in the project sponsor to resolve a conflict is another form of force project managers sometimes use.

The least used and least effective mode of conflict resolution is withdrawal. A project director can simply withdraw from the conflict and leave the situation unresolved. When this method is used, the conflict does not go away and is likely to recur later. Personality conflicts might well be the most difficult conflicts to resolve. Personality conflicts can occur at any time, with anyone, and over anything. Furthermore, they can seem almost impossible to anticipate and plan for.

Let’s look at how one company found a way to anticipate and avoid personality conflicts on one of its projects. Foster Defense Group (a pseudonym) was the govern- ment contract branch of a Fortune 500 company. The company understood the potentially detrimental effects of personality clashes on its project teams, but it did not like the idea of getting the whole team together to air its dirty laundry. The company found a better solution. The project manager put the names of the project team members on a list. Then he interviewed each of the team members one on one and asked each to identify the names on the list that he or she had had a personality conflict with in the past. The information remained confidential, and the project manager was able to avoid potential conflicts by separating clashing personalities.

If at all possible, the project manager should handle conflict resolution. When the project manager is unable to defuse the conflict, then and only then should the project sponsor be brought in to help solve the problem. Even then, the sponsor should not come in and force a resolution to the conflict. Instead, the sponsor should facilitate further dis- cussion between the project managers and the team members in conflict.

10.3 STAFFING FOR EXCELLENCE

Project manager selection is always an executive-level decision. In excellent companies, however, executives go beyond simply selecting the project manager. They use the selec- tion process to accomplish the following:

● Project managers are brought on board early in the life of the project to assist in out- lining the project, setting its objectives, and even planning for marketing and sales. The project manager’s role in customer relations becomes increasingly important.

● Executives assign project managers for the life of the project and project termina- tion. Sponsorship can change over the life cycle of the project, but not the project manager.

● Project management is given its own career ladder.

Staffing for Excellence 461

● Project managers given a role in customer relations are also expected to help sell future project management services long before the current project is complete.

● Executives realize that project scope changes are inevitable. The project manager is viewed as a manager of change.

Companies excellent in project management are prepared for crises. Both the project manager and the line managers are encouraged to bring problems to the surface as quickly as possible so that there is time for contingency planning and problem solving. Replacing the project manager is no longer the first solution for problems on a project. Project man- agers are replaced only when they try to bury problems.

A defense contractor was behind schedule on a project, and the manufacturing team was asked to work extensive overtime to catch up. Two of the manufacturing people, both union employees, used the wrong lot of raw materials to produce a $65,000 piece of equip- ment needed for the project. The customer was unhappy because of the missed schedules and cost overruns that resulted from having to replace the useless equipment. An inquisi- tion-like meeting was convened and attended by senior executives from both the customer and the contractor, the project manager, and the two manufacturing employees. When the customer’s representative asked for an explanation of what had happened, the project man- ager stood up and said, “I take full responsibility for what happened. Expecting people to work extensive overtime leads to mistakes. I should have been more careful.” The meeting was adjourned with no one being blamed. When word spread through the company about what the project manager did to protect the two union employees, everyone pitched in to get the project back on schedule, even working uncompensated overtime.

Human behavior is also a consideration in assigning staff to project teams. Team members should not be assigned to a project solely on the basis of technical knowledge. It has to be recognized that some people simply cannot work effectively in a team environment. For example, the director of research and development at a New England company had an employee, a 50-year-old engineer, who held two master’s degrees in engineering disciplines. He had worked for the previous twenty years on one-person projects. The director reluctantly assigned the engineer to a project team. After years of working alone, the engineer trusted no one’s results but his own. He refused to work cooperatively with the other members of the team. He even went so far as redoing all the calculations passed on to him from other engineers on the team.

To solve the problem, the director assigned the engineer to another project on which he supervised two other engineers with less experience. Again, the older engineer tried to do all of the work by himself, even if it meant overtime for him and no work for the others.

Ultimately, the director had to admit that some people are not able to work coopera- tively on team projects. The director went back to assigning the engineer to one-person projects on which the engineer’s technical abilities would be useful.

Robert Hershock, former vice president at 3M, once observed:

There are certain people whom you just don’t want to put on teams. They are not team players, and they will be disruptive on teams. I think that we have to recognize that and make sure that those people are not part of a team or team members. If you need their expertise, you can bring them in as consultants to the team but you never, never put people like that on the team.

462 BEHAVIORAL EXCELLENCE

I think the other thing is that I would never, ever eliminate the possibility of anybody being a team member no matter what the management level is. I think if they are properly trained, these people at any level can be participators in a team concept.

In 1996, Frank Jackson, formerly a senior manager at MCI, believed that it was pos- sible to find a team where any individual can contribute:

People should not be singled out as not being team players. Everyone has got the ability to be on a team and to contribute to a team based on the skills and the personal experi- ences that they have had. If you move into the team environment one other thing that is very important is that you not hinder communications. Communications is the key to the success of any team and any objective that a team tries to achieve.

One of the critical arguments still being waged in the project management commu- nity is whether an employee (even a project manager) should have the right to refuse an assignment. At Minnesota Power and Light, an open project manager position was posted, but nobody applied for the job. The company recognized that the employees probably did not understand what the position’s responsibilities were. After more than 80 people were trained in the fundamentals of project management, there were numerous applications for the open position.

It’s the kiss of death to assign someone to a project manager’s job if that person is not dedicated to the project management process and the accountability it demands.

10.4 VIRTUAL PROJECT TEAMS

Historically, project management was a face-to-face environment where team meetings involved all players meeting together in one room. Today, because of the size and complex- ity of projects, it is impossible to find all team members located under one roof. Duarte and Snyder define seven types of virtual teams.1 These are shown in Table 10–1.

Culture and technology can have a major impact on the performance of virtual teams. Duarte and Snyder have identified some of these relationships in Table 10–2.

The importance of culture cannot be understated. Duarte and Snyder identify four important points to remember concerning the impact of culture on virtual teams. The four points are2:

1. There are national cultures, organizational cultures, functional cultures, and team cultures. They can be sources of competitive advantages for virtual teams that know how to use cultural differences to create synergy. Team leaders and members who understand and are sensitive to cultural differences can create more robust outcomes

1. D. L. Duarte and N. Tennant Snyder, Mastering Virtual Teams. San Francisco: Jossey-Bass, 2001, p. 10. Reproduced by permission of John Wiley & Sons.

2. Ibid., p. 70.

Virtual Project Teams 463

than can members of homogeneous teams with members who think and act alike. Cultural differences can create distinctive advantages for teams if they are understood and used in positive ways.

2. The most important aspect of understanding and working with cultural differences is to create a team culture in which problems can be surfaced and differences can be discussed in a productive, respectful manner.

3. It is essential to distinguish between problems that result from cultural differences and problems that are performance based.

4. Business practices and business ethics vary in different parts of the world. Virtual teams need to clearly articulate approaches to these that every member understands and abides by.

TABLE 10–1. TYPES OF VIRTUAL TEAMS

Type of Team Description

Network Team membership is diffuse and fluid; members come and go as needed. Team lacks clear boundaries within the organization.

Parallel Team has clear boundaries and distinct membership. Team works in the short term to develop recommendations for an improvement in a process or system.

Project or product development Team has fluid membership, clear boundaries, and a defined customer base, technical requirement, and output. Longer-term team task is nonroutine, and the team has decision-making authority.

Work or production Team has distinct membership and clear boundaries. Members perform regular and outgoing work, usually in one functional area.

Service Team has distinct membership and supports ongoing customer network activity.

Management Team has distinct membership and works on a regular basis to lead corporate activities.

Action Team deals with immediate action, usually in an emergency situation. Membership may be fluid or distinct.

Source: D. L. Duarte and N. Tennant Snyder, Mastering Virtual Teams. San Francisco: Jossey-Bass, 2001, p. 10. Reproduced by permission of John Wiley & Sons.

TABLE 10–2. TECHNOLOGY AND CULTURE

Cultural Factor Technological Considerations

Power distance Members from high-power-distance cultures may participate more freely with technologies that are asynchronous and allow anonymous input. These cultures sometimes use technology to indicate status differences between team members.

Uncertainty avoidance People from cultures with high uncertainty avoidance may be slower adopters of technology. They may also prefer technology that is able to produce more permanent records of discussions and decisions.

Individualism–collectivism Members from highly collectivistic cultures may prefer face-to-face interactions.

Masculinity–femininity People from cultures with more “feminine” orientations are more prone to use technology in a nurturing way, especially during team startups.

Context People from high-context cultures may prefer more information-rich technologies, as well as those that offer opportunities for the feeling of social presence. They may resist using technologies with low social presence to communicate with people they have never met. People from low-context cultures may prefer more asynchronous communications.

Source: D. L Duarte and N. Tennant Snyder, Mastering Virtual Teams, San Francisco: Jossey-Bass, 2001, p. 60.

464 BEHAVIORAL EXCELLENCE

10.5 REWARDING PROJECT TEAMS

Today, most companies are using project teams. However, there still exist challenges in how to reward project teams for successful performance. The importance of how teams are rewarded is identified by Parker, McAdams, and Zielinski3:

Some organizations are fond of saying, “We’re all part of the team,” but too often it is merely management-speak. This is especially common in conventional hierarchical organizations; they say the words but don’t follow up with significant action. Their employees may read the articles and attend the conferences and come to believe that many companies have turned collaborative. Actually, though, few organizations today are genuinely team-based.

Others who want to quibble point to how they reward or recognize teams with splashy bonuses or profit-sharing plans. But these do not by themselves represent a commitment to teams; they’re more like a gift from a rich uncle. If top management believes that only money and a few recognition programs (“team of year” and that sort of thing) reinforce teamwork, they are wrong. These alone do not cause fundamental change in the way people and teams are managed.

But in a few organizations, teaming is a key component of the corporate strategy, involvement with teams is second nature, and collaboration happens without great thought or fanfare. There are natural work groups (teams of people who do the same or similar work in the same location), permanent cross-functional teams, ad hoc project teams, pro- cess improvement teams, and real management teams. Involvement just happens.

Why is it so difficult to reward project teams? To answer this question, we must under- stand what a team is and is not4:

Consider this statement: an organizational unit can act like a team, but a team is not neces- sarily an organizational unit, at least for describing reward plans. An organizational unit is just that, a group of employees organized into an identifiable business unit that appears on the organizational chart. They may behave in a spirit of teamwork, but for the purposes of developing reward plans they are not a “team.” The organizational unit may be a whole company, a strategic business unit, a division, a department, or a work group.

A “team” is a small group of people allied by a common project and sharing perfor- mance objectives. They generally have complementary skills or knowledge and an inter- dependence that requires that they work together to accomplish their project’s objective. Team members hold themselves mutually accountable for their results. These teams are not found on an organization chart.

Incentives are difficult to apply because project teams may not appear on an organi- zational chart. Figure 10–1 shows the reinforcement model for employees.5 For project teams, the emphasis is the three arrows on the right-hand side of Figure 10–1.

3. G. Parker, J. McAdams, and D. Zielinski, Rewarding Teams, San Francisco: Jossey-Bass, 2000, p. 17. Reproduced by permission of John Wiley & Sons.

4. Ibid., p. 17.

5. Ibid., p. 29.

Rewarding Project Teams 465

Project team incentives are important because team members expect appropriate rewards and recognition6:

Project teams are usually, but not always, formed by management to tackle specific proj- ects or challenges with a defined time frame—reviewing processes for efficiency or cost- savings recommendations, launching a new software product, or implementing enterprise resource planning systems are just a few examples. In other cases, teams self-form around specific issues or as part of continuous improvement initiatives such as team-based sug- gestion systems.

Project teams can have cross-functional membership or simply be a subset of an existing organizational unit. The person who sponsors the team—its “champion” typically creates an incentive plan with specific objective measures and an award schedule tied to achieving those measures. To qualify as an incentive, the plan must include preannounced goals, with a “do this, get that” guarantee for teams. The incentive usually varies with the value added by the project.

Project team incentive plans usually have some combination of these basic measures:

● Project milestones: Hit a milestone, on budget and on time, and all team members earn a defined amount. Although sound in theory, there are inherent problems in tying finan- cial incentives to hitting milestones. Milestones often change for good reason (techno- logical advances, market shifts, other developments) and you don’t want the team and management to get into a negotiation on slipping dates to trigger the incentive. Unless milestones are set in stone and reaching them is simply a function of the team doing its

Base Compensation

Capability (Competency)

Individual Incentives

Recognition Project Team

Incentives

Organizational Unit Incentives

Individual Program Team Organizational

Unit

Participant Focus

Cost of Doing Business Investment in Results

Cost (Payouts)

Figure 10–1. Reinforcement model.

6. Ibid., pp. 38–39.

466 BEHAVIORAL EXCELLENCE

normal, everyday job, it’s generally best to use recognition-after-the-fact celebration of reaching milestones—rather than tying financial incentives to it.

Rewards need not always be time based, such that when the team hits a milestone by a certain date it earns a reward. If, for example, a product development team debugs a new piece of software on time, that’s not necessarily a reason to reward it. But if it discovers and solves an unsuspected problem or writes better code before a delivery date, rewards are due.

● Project completion: All team members earn a defined amount when they complete the project on budget and on time (or to the team champion’s quality standards).

● Value added: This award is a function of the value added by a project, and depends largely on the ability of the organization to create and track objective measures. Examples include reduced turnaround time on customer requests, improved cycle times for product development, cost savings due to new process efficiencies, or incremental profit or market share created by the product or service developed or implemented by the project team.

One warning about project incentive plans: they can be very effective in helping teams stay focused, accomplish goals, and feel like they are rewarded for their hard work, but they tend to be exclusionary. Not everyone can be on a project team. Some employ- ees (team members) will have an opportunity to earn an incentive that others (non-team members) do not. There is a lack of internal equity. One way to address this is to reward core team members with incentives for reaching team goals, and to recognize peripheral players who supported the team, either by offering advice, resources, or a pair of hands, or by covering for project team members back at their regular job.

Some projects are of such strategic importance that you can live with these internal equity problems and non–team members’ grousing about exclusionary incentives. Bottom line, though, is this tool should be used cautiously.

Some organizations focus only on cash awards. However, Parker et al. have concluded from their research that noncash awards can work equally well, if not better, than cash awards7:

Many of our case organizations use non-cash awards because of their staying power. Everyone loves money, but cash payments can lose their motivational impact over time.

However, non-cash awards carry trophy value that has great staying power because each time you look at that television set or plaque you are reminded of what you or your team did to earn it. Each of the plans encourages awards that are coveted by the recipients and, therefore, will be memorable.

If you ask employees what they want, they will invariably say cash. But providing it can be difficult if the budget is small or the targeted earnings in an incentive plan are mod- est. If you pay out more often than annually and take taxes out, the net amount may look pretty small, even cheap. Non-cash awards tend to be more dependent on their symbolic value than their financial value.

Non-cash awards come in all forms: a simple thank-you, a letter of congratulations, time off with pay, a trophy, company merchandise, a plaque, gift certificates, special

7. Ibid., pp. 190–191.

Keys to Behavioral Excellence 467

services, a dinner for two, a free lunch, a credit to a card issued by the company for purchases at local stores, specific items or merchandise, merchandise from an extensive catalogue, travel for business or a vacation with the family, and stock options. Only the creativity and imagination of the plan creators limit the choices.

10.6 KEYS TO BEHAVIORAL EXCELLENCE

There are some distinguishing actions that project managers can take to ensure the suc- cessful completion of their projects. These include:

● Insisting on the right to select key project team ● Negotiating for key team members with proven track records in their fields ● Developing commitment and a sense of mission from the outset ● Seeking sufficient authority from the sponsor ● Coordinating and maintaining a good relationship with the client, parent, and team ● Seeking to enhance the public’s image of the project ● Having key team members assist in decision-making and problem solving ● Developing realistic cost, schedule, and performance estimates and goals ● Maintaining backup strategies (contingency plans) in anticipation of potential

problems ● Providing a team structure that is appropriate, yet flexible and flat ● Going beyond formal authority to maximize its influence over people and key deci-

sions ● Employing a workable set of project planning and control tools ● Avoiding overreliance on one type of control tool ● Stressing the importance of meeting cost, schedule, and performance goals ● Giving priority to achieving the mission or function of the end item ● Keeping changes under control ● Seeking ways to assure job security for effective project team members

Earlier in this book, I claimed that a project cannot be successful unless it is recognized as a project and gains the support of top-level management. Top-level management must be willing to commit company resources and provide the necessary administrative support so that the project becomes part of the company’s day-to-day routine of doing business. In addition, the parent organization must develop an atmosphere conducive to good working relationships among the project manager, parent organization, and client organization.

There are actions that top-level management should take to ensure that the organiza- tion as a whole supports individual projects and project teams as well as the overall project management system:

● Showing a willingness to coordinate efforts ● Demonstrating a willingness to maintain structural flexibility ● Showing a willingness to adapt to change ● Performing effective strategic planning

468 BEHAVIORAL EXCELLENCE

● Maintaining rapport ● Putting proper emphasis on past experience ● Providing external buffering ● Communicating promptly and accurately ● Exhibiting enthusiasm ● Recognizing that projects do, in fact, contribute to the capabilities of the whole

company

Executive sponsors can take the following actions to make project success more likely:

● Selecting a project manager at an early point in the project who has a proven track record in behavioral skills and technical skills

● Developing clear and workable guidelines for the project manager ● Delegating sufficient authority to the project manager so that she or he can make

decisions in conjunction with the project team members ● Demonstrating enthusiasm for and commitment to the project and the project team ● Developing and maintaining short and informal lines of communication ● Avoiding excessive pressure on the project manager to win contracts ● Avoiding arbitrarily slashing or ballooning the project team’s cost estimate ● Avoiding “buy-ins” ● Developing close, not meddlesome, working relationships with the principal client

contact and the project manager

The client organization can exert a great deal of influence on the behavioral aspects of a project by minimizing team meetings, rapidly responding to requests for information, and simply allowing the contractor to conduct business without interference. The positive actions of client organizations also include:

● Showing a willingness to coordinate efforts ● Maintaining rapport ● Establishing reasonable and specific goals and criteria for success ● Establishing procedures for making changes ● Communicating promptly and accurately ● Committing client resources as needed ● Minimizing red tape ● Providing sufficient authority to the client’s representative, especially in decision

making

With these actions as the basic foundation, it should be possible to achieve behavioral success, which includes:

● Encouraging openness and honesty from the start from all participants ● Creating an atmosphere that encourages healthy competition but not cutthroat situ-

ations or liar’s contests ● Planning for adequate funding to complete the entire project ● Developing a clear understanding of the relative importance of cost, schedule, and

technical performance goals

Keys to Behavioral Excellence 469

● Developing short and informal lines of communication and a flat organizational structure

● Delegating sufficient authority to the principal client contact and allowing prompt approval or rejection of important project decisions

● Rejecting buy-ins ● Making prompt decisions regarding contract okays or go-aheads ● Developing close working relationships with project participants ● Avoiding arm’s-length relationships ● Avoiding excessive reporting schemes ● Making prompt decisions on changes

Companies that are excellent in project management have gone beyond the stan- dard actions as listed previously. These additional actions for excellence include the following:

● The outstanding project manager has these demonstrable qualities: ● Understands and demonstrates competency as a project manager ● Works creatively and innovatively in a nontraditional sense only when neces-

sary; does not look for trouble ● Demonstrates high levels of self-motivation from the start ● Has a high level of integrity; goes above and beyond politics and gamesmanship ● Is dedicated to the company and not just the project; is never self-serving ● Demonstrates humility in leadership ● Demonstrates strong behavioral integration skills both internally and externally ● Thinks proactively rather than reactively ● Is willing to assume a great deal of risk and will spend the appropriate time

needed to prepare contingency plans ● Knows when to handle complexity and when to cut through it; demonstrates

tenaciousness and perseverance ● Is willing to help people realize their full potential; tries to bring out the best

in people ● Communicates in a timely manner and with confidence rather than despair

● The project manager maintains high standards of performance for self and team, as shown by these approaches: ● Stresses managerial, operational, and product integrity ● Conforms to moral codes and acts ethically in dealing with people internally

and externally ● Never withholds information ● Is quality conscious and cost conscious ● Discourages politics and gamesmanship; stresses justice and equity ● Strives for continuous improvement but in a cost-conscious manner

● The outstanding project manager organizes and executes the project in a sound and efficient manner: ● Informs employees at the project kickoff meeting how they will be evaluated ● Prefers a flat project organizational structure over a bureaucratic one

470 BEHAVIORAL EXCELLENCE

● Develops a project process for handling crises and emergencies quickly and effectively

● Keeps the project team informed in a timely manner ● Does not require excessive reporting; creates an atmosphere of trust ● Defines roles, responsibilities, and accountabilities up front ● Establishes a change management process that involves the customer

● The outstanding project manager knows how to motivate: ● Always uses two-way communication ● Is empathetic with the team and a good listener ● Involves team members in decision making; always seeks ideas and solutions;

never judges an employee’s idea hastily ● Never dictates ● Gives credit where credit is due ● Provides constructive criticism rather than making personal attacks ● Publicly acknowledges credit when credit is due but delivers criticism privately ● Makes sure that team members know that they will be held accountable and

responsible for their assignments ● Always maintains an open-door policy; is readily accessible, even for employ-

ees with personal problems ● Takes action quickly on employee grievances; is sensitive to employees’ feel-

ings and opinions ● Allows employees to meet the customers ● Tries to determine each team member’s capabilities and aspirations; always

looks for a good match; is concerned about what happens to the employees when the project is over

● Tries to act as a buffer between the team and administrative/operational problems ● The project manager is ultimately responsible for turning the team into a cohesive

and productive group for an open and creative environment. If the project manager succeeds, the team will exhibit the following behaviors: ● Demonstrates innovation ● Exchanges information freely ● Is willing to accept risk and invest in new ideas ● Is provided with the necessary tools and processes to execute the project ● Dares to be different; is not satisfied with simply meeting the competition ● Understands the business and the economics of the project ● Tries to make sound business decisions rather than just sound project decisions

10.7 PROACTIVE VERSUS REACTIVE MANAGEMENT

Perhaps one of the biggest behavioral challenges facing a project manager, especially a new project manager, is learning how to be proactive rather than reactive. Kerry Wills, discusses this problem.

Proactive versus Reactive Management 471

In today’s world Project Managers often get tapped to manage several engage- ments at once. This usually results in them having just enough time to react to the problems of the day that each project is facing. What they are not doing is

spending the time to look ahead on each project to plan for upcoming work, thus resulting in more fires that need to be put out. There used to be an arcade game called “whack-a-mole” where the participant had a mallet and would hit each mole with it when one would pop up. Each time a mole was hit, a new mole would pop up. The cycle of spending time putting out fires and ignoring problems that cause more fires can be thought of as “project whack-a-mole.”

It is my experience that proactive management is one of the most effective tools that Project Managers can use to ensure the success of their projects. However, it is a difficult situ- ation to manage several projects while still having enough time to look ahead. I call this ability to spend time looking ahead the “Proactive Management Capacity Propensity” (PMCP). This article will demonstrate the benefits of proactive management, define the PMCP, and propose ways of increasing the PMCP and thus the probability of success on the projects.

Proactive Management

Overview Project Management involves a lot of planning up-front including work plans, budgets, resource allocations, and so on. The best statistics that I have seen on the accuracy of initial plans says there is a 30% positive or negative variance from the original plans at the end of a project. Therefore, once the plans have been made and the project has started, the Project Manager needs to constantly re-assess the project to understand the impact of the 60% unknowns that will occur.

The dictionary defines proactive as “acting in advance to deal with an expected dif- ficulty.” By “acting in advance” a Project Manager has some influence over the control of the unknowns. However, without acting in advance, the impacts of the unknowns will be greater as the Project Manager will be reacting to the problem once it has snowballed.

A Metaphor When I drive into work in the morning, I have a plan and schedule. I leave my house, take certain roads and get to work in forty minutes. If I were to treat driv- ing to work as a Project (having a specific goal with a finite beginning and end), then I have two options to manage my commute [Figure 10–2]:

Proactive Management

Capacity Propensity8

8. The remainder of this section was provided by Kerry R. Wills, PMP®. Reproduced by permission of Kerry R. Wills.

STOP

PROACTIVE REACTIVE

STOP

Figure 10–2. Driving metaphor.

472 BEHAVIORAL EXCELLENCE

By proactively managing my commute, I watch the news in the morning to see the weather and traffic. Although I had a plan, if there is construction on one of the roads that I normally take, then I can always change that plan and take a different route to ensure that my schedule gets met. If I know that there may be snow then I can leave earlier and give myself more time to get to work. As I am driving, I look ahead in the road to see what is coming up. There may be an accident or potholes that I will want to avoid and this gives me time to switch lanes.

A reactive approach to my commute could be assuming that my original plan will work fully. As I get on the highway, if there is construction then I have to sit in it because by the time I realize the impact, I have passed all of the exit ramps. This results in me miss- ing my schedule goal. The same would happen if I walked outside and saw a foot of snow. I now have a chance to scope since I have the added activity of shoveling my driveway and car. Also, if I am a reactive driver, then I don’t see the pothole until I have driven over it (which may lead to a budget variance since I now need new axles).

Benefits

The metaphor above demonstrates that reactive management is detrimental to projects because by the time that you realize that there is a problem it usually has a schedule, scope or cost impact. There are several other benefits to proactive management:

● Proactively managing a plan allows the Project Manager to see what activities are com- ing up and start preparing for them. This could be something as minor as setting up conference rooms for meetings. I have seen situations were tasks were not completed on time because of something as minor as logistics.

● Understanding upcoming activities also allows for the proper resources to be in place. Oftentimes, projects require people from outside of the project team and lining them up are [sic] always a challenge. By preparing people in advance, there is a higher prob- ability that they can be ready when needed.

The Relationship

● The Project Manager should constantly be replanning. By looking at all upcoming activities as well as the current ones, it can give a gage of the probability of success which can be managed rather than waiting until the day before something is due to real- ize that the schedule cannot be met.

● Proactive management also allows time to focus on quality. Reactive management usu- ally is characterized by rushing to fix whatever “mole” has popped up as quickly as possible. This usually means a patch rather than the appropriate fix. By planning for the work appropriately, it can be addressed properly which reduces the probability of rework.

● As previously unidentified work arises, it can be planned for rather than assuming that “we can just take it on.”

Proactive management is extremely influential over the probability of success of a project because it allows for replanning and the ability to address problems well before they have a significant impact.

Proactive versus Reactive Management 473

Overview I have observed a relationship between the amount of work that a project manager has and their ability to manage proactively. As Project Managers get more work and more concurrent projects, their ability to manage proactively goes down.

The relationship between Project Manager workload and the ability to manage pro- actively is shown in Figure 10–3. . . . As Project Managers have increased work, they have less capacity to be proactive to and wind up becoming more reactive.

Not all Projects and Project Managers are equal. Some Project Managers can handle several projects well and some projects require more focus than others. I have therefore labeled this factor, the Project Management Capacity Propensity (PMCP). That is, the sum of those qualities that allow a Project Manager to proactively manage projects.

PMCP There are several factors that make up the PMCP that I have outlined below. Project Manager skill sets have an impact on the PMCP. Having good Time

Management and organization techniques can influence how much a PM can focus on looking ahead. A Project Manager who is efficient with their time has the ability to review more upcoming activities and plan for them.

Project Manager expertise of the project is also influential to the PMCP. If the PM is an expert in the business or the project, this may allow for quicker decisions since they will not need to seek out information or clarification (all of which takes away time).

The PMCP is also impacted by team composition. If the Project Manager is on a large project and has several team leads who manage plans, then they have an increased ability to focus on replanning and upcoming work. Also, having team members who are experts in their field will require less focus from the Project Manager.

Increasing the PMCP The good news about the PMCP is that it can be increased. Project Managers can look for ways to increase their skillsets through training. There

are several books and seminars on time management, prioritization, and organization. Attending these can build the effectiveness of the time spent by the PM on their activities.

The PM can also re-evaluate the team composition. By getting stronger team leads or different team members, the PM can offload some of their work and spend more time focusing on proactive management.

All of these items can increase the PMCP and result in an increased ability to manage proactively. The image . . . [in Figure 10–4] shows how a PMCP increase raises the bar and allows for more proactive management with the same workload.

PMCP Proactive Management

Reactive Management

Project Manager Workload

Figure 10–3. Proactivity graph.

474 BEHAVIORAL EXCELLENCE

Conclusion

To proactively manage a project is to increase your probability of being successful. There is a direct correlation between the workload that a PM has and their ability to look ahead. Project Managers do have control over certain aspects that can give them a greater abil- ity to focus on proactive management. These items, the PMCP, can be increased through training and having the proper team.

Remember to keep your eyes on the road.

PMCP Proactive Management

Reactive Management

Project Manager Workload

Figure 10–4. Increasing PMCP.

475

11 Measuring Return on

Investment on Project

Management Training Dollars

11.0 INTRODUCTION

For almost three decades, the 1960s through the 1980s, the growth and acceptance of project management were restricted to the aerospace, defense, and heavy construction industries. In virtually all other industries, project management was nice to have but not a necessity. There were very few project management training programs offered in the public marketplace, and those that were offered covered the basics of project man- agement with weak attempts to customize the material to a specific company. The concept of measuring the return on investment (ROI) on training, at least in project management courses, was nonexistent. Within the past ten years, there have been several studies on quantifying the benefits of project management with some pioneering work on the benefits of project management training.1–4 There is still a great deal of effort needed, but at least we have recognized the need.

Today, our view of project management education has changed and so has our desire to evaluate ROI on project management training funds. There are several reasons for this:

● Executives realize that training is a basic necessity for companies to grow. ● Employees want training for professional growth and advancement opportunities.

1.W. Ibbs and J. Reginato, Quantifying the Value of Project Management, Newton Square, PA: Project Management Institute, 2002.

4. J. Knutson, A three-part series in PM Network, January, February, and July 1999.

2.W. Ibbs and Y-H. Kwak, The Benefits of Project Management, Newton Square, PA: Project Management Institute, 1997. 3.W. Ibbs, “Measuring Project Management’s Value: New Directions for Quantifying PM/ROI®,” in Proceedings of the PMI Research Conference, June 21–24, 2000, Paris, France.

476 MEASURING RETURN ON INVESTMENT

● Project management is now viewed as a profession rather than a part-time occupation. ● The importance of becoming a PMP® has been increasing. ● There are numerous university programs available leading to MS, MBA, and PhD degrees in project

management. ● There are certificate programs in various project management concepts such as risk management

and program management. ● The pressure to maintain corporate profitability has increased, resulting in less money available for

training. Yet more and more training funds are being requested by the workers who desire to become PMP®s and then must accumulate sixty professional development units (PDUs) every three years to remain certified.

● Management realizes that a significant portion of training budgets must be allocated to project management education, but it should be allocated for those courses that provide the company with the greatest ROI. The concept of educational ROI is now upon us.

11.1 PROJECT MANAGEMENT BENEFITS

In the early years of project management, primarily in the aerospace and defense indus- tries, studies were done to determine the benefits of project management. In a study by Middleton, the benefits discovered were5:

● Better control of projects ● Better customer relations ● Shorter product development time ● Lower program costs ● Improved quality and reliability ● Higher profit margins ● Better control over program security ● Improved coordination among company divisions doing work on the project ● Higher morale and better mission orientation for employees working on the project ● Accelerated development of managers due to breadth of project responsibilities

These benefits were identified by Middleton through surveys and were subjective in nature. No attempt was made to quantify the benefits. At that time, there existed virtually no project management training programs. On-the-job training was the preferred method of learning project management, and most people learned from their own mistakes rather than from the mistakes of others.

Today the benefits identified by Middleton still apply, and we have added other ben- efits to the list:

● Accomplishing more work in less time and with few resources ● More efficient and more effective performance

5.C. J. Middleton, “How to Set Up a Project Organization,” Harvard Business Review, March–April 1967, pp. 73–82.

Growth of ROI Modeling 477

● Increase in business due to customer satisfaction ● A desire for a long-term partnership relationship with customers ● Better control of scope changes

Executives wanted all of the benefits described here, and they wanted the benefits yesterday. It is true that these benefits could be obtained just by using on-the-job train- ing efforts, but this assumed that time was a luxury rather than a constraint. Furthermore, executives wanted workers to learn from the mistakes of others rather than their own mistakes. Also executives wanted everyone in project management to look for continuous improvement efforts rather than just an occasional best practice.

Not every project management training program focuses on all of these benefits. Some courses focus on one particular benefit while others might focus on a group of ben- efits. Deciding which benefits you desire is essential in selecting a training course. And if the benefits can be quantified after training is completed, then executives can maxi- mize their ROI on project management training dollars by selecting the proper training organizations.

11.2 GROWTH OF ROI MODELING

In the past several years, the global expansion of ROI modeling has taken hold. The American Society for Training and Development (ASTD) has performed studies on ROI modeling.6 Throughout the world, professional associations are conducting seminars, workshops, and conferences dedicated to ROI on training.

According to the 2001 Training’s annual report, more than $66 billion was spent on training in 2001. It is therefore little wonder that management treats training with a busi- ness mindset, thus justifying the use of ROI measurement. But despite all of the worldwide commitment and documented successes, there is still a very real fear in many companies preventing the use of ROI modeling. Typical arguments are: “It doesn’t apply to us”; “We cannot evaluate the benefits quantitatively”; “We don’t need it”; “The results are mean- ingless”; “It costs too much.” These fears create barriers to the implementation of ROI techniques, but most barriers are myths that can be overcome.

In most companies, human resources development (HRD) maintains the lead role in overcoming these fears and performing the ROI studies. The cost of performing these studies on a continuous basis could be as much as 4–5 percent of the HRD budget. Some HRD organizations have trouble justifying this expense. And to make matters worse, the HRD personnel may have a poor understanding of project management.

The salvation in overcoming these fears and designing proper project management training programs could very well be the project management office (PMO). Since the PMO has become the guardian of all project management intellectual property as well as

6. J. J. Phillips, Return on Investment in Training and Performance Improvement Programs, 2nd ed., Burlington, MA: Butterworth-Heinemann, 2003, Chapter 1. In the opinion of this author, this is by far one of the best, if not the best, text on this subject.

478 MEASURING RETURN ON INVESTMENT

designing project management training courses, the PMO will most likely take the lead role in calculating ROI on project management–related training courses. Members of the PMO might be required to become certified in educational ROI measurement the same way that they are certified as a PMP® or Six Sigma Black Belt.

Another reason for using the PMO is because of the enterprise project management (EPM) methodology. EPM is the integration of various processes such as total quality management, concurrent engineering, continuous improvement, risk management, and scope change control into one project management methodology that is utilized on a company-wide basis. Each of these processes has measurable output that previously may not have been tracked or reported. This has placed additional pressure on the PMO and project management education to develop metrics and measurement for success.

11.3 THE ROI MODEL

Any model used must provide a systematic approach to calculating ROI. It should be prepared on a life-cycle basis or step-by-step approach similar to an EPM methodology. Just like with EPM, there is an essential criterion that must exist for any model to work effectively.

Because criteria are considered essential, any ROI methodology should meet the vast majority of, if not all, criteria. The bad news is that most ROI processes do not generally meet all of these criteria. A typical model is shown in Figure 11–1. The definitions of the levels in Figure 11–1 are shown in Table 11–1.

Develop Evaluation Plans and

Baseline Data

Reaction/ Satisfaction

Level 1

Learning Level 2

Application Level 3

Business Impact Level 4

Return on Investment

Level 5

Tabulate Program

Cost

Convert Data to

Monetary Value

Isolate Effects of Program

Identify Intangible Benefits

Reach Conclusion

and Generate Report

Transmit Information

to Target Groups

Planning Data Collection

Data Analysis

Reporting

Figure 11–1. The ROI model. Source: Adapted from J. J. Phillips, Return on Investment in Training and Performance Improvement Programs, 2nd ed., Burlington, MA: Butterworth-Heinemann, 2003 p. 37.

Planning Life-Cycle Phase 479

11.4 PLANNING LIFE-CYCLE PHASE

The first life-cycle phase in the ROI model is the development of evaluation plans and baseline data. The evaluation plan is similar to some of the PMBOK® Guide knowledge areas that require a plan as part of the first process step in each knowledge area. The evalu- ation plan should identify:

● The objective(s) of the program ● The way(s) the objective(s) will be validated ● The target audience ● Assumptions and constraints ● The timing of the program

Objectives for the training program must be clearly defined before ROI modeling can be completed. Table 11–2 identifies typical objectives. The objectives must be clearly defined for each of the five levels of the model. Column 3 in Table 11–2 would be rep- resentative of the objectives that a company might have when it registers a participant in a Project Management Certificate Program (PMCP) training course. In this example, the company funding the participant’s training might expect the participant to become a PMP® and then assist the organization in developing an EPM methodology based upon the PMBOK® Guide with the expectation that this would lead to customer satisfaction and more business. Column 4 in Table 11–2 might be representative of a company that registers a participant in a course on best practices in project management. Some companies believe that if a seminar participant walks away from a training program with two good ideas for each day of the program and these ideas can be implemented reasonably fast, then the seminar would be considered a success. In this example, the objectives are to identify best practices in project management that other companies are doing and can be effectively implemented in the participant’s company.

There can be differences in training objectives, as seen through the eyes of manage- ment. As an example, looking at columns 3 and 4 in Table 11–2, objectives might be:

● Learn skills that can be applied immediately to the job. In this case, ROI can be measured quickly. This might be representative of the PMCP course in column 3.

● Learn about techniques and advancements. In this case, additional money must be spent to achieve these benefits. ROI measurement may not be meaningful until

TABLE 11–1. DEFINING LEVELS

Level Description

1: Reaction/satisfaction Measures the participants’ reaction to the program and possibly creates an action plan for implementation of the ideas

2: Learning Measures specific skills, knowledge, or attitude changes

3: Application Measures changes in work habit or on-the-job performance as well as application and implementation of knowledge learned

4: Business impact Measures the impact on the business as a result of implementation of changes

5: Return on investment Compares monetary benefits with the cost of the training and expressed as a percentage

480 MEASURING RETURN ON INVESTMENT

after the techniques have been implemented. This might be representative of the best practices course in column 4.

● A combination of the above.

11.5 DATA COLLECTION LIFE-CYCLE PHASE

In order to validate that each level’s objectives for the training course were achieved, data must be collected and processed. Levels 1–4 in Figure 11–1 make up the data collection life-cycle phase.

To understand the data collection methods, we revisit the course on best practices in project management, which covers best practices implemented by various companies worldwide. The following assumptions will be made:

● Participants are attending the course to bring back to their company at least two ideas that can be implemented in their company within six months.

● Collecting PDUs is a secondary benefit. ● The course length is two days.7

Typical data collection approaches are shown in Table 11–3 and explained below for each level.

Level 1 measures the participant’s reaction to the program and possibly an action plan for implementation of the ideas. The measurement for level 1 is usually an end-of-course questionnaire where the participant

rates the information presented, quality of instruction, instructional material, and other such topics on a scale of 1–7. All too often, the questionnaire is answered based upon the

Level 1: Reaction and

Satisfaction

7. Some companies have one-day, two-day, and even week-long courses on best practices in project management.

TABLE 11–2. TYPICAL PROGRAM OBJECTIVES

Objectives

Level Description Typical PMCP Training Typical Best Practices Training Course

1 Reaction/satisfaction Understand principles of PMBOK® Guide Understand that companies are documenting their best practices

2 Learning Demonstrate skills or knowledge in domain groups and knowledge areas

Demonstrate how best practices benefit an organization

3 Application Development of EPM processes based upon the PMBOK® Guide

Develop a best practices library or ways to capture best practices

4 Business impact Measurement of customer and user satisfaction with EPM

Determine the time and/or cost savings from a best practice

5 Return on investment Amount of business or customer satisfaction generated from EPM

Measure ROI for each best practice implemented

Data Collection Life-Cycle Phase 481

instructor’s presentation skills rather than the quality of the information. While this method is most common and often serves as an indication of customer satisfaction hopefully lead- ing to repeat business, it is not a guarantee that new skills or knowledge have been learned.

This level measures specific skills, knowledge, or attitude changes learned during the course. Instructors use a variety of techniques for training, including:

● Lectures ● Lectures/discussions ● Exams ● Case studies (external firms) ● Case studies (internal projects) ● Simulation/role playing ● Combinations

For each training technique, a measurement method must be established. Some trainers provide a pretest at the beginning of the course and a posttest at the end. The difference in scores is usually representative of the amount of learning that has taken place. This is usu- ally accomplished for in-house training programs rather than public seminars. Care must be taken in the use of pretests and posttests. Sometimes, a posttest is made relatively easy for the purpose of making it appear that learning has taken place. Out-of-class testing can also be accomplished using take-home case studies and CD-ROM multiple-choice questions.

Testing is necessary to validate that learning has taken place and knowledge has been absorbed. However, simply because learning has taken place is no guarantee that the infor- mation learned on best practices can or will be transferred to the company. The learning might simply confirm that the company is doing well and keeping up with the competitors.

Level 2: Learning

TABLE 11–3. DATA COLLECTION

Level Measures

Data Collection Methods and Instruments Data Sources Timing

Responsible Person

Reaction/ satisfaction

A 1–7 rating on end- of-course critique

Questionnaire Participant (last day of program)

End of program Instructor

Learning Pretest, posttest, CD- ROM, and case studies

In-class tests and skill practice sets

Instructor Each day of course Instructor

Application Classroom discussion Follow-up session or questionnaire

Participant and/or PMO

Three months after programa

PMO

Business impact Measurement of EPM continuous improvement efforts

Benefit–cost monitoring by the PMO

PMO records Six months after program

PMO

Return on investment

Benefit–cost ratios PMO studies PMO records Six months after program

PMO

aUsually for in-house program only. For public seminars, this may be done by the PMO within a week after completion of training.

482 MEASURING RETURN ON INVESTMENT

This level measures changes in work habits or on-the-job performance as well as implementation of knowledge learned. Measurement at this level is normally done through follow-up sessions or follow-up ques-

tionnaires. However, for publicly offered courses with a large number of participants, it is impossible for the instructor to follow up with all participants. In such cases, the respon- sibility falls on the shoulders of the PMO. Participants may be required to prepare a short one- or two-page report on what they learned in the course and what best practices are applicable to the company. The report is submitted to the PMO that might have the final decision on the implementation of the ideas. Based on the magnitude of the best practices ideas, the portfolio management of projects may be impacted. However, there is no guar- antee at this point that there will be a positive impact on the business.

This level measures the impact on the business as a result of implementa- tion of the changes. Typical measurement areas are shown in Figure 11–2.

The critical terms in Figure 11–2 are:

● Critical Success Factor (CSF): This measures changes in the output of the proj- ect resulting from implementation of best practices. Hopefully, this will lead to improvements in time, cost, quality, and scope.

● Key Performance Indicator (KPI): This measures changes in the use of the EPM system and support received from functional management and senior management.

● Business Unit Impact: This is measured by customer satisfaction as a result of the implementation of best practices and/or future business opportunities.

The measurement at level 4 is usually accomplished by the PMO. There are several reasons for this. First, the information may be company sensitive and not available to the instructor. Second, since there may be a long time span between training and the

Level 3: Application of

Knowledge

Level 4: Business Impact

Project objectives Mission

Customer satisfaction

Functional support

Methodology

Time Cost Quality Scope

Executive support

Performance Analysis

Business opportunity

Business units [future]

Processes/ methodology

[KPI]

Deliverables [CSF]

Project measures

Figure 11–2. Postmortem pyramid. Source: From H. Kerzner, Advanced Project Management: Best Practices in Implementation, 2nd ed., Hoboken, NJ: Wiley, p. 302.

Data Analysis Life-Cycle Phase 483

implementation of best practices, the instructor may not be available for support. Third, the company may not want anyone outside of the company talking to its customers about customer satisfaction. Although the implementation of best practices may have a favorable business impact, care must be taken that the implementation was cost effective.

As shown in Figure 11–1, an important input into level 4 is isolate the effects of training. It is often impossible to clearly identify the business impact that results directly from the training program. The problem is that people learn project management from multiple sources, including:

● Formal education ● Knowledge transfer from colleagues ● On-the-job experience ● Internal research on continuous improvements ● Benchmarking

Because of the difficulty in isolating the specific knowledge, this step is often overlooked.

11.6 DATA ANALYSIS LIFE-CYCLE PHASE

In order to calculate the ROI, the business impact data from level 4 must be converted to a monetary value. The information can come from interviews with employees and managers, databases, subject matter experts, and historical data. Very rarely will all of the information needed come from one source.

Another input required for data analysis is the cost of the training program. Typical costs that should be considered include:

● Cost of course design and development ● Cost of materials ● Cost of the facilitator(s) ● Cost of facilities and meals during training ● Costs of travel, meals, and lodgings for each participant ● Fully burdened salaries of participants ● Administrative or overhead cost related to the training course or approach of par-

ticipants to attend training ● Possible cost (loss of income) of not having the participants available for other

work during the time of training

Not all benefits can be converted to monetary values. This is the reason for the “iden- tify intangible benefits” box in Figure 11–1. Some business impact benefits that are easily converted to monetary values include:

● Shorter product development time ● Faster, higher-quality decisions

484 MEASURING RETURN ON INVESTMENT

● Lower costs ● Higher profit margins ● Fewer resources needed ● Reduction in paperwork ● Improved quality and reliability ● Lower turnover of personnel ● Quicker implementation of best practices

Typical benefits that are intangible and cannot readily be converted to monetary value include:

● Better visibility and focus on results ● Better coordination ● Higher morale ● Accelerated development of managers ● Better project control ● Better customer relations ● Better functional support ● Fewer conflicts requiring some management support

Despite the fact that these benefits may be intangible, every attempt should be made to assign monetary values of these benefits.

Two formulas are required for completion of level 5. The first formula is the BCR, which can be formulated as

BCR = Program benefits

program costs

The second formula is the ROI expressed as a percent. The formula is based upon “net” program benefits, which are the benefits minus the cost. Mathematically, we can describe it as

ROI = net program benefits

program costs × 100

To illustrate the usefulness of this level, we consider three examples all based upon the same training course. You attend a two-day seminar on best practices in project manage- ment. Your company’s cost for attending the course is:

Registration fee $ 475 Release time (16 hr at $100/hr) 1,600 Travel expenses 800

$2,875

Level 5: Return on Investment

Data Analysis Life-Cycle Phase 485

When the seminar is completed, you come away with three best practices to recom- mend to your company. Your company likes all three ideas and assigns you as the project manager to implement all three best practices. Additional funds must be spent to achieve the benefits desired.

Example 1

During the seminar, you discover that many companies have adopted the concept of paper- less project management by implementing a “traffic light” status-reporting system. Your com- pany already has a web-based EPM system but you have been preparing paper reports for status review meetings. Now, every status review meeting will be conducted without paper and with an LCD projector displaying the web-based methodology with a traffic light display beside each work package in the work breakdown structure.

The cost of developing the traffic light system is:

Systems programming (240 hr at $100/hr) $24,000 Project management (150 hr at $100/hr) 15,000

$39,000

The benefits expressed by monetary terms are:

Executive time in project review meeting (20 hr per project to 10 hr per project × 15 projects × 5 executives per meeting × $250/hr): $187,500 Paperwork preparation time reduction (60 hr/project × 15 projects × $100/hr): $90,000 Total additional benefit is therefore $275,500:

BCR = $275,000 − $39,000

$2875 = 82

ROI = $275,000 − $39,000 − $2875

$2875 = 8109

This means that for every dollar invested in the training program, there was a return of $8,109 in net benefits! In this example, it was assumed that workers were fully burdened at $100/hr and executives at $250/hr. The benefits were one-year measurements and the cost of developing the traffic light system was not amortized but expensed against the yearly benefits.

Not all training programs generate benefits of this magnitude. Lear in Dearborn, Michigan, has a project management traffic light reporting system as part of its web-based EPM system. Lear has shown that in the same amount of time that it would review the status of one project using paper, it now reviewed the status of all projects using traffic light reporting.

Example 2

During the training program, you discover that other companies are using templates for project approval and initiation. The templates are provided to you during the training program and it takes a very quick effort to make the templates part of the EPM system and inform

486 MEASURING RETURN ON INVESTMENT

everyone about the update. The new templates will eliminate at least one meeting per week at a savings of $550:

Benefit = ($500/ meeting) × (1 meeting/week) × 50 weeks = $27,500

BCR = $27,500

$2875 = 9.56

ROI = $27,500 − $2875

$2875 = 8.56

In this example, for each $1 invested in the best practices program, a net benefit of $8.56 was recognized.

Example 3

During the training program, you learn that companies are extending their EPM systems to become more compatible with systems utilized by their customers. This should foster bet- ter customer satisfaction. The cost of updating your EPM system to account for diversified customer report generators will be about $100,000.

After the report generator is installed, one of your customers with whom you have four projects per year informs you they are so pleased with this change that they will now give you sole-source procurement contracts. This will result in a significant savings in procure- ment costs. Your company typically spends $30,000 preparing proposals:

BCR = (4 projects × $30,000) − $100,000

$2875 = 6.96

ROI(%) = (4 × $30,000) − $100,000 − $2875

$2875 = 5.96

In this case, for every dollar invested in the best practices program there was a net benefit of $5.96 received.

To date, there have been very few attempts to measure ROI specifically on project management education other than work done by Phillips. However, there have been some successes. In an insurance company, a $100 million project was undertaken. All employees were required to undergo project management training prior to working on the project. The project was completed 3 percent below budget.

Unsure of whether the $3 million savings was due to better project management edu- cation or poor initial estimating, the company performed a study on all projects where the employees were trained on project management prior to working on project teams. The result was an astounding 700 percent return on training dollars.

In another organization, the HRD people worked with project management to develop a computer-based project management training program. The initial results indicated a 900 percent ROI. The workers took the course on their own time rather than company time.

Conclusions 487

Perhaps this is an indication of the benefits of e-learning programs. The e-learning programs may produce a much higher ROI than traditional courses because the cost of the course is significantly reduced with the elimination of the cost of release time.

11.7 REPORTING LIFE-CYCLE PHASE

The final life-cycle phase in Figure 11–1 is reporting. The acceptance of the results could very well be based upon how the report is prepared. The report must be self-explanatory to all target groups. If assumptions are made concerning costs or benefits, then they must be justified. If the ROI numbers are inflated to make a training program look better than it was, then people may be skeptical and refuse to accept the results of future ROI studies. All results should be factual and supported by realistic data.

11.8 CONCLUSIONS

Because of the quantity and depth of available project management training programs, the concept of measuring ROI on training dollars can be expected to grow. Executives will recognize the benefits of this approach and its application to project management the same way it is applied to other training programs. Project management training organizations will be required to demonstrate expertise in ROI analysis. Eventually, PMI might even establish a special investigation group on ROI measurement.

489

12 The Project Office

12.0 INTRODUCTION

As companies begin to recognize the favorable effect that project management has on profitability, empha- sis is placed upon achieving professionalism in project management using the project office (PO) concept. The concept of a PO or project management office (PMO) could very well be the most important project management activity in this decade. With this recognition of importance comes strategic planning for both project management and the project office. Maturity and excellence in project management do not occur simply by using project management over a prolonged period of time. Rather, it comes through strategic planning for both project management and the PO.

General strategic planning involves the determination of where you wish to be in the future and then how you plan to get there. For PO strategic planning, it is often easier to decide which activities should be under the control of the PO than determining how or when to do it. For each activity placed under the auspices of the PO, there may appear pockets of resistance that initially view removing this activity from its functional area as a threat to its power and authority. Typical activities assigned to a PO include:

● Standardization in estimating ● Standardization in planning ● Standardization in scheduling ● Standardization in control ● Standardization in reporting ● Clarifi cation of project management roles and responsibilities ● Preparation of job descriptions for project managers

490 THE PROJECT OFFICE

● Preparation of archive data on lessons learned ● Benchmarking continuously ● Developing project management templates ● Developing a project management methodology ● Recommending and implementing changes and improvements to the existing methodology ● Identifying project standards ● Identifying best practices ● Performing strategic planning for project management ● Establishing a project management problem-solving hotline ● Coordinating and/or conducting project management training programs ● Transferring knowledge through coaching and mentorship ● Developing a corporate resource capacity/utilization plan ● Supporting portfolio management activities ● Assessing risks ● Planning for disaster recovery ● Auditing the use of the project management methodology ● Auditing the use of best practices

In the first decade of the twenty-first century, the PO became commonplace in the corporate hierarchy. Although the majority of activities assigned to the PO had not changed, there was now a new mission for the PO:

● The PO now has the responsibility for maintaining all intellectual property related to project man- agement and to actively support corporate strategic planning.

The PO was now servicing the corporation, especially the strategic planning activities for project management, rather than focusing on a specific customer. The PO was transformed into a corporate center for control of project management intellectual property. This was a necessity as the magnitude of project management information grew almost exponentially throughout the organization.

During the past 15 years, the benefits to executive levels of management of using a PO have become apparent. They include:

● Standardization of operations ● Company rather than silo decisionmaking ● Better capacity planning (i.e., resource allocations) ● Quicker access to higher-quality information ● Elimination or reduction of company silos ● More effi cient and effective operations ● Less need for restructuring ● Fewer meetings that rob executives of valuable time ● More realistic prioritization of work ● Development of future general managers

All of the above benefits are either directly or indirectly related to project management intellectual property. To maintain the project management intellectual property, the PO must maintain the vehicles for

Introduction 491

capturing the data and then disseminating the data to the various stakeholders. These vehicles include the company project management intranet, project websites, project databases, and project management infor- mation systems. Since much of this information is necessary for both project management and corporate strategic planning, then there must exist strategic planning for the PO.

The recognition of the importance of the PMO has now spread worldwide. Enrique Sevilla Molina, formerly Corporate PMO director for Indra, states:

We have a PMO at corporate level and local PMOs at different levels throughout the company, performing a variety of functions. The PMO at corporate level provides directions on different project management issues, methodology clarifications, and tool use to local PMOs.

Besides supporting the local PMOs and Project Managers as requested, the main functions of the cor- porate PMO include acting on the following areas:

● Maintenance and development of the overall project management methodology, including the exten- sions for Program and Portfolio levels

● Defi nition of the training material and processes for the PMs ● Management of the PMP certifi cation process and candidates training and preparation ● Defi nition of the requirements for the corporate PM tools

The Corporate PMO reports to the financial managing director. A typical PMO does not have profit and loss responsibility on projects, nor does a typical PMO man-

age projects for external clients. According to Jim Triompo, group senior vice president at ABB:

The project office does not deliver projects. The projects managed by the project management office are limited to process/tools development, implementation, and training. The project management office is sometimes requested to perform reviews, participate in division-level risk reviews, and operational reviews in various countries.

Most PMOs are viewed as indirect labor and therefore subject to downsizing or elimination when a corporation is under financial stress. To minimize the risk, the PMO should set up metrics to show that the PMO is adding value to the company. Typical metrics include:

● Tangible measurements include:

● Customer satisfaction ● Projects at risk ● Projects in trouble ● The number of red lights that need recovery, and by how much added effort

● Intangible elements may also exist and these may not be able to be measured.

● Early-on identifi cation of problems ● Quality and timing of information

492 THE PROJECT OFFICE

12.1 BOEING 1

Not all companies use the term Project Management Offi ce. In some companies it is also call a Community of Excellence or a Community of Practice. Every company has their own unique goals and objectives for a PMO. As such, the responsibilities of the PMO can vary from company to company. The following information on Boeing was provided by Kerry Braafl at – Boeing Executive Sponsor for Project Management; Stephen Markgraf – Leader Boeing Enterprise Project Management Offi ce; Scott Sears – Leader Boeing Project Management Community of Excellence; Christine Baker – Prior Leader Boeing Project Management Community of Excellence; and Sherry Kytonen –Boeing Senior Portfolio Project Manager:

The Boeing Enterprise Project Management Offi ce sponsors a Project Management Community of Excellence (PjMCoE) that exemplifi es Project Management best practices and promotes the Project Management disciple across The Boeing Company.

A Community of Excellence (CoE) within Boeing is a formally chartered group that functionally aligns with at least one business organization, has enterprise representation, and is committed to business engagement, knowledge sharing and application across the entire Boeing Company.

The PjMCoE operates as a voluntary interest group with more than 5,400 active Boeing members and is one of the largest interest groups within Boeing. The PjMCoE started out in 1997 as an informal Project Management interest group that included only 75 members. The purpose of the PjMCoE can be described as having the responsibility to lead and man- age a Boeing-wide forum for increased awareness of the skills, discipline and profession of project management. The PjMCoE is foundational to project management success at Boeing and provides the following services to both its members and the business:

● Provide a Forum of Networking, Collaboration & Support ● Provide Project Management Mentoring, Coaching & Training ● Host Annual PMP ® Study Group ● Assist Hiring Managers ● Provide Project Managers and Project Teams with available Resources

The PjMCoE has its own Steering Team with defi ned responsibilities that support CoE products and services and is representative across all Boeing operating groups and sites. The Steering Team is foundational to the achievement of the CoE charter, facilitation of regular meetings, oversees operation of an effective management information system, ensures all engagement requests receive a response, and notifi es aligned organizations when contacted by project teams, programs or functions with requests for support.

In support of the continued development of the project management skill, the PjMCoE provides support to its members by offering the following:

● Libraries containing Project Management–related books, periodicals, methodolo- gies, software, periodicals and presentations

● SharePoint and web site with regional chapter information and news

Philips Healthcare Software Customer Services 493

● Knowledge centers providing mentoring and coaching services and information on Project Management certifi cations and degrees

● An annual PMP ® study group hosting 16 live and recorded training sessions and lessons learned to assist in preparing for the PMP ® exam. The fi rst PMP ® study group started in 2000 and has had a 95% pass rate for those who actually took the PMP ® exam. By 2013 the PMP study group kick-off meeting had more than 400 employees in attendance

● Assistance for managers seeking to hire or promote Project Managers ● Bi-monthly WebEx meetings hosting guest speakers and offering Professional

Development Units used toward accreditation ● Annual Project Management Conference and Expo attracting Boeing employees

and contractors from around the world

PjMCoE maintains a strong ongoing relationship with PMI and is a registered PMI Education Provider. As such, the PjMCoE provides bi-weekly training events to its mem- bers, provides instructors to support the delivery of Boeing specifi c project management classes and offers other ad-hoc training offerings that provide Boeing employees with an opportunity to obtain Professional Development Units towards the re-certifi cation on their PMP ® certifi cations. Training modules in MS Project, Milestones Professional and Risk, Issue and Opportunity Management, Leadership, Communication and Virtual Team Management are also available. In 2012 alone, the PjMCoE provided training to more than 10,000 employees by offering more than 15,000 hours of training opportunities.

Many employees take advantage of the Mentoring and/or mentee and consultations services to assist them in career development and project management skills. Mentoring also provides visibility of opportunities for both managers and employees.

In 2013 the PjMCoE will be partnering with Boeing ’s Global Corporate Citizenship team to identify volunteer opportunities for Project Managers to support community ser- vice projects.

12.2 PHILIPS HEALTHCARE SOFTWARE CUSTOMER SERVICES 2

Michael Bauer, head of the Global PMO at Philips Healthcare Software Customer Services, describes how the PMO supports a global operat- ing clinical informatics solutions business to reach Project Management Excellence.

Philips Healthcare and Software Customer Services

Philips is a strong, diversifi ed health and well-being company, operating in all global geog- raphies. About 118,000 employees work in the three businesses Healthcare, Consumer Lifestyle and Lighting.

Project Management

Excellence with a Global

Project Management Office

(PMO)

494 THE PROJECT OFFICE

Philips Healthcare 3 provides meaningful innovations that improve the quality of care, enhance patients’ lives and enable the delivery of better outcomes at lower cost. Philips Healthcare operates in fi ve main business areas: Imaging Systems; Patient Care and Clinical Informatics (PCCI); Home Healthcare Solutions; Global Customer Services; and Healthcare Transformation Services.

Philips is a world leader in cardiology solutions, and has a strong presence in cardio- pulmonary, oncology and women ’s health. Philips helps clinicians diagnose, treat and manage today ’s most prevalent diseases such as congestive heart failure, breast and other cancers, respiratory and other coronary artery diseases as quickly, effectively and effi ciently as possible. The focus is on understanding the complete cycle of care—from disease prevention to screening and diagnosis through to treatment, monitoring and health management—and choosing to participate in the areas where Philips Healthcare can add signifi cant value. Philips Healthcare believes clinical excellence and continuous innova- tion around the patient experience can fundamentally change healthcare as we know it.

Patient Care and Clinical Informatics (PCCI) provides clinical informatics and patient care solutions that simplify clinician workfl ow, improve fi nancial outcomes, and help improve and save lives.

Philips Healthcare Software Customer Services (SCS) implements and supports clinical information solution projects in hospital organizations. Philips Healthcare SCS provides project management, implementation services and solution customer care to ensure superior customer experience across the entire solution life cycle. SCS is a global organization operating worldwide with a single focus—the successful implementation and customer care for Philips Healthcare Clinical Informatics solutions.

The Clinical Informatics solutions (based on highly confi gurable software products) offered are:

● Radiology PACS (picture archiving and communication system) and RIS (radiol- ogy information system) systems

● Cardiology PACS systems ● Cardiovascular information systems ● Intensive care, anesthesia and OB (obstetrics) care clinical information systems

The breadth of complexity in Clinical Informatics projects spans across:

● Standalone solutions in group practice or small departments ● Multiple applications across multiple departments ● Multi-hospital deployment ● “Greenfield” implementations across all modalities 4 and applications

Implementing Clinical Informatics projects is a local activity performed in each hos- pital organization in each country, often in the local language. SCS operates with both local and centralized resources. This global/local organizational design often leads to a

3. See as well http://www.healthcare.philips.com/main/ for more information.

4 . E.g., imaging modalities, like XR, MRI, CT.

http://www.healthcare.philips.com/main

Philips Healthcare Software Customer Services 495

virtual working environment with specifi c requirements to effi ciently run the projects. The requirements and maturity levels in each country/market and from each hospital customer greatly varies. Each project in a hospital is unique and varies in duration (from weeks to years), in size (up to multi-million euros/ dollars) and in complexity (from stand-alone solution for one clinician to regional distributed solution for thousands of users).

SCS has an awareness that each organization leaves an imprint with the customer, an experience made up of rational and emotional aspects which determines what Clinical Informatics customers associate with the Philips brand, what Philips means to them. This is especially pronounced in a services business. Customer experience 5 is at the heart of a relationship that translates into whether customers repeatedly rely upon the organization ’s capabilities and embrace them as a trusted advisor.

This fundamental understanding of the vital importance of customer experience—the way it is created and delivered—in forming the basis for continued business success and differentiation in the market has lead SCS to taking a holistic approach to customer experi- ence management. SCS has a vision and strategy based on customer experience and has shaped culture and operations to support the realization of this vision.

SCS applies this customer experience focused approach across the entire solution life cycle from the point in time the customers share their vision and mandate Philips with the realization, through solution implementation and post-go-live customer care. In this context, Project Management Excellence is a key strategic ingredient in ensuring SCS reliably and repeatedly delivers the desired customer experience. Hence, building and sustaining Project Management Excellence and reaching a high level of project manage- ment maturity with Clinical Informatics solution implementation projects is an adamant ambition of vital importance for both, the customer and Philips.

According to the Project Management Institute ’s 2012 Pulse of the Profession survey 6 only 73% of projects at organizations with high project management maturity meet their original business goals and intent. For Philips Healthcare Software Customer Services the ambitions for successful project implementation are high and require high project man- agement maturity for a Clinical Informatics business. This was the key strategic driver to implement a Global PMO. SCS uses the term Project Management Excellence with the focus on the following important aspects:

● People : Well educated, certified, skilled (hard, soft) and continuously trained project managers (and project teams) with a professional mindset, appearance and behavior. This also includes recruiting the best project manager talents. 7

● Processes : Highly effi cient, standardized, repeatable and well documented pro- cesses, which are continuously improved.

● Tools : Highly integrated and efficient tools, templates and applications from the project acquisition until the end of the project.

5. Sources for customer experience concepts: http://www.cxpa.org/ , http://www.temkingroup.com/ , http://www. beyondphilosophy.com/

6. Source: PMI ’s Pulse of the Profession March 2012, page 6.

7. See as well for importance of Project Management talent management: PMI ’s Pulse of the Profession In Depth Study: Talent Management , March 2013.

http://www.cxpa.org

http://www.temkingroup.com

http://www.beyondphilosophy.com

496 THE PROJECT OFFICE

Project Management Excellence is not seen as a static goal; the ambition is to con- tinuously raise the bar for project management maturity as well as oversee overall project management (PM) competencies and project delivery capacity.

Project Management Office

The establishment of a global Project Management Offi ce (PMO) was a clear strategic decision and has full support from top management to drive project management strategi- cally. 8 The PMO enables the ambition of Project Management Excellence , where the following aspects need to be highlighted:

● Project Management Excellence matters to SCS – key aspect to value and improv- ing skills, processes and tools.

● Change Management – identify, drive and implement improvements and changes in the organization.

● Standardization – enable standardized practices and processes across product domains and regions. 9

● Continuous learning – train, review and mentor as required. ● Facilitation of a PM Community of Practice – key aspect to enable to Share, Learn,

Leverage, Network and Communicate. 10

In building of the global Project Management Offi ce (PMO) the following conditions were considered:

1. PMO positioning: Senior experts in Project Management that guide the organization through changes towards Project Management Excellence with strong Change Management.

2. PMO focus: The PMO itself does not implement customer-facing projects in hospitals themselves but focuses on supporting the local project manager/project teams.

3. Project Management Consultant: Implementation of a dedicated senior subject matter expert role to provide consultancy for the project managers in all the countries. The aim of the Project Management Consultant position is to advance the project management processes, tools and methodologies to truly refl ect the ambitions of Project Management Excellence.

4. Project Support: Implementation of a dedicated operational project management process role to support operations, maintain the various platforms for information and knowledge sharing, train on operational aspects.

5. PMO integration in operations and geographic regions: The Global PMO is highly linked to the project implementation organizations in the respective countries to enable close alignment. PMO Team members are located in various locations to allow for a truly global reach.

8. See as well for importance of strategic support of Project Management: PMI ’s Pulse of the Profession , March 2013, page 3.

9. “High-performing organizations are almost three times more likely than low-performing organizations (36 percent vs. 13 percent) to use standardized practices throughout the organization, and have better project out- comes as a result.” Source: PMI ’s Pulse of the Profession , March 2013, page 10.

10. See as well http://wenger-trayner.com/Intro-to-CoPs/ for more information about Community of Practice (CoP).

http://wenger-trayner.com/Intro-to-CoPs

Philips Healthcare Software Customer Services 497

Project Management Office Services Offering

All PMO services are positioned around the Project Managers. The Project Managers are central to all initiative areas and projects of the PMO, as shown in Figure 12–1 .

● The initiative area Skills and Competencies focuses on all aspects to train, edu- cate and certify the project managers (and project teams). This includes the fol- lowing services:

● Designing and maintaining the SCS Project Manager curriculum ● Organization of PMI PMP/CAPM 11 and Prince2 Foundation and Practitioner

certifi cation preparation training ● Organization of SCS specifi c training, conferences and webinars ● Mentoring of new project managers ● Creation of trainings around internal tooling/process/methodology ● Facilitation of best practices, lessons learned, knowledge sharing and management ● Talent management

11. PMI (Project Management Institute) Project Management Professional (PMP)/Certified Associate in Project Management (CAPM)

Figure 12–1. Project excellence pyramid diagram.

498 THE PROJECT OFFICE

● The initiative area Tools, Processes, Methodology focuses on all aspects to improve tools, processes and methodology. This includes the following services:

● Standardization of Project Management practices and processes ● Design of the SCS Project Management framework SUCCESS 2.0 ● Improvement of the IT system landscape related to project management ● Creation of templates (e.g., SOW, WBS, risk register) adapted to used method-

ologies and related business ● Support of all improvement by strong change management

● The initiative area Operations focuses on all aspects to ease the life of the project managers (and their managers) from an operational perspective:

● Support specifi c projects in trouble, project recovery, project health checks ● Support project operations on system landscape ● Maintain the platforms for information and knowledge sharing ● Train on operational aspects ● KPIs and reporting ● Standardized communications.

Project Manager Community of Practice

As mentioned the project managers are central to the PMO services, in particular the Community of Practice (CoP). A CoP has the following characteristics: 12

1. Shared domain of interest (project management) 2. Members are practitioners (project managers) 3. Engagement of the members in joint activities

The Global PMO supports and facilitates the CoP in close teamwork with a CoP core team. The latter consists of volunteering project manager practitioners from different geographic regions. The goal of the SCS PM CoP is to Share, Learn, Leverage, Network and Communicate among the project managers. Engagement in the CoP varies from very active contributing members to passive participation. In addition, the PM CoP is one way to reach out to the project managers to share information.

The exchange in the CoP itself helps build individual and group competencies, resolve problems and avoid re-inventing the wheel. The CoP itself also provides a feedback mechanism to the PMO to help enhance and develop its services and its future direction via various tools (e.g., with using polling technology, the CoP can advise on preferences and priorities). From the beginning, the project managers are involved actively and their voice is taken into account.

Activities include regular online meetings to exchange information on the key topics, support in the preparation of face to face training and conferences, as well as build new artifacts in creation of new content for a specifi c product domain or project management processes. Online CoP Meetings are a repeated success. It ’s the best way to get the instant feedback from the community for the community.

12. Source: http://wenger-trayner.com/Intro-to-CoPs/

http://wenger-trayner.com/Intro-to-CoPs

Philips Healthcare Software Customer Services 499

Processes

Within Software Customer Services standard processes and methodologies are used throughout the lifecycle of a project. Figure 12–2 gives an overview:

It shows how Philips Healthcare processes are structured, how PMI process groups are mapped and how the process frameworks overlap for smooth handoff between areas of responsibilities within SCS.

● Order Acquisition : Tight teamwork between sales and project management is highly important in Clinical Informatics solution projects following a defined Sales Bid Management process.

● Order Realization : SUCCESS 2.0 is the SCS project management framework supporting the right milestones, templates, acceptance, reporting, etc.—all consis- tent with PMI and Prince2 combined with best practices from clinical informatics. SUCCESS 2.0 is closely related to the Sales Bid Management Process and enables a smooth handoff to the Customer Care area.

● Customer Care : ITIL 13 is an industry best practice to set up a highly effi cient, state-of-the art IT services concept.

● Customer Experience : To make current customer experience visible at different project milestones and later in the customer care phase customers are invited at key touch points in the Software Customer Lifecycle to share their feedback with the SCS organization. The survey process continues beyond implementations and upgrades, with ongoing support and maintenance. Feedback received is evaluated

Figure 12–2. Overview of standard processes and methodology.

13. ITIL (IT Infrastructure Library) developed by the Office of Government in Commerce (OGC) in the United Kingdom.

500 THE PROJECT OFFICE

under the aspect of congruence with the desired customer experience, identifying room for improvement and also learning about strengths with regards to Project Management Excellence and later on Customer Care. This closed loop process is a highly effective approach and key characteristic of a continuously learning and improving organization.

An important takeaway is that the different processes are all inter-related and thus break the traditional silo approach. Communication and teamwork are some of the key aspects that prevailed during the defi nitions of these processes. Especially in a global organization like Philips Healthcare SCS it is important to implement, train and improve harmonized and standardized processes. It is also important that everyone speaks the same Project Management language and uses the same terms. This is one of the reasons why every SCS Project Manager needs to be PMP certifi ed (for the UK & Ireland it is Prince2 Foundation & Practitioner according to market needs), and is trained on the SUCCESS 2.0 Project Management framework and is at least ITIL Foundation certifi ed.

Key Takeaways for Global Project Management Excellence with a Global PMO

The key takeaways for achieving Project Management Excellence with a Global PMO could be summarized as follows:

● Project Management Excellence , even though it is not an absolute objective per se, it is considered a proactive way to anticipate and fulfill the needs of the Clinical Informatics Industry .

● Project Management Excellence is not a static objective. It requires continuous improvement around People, Processes and Tools .

● A PMO is a key enabler for Project Management Excellence where specifi c roles focus and setup is very important for the success.

● A Community of Practice of the Project Managers is a state-of-the art approach and a key and recognized best-practice to Share, Learn, Leverage, Network and Communicate together.

Process Harmonization and Standardization is highly important for the success of an organization operating globally. Tight integration in the upstream processes (e.g., sales, bid management) and downstream processes (e.g., customer care) are very important too. This has to be supported by solid change management and training activities.

12.3 maxIT-VCS 14

maxIT-VCS has a PMO, which serves as the “home” for all of our project management consultants. The PMO reports directly to our senior vice president, who reports to our CEO. The group is matrixed into our functional or practice specific divisions. The PMO

14. The material on maxIT-VCS was provided by Marc Hirshfield, PMP, Director, Project Management Office at maxIT-VCS.

maxIT-VCS 501

serves the company in two primary ways (internally and externally). Internally, we offer employees a career path into project management. This includes access to methodology, as well as standards and educational opportunities (i.e., PMI ’s PMP ® credential) that are solely focused on project management. Externally, we offer our customers services with respect to healthcare information technology project management. This includes certified project managers with expertise in the industry (average at VCS is 14 years). We also offer our customers support with methodology and the tools to build the foundation of a PMO via our PMO JumpStart solution. maxIT-VCS has provided project and program manage- ment support services to our customer base for approximately seven years.

maxIT-VCS decided to invest and create the PMO to meet both internal and external market demands. Internally, the PMO allows maxIT-VCS to offer a home and path for employees who want to focus solely on the career path of project management. It provided opportunities across different software vendor suites and offers a formal methodology and documented approach to running a healthcare IT initiative (project). Externally, it met the needs of our customer base who were looking for qualifi ed project managers to help sup- port their healthcare IT initiatives.

The biggest challenge with a PMO is following one methodology or standard across multiple initiatives which vary in size, scope and complexity. The key to success is mak- ing sure your PMO follows a consistent format, provides the tools needed to get the job done, but allows for scalability based on the individual PM ’s needs. A “one size fi ts all” mentality just does not work when running a PMO.

When we started the PMO at maxIT-VCS, we had full executive (principal) support. Everyone was on-board with the value in the practice and this fact alone lead to our suc- cess. As we all know, having executive buy-in and support is not only critical to a success- ful project, but also integral in building a PMO.

Not only is the role of a PM at maxIT-VCS considered a career path for our employ- ees, but it is one of our solutions. Most healthcare organizations we provide services to are still learning the true value and ROI of a project manager. Some early adopter organiza- tions that have invested and supported a PMO properly are seeing a large return on their investment. We have job descriptions for our project managers, which include levels one through three (three being our senior PM).

Heidi Wurtz, VP, Solution Center, maxIT-VCS states that:

maxIT-VCS, an SAIC company, continues to support a PMO as we work to integrate our com- bined management and strategic consulting services. The PMO resides within our Solutions Group, the management consulting arm of our integrated organization. The Solutions Group has defined a Portfolio Management initiative with a vision to support maxIT-VCS ’s effort to improve its portfolio and program management capabilities. It seeks to capture and integrate key project data (status, schedules, resource assignments, etc.) in a data warehouse and pres- ent needed information to managers with specific needs. This will provide a foundation for business intelligence across the entire organization, while eliminating or streamlining manual processes. The Portfolio Management Opportunity Summary includes:

● Optimize leadership and management time spent on internal program and project communications

● Provide a business intelligence environment for all levels of the organization to help manage programs and projects

● Standardized and focused key documentation for maxIT-VCS PM and PD engagements

502 THE PROJECT OFFICE

● Leverage data entered into a project management database ● Leverages intellectual property—archives documents and data for future use ● Support and standardize expectations of PMs, PDs and analyst roles across practices ● Identify those projects requiring management attention based on business criteria (stan-

dardizing Project Review process) ● Client quality review score will be included, supporting appropriate interactions with

clients, and obtaining critical data for ongoing improvement, proposals, and sales and marketing

12.4 AVIVA 15

Market Context

Aviva-Canada is one of the leading Property and Casualty insur- ance groups in Canada providing home, automobile, recreational vehicle, group and business insurance to more than three million custom-

ers. The Company is a wholly owned subsidiary of UK-based Aviva plc and has more than 3,000 employees, 25 locations and 1,700 independent broker partners. Aviva Canada and its employees invest in positive change, including through the Aviva Community Fund and Eva ’s Initiatives, 16 its partner in Aviva ’s global Street to School program to help homeless and other at-risk youth reach their potential. ( http://Avivacanada.com/content/member-companies .)

Industry Context

Business megatrends 17 have started to shape, and impact many industries. Customer ser- vice need for speed, increased transparency, and a personalized ability to track products and services is our present reality. As a result, the business megatrends translate to insur- ance megatrends (to all: General Insurance, Life, Health Care, etc.) where all are pressured to become more agile (increase productivity—do more with less), digitize the value chain (both vertically, and horizontally), and human capital management is even more important than ever (up skills and invest in the skills of the not so distant future). See Figure 12–3 .

We describe Aviva Canada ’s EPMO as market-driven type, operating in a hybrid-fed- erated model. Our structure and processes allow the function to better respond to, and sup- port an organization that focuses on profi table growth, and being continually more nimble and effi cient. Allowing for a dynamic approval of initiatives enable agility and nimbleness. As a result initiatives are submitted as the environment justifi es the investment (legal, regu- latory, response to a competitor or cost pressure, etc.) Our approach is to manage within

Structure

16. Eva is the name of the youth center Aviva Canada supports

17. Service 2020: Megatrends for the Decade Ahead , a BDO Report, written by the Economist Intelligence Unit, Summer 2011, 37 pp

http://Avivacanada.com/content/member-companies

Aviva 503

the total portfolio investment budget for the year (we set it at a % of revenue target) and this is supported by a strong expand and contract resourcing model providing fl exibility in human capital. Traditional EPMOs mostly operate where initiatives are submitted once a year (and bottom-up) during the budgeting and planning season, where tremendous effort is spent on selection, prioritization and forecasting demand and supply over the next 12–18 months. We do not believe in this approach; if the environment demands the business to respond then it must be presented for evaluation and decision—let ’s hear it! Our job is to then make it happen if approved—this is why we are here for: leading and facilitating enterprise-wide changes.

Leadership

A culture of leadership is a critical ingredient to a market-driven type EPMO. To continually strive for speed, effi ciency, adaptability and fl exibility each and every single person (and not just management) must be able to challenge status quo, bust bureaucracy as required, and make their approach fi t for purpose within the directional governance framework. Leading from the edge as opposed to within , or top down is how we partner and engage.

BHAG, 4 Pillars

To achieve an element of thrust and connection with everyone, a clear big, hairy, and auda- cious goal (BHAG) is set—a transformative statement that continually reminds everyone where we come from, what we are aiming for and by doing what. To achieve the envisioned future and bring focus into how we will do this, four pillars support the BHAG. A simple state- ment that connects with full time employees and contractors. This is shown in Figure 12–4 .

This might be seen as diffi cult to maintain in a market-driven model, but is quite the opposite. This is core to our decision-making for hiring (interviewees are asked about their initial reaction and comment on the spur of the moment), for continuous improvement ini- tiatives we should have (process and operations), for how we must behave internally and externally, and most importantly how we align with our stakeholders and customers. Each FTE is assigned to one of the pillars to embody and drive the change required.

Business Megatrends Customer Service

Need for Speed Time is the new

luxury

Increased Transparency

Bought by Social Media

Personalized and Track Services More and More Individualistic

Insurance Megatrends Become More Agile, Increase Productivity

Digitize Value Chain Vertical,Horizontal

Human Capital Management

Priorities

Profitable Growth Focus, Nimble,

Efficient

Figure 12–3. Business and insurance megatrends shaping priorities.

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Industry Leadership and Get-Together

To have employees and contractors alike to strive to be thought leaders, versatile (do what- ever it takes to get the job done even if not in the job description),we also recognized the team must be highly engaged and visible externally in various project management com- munities. To unlock the power of thought leadership, connecting, sharing and discussing challenges, few employees get together at least twice a year with our functional peers, from various industries. These half-day sessions are worth their value in gold for every organiza- tion, as cross-pollination of knowledge tried and true approach enable all of us to quickly disseminate key learning in each of our organization, and expand everyone ’s network. This also enables us to share our vision and approach, so that as staff and contractors change organizations part as their career, we try to shape what the future can look like. As of 2012, the most senior leaders connect with other EPMO leaders, then the same take place with our Enterprise Business Analysis practice, and Change Delivery and BPM practice.

Perfect example is also taking this opportunity in Kerzner ’s latest release. This is another platform to raise the thought leadership required to elevate such an important, core function in many organizations.

Human Capital

Solid Talent Management Review

Aviva as an organization focus is on its talent, and has a good talent management process and framework. In the EPMO function, we make sure every one person has his or her

Figure 12–4. IT strategy and change vision, BHAG and pillars.

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yearly objectives set, a personal development plan in place, and do have their monthly 1:1 with their respective line managers to discuss progress on their objectives and develop- ment. At the mid-year, the management team comes together and discusses all their staff and how they have been performing over time, and how their agility has been develop- ing. This is a great way for the EPMO SLT to hear about how their delivery staff is being perceived by the rest of the organization, in fact, critical feedback for the development of our staff. The line manager then provides that feedback back to their staff in the following monthly 1:1, where honest feedback is provided, and an action plan is put in place. An important process, as it also empowers the employee to rectify its trajectory between the mid year and end of year performance review, for where the same process repeats but this time to discuss year end performance for merit and bonus increase.

Clear Career Path

Career path is important, and every role does have a clear position profi le that describes its responsibilities, but also demonstrate how one person can move from a junior, to interme- diate, to senior role, and even laterally in other project or portfolio management roles and enterprise business analysis roles. All position profi les up to the vice president are made available to the staff.

Visible Training Plan

The training plan is a bottom-up view of all staff personal development plan, and top down view of what the management team also envision what some of the individuals or teams will require in the present year based on the direction and focus of the organization as a whole. No one is ever left behind, and we make the training plan visible, as we are serious when we say we invest in everyone. Our admin staff also goes through productivity tools and project management training, this is important for everyone to speak the same language.

Rewards and Recognitions

Rewards and recognition is also core and instrumental in making our team a success; in fact, a lot of what we do is learned and applied in other area of the organization. Celebration as part of project successes take place, rewards are given to individual and teams, and sometime simple “thank you cards,” movie passes or coffee cards go a long way when it is one of your peer that is just simply saying thank you. Contractors are con- sidered as much as part of the team as our full time employees; team unity and uniformity is core for us to become a world-class organization, and as such, everyone must feel they are the trusted partners of choice.

Project Assignment Supporting Career Growth

To support the last three points above on career pathing, training and reward and recog- nition, our tiered project governance model also ensures more junior staff can take full accountability and responsibility of small to medium size type initiatives that fi t their seniority. More will be discussed around this topic around this in the Functions and Operations sections.

Hire for Success

A lot is being written in this section, but that is because if there are no people, you sim- ply do not exist as a function within an organization. Therefore, people are the nucleus

506 THE PROJECT OFFICE

of success. To sustain this, we ensure our hiring managers look at both “the what, and the how” of a candidate. To ensure focus around these two areas, our people managers agree on who will focus on what before the interview takes place; remember, to become world-class there are no compromises on the quality of individuals we bring in; full time or contractors we follow the same process. Professional designations are a must (PMI, Prince2, CBAP) – if years of experience justify the hiring, we make sure the designation gap is closed within 12 months of hiring. Delivery or management type roles (up to the VP level), designations are a must. To be clear, we constantly re-enforce the message that operating in this space requires great energy and drive; individual and team contribution are important, and we do recognize not everyone can adapt to such an environment—we understand and make sure that we exit underperformers from the organization.

Role-based Onboarding Program

Once a candidate is selected, most organization would welcome the new team members on their start day and give them a tour around, meet their new key stakeholders, etc. Not us. Onboarding is serious business; nimbleness and speed start day 1. We have developed role-based onboarding profi les where it could take 1–2 weeks of learning based on the role and seniority. Everything is covered; BHAG and our four pillars, tools, process, gov- ernance, facilities/logistics, approval and decision-making process, organizational charts, etc. Investing 1–2 weeks upfront save you weeks of running around and ineffi ciencies, and worst, minimize potential costly mistakes as a result of just not knowing what is and what isn ’t. As simple as this might sound, we are always surprised to hear how much this is nonexistent in other organizations from new staff we bring onboard, but also ecstatic to always hear how great our onboarding program is.

Embedding and Cross-pollination

Finally, this section wouldn ’t be complete if we didn ’t close the loop on our hybrid- federated model. Federated because our tentacles are in every function of the organization through our project delivery, and when we do have large, complex, multi year programs in execution, we do want our people to change reporting lines, and in others, we maintain the internal capacity but offer a different service; we are hybrid and adaptive. In the feder- ated sense, we welcome secondment opportunities (input) and letting our best people go (output) because the in and out of staff further pushes the management and delivery across the organization, and in turn they coach and mentors others in this operating space; again, constantly driving toward enabling focus, nimbleness and effi ciencies in enterprise-wide delivery. Hybrid because it isn ’t a true federated model, but also because in some instances we developed a program team that only support a specifi c function (our Personal Lines)—a great opportunity for PMs and BAs to learn about the insurance business operations, and even consider a career change in the function. Again, we never consider this a lost, but a tremendous win-win for both functions, and the organization as a whole.

Functional Teams—Our Strategic Partnership Ecosystem

We have found the right mix of roles and functions required allowing to quickly expand and contract based on the market dynamics. As its core, our team (including management) is made of about 30 FTs, and

can easily be double in size based on portfolio load. The strength of our operation and

Function

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what enables us to be seen more and more as the strategic partner in change excellence is because of the breath of our unit that goes beyond traditional project, program and portfolio delivery. EPMO operates within the IT Strategy & Change function, where the following teams could be seen as leading from the edges, leading from the core, and a mix of the two—our true enterprise delivery system. See Figure 12–5 for IT Strategy & Change functional overview.

Leading from the Edges: ● IT Business Partnering: At two levels. At the fi rst level business partnering

we have senior managers where their role is to be a ‘triangular’ escalation point between project / program managers, functional leaders from the area they repre- sent (can be project or BAU related), or IT specifi c that might / might not include a 3 rd party. At the second level we have the most senior IT leaders appointed as a partner to the other largest functional areas (like Sales, Finance, Underwriting, etc.). Their role is to be the bridge between other EC members and their SLT to the CIO offi ce. The most senior leader in IT strategy and Change is appointed to Broker Distribution (Sales).

● IT Strategy / CIO Office: This section directly supports the CIO Office in man- aging all requests for information, Executive Committee and Board presentations, as well as ensuring a solid information and technology roadmap is in place that supports directly the strategic direction of the organization as well as answering the tactical priorities, mainly through its portfolio delivery.

Leading from the Core ● Portfolio management and delivery: This is the project management delivery

arm of Aviva ’s portfolio; this is where PCs, PMs and PgMgrs report into. This is also where our Project Management practice resides.

● Enterprise Business Analysis: Being an enterprise PMO requires a wide business speak transcending many functional areas – all BAs supporting the portfolio deliv- ery report in this function

● Portfolio Planning and Reporting: This team is the application owner of the proj- ect and portfolio management package, where the portfolio demand and supply

IT Strategy & Change

IT Business Partnering

IT Strategy / CIO Office

Portoflio Management & Delivery

Project Management

Practice

QA & Compliance

Enterprise Business Analysis

Portfolio Planning & Reporting

EPMO Finance

Change Delivery &

BPM

Figure 12–5. Aviva Canada ’s IT strategy and change functional overview.

508 THE PROJECT OFFICE

information reside. This team produces all the business intelligence information required to all various stakeholders; our portfolio performance, health and status is made visible to all 3,500 employees across the organization.

● EPMO Finance: We have a team of sr. project financial analysts (SPFAs), where each of them have a mix of projects to support; no PMs or program managers are left alone. We manage our portfolio like a mutual fund; project fluctuates up and down every month and we make ensure we do not burden the delivery manage- ment team with maintaining proper Cash and P&L views. We have professionals that do this for a living (just like PMs or BAs), and this ensures that proper finance standards are followed with our investment and reporting. This team also sup- ports the development and initial financial details of any business case, and works closely with respective functional finance business partners as required. Also it tracks all statement of work, and invoices as they come in to ensure they match the initial agreed commitment.

Leading in Both Spaces ● Project Management Practice Lead: Leading from the core and because of our

expand and contract model, contractors do need a lot more coaching on how to navigate and work within our governance model. This is also where our project rescue function takes place—when things go wrong, we have someone who can quickly step in and work in partnership with the owners and delivery team to help bring things on track. In addition to leading from the edges, this area also owns the PMCoP (Community of Practice) where practitioners and functional leaders performing in a project manager role come together and discuss specifi c topics of interest and issues, and fosters an environment of networking with peers across the organization.

● Change Delivery and BPM: This area leads from the core where one needs to holistically understand all project interdependencies (schedules, resources) and in using this viewpoint, actively defi nes initiatives to continuously optimize the deliv- ery channel and also have business process re-engineering work based on project assignments (mostly when it involve transformational type work in nature). Leading from the edge where external interdependencies must be understood (we all know about BAU type initiatives) during the initiate and plan phase, so that a sound schedule is put in place. Business process re-engineering also take place outside of the portfolio of projects, mostly supporting strategic and IT business partners as required when ineffi ciencies are encountered in various areas of the organization.

● QA and Compliance: This isn ’t a policing function, but an enablement function to expedite and provide simple directions to what is next from a governance per- spective, or whom should be contacted based on where you are in the lifecycle. This function is also accountable to maintain all lifecycles (PMLC, SDLC, Agile, Iterative, Waterfall, and Hybrid). This team support specific projects, and will partner with various areas of the organization where functional leaders might need help to navigate the technology delivery landscape.

The strength of our model is that we are part of the decision-making process, we sup- port all direct reports to respective EC members through our partnership model, we are a

Aviva 509

key link between various functions and portfolio delivery teams, we also help shape and support the strategic development of future investments, and leverage every single asset existing in Aviva ’s value chain to ensure delivery success. This is what we defi ne as our enterprise delivery engine (See Figure 12–6 ):

Operating within this model is quite unique; we get to be exposed to the breadth and depth of the organization, and have a wide network of relationships and connections that break silo thinking. The challenge of any EPMOs is to feel they are one team. The nature of the work we do is to constantly dispatch the work request across the entire organization; when an initiative is approved, you then get assigned to work with the sponsor and owner of a function, bring people together and get the job done. Unless it is a really large project or program, you would get to work with a few key members, but otherwise, only small pods of the EPMO get to work together at any point in time. As a result, it is important to constantly perform team-building activities, and even though there is a functional structure in place, it wouldn ’t be complete if we didn ’t talk about the activities that are the glue to this function:

● Monthly PM/PC meetings: This is when all project managers and coordinators get together and discuss their initiatives and struggles; it ’s amazing to see how much dependency can exist between teams (resources, system promotion win- dows, vendor requests), and how others are willing to support and help each other. Creating an awareness of what else is in the pipeline through a simple roundtable achieve a lot.

● Quarterly Departmental Meetings: it is important to bring the department together once a quarter to discuss the latest top down news, decisions, org changes,

Figure 12–6. Enterprise delivery model and interactions.

510 THE PROJECT OFFICE

rewards and recognitions, and discuss any hot topics. These updates and discus- sions are critical because these teams must continually navigate through the orga- nizational landscape.

● Social Committee/Get Together: In the summer nothing better than inviting everyone for a late afternoon refreshments—it allow everyone to disconnect and get to know each other outside the corporate walls

● Corporate Social Responsibility: We like to mix fun, team get together, and impacting our community at all at once. Aviva allow each employee to give 15-hr/ year in helping the communities we live and work in. We take this seriously, and make it a part of our personal objectives. Every year we raise a few thousand dol- lars and do work (local youth organization, tree planting, etc.).

● Continuous Optimization: Every year we deliver between 10 and 20 continuous improvements initiatives for our area alone. Adaptation is key, and our EPMO is in constant fl ux to always better respond to the need of the organization. Therefore, we make sure to include this in everyone ’s objectives and ensure that all contribute to make this a better, fl exible place to work in.

● Quarterly Roundtable with PMs/PCs: When many projects are on the go, at var- ious stages of the lifecycle, it is important our project managers come together and share with their peers about their initiative and struggles. This cross-pollination of information sharing elevates the organizational awareness of all change initiatives, but more importantly, help identify interdependencies between projects.

Governance: A Partnership Model

Our model is about enabling the organization to be focused, nimble, [and] effi cient and provide the speed to market required. Therefore, we understand that our governance cannot be about control and policing, but rather being fi t for purpose and delivering agility. To achieve such,

our lifecycle is: business speak (proposal, initiate, plan, execute, closeout), nimble and self-served (we have 3-tier governance), adaptive (waterfall, iterative, agile, hybrid), agile and effective (5 phases, 5 gates, 3 approvals). See Figure 12–7 .

Business Speak

This looks a lot like PMI ’s proposed lifecycle at the macro level and this is true. Aviva Canada being in North America coupled with our expand-contract resource operating model and hiring practices, we want to make sure our project management professionals (PMI or Prince2) can quickly grasp our organizational blueprint in a language they are all familiar with. This also applies to any new senior management joining the organization who becomes either a Project Owner or Executive Sponsor.

Self-Served and Tiered Governance

Not one size fi ts all. Speed to market, ensures two things: the organization is enabled to lead and manage their own small to medium-size initiatives and allows those ini- tiatives to move quickly through the organization by requiring less bureaucracy and

Operations

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approvals regardless of who is leading it. This is supported by a self served governance assessment (as EPMO mostly lead and manage the large, complex, transformative type initiatives). Our self-served governance assessment is completed by check boxes, where we ask simple questions around performance (expected duration, team size, value) and complexity (strategic value, business risk, business and customer impact, technical risk, technical impact). The output will indicate if the project should navigate the organization in a light, medium or full governance approach. Now if we tie this back to our Human Capital section around career paths and development, this ensures our most senior delivery personnel are assigned to the most complex and large type initiatives, and also gives the opportunity to our junior staff to lead and manage small to medium-size initiatives, having P&L accountability relevant to their career experience and maturity. See Figure 12–8 .

Self-Served and Adaptive

No one size fi ts all, and no one delivery approach fi ts all. We ensure the delivery meth- odology applied to the initiative is also fi t for purpose, to ensure maximum delivery throughput to achieve the desired outcomes and realize benefi ts as soon as possible. As such, a self-serve model is also used here. We use ten simple questions to help determine if the delivery methodology should be waterfall, iterative, agile or hybrid. Respective process fl ow maps are integrated within the PMLC; therefore, once the delivery method- ology is identifi ed, one simply needs to pull the chart and follow the process fl ow steps. See Figure 12–9 for an example of our self-served project methodology selection and see Figure 12–10 for an example of how we map our iterative workfl ow within our planning stage of our lifecycle.

Agile and Effective—Portfolio Management

Having a great tiered governance approach, supported by multiple fi t for purpose delivery models will only get you so far until the senior management has full transparency and

Figure 12–7. Aviva Canada ’s adaptive, flexible and market-driven lifecycle.

512 THE PROJECT OFFICE

visibility into the portfolio. Strategic directions and decisions are made at the top; there- fore, the knowing-doing translation starts right at the Executive Committee table. It is criti- cal that right at that table we have a simple defi nition of a project (to remove the BAU vs. project stigma) and all agree on new change investments required, and are clear on present progress, status and health of the portfolio.

Back in 2010, our CEO endorsed and published from the Executive Offi ce what is the defi nition of a project.

Figure 12–8. Self-served governance assessment.

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A simple defi nition all employees understand. To support our relentless focus on execution and alignment, part of this published defi nition is that no work should be done on projects that are not listed in the portfolio. If an employee is requested to work on an initiative not listed on the portfolio, the employee needs to escalate with their respective line manager (we publish our portfolio on the intranet, every month). See Figure 12–11 for Aviva Canada ’s project defi nition.

Figure 12–9. Self-served project methodology selection.

Figure 12–10. An example of iterative workflow planning stage within PMLC.

514 THE PROJECT OFFICE

No Hidden Iceberg

As per our lifecycle, anyone that has an idea can submit it, by using our Initiative Proposal template. Simple information is asked to help shape the idea and bring consistency to how ideas are presented for funding approval. See Figure 12–12 to see the simple steps.

This simple process ensure that all projects are fi rst vetted with their respective Executive, so that it can be validated right away if this is considered a priority or not. From there and if their Executive approve, it is submitted to our CIO to ensure high level IT estimates (order of magnitude) include all the components required. Once validated by the CIO, we submit for the next Executive Committee meeting where the respective EC member will present and gain the EC approval. During that meeting, decisions are made on classifi cation (run transform, grow), priority level (P1, P2 or P3 bucket), funding type (Corporate, Business), and who should be leading this (EPMO, Business). We then com- municate the decision.

ARM—Assess Resource and Methodology

Every month we have a 30-min timeslot scheduled at the EC meeting for any Initiative Proposal approvals (if any) and to review the portfolio ’s health and fi nancial status. We learned from experience that once an initiative is approved, everyone wants to start right away; but yet assignment of resources by various line managers has not yet taken place. To expedite from the approval to resourcing so we can start our Initiate stage and choose the right delivery methodology, we have scheduled ARM meetings one business day follow- ing the EC meeting so that line managers come together to review the approved proposal and then identify their appropriate lead assignment (who ’s the best fi t and based on supply available). The immediate effect is that all respective managers are in synch about what are the initiatives and know who and by when they need to provide resources. This setup has provided us with a faster launch approach.

Figure 12–11. Aviva Canada ’s project definition.

Figure 12–12. Adding a project to Aviva Canada ’s portfolio—initiative proposal and approval workflow.

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One Version of the Truth, Status and Health of the Portfolio

The second piece we review at the EC meeting is the fi nancial health of our portfolio. All projects are classifi ed by Run, Transform or Grow. This enables us to keep a check on priorities alignment and where we need to bring focus or re-balance when required. In addition, every functional leader at the top know exactly how their change investment portfolio is progressing. See Figure 12–13 .

Company-Wide Visibility and Transparency

Once we close the month end status reporting and fi nancials, our portfolio team produces relevant monthly dashboards that get published on our intranet, and a link is sent to all Aviva Canada ’s management team (Sr. Manager and above). On our reporting landing page we update and publish our portfolio status including: projects by stage and gates (everyone is aware of what is coming, what is happening, and what is closing), how our projects and resources aligned against the strategic priorities of the organization, our overall risks and issues status, and resource demand and supply view by project, resource type and portfolio. See Figure 12–14 for an example of our resource demand and supply dashboard.

Customer-Centricity

The term “Customer” in a service department can have different meanings causing confu- sion or overlooking the true business customer. As strategic partners to the business we have expanded our understanding from our internal Business customer, to our external customer. This allows us to speak the same language as the business as it relates to a new product or service placement within a customer segment. For Aviva our Customer is our Brokers and in order to enable a foundational knowledge, we use a “Broker-On-A-Page” tool. The Broker-On-A-Page tools provides project teams and executives with a single snapshot of a specifi c customer segment, including critical success factors, desired interac- tion model and verbatims directly from the segment. This defi nes the segment distinctly to enable focused delivery. The Broker-On-A-Page tool is used as a vital decision-making tool to manage scope-creep and keep what is important top of mind. See Figure 12–15 .

Active Listening for Future Planning

Active listening requires comprehending key messages being sent to us by our stakehold- ers, peers, customers and market, and then acting upon them. Active listening is critical to

Figure 12–13. Example of our portfolio financial view.

516 THE PROJECT OFFICE

maintain a world-class EPMO which allows us to focus on “what matters” today and pro- actively plan and optimize for the future. This core competency has delivered several ideas which are at various stages of development for potential future deployment. For example, we are investigating the implications of a modernized relevant method of strategic think- ing based on scientifi c research of living systems. This self-enabled thinking method is

Figure 12–14. Example of one of the six dashboards: Resource demand and supply allocation.

Figure 12–15. Example of Broker-On-A-Page tool (or Customer-On-A-Page).

Churchill Downs Incorporated (CDI): Establishing a PMO 517

planned to support asking better strategic questions, further strengthening our decision making. Listening, understanding, sharing and responding to core messages from broad set of sources, internally and externally, powers the team to focus on what is important today, and while remaining forward-thinking.

12.5 CHURCHILL DOWNS INCORPORATED (CDI):

ESTABLISHING A PMO

Deciding to implement a PMO is easy. Being able to do it requires that certain obstacles be overcome. Chuck Millhollan, director of program management at CDI, discusses the chronology of events his organization went through and some of the obstacles that had to be overcome:

One of our primary barriers to implementing structured project, program and portfolio man- agement processes was “familiarity.” The Churchill Downs Incorporated PMO, chartered in April 2007, is the first in the thoroughbred horseracing industry. Our senior-most leadership understood the need for a structured, standardized approach to requesting, approving, and managing projects and maintaining the project portfolio; however, many of the organiza- tional resources had never been exposed to formal project management concepts.

Our executives took an active role in the implementation process. I would say this is one of the primary factors infl uencing the early success enjoyed by the

Churchill Downs Incorporated PMO. We chartered our PMO with clearly defi ned vision and mission statements and business objectives. Our CEO signed the charter, granting authority to the PMO to expend organizational resources as related to managing capital projects.

i. Our PMO was chartered in April 2007. ii. We developed a three-fold mission focused on the need identifi ed by our senior

leadership:

1. Establish, facilitate, and manage the project portfolio selection and funding process.

2. Create a foundation for consistent project success throughout the organization through development of a strong and pervasive Project Management discipline within CDI ’s project teams.

3. Guide key projects to a successful conclusion by providing project management leadership, while improving the quality and repeatability of related processes.

iii. We defi ned the PMO ’s business objectives and linked progress to the PMO Director ’s compensation plan. Objectives included:

1. Develop and Implement Standards for Project Selection. 2. Develop and Implement a Standardized Project Management Methodology. 3. Build Project Management Professionalism among CDI Staff. 4. Manage the CDI Project Portfolio. 5. Direct Project Management for Key Strategic Initiatives. 6. Ensure Processes for Benefi t Realization.

iv. We also conducted training classes on project management, team building, critical thinking, etc. . .. to not only share our knowledge, but also to build relationships with project team members and other stakeholders.

518 THE PROJECT OFFICE

v. The PMO has facilitated a book club (also chartered with clearly defi ned objectives) for the last year. This process received recognition throughout the organization and has directly contributed to developing relationships between different departments. Our Book Club membership includes representatives from 9 different departments, ranging from Vice President level members to individual contributors.

1. Objective 1: Personal growth through completing chosen books and active involvement in discussions.

2. Objective 2: Explore creative ideas and ways of addressing real-world business issues through practical application of concepts and shared learning as related to Churchill Downs and respective teams.

3. Objective 3: Promote interaction among different functional areas within the Churchill team by active participation in book club discussions and sharing opportunities for addressing real-world work-related issues in a safe, confi dential environment.

4. Objective 4: Share learning within respective teams through intradepartmental discussion and implementation of learning related concepts.

vi. The primary driving factors behind Churchill Downs Incorporated ’s decision to staff a PMO were challenges with defi ning and managing the scope of projects, effectively allocating resources amongst multiple projects, and brining projects to a defi ned closure.

12.6 CHURCHILL DOWNS INCORPORATED (CDI):

MANAGING SCOPE CHANGES

Mature PMOs either participate directly in the scope changes above a certain dollar level or set up processes for controlling scope changes. Chuck Millhollan, director of program management at CDI, identifi es six steps necessary for scope defi nition and change control 18 :

Trying to introduce any type of structure or control in an organization or environment that has been absent of controls can present a significant challenge. Before a project management organization can address scope

change control, they must implement a process to define scope. Getting organizational decision makers to accept the project management precepts is not overly difficult, but changing organizational behavior to leverage these principles is another matter altogether. The more change we attempt to introduce into an environment, the more difficulty that environment has in adapting to, accepting, and embracing that change. To avoid the natural resistance to excessive change, a logical approach is to limit the scope of change and focus on immediate needs. Focus on the foundation and basics. Why have a complex, highly mature process if you are not consistently performing the basics well?

The immediate need for an organization without processes for capturing the business objectives associated with project requests is to define a struc- tured approach for documenting, evaluating, and approving the prelimi-

Step 1: Be Lean

Step 2: Defi ne Preliminary

Scope

Churchill Downs Incorporated (CDI): Managing Scope Changes 519

nary scope of work. Note that approving the scope of work involves more than shaking heads, shaking hands, or a causal agreement on broad, subjective criteria. Approvals, in project management, imply documented endorsements More simply, signatures that pro- vide evidence of agreement and a foundation to build upon. It is important to emphasize to stakeholders and sponsors unfamiliar with our profession ’s structured approach to manag- ing projects that accepting a preliminary scope of work does not mean that you are locked in for the remainder of execution. Nothing could be farther from the truth. Instead, you are protecting their interests by beginning to set boundaries upon which effective planning can begin. In other words, you are increasing the probability (remember the research) that the project will be successful.

How do we know when we have arrived at a destination? When traveling, we know our trip is complete when we reach our intended destination. Likewise, we know that a project is complete when we have delivered on the business objectives identified in the project charter, right? Well, yes . . . and then some. The “and them some” is the focus of scope change

control. How does your organization define final sponsor acceptance? The recommended approach is to define sponsor acceptance for stakeholders using plain language. Sponsor acceptance is the formal recognition that the objectives defined in the original agreed upon scope of work have been met, plus the objectives agreed upon in all of the formally approved change requests. This plain definition helps to avoid the differing perceptions around what was wanted versus what was documented.

What is a change request? Some schools of thought suggest that changes are limited to requests for additional features, deliverables, or work. While this paper is focused on these types of change requests, or scope change requests, it is important to note that any change that has the potential to impact expec- tations should follow a formalized change request, approval, and communi- cation process. Remember, aggressively managing expectations is our best

opportunity to influence our stakeholder ’s perception of value. Scope, budget, schedules, and risks are typically interdependent and directly influence our stakeholder perceptions. Also, remember that the most effective change control processes include risk assessments that evaluate the potential risks of either approving or disapproving a change request.

Keep in mind that too much bureaucracy, too much analysis, or too much unnecessary paperwork will give stakeholders an incentive to circumvent your process. If you want your stakeholders to avoid, ignore or completely by-pass your process, include a great deal of administrivia. Administrivia is the new word for “trivial administrative process.” (As the author, I reserve the right to add to the English language.) Remember, our profession ’s focus is on delivery and business results, not just adherence to a predefi ned process. Taking a lean approach to scope change request documentation can help infl uence acceptance of this sometimes painful, but vital, process for capturing change.

Process tip: Determine early (either as an enterprise standard or for your specifi c project) what the tripwires and associated levels of authority are for approving a requested change. What level of change can be approved internally? For example, a change with an impact of less than one week schedule delay or budget impact of under $10,000 may be approved by the project manager. What needs to be escalated to the project sponsor, what needs to be reviewed by a change control board or governance council? Determining these decision points in advance can remove a great deal of the mystique around how to manage change.

Step 3: Develop

Understanding of What Final

Acceptance Means to Project

Sponsor or Sponsors

Step 4: Defi ne, Document,

and Communicate a

Structured Approach to

Requesting, Evaluating, and

Approving Change Requests

520 THE PROJECT OFFICE

Ensure that everyone understands the difference between the natural decomposition process and identifying new work that must be accomplished to deliver on a previously agreed upon business objective and work associated with new or modifi ed deliverables. Remember that omissions and errors in planning may lead to schedule and budget changes, but are usually not scope changes.

A great approach for defining all of the work required to complete a proj- ect is to start with the desired end state and associated expected benefits. What work is required to provide those benefits? What work is required to reach the approved end state goals (or business objectives)? Plan to the level of detail necessary to effectively manage the work. Decomposing

work packages beyond the level required for effective management is considered Administrivia. Note that defining and communicating the processes for final sponsor acceptance and requesting changes both come before traditional decomposition. Why? Terrific question! The natural planning processes that we follow in breaking down business objectives into definable work packages can be a catalyst for change requests. We want to communicate up front that change is not free and that additional requests will need to be formally requested, documented, agreed upon, and approved before being included in the project scope of work.

Your foundation is laid, you have documented the preliminary scope, you have defined processes for sponsor acceptance, you have defined and documented scope change request processes, and you have developed

your WBS, now the only thing left is to manage according to your policies and plan. Almost forgot . . . you have to manage the change requests that are guaranteed to come too! Scope change control protects the project manager, and the performing organization, from scope creep and contributes to managing stakeholder expectations.

A question that frequently comes up among practitioners is “what do I do when my leadership does not allow me to defi ne, document, and manage change?” This is a real, practical question that deserves a response. The instinctive approach is to communicate the necessity for a structured approach to documenting and managing scope. As our peers will confess, this is not always suffi cient to get the support we need to set organizational policy. We can attempt to implement these processes without formalization, or just “do it any- way.” This can be an effective approach for demonstrating the value, but can also be per- ceived as a self-protective measure instead of a process used to increase the likelihood of project success. People can be leery of someone else documenting requests, justifi cations, etc. . . for their needs. Ensure that you share the information and provide an explanation as to why this approach is designed to ensure you are managing to their expectations. In general, people have diffi culty not accepting altruistic approaches to meeting their needs.

Leveraging experience, best practices, and lessons learned, the Churchill Program Management Office began with the basics; they chartered their PMO. The three-fold mission of the newly founded PMO was to estab-

lish, facilitate, and manage the project portfolio selection and funding process; create a foundation for consistent project success throughout the organization through develop- ment of a strong and pervasive Project Management discipline; and to guide key projects to a successful conclusion by providing project management leadership, while improving the quality and repeatability of related processes. Sounds fairly standard, right? The

Step 5: Document and

Validate Full Scope of Work

(Create Work Breakdown

Structure)

Step 6: Manage Change

Learn from Other ’s Lessons:

A Real-World Application

Churchill Downs Incorporated (CDI): Managing Scope Changes 521

mission was then broken down into specific objectives and successful completion of these objectives was tied to the PMO Director ’s compensation.

1. Develop and implement standard processes for project requests, evaluation, and funding to ensure that approved projects were aligned with Churchill Downs Incorporated ’s business goals and objectives.

2. Develop and implement a standardized project management methodology, to include policy, standards, guidelines, procedures, tools and templates.

3. Build project management professionalism by providing mentorship, training, and guidance to project teams as they learn and adopt project management processes and best practices.

4. Manage the Churchill Downs Incorporated project portfolio by ensuring required documentation is in place and that stakeholders are properly informed about the ongoing progress of the project portfolio through effective reporting of key performance indicators.

5. Direct project management for key strategic initiatives. 6. Ensure benefi t realization by using processes for clearly defi ning business cases and

the associated metrics for measuring project success. Facilitate post-implementation benefi t measurement and reporting.

As related to change control, we wanted to ensure that the process was lean, that our stakeholders understood the importance of the process, and fi nally . . . arguably most important . . . communicated in a way that our stakeholders understood and could follow the change request processes. Here is a thought provoking question for our practitioners: “Why do we expect our stakeholders to learn and understand our vernacular?” To aid in understanding and training, we developed visual tools documenting our overall project management processes in a language that they understood. For example, the project “race track” (see Figure 4–10 ) demonstrated to our leadership and project team members what we, in our profession, take for granted as universally understood; that projects have a defi ned start, a defi ned fi nish, and require certain documentation throughout the planning and execution processes to ensure everyone understands expectations and that we will realize the intended benefi t from the investment.

For Churchill Downs Incorporated, scope change control begins with the foundation of a completed Investment Request Worksheet (or business case) and an agreed to scope of work as outlined in a signed charter. The work is then decomposed to a level of detail required to control the effort and complete the work necessary to deliver on the requested and approved objectives as detailed in that charter and approved scope change requests. A scope change request consists of a simple to understand, fi ll in the blank template, and the process is facilitated by the project manager. More important, the scope change request form is used to document the business objectives for a change request, the metrics needed to ensure the change ’s benefi ts are realized, the impacts on schedule and costs, the funding source, and the necessary approvals required for including the request in the overall scope of work.

Some of the benefi ts that Churchill Downs Incorporated has realized to date from this structured approach to documenting and controlling scope include:

1. Retroactively documenting scope for legacy projects, which resulted in canceling projects that were plagued with uncontrolled change to the point that the fi nal product would no longer deliver the benefi ts presented in the business case.

2. Denying scope change requests based on factual return on investment and impact analysis.

PMO Objectives Included

522 THE PROJECT OFFICE

3. Ensuring that requested scope changes would contribute to the business objectives approved by the investment council.

4. Empowering project team members to say “no” to informal change requests that may or may not provide a quantifi able benefi t.

5. Demonstrating that seemingly great ideas might not stand up to a structured impact analysis.

12.7 TYPES OF PROJECT OFFICES

There exist three types of POs commonly used in companies.

● Functional PO: This type of PO is utilized in one functional area or division of an organization such as information systems. The major responsibility of this type of PO is to manage a critical resource pool, that is, resource management. Many companies maintain an IT PMO, which may or may not have the responsibility for actually managing projects.

● Customer group PO: This type of PO is for better customer management and cus- tomer communications. Common customers or projects are clustered together for bet- ter management and customer relations. Multiple customer group POs can exist at the same time and may end up functioning as a temporary organization. In effect, this acts like a company within a company and has the responsibility for managing projects.

● Corporate (or Strategic) PO: This type of PO services the entire company and focuses on corporate and strategic issues rather than functional issues. If this PMO does manage projects, it is usually projects involving cost reduction efforts.

As will be discussed later, it is not uncommon for more than one type of PMO to exist at the same time. For example, American Greetings maintained a functional PMO in IT and a corporate PMO at the same time. As another example, consider the following com- ments provided by a spokesperson for AT&T:

Client Program Management Office (CPMO) represents an organization (e.g., business unit, segment) managing an assigned set of Portfolio Projects and interfaces with:

● Client Sponsors and Client Project Managers for their assigned projects ● Their assigned DPMO (see DPMO Roles and Responsibilities for contacts) ● Their assigned Portfolio Administration Offi ce (PAO) representative ● CPO-Resource Alignment (RA) organization Factories

The Department Portfolio Management Offi ce (DPMO) supports their client organi- zation ’s Executive Offi cer, representing their entire department Portfolio. It serves as the primary point of contact between the assigned CPMOs within their Client organization and the PAO for management of the overall departmental Portfolio in the following areas:

● Annual Portfolio Planning ● Capital and Expense Funding within portfolio capital and expense targets ● In Plan List Change Management and Business Case Addendums ● Departmental Portfolio Project Prioritization

Dell Inc. 523

The PMO is led by an Executive Director that is a peer to the line Project Management Executive Directors. All Executive Directors report to the Vice President— Project Management.

The functions of the PMO include: Defi ne, document, implement, and continually improve project management processes, tools, management information, and training requirements to ensure excellence in the customer experience. The PMO establishes and maintains:

● Effective and effi cient project management processes and procedures across the project portfolio.

● Systems and tools focused on improving effi ciency of project manager ’s daily activities while meeting external and internal customer needs.

● Management of information that measures customer experience, project performance, and organizational performance.

● Training/certifi cation curriculum supporting organizational goals.

12.8 DELL INC. 19

How Dell Services standardized on project management, and an over- arching PMO Framework, to support consistency in execution with reli- able, predictable, high-quality results for complex projects and programs, thus providing unified seamless delivery, enabling our customers to do more, through integrated, holistic, multi-service business solutions.

About Dell Services

Texas-based Dell Inc. is the world ’s No. 3 supplier of desktop and notebook PCs. Its technol- ogy products—including network servers, printers, data storage systems, and projectors— reach a global customer base. It also offers third-party software and hardware, as well as IT services. With more than 100,000 employees, Dell reported $62 billion in revenue for 2012.

A key business unit, Dell Services has 52,000 employees in more than 90 countries offering:

● Application services ● Managed services ● Cloud services ● IT support services ● Confi guration services ● Deployment services ● OEM services ● Information security services ● End-user computing

Increasing Efficiencies and

Improving Project Delivery

Quality through

Standardization and

Governance

524 THE PROJECT OFFICE

● Training services ● Enterprise consulting for data centers and for workloads ● Business process outsourcing

Created largely through the acquisition of Perot Systems in 2009, Dell Services sup- ports 95 percent of global Fortune 500 companies, 10 million small businesses, 400,000 classrooms, every G20 government, 200,000 physicians, 75,000 channel partners, and 60,000 retail locations

Dell Services PM3 Framework Evolution

For more than 28 years, Dell has empowered countries, communities, customers and people everywhere to use technology to realize their dreams. Dell is committed to deliver- ing the services, solutions and products customers need to drive their business goals and suit their lifestyles.

The Dell acquisition of Perot Systems in 2009 combined two iconic IT brands. The expanded Dell became better positioned for immediate and long-term growth and effi - ciency driven by: providing a broader range of IT services and solutions and optimizing how they ’re delivered; extending the reach of Perot Systems’ capabilities, including in the most dynamic customer segments, around the world; and supplying Dell computer systems to more Perot Systems customers.

In 2010, the Dell Services Business Unit President sponsored the launch of the Enterprise Project Management Standardization (EPMS) Program. In order to drive effi cien- cies and improve the overall customer experience in offering integrated, end-to-end, multi- service solutions for Dell ’s customers, it is imperative that the project teams demonstrate unifi ed, seamless, high-quality delivery. Over the past 3 years, the EPMS Program has been successful in achieving the ultimate goal, to establish a minimum standard for project man- agement practices to increase project management expertise, effi ciency, and effectiveness across Dell Services, ultimately increasing the success of global project delivery over time.

The EPMS Program team started with the best-in-existence project management com- ponents already contributing to operational success across the organization. Through col- laboration with representatives from all Dell Services’ segments and delivery teams across the globe, the Enterprise Project Management Standardization (EPMS) Program worked to establish one standard project management framework called the “PM3” ( P roject M anagement, P rogram M anagement, and P ortfolio M anagement). See Figure 12–16 .

The patented PM3 20 is the Dell Services Global Project Delivery Framework, which encompasses the Project and Program Management Framework, the Project Management Offi ce (PMO) Framework, and the internal Project Delivery Governance standards & processes.

The PM3 Project/Program Management Framework:

a. Addresses the people, process and tool aspects of project, program and portfolio management.

b. Is fl exible, scalable and applicable to any type of project.

20. US Patent 8,407,078 B1: Method of and System for Managing Projects, Programs and Portfolios Throughout the Project Lifecycle.

Dell Inc. 525

c. Is completely aligned to industry-recognized best practices from the Project Management Institute ’s A Guide to the Project Management Body of Knowledge ( PMBOK ® Guide ), as well as PMI ’s ® Standard for Portfolio Management.

d. Uniquely packages and integrates the methodology assets online, via SharePoint to help PM team members quickly and easily navigate the processes, templates and supporting toolkit, through a variety of user-friendly views.

The PM3 PMO Framework (See Figure 12–17 ):

● Focuses on portfolio-level standards, processes, tools and templates, addressing six standard PMO functions. These tools and processes, when properly applied, increase project delivery quality and effectiveness through better governance, overall support and leverage of best practices and lessons learned.

● Provides the standard processes, tools and templates to execute a group of standard functions that support business success through:

● Project Portfolio Governance ● Project Portfolio Management ● Portfolio Resource Management ● Portfolio Quality Management ● PMO Support for Project & Program Management ● PMO Organizational Planning, Design and Management

● Represents the portfolio management component of the PM3; It works within the PM3 Framework to provide a deeper organizational insight into all aspects of project execution both at the tactical and strategic levels. The PMO also helps to effi ciently allocate the resources among the ongoing initiatives and governs the projects from a strategic viewpoint, helping to increase alignment of project deliv- ery with the customer ’s strategic goals.

Processes

People

Tools

EPMS Program

Project Management Program Management Portfolio Management

The Dell Services Global Project Delivery Framework

Figure 12–16. The Dell service global project delivery framework.

Business Strategies

Approval and Prioritization

Portfolio Health Risk Change Requests

Project Categorization, Project Manager Certifications, Project Plan Certifications, Project Health Assessment

Project Portfolio Governance

Develop Strategic Business Drivers

Execute and Improve Governance Model

Manage Project Inventory & New Project Requests

Prioritize Projects for Execution

P or

tf ol

io Q

u al

it y

M an

ag em

en t

Manage, Analyze and Report

Project Portfolio Management

Portfolio Resource Management

Develop and Maintain Resource Capacity, Plan & Forecast

PMO Support for Project & Program Management

PMO Organizational Planning and Design

Develop Governance Model & Metrics

Plan PMO Organization

Develop PMO Organization

Assign Resources to Project Management Roles

Acquire PMO Staff

Manage PMO Organization

Project Scope Management

Project Time Management

Project Cost Management

Project Quality Management

Project Integration Management

Project HR Management

Project Communications Management

Project RAID Management

Project Procurement Management

Manage Project Change within the Portfolio

New Project Requests

Figure 12–17. PMO process fl ow.

526

Dell Inc. 527

● The PMO . . . ● Streamlines Project, Program and Portfolio Management effort and increases

project delivery quality and effectiveness. ● Provides data that can be applied to driving up project throughput, thus maxi-

mizing a customer ’s strategic gain for their investment. ● Is designed to accelerate organizational change management. ● Provides clear and effi cient lines of project leadership and authority for issue

escalation and resolution.

● Overall the Dell Services PM3 Framework contributes to operational excellence for both Dell and our customers by:

● Demonstrating unifi ed, seamless delivery to our customers, standardizing proj- ect management across integrated, end-to-end, multi-service solutions.

● Increasing likelihood of successful delivery, with proven, repeatable industry- aligned best practices.

● Providing continuous project performance monitoring & reporting, using quan- titative early warning metrics; proactively identifying & minimizing negative impacts which ultimately contributes to customer loyalty.

● Enabling project managers to grow and thrive through fl exible, cost-effective, industry-aligned training & certifi cation, providing on-going professional development and more clearly defi ned career paths.

Assuring Quality through Project Delivery Governance

Project Delivery Governance is the process and associated accountability framework to oversee, monitor and control global project delivery performance, as well as the compli- ance to the PM3 standards for project management.

The PM3 Project Delivery Governance process: ● Is applicable to both internal and external projects and programs. ● Is scaled appropriately based upon standardized Project Complexity Categorization

(PCC) –which scores each project based on a common questionnaire of size, com- plexity and risk factors.

● Includes responsibilities of the Account PMO, Business Line/Delivery Team PMO and/or Governance Leads, as well as the Services BU PMO. This standard also defi nes the role of the operations management in the governance of project delivery and how we all work together.

● Is accomplished through routine governance, reporting, quality assurance and quality control activities.

This governance process improves visibility of project performance at the Dell Services Business Line and Business Unit (BU) levels, as well as defi nes standards for performance measurements and reporting. Information reported as part of the governance process provides early warning and is used to trigger quality control, as well as interven- tion and remediation processes for underperforming projects.

528 THE PROJECT OFFICE

The scope of control for this Dell Services BU-wide governance process is: ● Global Project Delivery Performance ● Compliance to Project Management Standards

PM3 Project Delivery Governance Benefi ts include: ● Improves visibility of project performance across Dell Services. ● Provides continuous monitoring, early warning, identifi cation and inspection of

underperforming projects through timely, objective, quantitative performance reporting.

● Facilitates rapid response, proactive intervention and remediation for underper- forming projects and programs.

● Defi nes a consistent, common standard for performance metrics and reporting. ● Ultimately contributes to reducing the negative impacts to the company ’s fi nancials

and customer satisfaction. ● Increases our ability to replicate excellence in all of our projects. ● Enables consistency in execution, with reliable, predictable results. ● Ensures standardized project management methodology and toolkit across Dell

Services supporting scalability and growth targets.

Enabling Success through Project Manager Development,

Certifi cation and Leadership Skills

The “Art” and “Science” of Project Management

The patented PM3 methodology and supporting documents require qualifi ed project management team members to interpret and apply the methodology, standards, and tools appropriately, based on the specifi c needs of the project or program. Project Management cannot be executed successfully, nor can the value and benefi ts be fully realized by follow- ing a checklist, or step-by-step procedure. Standards, process, and tools are only half of the equation. Successful project management relies on strong leadership, decision-making, and expert judgment, as well. To reap the maximum benefi ts, the use of the PM3 Project and Program Management Framework, Project Managers must strike a balance between the science of disciplined execution and the art of using sound judgment in leading the effort. The value comes when the processes and tools are applied properly and most effi ciently for both our customers and Dell Services, balancing risk with the degree of rigor applied.

The PM3 processes and supporting tools and templates are designed to mitigate risk and deliver predictable and repeatable results–these processes and tools are what we refer to as “the Science” of project management. Project Managers must focus not only on the processes they need to follow but also on the intent of the processes and the results, or outcomes, these processes and standards are designed to produce.

The “Art” of project management is the judicious and cost-effective application of the science to the business problem and environment. The methodology and tools are fl exible and require experienced, qualifi ed project managers to apply them appropriately. Although our methodology provides guidelines for scaling based on the project size, complexity and risk, every customer engagement is different, and this scaling requires judgment and

Dell Inc. 529

experience on the part of the project manager to decide where to customize, and where to fl ex.

The PM3 framework is a means to an end. There can be several paths that lead the PM practitioner to the critical outcomes that are necessary for project success. The strong project manager will balance the “art” and “science” to ensure the critical outcomes are achieved.

Developing and Maintaining Profi ciency through the Internal

PM3 Project Management Certifi cation Program

Dell Services Internal PM3 Project Management Certifi cation Program

Is the standard for aligning the right project manager, based on their skills & experience, to the right project, based on size, complexity and risk factors (or project complexity cat- egorization—PCC Level)

● Enables better allocation of project management resources to project complexity levels, to reduce risk and increase probability of project success, in the most cost- effective manner.

● Establishes a consistent standard across Dell Services to enable career mobility and promote career growth, through a more clearly defi ned development path.

● Provides a consistent level of qualifi cation and quality assurance of the PM popula- tion, which is critical in a leveraged resource model.

● Is a multi-tiered project management certifi cation program that certifi es project management resources according to skills, training and most importantly, success- ful project experience.

● Is a key differentiator and value-add to the customer, demonstrating quality assur- ance and professional development for our project management team members, which increases customer confi dence level with our project management resources.

● Is measured and driven by organizational priority and need. ● Is complimentary to Dell ’s people strategy and PMI ® project management

certifi cations ● Formally recognizes project manager success, experience and knowledge. ● Encourages and fosters a culture of mentoring. ● Promotes profi ciency and consistency in project management standards and best

practices across Dell Services. ● Ensures assignment of a well-rounded project manager, who has demonstrated

effective application of the standards and proven success with like-sized/complex- ity projects and programs.

● Aligns with and compliments the PMI ® project management certifi cations. ● Provides more visibility into career opportunities for project managers.

Investing in Project Managers’ Development to Drive Quality and Success

In addition to technical skills related to the specifi c project management processes and tools, or what is sometimes referred to as the “science” of project management, the Dell Services Project Management Learning System (PMLS) emphasizes the importance of

530 THE PROJECT OFFICE

human performance skills, or the “art” part of project management. Excellent leadership skills and good judgment are critical to the success of any project manager.

The PM3 Project Management Certifi cation Program and associated PM3 Training are critical to long-term sustainability of the standards. The PM3 includes a comprehensive cur- riculum that provides project management team members the opportunity to build project management skills and understand the Dell Services approach. These experiential courses are based on the PM3 and associated toolkit, with additional real-world examples and case studies built to address common project management challenges. The project management curriculum has been approved by the Project Management Institute (PMI ® ), contributing to Dell Services PMI ® Registered Education Provider (REP ® ) status, which qualifi es participants to earn Professional Development Units (PDUs) toward their PMI ® Project Management Professional (PMP), or other PMI ® project management certifi cation, or recertifi cation.

All of the PM3 training is web-based, offered online to provide easy access and navi- gation, in the most convenient and cost-effective manner for Dell Services project manage- ment team members. A training homepage is available on the intranet to assist the user in navigating through all the available training resources, organized by:

Latest highlights and shortcuts to newly released courses Important links to other related sites, team-specific training A direct link to the PM3 repository and PM3 Project Management (PM) Certification

Program Training categorized by Learning Paths or Programs, aligned to:

● Role and PM3 PM Certifi cation Level ● Leadership Competencies ● Technical & Functional Competencies

Driving Long-Term Adoption and Sustainability through Organization

Change Management Techniques

A major critical success factor to the success of the Enterprise Project Management Standardization (EPMS) program has been in the approach and techniques used to drive and sustain major change over time, across the business unit.

The team found it most effective to leverage various Organizational Change Management (OCM) techniques, beginning with:

Committed executive-level sponsors established from the beginning and maintained throughout, including as the program transitioned to steady-state governance operations.

Top-Down Communication from Sponsors ● Reinforcing priority and alignment to overall organizational strategy ● On a regular basis

● minimum twice/year with a long-running program and especially after leader- ship changes and signifi cant re-organizations;

● In conjunction with and after the strategy is communicated.

A “Change Readiness Assessment”—a standard element of OCM, leverages inter- views and solicits input from a sample group of impacted stakeholders from all levels of

Dell Inc. 531

the organization. This input was critical to the PM3 implementation, training and commu- nication plans. In addition, it supports buy-in because the program team took the time to include and value stakeholder involvement and input right from the start of the program.

Ensure involvement from all impacted stakeholder groups and teams ● Global, Services Business Unit–Wide involvement and collaboration with subject

matter expert (SME) representatives from all teams with project delivery. ● Solicit and incorporate feedback through formal deliverables and routine weekly/

bi-weekly meetings. ● Establish a “leadership steering committee” for the program, with business unit-

wide representation at the level of leadership with authority to enforce standards, to remove obstacles and escalate/resolve issues.

● Be collaborative versus dictatorial; flexing to adapt to the business situation and level of maturity of the organization, without sacrificing quality or the intent of the standard. Focus on the intended outcome.

Establish and maintain credibility of the PMO and program team, across the business unit ● Lead by example; demonstrate the value through practical application versus

theory. ● Communicate alignment with industry-recognized best practices. ● Ensure implementation and/or improvement plans demonstrate value to the busi-

ness early, and regularly, in the rollout to maintain interest, momentum and visibil- ity to the value—with “quick wins,” “low-hanging fruit” aligned to hottest business “pain points.”

● Be supportive and fl exible, balancing risk with rigor, scaling and streamlining where appropriate without sacrifi cing quality;

● The PMO exists to serve the business, our customers and the PM community; be supportive and accommodating, not intrusive, nor disruptive.

● Listen; continue to seek to understand the business and be sensitive to customer priorities.

● Get involved with outside organizations, take advantage of opportunities to show- case your best practices to solicit outside industry-recognition and validation; use these accomplishments, awards and recognition in communications to establish and lend credibility to the standards and the PMO team driving the change.

● Communicate, Communicate, Communicate! Sustains visibility and momentum.

Contributors

PM3 contributions by subject matter experts from across Dell Services, with specifi c authorship for this publication by the Services Business Unit PMO Team: Michele A. Caputo, PMP ® Dell Services Business Unit Project Management Offi ce (BU PMO) Leader & Enterprise

Project Management Standardization (EPMS) Program Director Herm Barringhaus, PMP ® , CSM Allison Bass, PMP ® , ITIL, 6σGreenBelt Bonnie Flynn, PMP ®

532 THE PROJECT OFFICE

Tracy F. Grimes, PMP ® Brad Horner, PMP ® Tama S. Kinsey, PMP ® David H. Meyer, PMP ® , CSM Steve Sheppard, PMP ® , PRINCE2 ®

12.9 COMPUTER SCIENCES CORPORATION (CSC)

Consider for a moment the following situation. Your company wants to start up a PMO to function as the guardian of project management intellectual property for your company. You hire a person who has done this for a previous company with some success. What this person brings to your company are the successes and failures that he or she encountered at a previous company. This individual will make decisions based upon his or her expe- riences. This approach can work, and can work well. But there may be a better way to accomplish the goal of implementation of a PMO.

More companies today appear to be hiring consulting companies to help them imple- ment a PMO. Consulting companies maintain fi les of successes and failures among all of their clients and the consultant(s) you hire can draw upon the experiences provided within the consulting company ’s knowledge repository. If the consultant has issues where help is needed, the consultant can call upon other company consultants for advice and guidance. Simply stated, the consultant brings to the table perhaps hundreds of man-years of docu- mented experiences and best practices whereas the person you hired above may bring to the table only fi ve or ten years of personal experience.

Another problem occurs if the person you hire is unfamiliar with your industry. Consulting companies often maintain fi les by industry classifi cation. This can signifi cantly benefi t the on-site consultant. With consulting companies, it is often easier to fi nd industry- specifi c consultants. When starting up a PMO in a health-care environment, this is essential.

To illustrate how hiring a consulting company can be benefi cial, consider CSC 21 :

CSC ’s purpose is to deliver innovative business and technology solutions that help our commercial and government customers worldwide achieve what they want most—results. Focus is placed upon the uniqueness of each customer around the globe. CSC has over 91,000 employees in 80 countries worldwide and has been in business for over 49 years. CSC focuses upon a wide variety of industries and provides consulting, implementation, outsourcing and integration services at all levels.

In the above description of CSC, it is important to understand how critical the words “uniqueness of each customer” are. When starting up a PMO in a health-care environment, where improving and maintain-

Best Practices/Culture/

Governance Structure/

Methodology

21. The material on CSC in this section was provided by Nani Sadowski-Alvarez, PMP, CPHIMS Senior Management Consultant, Enterprise Program Management & Architecture, CSC.

Computer Sciences Corporation (CSC) 533

ing health are of prime concern, setting up a PMO based upon an engineering, construc- tion, or manufacturing company may not be advisable. Nani Sadowski-Alvarez continues:

Best practices were utilized extensively during the incorporation of a PMO (Project Management Office) at a large 9,000 employee based Health Care System located in Baton Rouge, Louisiana entitled Franciscan Missionaries of our Lady. This implementa- tion was conducted through a partnership with CSC over a duration of one year in order to formulate a streamlined, fully operational, optimized, and mature PMO team capable of facilitating and leading a large and balanced portfolio consisting of a blend of techni- cal, clinical and business focused projects, programs and extended service requests. The Best Practices were established via a variety of experiences and lessons learned during prior PMO implementations at other client locations as well as through lessons learned shared via professional affiliations within the health care industry as well as a cross sec- tion of industries, project management based statistics, industry trends, and healthcare based trends and regulations. In addition, client surveys (both formal and informal) were conducted to determine and unveil:

● Clients’ perception of areas within their organization that have proven to be operating in an effi cient and effective manner

● Target areas that are recognized as being in need of improvement ● Areas and processes requiring focused attention that would enhance overall needs, mis-

sion/vision, desired organizational direction as well as provide desired emphasis upon the creation of positive and productive outcomes.

● What and who are the perceived drivers of this change. ● Overall organizational “pulse” and view surrounding the implementation of project

methodology. ● Areas that require fi ne tuning and revisions. ● Internal employee views and feedback on the audits and assessments conducted by

other consulting and audit agencies. ● The “understood” organizational strategic goals and initiatives. ● Overall perception and view of the change and the transformation under way. ● Environment and tone of interaction between organizational facilities and departments.

With the fact being that the implementation was driven/lead by consultants who closely partnered with the Health Care System, there are several additional factors to be taken into consideration with utilization of Best Practices as a guiding foundation. Following is a list of these “ Challenges and Opportunities as a Consultant Surrounding Incorporation/ Utilization of Best Practices ”:

● Accurate interpretation of the organizational culture ● Listening effectively to all signs provided by the organization (verbal and nonverbal)

encircling their needs ● Customization of Best Practices to a level that provides the most benefi cial results. ● Obtaining and encouraging ample feedback and input from the leaders and end users to

ensure that the fi rst impression of the Best Practices is as positive as possible. ● Delivery of effective communications that target the impact that the initiative/project

and the incorporated Best Practices will have. ● Providing adequate answers to the Who, What, When, Where, Why and How surround-

ing the need for the transformation/change underway.

534 THE PROJECT OFFICE

● Instilling a balanced and fl exible approach to use the proven Best Practices as a founda- tion with the addition of adjustments that will ensure they blend with the organization acquiring and implementing them.

● Creating the proper balance to ensure silos are removed allowing for more transparent and fl uid communication and utilization of agreed upon Best Practices.

Best Practices Defi ned —Overall Best Practices are processes, procedures, standards, methodologies, techniques, activities, etc. that have proven to be more effective and suc- cessful in providing measurable effi ciencies and results than other comparable processes, procedures, standards, activities, and techniques.

Factors and questions considered in the evaluation of best practices are:

● What is it? A process, procedure, template, methodology, action? ● Are they repeatable? ● Is it something that results in effi ciencies? ● Is there impact to clinical care? How and what regulations (Patient Safety Goals,

JCAHO—The Joint Commission on Accreditation of Healthcare Organizations, HIPAA Compliance Regulations) are met or impacted by this?

● Is there an impact to Business Initiatives and Technological Advancements? ● What “trial and error” processes were underway to test a sample set of options and

determine what the “best route” would be to proceed with? ● What evaluation parameters were implemented in order to assess and determine if a

process/procedure/template/methodology/action were in fact meeting the needs of the impacted areas and were there effi ciencies related to it?

● Was there clear and defi nable collaboration involved by stakeholders to ensure that all factors were considered?

● Structuring all projects in a consistent manner with a core methodol- ogy in place (that is required to be adhered to)

● Undergoing periodic random project audits from an external depart- ment (either Legal Services or The Quality and Audit Department) that are made available to all internal requesting resources

● Conducting formalized project initiation and closing presentations with all stakeholders being invited to participate as well as Core Team member ’s attendance being required. These events/milestones are then followed-up and communicated via internal market- ing communications accessible to all employees.

● Ensuring all projects (clinical, technical, and business) receive input and scoring/rating from an experienced clinical executive representative.

● Validating that project scoring/prioritizing contains a section directly related to the organizations strategic initiatives as well as process fl ows and quality of care.

● Creating detailed project metrics that are available on a weekly basis for all stakehold- ers and employees within the organization.

● Creating transparency with all project related documentation in order to ensure that any interested parties are able to assess the current action items, risks, issues, change requests, etc. with the ability to then provide suggestions/opportunities for improve- ment if they feel so inclined.

● Instilling that the PMs are parties to the contract review and negotiation process and that they facilitate the completion of a contract checklist.

Samples of Best Practices

with Health-Care PMOs

Computer Sciences Corporation (CSC) 535

● All Project/Program and Extended Service Request goals must be compiled in alignment with the SMART Goal philosophy in order to validate that the goals are measurable.

● All Projects/Programs and Extended Service Requests must undergo formal Operational Turnover prior to the Project being fl agged as “closed.” This turnover occurs with partici- pating of Core Team Members, impacted areas, and key stakeholders and requires sign off from Management at all areas receiving support responsibilities.

● Projects must undergo the formal resource request process in order to validate that the Resource Managers will be able to support the dedication required to make a project successful.

Potential Best Practices are assessed and evaluated throughout the dura- tion of the project life cycle. These are then documented in the Lessons Learned template and made accessible to all organizational employees/

Team Members. Project documentation is stored in SharePoint with view access provided to all Core Team Members, approving Committee Members, and Key Stakeholders as well as requesting parties.

Determined Best Practices are recorded as standards and often created into Policies/ Procedures with the need for tiered sign off approval in order to ensure that supporting and enforcing levels of authority have the opportunity to provide feedback and input.

The PMO was created at this Healthcare System (XYZ Health System) under the direction of the organization as well as the full-time support of the CIO/CMIO, Dr. Stephanie Mills and the Director of the PMO,

Claudia Blackburn, PMP, CPHIMS. Nani Sadowski-Alvarez, PMP, CPHIMS was brought in from FCG/CSC to lead the organizational transformation Track focused upon the imple- mentation. A blend of methodologies was utilized. The core foundation of methodology resided upon PMI based practices with a blend of ISO 9000 (for segments on the technol- ogy driven projects) lean project management principals from Six Sigma and best practices already established within the organization. With the foundation being PMI and PMBOK ® Guide focused, the core phases of project management (Initiation, Planning, Executing/ Controlling, and Closing) were infiltrated throughout all project implementations. Supporting policies and procedures were developed along with standards and detailed pro- cess flows that targeted all stakeholders and explained the methodology step by step. Each of these tools provided input surrounding templates that would be utilized within the vari- ous phases as well as a listing of what the outputs and results would be. The key with all of these, was to keep the concepts and explanations direct and simple and to provide details surrounding the resource responsible for executing the particular steps in the process, anticipated turnaround times, outcomes, and reference to related and interdependent pro- cesses. All templates surrounding the methodology, processes, procedures, standards, workflows were standardized and available to anyone within the organization as well as requesting partner vendors. This creation of a transparent department enabled all stake- holders to have access to pertinent project details and methodology at any point in time.

The transformation of the organization was divided into tracks with 1 Tracks main focus upon creation and Implementation of the PMO, another Tracks focus upon IT Governance, another tracks focus upon

Storage and Indication

of Best Practices

Methodology

Governance

536 THE PROJECT OFFICE

implementation of a PPM and internal IT Resource and Capacity Management tool, and the 4th track focused upon organizational governance. The key to success with this was that all tracks had to work collectively in order to ensure collaboration and cohesiveness of the undertakings of each track. The governance for the healthcare system was designed to ensure buy in from all key areas—Business, Clinical, and Technical. The PM (in partnership with the PMO and the Project Program Sponsor) was responsible for facilitation of the process and ensuring that the Business, Clinical, and Technical committees had the opportunity to review the Project/Program Charter (and provide feedback—suggestions) prior to delivery to the Steering Council. From there, the project may or may not go to the Executive Council (Pending project cost, size, impact to resources as indicated in Governance Policies) as well as be presented to the board. The parameters were all clearly defined and created with participation from key resources throughout the organization. This ensured that all areas had equal input and that there was a greater likelihood of rapid buy in and support for the gov- ernance structure.

Project success is measured based upon the delivery of the projects on time and within budget along with their ability to meet the project mis- sion/vision as well as the SMART Goals. Now, with that being said, it is

accurate to state that Change Management methodology is solidly in place and accept- able in re-aligning the project and its scope with adherence to the triple constraints and agreement that change requests must be signed by the Project/Program Sponsor. It is the PMs Responsibility to update project documentation accordingly and to adhere to the project change management Policy, procedure, standard, and process flow. Project/ Program Status is available 24/7 to all requesting parties. It is encouraged that vendors participate in the status updates as well. Critical Success factors are clearly detailed within the project scope document (that is also signed by key stakeholders) and when changes are 25K or above they involve approval via the Governance Structure. PMs (Program and Project Managers) are required to conduct milestone updates and to report on them via the status report. PMs are also measured and evaluated based upon their ability to achieve the role based performance standards/indicators. These indicators align with their daily duties, project based duties as well as methodology perspectives and organizational initiatives.

Overall, project success is defi ned by the organization at large. The project charters contain full detail surrounding project mission/vision and the project goals. A balanced representation is present at Approving Council meetings (from the Financial/Business side, clinical and technological side of the house to include lead Executives, CFOs, Physicians, Technology Directors, Departmental Leads, SMEs, etc.) to ensure that the checks and balances are in place prior to voting a project to the approved state. Once it is approved the detailed scope is reviewed (containing critical success factors, known issues/ risks, detailed process fl ows, communication matrix, etc.) and open for suggestion/revision prior to sign off. Once signoff has occurred, the formal Change Management methodology is adhered to. This methodology does contain a ‘break the glass’ procedure in the situation that an item/opportunity for change arises that is of urgent and immediate attention status. The execution of this process does require executive level approval due to the magnitude of individuals whom will be impacted.

Excellence is defined clearly by the E 3 theory of Excellence Exceeding Expectations. With any effort to exceed the initially set and approved expectations, there is the ability

Project/Program Success

Computer Sciences Corporation (CSC) 537

to achieve excellence where streamlining, enhancing, cost savings, patient and employee satisfaction are present.

● Have milestones been met? ● Has effective change management taken place? ● Were Risks effi ciently mitigated?

● Were status reports provided per the policy and procedure guidelines throughout the duration of the project?

● Were there regularly scheduled Core Team Meetings? ● Were the Signed Project/Program Goals and Objectives achieved? ● Was the project methodology followed throughout the project life cycle? ● What are the Sponsor(s) and Key Stakeholder(s) view of the end results of the Project/

Program? ● Have all participants had the ability to provide their view of project successes and

opportunities for improvement? ● Is the project within Budget? ● Was the project delivered on time? ● What are the results of the project audit(s)?

NOTE: We have discovered and confi rmed that templates need to be fi ne-tuned for all clients in order to ensure that they meet the needs and initiatives of that organization. The length of the templates can at points hinder the success of the project. As a result, the recommendation is for the PMO to continually review and discuss the utilization of the templates and to adjust them accordingly.

The project management office that was created for the Health Care Facility consists of a Director PMO, 10 PMs (2 of whom are detailed as Senior PMs), 2 Extended Service Request Coordinators, and 2 technology

engineers (who focus upon guidance with project technology assessments and evaluations as well as audits). This PMO reports to the CIO/CMIO as well as the Steering Council and other governing Councils. Programs (such as the implementation of a Heart Hospital) are also facilitated through the PMO office.

The vision of the PMO is to “provide consistent and standardized project management with focus upon excellence in a collaborative setting. All approved projects will contain measurable goals and objectives directly related to the goals and standards of the Health System with convergence towards achieving a comprehensive continuum of quality care.”

There is a solid governance process in place as referenced in the governance section. Support for the PMO trickles directly from the C-Level Executives on down at this

Health Care organization as well as the consistent view point of the value that the PMO adds as a whole. Prior to the implementation of the PMO, an organizational audit occurred with the suggestion of more formalized methodology and standards as well as enhanced transparency surrounding project focused endeavors and initiatives.

Sponsors receive a one-on-one session with the Director of the PMO and the assigned PM in order to review a PowerPoint presentation and several hand outs that clearly defi ne what the role of a project sponsor is. In this conversation it is also assessed if they feel pre- pared to take on the role of a Sponsor. If not, then this realization is brought to the Steering

Questions to Ask Surrounding

Program/Project Success

Project Management Offices

(PMO)

538 THE PROJECT OFFICE

Council for discussion and determination as to who an appropriate Sponsor(s) might be. During the initial session with the Sponsor, items such as Project Communication, fre- quency of status reporting, regular standing meetings between the PM and Sponsor, etc. are all covered and details are aligned. Project Sponsors learn to become supportive of their projects and to value the partnership that the PM and PMO form with them in order to ensure that their project is a success. A PMO marketing tri-fold is also presented to them that contains information surrounding the following:

● Process fl ow for the project approval process ● Defi nitions of key roles on the project team and what their responsibility is ● Critical success factors for all projects ● Defi nition of project versus program versus extended service request ● High-level communication expectations (to include their role in assisting with removal

of barriers to the project ’s success) ● High-level review of project documentation that will consistently be provided ● Brief overview of project phases and methodology

Sponsors are held accountable for the success of their projects and are requested to be present in the initial presentation to the Steering Council requesting approval. They speak to the “need” of their project (for the organization), the ROI, the SMART Goals, overall added value, impact to resources, duration, scoring, etc. along with the PM and participate in the question/answer segment. As major changes (exceeding 25K in value or signifi cant impact to Resources, or project schedule) arise, the Sponsor and PM are requested to attend the Steering Council meeting to provide the details as well as discuss the options for resolution with the Council and obtain a vote of approval for the newly targeted “direction” to follow.

Sponsors are required to be management level and above. For Extended Service Requests (initiatives that are 500 hours or less in duration and require formal structure in order to execute) a Sponsor may reside at the

Managerial level. For Projects and Programs, however, a Sponsor must at least reside at the Director level in order to ensure that they have the leverage and authority to assist with the barrier removal.

12.10 SLALOM CONSULTING: UNDERSTANDING

THE NATURE OF A PMO

In the previous examples in this chapter, we saw companies that implemented a PMO after a well-thought-out process. But too often a company will rush into the implementation of a PMO well before it decides on the intended use of the PMO, what functions it will per- form, who will be assigned, and potential internal political issues. Not every PMO is the same, even in companies that have multiple PMOs. Carl Manello, practice lead—delivery effectiveness, Slalom Consulting, provides us with his insights on PMOs:

What ’s in a name? More than most of us would consider. Far too often the three letter acronym “PMO” is bandied about with far too little consideration for what it refers to in its implementation. I have seen this carelessness occur with my clients as well as within

Management Support

Slalom Consulting: Understanding the Nature of a PMO 539

consulting organizations that offer solutions in this arena. The over-simplification of proj- ect management organizations into a “PMO” has led to some disastrous results. What do “PMO ’s” do after all? Are they:

● Project Management Centers of Excellence (e.g., process owners) ● Governance Offi ces (i.e., overseeing compliance) ● Project manager resource pools ● Resource management centers charged with balancing supply and demand

I have seen of each of these implemented with the same name: PMO. “So what?”, you may ask. “Why is it so important what we call the function?” A quick anecdote may illustrate the point well.

A CFO reads in the latest trade magazine about the much celebrated success of a peer company in their implementation of a PMO. “Fantastic,” she thinks and proceeds to call the CIO. “Bill, we need to get your team to build a PMO. I know that they can make a difference, have a fi nancial impact and deliver results. Go make it happen!” After hanging up the phone, Bill is not sure where to turn. Does the CFO want a Project Management Offi ce, Program Management Offi ce, Program Offi ce, Enterprise Program Offi ce or Governance Offi ce?

As professional project managers we must help our companies distinguish the differ- ence in functional role of each of these different organizations. We must also help to clarify the span of control differences—say, between a Program Offi ce and an Enterprise Program Offi ce. I coach my colleagues and clients that we should stay away from a “one name fi ts all” reference of the mythical “PMO” and instead talk about operational functions.

For example, Figure 12–17 illustrates an IT Governance Offi ce which has a variety of accountabilities. However, it is focused within IT and does not reach into the “business” side of the company. Focused solely within IT, Governance takes on many roles. This “PMO” focuses on providing assistance to project managers, aligning and monitoring the assignment of project managers, assisting the Offi ce of the CIO with strategic planning, monitoring IT fi nancial/project spend and overall IT reporting for leadership. By contrast, this “PMO” does not contain a pool of project managers to be assigned to projects through- out the information technology organization. Neither does this governance organization “PMO” have the same span of control as a “PMO” (Program Management Offi ce) operat- ing within the confi nes of a large business initiative.

To illustrate the difference in span of control, let ’s look at the following models. While not perfect solutions for every implementation, these fi gures show the range of possibilities and begin to break-down the view of a one-size-fi ts-all PMO. Figure 12–18 (I ’m sure you ’ll align fi gure numbers later, just wanted to be sure you ’re pointing the right ones) provides one of the simplest models: The Project Offi ce. 22 The Project Offi ce provides oversight, monitoring and reporting and possibly even some governance functions over non-related projects. By contrast, the Program Management Offi ce in Figure 12–6 is contained within a single large-scale business initiative. This PMO has accountability for driving a busi- ness program, keeping track of multiple associated projects and providing monitoring and reporting to the key business executives. In some implementations, the PMO is not just the project governing body of the program, but it is the home of the key executives running the initiative. At Sears, during the integration with K-Mart, and at Donnelley for the Year

22. The symbol in the upper right-hand corner of Figure 12–19 illustrates that each of the successive PMO structures in Figures 12–20 through 12–22 leverages the same project management capabilities in PM f that was discussed in Figure 4–20 .

Delivery Support Services

Resource Management

Support

Strategy and Planning

Financial Oversight

Project Portfolio Management

Reporting and Response

Governance

• Knowledge Management • Consultative/ Mentoring Support • Communications • Training

• HR Processing and Support • Capability Development • Career Path Development

• Strategic Planning • Investment Management • Organizational Planning

• Contract Management • Fixed Asset Management • Project Spending

• Standards Management • Performance Monitoring • Management Reporting

• Demand Management • Project Tracking • Supply Management • Resource Allocation

Carl Manello©

Figure 12–18. Example functions of a PMO.

540

Slalom Consulting: Understanding the Nature of a PMO 541

Project

Project Office

Figure 12–19. Project office that oversees independent projects.

Project

Project Project

Project

Program: Business Initiative

PMO

Figure 12–20. Program management office internal to program.

2000 efforts, the PMO was the executive leadership team of the business focused effort. There were of course supporting teams of program and project managers on-board, but when the chairman referred to the “PMO” he was talking about leadership. Figure 12–7 illustrates the next wider governance organization: the Program Offi ce. Much like the Project Offi ce, the Program Offi ce oversees non-related projects with the added responsi- bility for governance over programs. By nature of its oversight, this organization is usually set up with accountabilities across large functions (e.g., across business units). Program Offi ce members work with their counter-parts in Program Management Offi ces to collect metrics, status and key updates, however, usually focused at a higher level. While the PMO works at a detailed level collecting, reporting and managing a single program, the Program Offi ce summarizes cross-initiative information for consolidation at the executive level. The last variant is the Enterprise Program Offi ce in Figure 12–18 , which is typically imple- mented in very large organizations. Its role is to further roll-up, consolidate and coordinate initiatives across the enterprise. In addition to governance responsibilities, this group may

542 THE PROJECT OFFICE

be charged with portfolio management activities. With its view of the entire enterprise, the EPO is well suited to operate with the goals of the whole organization in mind, as opposed to siding with one business unit over another. As part of the fi rst EPO at R. R. Donnelley & Sons in 1997, we worked on portfolio management for the whole enterprise, master sched- ule development, creation of project management methods and processes and we provided project support. We worked across corporate functions, Research & Development, all the business units (e.g., Book and Magazine) and were involved in several key business programs. Given that there are such a variety of project management organization incar- nations, with varying spans of control, it is no surprise that there are also a wide variety of reporting accountabilities; a project organization does not always report to the same function in every company. Typically, I have seen what I identify as Project Offi ces put in place within the Information Technology organization. Many if not all IT initiatives report into or have a link to the IT Project Offi ce, however, initiatives that do not involve IT as a major component are typically not tied to this governing body. My R. R. Donnelley & Sons EPO reported into the head of the Research & Development organization (at that time, Donnelley did not have a full-time CIO controlling the IT organization). My IT Governance Offi ce at Zurich North America reported into the Vice President of IT while the Sears implementation of a Program Management Offi ce was accountable to the Offi ce of the Chairman. The Sears’ PMO was a special reporting relationship and was due to the importance and the visibility of the businesses program we were leading. However, most other Program Management Offi ces usually report directly into the executive champion in charge of the business initiative.

While the illustrations I have provided are certainly not exhaustive, I think it clear that there are a number of different types of organization. There are also a variety of span of control or reporting accountabilities. Given this variability of implementation, it should

Project

Program

Program Office

Figure 12–21. Program office that oversees programs and projects.

Slalom Consulting: Understanding the Nature of a PMO 543

be clear to the reader that a generic label of “PMO,” is wholly inadequate and may in fact be short-sighted.

As mentioned in an earlier chapter, customers are now requiring their contractors to assess their organization and determine their level of maturity in project management. This assessment process, whether customer-driven or internally driven, most often requires PMO involvement. Carl Manello continues:

With so many different types of “PMOs” (as discussed above), what is the right one to build? Put another way, how can an organization assess where it is at in the project man- agement maturity continuum, in order to determine which type of “PMO” to implement? The answer is a bit more complex than one might first assume. One needs first to under- stand the environment into which the project management organization will be housed. For to plan a project management organization that is neither linked to the organization ’s current state (i.e., competencies and capabilities), nor tied to a vision for growth and devel- opment is a recipe for a sub-optimal solution.

Program

Program Office

Enterprise Program Office

Figure 12–22. EPO that spans programs and POs.

544 THE PROJECT OFFICE

There are scores of models for assessing project management maturity. Each organi- zation must carefully consider the implications of the model they choose and understand where the implementation based on the model will lead them. One maturity model is illustrated in the diagrams below.

Much like the CMMI provides a stepped maturity model for software development, the model in Figure 12–23 . . . creates a maturity model for project management organiza- tions. The various steps are loosely aligned as follows:

● Building Basics—establishing the Project Management Functions (PM f ) ● Deliverable Focus—implementing a Project Offi ce to coordinate/oversee discrete proj-

ects ● Business Focus—putting a Program Management Offi ce in an accountable role within

key business initiatives ● Integrated View—the Program Offi ce, bringing together disparate projects and pro-

grams into a holistic view for the organization ● Value Proposition—realization of the Enterprise Program Offi ce

While there is no absolute rule about progressing through maturity one step at a time, I think any organization that attempts to realize the value proposition of implementing an EPO before it has any experience with the less mature organizations, is looking for trouble. Just as one cannot jump maturity levels in CMMI, that same view should be considered when developing project management organizations. Another parallel to CMMI comes from the assessed performance level of an organization. To be “CMMI” in the truest sense, an organization must be assessed by a third-party against an international standard. While there is no such international standard to assess the maturity level of PM organizations, companies need to be brutally honest about their capabilities and competencies.

Too many of the organizations that I have worked for have had an over-optimistic view of where they lie on the CMMI scale (many companies thinks that they are at Level 3 or higher !). Similarly, companies that jump levels by over-optimistically assessing their PM maturity may actually diminish the value proposition of the “PMO” and in fact nega- tively impact the enterprise.

Building Basics

Deliverable Focus

Business Focus

Integrated View

Value Proposition

Figure 12–23. The project value maturity model.

Slalom Consulting: Understanding the Nature of a PMO 545

Figure 12–24 is a related view of the maturity progression, focusing on six project management organizational challenges, aligned with the six maturity levels. Note that this particular model was developed to illustrate the developmental challenges of an IT project management organization. Depending on the type of “PMO,” the model will be different.

● Business Alignment—the movement of the IT organization from separate business unit to service provider to the rest of the organization

● Project Focus—the growth from discrete IT projects to aligned initiatives focused on the business

● Governance—moving from no oversight to a metrics and measures based management organization

● Standards—evolving from the “wild west” of project management to a organization run with standard practices

● Planning Scope—evolving from independent operating projects to ones planned in a standard repeatable way and integrated as change initiatives for the business

● Community of Expertise Sphere of Infl uence—parallels the growth of “PMO” organi- zations outlined above, from individual oversight to enterprise-wide infl uence

Focus on technology,

not on business

Explicit link to business strategy Program Level Value Mgmt.

Loose linkage to business

goals

Reviews and updates to

bus. linkages Portfolio Mgmt.

Process Metrics Defined

Enterprise Portfolio

Management

Project orientation creates silos

Some project dependencies defined

Focus on business solutions Programs established

Programs for business value

Portfolio focus, investment

decision framework

“Cowboy” managers lead

without process

Standards defined L.O.B.

assignment/THequestion.docx

· Enterprise projects, integration across projects, and portfolio options. See the following two links and explore each page:

1. https://products.office.com/en-us/Project/project-online-portfolio-management#a

2. https://products.office.com/en-us/Project/enterprise-project-server

· Extend your experience as if your organization now runs all three of the projects project1,2,3.

1. The completion of these three projects by the 3 PMs within one organization

2. How you might unify resources to improve outcomes.

Deliver a 900 to 1500-word paper with at least one appropriate table and at least one appropriate image covering the following two areas:

· Provide an overview of project selection, PMO activities, and the relevance of a project portfolio. (15 points)

· Review the relevance and desirability of what you found on the Microsoft Project site. (15 points)

Use business writing in one file.