PMP Key Concepts

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					Project Fundamentals
1. A project is a temporary endeavor. Projects are unique and non-repetitive. Building a road is an example of a project. The process of building a road takes a finite amount of time, and produces a unique product. Operations on the other hand are repetitive. Delivering mail every day is an example of operation. 2. The characteristics associated with a project are - unique purpose, temporary in nature, require resources (often from various domains), should have a primary sponsor and/or customer, and involves uncertainty. 3. Project management is the application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements 4. A program consists of a related group of projects. Projects are finite where as programs are ongoing and continuous. Programs may be repetitive and cyclic. In some cases Project Management is a subset of Program Management. The project manager may report to the program manager in such cases. A portfolio consists of multiple programs. 5. A subproject is a subset of a project. Subprojects can be subcontracted. Technical or Functional Manager may be in charge of a subproject. 6. Type of organization - This is an important concept to understand for the PMP exam. The type of organizations in decreasing order of Project Manager's authority are o Projectized o Strong Matrix o Weak Matrix o Functional Project Manager has maximum authority in a Projectized organization and least authority in a Functional organization. In Functional organizations staff is organized based upon their specialty, such as engineering or sales. In these organizations, functional managers are responsible for specialized departments like marketing. In Functional organization, the role of Project Manager is limited. In Projectized organization, PMs have more authority and independence. All the persons in the project team report to the Project Manager. Real situations are a mixture of functional and projectized organizations. These mixed situations are called matrix organizations. Strong matrix organizations have characteristics of projectized organizations. Weak matrix organizations have characteristics of functional organizations. 7. Leadership style varies from autocratic to democratic. Shared leadership involves team members taking most of the decisions. It encourages team development. 8. Project Management consists of nine Knowledge Areas. These are o Project Integration Management o Project Scope Management o Project Cost Management o Project Time Management o Project Risk Management o Project Quality Management o Project HR Management o Project Communication Management o Project Procurement Management Each Knowledge area has further Processes. There are a total of 44 processes. Each process has inputs, outputs and "tools and techniques" (ITTO). The PMBOK primarily covers each of the processes and it's ITTO in detail. You need to understand the concepts related to each of the input, output and "tools and techniques".

9. Further the discipline of Project Management has five process groups. These are o Initiation o Planning o Execution o Control o Closure Each process is part of one of these five project phases. It is important to know the process group for each of the 44 processes. 10. Project Sponsors are primarily involved in funding the project. Tasks performed by project sponsor include o Provides financial support o Accepts the project during scope verification o May provide key milestone and deliverables due dates o Does not sign the Project Charter. This is done by Senior Management. Tasks performed by the senior management include o o o o Issues the project charter Helps organize the work into projects Helps identify risks Approves the final project plan

Stake-holders are all the individuals that are concerned with the project. Stakeholders have vested interest in the outcome of the project. They include project team members, customers, management, and other individuals who get impacted by the project. Stake holders role includes o Distributed information during the project. o Notified of project plan changes o Are listed in the project team directory. o Become risk owners. 11. At the end of each project phase, reviews against a set of metrics are performed. If the project fails to meet these metrics, the project may not be allowed to continue. These phase end reviews are called Stage gates or Phase exits. 12. At the beginning of the project there is less cost and demand for resources. Also there is a higher risk of failure at the beginning of the project.

Project Integration Management
1. The knowledge area of Project Integration Management consists of the following seven processes Project Integration Processes Process Develop Project Charter Develop Preliminary Project Scope Statement Develop Project Management Plan Direct and Manage Project Execution Manage and Control Project Work Integrated Change Control Close Project Project Phase Initiating Initiating Planning Execution Control Control Closure Key Deliverables Project Charter Preliminary Project Scope Statement Project Management Plan Deliverables Requested Changes Approved Change Requests Final product

2. A project charter o Formally authorizes the project. o Gives the objectives and business case o Identifies the Project Manager. o Generic enough not to change often. o Written by a Manager higher in authority than Project Manager. o Includes name, description, deliverables o A project does not start unless it has a Project charter. 3. During project execution the project team focuses on completing the tasks assigned. The Senior Management protects the project from changes and loss of resources. The Project Manager integrates all the pieces into the project as a whole. 4. The Inputs, Tools and Techniques, and Outputs of the Project Plan Development process are given in the table below. Project Plan Development Inputs Historical Information Organizational Policy Constraints Assumptions 5. At the end of each phase of a project, a lessons learned document must be prepared. The lessons learned document defines what was done right, wrong etc. It is required to be completed in order for the project to be completed. 6. Project Management Information System (PMIS) is a system that keeps track of status of all the project tasks. It is used to track the status of the project. The exam does not focus on any specific system (for example Microsoft Project ). Tools & Techniques Stake holder skills and Knowledge Project Management Information System (PMIS) Earned Value Management (EVM) Outputs Project Plan Other Planning outputs Project Planning Methodology

7. Project Plan is developed by Project Manager with inputs from the team, stake holders and management. Project Plan development is iterative. A project plan is bought into, approved, realistic and formal. 8. A Project Plan includes o Project Charter o Budget o Schedule o Resources o Scope Statement o WBS o Responsibility charts/assignments o Management Plans 9. Project baseline refers to the original version of the project plan. 10. Progressive Elaboration involves the process of taking a project from concept to detailed design. 11. Kick-off meeting happens after the planning phase and before the project execution. It is typically used to communicate responsibilities of key stake holders. 12. Change Control Board is formed to review change requests. It is used to approve or reject change requests. After the project scope has been baselined, each requested change must go through a change control review process. 13. Project Manager needs to be proactive in looking for deviations from project plan and then take timely corrective action. After that the Project Manager needs to evaluate the effectiveness of corrective action, and measure performance of corrective action, and then determine the need for further corrective action. 14. When a change request is received, the following steps must be taken (in this order) 1. Evaluate (assess) the impact of change to the project 2. Create alternatives including cutting other tasks, crashing, fast-tracking etc. 3. Meet with management, sponsors etc. 4. Meet with the customer if necessary

Project Scope Management
This chapter covers key concepts related to Project Scope Management. 1. The knowledge area of Project Scope Management consists of the following processes Scope Management Processes Process Scope planning Scope definition Create WBS Scope control Project Phase planning planning planning Control Key Deliverables scope management plan project scope statement WBS, WBS dictionary Acceptance deliverables Requested Changes

Scope verification Control

2. The knowledge area of Scope Management includes the processes required to ensure that the project includes all the work, and only all the work required to complete the project successfully. It is primarily concerned with controlling what is and what is not in the scope. 3. Project Portfolio Management is the process of project selection. It involves making a decision about which project an organization should execute. 4. There are two types of project selection methods. These are o Benefits Measurement o Constrained Optimization 5. Benefits Measurement project selection methods involve comparing the values of one project against another. There are the following type of Benefit Measurement project selection techniques o Murder Boards - This involves a committee asking tough questions from each project o Scoring Models - Different projects are given scores based on certain defined criteria. Project with higher score is selected. o Benefits Cost Ratio - This technique involves computing benefits to cost ratio (BCR) for a project. Project with higher BCR is selected. o Payback period - This technique involves considering how long it takes back to "pay back" the cost of the project. Inflation or interest earned in not considered in this technique. A project with lower pay back period is better. o Discounted Cash Flow - This technique takes into account the interest earned on the money. The Future Value (FV) of projects is compared. FV=PV(1+i)n PV is the present value of the project. A project with higher present value is better. o Internal Rate of Return (IRR) - A project that has higher IRR is better, as it is giving higher return on money. 6. Constrained Optimization Project selection methods are used for large projects. These are techniques based on mathematical models. The Constrained Optimization techniques are o Linear Programming o Non-Linear Programming o Integer Algorithm o Dynamic Programming o Multi-objective Programming

7. Expected monetary value of a project (or expected value) is equal to probability*impact. So if probability of a project's success is 20% and revenue earned if successful is $100000, then the net value of the project will be $20,000. A project with higher net value should be selected when performing project selection. 8. Management by Objective (MBO) is a management philosophy with three objectives o Establish unambiguous and realistic objectives o Periodically Evaluate if objectives are being met o Take corrective actions. MBO works only if management supports it. 9. The tools and techniques of the Scope planning process are - Expert Judgment and "Templates, forms and standards". The process has only one output - Project Scope Management Plan. 10. Work Breakdown Structure (WBS) is an important part of the exam. It is a graphical representation of the hierarchy of the project. The WBS template can be reused across projects. WBS forces the project team to think through all the levels of the project. If a task is not in the WBS, then it is not part of the project. 11. 8/80 rule for WBS - No task should be less than 8 hours or more than 80 hours. 12. WBS dictionary explains all the WBS components. Also WBS is input to most of the planning processes. Specifically WBS is input to the following processes o Cost Estimating o Cost Budgeting o Scope control o Activity Definition o Plan Purchases and Acquisitions 13. The Scope Verification is the process in which the project customer formally accepts the project deliverables. Scope Verification happens at the end of each phase. It is the customer feedback on a detailed basis. While Scope Verification focuses on customer acceptance, Quality Control focuses on correctness of work. 14. The table below gives inputs, Tools & Techniques, and Outputs of the Scope Verification process. Scope Verification Process Inputs Project Scope Statement WBS Dictionary Project scope management plan Deliverables Project Plan Tools & Techniques Inspection Outputs Accepted Deliverables Requested changes Recommended corrective actions

Project Time Management
This chapter covers key concepts related to Project Time Management. 1. The knowledge area of Project Time Management consists of the following processes Time Management Processes Process Activity Definition Activity Sequencing Project Phase Planning Planning Key Deliverables Activity List, Milestone list Project Schedule network diagrams Activity resource requirements, Resource breakdown structure Activity duration estimates, Activity attributes (updates) Project Schedule, Schedule model data Performance measurements, Requested changes

Activity Resource Estimating Planning Activity Duration Estimating Planning Schedule Development Schedule Control Planning Control

2. Inputs to Activity Definition process are o Enterprise environmental factors o Organizational process assets o Project Scope Statement o WBS o WBS Dictionary o Project Management Plan 3. The Activity Sequencing process has the following inputs and Tools and Techniques Activity Sequencing Process Inputs Project scope statement Activity List Activity attributes Milestone list Tools and Techniques Precedence diagram method (PDM) or AON Arrow diagram method (ADM) or AOA Schedule Network Templates Dependency determination

Approved change requests Applying leads and lags 4. Tools and Techniques for Activity Duration Estimating process are o Expert Judgment o Analogous Estimating o Parametric estimating o Three point estimating o Reserve analysis

5. The Schedule Development process has the following inputs and Tools and Techniques Schedule Development Process Inputs Organizational process assets Project scope statement Activity List Activity attributes Activity Resource requirements Resource Calendars Activity duration estimates Project Management Plan Risk Register Tools and Techniques Schedule network analysis Critical path method Schedule Compression What-if scenario analysis Critical chain method Project Management Software Applying calendars Adjusting Leads and Lags Schedule Model 6. Bar charts (or Gantt charts) are used to display tasks and their dates in a graphical fashion. They are used to display information of the type task 1 is scheduled from date A to date B. Typically the date range is displayed in the X-axis and the tasks on the Y-axis. Bar charts do not show task dependencies. They are generally used to track progress and show to the team. 7. Milestone charts are similar to bar charts but display only major events. They display major milestones (for example bridge design completed). They are used to report status to Management. 8. Network diagrams are used to display activities and their dependencies. Network diagrams can be used to perform critical path analysis. Network diagrams can also be used to perform crashing and fast tracking of the project. There are two type of network diagrams o Activities on Node (or Precedence) o Activities on Arrow (or AOA) Precedence is most commonly used. AON and AOA cannot have loops or conditional relationships. 9. An activity in a network diagram is displayed as shown below. Activity name Activity Number Estimate 10. As an example Documentation 2 5 days

Project Schedule Network diagram Resource levelling

11. In the above example Documentation is activity number 2 and is estimated to last 5 days.

12. Precedence (or Activity on Node) diagrams can be used to display four type of relationship between activities. These are o Finish-To-Start o Start-To-Start o Start-To-Finish o Finish-To-Finish Finish-to-start relationship means the dependent activity cannot start until the first activity is finished. This is the most common way to represent relationships between activities. 13. Activity on Array (AOA) network diagrams have the following characteristics. o AOA only uses Finish-To-Start relationship between tasks. o PERT and CPM can only be used with AOA. o Dummy events are shown with dotted lines. They do not take any time. They show dependencies between tasks. 14. Longest path through the network diagram is called the critical path. The activities on the critical paths are called critical activities. 15. Lags are inserted waiting times in between tasks. For example Task B cannot start until three days after task A completes. 16. Slack or Float is the amount of time a task can be delayed without delaying the project. Tasks on the critical path have zero float. 17. Critical Path Method (CPM) has the following characteristics. o It uses one time estimate per activity o It can be drawn only using AOA diagrams o It can have dummy events 18. Program Evaluation and Review Technique (PERT) has the following characteristics. o It uses three estimates per activity - optimistic, pessimistic and most likely o It can be drawn only using AOA diagrams o It can have dummy events 19. PERT utilizes more information than CPM as it considers the "Pessimistic" and "Optimistic" values in addition to the "Most Likely" value in its calculations. The following are formulae used by PERT Mean = (P + 4M + O)/6 Standard Deviation = (P-O)/6 Variance = ((P-O)/6)2 Here P is the pessimistic estimate, O is the optimistic estimate and M is the most likely estimate. 20. GERT is another type of network diagram. It can support looping. 21. If a project has more than one critical paths then the risk to the project increases. 22. Resource levelling refers to keeping the resources same across the duration of the project.

Project Cost Management
This chapter covers key concepts related to Project Cost Management. 1. The knowledge area of Project Cost Management consists of the following processes Project Cost Processes Process Project Phase Key Deliverables Activity Cost Estimates, Cost Management Plan Cost Baseline Cost Estimates (updates), Cost baseline (updates)

Cost Estimating Planning Cost Budgeting Planning Cost Control Control

2. Alternative identification process identifies other solutions to an identified problem. 3. Value Analysis approach is used to find more affordable, less costly methods for accomplishing the same task. 4. The Cost Estimation process takes the following inputs o Enterprise environmental factors o Organizational process assets o Project scope statement o WBS o WBS dictionary o Project Management plan Schedule Management plan, Staffing Management plan, Risk register 5. Depreciation is technique used to compute the estimated value of any object after few years. There are three type of depreciation techniques. These are o Straight line depreciation The same amount is deprecated (reduced) from the cost each year. o Double-declining balance - In the first year there is a higher deduction in the value - twice the amount of straight line. Each year after that the deduction is 40% less than the previous year. o Sum of year depreciation - Let’s say the life of an object is five years. The total of one to five is fifteen. In first year we deduce 5/15 from the cost, in second year we deduce 4/15, and so on. 6. Analogous Estimating is an estimating technique with the following characteristics o Estimates are based on past projects (historical information) o It is less accurate when compared to bottom-up estimation o It is a top-down approach o It takes less time when compared to bottom-up estimation o It is a form of an expert judgment 7. In Parametric Modeling Estimation, you use a mathematical model to make an estimate. It is of two types. o Regression Analysis is a mathematical model based upon historical information. o Learning Curve model is based upon the principal that the cost per unit decreases as more work gets completed. 8. Bottom up estimation is same as WBS estimation. It involves estimating each work item and adding the estimates to get the total project estimate.

9. You can expect five to ten questions related to Earned Value Management. These are generally pretty simple once you have good understanding of the concepts, and remember the formulae. These formulae are explained below. 10. Planned Value (PV) refers to what the project should be worth at this point in the schedule. It is also referred as BCWS (Budgeted Cost of Work Scheduled). 11. Earned Value (EV) is the physical work completed to date and the authorized budget for that. It is also referred as BCWP (Budgeted Cost of Work Performed). 12. Actual Cost (AC) is the actual amount of money spent so far. It is also referred as ACWP (Actual Cost of Work Performed). 13. Estimate at Completion (EAC) refers to the estimated total cost of the project at completion. 14. CPI refers to Cost Performance Index. It is defined as CPI = EV/AC If CPI is less than 1, this means that the project is over budget. 15. BAC refers to Budget at Completion. It is related to EAC. EAC = BAC/CPI 16. ETC refers to Estimate to Completion. It is defined as ETC = EAC - AC 17. CV refers to Cost Variance. It is defined as CV = EV - AC 18. SV refers to Schedule Variance. It is defined as SV = EV - PV Negative cost or schedule variance means that project is behind in cost or schedule. 19. SPI refers to Schedule Performance Index. It is defined as SPI = EV/PV 20. VAC refers to Variance at Completion. It is defined as VAC = BAC - EAC 21. The process of Cost budgeting defines time phased cost estimates for the project. For example, in the first month the project will require $10,000. Cost estimating involves defining cost estimates for tasks. Cost budgeting defines cost estimates across time. 22. The tools and techniques used for Cost Estimating are o Analogous estimating o Determine resource cost rates o Bottom-up estimating o Parametric estimating o Project Management software o Vendor bid analysis o Reserve analysis o Cost of quality 23. Cost baseline refers to what is expected to be spent on the project. It is usually an Scurve. That is the expenditure is less in the beginning, and the end. The expenditure is maximum during the middle of the project. 24. The after project costs are called life cycle costs.

Project Risk Management
This chapter covers key concepts related to Project Risk Management. 1. The knowledge area of Project Risk Management consists of the following processes Risk Management Processes Process Risk Identification Qualitative Risk Analysis Quantitative Risk Analysis Risk Response Planning Project Phase Planning Planning Planning Planning Key Deliverables Risk Management Plan Risk register Risk register (updates) Risk register (updates) Risk related contractual agreements Requested changes Risk Management Planning Planning

Risk Monitoring and Control Control

2. A project risk is a potential source of deviation from the project plan. Project risks can have a negative or positive impact on the project. Project risks that are negative are called threats. Project risks that are positive are called opportunities. 3. Responses to threat include -o Reducing the probability of risk o Developing contingency plans o Passively accepting consequences. o Transferring risk Insurance is an example of transferring risk. 4. Non-critical risks should be documented. They should be revisited and reviewed regularly. 5. Risks are identified in all phases. 6. Work-around refers to how to handle risks that have occurred but are not part of risk response plan. This happens in risk monitoring and control phase. 7. Delphi technique is most commonly used to obtain expert opinions on technical issues. It can be used to get inputs on Scope, Estimates or Risks. Some characteristics of the Delphi technique are o The experts identities are anonymous. They are not in the same room. o The PM tries to build a consensus among the experts.

Project Quality Management
This chapter covers key concepts related to Project Quality Management. 1. The knowledge area of Project Quality Management consists of the following processes Quality Management Processes Process Quality Planning Project Phase Planning Key Deliverables Quality Management Plan, Quality Metrics, Quality baseline Requested changes Quality control measurements

Perform Quality Assurance Execution Perform Quality Control Control

2. Grade refers to category or rank given to entities having same functional use but different technical characteristics. As an example, for different grades of hotels, the customers expectations are different. Poor grade may be acceptable, but poor quality is not. 3. The aim of quality is to ensure "Conformance to requirements" and "fitness for use". 4. Quality Policy defines the company goals and how to adhere to them. This acts as an input to Quality Planning for a project. 5. Deming suggested a process of Plan-Do-Check-Act to improve quality. According to Deming, each process should go through these steps to improve the quality. 6. Kaizen Theory - Apply continuous small improvements to reduce costs and ensure consistency. 7. Marginal Analysis - You compare the cost of incremental improvements against the increase in revenue made from quality improvements. Optimal quality is reached when cost of improvements equals the costs to achieve quality. 8. The value of sigma of Normal Distribution are given below. These are important for the exam. Normal Distribution Sigma values Sigma One sigma Two sigma Six sigma Percentage covered 68.26% 95.46% 99.99%

Three sigma 99.73%

9. Based on the above table, we can see that in six sigma one out of 10,000 items can have defects. In three sigma, twenty seven out of 10,000 items can have defects. 10. The following are inputs to Quality Planning Process o Enterprise environmental factors o Organizational process assets o Project Scope statement o Project management plan 11. Giving extras i.e. doing more than the project scope is called gold-plating. PMI does not recommend gold-plating. 12. Quality must be planned in and not inspected in. Prevention is more important than inspection. 13. The following are tools and techniques for Quality Planning process -



16. 17. 18.

o Benefit/Cost Analysis o Benchmarking o Additional quality planning tools o Design of experiments o Cost of quality Quality Assurance is done during execution of the project. It includes o Process of evaluating overall performance on a regular basis o Re-evaluating quality standards o Quality audits - structured review of quality activities that identify lessons learned. These lessons learned are used for process improvement. Perform Quality Control focuses on correctness of work. It includes inspections. The tools and techniques used for Quality Control are o Cause and effect diagram o Control charts o Flowcharting o Histogram o Pareto chart o Run chart o Scatter diagram o Statistical Sampling o Inspection o Defect repair review In Just-In-Time (JIT) Quality, the amount of inventory is zero. The inputs are made available, just when they are required. This reduces the storage cost. Rule of seven : In control charts, if there are seven points on one side of mean, then an assignable cause must be found. The process of Analogous Estimation involves looking at the history of past projects, and use them to make estimates.

Project HR Management
This chapter covers key concepts related to Project HR Management. 1. The knowledge area of Project HR Management consists of the following processes HR Management Processes Process Project Phase Key Deliverables Organization Chart, Roles and responsibilities, Staffing Management Plan Project Staff assignments Team performance assessment Requested changes

Human Resource Planning Planning Acquire Project Team Develop Project Team Manage Project Team Execution Execution Control

2. The table below gives the inputs, and tools and techniques for the Human Resource Planning process Human Resource Planning Process Inputs Enterprise environmental factors Organizational process assets Project Management Plan Activity resource requirements Tools and Techniques Organization charts and position descriptions Organizational Theory Networking

3. Responsibility Assignment Matrix (RAM) defines who does what. The Staffing Management Plan defines when will people get added and removed from the project. 4. A Project Manager may yield authority over the project team in one of the following ways o Referent - project team knows the PM o Formal Power - Power due to Project Managers position o Technical Power - Project Manager has strong technical skills in the projects domain. o Coercive Power - The project team is afraid of the power the Project Manager holds. 5. Conflicts in the team are caused due to the following reasons in decreasing order of occurrences. o Schedules o Project Priorities o Resources o Technical Opinions So the most common cause of conflicts in projects are issues related to schedules. 6. Conflicts are best resolved by those in the team. 7. There are standard conflict resolution techniques available to resolve conflicts. These are (from best to worst) -


9. 10. 11. 12. 13.



Problem Solving or Confrontation (look at the facts, analyze them and find a solution). This is an example of win-win situation. o Compromising (Find the middle route). This is an example of loose-loose situation. o Withdrawal or Avoidance o Smoothing (Emphasize the agreements) o Forcing (Do it my way). This is an example of win-loose situation. The process of problem solving has these steps o Define the cause of the problem o Analyze the problem o Identify solution o Implement a decision o Review the decision, and confirm that the problem is solved. War room is a technique for team building. As part of this the project team meets in one room. It helps to create a project identity. Halo Effect is the assumption that because the person is good at a technology, he will be good as a project manager. There are many organizational theories. Some of the main ones are - Expectancy Theory, McGregory Theory, Herzberg Theory, Maslow's Hierarchy of needs. Expectancy Theory - People accept to be rewarded for their efforts. This is a motivation factor. People put in more efforts because they accept to be rewarded for their efforts. McGregory Theory of X and Y - There are two type of employees. Employees of type X need to be always watched. They cannot be trusted and need to be micro managed. Employees of type Y, on the other hand, are self-motivated. They can work independently. Herzberg Theory - Hygiene factors (salary, cleanliness etc.) if not present can destroy motivation. However good hygiene alone does not improve motivation. What motivates people is the work itself. The motivation factors for employees include responsibility, selfactualization, growth, recognition etc. Maslow's Hierarchy of needs - there are various levels of needs for an employee. When a lower level is met, employee attempts to reach the next higher level. The maximum satisfaction is achieved when the employee reaches the highest level of satisfaction - self-fulfillment. These level of needs from the highest to lowest are o Self-fulfillment o Esteem o Social o Safety o Physiology o

Project Communication Management
This chapter covers key concepts related to Project Communication Management. 1. The knowledge area of Project Communication Management consists of the following processes Communication Management Processes Process Project Phase Key Deliverables Communication Management Plan Organization process assets (updates) Performance Reports Resolved issues Communication Planning Planning Information Distribution Performance Reporting Manage Stakeholders Execution Control Control

2. Communication Management Plan defines how and when the various stakeholders receive information, and communicate with each other. 3. Memos, emails are examples of non-formal communication. 4. The total number of communication channels between n stakeholders is n(n-1)/2. So if there are ten stakeholders in a project, there are 45 channels of communication.

Project Procurement Management
This chapter covers key concepts related to Project Procurement Management. 1. Procurement Management involves getting work done by people outside the project team. The knowledge area of Project Procurement Management consists of the following processes Procurement Management Processes Process Project Phase Key Deliverables Procurement Management Plan Contract Statement Of Work, Evaluation Criteria Sellers list, Proposals Selected Sellers, Contract Contract Changes Closed Contracts Plan Purchases and Acquisitions Planning Plan Contracting Request Seller Responses Select Sellers Contract Administration Contract Closure Planning Execution Execution Execution Closure

2. Procurement Planning involves build versus buy decisions. 3. A contract is a formal agreement. It is a legal document biding to both seller and buyer. Changes to contract must be in writing and formally controlled. Most Governments back all contracts by providing a court system. 4. Sole Source refers to a market condition in which only one qualified seller exists in the market. Single Source refers to a market condition in which the company prefers to contract with only one seller. Oligopoly refers to a market condition where very few sellers exist, and the action of one seller will have impact on other seller prizes. 5. Contract can be used as a risk management tool, as in transferring risk. 6. Centralized Contracting refers to a separate contracting office that handles contracts for all projects. In De-centralized Contracting a contract administrator is assigned for each project. 7. Force majeure is a powerful and unexpected event, such as hurricane or other disaster. 8. Privity is contractual information between customer and vendor

Code of Professional Ethics
This chapter covers PMI's code of Professional Conduct. 1. Culture Shock refers to the initial disorientation that a person first experiences when visiting a country other than his own. 2. Ethnocentrism is a typical belief that one's culture is superior to the foreigner's culture. 3. PMP's Code of Professional Conduct is a document provided by PMI. It is a guide to Project Managers on how to conduct as a professional. 4. PMP aspirants need to provide accurate and truthful information through out the application process. Any violations can lead to disciplinary action. 5. If a project team member or the project manager has a conflict of interest, then it must be brought into notice of all the stake-holders, to prevent any appearance of impropriety. As an example of this consider a case where a Project Manager is evaluating some vendors. Lets assume the Project Manager has friendship with one of the vendors. In such a situation, the Project Manager should let all the stakeholders know, and offer herself to be excluded out of the evaluation process. 6. The confidentiality of any intellectual property information that a PMP professional works with, must be maintained. 7. Any information that a PMP provides to general public must be accurate and truthful. 8. A PMP must not accept any form of inappropriate gifts. Similarly a PMP must not offer inappropriate compensation for personal gains.

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