PMP Dictionary for Exam Prep

PMP DICTIONARY TERM Operational work SUB-TERM DESCRIPTION It refers to activities which are performed on regular, repetitive and routine basis with similar products or services. Operational work are not considered as projects. KNOWLEDGE AREA Integration KEY TERM / FIGURE 1 OPM3 PMO Organizational project management maturity model. Project management office. It is an organizational setup responsible for overseeing project management activities centrally. Its functions vary from supporting PM by setting up project management processes, procedures, historical database, information systems, etc. to actually being accountable for projects' performance to meet business objectives. Depending on organization structure, PM may or may not report to PMO. For example, PM may report to PMO in a strong matrix organization structure. It refers to a thorough lifespan of a product, which usually includes involves conception, growth, maturity, decline and withdrawal phases. Product life cycle may consist of project life cycles (e.g. R&D) at different phases. It refers to a lifespan of a project, which usually includes initiation, planning, execution, monitoring & control, closure, etc. A project life cycle may consist of several major milestones on which these phases repeat. They include expertise on project management knowledge, industry or application area (business / product) knowledge, general management skills and interpersonal skills. Areas of PM's expertise are where PM should be competent at and their personal development enhancement should focus at. It indicates basic scope, schedule, cost and quality versions which are defined and agreed during planning phase for the projects to achieve. Baseline forms the basis on which project execution and work performance are monitored against. If there is any variance between baseline and actual performance, the variance should be identified, evaluated and have appropriate preventive, corrective actions and change requests recommended. It refers to a group of project stakeholders which are selected for the purpose of reviewing, evaluating, approving and rejecting change requests, recommended corrective, preventive actions and defects on ICC. Change control board should ensure that interests of all key stakeholders are taken into account. 1 1 Integration Integration Product life cycle 1 Integration Project life cycle 1 Integration Areas of PM's expertise 1 Integration Baseline 1 Integration Change control board 1 Integration Change control system It refers to the processes, procedures, policies, evaluation & approval hierarchy, communication channel, documentation requirements, timelines, etc. on handling change requests that come up in a project. They are recommended modifications on project scope, schedule, costs, quality or other requirements which are initiated by project stakeholders. Change requests are not caused by variances between work performance and baselines, but they have impacts on the baselines. They should be processed through ICC for approval before they are implemented. It is a part of automated PMIS which facilitates submission of proposed changes, tracking changes for evaluation and approval, defining approval levels and validating changes. Configuration management system also identifies and documents products' functional and physical characteristics. E.g. PONL Remedy User. 1 Integration Change requests 1 Integration Configuration management system 1 Integration Constraint It refers to limitations that restrict a project. E.g. urban planning regulations imposed by government is a constraint on an office building project. It refers to recommended modifications on project scope, schedule, costs, quality or other requirements. Corrective action is caused by variances, discrepancies and other problems which arise during project exeuction, monitoring and control. They should be processed through ICC for approval before they are implemented. 1 Integration Corrective action 1 Integration Defect repair It refers to recommended modifications on activities or processes in order to fix design, functional or performance problems. Defect repair is identified during quality measurement of deliverables. It refers to organizational culture, industry / application areas' features, government regulation, physical / cultural environment, etc. which have impacts on projects. 1 Integration Enterprise environmental factor 1 Integration Integrated change control It refers to processes and systems which are established for raising, submitting, reviewing, evaluating, approving and documenting change requests, corrective and preventive actions. It is a meeting which occurs at the beginning of a project, involving all key stakeholders of a project. In kick-off meetings, project sponsor formally initiates a project, introduces project manager and reinforces project charter. It may also occur at the start of each project phase when project manager recaptures deliverables and lessons learnt of previous phase and objectives of next phase. 1 Integration Kickoff meeting 1 Integration Organizational culture It refers to unique and describable values, norms, policies, authority relationship, ethics, etc. which are developed in organizations. Organizational culture could have direct impacts on projects, e.g. stakeholders' risk tolerance maybe low in a conservative organization, etc. Process It refers to a group of interrelated activities to produce defined outputs and meet a specific goals and objectives. 1 Integration Organizational process assets 1 Integration PMP DICTIONARY TERM Organizational process assets SUB-TERM Corp knowledge base DESCRIPTION It refers to a database in organizations on which historical project information and lessons learnt are stored and retrieved for use. PM, project teams and other stakeholders should make use of the knowledge base to facilitate their work. As new projects proceed, PM and project teams should ensure lessons learnt are documented and stored onto the base at the end of each project phase. It refers to information of past projects. Historical information is stored in corp knowledge base or historical database and used to facilitate PM and project teams of future projects. E.g. analogous estimating, qualified seller list, etc. KNOWLEDGE AREA Integration KEY TERM / FIGURE 1 Organizational process assets Historical info 1 Integration Organizational process assets Lesson learnt It refers to experiences, insights, best practice, improvement opportunities, etc. from projects which are stored on corp knowledge base or historical database and used to facilitate PM and project teams of future projects. 1 Integration Organizational structure It indicates a hierarchy of interrelation, e.g. reporting relationship, etc. among different functional areas and roles in organization. Strong matrix It is one type of matrix organization structure in which functional managers have less organizational power, impacts and controls than project manager. It is one type of matrix organization structure in which functional managers have larger organizational power, impacts and controls than PM. It is one type of matrix organization structure in which functional managers and PM have similar organizational power, impacts and controls. It is an organization structure which is primarily formed by functional areas. Crossfunctional teams are subsidiary to functional areas. Functional managers have dominant impacts and controls and PM' organization power is minimal. Projects are usually performed within functional areas and project interactions between functional areas are usually performed through functional managers. 1 Integration Organizational structure 1 Integration Organizational structure Weak matrix 1 Integration Organizational structure Balanced matrix 1 Integration Organizational structure Functional 1 Integration Organizational structure Projectized It is an organizational structure which is primarily formed by project teams. PM have dominant organizational power, impacts and controls on their teams. Project team members work based on projects and when a project is completed project team members would be transferred to another project team or left. 1 Integration Preliminary project scope statement It is a document which defines, at a high and early level, project and project scope, project boundary, milestones, rough order of magnitude, constraints, assumptions, etc. Preliminary scope statement is developed during initiating phase. It is expected that preliminary scope statement would be refined during planning phase to be detailed scope statement which forms part of scope baseline. 1 Integration Preventive action It refers to recommended modifications on project scope, schedule, costs, quality or other requirements. Preventive action is to avoid variances, discrepancies and other problems from occurring or worsening during project exeuction, monitoring and control. They should be processed through ICC for approval before they are implemented. E.g. rule of 7. After changes are raised, they should be reviewed by project manager with project team. Impacts on project baselines and all options should be identified. If project baselines need to be changed, PM should escalate the changes to CCB, on which changes and options would be evaluated. Approval decision would be decided by CCB, and if changes are approved, PM should update project management plan and baselines, communicate with stakeholders affected and implement the changes. It is a high-level group of programmes and projects which share the same organizational strategic goals. Portfolio is usually managed by senior management of the organizations. Projects and programmes within the same portfolio may not have the same interrelation in terms of tactical objectives. It is a group of projects and sub-projects which share the same tactical organizational objectives. Programmes maybe managed by PMO. Different projects on the same programme are related. It is a temporal endeavour to deliver a unique set of products, services or results. 1 Integration Process for making changes 1 Integration Portfolio 1 Integration Programme 1 Integration Project 1 Integration Project charter It is a document which formalizes the initiation of a project and authorizes PM. Project charter is issued by project initiator, sponsor or a senior management member who is external to the project organization and has the authority for providing funding the projects. Poject managers may assist project sponsor in preparing project charter. 1 Integration Project coordinator It describes the role of PM in a weak matrix organization structure. Functional managers have more dominant power, but project coordinators also have a certain decision power on their projects. It describes the role of PM in a weak matrix organization structure. Functional managers have more dominant power, so project expediters rarely have decision power on their projects. Project expediters act more as assistants on their projects and have more project administration involvements. It refers to an automated system for generating project management documents, tracking their changes, etc. Project management information system include configuration management system and change control system. 1 Integration Project expediter 1 Integration Project management info system 1 Integration PMP DICTIONARY TERM Project management plan SUB-TERM DESCRIPTION It is a set of documents which indicates to project teams and stakeholders how a project would be planned, executed, monitored, controlled and closed. It consists of subsidiary management plans, e.g. scope, schedule, cost, quality, staffing, communications, risk and procurement, baselines, e.g. scope, schedule, cost and quality, risk register, etc. They are changes to one or different components of project management plan, i.e. subsidiary management plans and baselines. These changes are caused by change requests, corrective / preventive actions or defect repairs which are approved by ICC. KNOWLEDGE AREA Integration KEY TERM / FIGURE 1 Project management plan updates 1 Integration Project selection methods They are methods which are applied by senior management and project sponsor to decide if a project should start, or in case several projects are available, which one should be chosen to start. Project selection methods are divided into two types, i.e. benefit cost methods, e.g. and constrained optimization methods. 1 Integration Project statement of work It is a document which outlines high-level project objectives, business opportunities, project purposes / justificaions, requirements, milestones, etc. If projects involve procurement with external vendors, project SOW are usually prepared by buyers to provide potential sellers with general guidelines on what the projects require and what work would be involved. It refers to individuals or organizations: * Which are actively involved on projects, e.g. project manager, project management team, project team, sellers, etc. * Whose interests maybe affected by the outputs of projects, e.g. PMO, customers, users, functional organizations, etc. * Which may exert positive or negative impacts on projects, e.g. government, environmental groups, the public, etc. It refers to a proper way to manage project stakeholders in order to balance their interests and project objectives and gain their supports on the projects. Stakeholder management includes identifying stakeholders, determining their requirements, understanding their needs and expectations, understanding their attitudes towards projects, managing their influences, communicating with them, managing relationship with them, balancing their competing interests, etc. 1 Integration Stakeholder 1 Integration Stakeholder management 1 Integration Tight matrix Triple constraints It is the same as war room or co-location. They refer to scope, time and cost which are three major limitations affecting most projects. Changing one of these constraints is likely to affect the others. It refers to a process or system on which project manager, project teams and stakeholders communicate on authorizing s schedule activities to commence. 1 1 Integration Integration Work authorization system 1 Integration Activity It refers to work (how) that project teams or other stakeholders are required to execute in order to deliver an output or deliverable (what). They include: * Showing hierarchy of work packages and deliverables at different milestones, giving an indication of their complexities. * Providing a clearer picture on work requirements to avoid misunderstanding. * Providing opportunities to review what could be missing. * Being used on schedule and cost estimation and quality planning, which facilitates consistencies among the triple constraints. * Showing to project sponsor, senior management, etc. what are performed to facilitate buy-in. * Providing a clear visibility on project deliverables to minimize change requests. * Facilitating evaluation in case change requests are raised. * Getting project teams and stakeholders together to identify what need to be done. * Facilitating project team's team building as WBS requires the whole team's involvement and communication. * Fostering communication among stakeholders. 2 Scope Benefits of WBS 2 Scope Bill of materials It is a hierarchical tabulation of physical assemblies, sub-assemblies and components that are needed to manufacture a product. It is a summary group of work packages on WBS which is decomposed from project deliverables. Control account sits at a higher-level than work packages but lower than deliverables. It is a series of organized activities to plan, define and control project scope. The first purpose of scope management is to plan how project teams should develop scope of a project, including project boundary, product scope (descriptions), project scope, constraints, assumptions, deliverables, etc. Scope baseline is the outcome of any scope planning and definition processes and it would be the basis for subsequent planning activities, e.g. schedule development, cost estimating, human resources planning, risk identification, etc. The second purpose of scope management is to monitor scope baseline against actual work performance variances and change requests to ensure that any variances or changes should be reviewed properly before changes are finalized, in order to avoid scope creep. 2 Scope Control account 2 Scope Definition of scope management 2 Scope How to create a WBS Based on project scope statement, project teams identify deliverables which are required at different project milestones by applying techniques, e.g. product analysis, etc. After deliverables are identified, project teams decompose them onto smaller, measurable work packages. If scope statement details are insufficient for identifying work packages throughout all milestones, project teams may adopt a rolling wave approach to decompose more detailed work packages for closer milestones first. When work packages are decomposed, project teams construct a WBS dictionary with identifiers, description, other supporting details, etc. 2 Scope PMP DICTIONARY TERM Product analysis SUB-TERM DESCRIPTION It is a scope definition technique which gathers and determines the functional, performance, design requirements, etc. of products on projects. It refers to the features of the products, services or results that should be delivered upon project completion, e.g. system functions and utilization rate in a system implementation project. It refers to the requirements of project deliverables and activities that should be performed and delivered in order to meet stakeholders' requirements, e.g. planning and evaluation for a central finalization venue project. KNOWLEDGE AREA Scope KEY TERM / FIGURE 2 Product scope 2 Scope Project scope 2 Scope Project scope management plan It is a subsidiary component of project management plan which consists of details e.g. scope definition procedures, decomposition methologies, scope statement & WBS templates, roles & responsibilities, scope control system, etc. Scope management plan facilitates project teams in performing scope planning and control processes. 2 Scope Project scope statement It is part of scope baseline which defines both product scope and project scope. Project scope statement consists of details e.g. stakeholders' requirements, product descriptions, deliverables, project constraints, assumptions, etc. It is developed on scope definition process. Project scope statement maybe refined from preliminary scope statement which is developed on initiating process group with less details. It is a subsidiary component of project management plan with details of project scope that is developed as per scope definition and create WBS processes. Scope baseline consists of project scope statement, WBS and WBS dictionary (details). It is the basis on which PM control scope against actual deliverables, progress or changes during executing, monitoring and control phases. It is the process during monitoring and control phase to ensure that work performance and deliverables match scope baseline. Scope control process also manages any scope changes to ensure that they are reviewed through ICC, in order to avoid scope creep. 2 Scope Scope baseline 2 Scope Scope control 2 Scope Scope creep It refers to the practice for allowing product or project scopes to be added or changed without review through ICC or evaluating impacts of the changes. This indicates the lack of scope control and ICC on project management. It is the process to define project scope and deliverables from stakeholders' requirements and break the deliverables down onto a WBS with smaller, measurable work packages. It is a series of organized activities on planning, monitoring and controlling project scopes. There are five scope management processes including scope planning, scope development, create WBS, scope verification and scope control. It is a process to inspect, review, walkthrough deliverables for gaining customers' acceptance during monitoring and control process. It is a scope definition technique which gathers and determines project requirements, needs and expectation from stakeholders. It is a hierarchy of deliverables at different milestones and levels of the project life cycle. WBS is created at create WBS process, after scope definition process is finished. It decomposes major project deliverables into smaller work packages for estimates and measurements. In-between deliverables and work packages, WBS may have control accounts / planning packages to summarize work packages. It is usually represented on a diagrammatic format. It is a document to accompany WBS with details of work packages as identified, e.g. identifier, descriptions, work type, resources, etc. It is a smaller, lower-level unit of work, decomposed from project deliverables which project teams are required to perform and deliver. Work package forms the lowest level component on WBS. It allows the project teams to estimate schedule and costs more easily and facilitate work performance measurements and progress reporting. 2 Scope Scope definition and decomposition 2 Scope Scope management process 2 Scope Scope verification 2 Scope Stakeholder analysis 2 Scope WBS 2 Scope WBS dictionary 2 Scope Work package 2 Scope 50/50 rule It refers to practice to report schedule activity completion progress. Instead of assigning a % completed on an activity in progress haphazardly, PM or project teams could apply a 50/50 rule, i.e. to mark an activity as 50% completed once it starts and 100% completed when it finishes. 3 Time 0/100; 20/80; 50/50 Activity list It is a document which lists schedule activities as defined as required to be performed in order to deliver the work packages and deliverables on WBS. Activity list is supplemented by a list of activity attributes which provides supporting details e.g. activity identifiers, precedent and successor activities, resource requirements, etc. Changes of WBS may lead to changes on activity list. It is an estimating technique which estimates activity duration based on similar projects that were performed in the past. Analogous estimating is a top-down approach, requires expert judgment and is most effective when both the current and historical projects are similar on structure. It is an activity sequencing technique which shows activities' precedence and interrelations and produces schedule network diagrams. By applying ADM, activities are represented by arrows on network diagrams and their interrelations are represented by nodes. Only SF precedence could be shown on ADM and some dependences would be indicated by dummy activities (dashed arrows). They are a schedule presentation format on which each activity is indicated by a bar and its duration by the bar's length. Bar charts are visually clear in showing activities status and progress. As detailed activity schedules are shown, bar charts are often used for communication and reporting with project teams and other stakeholders which require to dig down into details. 3 Time Analogous estimate 3 Time Arrow diagramming method (ADM) 3 Time AOA Bar charts 3 Time PMP DICTIONARY TERM Change requests SUB-TERM DESCRIPTION They refer to requests to change project management plan and baselines. In project time management area, after an initial schedule baseline is defined and approved, change requests could be raised when activities, their interrelations, resource requirements, durations, schedules, etc. are changed . These changes may affect schedule baseline, e.g. schedule delays caused by resource unavailability, other baselines or subsidiary project management plans, e.g. additional cost estimates caused by crashing. Change requests should be evaluated by PM and reviewed and approved through ICC. It is a schedule network analysis technique. To apply critical chain method, a schedule network diagram is first produced. Activity interrelations, dependence and precedence are identified to calculate critical path. After the critical path is calculated, resource availabilities are input onto schedule and critical path is usually altered as a result of it. Based on the altered critical path with known resource availabilities, project, resource & feed buffers are added as non-work schedule activities and the schedule's latest start and end dates are determined. Critical chain method focuses on managing buffers on altered critical path instead of floats. It is a schedule network analysis technique. Critical path refers to the path of activities on a schedule network diagram which has the longest duration. This path is critical because delay on any activity on the path would delay the project. Critical path does not have any free or total float. There could be more than one critical paths on a project and risks are generally larger in such cases. PM could apply techniques like crashing or fast tracking to shorten critical path but these may affect costs or risks. Mandatory They indicate dependencies between two activities which are caused by the nature of work, i.e. the successor activities must depend on predecessor activities. E.g., in a new airport project, a runway could be constructed only after the site has been reclaimed. Mandatory dependencies are also known as hard-logic. KNOWLEDGE AREA Time KEY TERM / FIGURE 3 Critical chain method 3 Time Critical path method 3 Time Dependencies 3 Time Dependencies Discretionary They indicate dependencies between two activities which reflect project teams' preferences or best practice, i.e. it is not essential for successor activity to rely on predecessor activity but project teams see benefits of assigning such dependencies. E.g. in a new airport project, a baggage system could be designed without airlines' requirement inputs. But if the design is performed after inputs are submitted, it would help improve the quality of the design. Discretionary dependencies are also known as soft logic or preferential logic. They indicate dependencies between two schedule activities which are caused by external factors. E.g.: in an airlines' new destination project, new destination launch would depend on bilateral aviation agreements controlled by governments. 3 Time Dependencies External 3 Time Efforts They are time which is actually spent on performing a schedule activity. An activity duration would be longer than purely efforts if elapsed time is involved, e.g. if 3 5-day training are conducted within a 3-week period, efforts would be 15 days while activity duration would be 19 days. It is the same as lags. Free float It refers to the duration in which a schedule activity could be delayed without affecting the start date of its successor activity. It refers to the duration of a schedule activity which could be delayed without affecting the end date of its immediate milestone or the whole project. It refers to the duration of a project which could be delayed without affecting its externally assigned end date. They are a graphical / diagrammatic presentation format of schedule activities, their sequences and interrelation. Graphical evaluation and review technique. It indicates conditional branches and loops on activity sequencing. E.g., on a system implementation project, if UAT results fail, UAT would need to be repeated. The results failure indicates a conditional branch and repeated UAT indicates a loop. They are the same as summary activities. It means the rule of thumb. E.g, if a schedule activity is know to take 2 man-days, then the activity duration rate would become heuristics for future planning of the same activity. Lags refer to time which is left idle between a predecessor and a successor. They are the same as elapsed time. Leads refer to time which is saved because two activities which originally have precedence could now be performed (partially) concurrently. Leads may contribute to increasing floats. They are a schedule presentation format which only shows major milestones / phases and their start / completion dates. Milestone charts provide high-level, summarized view on project schedule and progress, so they are usually used for communication and reporting with senior management which does not require excessive details. 3 Time Elapsed time Float / slack 3 3 Time Time LS - ES; LF - EF Float / slack Total float 3 Time Float / slack Project float 3 Time Flowcharts 3 Time GERT 3 Time Hammock activities Heuristics 3 3 Time Time Lags 3 Time Leads 3 Time Milestone charts 3 Time Milestones They indicate major project phases. Milestones consists of various activities, which deliver different deliverables and work packages. It is one type of what-if analysis which simulates the impacts of different variables on schedule. E.g., one type of Monte Carlo analysis takes optimistic, most likely & pessimistic estimates of all activities to calculate the probability of the project completing at different dates. It could also calculate the probability of an activity falling onto critical path. 3 Time Monte Carlo analysis 3 Time PMP DICTIONARY TERM Near critical path SUB-TERM DESCRIPTION It indicates the path of activities in a project which has the 2nd longest duration. Near critical path is secondary to the critical path in terms of duration and risks of delays. PM require monitoring on near-critical paths because they could pose additional risks on schedules, e.g. when their duration is lengthened or critical path's duration is shortened. It is a graphic / diagrammatic presentation of schedule activities and their sequence, interrelationship, dependence and precedence. Network diagrams could be created in two ways, arrow diagramming method (ADM, activities-on-nodes) and precedence diagramming method (PDM, activities-on-arrows). Schedule network diagram is used on activity sequencing and schedule development. It refers to practice to take only one estimate on project activity duration without considering optimistic, most likely and pessimistic scenarios. One-time estimate may result in padding. It refers to practice which adds reserve time on activity duration haphazardly without proper risk identification and analysis. It is a technique to estimate activity duration by calculating resources requirements and their productivity rates. Parametric estimate is a quantitative-based method, e.g. in a training project, if each training session takes 5 working days and 5 training sessions are required, then training execution activity would require 25 working days. KNOWLEDGE AREA Time KEY TERM / FIGURE 3 Network diagram 3 Time One-time estimate 3 Time Padding 3 Time Parametric estimate 3 Time PERT Programme evaluation & review technique. It estimates activity duration with reference to optimistic, most likely and pessimistic scenarios. PERT could also be used to calculate duration range estimates of an activity or the whole project. 3 Time Activity Estimate = [O + 4(M) + P]/6; SD/Sigma = (P-O)/6; Variance = [(P-O)/6]2; Duraion range = Estimate +/- q*SD where q = sigma level Project Estimate = Sum (Estimate 1...n) SD/Sigma = √(Project variance); Variance = Sum (Variance (1…n); Duration range= Estimate +/- q*√(Project variance) where q = sigma level Precedent diagramming method (PDM) It is an activity sequencing technique which shows activities' precedence and interrelations and produces schedule network diagrams.By applying PDM, activities are represented by nodes on network diagrams and their interrelationship is represented by arrows. PDM could be used to show SF, FF, SS & FS precedence. 3 Time AON Progress reporting It is the collection of work performance and progress information from project team and other stakeholders, consolidation of such information and reporting stakeholders using communication methods as defined on communications management plan. 3 Time Resource breakdown structure It is a graphic / diagrammatic presentation of activity resources which are estimated as required. RBS categorize all resources required and show the activities which require these resources. RBS not only facilitates schedule but also accompanies WBS. 3 Time Resource leveling It is a technique to cater for circumstances when resources are only available at a certain time, or when PM would like to stabilize the use of resources over a period of time (i.e. avoid utilizing a resource heavily at a point then leave it half-utilized at another point). In case resources availability is fixed at a certain time, PM may need to perform resource-based estimating to schedule project based on such availability (i.e. backward scheduling). Resource leveling usually results in a longer schedule completion. It is a subsidiary component of project management plan with schedule details as planned on schedule development process. Schedule baseline consists of project schedule (in network diagram, milestone chart or bar chart formats) & schedule modeling data (schedule details). Schedule baseline is the basis for actual project execution progress to be benchmarked. Any change which would affect the baseline should be reviewed and approved through ICC before the baseline is updated. Crashing It is a schedule compression technique on which PM shorten schedule duration by increasing resource inputs on those activities which cause least incremental cost increases. Crashing would result in additional costs, so there is a trade-off between time and cost constraints. Crashing is effective in shortening schedule only when it is applied on activities on critical path. It is a schedule compression technique on which PM shorten project schedules by scheduling some activities to occur concurrently. Fast-tracking increases project risks since quality of delivered maybe adversely affected by the parallel run when precedessor activity is not completed. So risk management would come into place when fast-tracking is applied. It is effective in shortening overall schedule duration only when it is applied on activities on critical path. It is a subsidiary component of project management plan which consists of details e.g. schedule planning & control activities, procedures, formats, methodologies, information sources, roles & responsibilities, schedule change control system, etc. Schedule management plan facilitates project teams in performing all schedule planning and control processes. It is supporting details to project schedule, e.g. activity identifier, description, predecessor, successor, resource requirements, etc. Schedule model data is part of schedule baseline. They are groups of schedule activities which are logically interrelated, e.g. produce the same deliverable. Summary activities are used for easier tracking and monitoring purposes. Summary activities are the same as hammock activities. 3 Time Schedule baseline 3 Time Schedule compression 3 Time Activity crashed - Lowest cost increase for same unit of resources required Schedule compression Fast-tracking 3 Time Schedule management plan 3 Time Schedule model data 3 Time Summary activities 3 Time PMP DICTIONARY TERM Three-point estimate SUB-TERM DESCRIPTION It estimates activity duration with reference to optimistic, most likely and pessimistic scenarios. It refers to a series of organized activities on planning, monitoring and control project schedules. There are six time management processes including activity definition, activity sequencing, activity resource estimating, activity duration estimating, schedule development and schedule control. It refers to an analysis to monitor variances between schedule baseline and actual work progress. Earned value analysis is one type of variance analysis in which PM monitor SV and CV for tracking project progress and budget utilization situations. KNOWLEDGE AREA Time KEY TERM / FIGURE [O + 4(M) + P]/6 3 Time management process 3 Time Variance analysis 3 Time Analogous estimate It is an estimating technique which estimates activity costs based on similar projects that were performed in the past. Analogous estimating is a top-down approach, requires expert judgment and is most effective when both the current and historical projects are similar on structure. It indicates the proportion between financial gains in relation to project cost. It is an estimating technique which estimates costs of individual work packages / activities first, and then aggregate these costs upto control accounts and overall project costs. Bottom-up estimate is more effective if project scope and activity list are clearly defined and parties which perform the actual activities are responsible for estimation. 4 Cost Benefit cost ratio Bottom-up estimate 4 4 Cost Cost Benefits / Cost Cost Variable cost It refers to those cost items on which cost level (amounts) vary as output levels change, e.g. material prices, labour cost, etc. It refers to those cost items on which cost level (amounts) remain the same as output levels change, e.g. office rent, company license, etc. It refers to those cost items which are directly charged to the project, e.g. project team's wages, etc. It refers to those cost items which are not directly charged to the project, e.g. office rent, etc. It is a subsidiary component of project management plan with project budget (cost over project life cycle) as planned on cost budgeting process. Cost budget consists of aggregated activity costs, contingency reserves and management reserves. It indicates the project's funding requirement during project life cycle and is usually represented by a s-shape curve. Cost baseline is the basis for actual project expenditure to be benchmarked. Any change which would affect the baseline should be reviewed and approved through ICC before the baseline is updated. It indicates cost expenditures across lifespan of project life cycle. Cost budget forms a project's cost baseline. It is a subsidiary component of project management plan which consists of details e.g. cost estimation approaches, cost estimation and budgeting processes, contingency and management reserve levels, fund-acquisition policies, roles & responsibilities, approval hierarchy, etc. Cost management plan facilitates project teams in performing all schedule planning and control processes. It refers to a series of organized activities on planning, monitoring and controlling project costs. There are three cost management processes including cost estimating, cost budgeting and cost control. It indicates whether buyer or seller is more prone to risk of significant cost changes under different contract types. It refers to a lower cost estimate variation tolerance levels at project execution phase. 4 Cost Cost Fixed cost 4 Cost Cost Direct cost 4 Cost Cost Indirect cost 4 Cost Cost baseline 4 Cost Cost budget 4 Cost Cost management plan 4 Cost Cost management process 4 Cost Cost risk 4 Cost CR: Buyer FP: Seller T&M: Same Definitive estimate 4 Cost Earned value analysis PV Planned value. It indicates the monetary value of project work which is planned to achieve up to a particular point in time on schedule baseline. Earned value. It indicates the monetary value of project work which is actually completed up to a particular point in time on schedule baseline. If a project is not terminated, its EV would be the same as PV. Actual cost. It indicates the expenditures which is actually spent up to a particular point in time on schedule baseline. Cost performance index. It is a ratio which indicates a project's actual cost expenditures in relation to the project work completed up to a particular point in time on schedule baseline. Cost performance index indicates whether a project is over budget or within budget. Schedule performance index. It is a ratio which indicates a project's actual earned value in relation to planned value up to a particular point in time on schedule baselive. Schedule performance index indicates whether a project is ahead of, on or behind schedule. Cost variance. It indicates the difference between a project's earned value and actual cost up to a particular point in time on schedule baseline. Cost variance indicates whether a project is over budget or within budget and actual amount of difference. 4 Cost Earned value analysis EV 4 Cost Earned value analysis AC 4 Cost Earned value analysis CPI 4 Cost EV / AC. CPI > 1 = Within budget. Earned value analysis SPI 4 Cost EV / PV. SPI > 1 = Ahead of schedule. Earned value analysis CV 4 Cost EV - AC. Positive = Within budget. Earned value analysis SV Schedule variance. It indicates the difference between a project's earned value and planned value up to a particular point in time on schedule baseline. Schedule variance indicates whether a project is ahead of, on or behind schedule and actual amount of difference. Variance at completion. It indicates the difference between actual project cost expenditures and budget at the end of project. 4 Cost EV - PV. Positive = Ahead of schedule. Earned value analysis VAC 4 Cost BAC - EAC PMP DICTIONARY TERM Earned value analysis SUB-TERM BAC DESCRIPTION Budget at completion. It is the same as the original budget which comes up during planning phase. Estimate at completion. It indicates the revised cost expenditure estimate of the whole project based on actual cost expenditures and cost estimates for remaining project work. KNOWLEDGE AREA Cost KEY TERM / FIGURE PV at project closure 4 Earned value analysis EAC 4 Cost Similar performance throughout project: BAC / CPI; Totally wrong: AC + ETC; Performance atypical: AC + (BAC - EV); Performance typical: AC + (BAC - EV) / CPI Earned value analysis ETC Estimate to complete. It indicates the cost expenditure estimate for completing remaining project work. 4 Cost Totally wrong: EAC - AC; Atypical performance: BAC - EV Typical performance: (BAC - EV)/CPI Internal rate of return It indicates rate of capital reinvestment. If several projects are available for selection, the one with the highest IRR would be selected (assuming IRR is the only criteria & only one project is selected to proceed). 4 Cost Law of diminishing returns It means that as amount of inputs increases, marginal outputs will increase at the beginning but start to fall after a certain level. It refers to costs that are incurred throughout the whole product life cycle which extends beyond project life cycle. E.g., product maintenance costs may not be incurred on project's lifespan but at a later part of a product life cycle. It indicates the present equivalent of future revenues / values based on interest rate. If several projects are available for selection, the one with the highest NPV would be selected.. It refers to the best alternative forgone. It is a project cost estimation technique on which amounts of the resources required and per unit resource rates are multiplied to estimate an overall cost. It is more effective if a project's activity resource requirement and resource rates are clear. 4 Cost Life cycle cost 4 Cost Net present value 4 Cost Opportunity cost Parametric estimate 4 4 Cost Cost Payback period It indicates the length of time in which a project takes for its revenues / financial gains to breakeven with project costs. If several projects are available for selection, the one with the shortest payback period would be selected. It refers to current equivalent of monetary values (e.g. income) which are generated in future. Real interest rate is applied when deriving present value from future value. 4 Cost Present value 4 Cost Rough order of magnitude (ROM) It is based on the notion that there are different variation tolerance levels between cost estimates at planning phase and actual cost expenditures at completion. A higher tolerance level is allowed at project planning phase when requirements are more uncertain. Since project requirements will become clearer as it progresses, variation tolerance between cost estimates and actual costs will narrow down. Depreciation is the loss of asset values over time. Straight line depreciation means asset values decrease at a constant rate over time. 4 Cost ROM: -50% - +100%; Budgetary: -10% - +25%; Definitive: -5% - +10% Straight line/accredited depreciation 4 Cost Sunk cost It refers to costs which are incurred historically. As these are historical costs, they could not be avoided. It estimates activity costs with reference to optimistic, most-likely and pessimistic scenarios. It is a technique to increase cost efficiency while performing the same work. It is the difference between current assets and current liabilities. It is the same same as standard deviation. Sigma indicates the control limits within which variances are regarded as acceptable. E.g.: 3 sigma means 3 standard deviations above / below mean. It also indicates the percentage of deliverables which conform to quality standards. It compares a projects' quality performance against other measures or yardsticks. These benchmarks could be from the same or other organizations, or from the same or different application areas. It refers to diagrams which show all possible causes of an event or an outcome. Causeeffect diagram is also called fishbone / Ishikawa diagram. It is a document which states the procedures, quality checkpoints, acceptance or failure criteria, etc. to facilitate project teams to perform quality measurements. 4 Cost Three-point estimate 4 Cost (O+4M+P)/6 Value analysis/engineering Working capital 3 or 6 sigma 4 4 5 Cost Cost Quality Current assets - Current liabilities 1-sigma: 68.26 2-sigma: 95.46 3-sigma: 99.73 6-sigma: 99.99985 Benchmarking 5 Quality Cause-effect diagram 5 Quality Checklist 5 Quality Common cause It refers to attributes or factors which result in variances within acceptable levels. Common cause is also called random cause. It is the practice which emphasizes that everyone in organizations should regularly review and improve their business practice, processes and products. 5 Quality Continuous improvement 5 Quality Control chart Special cause It refers to specific attributes of factors which cause out of control results. Special cause is also called attribute cause. They refer to the upper and lower boundaries within which a quality measurement result would be defined as acceptable. Control limits are usually defined based on 3 or 6-sigma. It refers to the average value of a variable on quality measurement. 5 Quality Control chart Control limits 5 Quality Control chart Mean 5 Quality PMP DICTIONARY TERM Control chart SUB-TERM Specification limits DESCRIPTION They refer to the upper and lower boundaries which are defined by customers as acceptable. Specification limits maybe within or beyond control limits. It refers to the situation in which either a sample is measured to be outside the control limits, or a series of samples are measured between mean and upper / lower control limit continuously, e.g. rule of 7. It refers to the situation in which a group of samples are measured between mean and upper / lower control limit continuously. Rule of seven signals an out of control problem. Cost of conformance refers to cost incurred to ensure projects and deliverables meet quality standards, e.g. training, quality survey costs, etc. Cost of nonconformance refers to cost incurred as a result of quality problems or variances, e.g. rework costs, costs of schedule delays, loss of reputation, etc. It includes prevention costs, detection costs and failure costs. It is the same as marginal analysis. It refers to the degree to which projects' deliverables meet customers' requirements. KNOWLEDGE AREA Quality KEY TERM / FIGURE 5 Control chart Out of control 5 Quality Control chart Rule of seven 5 Quality Cost of conformance and nonconformance 5 Quality Cost of quality Cost-benefit analysis Definition of quality 5 5 5 Quality Quality Quality Design of experiments It is the technique to analyze the impacts of different factors on different variables of processes and products. It is a graphical representation of processes, including inputs, activities, outputs and their interrelations. It refers to the practice on which project teams deliver more than what customers require (defined on projects), e.g. additional functionalities, etc. Gold plating is not desirable. It includes the cost of change requests, corrective actions and defect repairs; schedule delays; customer non-satisfaction, low morale in project teams; poor project or organization reputation, etc. It is a certification standard which is established by International Standard Organization. Organizations could obtain this certification if they pass the certification audits conducted by an authorized inspector. ISO9000 certified means there are set business processes and procedures in place and documented. 5 Quality Flowcharts 5 Quality Gold plating 5 Quality Impact of poor quality 5 Quality ISO9000 5 Quality Just in time It is an inventory management strategy which focuses on replenishing inventory from suppliers only when it is required. Just in time addresses the problem of excessive inventory which results in increasing costs. It is highlights that optimal quality management occurs when its marginal gains equal the marginal costs. This is the optimum level that organizations should perform quality management up to. Marginal analysis is the same as cost-benefit analysis. 5 Quality Marginal analysis 5 Quality Metrics It categorizes items or features which are measured on quality control process and standards and objectives which are defined on quality planning process. 5 Quality Mutually exclusive It indicates a circumstance in which either event A or event B may happen, but both events could not together. It indicates a distribution of variances in a balanced bell shape. 80/20 rule It indicates a trend that 80% of quality problems are caused of 20% of factors / root causes. It indicates the size (number or amount) of deliverables or products which are included on sampling or inspection. It is the modern quality management thought which emphasizes on preventing quality nonconformance from occurring rather than detecting them after execution for corrective actions. The major reason behind is that the cost of conformance (i.e. prevention costs) is much less than the cost of non-conformance (i.e. detection & failure costs). The thought is echoed by another thought that 'quality is planned (quality planning), designed and built-in (QA); not inspected (QC). 5 Quality Normal distribution curve Pareto chart 5 5 Quality Quality Population 5 Quality Prevention over inspection 5 Quality Probability Process Analysis It indicates the likelihood of an event occurring or not occurring. It is a methodology to study processes in order to analyze problems or improvement opportunities. Process analysis usually facilitates continuous process improvement. 5 5 Quality Quality Process improvement plan It is a plan which highlights continuous process improvement of quality management in projects. Process improvement plan consists of details e.g. process improvement objectives, methodologies, roles & responsibilities, forms & templates used, etc. It facilitates project teams in performing process improvement activities on quality assurance process. They refer to a set of interrelated inputs and activities which delivers definite outputs, incl. products, services or results. It indicates reviews, walkthrough, etc. on business processes in organizations in order to verify the extent to which these processes conform to project's quality standards. 5 Quality Processes 5 Quality Quality audits 5 Quality Quality baseline It is the basic quality standards and objectives that are defined to meet customers' requirements. They are tools to facilitate project teams to perform QC. Quality control tools include control charts, histograms, pareto diagrams, run charts, scatter diagrams, flowcharts, etc. 5 Quality Quality control tools 5 Quality PMP DICTIONARY TERM Quality management plan SUB-TERM DESCRIPTION It is a subsidiary component of project management plan which consists of details e.g. customers' requirements, quality standards adopted, process improvement objectives, QA and QC processes, formats, methodologies, roles & responsibilities, change control system, etc. Quality management plan facilitates project teams in performing quality assurance and control processes. It refers to a series of organized activities on planning, monitoring and controlling project and product quality. There are three quality management processes including quality planning, quality assurance & quality control. Nowadays, quality management emphasizes prevention over inspection, so the focus is placed on planning, designing and building in quality on processes to ensure quality fulfillment to customer requirements rather than inspection and corrective actions. Everyone in organizations are responsible for quality. However, management should take the most responsibility because it controls the resources which are made available for meeting quality objectives. It refers to diagrams which show trends / tendency from a group of quality measure results. It is the actual deliverables or products which are selected (randomly) for inspection. KNOWLEDGE AREA Quality KEY TERM / FIGURE 5 Quality management process 5 Quality Responsibility of quality 5 Quality Run chart 5 Quality Sample 5 Quality Scatter diagram It is a graphical representation which plots values from different samples against the same set (2) of variables. Scatter diagram could indicate if these values form any specific pattern or if any correlation exists. It is the same as sigma. It indicates a situation in which the probability of event A occurring does not affect the probability of event B occurring. It is the method to determine sample size to be applied for inspection. It is the thought which emphasizes that everyone in organizations should regularly attempt to improve their business practice, processes and products. 5 Quality Standard deviation Statistical independence 5 5 Quality Quality Statistical sampling Total quality management 5 5 Quality Quality Arbitration It is the practice in which two parties which with a legal disagreement bring the case to an independent mediator who acts to reconcile the case and reaches a solution which both parties accept.The case is not taken to court if it is resolved through arbitration. 6 Human resources Conflict resolution techniques They are skills / approaches to tackle disputes among project team members. Conflict resolution techniques include confront, compromise, smooth, withdraw and force. 6 Human resources Expectancy theory It postulates that people who expect their efforts lead to better performance and are awarded would continue to be effective. They are standard rewards, e.g. pensions, medical leaves, discount purchases, etc., which are offered to staff members as part of their remuneration packages. 6 Human resources Fringe benefits 6 Human resources Ground rules They refer to norms on the allowable / desirable and non-allowable / undesirable behaviour in a project team. It describes a misconception that if a person performs something well, that person would also perform everything else well, without reference to the different natures of work. PM's HR responsibilities include: * Create project team directory. * Create job descriptions for project team members and stakeholders. * Create a staffing management plan, e.g. roles and involvement. * Create training plan for project team. * Create recognition and reward system for project team. * Send project performance appriasals are filed on HR's personnels' records. * Send letters of commendation to project team members and their resource managers * Take care of project team members' needs. It refers to a document which records project team issues occurring throughout project life cycle. They include directing, facilitating, supporting, coaching, consulting, consensus, autocratic, etc. McGregor's X & Y It hypothesizes that staff is divided into two groups: X group lacks initiatives and requires constant supervision; Y group is self-motivated and does not require supervision. It hypothesizes that there are 5 levels of human needs that need to be fulfilled, i.e. physiological, safety, social, esteem & self-actualization. People are motivated only when needs at lower levels are fulfilled. It hypothesizes that there are 2 styles of stimuli affecting people's motivation: hygiene factors are fundamental. These factors do not motivate people but without which people will be demotivated; Motivation agents are factors which, if increased, will enhance people's motivation. It is a hierarchical illustration of individuals and groups which make up a project organization & their reporting relationship. They are additional benefits to individual project team members, e.g. vouchers, etc. 6 Human resources Halo effect 6 Human resources HR responsibilities for project manager 6 Human resources Issue log 6 Human resources Leadership styles 6 Human resources Motivation theory 6 Human resources Motivation theory Maslow's hierarchy 6 Human resources Motivation theory Herzberg's theory 6 Human resources Organizational breakdown structure 6 Human resources Perquisites 6 Human resources Position descriptions They refer to the titles / designations of individual project team members. 6 Human resources PMP DICTIONARY TERM Powers of project manager SUB-TERM DESCRIPTION They indicate the formal and informal authorities that are given to a project manager in an organization on making project-related decisions. It refers to the way in which problems are resolved. Problem solving process includes: * Understanding nature of the problem. * Assessing impacts of the problem. * Considering resolution options. * Deciding solutions. * Implementing the chosen solutions. * Reviewing if solutions could tackle the problem after they are in place. They refer to exercises to evaluate contribution, strengths, weaknesses, opportunities, etc. of individual project team members. It refers to the mechanisms and processes for PM to recognize and reward positive performance of project team members, e.g. perquisites, etc. KNOWLEDGE AREA Human resources KEY TERM / FIGURE 6 Problem solving process 6 Human resources Project performance appraisals 6 Human resources Recognition & reward system 6 Human resources Resource histogram It is a type of histogram on which resource availabilities / requirements at different periods (e.g. weeks, months, etc.) throughout project life cycle are plotted with individual bars. Resource histogram could be used to indicate peak and trough periods of a resource utilization, facilitating resource leveling. 6 Human resources Responsibility assignment matrix It shows the connections between work that needs to be done and project team members (individuals or groups). RAM could be developed at different levels in larger projects. They indicate the reasons which result in conflicts among project team members. Most frequent sources include schedules, project priorities, resources, technical opinions, administrative procedures, costs and personality. 6 Human resources Sources of conflict 6 Human resources Staffing management plan It is a subsidiary component of project management plan which consists of details e.g. project resource requirements, project team acquisition & development processes, training plan, recognition & reward systems, roles & responsibilities, change control system, etc. Staffing management plan facilitates project team acquisition, development and management processes. These are activities which involve project team members and aim at enhancing their understanding and cohesiveness and reducing potential conflicts. 6 Human resources Team building 6 Human resources Team development It includes: * Forming - when the team is in the begining and in the phase of forming a team * Storming - When the team works together and everyone trying to show his power * Norming - when the team get used to each other and work together in a friendly way * Performing - when the team reaches their maximum performance together 6 Human resources Team performance assessment It refers to exercises to evaluate project teams' effectiveness, e.g. team cohesiveness, staff turnover rate, etc. It refers to organized activities or arrangements on which people are given guidances or instructions to acquire knowledge, skills and techniques. It refers the arrangement on which different members of project team originated from different offices / locations work in a central physical location. This is to enhance team cohesiveness and reduce misunderstanding or conflicts among teams. 6 Human resources Training 6 Human resources War room / co-location 6 Human resources Communication blockers They are obstacles which hinder parties from communicating with each other effectively, e.g. personal insults, noise, hostility, language, etc. They refer to the number of ways which could be used for communications among stakeholders. It is a subsidiary component of project management plan which outlines a project's communications requirements, processes, communications technology used, parties involved, frequency, etc. Communications management plan should be set up during project planning phase and aims at clearly defining how communications should take place among different project stakeholders and in different situations throughout project lifecycle. Details e.g. methods of work performance information gathering, frequency and modes of regular project reporting, roles and responsibilities, communication channels are also covered on the plan. It refers to a series of organized activities to manage communications, information distribution, work performance information reporting and managing of stakeholders. The aim is to ensure that required communication channels are established among project's stakeholders to disseminate information throughout the project, in most appropriate ways that meet different stakeholders' (and situations) needs. Formal/informal written They refer written communications conducted in formal (e.g. project management plan, WBS, etc.) / informal (e.g. memo, emails, etc.) channels or occasions. 7 Communications Communication channels 7 Communications n (n - 1) / 2 Communication management plan 7 Communications Communication management process 7 Communications Communications methods 7 Communications Communications methods Formal/informal verbal They refer verbal communications conducted in formal (e.g. presentation, speeches, bidder conferences, etc.) / informal (e.g. internal meetings, conversations, etc.) channels or occasions. It includes mannerism, gesture, etc. 7 Communications Communications model Nonverbal 7 Communications PMP DICTIONARY TERM Communications model SUB-TERM Percent of communication that is It takes 55%. non-verbal Paralingual DESCRIPTION 7 KNOWLEDGE AREA Communications KEY TERM / FIGURE 55% Communications model It refers to pitch, tone, etc. which are associated on communications between senders and receivers. Senders should ensure that proper paralingual is used to facilitate encoding of messages, and receivers should ensure that proper paralingual is used to facilitate active decoding. It means a receiver is trying to confirm receipt and understanding of messages e.g. asking questions, etc. to ensure proper decoding. It means that in communications, receivers should ensure that messages are properly decoded and fully understood. It refers to responses receivers make after they receive and decode messages from senders. It means that it is impossible to control all communication directions among stakeholders, but PM should manage communication channels, directions, methods, etc. to minimize chaos. This refers to the actions taken to implement communications management plan which is set up on planning phase and handles unexpected information requests, e.g. additional reports, which are not planned during planning phase. 7 Communications Communications model Active listening 7 Communications Communications model Effective listening 7 Communications Communications model Feedback 7 Communications Control of communications 7 Communications Information distribution 7 Communications Issue log It is a document used by PM to record and keep tracks of issues with stakeholders which come up during project life cycle. They are part of an organizational process asset which document the experiences as accumulated in a project, e.g. good practice which works effectively, areas which could be improved and recommendations. PM and project teams should refer to lessons learnt from other projects as their own projects proceed. At the same time, when each phase of their projects finish, PM should ensure that lessons learnt are properly documented and stored so that these would become new inputs to the organizational process assets for other (future) projects. 7 Communications Lessons learnt 7 Communications Percentage of time a project manager spends communicating Rules of meetings PM are estimated to take 90% communicating with stakeholders. 7 Communications 90% These are guidelines that are established and agreed by project teams and enforced by PM about what behaviour is allowed and not allowed during meetings. E.g. on time attendance, how to raise questions, how to interrupt a speaker's presentation, how meeting content is documented, etc. are rules of meetings. 7 Communications What should be reported When reporting work performance, status, progress, trends, forecasts, variances, earned values, changes, lessons learnt, etc. should be reported. It is a technique on risk identification process, in which project assumptions as documented on project management plan are reviewed and challenged in order to identify potential risks. It refers to a plan which highlights, if risks as identified occur, triggers that signal the plans' execution, contingency actions to be taken, action ownership, communication channels, monitoring and control processes, fallback plans, etc. It is formulated on risk response planning process though many inputs are also provided on risk management planning, qualitative risk analysis and quantitative risk analysis processes. It refers to outsourcing a schedule activity or risk response action to a third party. 7 Communications Assumption analysis 8 Risk Contingency plan 8 Risk Contracting 8 Risk Data quality assessment It is part of qualitative risk analysis on which data used to identify and classify risks is evaluated for reliability & accuracy. It is a technique which outlines all possible outcomes of a decision to facilitate choice. Decision tree is usually used in conjunction with EMV. It refers to a situation in which its occurrence is not absolutely probable. It is a monetary gain or loss that, as project team anticipates, could be resulted from a risk's occurrence, considering both its probability and its impact. It is often used in conjunction with decision trees to analyze monetary gains or losses of various options and decide appropriate options. It is a plan which highlights the actions to be taken, action ownership, communication channels, monitoring & control processes, etc. in case a contingency plan has become in effective in dealing with risks. It is formulated on risk response planning process. 8 Risk Decision tree 8 Risk Definition of uncertainty Expected monetary value 8 8 Risk Risk Fallback plan 8 Risk Monte Carlo analysis It refers to a simulation modeling technique which analyzes how different variables affect project outcomes. Monte Carlo analysis could provide results on probability of a project meeting objectives or probability of a risk on a critical path. 8 Risk Opportunities Probability & impact It refers to risks which, if occur, will have positive impacts on a project. Probability refers to the statistic likelihood of a risk occurrence. Impact refers to the potential or actual consequences that a risk occurrence could result in. 8 8 Risk Risk PMP DICTIONARY TERM Probability & impact matrix SUB-TERM DESCRIPTION This matrix classifies probabilities and impacts of risks into different groups (e.g. low, moderate, high, very high) and defines risk categories (e.g. low, moderate, critical) based on different probability and impact combinations. It helps classify risks that are identified and facilitates appropriate ranking and priorities for action planning. It is formulated on risk management planning process and updated on risk identification and risk response planning processes. KNOWLEDGE AREA Risk KEY TERM / FIGURE 8 Reserve analysis This refers to organized activities e.g. triggers, contingency actions, action ownership, approval channel, communication channel, etc., which formulate contingency plans to deal with risks in case they occur. This refers to financial resources that are additional to project costs and budgeted for utilization to deal with risks (known-unknown and unknown-unknown) in case they occur. They include contingency reserves and management reserves. 8 Risk Reserves 8 Risk Residual risk It refers to risks which are identified as low ranking / priority on risk identification and qualitative risk analysis processes, and no response actions are planned. 8 Risk Revised project management plan As a result of risk management planning, risk identification, risk response planning and risk monitoring and control processes, different subsidiary plans of project management plan may need to be revised. For example, risk management planning process formulates a risk management plan, which is part of project management plan. It may revise roles & responsibilities, constraints and assumptions on project management plan. Risk identification and risk response planning processes may reveal actual risk thresholds and resource requirements, which may revise schedule baseline, cost baseline, contingency reserves, etc. It refers to audits which are conducted to evaluate project team's performance in performing risk management processes, e.g. completeness of risk management plan, etc. It refers to exercises which reviews, inspects and walkthrough how risk management process is being performed. It refers to those parties which have a more conservative attitude towards risks. They have a lower risk tolerance even if potential gains are huge. It is a hierarchy on which risks with different probability and impact combinations are classified in groups, for the purpose of ranking their criticalness and priorities. It is formulated on risk management planning and risk identification processes. 8 Risk Risk assessment 8 Risk Risk audit 8 Risk Risk averse 8 Risk Risk category 8 Risk Risk identification techniques Cause analysis, assumption analysis, data gathering techniques, risk identification checklists, document reviews, SWOT, etc. It is a subsidiary component of project management plan which consists of details e.g. processes to manage project risks, actions required, deliverables required, roles & responsibilities, approval channel, risk tolerance thresholds, risk breakdown structure (causes), probability & impact matrix (categories), etc. It is formulated on risk management planning process and updated on risk identification and risk response action processes. It refers to a series of organized activities to manage, identify, analyze risks, plan response actions towards these risks, monitor and control these risks and actions. It occurs during planning, execution and monitoring and control phases of project management cycle. It refers to those parties which do not have an conservative or aggressive attitude towards risks. It is a document which consists of details e.g. lists of risks affecting a project, their categories, ranking/priorities, causes, response strategy and actions, response owners, etc. It is formulated on risk identification process and updated on qualitative risk analysis, quantitative risk management, risk response planning and risk monitoring and control processes. It refers to the party which is responsible for taking risk response actions. Avoid This strategy tackles threats by preventing circumstances that may cause risks to occur. 8 Risk Risk management plan 8 Risk Risk management process 8 Risk Risk neutral 8 Risk Risk register 8 Risk Risk response owner Risk response strategies 8 8 Risk Risk Risk response strategies Mitigate This strategy tackles threats by reducing either the probabilities or impacts (or both) of risks. This strategy tackles threats by shifting or allocating activities that bear risks to a third party in order to spread the risk. This strategy seizes opportunities by creating a favourable environment for the occurrence of opportunities. This strategy seizes opportunities by allocating activities ownership to a third party which has a better capability to accomplish the activities in order to actualize the opportunities. This strategy seizes opportunities by creating an environment that increases the probability of opportunities' occurrence or extends the benefits (or both). This strategy handles threats or opportunities by being aware of their occurrence without proactive actions to tackle or seize them. It refers to those parties which have a more aggressive attitude towards risks. They have a higher risk tolerance esp if potential gains are huge. It refers to the risk level on which major project stakeholders e.g. project sponsors and customers could accept. 8 Risk Risk response strategies Transfer 8 Risk Risk response strategies Exploit 8 Risk Risk response strategies Share 8 Risk Risk response strategies Enhance 8 Risk Risk response strategies Accept 8 Risk Risk seeker 8 Risk Risk tolerance 8 Risk PMP DICTIONARY TERM Risk trigger SUB-TERM DESCRIPTION It refers to events or factors which are identified on risk response planning process and, if observed, will signal occurrence of risks and start of corresponding risk response actions. It refers to risks which may come up as a result of certain risk response actions that are planned. For example, if a risk response action is to outsource manufacturing of parts to a third party, a secondary risk would be the potential delay of parts delivery from the vendor. It refers to risks which, if occur, will have negative impacts on a project. They are grouping of risks with common attributes. Types of risks could be classified based on risks' nature (e.g. technological, physical, political, etc.), causes (e.g. electricity failure, PM resignation) or project management areas (e.g. scope, schedule, quality). KNOWLEDGE AREA Risk KEY TERM / FIGURE 8 Secondary risk 8 Risk Threats Types of risk 8 8 Risk Risk Watch list It is a list of low ranking / priority risks which do not have quantitative risk analysis or risk response planning conducted but remain on regular reviews, so that if trend points to their increasing probability of occurrence or impact, their priorities would be raised, quantitative analysis and response planning would be conducted. 8 Risk Workaround It refers to actions which could be taken as alternatives if an originally-planned action could not be executed owing to risks occurrence. It means buyer announcing RFP, IFB and RFQ in mass media, e.g. tender notice on newspaper. Some govt require tenders to be advertised. They are formal meetings between buyer and all potential sellers. Buyer presents procurement requirements and answers enquiries from sellers. Q&A, clarifications and changes which are covered on bidder conferences should be updated on procurement document and sent to all sellers. It refers to the situation in which one party on the contract (i.e. buyer or seller) violates contract terms and conditions. It is a formal assessment hosted by buyers on their contract sellers' fulfillment of contracts, e.g. quality of deliverables, cost and time control capability, issues & problems, opportunities for improvements, etc. The review results should be agreed by both sides, recorded and filed. Buyer-conducted performance review is part of contract administration process which occurs in monitoring and control phase of project lifecycle. In case CRIF, FPIF or other forms of incentive bonus are involved on contract types, buyer-conducted performance review is one of the sources to determine release of such incentives. It indicates whether procurement in an organization is managed through a central contracting dept or decentralized by individual project teams or dept. It refers to the handling of contested and constructive claims which are raised by sellers. Claim administration may include verification of claims' validity, claims approval, negotiation with sellers, arbitration, litigation, etc. Constructive changes Contested changes They are change requests to contracts which are regarded as positive. They are change requests to contracts which raise disputes between buyer and seller, e.g. disputes, appeals, etc. It refers to situations in which project manager and contract administrator are in conflict on contract administration process. Conflicts could come up especially when project manager would like to initiate changes which are different from contract terms. 8 Risk Advertising 9 Procurement Bidder conferences 9 Procurement Breach / default 9 Procurement Buyer-conducted performance review 9 Procurement Centralized / decentralized contacting 9 Procurement Claim administration 9 Procurement Claims Claims 9 9 Procurement Procurement Conflict with contract administrator 9 Procurement Contract It is a legal binding agreement which specifies the requirements and obligation between two parties. It is usually but not always in a written format. 9 Procurement Contract administration work It refers to activities which should be performed for monitoring and controlling sellers for fulfillment of contracts, e.g. verifying sellers' deliverables, ensuing contract change control system is followed in case of changes, performing sellers' performance appraisals, filing and archiving correspondence between buyer and sellers, logging utilization of sellers' resources (e.g. consultants' working time in case of T&M pricing), checking invoices for payment, settling payment, etc. Contract administrative work occurs in monitoring and controlling phase. 9 Procurement Contract change control system It is a defined way to raise, assess, liaise, approve and implement changes on contracts which arise (either from buyer or from seller side) after the contracts are signed. The system may include processes, procedures, authorization parties, roles & responsibilities, templates & forms, filing, etc. to perform the above activities in relation to contract changes. It could be derived from OPA or established specifically for a project. The system forms a part of ICC. It refers to a system to record, file and archive all contracts and related information, e.g. changes, invoices, payment records, logs, correspondences, etc. 9 Procurement Contract file 9 Procurement Contract interpretation Contract management plan It indicates how different terms or conditions would be interpreted legally. It is a subsidiary component of project management plan which outlines the requirements, processes, procedures, authorized parties, roles & responsibilities, etc. relation to the signing, monitoring, verification, change management, closing, filing & archiving of contracts in a project. CR CPFF CPPC CPIF T&M Cost-reimbursed Cost-plus-fixed-fee Cost-plus-%-cost Cost-plus-incentive-fee Time-&-materials 9 9 Procurement Procurement Contract types Contract types Contract types Contract types Contract types 9 9 9 9 9 Procurement Procurement Procurement Procurement Procurement PMP DICTIONARY TERM Contract types Contract types Contract types Contract types SUB-TERM FP FPIF FPEPA Purchase order DESCRIPTION Fixed-price Fixed-price-plus-incentive-fee Fixed-price-plus-economic-price-adjustment It is a unilateral contract, usually signed by buyer, on purchase of commodities, materials, etc. It refers to indicators which are used to measure the capability, competence and competitiveness of sellers. There are three types of evaluation criteria: technical, financial and management. It means the act of god, e.g. natural hazards, etc. which give an allowable excuse for buyer or seller to be unable to fulfill contract requirements. It indicates that a seller has accepted the offer or draft contract from buyer. A contract is going to be signed. It refers to additional bonds or bonus which are given to sellers if they meet or exceed project objectives, e.g. schedule, costs, etc. They include EEF, OPA, project management plan & baselines, scope baseline, etc. Project team will rely on these inputs to evaluate the needs of acquisition and purchases. It is a document which expresses buyer's intention to hire sellers. Letter of intent is not legally binding. It refers to decisions on whether to produce a product, service or result internally, or buy it from an external source. It refers to the practice in which project team performs purchasing or acquisition with sellers without going through seller selection process, e.g. request for proposals or invitation for bidding. Non-competitive form of procurement may occur because the products or expertise services required is only supplied by a seller (monopoly) (e.g. patent holder), or the sellers have provided the same products or services for the project team (or organization) would prefer to continue. It refers to a legally-binding document which limits the disclosure of confidential information to third parties. It indicates a level on which a seller's project cost equals the contract fees it receives. Beyond the point of total assumption are costs which the seller pays from its own. KNOWLEDGE AREA Procurement Procurement Procurement Procurement KEY TERM / FIGURE 9 9 9 9 Evaluation criteria 9 Procurement Force majeure 9 Procurement Formal acceptance 9 Procurement Incentives 9 Procurement Inputs to procurement 9 Procurement Letter of intent 9 Procurement Make or buy 9 Procurement Non-competitive forms of procurement 9 Procurement Non-disclosure agreement 9 Procurement Point of total assumption 9 Procurement Presentations It refers to occasions on which a buyer invites qualified sellers to conduct presentations on their proposals as part of evaluation process. It indicates a condition that if party C is a seller of party B under a contract, and providing products / services for party A, party A still could not contact party C directly as they do not have a contractual relationship. It is a structured review of procurement process from planning acquisition and purchasing to contract administration. Procurement audits are one type of lessons learnt. It is a full set of documents to be sent to potential sellers for evaluating buyer's requirements and creating proposals. Procurement document package includes letter of intent, RFP/IFB/RFQ, contract SOW, bidder conference Q&A and changes, etc. 9 Procurement Privity 9 Procurement Procurement audit 9 Procurement Procurement document package 9 Procurement Procurement documents Procurement documents Procurement documents Procurement management plan RFP IFB RFQ Request for proposal. Invitation for bidding. Request for quotation. It is a subsidiary component of project management plan which outlines the requirements, processes, procedures, parties involved and other information in relation to the planning, management and control of procurement activities in a project. 9 9 9 9 Procurement Procurement Procurement Procurement Procurement management process It refers to the activities about the planning, execution, management and control of procurement that is required for a project. It includes processes, procedures, parties involved, etc. on acquisition planning, contracting, sellers request, monitoring, evaluation, etc. It refers to activities which are performed by buyer to measure quality and verify acceptance of sellers' deliverables. Product verification includes inspection, audits, etc. 9 Procurement Product verification 9 Procurement Project manager's role in procurement A project manager should: * Identify if any products, services that need to procure externally during planning phase or after ICC. * Follow procurement processes, procedures and policy of the organization (if any) or establish one during planning phase. * Communicate with procurement personnel in the organization about its procurement requirements. * Facilitate contracting, requesting seller responses, selecting sellers, contract signing, contract administration and closing activities by providing inputs on what project needs. * Ensure that sellers provide all deliverables and requirements as outlined on the contracts. * Ensure that the organization fulfils all buyer-side obligations. They list sellers which are identified as appropriate for providing products or services that buyer is looking for. Buyer evaluates and selects sellers on qualified seller lists. 9 Procurement Qualified seller lists 9 Procurement Records management system It is a system in which procurement related information is recorded, filed and archived. 9 Procurement Risk and contract types It refers to the fact that buyer and seller assume different risk levels on different contract types. For CR, buyer bears more risks since seller does not have strong incentives to min costs; for FP, seller bears more risks owing to cost fluctuations esp for long run projects. 9 Procurement PMP DICTIONARY TERM Special provisions SUB-TERM DESCRIPTION They refer to terms, conditions or clauses additional to general contract wording. PM usually attach special provisions on contracts for specific projects' requirements. KNOWLEDGE AREA Procurement KEY TERM / FIGURE 9 Standard contract It refers to contract with general terms and conditions. Special provisions are not included. A contract is terminated if it is closed before all deliverables or requirements as covered on the contract are completed. It could be owing to one side's breach of the contract, or upon both sides' agreements (convenience). They refer to clauses on contracts that buyer and seller are legally required to fulfill. 9 Procurement Termination 9 Procurement Terms and conditions 9 Procurement Types of contract statements of work They include performance, functional and design contract SOW. Performance contact SOW states the performance requirements of the products or services purchased, e.g. delivering a specific expertise training, building a customer proposition, etc. Functional contract SOW states the features (mostly of products) purchased, e.g. specifications of computer hardware and machinery. It means that certain work or items are provided without charging customers. It refers to written, verbal agreements (or even actions) between buyers and sellers which are legally-binding. It means being truthful, honest, ontime, committed, non-discriminatory, transparent, fair, self-improving, respect, proactive, etc. 9 Procurement Waiver What makes a legal contract 9 9 Procurement Procurement Act ethically, fairly and professionally towards team and resource owners 10 Prof and social resp Balance stakeholders' interests It means taking all stakeholders' interests into consideration and compromise their interests based on objectives criteria. It means PM should ensure that lessons learnt are thoroughly documented within project teams and properly filed on corp knowledge base / historical database so that other PM / project teams could refer to the lessons learnt. It means taking initiatives in resolving problems when they arise. E.g. confront instead of smooth or withdraw. It means following the right process, abiding by laws and policies, being honest and fair, etc. It means PM should continuously review their personal strangths and weaknesses and enhance their general management, application areas / expertise, project management and softskills. It means PM should ensure that their decisions and actions reflect the principles of responsibilities, respect, fairness and honesty. Alignment of an organization's stated values, the decisions of its leaders, the behaviors that are encouraged by its systems, and the values of its employees. 10 Prof and social resp Contribute to the project management knowledge base 10 Prof and social resp Deal with problems 10 Prof and social resp Do the right thing 10 Prof and social resp Enhance personal professional competence 10 Prof and social resp Ensure individual integrity 10 Prof and social resp Ethical congruence 10 Prof and social resp Follow the right process It means adopting the right PM, organizational processes, policies, etc. wherever applicable. It means ensuring technical interfaces are in place and encouraging proper communications among stakeholders so that they could understand each other's interests, benefits and concerns. It means putting the project's priority, interests and benefits before PM's own personal interests and benefits. It means reporting policy, ethics, legal violations to appropriate organization and, if necessary, parties affected. When workers feel undervalued or their perception of the organization's requirements is out of sync with their personal values, they can engage in retaliatory behavior e.g. stealing, lying, and cheating. It means sharing lessons learnt with other PM within the organization. It means being alert of potential conflicts of interest even if it does not appear likely, and if potential conflicts are observed, proactively disclose to organization involved and avoid them. 10 Prof and social resp Promote interactions among stakeholders 10 Prof and social resp Put the project's needs before your own 10 Prof and social resp Report violations 10 Prof and social resp Retaliatory response 10 Prof and social resp Share lessons learnt Watch for conflicts of interest 10 10 Prof and social resp Prof and social resp