3.participant Guide Project Planning Analysis Control

Project
Management
participant guide
Project Planning, Analysis, and Control

BTV27 0913
www.esi-intl.com
participant guide
Project Planning, Analysis, and

Control
BTV27 0913
www.esi-intl.com
© Copyright ESI International
September 2013
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All material from A Guide to the Project Management Body of Knowledge (PMBOK® Guide) is
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Course Map
Unit 1 Unit 2 Unit 3
Introduction to Project
Introduction Project Project Initiation Planning:
Management The WBS
Unit 4 Unit 5 Unit 6 Unit 7
Risk Baselining the

Estimating Scheduling
Management Project
Unit 8 Unit 9
Project
Implementation:
Monitoring, Project Closeout
Replanning, and
R
Reporting
ti
Welcome
W l to
t
 Emergency phone number
 Local emergency exit procedures
 Cell phones/beepers
 Fax number
Start on time = End on time
 Floor and facility layout
 B k
Breaks
 Start and end expectations
 Attendance
 Exam
© ESI September 2013 btv27-in!.ppt IN-2

Course Scope
This course does—
 Teach the fundamentals, tools, and concepts of
project planning, analysis, and control
 Discuss the role of the project manager as well
as tea
team members
e be s in managing
a ag g a pproject
oject
 Practice fundamentals of project management
This course does not—

not
 Provide training sufficient to sit for the PMP
exam. However, all techniques, tools, and
terminology in this course are consistent with the
PMBOK Guide
“PMP” is a certification mark of the Project Management Institute, Inc., which is registered in the United States and
other nations
nations.
“PMBOK” is a trademark of the Project Management Institute, Inc., which is registered in the United States and
other nations.
Course Objectives
By the end of this course
course, you will be able to
to—
 Describe the roles and responsibilities of project
managers across the project life cycle
 Define and develop the foundations of a project
plan, including the project requirements
document,, work breakdown structure,, schedule,,
and resources
 Describe project risk identification, risk
assessment and risk mitigation strategies
assessment,
 Control the project by managing against the
baseline
 Close out a project effectively

Participant Introductions
 Name
 Location
 Years in current organization
 Project experience
 Expectations of the course
 M t challenging
Most h ll i project
j t you ever worked
k d on

Unit 1
Management
Management The WBS
Risk Baselining the

Estimating
g Scheduling
g
Managementt
M P j t
Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
By the end of this unit
unit, you will be able to—
to
 Discuss key characteristics defining a project
 Identify the types of key stakeholders on the
project
 Describe influences on a project, including
project
p j organizational
g structure and common
external pressures
 Identify the skills that the project manager needs
 Describe project processes that make up every
project
 Explain the triple constraint that affects projects
© ESI September 2013 btv27-01!.ppt 1-2

What Is a Project?
“[A]
[A] temporary endeavor undertaken to create a
unique product, service, or result”
Program X
Project A Project B Project C
Ongoing Business Operation
Program Y
Project D Project E
Source: PMBOK® Guide, p. 553

What Is Project Management?
Project management is—
 “[T]he application of knowledge, skills, tools and
techniques to project activities to meet project
requirements”*
q
 Accomplished through the application and integration
of the project management processes of initiating,
planning, execution, monitoring and controlling, and
closing
l i
 Achieving desired outcomes in a context of conflicting
expectations and changes, using other people’s
resources and having limited authority
resources,
Sound project management helps ensure success.
*Source: PMBOK® Guide, p. 554

Project Influencers
External ORGANIZATION
 Social  Systems
 Cultural  Structures
 Culture
 Environmental Stakeholders
Project Internal
 Economic  Sponsor
 Conflict
 Governmental  p y
Complexity
 End users
 Upper management
 Customers
 Team members
External
 Suppliers
 Subcontractors
 Regulatory agencies

Organizational Structures and Their
Influence on Projects
Functional Matrixed Structure Projectized

Structure Weak Matrix Strong Matrix Structure
Project Management Authority Project Management Authority

Decreases Increases
Appendix B
Making the Matrix Work
 Successful operation depends on the attitudes
attitudes,
actions, and activities of the people involved
 A project charter is extremely helpful
 Project managers and functional managers must
develop good working relationships
 Project managers must realize that they get their
job accomplished primarily through the process
of negotiation and leadership
 Project team members must adapt to a two two-boss
boss
situation

Project
P j t Organization:
O i ti Survival
S i l
Techniques
 Have a charter that clearly defines expectations
 Learn how to anticipate and constructively
channel conflict
 Establish a clear project scope with team
members
 Develop methods to promote teamwork
 Document approval of objectives, plans, and
budgets
S
Source: Y
Youker,
k 1977

Project
P j tO Organization:
i ti Survival
S i l
Techniques (continued)
 Reduce uncertainty and risk through careful and
continual planning
 Plan globally; think locally
 Develop political awareness:
 Know the key players
 Know their goals
 Know your strengths and weaknesses
Source: Youker, 1977

Sources off C
S Conflict
fli t iin a P
Project
j t
Environment
 Conflicts arise from differences in goals
goals, facts
facts,
values, and methods
 Organizational features that contribute to conflict
in project organizations include—
 Functional and project structures
 Status and authority
 Competition for resources
 Reward and compensation programs
 Communication networks

Sources off Conflict
S C fli t in
i a Project
P j t
Environment (continued)
 Major sources of conflict on project teams
include—
 Costs and schedules
 Priorities
 Administrative procedures
 Technical recommendations
 Resources
 Personalities

Complexity and Change
 Complexity is influenced by both internal and
external changes:
 Changing players
 Budgetary instability
 Changing technology
 Changing competitive environment
 People changing their minds
 Changing macroeconomic forces

Complexity
Complexity is a fact of life: n (n – 1) / 2
connections.
 Project
j manager
g  Brand and channel
 Project sponsor processes
 Customers  General managers
 Auditors  Vice presidents
 Resellers  Directors
 Integrators  Reengineering teams
 Legacy systems
Global Projects Increase Complexity
 Number of interfaces
 Temporal differences
 Physical distance
 Language issues
 Cultural differences
 C
Country-specific
t ifi llaws and
d regulations
l ti

Need for Skillful Project Management
Expectations are higher from—
from
 Customers
 Staff
 Management

Skills Needed by Project Managers
Hard Skills Soft Skills
 Contracting  Communicating
 Financing  Negotiating
 Measuring  Satisfying customers

performance  Managing change
 Monitoring quality  Beinggp politicallyy astute
 Analyzing risks  Thinking in geographic
and worldwide terms
 Understanding the
needs of people
 Thinking systemically

Project
P j t Manager
M Roles
R l and
d
Responsibilities
 Explicit role: Managing the project
 Related roles: Planning, leading, negotiating,
communicating, running interference,
prioritizing…
 Professional responsibilities: Integrity, action-
orientation,, self-improvement,
p , fairness,, honesty,
y,
professional conduct

Tools Available to the PM
 PMBOK® Guide
 Project life cycles
 The nine knowledge areas
 The five process groups
 The triple constraint
 Oth
Others
 Commercially available methodologies
 Company
p y methodologiesg

Project Life Cycle
 Projects are usually divided into phases
 Collectively, these phases make up the project
life cycle
I P I C
Initiation Planning Implementation Closeout
 Needs Assessment  WBS, Budget, Schedule  Change Management  Final Risk Management
 Project Definition  Resource/Staffing Plan  Risk Control  Customer Satisfaction
Key  Project Selection  Project Control and Survey
 Risk Management Plan
Activities  Project Charter  Communications Plan Evaluations  Lessons Learned
 Project Requirements  Procurement Plan  Forecasting  Final Project Evaluation
Document  Monitoring  Personnel/Material
 Scope Statement  Status Reporting Closeout
Appendix C: Project Life Cycles

PMBOK® G id ’ Ten
Guide’s T KKnowledge
l d
Areas
 Knowledge areas describe project management
k
knowledge
l d and d practice
ti ththrough
h th
their
i componentt
processes
 Project management is organized into ten knowledge
areas:
 Integration
 Scope
 Time
 Cost
 Quality
 Human resources
 Communications
 Risk
 Procurement
 Stakeholder Management
The Triple Constraint
Tim
st
Co
e
Scope

Managing
M i P Projects
j t U Using
i ththe T
Triple
i l
Constraint
 Balancing the three “sides”
sides while managing the
project
 Combining art and science
 Ongoing effort to define, refine, and re-refine
project
 Based on a foundation of process management
Process
Tim
st
Co
Scope
Management
Exercise 1-1:
The Importance of PMs

Key Messages
 “A
A project is a temporary endeavor undertaken to
create a unique product, service, or result”*
 “Project management is the application of
knowledge, skills, tools and techniques to project
activities to meet project requirements”
 The manyy influences on a p project
j range
g from the
organization of the team to key stakeholders
 Effective communication with all stakeholders is
important for project success
Reading
g A: Project
j Management
g Program
g Fundamentals Prep
p Pack
*Source: PMBOK® Guide, pp. 554, 553

Key Messages (continued)
 The project manager has a variety of

responsibilities to make sure the project is
headed in the right direction
 Every project has a life cycle with identifiable
phases and activities
 Five interacting gpprocess ggroups
p make up pa
project: Initiating, planning, executing, monitoring
and controlling, and closing
 The triple constraint of time,
time cost,
cost and scope
underlies every project

Unit 2
Project Initiation
Management The WBS
Risk Baselining the

g
Management j
Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
By the end of this unit, you will be able to—
 Describe quantitative and qualitative factors that
are used in project selection
 Identify
y high-level
g risks inherent in a p
project
j
before it is planned
 Develop good project objectives based on
assessing g needs
 Distinguish between functional and technical
requirements and their roles
 Develop a project charter
 Develop a project requirements document and
document the project’s scope

Initiating a Project
Activities
 Conduct needs assessment and stakeholder
assessments
 Determine project definition
 Calculate values used in project selection
Deliverables
 Project charter
 Project requirements document
 Scope statement

Assessing Needs
 Needs
 Exist on a variety of levels
 Should be separated from wants
 Projects are often built on conflicting needs
 Customers often do not actually know or
understand their needs
 Some typical assessment techniques include—
include
 Group workshops
 Interviews
 Document reviews
 Surveys
 Audits

Basic Project Definition Questions
The first step in the project definition process is
to address the following questions:
 Precisely who is affected by the project?
 What
Wh t are the
th requirements
i t off those
th affected?
ff t d?
 Where are we now?
 Where should we end up?
 What are the technical performance requirements?
 What are the cost limitations?
 What is the p project’s
j duration includingg time-to-
market, time-to-profitability, and total life cycle?
 What are the risks?
 Which aspects of deliverables are most important
(technical, ease of use, distribution)?
Differences Between
Diff B t Goals,
G l Objectives,
Obj ti
Requirements, and Specifications
G l
Goals: Ends
E d th
thatt th
the organization
i ti strives
ti to
t attain—
tt i
for example, becoming the leader in indoor
mall transit systems
Objectives: Specific targets that further the goal—for
example, implementing a new mall transit
system for a shopping mall, within budget,
to be
b operational
i lb
by S September
b 1
Requirements: The needs of the customer that refine the
objectives in sufficient detail to plan the
work
Specifications: The organization’s approach to meeting the
requirements,
q ,g
goals,, and objectives,
j ,
described in considerable detail
Formulating Good Objectives
An objective—
 Is an understanding between someone who
needs something and someone who can provide
it
 Exists at all levels (corporate, project, work team,
specific task)
 Uses the SMART model
 S = Specific
 M = Measurable
 A = Agreed-to
 R = Realistic
 T = Time
Time-constrained
constrained

Ensuring Good Project Objectives
When an objective meets the SMART criteria,
criteria it
it—
 Can survive the departure of a key team member
without diluting its clarity
 Matches the organization’s approach to doing
business
 Serves the customer need without restricting how
the job is accomplished
 Serves as a foundation for the work breakdown
structure (WBS)

Exercise 2-1
Formulating Good Objectives

Project Selection
 Selection practices are unique to each
organization
 Best practices encourage objectivity
 Project selection is rarely purely quantitative
 Selection should align with an organization’s
strategic intent

Selection Tools
 Quantitative tools
 Life cycle cost (LCC)
 Profitability tools
 Payback period
 Benefit-cost ratio (BCR)
 Return on sales (ROS)
 Present value (PV) and net present value (NPV)
 Return on assets (ROA)
 Economic value add (EVA) and economic value
loss (EVL)
 Qualitative factors
 Stakeholder bias
 Organizational fit
 Risk analysis

Life-Cycle Cost (LCC) Approach
Technique assesses “total
total cost of ownership
ownership”
from project inception to disposal:
 Normalizes all risks to measure their effect on
baseline LCC
 Usually uses computer model
 Generally used for complex projects that are

relatively expensive and multiyear in duration

Profitability Measures
 Assess the relative levels
levels-of-return
of return to an
organization from various alternatives
 May be applied to factors having nothing to do
with monetary profit or loss; are a means to
evaluate the relative desirability of a given option
 Are selected for use based on the relative length
g
of an option, the level of investment, and the
timing of inflow and outflow

Profitability Measures (continued)
In order of increasing complexity

complexity, the most
common profitability measures are—
 Benefit-Cost Ratio (BCR)
 Return on sales (ROS) or simple profit
 Present value and net present value (NPV)
 Return on assets (ROA) or return on investment

(ROI)
 Economic value added (EVA)

Benefit-Cost Ratio (BCR)
A comparative analysis of benefits vs vs. costs:
benefit/cost
Example:
 Project A will charge $100
$100,000
000 (cost) and generate
$150,000 in value (benefit)
 Project B will charge $100,000 (cost) and generate
$160,000
$ , in value (benefit)
( )
Which has a higher BCR?

ROS
 ROS is a simple,
simple non
non-time-dependent
time dependent measure of
net profit or return as a percentage of a project’s
total sales or revenue generated
Net profit
ROS 
Sales
 Negative return on sales indicates a loss

ROS Example
Components of a computer system are purchased
for $500,000. Additional systems integration and
programming work is performed for $200,000.
Indirect (overhead) expenses of 50% of labor costs
are allocated to the project. Once assembled, the
computer system is sold for $1 million. Income taxes
are 40%.
40%
Calculate net profit and return on sales.

ROS Example (continued)
Sales = $1,000,000
$1 000 000
Material = - 500,000
Labor = - 200,000
Overhead = - 100,000
Profit = 200,000
T
Taxes = - 80,000
80 000
Net Profit = $ 120,000
Net profit $120
$120,000
000
ROS=   .12  12%
Sales $1,000,000

Present Value
What is the value today of future cash flow?

PV= FV / (1+ i )n
Remember —
PV= present value of money
FV= future
f value
i = interest rate or internal discount rate
n = number
b off time
ti periods
i d from
f today
t d

Net Present Value
NPV = PV(Benefits) – PV(Investments)
Using a Discount Rate (Interest) of 10%
Project
P j tA Total
T t l
Year Initial Investment 1 2 3 Benefit
Cash Flow -100k 75k 75k 0 150k
Project B Total
Year Initial Investment 1 2 3 Benefit
C h Fl
Cash Flow -100k
100k 0 50k 110k 160k
Whi h project
Which j t is
i financially
fi i ll smarter?
t ?
ROA
 A relative measure of profitability comparing an
organization’s return on an effort with its overall
investment in assets required to perform the
effort
 Sometimes referred to as return on investment
(ROI) Net profit
ROA 
Total assets

ROA Example
In the previous example
example, assume that the computer
assembly operation required an asset base of
$2 million to support its operation.
Calculate ROA.
Net profit $120,000

ROA=
ROA   6%
Total assets $2,000,000

EVA and Economic Value Loss (EVL)
 Approach that evaluates the return-on-capital

percentage vs. the cost-of-capital percentage
 Can be calculated using various methods
 Assesses the effectiveness of creating value for
shareholders

What Is the Cost of Capital?
 Represents the cost of financing an
organization’s operations
 Reflects the minimum rate of return required by
investors:
 Debt holders require interest and principal
p y
repayment
 Shareholders require dividends and stock
price appreciation
 Focusing on the cost of capital enables an
organization to identify development projects that
create value for shareholders

EVA Approach
 To calculate EVA,
EVA you must know
know––
 NOPAT: Net operating profit after taxes
 WACC: Weighted
WACC W i ht d average costt off capital
it l
(expressed as a percentage)
 C: Capital used on the project
EVA = NOPAT – (WACC x C)

EVA Example
 Using the same information from the ROS and
ROA examples, assume the weighted average
cost of capital for your company is determined to
be 10%
 Calculate EVA
EVA = NOPAT – (WACC x C)
= $120,000 – (10% x $2,000,000)
= $120,000 – $200,000)
= –$80,000*
*This negative value = Economic Value Loss (EVL)

Raising EVA
There are five ways to increase EVA:
 Earn more profit without using more capital.
You probably spend much of your time thinking of
ways to do this; cost cutting is today’s favorite
method. There is nothing wrong with that, but
focusing on it often blinds companies to other
ways of raising EVA.

Raising EVA (continued)
 capital. In practice,
Use less capital practice this is often the
method that companies adopting EVA find most
effective. Coke uses plastic containers for
concentrate instead of costlier metal ones
ones. CSX
figures out how to operate with 100 locomotives
instead of 150. Quaker reschedules production
t require
to i ffewer warehouses.
h Wh
Whatt tto d
do with
ith
the capital saved? Companies can return it to
shareholders through higher dividends or stock
b b k or th
buybacks, they can...

Raising EVA (continued)
 Invest capital in high

high-return projects. This is
return projects
what growth is all about. Just make sure you
expect these projects to earn more than the total
cost of the capital they require
require.
 Use cheaper capital. Less expensive capital
reduces the total cost of the capital.
 Reduce tax burden. If the capital structure
cannot be changed then the next place to look is
p
the net operatinggpprofit after taxes ((NOPAT).
)
Reducing the tax burden increases NOPAT.

Summary off Profitability
S P fit bilit Measurement
M t
Tools and Techniques
Tool Advantages Disadvantages
ROS  Simplicity of use  Does not evaluate relative levels of

 Simplicity of understanding investment
 Flexibility  Does not consider length of project or effort
 Does not reflect time value of return
ROA  Reflects actual level of investment in effort  More complex than ROS measurement
 Easy method is relatively accurate
EVA  Measures value created  No set formulas

 Easy to understand  Difficult to compute EVA at project level
 Focuses decision making
NPV  Assesses time value of money  Cannot effectively perform cross-project

comparisons because NPV is an absolute
 Easy to use measure, not a relative measure such as
percentage

Payback Period
 Making money is not the only goal of the project
 How quickly you make the money is also critical
 How long it takes to get your investment back
Year Project A Project B

Cash Flow Cash Flow
0 -100K
100K -100K
100K
1 75K 0
2 75K 50K
3 0 110K
Total Benefit 50K 60K
Whi h has
Which h the
th shorter
h t payback
b k period?
i d?

Exercise 2-2
Present Value

Qualitative Factors in Project Selection
 Stakeholder bias
 Power
 Concern
 Organizational fit
 Risk analysis
 High-level
Hi h l l ffocus
 Inherent risks

Project Charter
A project charter is a
a—
 Formal recognition of the project
 Reference of authority for the future of the project
 Summary of project goals and objectives
 Written agreement between senior management,

the project manager
manager, and the functional
managers
 Preliminary delineation of roles and
responsibilities
ibiliti
Tool: Project Charter

Project Charter Fundamentals
 Set boundaries
 Be as concise as possible
 Identify positions of responsibilities, the names of
persons who hold themthem, and their titles
 Assess stakeholders’ power and concern for the
project
 M out the
Map h flow
fl off documentation
d i and d
information in advance
 Establish expectations for change control,
b d t and
budget, d status
t t reportst
 Have senior management and functional support
managers review and sign the document

Project Requirements Document (PRD)
 Documents project and product requirements
 Is drafted by the project team and approved by
senior management and stakeholders
 Is used to build consensus among key
stakeholders
T l P
Tool: Project
j tR Requirements
i t

Project Requirements
 Gathered, refined,
Gathered refined verified,
verified and validated
throughout all phases in the project life cycle:
 Project team is responsible for project
requirements activities
 Documented in project plan

Requirements:
R i t Functional
F ti l and
d
Technical
Functional: The Whats Technical: The Hows
 Nontechnical  Detailed components
 Understandable  Particular technology
 What it is and does  Performance specifications
 Features and capabilities  Project team-oriented
 Customer-oriented 
Key problems
 Customers giving technical requirements, such as telling the
team how to do the technical work
 Team members wanting to rewrite the customer’s functional
requirements—that is, changing the customer’s what-is-
needed specifications without approval

Prototyping
P t t i anddP
Progressive
i
Elaboration
Prototyping Progressive Elaboration
 Dynamic development  Project specifications
of requirements are carefully coordinated
 Customer
C t d
defines
fi with proper project
general requirements scope definition
 Team builds  Especially important
prototypes,
t t or models,
d l when projects are
to help customer clarify performed under
its requirements contract
 Rules
R l stilltill mustt exist,
i t
or chaos results

Project Requirements Checklist
The following topics should be addressed in the
project plan:
Aggregating By assessing the requirements of the project at hand, as
requirements: well as other related efforts within the organization, it is
possible to simultaneously enhance the economics of a
project and reduce workload by joint development.
Similarly, if a project does not match an existing endeavor
but is similar in its requirements, some of the insight gained
during the previous requirements definition process may be
instrumental in preparing the current requirements.
Customer Refined and validated during all phases of the project

requirements: life cycle. Customer requirements and buying criteria are
established using customer, market intelligence, and
financial performance information for each market
segment.
g

Project
P j tR Requirements
i t Ch
Checklist
kli t
(continued)
Technical/ The project must live up to the established technical/
service service performance requirements to ensure that customer
performance: needs and expectations will be met. Technical/service
performance includes areas other than engineering.
Workload Considerations must include the entire product/service

and life cycle of the project, as well as peripheral support,
capabilities: ongoing maintenance, and management.
Compatibility: For projects under consideration, the effects of any

interfaces with existing programs or projects, and
coexistence with any efforts being replaced or
supplemented, must be taken into account.
Deliverables Project deliverables must be developed in conformance

management: with relevant product and/or project management
methodologies, if applicable.

Project
P j tR Requirements
i t Ch
Checklist
kli t
(continued)
Training: As an element of any project, training requirements must

be evaluated to ensure effective use of resources.
Space: Space and environmental considerations also must be taken

into account, particularly in projects requiring extensive
adjustments to existing physical limitations.
Validation: M easurement systems must be put in place to assess the

performance of the project to ensure that it is meeting the
requirements.
Contingencies As w ith any effort, alternatives must be introduced and

(risk assessed to ensure that there are no adverse effects on the
assessment): company.

Two Important Inherent Risk Criteria
Newness of Technology
NEW OLD
LARGE
Very High High

ze
Project Siz
Medium High Low

SMALL

Examples of Inherent Risk Factors
 Project “size”
size
 Untried solutions or technology
 Lack of a clear project management process
 No clear project management structure
 An environment of fluid priority changes
 P j t manager’s
Project ’ low
l experience
i llevell
 No clear ownership, buy-in, or commitment
 Scarcityy of relevant resources and skills
 Prescribed deadline or urgency of completion

Reducing Inherent Risk
 Break project into modules and stages and clarify
project priorities
 Manage by phase (making commitments based
on time horizons)
 Prototype with untried technologies
 Use the most experienced project managers
available
 Clarify project structures and reporting lines, and
do not start until they are in place
 Focus early on team building
 Establish a communication p plan

Risks
Ri k Associated
A i t d with
ith All
Requirements
 Changing requirements
 Underestimating cost of satisfying requirements
 Incomplete requirements
 Misinterpreted requirements
 Vague requirements
 C t
Customers are nott always
l sure off their
th i needs
d

Specification Questions
A review of fundamental questions can provide
insight on a project’s requirements:
 What should it do?
 Who are the customers?
 How much will it cost the customer?
 How will it be marketed?
 Where will it be bought?
 How will it be ordered?
 How long will it last?

Specification Questions (continued)
 Are similar products already in development or

operation?
 What is the cost plan?
 How long is the development process?
 How will it be serviced?
 Can the organization
organization’ss existing infrastructure
support it?
 What outside support is required?
 How will success be defined?
 How will the organization support the project
during its life cycle?

Project
P j t Definition
D fi iti anddRRequirements:
i t
Organizing for Results
The project manager is the focal point
 Collaborate with functional managers regarding—
 Need to collect additional requirements
 Who to query
 Verification and validation of requirements
 Sign-off
Si ff process

Case Study 2-1
Document

From Concept to Planning
Charter/PRD/Scope Definition

Key Messages
 Projects require clear needs assessments to create a
stable set of expectations and reduce the number of
changes
 Outcomes and products need to be made specific
 Documenting scope is vital to understanding the
project and managing changes along the way
 P j t h
Projects have inherent
i h t risks
i k ffrom the
th momentt they
th
start

Unit 3
Project Planning: The WBS

Management The WBS
Risk Baselining the

g
Management j
Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
 Identify and observe how project managers work
with project teams to plan a project
 Plan for the scope of a project through a work
breakdown structure
 Begin producing a project plan

Planning’s
Pl i ’ Foundation:
F d ti Scope
S and
d
Requirements
 Scope is “the
the sum of the products,
products services,
services and
results to be provided as a project”*
 Scope was outlined in the project initiation phase
and documented in the PRD; it is now time to
focus on project details
 Clear requirements
q p
provide control duringg the
project

An Approach to Planning
Estimate
Scope Develop  Resources Develop
Definition WBS  Activity Duration Schedule
 Cost
 Risks
Yes, still changing Refine

Schedule
No, ready
y to baseline!
Finalize Schedule
Finalize
Baseline
Project Plan
Finalize all other plans
 Communication
 Procurement
 Human Resources
 Q lit
Quality

Scope Definition—A Proven Agenda
 Project mission and purpose
 End deliverables (outcomes) and phase
deliverables
 End conditions (for measuring completion and
success)
 Project exclusions (what it is not) and
nonnegotiable items
 Constraints, such as expandability, compatibility,
flexibility physical limits
flexibility, limits, timing
timing, and money
 Assumptions

Scope Definition—A
S D fi iti APProven A
Agenda
d
(continued)
 Geographic locations (of project),
project) with travel
travel, time
zone, and language implications
 Implications of external and internal organizations
involved in the project
 Relative priority of the project

Work Breakdown Structure (WBS)
 “A
A hierarchical decomposition of the total scope
of work to be carried out by the project team to
accomplish the project objectives and create the
required deliverables”*
 It also organizes and defines total scope

Where Does the WBS Originate?
 Templates
 Past projects
 System tutorials
 Creative energy
 Expert opinion

Benefits of a WBS
 Defines the objectives and identifies all the work
necessary to accomplish them
 Identifies only the necessary work
 Identifies specific work packages for estimating
and assigning work
 Provides a structure for measuring success
 Forces detailed planning and documentation
 Clarifies responsibilities
 Builds team member commitment

Uses of a WBS
 Planning and budgeting

 Funding
 Estimating
 Scheduling
 Performance measurement
 C fi
Configuration
ti managementt
 Integrated logistic support
 Test and p
performance evaluation

WBS Sample: Graphical Format
1.0 Management
Information
Software System
1.2
1 2 Specification
ifi ti 1 3 Systtems
1.3
1.1 Needs Assessment
Development Engineering
1.2.1 Develop 1.2.3 Develop

1.2.2 Develop detailed
preliminary software preliminary hardware
software specs
specs specs
1.3.1 Develop 1.3.2 Develop 1.3.3 Develop cost 1.3.4 Determine best 1.3.5 Develop
alternative software alternative hardware estimates for each technical and cost- preferred system
approaches
h approaches
h alternative
lt ti approach h effective
ff ti approach h architecture
hit t
1.1.1 Measure 1.1.2 Determine 1.1.3 Develop 1.1.4 Develop

state of current future capability alternative system
system requirements approaches requirements

WBS Sample: Indented Format
1.0 Management Information Software System

1.1 Needs Assessment
1.1.1 Measure state of current system
p y requirements
1.1.2 Determine future capability q
1.1.3 Develop alternative approaches
1.1.4 Develop system requirements
1.2 Specification Development
1.2.1 Develop preliminary software specifications
122D
1.2.2 Develop
l d detailed
t il d software
ft specifications
ifi ti
1.2.3 Develop preliminary hardware specifications
1.3 Systems Engineering
1.3.1 Develop alternative software approaches
1.3.2 Develop alternative hardware approaches
1.3.3 Develop cost estimates for each alternative approach
1.3.4 Determine best technical and cost-effective approach
1.3.5 Develop preferred system architecture

Approaches to Developing a WBS
 By deliverable
 By product
 “What do I have to do to create_____?”
 By function or department
 By resource
 “Who
“Wh will
ill d
do th
the work
k tto create____?”
t ?”
 By time frame
 Phase of life cycle
y
 “When will the work to create____be done?”

Developing a WBS
1. Understand the purpose of the project
1
2. Establish the major breakout segments of the work
3. Break down these large pieces into the next level of
components t
4. Break down each component into subcomponents
5. Continue down to the level where project work will be
assigned and monitored
6. Hold review session with core project team, client, and
other key stakeholders to gain buy-in and identify
missing items
7. Prepare the WBS dictionary

Key WBS Terms
 Work package
 Lowest level of the WBS
 Level where work is assigned and monitored
 Basic level for addressing schedules, costing,
and resources needed
 Control account
 Typically one level above the work package
 Level for management reporting
 Planning package
 An unplanned work package
 A work package without detail

WBS Dictionary
Di ti
 Is NOT a book of terms and definitions

 Provides detailed background on each work package
 Captures critical information about the work package,
suchh as—
 Specific activities required  Successors
to complete the work package  Duration
 Assumptions  Start and end date
 Resources  Budget
 Predecessors  Risks
 Has varied content depending on need for information
Tool: WBS Dictionary

WBS Numbering System
 WBS numbering supports
easy reference to specific
work items 1.0 Management Information Software System
 Conventional numbering 1.1 Needs Assessment
y
1.1.1 Measure state of current system
uses a decimal system of 1.1.2 Determine future capability
increasing detail requirements
 After the numbers are 1.1.3 Develop alternative approaches
established— 1.1.4 Develop system requirements
1 2 Specification Development
1.2
 Add numbers for new 1.2.1 Develop preliminary software
work specifications
 Do NOT delete 1.2.2 Develop detailed software specifications
numbers no longer in 1.2.3 Develop preliminary hardware
specifications
project (not used)
 Do NOT reuse
numbers
 DoD NOT change
h
numbers
Exercise 3-1
Creating a WBS

Using the WBS in Other Plans
 The WBS identifies the work to be done
 If necessary decompose work packages to
activities
 Activities translate the WBS into a precedence
diagram, then to the schedule
 Developing the project plan requires that
activities be quantified
 Quantify activities by estimating expected—
 Duration
D ti
 Resources needed
 Cost

Key Messages
 The core project team is involved in project
planning
 Understanding the scope is key to project
planning
 A work breakdown structure (WBS) is a
deliverable-oriented method to break down the
scope to plan for its completion
 Although a WBS has different formats, levels of
detail and ways of being created
detail, created, the work
package is always the bottommost level
 A WBS dictionary provides important working-
l
levell iinformation
f ti about
b t eachh work
k package
k
Unit 4
Risk Management
Management The WBS
Risk Baselining the

g
Management j
Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
 Define risk and risk management
 Describe the benefits of doing risk management
 Describe how and when risk management is
used within the PM life cycle
 Describe the basic ESI eight-step risk
management model d l andd activities
i ii
 Identify project risk using a variety of techniques
 Analyze
y p project
j risks using
g systematic
y techniques
q
 Prioritize project risks
 Plan and implement basic risk response
strategies

Key Definitions
Risk
 “An uncertain event or condition that, if it occurs,
has a positive or negative effect on one or more
project objectives
objectives”
Project risk management
 “…includes the processes concerned with
conducting risk management planning,
identification, analysis, response planning, and
controlling risk on a project”
Source: PMBOK® Guide, pp. 555, 559

“PMBOK” is a trademark of the Project Management Institute, Inc., which is registered in the
Elements of Risk
 A definable event
 Timing: Short- or long-term potential of risk
occurring
 Frequency: How often the event might occur
 Probability of occurrence
 Impact (consequence) of occurrence

Dual Nature of Risk
Threat Opportunity
Probability Consequence Probability Benefit

of of of of
occurrence failure success success

Benefits of Risk Management
 Minimizes management by crisis
 Minimizes surprises and problems
 Gains competitive advantage
 Decreases overall probability of project variances
 Increases probability of project success
 I
Increases profitability
fit bilit
 Focuses on building the right product the first
time
 Prevents problems from occurring, or if they do,
from escalating

Responsibilities in Risk Management
Project manager Project team
 Initiate and lead the risk  Understand and follow the

management process risk management process
 Provide direction to the  Execute risk management
project team on the risk strategies
management process and  Report status on the risk
tools management process

Risk
Ri kMManagement—A
t A Full
F ll Project
P j t Lif
Life-
Cycle Responsibility
Project Life Cycle
Implement
Initiate Plan Closeout
Execute Control
Risk Planning Processes

Preliminary Final Project Project
project
j t plan
l project
j t plan
l replanning
l i replanning
l i
Risk assessment and response processes are performed—
 At regular intervals throughout the project life cycle
 Every time a new baseline or plan is established
 At major milestones or decision check points
Risk Monitoring and Control Processes
Risk monitoring and control processes are performed—
 Continuously y throughout
g the p
project
j life cycle
y
 During project status and reporting updates

Risk Exposure Is a Function of Its
Components
Risk exposure = (probability of occurrence) × (impact of occurrence)
High
High
threat or
Moderate opportunity
Probability
threat or
of opportunity
Occurrence
Low threat or
opportunity
Low
High
Low
Impact of Occurrence
ESI’s Risk Management Model
Risk
Management
Planning
Document Identify
E l t
Evaluate Document and Analyze
Communicate
Execute Prioritize
Plan

Step 1: Risk Management Planning
Risk management
planning is the— Risk
Management
 Preliminary planning Planning
for addressing risk Document Identify

 Initial development of
a framework to be Evaluate
Document Analyze
and
carried out during the Communicate
project Execute Prioritize
Plan

Risk Management Planning Outputs
Outputs include the
f ll i
following:
 Methodology
 Roles and responsibilities
 Budgeting
 Timing
 Risk categories
 Definitions of risk
probability and impact
 Probability and impact
matrix
 Revised
R i d stakeholders’
t k h ld ’
tolerances
 Reporting formats
 Tracking
ac g
Source: PMBOK® Guide, p. 316-318
Step 2: Identify Risks
Risk identification is
is—
 The comprehensive
Risk
Management
identification of Planning
potential risk events Document Identify

using a structured
and consistent Document
ocu e t Analyze
Evaluate
approach and
Communicate
 The reduction of
Execute Prioritize
g y and the
ambiguity
description of the risk
Plan
event under study

Risk Identification
Input Tools
 Work breakdown structure (WBS)  Documentation reviews*

 Scope baseline  I f
Information
ti gathering
th i techniques
t h i
 Brainstorming
 Activity cost estimate
 Delphi technique
 Activity duration estimate  Interviewing
 Stakeholder register  Root cause analysis
 Project
j documents  Checklist analysis
 Assumption analysis
 Procurement documents
 Diagramming techniques
 Enterprise environmental factors  Cause and effect diagrams
 Organizational process assets  System or process flow charts
 Influence diagrams
 SWOT analysis
 Expert judgement
*Source: PMBOK® Guide, pp. 321-327

Risk Identification Guidelines
 Ensure that risk events are specific and fully
defined
 For example, “failures may occur during the
final test, thereby causing a schedule impact”
 Use the WBS as a basis for risk identification
 Develop as comprehensive a list of risks as
possible
 Perform risk identification tasks as a team or as
groups of team members
 Focus on identifying all the risks; do not try to
analyze risks at this time

Types of Risks
Risks can come from internal or external sources
and will be either—
 Business risks: Normal risks of doing business
th t carry th
that the potential
t ti l ffor both
b th gains
i and
d llosses
 Pure, or insurable, risks: Risks that present
potential for loss only
p y

Categories Help Identify More Risks
Categories help identify additional risks;
categories may vary from project to project
External Internal
Predictable
Unpredictable (but Financial Schedule Technical Legal
uncertain)
 External: Beyond team control

 Internal: Within team control
Appendix E: Risk Categorization

Idea-Generation Techniques and Tools
Tool Advantages Disadvantages
Expert interview  Can be used for many different  Is not a substitute for project manager
specific applications decision making
 Gets access to knowledge project  Labor and time intensive
manager does not have
Delphi technique*  Permits anonymity of respondents  Requires a lot of analysis
 Avoids tendency to focus on single  Time consuming
train of thought  No direct group interaction initially
 Allows “unbiased”
unbiased expert judgment
Brainstorming  Interactive nature encourages group  Strong moderator required to prevent
synergy evaluation before end of idea
generation
 Outspoken individuals can dominate
the process
 Potential for “group think”
 Time intensive
* Discussed in class; all others are addressed in reference material for this unit.

Idea-Generation
Id G ti Techniques
T h i and
d Tools
T l
(continued)
Tool Advantages D isadvantages
N ominal group  Avoids inhibition problems associated  Lack of multiperson synergies

technique* w ith interactive methods
 Avoids tendency to start evaluation
too early
 Avoids tendency to focus on single
train of thought
Craw ford slip  Same as nominal group  Same as nominal group
method  M ost efficient method in terms of  M oderator must integrate large
number of ideas per w ork hour volume of data
 Complete paper trail of process
Affinity diagram*  Expedites information sorting  N o personal interaction
 Eliminates dominant personalities  N o synergy
from directing group decision making
Analogy techniques  Essential to learn from past mistakes  Can be time intensive
 Prevents “ reinventing the w heel”
heel  Relevant data may be difficult to
 If lessons learned summaries exist, it obtain
can be easy to get data  D ata may not be accurate for new
 Can be used effectively in applications
conjunction w ith interview ing
techniques
* D iscussed in class; all others are addressed in reference material for this unit.

Checklists,
Ch kli t Q Questionnaires,
ti i and
d
Templates
Again, based on the idea that no new project
Again
represents a completely new set of risks
 A list of threats that have occurred on certain types of
projects in the past
 Some publicly available risk checklists,
questionnaires, and templates
 Software
S ft Engineering
E i i Institute
I tit t (SEI) Risk
Ri k
Taxonomy (an organized list)
 Software Program Managers Network (SPMN)
 Examine checklists or questionnaires to generate

additional risks for the project
Tool: Risk Interview Questions—25 Generic

The Modified
Th M difi d D
Delphi—A
l hi A M
More P
Practical
ti l
Approach
Steps of the modified Delphi:
1. Facilitator prepares materials for review with
written instructions
2. Facilitator schedules a kickoff meeting if required
3. Reviewers review materials and offer
modifications of alternatives
4. Facilitator analyzes reviewer feedback and
prepares a clean version for the reviewers
5 Reviewers
5. R i meett to
t resolve
l any issues
i
6. Facilitator finalizes solution

Nominal Group Technique (NGT)
Stage I Each member of a small group (6 to 12) writes
d
down what
h thhe or she
h sees as th
the major
j issues
i tto
the proposition—no talking!
Stage II First person reads off one item from his or her list
Item is recorded on flip chart in front of the group
Next person does the same
Continue in order until all lists are exhausted
Again—no talking
Stage III Each member privately ranks the results from Stage II
R l are tabulated
Results b l d
Facilitator finalizes list of risks

Affinity Diagramming
 Builds on brainstorming
brainstorming, NGT
NGT, or Crawford slip
method by providing a method of sorting or
classifying data
 Is done in silence
 Is creative rather than logical
 Sorts a large volume of data quickly
 Produces order from chaos
 Can lead to breakthrough thinking

Step 3: Analyze Risks
Risk analysis is
is—
 The systematic
Risk
Management
process of estimating Planning
probability of Document Identify

occurrence and
magnitude of impact Document Analyze
Evaluate
for each risk event and
Communicate
from Step 2
Execute Prioritize
 Ap process that
reduces
Plan
measurement and
event outcome
uncertainty
Risk Analysis
Input Tools
 Categorized list of identified risks  Specific tools

 WBS  Decision trees
 Contractual requirements (statement of work)  Expected value
 Cost and schedule estimates  Risk assessment q
questionnaires
 Lessons learned files  Decision-making tools
 Staffing plan  Life-cycle cost analysis
 Other project-related plans  Financial measures
 Rating system guidelines  Probability functions
 Project management tools
 Milestone charts
 Gantt charts
 Network diagrams
 Program Evaluation and
Review Technique (PERT)
 Computer simulations
 Monte Carlo

Risk Analysis Guidelines
 Work down the complete list of risk events
 Assign risk analysis tasks to appropriate team
members
 Quantify and/or qualify each risk identified for
probability and impact
 Identify worst,
worst best,
best and most likely outcomes for
risk events with higher uncertainty
 Review risk analysis results with team members
 D nott prioritize
Do i iti risks
i k att thi
this titime

Presenting Risk
Risk information is typically expressed in one of
three forms:
 Narrative: Uses text to explain the risk in some
depth, including what might happen, why, and
ideas for controlling it
 Qualitative: Categorizes
g the risk using
g a rating
g
system of adjectives or colors to rank probability
and/or impact
 Quantitative: Quantifies risk using a percentage
to indicate probability of occurrence and a dollar
value to indicate impact

Presenting Probability and Impact
VH
H
ability
Proba
L M H VH
Impact
Qualitative Risk Rating Example
Rank Probability Impact

High Risk event is very likely to occur If risk event occurs, a significant
g p
Risk event has high probability
y of impact to cost, schedule, quality, or
occurrence customer satisfaction will occur
Medium Risk event is likely to occur If risk event occurs, a moderate

Risk event has medium probability impact to cost, schedule, quality, or
of occurrence customer satisfaction will occur
Low Risk event is unlikely to occur If risk event occurs, a small impact
Risk event has low probability of to cost, schedule, quality, or
Defining high, medium, and low risks is subjective but

essential
essential.

Quantitative
Q tit ti Ri
RiskkA
Analysis
l i E Example
l for
f
Individual Risks
Risk Event Probability of O ccurrence I m pact

1 10% $ 5 0 0 ,0 0 0 o v erru n
1 0 -w eek d el ay
2 50% $ 1 0 0 ,0 0 0 o v erru n
1 6 -w
w eek d el ay
Seri o u s cu sto m er sati sfacti o n d ecrease
3 75% $ 1 0 ,0 0 0 o v erru n
2 -w eek d el ay
Sm al l i n crease i n d efect l ev el s

Probability
P b bilit Assessment:
A t Combining
C bi i
Qualitative and Quantitative Approaches
99% 99%
High Very high
85%
Probable probability High
65%
Medium Medium
50%
probability
35%
Improbable Low Low
15%
1%
probability
p y Very
y low
1%

Comparison of Approaches
Qualitative Quantitative Narrative

 Fast and easy to  Preferred methodology, often  Difficult to quantify
administer and mandated by management  Usually based on
understand  More time consuming; experience
 Difficult to enforce requires estimation
uniformly across  Misleading in that numbers
organization and may give appearance of
projects precision and specificity,
 Requires definitions,
definitions unless the precision of the
rules, standards, and estimate is given
processes  Difficult if team resists
deriving the numbers
 Easier to forecast
 Able to use trends
 Substantially more valuable in
developing risk response
strategies and reserves

Probability Analysis
 Purpose
 To understand the likelihood of the
occurrence of a risk event
 Sources of probability data
 Theoretical distributions
 Subjective judgment
 Simulations
 Historical data

Probability Rules
 Mutually exclusive events
 A set of events is mutually exclusive if the
occurrence of one event excludes the
occurrence of any of the others
 If the risk event occurs, it excludes the
possibility
p y of the risk not occurring
g
 Nonmutually exclusive events
 Probabilities multiply and generate additional
risks
 Probabilities are expressed as decimals between
0 (definitely will not happen) and 1 (definitely will
happen) or as percentages
Probability Rules (continued)
 Addition rule: The probability of one outcome or
another outcome occurring is equal to the sum of the
probabilities of the outcomes occurring individually
P(A or B) = P(A) + P(B)
Tip: If the event is listed as “or,” add the outcomes.
 Multiplication rule: The probability of one outcome and

another outcome occurring is equal to the product of the
probabilities of the outcomes occurring individually
P(A and B) = P(A) × P(B)
Tip: If the event is listed as “and,” multiply the

outcomes.

Probability Rules (continued)
 Summation rule: The sum of the probabilities of

occurrence for all possible outcomes from a
single event must equal 1.0
 (P + 1 P2 + P3 . . . + Pn ) = 1.0

Exercise 4-1
Basic Probability Concepts

Risk
Ri k Quantification
Q tifi ti and
dEExpected
t d
Value
 Involves numerically assessing probability and
impact
 Expected value (EV) is a statistical assessment
of risk value, not a prediction of final cost should
the risk occur or not occur
 Assess—
 Best case (all good things happen and no
bad)
 Worst case (all bad things happen and no
good)
 Final actual value will probably fall between best
case and worst case
Expected Value Basics
 Expected value = probability × impact
 For threats, expected value is called
exposure
 For opportunities,
opportunities expected value is called
leverage
 Each risk event identified has a probability of
occurrence that can be weighed against the
impact
 Project-level expected value equals the sum of
the expected values for each risk event
 Expected value also may be used with other
analysis tools (for example, in a decision tree)

Expected Value Example
Project budget baseline = $5
$5,000,000
000 000
Risk Event* Probability × Impact = Expected Value
Suppliers strike 50% + $500,000 + $250,000

during project
Prototype 20% -$200,000 -$40,000
functions correctly
the first time
Snow storm in 90% + $5,000 + $4,500
M arch
Total expected value for the risks = $214,500
* Complete
C l t list
li t off project
j t risk
i k events
t
Adjusted project budget baseline = $5,214,500

Expected Value—Expanding the Range
 Expected value for a project should be evaluated
against the best-case and the worst-case
scenarios
 Best case
 Everything happens perfectly
 Probability for threats = 0%
 Probability for opportunities = 100%
 Worst case
 Everything goes wrong
 Probability for threats = 100%
 Probability for opportunities = 0%

Expected
E t dV
Value—Expanding
l E di the
th Range
R
(continued)
Best Case
C Expected Value Worst Case
C
Risk Event T/O Impact ($) Prob. Cost Prob. Cost Prob. Cost
Suppliers T 500,000 0% $0 50% $250,000 100% $ 500,000

strike during
project
Prototype O -200,000 100% -$ 200,000 20% -$ 40,000 0% $0

works right (savings
the first time to project)
(savings)
Snowstorm in T $5,000 0% $0 90% $ 4,500 100% $ 5,000
March
Total EV for Risk -$ 200,000 $ 214,500 $ 505,000

Project budget baseline $ 5,000,000 $ 5,000,000 $ 5,000,000
Adjusted project budget baseline $ 4,800,000 $ 5,214,500 $ 5,505,000

Exercise 4-2
Expected Value

Decision Tree
 A decision tree is a diagram that depicts key
interactions among decisions and chance events
as they are understood by the analyst
 A decision tree is valuable in risk analysis to
understand all the outcomes for a given set of
related project risks as the analysis complexity
increases
 Decision-tree analysis uses the notion of
p
expected value to determine the consequences
q
of alternative courses of action

Decision Tree (continued)
 Diagram of all possible acts

acts, events
events, and
outcomes
 Convenient when choices must be made at
different points over
Basic a long period of time
Format
Decision Event Outcome
E1 O1
D1
E2 O2
E1 O1
D2
E2 O2

Decision Tree—The Rules
 Represent decisions by boxes (decision nodes);
represent outcomes or events by circles
 Enter the primary decision on the left side of the
t
tree and
d workk ffrom lleft
ft tto right
i ht
 Represent all possible scenarios by paths
 Assign probabilities to all path segments leading
from events
 Determine expected value for each segment
 Work from right to left
left, adding expected values of all
path segments leading to a decision node
 Work until the most advantageous path is
established
Appendix F: Decision Tree Analysis Guidelines
Decision Tree—Example
Should we build a prototype of the new flight
simulator product? Project requirements were poorly
defined. As a result, there is the risk that the final
product will not pass the customer acceptance test test.
A prototype also would substantially reduce the cost
of rework for failures at customer acceptance test.
Cost to build prototype $98,000
Probability of passing customer acceptance test
With prototype 90%
Without prototype 20%
Cost of rework after customer acceptance test
With prototype $20,000
Without prototype $250,000

Decision
D i i Tree
T with
ith Probability—
P b bilit
Example
90% Pass customer acceptance test
Build prototype
10% Fail customer acceptance test
20% Pass customer acceptance test

Do not build
prototype
80% Fail customer acceptance test

Decision
D i i TTree S
Scenario
i with
ith E
Expected
t d
Value—Example
$0
90 × $0 =
.9 Pass customer acceptance
p test
Build prototype
, 000
8 .10 × $20
$9 ,000 = $2,000 Fail customer acceptance test
$0
Do not build $0 .20 × $0 = P customer
Pass t acceptance
t ttestt
prototype
.80 × $25
0,000 = $
200,000 Fail customer acceptance test
Expected Value with prototype:

$98,000+ $2,000+ $0 = $100,000
Expected Value without prototype:

$0+ $0+ $200,000 = $200,000

Exercise 4-3 (Optional)
Decision Tree Diagramming

Documentingg the Analysis:
y
Determining the Overall Expected
Value
To determine the overall expected value for each risk event, some decisions must be made
Rank Probability Impact Probability Best Case Most Likely Worst Case
High Risk event is very likely to occur If risk event occurs, a significant Base case 5,000,000 5,000,000 5,000,000
Risk
Ri k eventt h
has hi
high
h probability
b bilit off impact to cost
cost, schedule,
schedule quality
quality, or
occurrence customer satisfaction will occur Strike 50% 0 250,000 500,000
Medium Risk event is likely to occur If risk event occurs, a moderate Prototype 20% - 200,000 - 40,000 0
Risk event has medium probability impact to cost, schedule, quality, or
of occurrence customer satisfaction will occur
Snowstorm 90% 0 4,500 5,000
Low Risk event is unlikely to occur If risk event occurs, a small impact
Risk event has low probability of to cost, schedule, quality, or
Total 4 800 000
4,800,000 5 214 500
5,214,500 5 505 000
5,505,000

Step 4: Prioritize Risks
 Risk prioritization is
the process of Risk
Management
ranking identified Planning
risks
Document Identify
 The project team
must decide which Document Analyze
Evaluate
risks will be and
Communicate
addressed, based on
Execute
the premise that Prioritize
there never will be

enough time and Plan
p
resources to respond
to all risks
Risk Prioritization
Input Tools
 List of analyzed risks  Qualitative assessment
 Prioritization structure  Expected value
 Comparative risk ranking

Practical
P ti l Approach
A h for
f Prioritizing
P i iti i
Risks
 Rank analyzed risks from highest to lowest
(based on analysis completed in Step 3)
 Use quantitative rankings when possible;
otherwise use qualitative rankings
 Separately rank risks with similar ratings
 Prioritize risks as a team
 Do not plan risk response strategies at this time

Risk
Ri k Prioritization
P i iti ti T Tools
l and
d
Techniques
Tools
 Qualitative risk ranking
 Expected value
 Comparative risk ranking (CRR)
Techniques
 Filtering
Filt i

Expected Value Ranking
 Perform expected value calculation for each risk event
 Rank 1 through n, based on magnitude of expected
values
Qualitative
Risk Probability Impact Expected Value Rank
1 L M L/M 3
2 M H M/H 2
3 H H H/H 1
Quantitative
Risk Probability Impact Expected Value Rank
1 0.10 $50,000 $5,000 3
2 0.50 $70,000 $35,000 1
3 0.70 $10,000 $7,000 2

Filtering
Filt i and
d Comparative
C ti Risk
Ri k
Ranking
Filtering
 A question-and-answer technique that filters out
risks that are currently less important
Comparative risk ranking (CRR)

 A comparison tool that produces a reliable
prioritized list of important risks
 Uses filtering to remove less important risks

Filtering
List of risks
Filter 1
N Y Will any customer see the impact of this risk in terms
of performance? Function? Quality?
Filtering criteria Insignificant Significant
impact impact impact
Filter 2
N Y
Have you seen thi
H this occur b
before?
f ?A Are th
there conditions
diti
or circumstances that make this risk more likely?
Not likely Likely to
Likelihood
to happen happen
Filter 3
N Y Will the project be affected soon? Does this risk
require
i a llong llead-time
d ti solution?
l ti ?
Long-term Short-term Must we act soon?
Time frame
time frame time frame
Filter 4
N Y Does this risk require a technical solution?
D
Does thi
this risk
i k require
i program managementt action?
ti ?
Not within Within
Locus of
management management
control
control control
Keep on
active risk
list

Comparative Risk Ranking
Comparison question: Which risk has more
significant impact? (Assume that 4 persons are
voting)
Total Votes
9 for Risk A Risk A
A2
7 for Risk B Risk B
B2
A2 B3
8 for Risk C Risk C
C2 C1
A3 B1 C3
6 for Risk D Risk D
D1 D3 D1
A2 B1 C2 D1
10 for Risk E Risk E
E2 E3 E2 E3
Tool: Pairwise Comparison

Tool: Comparative Ranking
How Filtering and CRR Work Together
List of
analyzed
risks
 Impact
Filtering  Likelihood
process  Time frame
 Span of control
List of  Not in any order

significant
risks
 Comparison using
multivoting technique
CRR
Rank
ordered list
of risks

Step 5: Risk Response Planning
 Work through Risk
Management
prioritized risk listing Planning
 Create risk response Document Identify

strategies for both
threats and Evaluate Document Analyze
and
opportunities Communicate
 Evaluate and select Execute Prioritize

a primary response
 Incorporate options Pl
Plan
into the risk and
project plans

Risk Response Planning Process
Input Tools
 Prioritized risk listing  Specific tools

 Opportunities to pursue, threats to respond to  Risk response development worksheet
 Opportunities to ignore, threats to accept  Filtering approach
 Project plan  Comparative risk ranking (CRR)
 Idea-generation tools
 Group techniques
 Analogy comparisons
 Decision-making tools
 Decision trees
 Life cycle cost analysis
 Financial measures
 Probability functions

Response Strategy Guidelines
 Responses must be developed for both
opportunities and threats
 Work down prioritized risk listing
 Ask questions
 How can this threat event be avoided or
opportunity be pursued?
 What
Wh d does iit mean to accept this
hi threat
h or
ignore the opportunity?
 Can we mitigate or transfer this threat or
enhance
h th
the opportunity?
t it ?
 Identify as many various response alternatives as
practical

Response Strategy Guidelines (continued)
 Evaluate response strategies for consistency with
the—
 Project objectives
 Team members
members’ ability to assimilate
strategies
 Project constraints
 Evaluate response strategies for each risk to
understand its effect on others
 Risks usually do not exist in isolation
 Evaluate alternatives and select a primary
option
 Incorporate options into risk management, project
plan

Response Strategies for Threats
 Accept (accepting the consequences)
 Mitigate (reducing the expected value of a threat)
 Minimizing the probability of the threat event
 Minimizing the impact of the threat event
 Transfer (passing the threat to another)

 A id ((eliminating
Avoid li i ti a specific
ifi th
threat,
t usually
ll by
b
eliminating the cause)
 Accomplish the work package, eliminate the
threat
Source: PMBOK® Guide, pp. 344-345

Response Strategies for Opportunities
 Accept
 Adapt for threats or opportunities
 Passive or active
 Enhance
 Increase the probability
 Maximize
M i i th the value
l off th
the iimpactt
 Exploit (ensure opportunity is realized)
 Share ((allocate ownership
p to third party)
p y)
Source: PMBOK® Guide, pp. 304–305

Establish an Early Warning System
Establish an early warning system to detect
deviations from plan that may be or may cause
risk triggers
 Exposure increases as cost and schedule
variances increase
 Examples
p of an early
y warning
g system
y include—
 Earned value
 Cost variance
 Schedule
S h d l variance
i
 Changes in forecasted project end date
 Changes in float
 Changes in stakeholder attitude

Risk Response Development Form
 Attempts to develop a risk response for each
type of strategy (refer to analysis results on
top of form)
 Assesses the trade-offs for each strategy
 Ranks strategy alternatives in order of
preference or effectiveness
T l Ri
Tool: Risk
kAAnalysis
l i and
dRResponse D
Development
l

Update Risk Management Plan
 Represents the final output of all the risk
response work
 Contains results of the preceding steps of risk
identification, analysis, and prioritization
 Includes how contingency plans will be
p
implemented and executed
 Includes how reserves will be allocated
Tool: Risk Management Plan

Case Study 4-1
Risk Analysis and Response

Development

Key Messages
 A systematic approach to risk management
enhances the possibilities of successful risk
response
 The project team and functional managers
collaborate to assess and respond to risk
 Risk reassessment should be continuouslyy
performed throughout the project life cycle
 Every risk consists of an event, a probability, and
an amount at stake
stake, none of which can be
ignored
 The four basic threat responses are accept,
avoid,
id mitigate,
iti t and d ttransfer
f
Unit 5
Estimating
Management The WBS
Risk Baselining the

g
Management j
Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
to
 Use fundamental estimating processes to
determine project costs and duration
 Apply various methodologies in project estimating
 Use different estimating tools in project planning
 Incorporate risk factors into project estimates

Estimating
An estimate is “aa quantitative assessment of the
likely amount or outcome. Usually applied to
project costs, resources, effort, and durations
and is usually preceded by a modifier
modifier. It should
always include some indication of accuracy. . .
.”*
Work packages provide the basis for the project

manager’s estimates of—
 How long?
 How much money?
 How many people and other resources?


Good Estimating Practices
 Acknowledge the level of accuracy
 Estimates can and should be done at varied
levels of accuracy
 Communicate the level of accuracy with the
estimate
 Receive input from many sources
 In-house
I h sources
 Outside sources
 Professional organizations
g
 Estimating is a deliberate process
 The quality of the estimates directly affects
the quality of the project plan

Estimates
WBS Level Estimate Name(s) Precision and Range When to use
An industry PMBOK® Guide

standard 5th Edition
precision and precision and
range range
Top levels Order of magnitude: + 75, –25% + –50% When only very basic
Portfolio, conceptual, information is available or
factored, quickie, feasibility needed (project selection)
Middle summary Budgetary: Preliminary, + 25, –10% N/A When resource materials,
levels design, appropriation expense, and overhead
information are available
and the objective is
identified
All levels Definitive: Finalized,
Finalized + 10,
10 –5% + –10% When detailed information
expense, grass roots, is available
engineering

Estimating Approaches
 Analogous (also called top
top-down)
down)
 Parametric modeling
 Vendor bids
 Bottom-up (also called engineering or detailed)
 PERT estimation

Analogous/Top-Down Estimates
Analogous (or top
top-down)
down) estimates are made by
comparing similarities of future projects with
past experiences. For example—
 Imagine that you are in the home repair business
 You formerly worked on houses that were built in

g , DC,, area
2 months or less in the Washington,
 Typical work cost is $70,000
Whatt factors
Wh f t should
h ld you consider
id to
t raise,
i lower,
l
or keep the price the same if you operate in
Southern California?

Parametric
P t i Estimating:
E ti ti A Cost
C t
Estimating Relationship (CER)
A mathematical relationship that describes project costs
in terms of a known project characteristic
Example:
ESTIMATING TABLE
$/Lane-Mile
Cost Highway Cost Lane-Miles Cost
Element Per Lane
Lane-Mile
Mile Required
Asphalt $2,200 48
Stripe $120 24
Curb $2 550
$2,550 48
TOTAL

Vendor Bids
Vendor bids are excellent sources of estimating
data, but requirements statements must be clear.
Why should project managers obtain vendor
bids?
 Vendor 1: $296,000
,
 Vendor 2: $301,200
 Vendor 3: $308,000
 V d 4
Vendor 4: $303
$303,500
500
Why are the bids different?

Bottom-Up
B tt U Method:
M th d Detailed
D t il d
Estimates
The bottom-up
bottom up estimating method method—
 Is the most accurate method
 Allows for integration of activities
 Uses the bottom level of the WBS
 Adds work
WBS Name Cost ($)
1 House Project
1.1 Phase I—Planning and Design
package estimates 1.1.2
1
1.1.1
1 1 A Ki k Off Project
A—Kick P j t
B—Build Requirements and Design
1,000
1 000
5,000
to obtain total 1.1.3
1.2
C—Review Functional Design
Phase II—Site Preparation
500
project cost 1.2.1

1.2.2
A—Study Site
B—Prep Site
5,000
1,000
1.2.3 C—Order Equipment 50,000
1.2.4 D—Prepare Site 4,000
1.3 Phase III—Build
1.3.1 A—Interior 130,000
1.3.2 B—Exterior 110,000
1.3.3 C—Landscape 6,000
1.4 Phase IV—Postbuild
1.4.1 A—Conduct
A Conduct Walk-through
Walk through 1,800
1.4.2 B—Create Punchlist 500
1.4.3 C—Obtain Formal Acceptance 100

Program Evaluation
P E l ti and
dRReview
i
Technique (PERT)
One of the more significant statistical sums used in risk
analysis
 An event-oriented, network analysis technique used
when task durations have a high degree of uncertainty
 Applies the critical path method (CPM) to a weighted
average estimate for task durations
Most likely
PERT weighted average =

Probability
Optimistic + (4 × Most Likely) + Pessimistic
6
Optimistic Pessimistic
Possible durations
PERT
Optimistic   4  Most Likely   Pessimistic

Estimated Time =
6
3 days   4  5 days  8 days

e(t ) =  5.17 days
6
PERT is useful in estimating costs as well as

schedule.

Standard
St d d Deviation
D i ti (SD) iin PERT
Estimates
 When mean is recalculated using PERT formula
formula, a
normal distribution can be used to determine
probability of meeting the schedule
Mean
-1  + 1
-2  + 2
-3  + 3
68% Pessimistic  Optimistic

Probability 
6
95%
83
99%   .833
6
Possible project durations or cost

Duration: Key Terms
Term Definition Example
Elapsed Time Calendar time (includes 24 hours = 1 calendar day

weekends holidays
weekends, holidays, breaks)
Working Time Business time; time when Most people work
resource is available for work approximately 8 hours a day, so
(does not include weekends, 24 hours = 3 business days
time off
off, holidays
holidays, and so on)
Effort Time Time-on-task; time it will take
to complete task (does not
include weekends, time off,
holidays, coffee breaks, lunch
breaks)

Duration: Key Terms (continued)
Duration Modifiers
Available Resource is present and ready to work

Productivity Rate at which work is accomplished
Duration Types
Contiguous Work time that has no breaks—uninterrupted

Interruptible Work time with breaks—interruptible

Case Study 5-1
Estimating

Key Messages
 Estimates are based on a set of assumptions
assumptions,
including customer requirements
 Estimates must be based only on the current
approved scope and specifications of the project
 Estimates must be changed when the scope of
the p
project
j changes
g significantly
g y
 Estimates must be changed when there are
authorized changes in resources, materials,
services and so on
services,

Unit 6
Scheduling
Management The WBS
Risk Baselining the

g
Management j
Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
to
 Use a variety of network logic and scheduling
approaches
 Identify various types of logic networks and
approaches, and weigh their relative merits for
p
specific development
p p
projects
j
 Use logic networks and scheduling approaches
appropriate to the project
 Integrate a WBS into a logic network and
determine a schedule for that network

Schedule Planning
 Determines the time duration to complete the
project
 Clarifies relationships between various work
packages
Tools help in schedule planning only when

accurate information is used with the tools.

Common Scheduling Tools
 Network diagrams
 Gantt charts
 Project calendars
 Milestone charts

Network Diagramming
Start 1.1.1 1.1.2 1.2.2 Finish

Start
1.2.1 1.3.1 1.3.2
A ti it
Activity-on-Node
N d (AON) Di
Diagram
“Schematic
Schematic display of the logical relationships of project
activities. Usually drawn from left to right to reflect project
chronology. Often incorrectly referred to as a ‘PERT chart.’”*
*Source: Ward, p. 284

Precedence
P d Di
Diagramming
i M Method
th d
(PDM)
“A technique used for constructing a schedule model in
which activities are represented by nodes and are
graphically linked by one or more logical relationships to
show the sequence in which the activities are to be
performed.”*
f d ”*
Start
Start 1.1.1 1.1.2 1.2.2 Finish
Start
1.2.1 1.3.1 1.3.2
PDM uses activity-on-node (AON) diagrams

 Shows relationships between activities
 Accommodates lag g and lead times

Logical Relationships
In the PDM,
PDM two activities are linked by relationships
relationships.
 Finish-to-start (FS)
 Finish-to-finish (FF)
 Start-to-start (SS)
Activity
yA Activity
yD
Activity C
Activity B
Start-to-Start Finish-to-Start Finish-to-Finish

Transforming
T f i a WBS into
i t a Precedence
P d
Diagram
Project: Install new building fire alarm
WBS Work Package Duration (t) Predecessors

a Determine system requirements (Req’ts)
a. (Req ts) 10 Boss go
go-ahead
ahead
b. Design system layout (Layout) 15 a
c. Obtain new waterline (Waterline) 20 a
d. Obtain permits (Permits) 32 b
e Order/receive parts (Parts)
e. 35 b
f. Install new system (Install) 5 d, e
g. Test new system (Test) 2 c, f
h. Deactivate old system (Deactivate) 1 g
System
Start Req’ts
t=10
Reading B: Precedence Diagramming

Schedule Network Analyses
Determine
Determine—
 Earliest possible start and finish dates
 Latest possible start and finish dates
 Overall project duration
Techniques used:
 Critical
C iti l path
th method
th d (CPM)
 Resource leveling

Critical Path Method (CPM)
Determines—
 Schedule flexibility (a.k.a. float, slack)
 Minimum total project duration
Steps of CPM
1. Start with precedence diagram
2. Calculate earlyy start and finish dates in forward
pass
3. Calculate late start and finish dates in backward
p
pass
4. Calculate float (early start–late start)
5. Identify critical path or paths

Precedence Diagram
Parts
t= 35
Req’ts Layout Install Test Deactivate Finish

Start
t= 10 t= 15 t= 5 t= 2 t= 1
Permits
t= 32
Waterline
t= 20

Conduct the Forward Pass
Early Early
Start Finish
Parts
t= 35
0 0 10 10
Start
t= 10 t= 15 t= 5 t= 2 t= 1
Permits
t= 32
Waterline
t= 20

Conduct the Backward Pass
25 60
Parts
tt= 35
0 0 10 10 25 60 65 65 67 67 68 68
Start
t= 10 t= 15 t= 5 t= 2 t= 1
67 68 68
25 57
Permits
t= 32 Late Late
Start Finish
10 30
Waterline
t= 20

A Completed Network Diagram
25 60
Parts
t= 35
0 0 10 10 25 25 60 60 65 65 67 67 68 68
Start
t= 10 t= 15 t= 5 t= 2 t= 1
0 0 10 10 25 25 57 60 65 65 67 67 68 68
Permits
t= 32
28 60
10 30
Waterline
t= 20
45 65

Calculate the Float
“The
The amount of time that a schedule activity can
be delayed or extended from its early start date
without delaying the project finish date or
violating a schedule constraint.”*
constraint ”*
 Calculated from the network diagram after
completing a backward pass
 Indicates the amount of flexibility the project
manager has to adjust the timing of a particular
activity
 Calculated by subtracting early finish from late
finish (or early start from late start)

Determine Float
Float
Float
Float Float
25 60
Parts
t= 35
0 0 10 10 25 25 60 60 65 65 67 67 68 68
Start
t= 10 t= 15 t= 5 t= 2 t= 1
0 0 10 10 25 25 57 60 65 65 67 67 68 68
Permits
Float t= 32
Float
0 28 60
Float 10 30
Waterline
t= 20
Float
45 65

Critical Path
 The critical path is the
the—
 Path through the project that takes the
longest time to complete
 Shortest time to complete the whole project
 Path with minimum float or slack time

Determine the Critical Path
25 60
Parts
t= 35
0 0 10 10 25 25 60 60 65 65 67 67 68 68
Start
t= 10 t= 15 t= 5 t= 2 t= 1
0 0 10 10 25 25 57 60 65 65 67 67 68 68
Permits
t= 32
28 60
10 30
Waterline
t= 20
45 65

Lag and Lead
Lag and lead are inputs to the network diagram for
showing planned timing between activities.
 Lag: “The amount of time whereby a successor
activity
y is required
q to be delayed
y with respect
p to a
predecessor activity”* (positive)
 Lead: “The amount of time whereby a successor
activity can be advanced with respect to a
predecessor
d activity”*
ti it ”* ((negative)
ti )
no lag or lead + 2 days lag
Activity A Activity C
Activity B Activity D
Activity E
Activity F
*Source: PMBOK® Guide, p. 544 –2 days lead

Gantt Charts
Today Today
Task A Task A
Task B Task B
Task C Task C
T kD
Task T kD
Task
Task E Task E
Task F Task F
Project Project
Month 1 2 3 4 5 6 7 Month 1 2 3 4 5 6 7
White areas are planned; shaded areas are actuals.

Project Calendar (Month 4)
Monday Tuesday Wednesday Thursday Friday
1 2 3 4 5
7.1.1 7.1.1 7.1.1 7.1.1 7.1.1
7.1.2 7.1.2 7.1.2 7.2.1 7.2.1
8 9 10 11 12
7.2.1 7.2.1 7.2.1 7.3.2 7.4.1
7.3.1 7.3.1 7.3.1
7.3.2 7.3.2 7.3.2
15 16 17 18 19
7.4.1 7.4.1 7.4.1 7.4.1 7.4.1
7.4.2 7.4.2 7.4.2 7.4.2
7.5.1 7.5.1 7.5.1 7.5.1
22 23 24 25 26
7.4.1 7.6.1 7.6.1
7.4.2
7.5.1
Milestones
 Significant events in the project
 Major project happenings (component X
complete)
 Funding milestone (X% of budget expended)
 Level of effort milestone (X% labor hours

expended)
 Activities of zero duration
 Take no time and consume no resources
 Serve as reminders to check on overall project

status at key points

Exercise 6-1
Network Diagramming

Ways to Speed Up Schedules
 Methods
 Crashing
 Fast tracking
 To speed up a project, you must speed up the

critical path
 Usually always incurs
incurs—
 Additional costs
 Additional resources
 Increased risks
Appendix D: Crashing a Network

Speeding Up the Schedule
10 14 14 20 20 27 27
Original Schedule t= 4 t= 6 t= 7 Finish
10 14 14 19 19 25 25
Crashing
t= 4 t= 5 t= 6 Finish
((Shortening
g durations))
10 14 14 20 18 25 25
Fast Tracking –2
t= 4 t= 6 t= 7 Finish
(Overlapping tasks)

Case Study 6-1
Network Logic/Scheduling

Key Messages
 Time is usually a critical factor in projects
 A variety of tools can evaluate and map out
schedules
 Project managers must know how to evaluate
their schedules and the potential for schedule
p
improvement

Unit 7
Baselining the Project

Management The WBS
Risk Baselining the

g
Management j
Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
to
 Perform resource leveling
 Determine project baselines using fundamental

estimating processes
 Establish baselines for a project
 Develop a cumulative cost curve
 List fundamental rules associated with

establishing a baseline

Loading and Leveling the Schedule
Bringing all the plans together and integrating
them
 Reserves
 Resources
 Resource leveling
 Cost plan
 Baselining

Resource Planning
Fundamental questions
 What needs to be done?
 Who and what do we need?
 Who can do the work?
 What can do the work?
 Who
Wh and d what
h t can we get?
t?
 What level of excellence and competence is
essential?
 How will we use the resources?
 How will the resources affect schedules and

costs?

Resource Planning (continued)
 Plan for the resources you need to accomplish

the project:
 People
 Equipment
 Facilities
 Materials

Resource Planning Tools
 Resource/responsibility matrixes
 Resource loading tables
 Resource loading histograms
 Leveling requirements

Responsible,
R ibl Accountable,
A t bl C Consult,
lt
and Inform Chart
RACI Chart Person
Activity Ann Ben Carlos Dina Ed
Create charter A R I I I
Collect requirements I A R C C
g request
Submit change q I A R R C
Develop test plan A C I I R
R = Responsible
A = Accountable/Approve
C = Consulted
I = Informed
Tool: Responsible, Accountable, Consult, and Inform Chart

Source: PMBOK® Guide, p. 262, Responsibility Assignment Matrix

Resource Trade-Offs: Leveling
Leveling is the rescheduling of tasks with float to
resolve resource issues.
Steps:
 Determine early and late schedules
 Evaluate resource loading for each schedule
 Identify free float
 Adjust activities (tasks) on an activity-by-activity

basis within the float to fit available resources
 Determine new schedule

Sample
S l Procedure
P d (D
(Develop
l Software):
S ft )
WBS Example
Systems integration and testing schedule
A. Develop testing G. Review software code—
algorithms—6
l ith 6d
days 4 days
B. Prepare test area—2 H. Test software against
days documentation—5 days
C. Finish test procedures—
procedures
3 days I Run
I. R software
ft ttestt against
i t
procedures—8 days
D. Test algorithm and
speed—10 days J. Identify and document
E Review
E. R i bugs—4
bugs 4 days
documentation— 3 K. Test person-machine
days interface—6 days
F. Install hardware and L. Prepare test report
report—2 2
software—2 days days
Define the Logic
D . Test algorithm
and speed
10
H . Test software
A. Develop testing E. Review
against
algorithms documentation
documentation
6 3
5
I. Run software
Start/ B. Prepare test F. Install hardware J. Identify and
test against
receive area and software document bugs Finish
procedures
software 2 2 4
8
K. Test person-
C. Finish test G. Review L. Prepare test
machine
procedures software code report
interface
3 4 2
6

Determine Early Schedule
6 16
D. Test algorithm
and speed
10
0 6 6 9 9 14
A. Develop H. Test software

E. Review
testing against
documentation
3
6 5
0 2 2 4 7 15 15 19 19
F. Install I. Run software

B. Prepare test J. Identify and
Start/receive hardware and test against
area document bugs Finish
software software procedures
2 4
2 8
0 3 3 7 7 13 13 15
G. Review K. Test person-

C. Finish test L. Prepare
software machine
procedures test report
code interface
3 2
4 6

Review Float: Early Schedule
Modified Gantt Chart

Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
E. Review H. Test software against

FLOAT
documentation documentation
A. Develop testing algorithms D. Test algorithm and speed FLOAT
B. Prep test
F. Install FLOAT
area
C. Finish test
C J. Identify and
G. Review software code I. Run software test against procedures
procedures document bugs
L. Prepare
K. Test person-machine interface FLOAT
report

Review
R i Resource
R L
Loading:
di E
Early
l
Schedule
Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Total
E. Review 3 3 3 9
documentation
H. Test software 2 2 2 2 2 10
against doc
A. Develop testing 4 4 4 4 4 4 24
algorithms
D. Test algorithm 4 4 4 4 4 4 4 4 4 4 40
and speed
B. Prepare test 2 2 4
area
F. Install hardware 4 4 8
and software
C. Finish test 4 4 4 12
procedures
G. Review software 2 2 2 2 8
code
I. Run software 3 3 3 3 3 3 3 3 24
test against
procedures
J. Identify and 2 2 2 2 8
document bugs
K. Test person- 6 6 6 6 6 6 36
machine
interface
L. Prepare test 3 3 6
report
Total (Res. Days) 10 10 12 10 6 6 9 16 16 15 15 15 15 12 10 6 2 2 2 189

Resource L
R Loading
di Hi
Histogram:
t E
Early
l
Schedule
20
18
16
14
12
Number of
10
Resources
8
6
4
2
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Workdays
Determine Late Schedule
6 16
D. Test algorithm
and speed
10
9 19
0 6 6 9 9 14
A. Develop H. Test software

E. Review
testing against
documentation
3
6 5
3 9 11 14 14 19
0 2 2 4 7 15 15 19 19
F. Install I. Run software

B. Prepare test J. Identify and
Start/receive hardware and test against
area document bugs Finish
software software procedures
2 4
2 8
3 5 5 7 7 15 15 19 19
0 3 3 7 7 13 13 15
G. Review K. Test person-

C. Finish test L. Prepare
software machine
procedures test report
code interface
3 2
4 6
0 3 3 7 11 17 17 19

Review Float: Late Schedule
Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

FLOAT
documentation
d t ti d
documentation
t ti
FLOAT A. Develop testing algorithms D. Test algorithm and speed
B. Prep
FLOAT F. Install
test area
C. Finish test G. Review software J. Identify and

I Run
I. R software
ft test
t t against
i t procedures
d
procedures code document bugs
L. Prepare
FLOAT K. Test person-machine interface
report

Review
R i Resource
R L
Loading:
di L
Late
t
Schedule
Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Total
E. Review 3 3 3 9
documentation
against doc
algorithms
D Test algorithm
D. 4 4 4 4 4 4 4 4 4 4 40
and speed
area
and software
procedures
code
I. Run software 3 3 3 3 3 3 3 3 24
test against
procedures
document bugs
K. Test person- 6 6 6 6 6 6 36
machine
interface
report
Total (Res. Days) 4 4 4 8 8 10 10 7 7 7 7 16 16 16 15 14 14 11 11 189

Resource L
R Loading
di Hi
Histogram:
t L
Late
t
Schedule
20
18
16
14
12
Number of
10
R
Resources
8
6
4
2
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Workdays
Review
R i Resource
R L
Loading
di (Resource-
(R
Limited)
Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Total
E. Review 3 3 3 9
documentation
against doc
algorithms
D Test algorithm
D. 4 4 4 4 4 4 4 4 4 4 40
and speed
area
and software
procedures
code
I. Run software 3 3 3 3 3 3 3 3 24
test against
procedures
document bugs
K. Test person- 6 6 6 6 6 6 36
machine
interface
report
Total (Res. Days) 10 10 12 10 6 6 5 12 12 13 13 13 13 10 12 8 8 8 8 189

Review
R i Float:
Fl t Resource-Limited
R Li it d
Schedule
Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

FLOAT
documentation documentation
A. Develop testing algorithms FLOAT D. Test algorithm and speed
B. Prep
F. Install FLOAT
test area
C. Finish test G. Review software J. Identify and

I Run software test against procedures
I.
procedures code document bugs
L. Prepare
K. Test person-machine interface FLOAT
report

Resource L
R Loading
di Hi
Histogram:
t
Resource-Limited Schedule
20
18
16
14
12
Number of
10
Resources
8
6
4
2
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Workdays
Review WBS
 If, after reviewing resource loading with all
If
available resources, the project manager still
cannot meet the due date, he or she must review
the WBS to determine recommendations for a
usable, scoped-down portion of the overall
deliverable
 Reviewing the WBS helps to keep the triple
constraint realistic

Other Essential Planning Processes
 Communication
 Quality
 Human resource
 Procurement

Communication Planning
The primary objective of communication
planning is to determine—
 Who needs to know what?
 How will they be told?
 When will they be told and how often?
 What needs to become part of a permanent

record and how?
Tool: Communication Plan: High

Level
Quality Planning
Quality is planned into a project,
project not inspected
in. The primary objective of quality planning is to
determine which standards apply and which
metrics to use to measure compliance.
 The project manager and team must—
 Clarify the direction of the quality policy
 Link to customer’s policies
 Link to organization’s
organization s strategy
 Determine project standards and metrics for
tasks where the standards can be applied
Tool: Quality Plan
Elements of a Project Plan
 Management summary
 Deliverable
 Project requirements
 Resources
 Potential project risks and issues
 S h d l
Schedule
 Reporting
 Regulation
g and standards
 Evaluations
Tool: Project Plan Outline—Typical

The Basics of Baselines
 A baseline is the
original approved plan,
plus approved scope
changes
 The baseline
establishes a reference
against which project
managers can
measure actual project
p g
progress

Baselines
E t bli h technical
Establish t h i l baselines
b li
Establish baseline budgets $

Performance
Establish baseline schedules measurement
baseline
Ti
Time

Cost Planning
After the schedule has been determined and
agreed to, the cost planning can proceed and
estimates can be refined.
 How much will the project cost (in money)?
 Sources of input
 Outside estimators
 Those who perform the work
 Those with experience
 Those who know the risks
 Those who are responsible for the work

(WBS work packages)

Cost Components
 Direct  Indirect (overhead)
 Labor  General
 Internal administrative
 Contract  HQ expenses
 Materials and  Fringe benefits
equipment  Marketing and
 Other direct costs sales

 Fees  R&D
 Travel
 Incidentals

Cumulative Cost Curve
350
300
250
$ 200
150
100
50
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Days

Reserve Planning
A set
set-aside
aside of resources to deal with risk events
as provided for in the project management plan
 Reserve has multiple components
 Cash
 Time
 People and equipment
 Reserve planning—
 Deals with unexpected events within the

original scope
 Does not deal with changes or additions to
your plan

Definition of Reserves
 Reserves: “A provision in the project management
plan
l to mitigate
ii cost and/or
d/ schedule
h d l risk.
i k Of
Often used
d
with a modifier to provide further detail on what types
of risk are meant to be mitigated.”*
 Management reserves: A separately planned
quantity intended to reduce the impact of missing cost,
schedule, or performance objectives that are
impossible to plan for, “unknown unknowns”**
 Contingency reserves: “Budget within the cost
baseline or performance measurement baseline that is
allocated for identified risks that are accepted and for
which contingent or mitigating responses are
developed”*
*Source: PMBOK® Guide, pp. 533, 558

**Source: Ward, p. 259
Factors in Determining Reserves
Consider the following factors:
 Life-cycle position
 Estimating approach
 Type of contract
 Threat exposure
 Opportunity
O t it leverage
l
 Risk tolerance levels
 Risks accepted
p
 Consequences of overruns
 Lessons learned

Baseline Costs Plus Reserve
Reserve is money or time provided for in the
project plan to address cost, schedule, or
performance risk.
Cost to Complete (CTC)
Budget at Completion
(BAC)
$
Baseline
costs
Reserve
T1 T2 T3
Time

Cost Baseline Sample
2,500
2,000
1,500
$ 1,000
500
0
0 5 10 15 20
Days
A B D
Start
Dur= 3 Dur= 4 Dur= 4
C E F
Finish
Dur= 5 Dur= 3 D 4
Dur=

Review the Baseline
 Ensure that the baseline is agreed upon by all
key stakeholders
 Work to establish risk response strategies before
setting the baseline
 Be clear about when and how to access the
g
management reserve
 Know the objective measures to identify when the
baseline is out of control
 Know when and how to change the baseline
 Rebaseline…only as a last resort

Case Study 7-1
Baselining the Project

From Planning
F Pl i tot D&D andd
Implementation: The Project Plan
Project Plan

Key Messages
 There is no way to evaluate the relative progress
or success of a project without a baseline
 The project manager is responsible for action
when a project is off the baseline
 The project manager must establish risk
g
strategies before setting
g the baseline
 The baseline is only changed when change is
authorized and approved

Unit 8
Project Implementation: Monitoring,

Replanning,
p g, and Reporting
p g
a age e t
Management Thee WBSS
Risk Baselining the

Management Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
to
 List considerations and tools for project control
 Discuss mechanisms that will enable project

monitoring and replanning
 Discuss using the triple constraint in monitoring
project status
 Execute a risk management plan
 Explain why change occurs in a project
 Describe a change control process
 Define configuration management

Objectives (continued)
to
 Discuss the earned value management (EVM)
approach to project monitoring and replanning
 Apply EVM to a project
 Use the 50-50 rule as part of EVM

Project Control Considerations
Project control is the daily monitoring
monitoring, at the
team level, of resources, tasks, and schedule. It
is—
 A vital component of tracking and managing
progress
 Managing
g g the triple
p constraint
 Relatively simple, “user friendly,” and inexpensive

Project
P j tC Control
t lCConsiderations
id ti
(continued)
Project control is concerned with
with—
 Tasks
 Requirements
 Timing and performance
 Resource utilization and outsourcing
 Scope,
S d
deliverable
li bl completion,
l ti and
d product
d t
quality
 Process improvement possibilities and lessons
learned
 Schedule and cost performance

Responsibilities in Project Control
To control a project for each work package
package, the
project manager should—
 Track and control time and cost expenditures
 Establish
E t bli h performance
f monitoring
it i baseline
b li
 Discuss performance measures with work package
manager
 Negotiate to balance productivity and availability of
resources
 Coordinate and negotiate that the right person shows
up at the right time, at the right place, with the proper
information, skills, tools, and materials needed to
perform the work (within acceptable variance limits)

Tools
T l andd Techniques
T h i for
f Project
P j t
Control
 The scope documents
 Scope statement
 WBS
 Business requirements document
 Project requirements document
 P j t evaluations
Project l ti and
d status
t t reports
t
 The triple constraint
 Change
g control and configuration
g management
g
 Earned value management

Project Monitoring Processes
Plan Actuals
Comparison
Trend
analysis
Variances
Replanning
Variance
Forecasts
analysis
y
Decisions on
action plan

Managing the Triple Constraint: Time
Time management
 Compares planned and
actual project progress
 Determines a strategy
for limiting schedule
variance
Tim
st
 Manages activities to
Co
e
maintain acceptable
variance from schedule
baseline
 Includes recovery Scope
strategies
 Identifies schedule
risks

Managing the Triple Constraint: Cost
Cost management
 Compares planned and
actual project costs
 Determines
D t i a strategy
t t
for limiting variation
st
Tim
from project cost
Co
e
baseline
 Manages activities to
maintain budget
 Tracks
T k costt off changes
h Scope

Managing the Triple Constraint: Scope
Scope management
 Compares deliverables
completed and in
progress
p g to
specifications
 Determines a strategy
Tim
st
for limiting scope
Co
e
changes
h
 Manages activities to
maintain scope
 Tracks changes
throughout the project Scope
 Traces changes back
to the requirements

Managing
M i th
the Triple
T i l Constraint:
C t i t
Process Management
Process managementt
P
Process
 Assesses effectiveness
of current processes
 Determines a strategy
for improving
Tim
st
Co
processes during the
e
lif off a project
life j t
 Manages continuous
process improvements Scope
( ithi th
(within the project
j t
Management
context)

Change Control
 Change comes from many sources
 Customer input
 Team input
 Business input
 Risk events
 A organized,
An i d systematic
t ti approachh is
i helpful
h l f l in
i
managing change
 Change request forms
 Review and evaluation process
 Decisions by a change control board (CCB)
Tool: Change Request

Change Control Process
Identify and
submit change Screen request Assess impact
request
Get customer Inform Implement and

approval stakeholders document
Distribute

Configuration Management
Documented procedure to apply technical and
administrative direction to—
 Identify and document functional characteristics
of a deliverable
 Control and evaluate any changes to deliverable
p , characteristics,, and functionalityy
specifications,
 Record and report the change and its
implementation status
 Audit the deliverables to verify conformance to
requirements

When Risks Become Reality
R
O
Opportunity
t it i Wi df ll
Windfall
s
Threat k Problem
E
Response plan v
for known event e Corrective action
n
t Workaround (reaction to the
Unknown
U k occurrence of unknown risk
event events)
time

Risk Monitoring and Control
“[I]s the process of implementing risk responses
plans tracking identified risks
plans, risks, monitoring
residuals risks, identifying new risks, and
evaluating risk process effectiveness throughout
the project
project”*
 Integrated with project plan, execution, and control
processes
 R l t d to
Related t the
th accomplishment
li h t off project
j t objectives
bj ti
 Performed continuously during the project
 Composed of three steps
 Execute the risk management plan (RMP)
 Evaluate the RMP
 Update documentation in the RMP


Step 6: Execute Risk Strategy
 Identifying, analyzing
Identifying analyzing, Risk
and planning for new Management
risks Planning
 Keepp track of identified Document Identify

risks
 Monitor risk triggers Document
Evaluate Analyze
and residual risks and
Communicate
 Reanalyze existing
risks Execute Prioritize
 Review execution and
effectiveness of risk
Plan
response strategies
 Communicate plan
status to project
stakeholders
Execute Risk Strategies
Input Tools
 Project plan  Risk assessment
 Risk management plan
 Risk audits
 Risk list
 Variance and trend analysis
y
 Approved
A d change
h  Technical performance measurement
requests  Reserve and contingency analysis
 Work performance
 Status reports and meetings
information
 Performance requests

Step 7: Evaluate Results
Evaluating risk response Risk
results involves— Management
Planning
 Monitoring the results
of executingg risk Document Identify
response strategies
 Evaluating corrective Document Analyze
Evaluate
actions taken and
Communicate
 Reassessment and
replanning Execute Prioritize
 Evaluatinggpproject
j
assumption validity Plan
 Reacting to risk
triggers
 Identifying new risks

Risk Evaluation
Input Tools
 Risk management plan  Risk response strategies
and project plan  Personal management tools
 C and
Cost d schedule
h d l  Communication
information  Time management
 Technical issues  Project management tools
 All relevant event  Networks
information  Cost and schedule reporting process
 Corrective actions  Team meetings and status reports
 Decision-making g tools
 Decision trees
 Life-cycle cost analysis
 Financial measures
 Probability
P b bilit ffunctions
ti

Evaluation Guidelines
 Identify opportunities to refine the risk
management plan
 Identifyy anyy additional action required
q
 Reassess risks and response strategies
 Determine whether the consequences of the
strategy were the same as envisioned

Step 8
St 8: D
Documentt Ri
Risk
kMManagementt
Results
 Provides a valuable Risk
historical reference for Management
Planning
future projects (lessons
learned) Document Identify
 Provides a chronology
of events for this Evaluate
Document Analyze
and
project for audit and Communicate
other reasons
Execute Prioritize
 Provides a
communications
mechanism Plan
 Should be done by the

project team members

Risk Documentation
 Documentation is a continual process
 Documentation should be—
 Current
 Accurate and complete
 Clear and succinct
 Obtainable (p
(project
j manager
g should have easy
y
access to it)
 A means for disseminating information

Earned Value Management (EVM)
 EVM allows project managers to integrate scope
scope,
schedule, and resources to measure project progress
 Earned value technique (EVT) is a consistent and
simple technique for analyzing targets and actual
results, and making projections; it provides the
following:
 Set of standard calculations
 Objective assessment of future variance
 Measure of actual work accomplished compared
to the authorized budget for that work
 Consistent measure from project manager to
project manager

Earned Value Terminology
Current Term Definition Previous Term

Earned Value = EV The sum of the approved cost estimates Budgeted Cost of Work
for activities performed by a given date Performed = BCWP
Planned Value = PV The sum of the approved cost estimates Budgeted Cost of Work
for activities scheduled to be performed Scheduled = BCWS
by a given date
Actual Cost = AC The sum of all costs incurred in Actual Cost of Work
accomplishing the work performed by a Performed = ACWP
given date
Budget at Completion = BAC  The total approved cost of the project Budget at Completion =
 An aggregate
gg g of all estimated costs for AC
all activities and other costs

Earned Value Terminology (continued)
 Schedule variance (SV)—The
(SV) The difference
between the estimated value of the work actually
completed (EV) and the planned value completed
(PV)
SV = EV – PV
 Cost variance (CV)—The difference between

the estimated values of the work completed (EV)
and what has actually been paid for the
completed work (AC)
CV = EV – AC

Earned Value Terminology (continued)
 Schedule performance index (SPI)—The

(SPI) The value
of work completed per each monetary unit
scheduled to be completed; performance on the
money planned to be spent
SPI = EV/PV
 Cost performance index (CPI)—The value of

work completed per each monetary unit spent;
performance on the money actually spent
CPI = EV/AC

Other Useful
Oth U f l Earned
E d Value
V l
Terminology
 Estimate at completion (EAC)—The
(EAC) The estimate of
the completion cost of a project, based on current
actual costs and performance
 Estimate to complete (ETC)—The amount that
will need to be spent to complete a project, based
on EAC and AC
 Variance at completion (VAC)—The difference
between the original budget (BAC) and the latest
p
estimate of completion cost ((EAC))
 Cost to complete (CTC)—The budgeted cost
plus reserves (BAC + Reserve)

Graphical Analysis of Earned Value
Cost EAC
Target (Budgeted) Costs
(including Management Reserve) CTC
VAC
Reserve
BAC
ETC
Cumulative Estimated Costs
= Budget at Completion (BAC) EV
CV
AC SV
PV
Time
Analysis Planned Revised
Date End End

Integrated Cost/Schedule Status
Data Date
= Time Now
PV = $4,525
Review science A AC = $4,525
curriculum (1–3)
PV = $6,450
Review science B AC = $7,000
curriculum (4
(4–6)
6)
PV = $4,450
Identify site C AC = $5,000
PV = $6,025
Target Group A D EV = $4,519
,
AC = $4,520
PV = $8,025
Target Group B E EV = $6,420
AC = $6,420
Define Curriculum PV = $1,110

equ e e ts A
Requirements
F AC = $0
Define Curriculum G PV = $0
Requirements B
Hold departmental H PV = $0
review
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Key Earned Value Data
Task Task Cost % PV EV AC
Estimates Complete
A $4,525 100 $4,525 $4,525 $4,525
B $6 450
$6,450 100 $6 450
$6,450 $6 450
$6,450 $7 000
$7,000
C $4,450 100 $4,450 $4,450 $5,000
D $6,025 75 $6,025 $4,519 $4,520
E $8,025 80 $8,025 $6,420 $6,420
F $3,330 0 $1,110 0 0
G $4,750
$ , 50 0 $0 0 0
H $7,800 0 $0 0 0
Totals $30,585 $26,364 $27,465
BAC = $45,355

Schedule and Cost Variance
Variances are key indicators of whether the project is
on schedule and within budget at the current date.
Metric Formula Calculation Result
Schedule variance (SV) EV – PV $26,364 – $30,585 $ –4,221
Cost variance (CV) EV – AC $26,364 – $27,465 $ –1,101

Schedule
S h d l and
d Cost
C tP Performance
f
Indexes
Performance indexes are another way of
comparing how the project is performing against
the schedule and the cost baseline.
M etric Formula Calculation Result
Schedule EV/PV $26 364/$30 585

$26,364/$30,585 .86
86
performance index
(SPI)
Cost performance EV/AC $26,364/$27,465 .96

index (CPI)

Percent Complete and Percent Spent
Percent complete and percent spent are good
communication metrics.
Percent complete (PC) EV/BAC $26,364/$45,355 .58 (= 58%)
Percent spent AC/BAC $27,465/$45,355 .61 (= 61%)

Completion Estimates
Estimate at completion BAC / CPI

(EAC) or latest revised
estimate (LRE)
Variance at completion BAC – EAC

(VAC)
Estimate
E ti t tto complete
l t EAC – AC
(ETC)

Exercise 8-1
Earned Value Management

The 50-50 Rule
A simple way to estimate percent complete:
 Work is 0%, 50%, or 100% complete
Case where work has just begun:
Percent complete = 50
Case where work has nearly ended:
P
Percent
t complete
l t = 50
 Other rules: 20-80 and 0-100

Case Study 8-1
Project Reporting
Tools: Project Status Summary Report and Project Status Report

Key Messages
 The triple constraint defines the key elements to
monitor and replan
 The triple constraint has as its foundation the
management of project management processes
 Simple systematic mechanisms can be put in place to
monitor projects, both for senior management and
project
p j team levels
 EVM is the best method for monitoring and controlling
project progress
 PMs need to apply
pp y recoveryyp plans to close the g
gaps
p
that monitoring identifies
 The 50-50 rule is a simple way to consistently
measure the value of work in progress (earned value)

Unit 9
Project Closeout
Management The WBS
Risk Baselining the

Management Project
Unit 8 Unit 9
Project
Implementation:
Replanning, and
Reporting
Objectives
to
 Explain the importance of planning for project
closeout
 List typical closeout steps and related activities
 Provide a final project evaluation

Project Closeout
The last,
last formal phase of the project life cycle
cycle—
 Ends the project
 Is planned for when developing the project

requirements document (PRD)
 Measures outcomes and results, thus verifying
scope (as documented in the PRD)

Typical Closeout Steps
Transition
Customer
Celebrate
Success
Reaffirm
Customer
Relationships
Conduct Final
WBS Review
Schedule Disband
Fulfill
Closeout Measure Project
Contract
Review Outcomes Team
Obligations
Review
Closeout Perform
Checklist Administrative Assess Assess
Closeout Lessons Management
Organize Learned Performance
Documentation
and Archives

Conduct Final WBS Review
Is every work package complete?
 Yes: Document the date closed out, who decided to
close it out, and reasons for closeout
 No: Document why y not,, who decided not to complete
p
it, and reason why it was not closed
WBS Name % Complete
1 LAN Installation Project 100
1.1 Phase I - Planning and Design 100
111
1.1.1 A - Kick
Ki k Off Project
P j t 100
1.1.2 B - Build Technical Requirements and Design 100
1.1.3 C - Review Functional Design 100
1.2 Phase II - Installation Preparation 100
1.2.1 A - Order Equipment 100
1.2.2 B - Prototype System 100
1.2.3 C - Preconfigure System and Test 100
1.2.4 D - Prepare Site 100
1.3 Phase III - Installation 100
1.3.1 A - Install On-Site 100
1.3.2 B - Establish Documentation Protocols 0
1.3.3 C - Generate Documentation 100
1.4 Phase IV - Postinstallation 100
1.4.1 A - Conduct Initial Orientation 100
1.4.2 B - Review Installation 100
1.4.3 C - Obtain Formal Acceptance 100

Measure Outcomes (Success Criteria)
 Have all success measures from the PRDPRD, the
business requirements document (BRD), and
scope documentation been validated, measured,
and accepted by the customer?
 Have any areas of concern been flagged for
follow-up, by whom, and when? Have the
relevant persons been notified (with a scheduled
follow-up date)?
 What is the customer’s view on completion,
p ,
success measures, and any required follow-ups?
Will a customer satisfaction survey be favorable?

Review Closeout Checklist
 Create closeout checklist at start of project
 Use a template to populate checklist with
standard closeout items
 Add closeout items as project proceeds
 Gather checklist items during team and
management reviews

Fulfill Contract Obligations
 Identify and list outstanding deliverables
 Customer analysis
 Internal analysis
 Discrepancies between them
 Identify outstanding promises made verbally and
in writing
 Assess customer’s willingness to close out, or
what is still required for this
 Review p project
j charges,
g invoices, and accounts
 Hand off deliverables to customer
 Ensure customer acceptance

Reaffirm
R ffi C
Customer
t and
d St
Stakeholder
k h ld
Relationships
 Finalize product or deliverable acceptance
 Acceptance signatures
 Payments and release of retentions (if any)
 Activate ongoing responsibilities

 Audits
 Maintenance
M i t projects
j t or contracts
t t

Reaffirm
R ffi Customer
C t and
d St
Stakeholder
k h ld
Relationships (continued)
 Reaffirm ongoing relationships with customers
and (various) stakeholders
 Plan these before closeout:
 Future bids
 Reference from the client
 Alliances and partnerships
 Joint papers (journals and public platforms)
 User group membership
 Senior executive contacts

Administrative Closeout
 Accumulate project Authorizations
data Contracts
 Formal
 Informal
I f l Customer correspondence
 Organize data Older Gantt charts
 Assess lessons PRD
learned Change requests
Letters from vendors

 Update data
 Eliminate superfluous
p
data
 Document, index, and
archive
Tool: Closeout Procedures
Assess Lessons Learned
Before project team is disbanded—
disbanded
 Schedule a lessons learned review
 Circulate a draft list of lessons learned
 Hold group workshop (with PMO people)
 Document new and modified best practices
 Agree
A where
h and d how
h llessons will
ill b
be used
d iin
future:
 Templates and tools
 Training sessions
 Intranet site
Tool: Lessons Learned

Celebrate Success
 Celebrate
 Reminisce
 Give awards
 Celebrate

Disband Project Team
 Ensure all outstanding performance evaluations
are completed while information is fresh
 Schedule release of resources to keep
discontinuities and “cracks”
cracks to a minimum
 Maintain a skeleton crew until planned testing (if
any) is complete (and customers take over use of
final products)
 Affirm relationships with resource providers (for
future project work)
 Ensure personal niceties are carried out
 Thank-you letters
 Trophies and photos

Assess Management Performance
 Assessment of project manager’s
manager s performance
 Project success criteria
 Organization’s own success criteria
 Communications
C i ti managementt
 Team leadership
 Assessment of sponsor’s performance

 Project success criteria
 Organization’s own success criteria
 Communications management
g
 Team leadership
 Review lessons learned and coaching needs (if any)

 Action plan and follow-up
follow up plan

Final Project Evaluation
Some reasonable time after project completion
completion—
 Assess real success of project (products have
had time to be used by customer)
 Assess further lessons learned and process
improvements
 Assess opportunities to update standards
standards, best
practices, templates, tools, checklists, and
methodology
 Assess processes for automation possibilities
 Reexamine suitability of organization and team

structures

Final Project Evaluation (continued)
 Update guidelines for sponsors and project

managers
 Consider any new opportunities and issues
 Review again whether customer received what
was specified for delivery, when it was expected
 Will the customer do business with us again? If
not, why not?

Key Messages
 Closeout is a process
process, not an event
 All steps should be followed to close out a project
thoroughly
 Many stakeholders can be involved in project
closeout
 The customer evaluates real-world
real world use of
deliverables and realistic attainment of stated
outcomes and goals
 A final lessons learned review should be
performed soon after the project is completed

Case Study Supplements
Case Study 2-1: Project Requirements Document
Case Study 4-1: Risk Analysis and Response Development
Case Study 5-1: Estimating
Case Study 6-1: Network Logic/Scheduling
Case Study 7-1: Baselining the Project
Case Study 8-1: Project Reporting

CASE STUDY 2-1
PROJECT REQUIREMENTS DOCUMENT
You are a newly assigned team to take over the project to provide the rider
access/indoor line (RAIL) system for the Tucker’s Circle Mall (TCM). Your first
task is to review the enclosed file of memoranda and data to develop a
project requirements document (PRD) for the project. This activity is key to
good project planning.
© ESI September 2013 btv27-s2-1.doc S2-1.1

Project Requirements Document Case Study 2-1
Memorandum
TO: Project Team
FROM: Will DeWitt, PRR Division Chief
RE: Tucker’s Circle Mall (TCM) Project
Congratulations! The 21st Century Streetcar Company (21CSC), Plaza Rail

Ridership (PRR) Division has been awarded the contract to provide the rider
access/indoor line (RAIL) system for the Tucker’s Circle Mall (TCM). You have
been selected to participate in this exciting and challenging project, which
has upper management’s close attention.
You will find memos from the previous project manager, Sol Long, attached.
These memos will provide you with additional background information about
this project, which I am sure you will find helpful.
As you are aware, we believe in project management as a way of doing

business. It increases 21CSC’s success in accomplishing business objectives.
In keeping with the company’s project management process, the team’s first
steps include developing a project charter and the project requirements
document (PRD) for the project plan. The project charter is included within
this packet of information.
This is an $11.6 million contract for 21CSC/PRR. To ensure a reasonable profit

margin, the company’s project cost budget must not exceed $8.5 million. I
sincerely believe that the planning process is key to achieving target cost
objectives and the project’s tight time frames. I have the utmost confidence
in your ability to handle this challenge!
S2-1.2 © ESI September 2013 btv27-s2-1.doc

Case Study 2-1 Project Requirements Document
The 21ST Century Streetcar Company (21CSC)

Plaza Rail Ridership (PRR) Division
Memorandum
TO: Project Manager and Team
FROM: Sol Long, former Tucker’s Circle Mall Project Manager
RE: Tucker’s Circle Mall (TCM) Project—Background Information
Congratulations on accepting the assignment to take over this project. Will DeWitt has
asked that I assist you by providing you with an overview.
Background
The contract award took place early this month, with a scheduled project start date of
January 2. As you can see from the attached SOW, 21CSC is required to finish the project
within 1 year. The project must be finished in time for TCM’s Midnite Madness Mall Mania
event. 21CSC/PRR will face penalties for late delivery. For project planning purposes, a year
is considered to be 50 weeks, or 250 workdays.
TCM is a large, circular mall with three floors and 240 stores. Each floor has an entrance to
each of the five major anchor stores. We are to install a RAIL transport system on each of
the three floors. Because the mall is circular and has a large atrium in the center, there is no
need for the complex, double-back layout that is required for many long, rectangular
shopping centers.
The following groups are involved in this project:
Project Management
As you know, 21CSC will dedicate a full-time project manager to this project. His or her
principal duties are to develop the project plan and to provide overall project management,
including coordinating all work, interfacing with the customer and internal groups,
conducting bimonthly project reviews, supervising the final customer acceptance test, and
ensuring a smooth transition and closeout of the project. The project manager’s time is
charged to the project at a loaded rate of $750 per day.
Marketing
Marketing will handle most of the customer interaction and negotiate any specific contract
modifications. However, the project manager must maintain close contact with the
customer to ensure that 21CSC/PRR delivers everything that Marketing has promised the

customer. Marketing also must follow through to ensure that the TCM provides its project
deliverables as required. As usual, Marketing insists on adding a final “promotional” touch
to the system operation and maintenance manuals before they are turned over to the
customer.
Purchasing
The Purchasing group assures me that it will meet all project management requests for
procurement, leasing, and subcontracts on time, although it has missed deadlines on two
other projects (each by 4 days). With a 28-week interval (lag) between the time Purchasing
places the order for the RAIL cars and their delivery, there is cause for concern.
Purchasing has not yet finalized the subcontracts for furnishing and installing the track and
installing the RAIL cars. Purchasing has received a proposal from Ray Lehr & Son, a
subcontractor that has performed this work on previous projects. Lehr indicates that it can
install the track within 30 weeks. Lehr will require an additional 4 weeks if Purchasing selects
it to install the RAIL cars. (I told Lehr & Sons that this is a distinct possibility if its prices are
right.)
Design
The Design group is responsible for developing the entire system layout. Because the
Software group, the Hardware group, and the subcontractor use the layout information,
Design’s effort is crucial to meeting the project’s tight time frames. Design anticipates a
normal development time of 18 to 20 weeks. Design should be able to accomplish its work
within this time frame because the layout already is mandated by the building design.
Design also is responsible for providing as-built drawings to the customer after installation is
complete.
Software
The Software group is responsible for developing requirements and for building and testing
the software required to operate the RAIL system. It plans to purchase a software package
(MALLRIDE) and to modify it to handle the mall’s unique requirements. However, it is
concerned that modifications to accommodate more than four anchor store slowdowns may
impact system performance negatively and that its time frame of 30 to 35 weeks is
inadequate. Marketing was able to negotiate rotating slowdowns for anchor stores in other
malls. Marketing’s ability to do the same for this project is critical.
Hardware
The Hardware group estimates that it will take 10 to 12 weeks to design and build the
hardware housing and switching control system (the “brain” for this project). Hardware’s
work depends on receiving the layout from Design so it can requisition the necessary
components and materials from Purchasing. It also requires an additional 4 to 6 weeks to

install the housing and control system (in storage closets provided by the Mall) and to test
the entire system.
Summary
In addition to background information, I have included a WBS from another project to help
you with your planning. However, I recommend you view it with a critical eye—it’s far from
perfect.

Tucker’s Circle Mall (TCM) Project Charter

Assignment
John Smith is authorized as project manager for the Tucker’s Circle Mall (TCM) effort. John
Smith is designated to ensure customer satisfaction and to shepherd the project to a
successful conclusion, as described in this charter. John Smith will be responsible for internal
communication and cooperation with responsible functional managers included in the
distribution list.
Responsibility
The project manager will—
Be the primary point of contact for the 21st Century Streetcar Company (21CSC) and
Tucker Circle Mall (TCM)
Ensure team members know their responsibilities
Track team member performance
Track overall project performance
Prepare a detailed project plan and obtain agreement to that plan from the related
functional managers
Approve the release of project funds
Maintain a project binder containing all pertinent project data
Report project status to management
Authority
The project manager’s authority includes—
Authority to direct the project team
Access to TCM on all matters related to this effort
Access to the functional managers on all matters related to this effort
Control of the project budget
Access to financial reports related to project expenditures, including time and

attendance
Renegotiation with functional managers to delegate responsibility and authority to

functional organization team members

Scope Statement
The 21st Century Streetcar Company (21CSC) will design, develop, and install a rail
access/indoor line (RAIL) on each of three floors of Tucker’s Circle Mall (TCM) in accordance
with the signed contract.

Tucker’s Circle Mall

Where Shopping Is a Way of Life
Rider Access/Indoor Line (RAIL) Scope of Work

Tucker’s Circle Mall (TCM) hereby agrees to enter into a contract with the 21st Century
Streetcar Company (21CSC), Plaza Rail Ridership (PRR) Division, for the design, development,
and installation of a RAIL on each of the facility’s three floors. The system shall meet the
following criteria—
A minimum of four RAIL streetcars will be installed on each floor, providing service to
any given location at a frequency of no less than one tram every minute. The track
allotted per floor shall be 1,800 feet.
The streetcars will slow down at each of TCM’s five anchor stores.
The system will be designed, developed, and installed within 52 weeks from start date.
Installation shall not interfere with pedestrian traffic within TCM; therefore, no
workspace greater than 200-square feet per floor shall be blocked by installation at
any given time.
The RAIL system will meet standard performance and safety requirements and pass
TCM’s acceptance test.
TCM will provide a storage closet of not less than 125-square feet for hardware and
switching system equipment. 21CSC is responsible for installing the equipment.
TCM will provide three RAIL car storage sheds, 10’ x 18’ (one for each floor) for storage
of spare cars to be used in times of streetcar failure. 21CSC shall provide the spare
streetcar, as well as the additional 140 feet of track connecting to the storage shed.
This system is vital to the ongoing growth of TCM and is essential to the Midnight Madness
Mall Mania event set for the end of the year. Failure to meet this deadline will result in a
payment penalty of $13,000 for each shopping day until the work is complete.

Layout of Tucker’s Circle Mall (TCM)
m Calv
dstro in D eC
N ur line
Secondary
stores
Needless
Markup
Tram
track
ue
Wa Aven
nna h
bee gs Fift
s
Anchor Bag
stores
p-scc-06.wmf

Will Sohkum Consulting

Corporate History Prepared for the
21st Century Streetcar Company
The 21st Century Streetcar Company (21CSC) grew out of the recession of the late
1980s, as consumers turned away from large shopping malls and gradually
returned to local strip shopping centers and neighborhood retailers. Mall
developers searched for new ideas to regain their competitive edge, turning to
market studies to find where they had gone awry. They learned that consumers
were disillusioned with huge malls. Consumers often faced longer walks (albeit
indoors) to get from one store to another in the mall than they would in their own
neighborhoods.
21CSC responded to this need in 1989 by developing the first rider access/indoor
line (RAIL) at the Southern Park Mall outside Youngstown, Ohio. This system
provided a new attraction for mall shoppers. A single rail embedded in the floor
brought new life to the flagging facility. Shoppers enjoyed the convenience of
riding from one store to the next, and the streetcar’s appearance added an old-
fashioned, neighborhood ambiance that was missing at most large, retail facilities.
Through the Youngstown test case, 21CSC learned the fundamentals of indoor
streetcar operation:
Streetcars must maintain an average speed of 4.4 mph, which is just above the
average walking speed, to permit passengers to board the streetcars without
stopping them. The streetcars can be programmed to allow speed variations,
moving faster through areas without stores, and slowing near larger anchor
stores with heavier customer/rider volume. It should be noted, however, that
excessive slowdowns can cause the cars to drop below the recommended
average speed.
One car should be in operation for every 400 feet of track. A minimum distance of
300 feet between cars should be maintained.
Small speakers at the front of the car, triggered by motion sensors scanning 15 feet
ahead, must warn pedestrians of the streetcar’s approach.
Motion sensors scanning 8 feet ahead of the car must stop the car automatically if
someone is in its path.
Support cars (spares) should be maintained at all times, as failure rates tend to run
as high as one car per week.

Since the Youngstown test case, 21CSC has flourished by developing both
commercial and industrial applications for indoor transportation. The PRR Division
is key to growing 21CSC’s business.

Point Olive Mall (POM) WBS

POM WBS (continued)

POM WBS (continued)

Project Name Project Ref. No. Prepared By (print) Preparer’s Initials
Customer Contact Contact’s Phone Date Prepared
BACKGROUND/SUMMARY OF PROJECT
COMMENTS
PROJECT OBJECTIVES
COMMENTS
PROJECT PHASES/DELIVERABLES
COMMENTS
KEY MILESTONES
COMMENTS
ASSUMPTIONS
COMMENTS

RISKS
COMMENTS
KEY RESOURCE REQUIREMENTS

COMMENTS
CONSTRAINTS
COMMENTS
INTERRELATED PROJECTS
COMMENTS
ACCEPTANCE CRITERIA
COMMENTS
REVIEWS
COMMENTS
COMMUNICATION PLAN
COMMENTS

CHANGE MANAGEMENT PLAN

COMMENTS
FINANCIAL ANALYSIS
COMMENTS
SIGNATURES
COMMENTS
Return to Slide 2-50
Solutions

CASE STUDY 4-1
RISK ANALYSIS AND RESPONSE DEVELOPMENT
You and your team are ready to analyze your project for risks (both threats and
opportunities) and develop a response plan for them.
From your predecessor, Sol Long, you have received this list of risks that he had identified:
 The WBS may not be complete
 The trains may not slow down enough
 The delivery of the track may be late
 The software modifications may take too long
 No standard change control process is identified
Take a few minutes at your table and decide on one of these risks above, or you may come
up with your own. Also brainstorm a bit and come up with an opportunity for your project.
With your threat and opportunity identified, complete the Risk Analysis and Response
Development form for each (threat on front, opportunity on back).

Case Study 4-1 Risk Analysis and Response Development
Risk Analysis and Response Development
Threat Response Development

Project Demographics Describe the event that could occur.
Project Name __________________________________________________
Project Manager __________________________________________________
Phone __________________________________________________
WBS No.
WBS Element Describe the significant impact on the project if this occurs.
High
__________________________________________________
__________________________________________________
__________________________________________________
Probability of Occurrence
Describe the probability of the event’s occurring.

__________________________________________________
__________________________________________________
__________________________________________________
Low Impact High
Have at least four people plot chart.
Threat Response Development Strategy

Mitigate
Avoid Accept Minimize Probability Minimize Impact Transfer
Strategy
Advantages
Drawbacks
Order of Preference

Risk Analysis and Response Development Case Study 4-1
Opportunity Response Development

Project Name __________________________________________________
Project Manager __________________________________________________
Phone __________________________________________________
WBS No.
WBS Element Describe the significant impact on the project if this occurs.
High
__________________________________________________
__________________________________________________
__________________________________________________

__________________________________________________
__________________________________________________
__________________________________________________
Low Impact High
Opportunity Response Development Strategy

Enhance
Pursue Ignore Maximize Probability Maximize Impact
Strategy
Advantages
Drawbacks
Order of Preference
Solutions

CASE STUDY 5-1
ESTIMATING
The pressure is on to develop a more detailed estimate for the TCM project.
Some of the team members working with the former project manager, Sol
Long, have also forwarded a WBS for the project that is included in this
package. You want to review it and be sure it is accurate. Remember, if it is
not on the WBS, it does not get scheduled and tracked.
You recently sent out requests for information from other groups to try to
estimate what you are planning to do with market-derived numbers.
You asked them to provide you information about their baseline schedules
and estimates for projects similar to your TCM project.
The groups from which you requested information were:
 Marketing
 Hardware
 Design
 Software
 Purchasing
 Manufacturing
Provided are the memos that were returned to you with the information you
requested.
Work up the most detailed duration estimate possible with the information
available.
Recognize that, as with real projects, this is not a perfect world and you may
not have every shred of information you would like to have.

Estimating Case Study 5-1
WBS Task Name Duration Predecessors
1 TCM Contract Award 1d

2 Project Management 258d
2.1 Hold Kickoff Meeting 1d
2.2 Monitor Work 257d
2.3 Interface with Customer 257d
2.4 Supervise Customer Acceptance Test 1d
2.5 Close Out TCM Project 5d
3 Purchasing Support 240d
3.1 Procure Materials 102d
3.1.1 Order Track 5d
3.1.2 Order Cars 10d
3.1.3 Order HW Materials 10d
3.1.4 Order MALLRIDE Software 10d
3.2 Procure Facilities and Equipment 10d
3.2.1 Lease Facility 10d
3.2.2 Lease Computer 10d
3.3 Monitor Contract 150d
4 Marketing Support 156d
4.1 Finalize User Manuals 10d
4.2 Schedule Customer Acceptance Test 1d
4.3 Obtain Hardware Closet 1d
4.4 Obtain RAIL Car Storage Closet 1d
5 Design Development 262d
5.1 Customer Negotiation and Design 18d
5.1.1 Conduct Initial Customer Meeting 2d
5.1.2 Determine Basic Design 12d
5.1.3 Confirm Parameters 3d
5.1.4 Conduct Site Survey 15d
5.2 Initial Project Layout 36d
5.2.1 Create Architectural Drawings 12d
5.2.2 Create Electrical Schematics 12d
5.2.3 Create Support Systems 12d

Case Study 5-1 Estimating

5.3 Customer Review and Redraft 27d
5.3.1 Conduct Customer Review 15d
5.3.2 Modify Designs 12d
5.4 Finalize Project Design 181d
5.4.1 Develop Final Layout 9d
5.4.2 Complete As-Built Drawings for System 10d
6 Software Development 176d
6.1 Initial Requirements Definition 15d
6.1.1 Requirements Definition 5d
6.1.2 First Draft Functional Specifications 5d
6.1.3 Identify Initial Parameters 5d
6.2 Preliminary Design 25d
6.2.1 Prepare Initial Design Document 10d
6.2.2 Develop First Prototype 13d
6.2.3 Conduct Preliminary Design Review 2d
6.3 Detailed Design 40d
6.3.1 Identify Modules and Interfaces 30d
6.3.2 Define Final Specifications 10d
6.4 Write Code and Test Modules 85d
6.4.1 Code Modules 80d
6.4.1.1 Code Speed Module 80d
6.4.1.2 Code Stop Module 80d
6.4.1.3 Code Distance Sensor Module 80d
6.4.1.4 Code Alarm Module 80d
6.4.2 Conduct SW Integration Test 5d
6.5 Integration Testing 16d
6.5.1 Load SW on CPU 1d
6.5.2 Conduct HW/SW Integration Test 15d
6.6 Develop Software Maintenance Manual 10d
7 Hardware Development 160d
7.1 Clarify Goals 2d
7.2 Establish Fundamental Parameters 3d


7.3 Design and Preparation 15d
7.3.1 Design Harware Housing 5d
7.3.2 Design Backplane 3d
7.3.3 Design CPU 15d
7.3.4 Design Floor Control System (FCS) 10d
7.4 Material Development 50d
7.4.1 Build Hardware Frame 5d
7.4.2 Build Hardware Backplane 5d
7.4.3 Build CPUs 20d
7.4.4 Build FCSs 20d
7.5 Hardware Installation and Testing 158d
7.5.1 Install Hardware Housing 7d
7.5.2 Install CPUs and FCSs 10d
7.5.3 Install Connecting Cables 15d
7.5.4 Prepare Draft Maintenance Manuals 3d
7.5.5 Develop Hardware Training 5d
7.5.6 Prepare Hardware As-Built Drawings 10d
7.5.7 Conduct System Integration Test 10d
8 Subcontractor Installation 150d
8.1 Install Tracks 150d
8.2 Install Cars 20d
9 Close Out Team Project 1d

MEMORANDUM
To: Will Dewitt
From: Marketing
Re: Baseline
Date: Today
We appreciated receiving the brilliant memo on baselining. It’s a concept

whose time has come, and we’re grateful to see that PRR is once again on the
cutting edge of technology on this kind of thing. I doubt many companies
are taking the time to find out where their people are and what kind of
capabilities the various support groups possess. We in Marketing will do
what we can to provide you with an idea of the typical life cycle of a project
within our organization. A description of our role in a representative project
follows:
Reach Out and Win Someone: The Seagull Arcade, Salt

Lake City
The Seagull Arcade project grew out of contacts made during the Oldandingy
Mall effort in Columbus, Ohio. Carefully cultivated contacts at the Seagull
Arcade committed to a Mall Transit System just over 1 year ago.
As is typical with new clients, Seagull was wary of the concept and concerned
that the project might prove to be a financial black hole. Marketing is familiar
with this concern and provided statistics to prove that RAILs increase mall
traffic by an average of 10 percent of the customer base during the first year.
Admittedly, novelty works in favor of the system. However, it is practicality
that holds the customer over the long term.
Once sold, the biggest challenge during the development phase was
overcoming Arcade management’s insistence that the tram have anchor store
slowdowns at each of the six anchor stores. As anyone familiar with the

system knows, four slowdowns will tax a system to its limits. Attempts to
expand beyond these limits in the past have dropped RAIL to under 2 mph.
Management concerns were addressed by adjusting the software to rotate

the four slowdowns among the six stores on a weekly basis. The adjustments
to the software package consumed only 3 days of Software’s time.
As always, Marketing participated heavily during the verify and GA phases,

maintaining an ongoing, steady interface with the customer to ensure the
best relations possible. These endeavors included work with Software during
unit testing and development of user manuals and other materials (which
needed a “promotional” touch before being turned over to the client). As the
primary interface with the client during the implementation phase, it was
Marketing’s mission to ensure that the customer received what was wanted
and that PRR was not deterred in its efforts to deliver a quality product on
time and within budget. Additionally, we will be the principal lead in
arranging and conducting the final customer acceptance test during the
project closeout phase.
Marketing continues to devote significant time and energy to this effort.

Because Marketing is incorporated into all budgets as overhead, the Seagull
Arcade project continues to get extensive attention without additional cost to
other PRR groups. With the two marketing aides assigned to the Seagull
Arcade project (full time) and the energies of Marketing leadership, PRR
clearly shows a commitment to developing future business from the current
base.

MEMORANDUM
To: Will Dewitt
From: The Hardware Group
Re: Baselining effort
Date: Today
Per your request, here is a project that is representative of the efforts of the
Hardware Group. We feel that it provides a typical sample of the resources
essential to our contributions to a project.
The Wickedgood Mall, Lewiston, Maine

Hardware’s Efforts: 14 weeks
Project Parameters
Hardware was able to begin work on its end of the project just 18 weeks
before the total project completion deadline. Despite our initial projections
of 16 weeks of work, Hardware was able to turn the effort around in just
14 weeks.
The work, a standard effort for our group, included developing a framework
for the system to match the size and shape of the switching storage facility
area to serve a two-story, two-track mall. Connections between the hardware
and the track (and trams) were a bit more challenging than normal, because
of the unusual configuration of the facility.
A standard team of Hardware staffers was assembled, including an

integration specialist, a mechanical engineer, and a project coordinator who
also served as the liaison with Software. A team of union laborers was also
used in the effort. We utilized off-the-shelf PRR equipment for the effort,
with some customization to meet client needs.
This Hardware effort (like most) consisted of five phases:

1. Clarification and goal-setting: Through meetings with Design and

Software, Hardware is able to establish the fundamental parameters for
a project and to clarify any early incongruities in the project plan. The
role of the integration specialist is critical at this phase because a clear
understanding of the interplay of the various groups is essential. This
effort requires a full week of effort.
2. Design and preparation: During the early stages of the project,

essential materials are amassed by the project coordinator. The
integration specialist and mechanical engineer review draft drawings-to-
date to design the frame, backplane, central processor, and floor control
systems and to make any necessary modifications to the specifications
as developed. The integration specialist and the mechanical engineer
spend full time on this phase for 4 to 6 weeks.
3. Material development: Using teams of highly specialized laborers,

customization of PRR hardware begins to build the system to meet the
needs of the software and the physical plant. These include building the
hardware frame, the backplane, the CPUs, and floor control systems.
Workers often labor around the clock to ensure that the system is
completed on schedule and matches the unique needs of the client.
These teams are carefully monitored by the project coordinator, and
their work is tested and reviewed by the mechanical engineer. This
effort represents the bulk of our work and generally requires 5 to 7
weeks to complete.
4. Testing: Using the PRR test tracks, the hardware is put to the test. Any
hardware malfunctions generally occur during the first 200 hours of
operation, so a 200-hour test run is conducted. Test charges run as high
as $350 an hour, but for this particular effort, the charges were waived,
because the Testing Unit was also testing new test equipment. This
phase generally requires 10 days for a thorough test to be conducted.
5. Implementation and installation: Union labor assists in the physical

installation of the computer hardware on-site, under the supervision of
all team members.
Implementation is a very group-intensive effort and involves the cooperation

of other divisions and groups as the following endeavors are undertaken:
 Hardware housing installation
 Computer installation
 Connecting cable installation
 Drafting of maintenance manuals

 Hardware training development
 As-built drawings design
 Closeout
Because the implementation phase has come under increasing corporate

scrutiny, I have taken the liberty of breaking down this element into
somewhat greater detail.
 Hardware housing installation is the construction of the shell

required to protect the hardware from unauthorized entry or
operation. In this instance, because the hardware was in a secure
closet, the shell was only needed to physically support the
hardware. This is becoming the case in more and more installations.
Labor required to develop the hardware housing was limited to 80
hours of union labor over 5 days.
 Computer installation began 3 days after the installation of the

hardware housing began and required the full-time attention of an
integration specialist for 20 hours and 80 hours of union labor over
5 days.
 Connecting cable installation was conducted concurrently with

computer installation, requiring 160 hours of union labor over
10 days. We had to coordinate heavily with mall officials on this
particular stage, because large pedestrian areas suffer during this
particular phase of installation. Marketing was instrumental in
paving the way for this endeavor. As we install this equipment
ourselves, we usually plan for 1 week per floor for the cable.
 Drafting of maintenance manuals is performed in conjunction

with Software, because any maintenance that affects all system
hardware will invariably affect at least some system software. The
project coordinator, integration specialist, and mechanical engineer
each contributed about 20 hours to this effort. Software’s
contribution was made primarily by sharing information about their
manuals. Maintenance manuals, developed independently of the
installation tasks, could not be completed until cable installation
was complete, because the peculiarities of the Wickedgood system
could not be detailed until the cable was fully installed.
 Hardware training development was done writing the

maintenance manuals and required a 32-hour commitment from
the project coordinator, as well as 32 hours of the integration
specialist’s time. Because the training is based in part on the
maintenance manuals, this stage must follow the maintenance

manual development. These materials had to be integrated with

Software’s materials as well. Training materials are turned over to
Design when they are completed.
 As-built drawings design is actually a function of Design, but they

required Hardware’s assistance to complete. The effort took about
2 weeks, but Hardware’s contribution consisted of about 40 hours
of our mechanical engineer’s time.
 Closeout involves completing an integrated test using the

hardware, software, track, and cars. This test is done to ensure that
the power, software, and hardware all work as designed. After we
finish this, we are ready for CAT.
Overall Project Review

Costs to PRR for the effort: $734,000
Cost Breakdown:
Integration specialist: 560 hours @ $50 = $ 28,000
Mechanical engineer: 560 hours @ $75 = 42,000
Project coordinator: 560 hours @ $100 = 56,000
Labor: 1,200 labor-hours @ $50 = 60,000
Personnel Costs = 186,000
PRR Switcher Unit 2100 (Standard mall = 250,000

hardware)
Connection lines (one set per floor @ = 240,000

$120,000)
Miscellaneous = 58,000
Material Costs (boards, chips, frame, = 548,000

hard drive, CPU)
Total Costs = $734,000
Note that the client in this instance specifically requested that unit testing for
the cars, hardware, track, and software be eliminated. The client indicated
that such testing was redundant with testing completed early in the
development process. The estimated savings to the client were as follows:
Unit test—car 1 labor resource (day)
Unit test—track 1 labor resource (day)

Unit test—hardware 1 labor resource (day)

Unit test—software 3 software programming
resources (days)
(The client, as it turns out, was probably savvy in their approach to this
element of the negotiation, because staff conducted unit tests without
funding or authorization to ensure quality performance.)
As is standard with Hardware, the project was completed in line with

established budget parameters, despite conditions created by delays within
Software.

HARDWARE SWITCHING UNIT FOR A

TWO-FLOOR MALL TRANSPORT SYSTEM
Floor Control
System
A A
B B
Redundant
CPUs
A A
B B

MEMORANDUM
To: Will Dewitt
From: The Design Group
Re: Request for Information
Date: Today
We recently received your memo requesting some “baseline” information

from all groups within PRR. This is an exceptional idea, in light of the
challenges some PRR project managers have cited in dealing with the
estimating process.
Per your request, we are providing the following information to help you
establish a baseline for the TCM project.
Sample Project
Oldandingy Mall, Columbus, Ohio—One Year Ago
Designing the Oldandingy Mall came the closest to being an “average”

project as could be found in Design’s files. The mall project design lasted 20
weeks and featured an L-shaped design with two siderails. Had it not been
for some vague customer requirements, we believe the project could have
been brought in ahead of schedule and under budget.
The design featured one large, L-shaped loop, which had to be designed from
the ground up. The mall developer, Edwin J. Bedartelo, had no preconceived
notion of how the tram should be designed, and his approvals on the design
occupied the first 4 weeks of the design process.
Four team members worked on the effort, specifically drafting design options
and figuring out the electrical and logistical configurations that would make
the design feasible. Generally, four team members are required on all
projects, regardless of size, because draft plans don’t require additional labor
for larger projects.

Design expenses are fundamentally a function of time. The more time

required to plan and outline the project, the more expensive it becomes.
Customers with clearly defined plans significantly reduce the amount of time
necessary for Design to develop materials. The use of computer modeling
software is also essential to ensure that projects can be developed as
designed.
Design efforts are normally broken down into these four phases (percentages
indicate percentage of total time consumed):
Customer negotiation and design determination: 20%

(includes initial meetings with the customers,
determination of basic design, confirmation of any unusual
parameters for the effort, and site survey)
Initial project layout development: 40%

(includes the “meat” of Design’s efforts, including creation
of architectural drawings, electrical schematics, and
supporting systems)
Customer review and redraft: 30%

(allows the customer to modify the initial layout and to
express any concerns or potential problems with the
design)
Layout finalization and final draft: 10%

(can become more significant if major revisions occur
during the customer review)
In terms of the Oldandingy effort, Design’s costs to PRR came to $42,666 per
week. The final tab for our end of the project was just under $855,000. This
final figure included the cost of facilities, computers, modeling software, and
support personnel.
In terms of current efforts, Design’s leads include the following individuals:
 May Kaplan, mechanical engineer: Responsible for developing

initial specifications for all mechanical aspects of a RAIL. Current in-
house rate: $90/hr.
 Mark Etman, customer relations specialist: Responsible for

customer interface on design considerations. Only responsible for
ongoing customer contact to translate customer wishes into
fundamental outlines and designs for the rest of the team. Current
in-house rate: $75/hr.

 Harvey Graffix, technical artist: Prepares drafts and final copies of all
renderings required for an effort, including schematics and
mechanical drawings. Current in-house rate: $70/hr.
 Bill Powers, electrical engineer: Responsible for developing initial

specifications for all electrical aspects of a RAIL. Current in-house
rate: $95/hr.
As they develop projects, Design is normally isolated from the rest of their
work. Sent to a rented facility (at a rate of $2,500 per week) the group may
work for as long as 3 months to bring a project in on time and within budget.
Perhaps the single most significant (and most expensive) item in the Design
budget is the inclusion of large-scale computer hardware brought in (on a
rental basis) for each effort. Because every effort requires different hardware
capabilities, PRR continues to rent hardware for projects. Computer hardware
rental costs generally run about $27,000 per week. Design usually requires
both the computer and facility 4 weeks after we start our effort.
As the project drew to a close, Design also took on the responsibility of

ensuring the fulfillment of the contractual obligation for “as-built” drawings
and project design monitoring just before closeout. Because of Harvey
Graffix’s overall familiarity with the project, he participated in this process and
ensured the integrity of the system (as compared with the design) working
with professionals from Hardware. He also provided some drawings for the
hardware and software manuals and served on the implementation phase for
its duration. This additional effort for both manuals only consumed 20 hours
of his time.
The site survey is carried out under the supervision of May Kaplan. Typically,
we use in-house union labor at the cost of $800 per day to perform this task.
The site survey usually requires 10 to 15 days to complete, depending on the
complexity of the mall. All design layout depends on the information
developed from the site survey.

MEMORANDUM
To: Will Dewitt
From: The Software Group
Re: Project Review
Date: Today
We recently received your request for a “model” project to help you establish
a baseline for the organization. As a group, we believe your goals are sound,
but we have concerns that any single project cannot represent our efforts as a
whole. Because software needs and programming considerations vary
dramatically from project to project, we present this report with the caveat
that any given project may have special considerations that will cause costs to
vary. This is particularly important in view of the stringent requirements for
five anchor store slowdowns.
Location: Ice Palace Mall, Yellowknife
Date: 2 years ago
Project: Oval track installation (two floors),

including three anchor store slowdowns
per track
Duration: 48 weeks (1,920 paid workhours)
Staffing: Software programmers (8) @ $65 $ 998,400

Hardware/Marketing liaison @ $75 144,000
Programming aides/input (22) @ $15 633,600
Software Package: MALLRIDE 2100 1,687,500
TOTAL COSTS $3,463,500
Note that the costs of the MALLRIDE package, which has been used
exclusively for several projects, have increased by 10 percent over the past

2 years. We should insist that Purchasing try to get a discount in the price of
at least 30 percent.
The Ice Palace Mall project provides a reasonable snapshot of a Software

effort. Under the guidance of the Hardware liaison, the teams of software
programmers and programming aides worked feverishly to meet the
deadlines imposed by Marketing and the client. Software’s efforts follow the
standard methodology adopted by 21-CSC during our last major project. We
divide the work into phases as follows:
1. Develop Initial Requirements Definition: During this phase, we work

with the customer to determine the overall requirements of the project.
We use this information to develop our first draft of the functional
specifications. We also use this information to identify the initial
parameters to be provided to Hardware. This normally requires
between 2 and 3 weeks to complete.
2. Preliminary Design: During this phase, we spend a lot of time

developing the initial design document and first level prototype to show
the customer. This is usually a conceptual representation for the
customer’s review. This design is validated early in the software process
and prepares us for the preliminary design review (PDR). This requires
approximately 4 to 6 weeks of effort.
3. Detailed Design: During this phase, we do the most cognitive work of

the process. After PDR, we really hammer out the design details, which
involves identifying all our modules and interfaces. As a result, we can
provide a definitive final specification requirement to Hardware a few
weeks after PDR. Our efforts during this phase last about 8 weeks.
4. Write Code and Test Units: We combine these into a single phase,
because we use a spiral approach to coding. We prefer to test each unit
as it is developed. Because we use a specialty team structure, we build
the “speed, stop, distance, and alarm” modules in parallel. Each “build
team” is responsible for testing its modules as it builds them. When we
have completed all unit testing, we conduct an integration test in-house
before loading the software on the customer’s platform. This represents
the bulk of our efforts and easily takes 15 to 18 weeks.
5. Integration Testing: This is the final stage of our efforts. We load the
software on the customer’s platform, assuming that Hardware has
completed their efforts on assembling the control unit. We then run a
quick unit test to make sure the units work, and we conduct an
integration test before we turn it over to Hardware for final system
testing. The time required to do this has ranged from a single week to

as much as 4 weeks. Because of Marketing’s demand for five stops, we

believe we will need at least 3 weeks to ensure acceptance.

MEMORANDUM
To: Will Dewitt
From: Purchasing
Re: Representative Efforts
Date: 2 Weeks Ago
We recently received your memo requesting information on the degree of

our involvement in RAIL efforts and the costs associated with a sample
project. Inasmuch as our involvement in most projects is relatively minor,
albeit significant to the success of a project, we are providing a list of some
key purchases over the past 6 months that may be helpful in determining the
overall cost of the project.
RAIL Cars—Tenth & Powell Company $120,000 each

Car Installation—Shorter Line $20,000 each
Mallride Software $1,900,000
Rental Facilities $2,000/week
Rental Computers $25,000/week
These are the items that most closely relate to the baselining effort currently
underway. As always, the costs of Purchasing’s efforts are rolled into all PRR
costs as overhead. If supplemental information is needed, please advise. All
these contractors have performed admirably. Those who have not are not
included on this list.
As for timelines, Purchasing maintains its policy of 2 weeks (10 working days)
of notice for all large purchases. The procedure for purchases is as follows:
Day 1: Requisition received

Day 2: Requests for proposals developed
Day 3: Requests for proposals issued
Day 8: Proposals received

Day 9: Proposals evaluated

Day 10: Award
These efforts are undertaken by two purchasing analysts who strive to bring
PRR the best products at the lowest possible cost. Their efforts are overseen
by the Purchasing’s director. During this process, we allow vendors 4
business days to respond to our RFPs. When we preselect a vendor, however,
we only require 5 working days to finalize contracts instead of the normal 10
days.
Purchasing continues its mission of thorough follow-up on major projects and

procurements. It is the Purchasing’s mission (only during the formal
implementation phase) to manage the procurement contract to ensure that
the contractor lives by the contract and that contractors’ materials are
acceptable when they arrive on the job. On most projects, a contract monitor
is sent to the field for the duration of the implementation phase to ensure
that the contractor lives within the contract. This is the only supplemental
project expense associated with Purchasing, and it normally costs the
company $700 per day for travel, the monitor’s wages, and his or her per
diem. This cost is directly charged to the project.

MEMORANDUM
To: Will Dewitt
From: Manufacturing
Re: Baseline Requirements
Date: Today
Finally, someone is starting to recognize the value of having some planning in

our new product development efforts. This is an idea whose time is long
overdue. We in manufacturing are thrilled at being in on the ground floor of
the new effort. I have provided some of the basic information required for a
typical manufacturing effort.
Manufacturing is divided into two areas of work: production and installation.

The production function is only concerned with manufacturing the rail units.
These units are standard 18 feet in length and roll off the production line at a
rate five per hour. We can speed up the process and increase output to 10
per hour in times of crisis. Rail segments that require bending to meet
curvature requirements demand more time and usually take 1 day for each
segment. Given enough lead time, however, we can produce high-quality
segments without the need for cutting corners. The cost of the tracks is
priced at $100 per linear foot.
The installation function is responsible for installing the rail into the floor of
the sites. They typically work in crews of four to five persons with one team
leader for each group. The standard rate per crew is $1,500 per day. The
crews can lay down about 48 feet of track per day if no problems arise. Their
work includes preparing the site and installing the track. Additionally, we
have recently hired a crew of car installation specialists who are capable of
installing the cars on the tracks and conducting site acceptance tests of those
cars. They are charged to the project at a rate of $10,000 per car. They can
place and test two rail cars per week. In many cases, the cars are installed on
the tracks after 150 feet of track has been laid. Installing the cars involves
unpacking, assembly, cleaning, placing on tracks, and power-up testing.

In terms of scheduling our efforts, all we require to begin work is the final
drawings from Design. On an effort like yours, we would anticipate a
duration of 30 work weeks.
Solutions

CASE STUDY 6-1
NETWORK LOGIC/SCHEDULING
The pressure is building to start work, but you still need the schedule.
Develop a network diagram using Post-it® Notes (Will DeWitt’s favorite form
of communication). Conduct a forward pass and backward pass. Identify
float, and highlight the critical path.
Recognize that, as with real projects, this is not a perfect world and you may
not have every shred of information you would like to have.
Solutions

Case Study 7-1 Baselining the Project
CASE STUDY 7-1

BASELINING THE PROJECT
Your schedule appears to be realistic. Upper management is very interested
in the cost plan and wants to see your project budget baseline, as well as the
milestones you will establish for the project.
Develop your cumulative cost curve using the following days: 40, 80, 120,
160, 200, 240, and the final day of your project. Ensure that all your resources
are assigned to the proper work package to ensure an accurate spending
profile.

Baselining the Project Case Study 7-1
MEMORANDUM
To: Will Dewitt
From: The Design Group
Re: Activity Report
Date: Today
Tysons Circle Mall (TCM) Project

We have done some preliminary work to ensure that all deadlines will be met
and the project will be completed on time. Some concerns have arisen,
however, since the project was first announced. First and foremost is the
unusual design of the layout. Most PRR tracks include a rectangular layout,
easing problems with wiring and line-of-sight motion sensor activity. This is
not the case with the TCM project, and it may add to our normal time frame
of 18 weeks. Although we recognize that actual track layout will be much
easier than normal, the supporting systems may take more time to design
because of the unusual approach. Under the strictest constraints, the best we
can hope for is an estimated 87 work days to complete our end of the project.
We are waiting for word from Marketing on the parameters for the hardware
switching system storage area.
As for Manufacturing, we should be able to provide sufficient information for

them to begin their endeavors within 68 work days. We will be able to
provide Hardware with initial specifications within 24 working days.
These timelines are all contingent on support from the Purchasing, which is
scheduled to deliver a package of computer modeling supplies within the
next 2 days. These supplies are available through our internal catalog, but
they are also available through outside sources (at three times the price).

MEMORANDUM
To: Will Dewitt
From: The Hardware Group
Re: Activity Report
Date: Today

We have concluded from our review of the contract that we can begin our
efforts for developing the system framework within a short amount of time.
We will need specific parameters on the switching facility storage area from
the Design and basic requirements from Software for hard disk space, RAM,
ROM, speed, and other items as soon as possible.
If we get a reasonable amount of preliminary requirements from these groups

within the next 6 weeks, we will be able to complete our work within our
original parameters. With quick response from Purchasing, we may be able
to trim that down by 2 or 3 weeks, but that’s being optimistic.
There is one area of concern: unless hardware configuration is under way

within 5 weeks, we will lose our current integration specialist to another
project. This will add approximately 25 percent more time to our efforts while
the new specialist comes up to speed.

MEMORANDUM
To: Will Dewitt
From: The Software Group
Re: Activity Report
Date: Today

We have reviewed the contract requirements and have talked in depth with
the Marketing representative. We feel we can stand by our original estimate
of 30 to 35 weeks. We know Hardware is depending on us to provide them
with the initial parameters. We feel that realistically we can supply the
necessary information about 8 weeks after we start our efforts. We will be
prepared to deliver the final version of the system software during week 36 or
37 of the project.
Thus far, we have identified several potential software problems due to the
unusual building configuration. With five anchor stores (and the conventional
anchor store slowdown), maintaining speeds of over 4 mph around the 1,800-
foot circle is virtually impossible. The only way we will be able to meet the
requests of TCM will be either to eliminate one of the anchor store
slowdowns or to add another car to each of the circles. We believe it would
be prudent to add a car. This will require fewer software modifications and
save us time.
The added car would drop average speeds even lower, because we must
factor in the average pedestrian interference time (PIT). It might, however,
improve the situation enough to allow for a single car to pass any given point
in the mall at least once a minute, but it will still keep us below our acceptable
operating parameters. Thus, we will be pushing our development time to the
very limits to find a way to modify our software to improve overall speeds.
None of these changes would be necessary if Marketing had not insisted on

anchor store slowdowns at each of the five stores on each of the three floors.
If we can backtrack and adhere to the conventional software (which allows for
four anchor store slowdowns), we will be able to trim 4 to 6 weeks from the
schedule.
© ESI October 2013 btv27-s7-1.doc S7-1.5

MEMORANDUM
To: Will Dewitt
From: Marketing
Re: Activity Report
Date: Today

The TCM effort remains on schedule and within budget. We’re very enthused
about progress to date on this particular effort, because it is the biggest
single-ticket item in PRR for this quarter. In an effort to keep the client
happy, we have negotiated several minor modifications that will have only a
minuscule impact on the overall project schedule.
 We have agreed to increase the level of customer pedestrian traffic

interference to 300 square feet of work space per floor. This will
keep two more stores out of the construction area as it passes by
their doors.
 The tram storage area has been reduced to 110 square feet on each
of the floors. The rooms are to be 11 feet by 10 feet.
 The customer has accepted the need for five cars per track.
Customer relations remain strong, but I can’t stress firmly enough how much
these people want this effort completed on schedule. They have indicated
that much of their satisfaction will rest on the timeliness of the effort.

MEMORANDUM
To: Will Dewitt
From: Purchasing
Re: Activity Report
Date: Today

We remain firmly behind the TCM effort, but we regret to report that some
costs are exceeding original expectations. In the tradition of the Purchasing
Group, we are working to bring those costs back in check. Toward that end,
we are working to limit all outside expenditures. Recent requests for outside
purchases have been returned. (Example: A recent request from Design for
outside modeling software would have cost $13,000. The request will be
denied, as similar software is available without cost in-house. The only
expense will be a 2- to 6-week delay in delivery of the software).
As to the streetcars, we were able to negotiate an above-average agreement

and ordered a dozen for a total of $1.2 million. They will be ready 28 weeks
from date of award. An additional 6 cars will be available at the same price
per unit if ordered within 30 days.
We are currently working with the MALLRIDE software vendor to secure a

larger discount, because we are buying their package repeatedly. So far, they
have agreed to a 25 percent discount. We’ll keep you informed as to further
progress.
Solutions

CASE STUDY 8-1
PROJECT REPORTING
Onto each project, a little rain must fall. Attached is some information
regarding concerns that have surfaced during the first few weeks of your
project. Some of these may not affect the WBS as you have created it.
However, if you have a work package associated with these concerns, assume
it has suffered as a result of the changes.
After you’ve determined the extent of the effect on your project—
 Apply the changes that affect your project
 Update your schedule and cost variances to date and develop an

EAC
 Evaluate your new project configuration against the baseline and

develop a plan to get the project back on track
 Determine who needs what information
 Determine how they need the information
 Complete the Project Status Summary Report

Project Reporting Case Study 8-1
Memorandum
To: Project Team
From: The Powers-That-Be
Re: Project Status Summary Meeting
Date: Today
We are now six months into the Tucker’s project with six months to go. Will
DeWitt has asked you for a project update to be presented to him and upper
management. He is particularly interested in current cost and schedule
status, actuals to date, variances from plan, your estimate of final project cost,
ability to meet schedule (and avoid liquidated damages of $13,000/day), and
any potential deviations from the specs. At your request, all cost managers
and task managers have compiled the following update, current as of today.
Unless otherwise indicated, tasks not specifically mentioned were completed

as planned.
1. A small fire and “no-notice” inspection at the mall created some

problems for us. The architectural drawings took a week longer to
complete than planned when the originals were doused by overzealous
fire crews. Although the fire was not our fault, we expended $5,000 in
overtime and materials to produce the drawings. Our CAD operator
vows that next time he’ll make a back-up copy.
2. Due to vacations by key customer representatives, the final approval of

the design slipped by two weeks.
3. In customizing the software package, coding and unit tests have been
much more difficult than we anticipated due to the unusual
configuration and some friction on the software team. As a result, we
are currently 60 percent complete with that task, despite having already
spent 75 percent of the budget for that item.
4. Based on prior experience and close teamwork with designers, the

Hardware group has already completed the schematics and connectivity
scheme. Actual costs were as planned.
5. Purchasing, working closely with Design and Hardware, was able to

execute necessary purchase orders and contracts for track, cars, and
associated materials at the unit prices previously stated in their memos.

Case Study 8-1 Project Reporting
6. Design spent $13,000 to purchase modeling software in order to avoid a

delay in the schedule.
7. From your communication plan in the PRD you know—
 Project team leaders will provide project manager with progress

reports by e-mail by 9 a.m. on Friday each week for activities
scheduled during the week.
 Project manager will distribute progress reports to project team

members each Monday; reports reflect the status reported the
previous Friday.
 Project manager will conduct project team meetings each Monday

from 7 a.m. to 8 a.m.
 Project manager will distribute meeting agenda by e-mail on Friday

at 3 p.m.
 Project manager will conduct customer meetings at 9 a.m. the first

Tuesday of each month.
 Project manager will organize management review meetings on a

bimonthly basis.
 The project manager will maintain an ongoing “open issues” log.
Based on this information, prepare your briefing for Mr. DeWitt and higher
management. Select the information and format you deem appropriate for a
briefing at this level.

MALL NEWS
FROM THE WASHINGTON POST
Tysons Circle—It’s not Metro, but at any of the anchor stores.
it’s a start. The Tysons Circle Needless Markup reports record
Mall yesterday welcomed the sales thanks to the programming
future as thousands turned out fluke. The tram’s warning
for the Midnight Madness sales system, essential in a crowded
event, which marked the pedestrian area, suffered from a
unveiling of the new Tysons volume control problem,
Circle Transport Company shouting some pedestrians out
Tramway (TCTCT). The TCTCT, of the mall and back into their
created by The 21st Century cars.
Streetcar Company, represents Spare tram cars, clearly intended
the region’s first venture into the to be in storage, stretched some
latest developments in public four feet into the pedestrian
indoor transportation. walkways on each of the floors.
Tysons General Manager Betty
The $11.6-million effort went
Sinesoff says 21-CSC is working
down to the wire, as developers
to rectify the problem.
of the system worked feverishly
on the final tests mere minutes Despite the minor glitches, the
before the mall opened for its record turnout for what Sinesoff
annual sales event. refers to as Midnight Madness
Mall Mania puts Tysons back to
The evening was not without its
the forefront of local mall
share of opening night
marketing. “We’ve seen the
headaches. One tram would
future, and we’re it,” offers
slow down at only one point in
Sinesoff.
the mall, failing to stop or slow

Case Study 8-1Case Study 8-1 Project Reporting
Tysons Circle Mall
Where Shopping Is a Way of Life
MEMORANDUM
To: 21-CSC Project Manager
From: Betty Sinesoff, GM, Tysons Circle Mall
Re: Ongoing problems
Date: Today
We’re anxious to come to closure on the TCTCT project (as we’ve renamed it), but we’re still
waiting for you to wrap up a couple of key items. The problems with the Needless Markup
anchor store slowdown still haven’t been resolved completely. Although the other stores are
getting their stops, Needless Markup is now complaining that you’re speeding the cars past
their location.
The tram cars do not fit in the floor “garages” that were created for them. Please identify a
solution.
We’re still waiting for acknowledgment of our request for $26,000 in damages for the 2 days
it took to resolve problems after the Midnight Madness Mall Mania event.
Your closeout team continues to work in the closets long after regular business hours. Our
security staff is uncomfortable with their presence. Please see that they leave when the mall
closes.

MEMORANDUM
To: 21-CSC Project Manager
From: Will Dewitt
Re: Wrapping it up
Date: Today
A brilliant performance on TCTCT. I’m glad it’s almost over. As you wrap things up, I hope
you’ll understand that I want to reassign some of your personnel.
I want to send your integration specialist to Guam to work on the Guam Rail Elevated
Enterprise Design (GREED) project.
Despite your Hardware/Marketing Liaison’s desires, I want someone of that caliber to take
on the next high-visibility (and high-risk) project in France: the Cannes Train—Bi-Level
Driverless Operations Network (CannesT—BDON).
In addition, I’m hoping you’ll be interested in an opportunity with our new operation in
Northern Russia. I understand you’ll need to think it over before you commit. You may
want to talk with your predecessor, Cy Beeria.
Thanks again for all your hard work. Get the customer signoff by tomorrow.

Change Request
DOCUMENT PREPARATION INFORMATION

PROJECT NAME PREPARED BY (PRINT) SIGNATURE DATE PREPARED DOCUMENT FILE NAME
Tucker’s Circle Mall Case Study 5-1
CUSTOMER INFORMATION
CUSTOMER CONTACT TELEPHONE
Tucker’s Circle Mall DeWitt (123) 456-7890
PROJECT BACKGROUND INFORMATION

PROJECT MANAGER CHANGE REQUEST NO. DATE REQUESTED
You 1 Today
ORIGINATOR DEPARTMENT/COMPANY
Customer
TELEPHONE FAX E-MAIL
(123) 456-7890 (123) 456-7899 cust@tcm.com
PROPOSED CHANGE
BASELINE DESCRIPTION
Vacations. To cause date slippage.
CHANGE DESCRIPTION
Key client representatives have taken two weeks’ vacation. The vacations were not previously scheduled.
RATIONALE
Key client representatives are necessary for review and sign-off of the final design.
MODIFIED ACTIVITIES
WBS NO. ACTIVITY NAME/TITLE
6.3.2 Define finals specifications

OTHER REFERENCES

APPROVALS
NAME (PRINT) SIGNATURE DATE
DeWitt Signed electronically Today

(123) 654-7890 (123) 654-7899 dewitt@dewitt.com
IMPACT REVIEW
MEETING DATE
Today
TECHNICAL IMPACT
Two-week delay
BUDGET IMPACT
Two-week delay
SCHEDULE IMPACT
Two-week delay
PERFORMANCE IMPACT
Negative
CONTRACT IMPACT
None
CHANGE CONTROL BOARD (CCB) ACTION

SIGNATURE, CCB CHAIRPERSON
Approve and forward for customer concurrence
Deny CCB
CUSTOMER DECISION
COMMENTS (IF APPROPRIATE)
Approved
Tabled
Disapproved
CUSTOMER SIGNATURE
Customer
customer@tcm.com

Change Request

PROJECT NAME PREPARED BY (PRINT) SIGNATURE DATE PREPARED DOCUMENT FILE NAME
CUSTOMER CONTACT TELEPHONE
PROJECT BACKGROUND INFORMATION

PROJECT MANAGER CHANGE REQUEST NO. DATE REQUESTED
ORIGINATOR DEPARTMENT/COMPANY
PROPOSED CHANGE
BASELINE DESCRIPTION
CHANGE DESCRIPTION
RATIONALE
MODIFIED ACTIVITIES
OTHER REFERENCES

APPROVALS
IMPACT REVIEW
MEETING DATE
TECHNICAL IMPACT
BUDGET IMPACT
SCHEDULE IMPACT
PERFORMANCE IMPACT
CONTRACT IMPACT
CHANGE CONTROL BOARD (CCB) ACTION

SIGNATURE, CCB CHAIRPERSON
Approve and forward for customer concurrence
Deny
CUSTOMER DECISION
COMMENTS (IF APPROPRIATE)
Approved
Tabled
Disapproved
CUSTOMER SIGNATURE

Project Status Summary Report
Project Manager Phone E-mail
Report Phase Period Date
Summary of progress
Comments
Problems encountered Actions taken

1. 1.
2. 2.
3. 3.
4. 4.
Planned activities for next reporting period

Comments

Ongoing/Anticipated problems
Comments
Recommendations
Comments
Solutions

Exercise Supplements
Exercise 1-1: The Importance of PMs

Exercise 2-1: Formulating Good Objectives
Exercise 2-2: Present Value
Exercise 3-1: Creating a WBS
Exercise 4-1: Basic Probability Concepts
Exercise 4-2: Expected Value
Exercise 4-3 (Optional): Decision Tree Diagramming
Exercise 6-1: Network Diagramming
Exercise 8-1: Earned Value Management
EXERCISE 1-1
THE IMPORTANCE OF PMS
Take about 10 minutes to discuss this topic within your table group.
 Make a list of issues or events that disrupted your projects or projects

you know about.
 Categorize the issue/event list into the following four categories:
A. Showstoppers
B. Caused severe replanning
C. Caused minor replanning
D. Were not a problem
 List suggestions for resolving the situations in a proactive way (before

they become a crisis).
Solutions
© ESI September 2013 btv27-e1-1.doc E1-1.1

EXERCISE 2-1
FORMULATING GOOD OBJECTIVES
Customer Objectives
1. Install new flooring in this room.
2. Develop a database to monitor office vacation time requests.
3. Build your daughter’s new puppy a home.
Your Task
As a group, rework the above objectives using the SMART model for
formulating good objectives.
Rewrite the objectives on a flip chart or visual to share with the whole class.
Return to Slide 2-9
Solutions

EXERCISE 2-2
PRESENT VALUE
Good Answers’ controller, Sal Reigh, has negotiated a lease agreement with
Columbia Management. Included in the agreement is an option to pay $40,000
upon signing the lease to pay for the cost of configuring the office to meet the
needs of Good Answers or to pay nothing up front, but to increase the annual
lease amount by $11,000 per year for the four-year term of the lease.
Assuming Good Answers has a cost of capital of 10 percent, which option

should Sal choose?
Solutions

EXERCISE 3-1
CREATING A WBS
You have received basic guidance from Joe Storum, the facilities manager and
your program manager, about the needs of a moving project:
 The entire office of 150 people will be relocated to a new office

building about 10 blocks down the street.
 The purchase and installation of items in the new building is our

project’s responsibility.
 The removal of items not moved and general cleanup of the old office
will be handled by someone else.
 A not-yet-determined moving company will move the heavy items.
Discussion during meeting with the president on plans for the move:
 The chief of IT informs the group that computers are out-of-date and
she plans to replace all the desktops and servers during the move.
She has already signed a contract for the new items. She now needs
information about the timing of the move.
 The purchasing department presents the group with services and

pricing information for three moving companies it has researched.
 HR suggests doing most of the move during the last week of July;
everyone agrees.
 The president comments on the poor condition of much of the firm’s

office furniture. No further discussion took place on this.
After the meeting, you go down to Joe’s office to discuss the move further. You
agree to build the WBS. Major areas of move that you discuss include—
 Project planning
 Premove activities
 Moving activities
 Postmove activities

Creating a WBS Exercise 3-1
You and Joe began brainstorming about the various tasks that will have to be
performed to make the move successful. Joe has had experience with moves of
this type, so he was a wealth of information. However, he is not a very
organized person so the session seemed to be a random recall of various tasks
he had encountered in his previous moves. Joe stopped occasionally to laugh
about a problem or a foul-up in his previous moves, but he reminded you not to
let those oversights happen on this move. Fortunately, you took good notes as
Joe rambled on and on about the many tasks that would have to be handled by
the moving team.
The meeting ended before you and Joe could organize his thoughts into a WBS
because of a water pipe break that Joe had to deal with. As he ran out the door,
he suggested that you organize the WBS so that the two of you can finalize it
when he returns.
Your Team’s Job

Use Post-it® notes to organize your notes from your meeting with Joe into a
WBS. Your notes of Joe’s brainstorming include the following tasks: Deciding
on furniture; office preparation; kickoff meeting; utilities setup; build-out of new
building; initial planning for the overall project; actual move of existing
furniture, files, and so on; installation of new furniture, communications
equipment, and computers; installation of new signs; and of course, closeout
activities.
You decide to arrange these tasks as work packages under the four headings
discussed at the beginning of your meeting.
Solutions
E3-1.2 © ESI September 2013 btv27-e3-1.doc

EXERCISE 4-1
BASIC PROBABILITY CONCEPTS
1. You roll a single die. What is the probability of—
Getting a six?
Getting a five?
Not getting a six?
On the second roll, getting a six?
On the second roll, getting a five?
On the second roll, not getting a six?
2. For two consecutive rolls of the single die, what is the probability of—
Getting two sixes in a row?

Getting two fives in a row?
Getting a five and then a six?
Getting no sixes on either roll?
Getting at least one six?
3. For six consecutive rolls of the single die, what is the probability of—
Getting no sixes?
If you do not roll a six in the first five rolls, getting a six on the sixth
roll?
Solutions
EXERCISE 4-2
EXPECTED VALUE
Assume all costs are normalized to real dollars; in other words, do not discount
future cash flows.
You are the proposed project manager for the construction of a new electric
power plant using solar thermal technology. This power plant is designed to last
10 years. Expenses to construct the plant are estimated to be $100 million, but
you have identified a 10 percent chance of litigation by environmental groups
during this 10-year period over land use that could add $20 million to the cost
of construction.
Over the plant’s useful life, the electricity generated is expected to produce
$40 million each year in revenue. However, you have several industry and
Department of Energy reports indicating that increased demand for power and
dwindling baseload supply have a 25 percent chance of causing electricity
prices to rise, so you could realize additional revenues of $10 million per year
of operation. Partially offsetting that good news is a 40 percent chance that the
county will raise real estate taxes for industrial land use that significantly affects
natural habitats of certain wildlife species. This raise in taxes could potentially
reduce your revenues by $2 million per year.
In addition, there is a 25 percent chance, per year of operation, of a fire caused

by reflection from heliostats, which would reduce your revenue by $1 million in
any year in which such a fire occurs. Insurance could be purchased to fully
protect you from such losses for $250,000 per year. Other mishaps already are
covered by a blanket insurance policy included in the base operating costs.
Operational and maintenance costs to run the plant are expected to be $10
million a year.
Decommissioning costs at the end of the 10-year life would be $35 million (real
current dollars). Your government affairs division estimates that there is a 35
percent chance that increased environmental requirements will be passed by the
end of 10 years, so the decommissioning costs actually could be $5 million
higher.

Expected Value Exercise 4-2
Answer the following questions:
1. What is the value of the project if none of the identified risk events occur?
2. What is the overall expected value of the project, considering the baseline
and all risks?
3. What is the worst-case value for this project?
4. What is the best-case value for this project?
5. Would it be more prudent to purchase insurance against heliostat fires or

risk the chance of a fire?
Solutions
Alternate Solutions

EXERCISE 4-3 (OPTIONAL)
DECISION TREE DIAGRAMMING
You travel regularly from Rome to Paris on business. Historically, the
accounting department always told you to fly Ronco Airlines to save money.
The Rome-Paris run is $750. You would much rather fly Popeil Air, which has a
wonderful frequent-flyer program and much better food. The Rome-Paris run is
$1,000 on Popeil.
If you arrive in Paris on time, you always have one meal in the airport that costs
$20. When you arrive late, the company normally must put you up in a local
hotel (rather than making a same-day return) at a cost (including per diem) of
$250. The company also loses an extra full day of your time, and your fully
loaded rate is $800/day.
Ronco Airlines has an on-time arrival record of 60 percent on the Rome-Paris

trip. Popeil Air has an on-time arrival record of 90 percent on the same run.
Build a decision tree to present this case.
Solutions

EXERCISE 6-1
NETWORK DIAGRAMMING
Now that Joe has agreed to your WBS, he wants to review a schedule and
present it to the president. She is a “big picture” thinker and does not usually
get involved with the details, so Joe wants to limit the content of the diagram
you show her to the basics that concern her.
You have also worked with your team on estimating the durations of each of the
work packages in the WBS. Following is your current plan for the briefing to
the president:
Work Package Duration (days) Predecessors

Initial planning for the overall 20
project
Kickoff meeting 1
Deciding on furniture 25
Office preparation 20
Actual move of existing furniture, 5
files, and so on
Utilities setup 30
Closeout activities 5
Installation of new company signs 15
Build-out of new building 45
Installation of new furniture, 10
communications equipment, and
computers
Your Job
 Determine the task predecessors
 Build a network diagram
 Calculate forward pass, backward pass, float, and critical path
 Be ready to address—
 How long will the project take?

Network Diagramming Exercise 6-1
 When do you plan to begin the planning process if you want to be

in the new office by July 31?
 What items are on the critical path?
Solutions

EXERCISE 8-1
EARNED VALUE MANAGEMENT
You have evaluated your project and have developed the following earned
value table from your analysis:
Tasks EV PV AC
Task A $10,000 $10,000 $11,000

Task B 12,000 11,000 13,000
Task C 9,000 8,000 8,500
Totals $31,000 $29,000 $32,500
Determine the project status by calculating—
CV
SV
CPI
SPI
How is the project doing based on these indicators?
Solutions

Case Study Solutions
Supplements
Case Study 2-1 Solution: Project Requirements Document
Case Study 4-1 Solution: Risk Analysis and Response Development
Case Study 5-1 Solution: Estimating
Case Study 6-1 Solution: Network Logic/Scheduling
Case Study 7-1 Solution: Baselining the Project
Case Study 8-1 Solution: Project Reporting

SOLUTION: CASE STUDY 2-1
PROJECT REQUIREMENTS DOCUMENT

Tucker’s Circle Mall (TCM) Case Study 3-1 Sample Solution ESI
TCM (Tucker’s Circle Mall) DeWitt (123) 456-7890 Today
Background/Summary of Project
Comments
The 21st Century Streetcar Company (21CSC) will design, develop, and install a rail access/indoor line (RAIL) on
each of three floors of the Tucker’s Circle Mall (TCM) in accordance with the signed contract. The project will
ultimately support the growth of TCM by providing convenient transportation for shoppers and an old-fashioned
neighborhood ambiance.
Project Objectives
Comments
Time
 RAIL will be in place within 52 calendar weeks of project start date
Price and Cost
 Contract price: $11.6 million
 Target cost: $8.5 million
© ESI September 2013 btv27-as2-1.doc AS2-1.1

Project Requirements Document Solution: Case Study 2-1
Project Phases/Deliverables
Comments
Project Deliverables
 5,820 feet of track embedded in floors (1,800 feet plus 140 feet of spare track on each floor)
 15 to 18 streetcars installed on tracks
 Four cars per floor, plus one spare car per floor, are required
 An additional one car per floor may be needed to meet the requirement of five anchor-store
slowdowns
 RAIL control system consisting of housing, hardware, and software
 System operation and maintenance manuals
 One-time customer training course on control system at time of RAIL system delivery
 As-built drawings
Customer Deliverables (delivered in accordance with project master schedule)
 Installation of a 125-square foot storage closet for hardware and switching system equipment
 Three 10-by-18 foot closets for storage of a spare tram (one on each floor)
 Electrical power for installation, testing, and operation
 Acceptance test criteria within 2 weeks of project start
 Access to TCM and equipment staging area 24 hours a day, 7 days a week
Work to Be Performed: Major Segments and Phases
 Project management: Plan and manage project
 Marketing: Obtain customer deliverables and arrange customer acceptance test
 Design: Design system layout
 Hardware: Design, build, install, and test control-center hardware
 Software: Define, develop, and test software
 Purchasing: Procure hardware, software, cars, leases, and subcontracts
 Purchasing (subcontracts): Furnish and install track; install RAIL cars
 Hardware and software groups: Conduct system integration tests
 Project management: Conduct customer acceptance test
AS2-1.2 © ESI September 2013 btv27-as2-1.doc

Solution: Case Study 2-1 Project Requirements Document
Key Milestones
Comments
 Project start
 Design complete
 Hardware development complete
 Software development complete
 Track ordered
 Track delivered
 Cars ordered
 Cars delivered
 Storage, hardware closet delivered
 Track installation start
 Track installation complete
 Car installation start
 Integration testing complete
 Customer acceptance test complete
 Customer sign-off
Assumptions
Comments
 TCM will provide its deliverables in accordance with the project master schedule.
 TCM is structurally sound and will support the RAIL system.
 TCM work hours will be eight hours per day (8 a.m. to 5 p.m.), five days a week. However, overtime may be
used to maintain project schedule, if necessary.
 Software can be modified to accommodate slowdowns at five anchor stores.
 This is a fixed-price contract for TCM and for the subcontractor.
 Subcontracts will include penalties for nonperformance and schedule delays.
 TCM project is “number one” priority, and key resources will be dedicated.
 Project start date is January 1.
 Requests for contract or design modifications will be submitted and evaluated in accordance with the change
management plan.
Risks
Comments
 If 21CSC fails to meet the project’s scheduled completion date, it must pay a penalty of $13,000 for each
shopping day the project is incomplete after December 31.
 Design cannot accommodate five anchor-store slowdowns.

Key Resource Requirements

Comments
 Project manager is dedicated 100 percent to the project.
 21CSC will use MALLRIDE software.
 Hardware, software, and design groups will provide technical expertise.
 Purchasing will provide support.
 Marketing will provide support.
 Purchasing will monitor job-site subcontract.
 Purchasing will provide a subcontractor for RAIL car and track installation.
Constraints
Comments
 During installation, work area cannot exceed 200 square feet per floor at any time.
 A minimum distance of 300 feet between cars must be maintained, with one car recommended for every 400
feet of track.
 The system must have a circular design.
 Storage closets for spare trams will be located 140 feet from primary track.
 Hardware and switching system storage closet is, at a minimum, 125 square feet.
 There will be five anchor-store slowdowns.
 Work must be complete in time for midnight madness sale.
Exclusions
 21CSC will not be responsible for removing construction debris or for cleaning up.
 TCM is responsible for liability insurance for its customers, suppliers, and employees.
Interrelated Projects
Comments
 There are no interrelated projects.

Solution: Case Study 2-1 Project Requirements Document
Acceptance Criteria
Comments
 A minimum of four streetcars will be installed on each of three floors, plus one spare car per floor.
 Frequency of service to any given location will be no less than one tram every minute.
 Streetcars will maintain an average speed of 4.4 mph; this speed will allow passengers to board cars while the
cars are moving.
 Streetcars will slow down at each of the five anchor stores.
 Motion sensors at front of streetcar will scan 15 feet ahead. Speakers will warn pedestrians of tram’s
approach. The tram will stop automatically if someone is within 8 feet of the front of the tram.
 The customer acceptance test (CAT) is satisfactory.
 System will be operational for the annual, year-end TCM Midnight Madness Mall Mania.
Reviews
Comments
 Monthly status meeting with TCM
 Bimonthly management review
 Weekly team meetings
Communication Plan
Comments
 Project team leaders will provide project manager with progress reports by e-mail by 9 a.m. on Friday each
week for activities scheduled during the week.
 Project manager will distribute progress reports to project team members each Monday; reports reflect the
status reported the previous Friday.
 Project manager will conduct project team meetings each Monday from 7 a.m. to 8 a.m.
 Project manager will distribute meeting agenda by e-mail on Friday at 3 p.m.
 Project manager will conduct customer meetings at 9 a.m. the first Tuesday of each month.
 Project manager will organize management review meetings on a bimonthly basis.
 The project manager will maintain an ongoing “open issues” log.

Change Management Plan

Comments
 All change requests must be submitted in writing on the change request form to the 21CSC project manager.
 All change requests—approved and unapproved—will be recorded in the change control log.
 Configuration control board (CCB) meetings will be held on a biweekly basis and will include
representatives from Design, Software, Hardware, and TCM.
 The customer will be notified within 5 days of change request disposition by the CCB.
 Changes that receive preliminary feasibility approval by the CCB will be evaluated for their effect on the
schedule, cost, and specifications.
 Customer will be notified of the effect of changes on schedule and cost, and must sign and authorize any
changes within 10 working days of receipt and before the performance of additional work.
 Authorized changes will be forwarded to the appropriate department and communicated to the project team
by the 21CSC project manager, who also will update cost, schedule, and specification baselines.
Financial Analysis
Comments
 $11.6 million in revenue
 $8.5 million expense
Signatures
Comments
 TCM project manager
 21CSC project manager
 21CSC/PRR division chief, Will DeWitt
Return to case study

RISK ANALYSIS AND RESPONSE DEVELOPMENT
Risk Analysis and Response Development

Tucker’s Circle Mall Case Study 4-2 PM PM
Tucker’s Circle Mall DeWitt (123) 456-7890 Today
Threat Response Development

Project Name Tucker’s Circle Mall Changes to the plan are requested and there is no standard
Project Manager PM change management process identified.
Phone (123) 456-9999

WBS No. Not in WBS
WBS Element Project Management Describe the significant impact on the project if this occurs.
High
If unchecked, the scope of the project could increase
B
dramatically at the whim of the customer, without the necessary
time and cost adjustments.
D

C Rather significant! Since this is new technology and a new

client it is often the case that the customer only “knows what
they don’t want” when they see the end product.
Low Impact High

Risk Analysis and Response Development Solution: Case Study 4-1
Threat Response Development Strategy

Mitigate
Avoid Accept Minimize Probability Minimize Impact Transfer
 Get change process  Get change
in place process
Strategy NA NA  Manage  Document NA
expectations requirements
Advantages NA NA NA
 Timing (a bit late)
 Time to build
Drawbacks NA NA change process
1. Manage
expectations
Order of Preference 2. Get change process
3. Document
requirements

Solution: Case Study 4-1 Risk Analysis and Response Development

Opportunity Response Development

Project Name Tucker’s Circle Mall Pricing for cars and truck won’t change. Background: The
Project Manager PM company said there might be an increase soon, of 10-25%.
Phone (123) 456-9999
WBS No. 8.1 and 8.2

WBS Element Subcontractor Install Describe the significant impact on the project if this occurs.
High
If it occurs, it will keep the project within budget and not force
us to pay the penalty.
C
D
A
Moderate to low. Purchasing is notoriously slow.
Low Impact High
Opportunity Response Development Strategy

Enhance
Pursue Ignore Maximize Probability Maximize Impact
Strategy √ Get Purchasing and Design Same

and Hardware to work
together.
Advantages Keep us in budget Keep us from paying extra
Drawbacks May not work
Order of Preference 1 2

Solution: Case Study 5-1 Estimating
WBS # Activity Work Package Cost Account Summary Comments
1 TCM Contract Award $0
2 Project Management $187,500 Total of 250 days (Background Info Memo from Sol Long)
2.1 Hold Kickoff Meeting $750 1 day
2.2 Monitor Work $112,500 150 days
2.3 Interface with Customer $69,750 93 days
2.4 Supervise Customer Acceptance Test $750 1 day
2.5 Close out TCM Project $3,750 5 day
3 Purchasing Support $1,642,000 Purchasing labor included in overhead

3.1 Procure Materials $1,485,000
3.1.1 Order Tracks $0 Tracks and cars ordered by purchasing through subcontracts
3.1.2 Order Cars $0 See WBS 8.0
3.1.3 Order HW Materials $0
3.1.4 Order Mallride Software $1,485,000 Original cost of $1,687,500 X 10% price , less 20% discount
3.2 Procure Facilities and Equipment $52,000
3.2.1 Lease Facility $25,000 Assume 10 weeks because design requirements better
3.2.2 Lease Computer $27,000 understood and we had benefit of other mall designs.
3.3 Monitor Contract $105,000 150 days @ $700/day = $105,000 for subcontract agent
4 Marketing Support $0 Marketing expenses included in overhead

4.1 Finalize User Manuals $0
4.2 Schedule Customer Acceptance Test $0
4.3 Obtain Hardware Closet $0
4.4 Obtain RAIL Car Storage Closet $0
© ESI September 2013 btv27-as5-1.xls AS5-1.1

5 Design Development $41,100

5.1 Customer Negotiation and Design $10,800 $720 per day for
5.1.1 Conduct Initial Customer Meeting $700 10 to 15 days
5.1.2 Determine Basic Design $4,000 Prorated by duration
20%
5.1.3 Confirm Parameters $1,000 with rounding
5.1.4 Conduct Site Survey $5,100
5.2 Initial Project Layout $19,000 $760/day for 25 days
5.2.1 Create Architectural Drawings $6,500 Spread costs evenly
5.2.2 Create Electrical Schematics 50% $6,500
5.2.3 Create Support Systems $6,000
5.3 Customer Review and Redraft $9,000 $600 per day for 15 days
5.3.1 Conduct Customer Review $5,000 Prorated by duration
30%
5.3.2 Modify Designs $4,000 with rounding
5.4 Finalize Project Design $2,300 $560/day for 4 days
5.4.1 Develop Final Layout $1,100 Prorated by duration
Documentation
5.4.2 Complete As-Built Drawings for System $1,200 with rounding
6 Software Development $1,953,500

6.1 Initial Requirements Definition $27,000 2 systems analysts @ $600/day; 1 integration
6.1.1 Requirements Definition $9,000 manager @ $600/day, all for 10 to 15 days
6.1.2 First Draft Functional Specifications $9,000 Spread costs evenly
6.1.3 Identify Initial Parameters $9,000
6.2 Preliminary Design $156,000 2 systems analysts @ $600/day; 8 programmers @
6.2.1 Prepare Initial Design Document $62,500 Prorated by duration $500/day for 30 days
6.2.2 Develop First Prototype $81,000 with rounding
6.2.3 Conduct Preliminary Design Review $12,500
6.3 Detailed Design $304,000
6.3.1 Identify Modules and Interfaces $228,000 Prorated by duration 2 systems analysts @ $600/day; 6 programmers @
6.3.2 Define Final Specifications $76,000 with rounding $500/day, 9 programming assistants @ $250/day; 1 integration
6.4 Write Code and Test Modules $1,309,000 manager @ $600/day, and 1 tech writer @ $550/day
6.4.1 Code Modules $1,280,000 for 40 days
6.4.1.1 Code Speed Module $320,000 Total of coding expenses
6.4.1.2 Code Stop Module $320,000 6 programmers @ $500/day and 4 programming assistants @
6.4.1.3 Code Distance Sensor Module $320,000 $250/day for 80 days for each module
6.4.1.4 Code Alarm Module $320,000
6.4.2 Conduct SW Integration Test $29,000 2 analysts, 6 prog., 4 prog. assts, 1 Int. Mgr. ($5800 for 5 days)

6.5 Integration Testing $152,000 8 programmers, 12 prog asst., 1 Int. Mgr ($7600) @ 20 day
6.5.1 Load SW on CPU $30,400 Assumed 20% of cost was for installation
6.5.2 Conduct HW/SW Integration Test $121,600 Assumed 80% of cost was for actual sw/hw int. test
6.6 Develop SW Maintenance Manual $5,500 Technical writer @ $550/day for 10 days
7 Hardware Development $1,010,800

7.1 Clarify Goals $2,400 Prorated by duration Integration Spec ($400) and Proj. Coordinator ($800) for
7.2 Establish Fundamental Parameters $3,600 with rounding 5 days. Total cost is $6,000 spread over these two tasks.
7.3 Design and Preparation $46,200 Mech. Eng. ($600), Int Spec. ($400), 2/3 time for
7.3.1 Design Hardware Housing $7,000 Prorated by duration Project Coordinator ($800 X .67 = $536). Total rate = $1,536
7.3.2 Design Backplane $4,200 with rounding for 30 days
7.3.3 Design CPU $21,000
7.3.4 Design Floor Control System (FCS) $14,000
7.4 Material Development $512,000 Material, Equipment & Labor
7.4.1 Build Hardware Frame $18,500 Prorated by duration CPU ($125,000/floor) $375,000
7.4.2 Build Hardware Backplane $18,500 with rounding FCU ($20,000/floor) $60,000
7.4.3 Build CPUs $395,000 Misc. material ($9,000/floor) $27,000
7.4.4 Build FCSs $80,000 Total Material & Equip. $462.000
Labor
Skilled labor (4 @ $100/day for 35 days) $14,000
Proj. Coord. (1 @ $800/day for 35 days) $28,000
Mech. Eng. ($600/day for 13 days) $7,800
7.5 Hardware Installation and Testing $446,600
7.5.1 Install Hardware Housing $11,200 Skilled labor (2), Mech, Eng, Proj Coord ($1,600 for 7days)
Skilled labor (2), Mech, Eng, Proj Coord, Int. Mgr.,($2,200/day for
7.5.2 Install CPUs and FCSs $22,000
10days)
skilled labor (4 @ $100/day/floor for 15 days) + Cables
7.5.3 Install Connecting Cables $378,000
($120,000/floor)
7.5.4 Prepare Draft Maintenance Manuals $5,400 Int. Spec., Proj. Coord. Mech. Eng. ($1,800 for 3 days)
7.5.5 Develop Hardware Training $6,000 Int. Spec., Proj. Coord. ($1,200 for 5 days)
7.5.6 Prepare Hardware As-Built Drawings $6,000 Mech. Eng. 10 days @ $600
7.5.7 Conduct System Integration Test $18,000 Int. Spec., Mech. Eng., Proj. Coord. ($1,800 for 10 days)
8 Subcontractor Installation $2,970,000

8.1 Install Tracks $1,200,000 Memo from Ray Lehr (Tracks for $1.2M in 150 days)
8.2 Install Cars $1,770,000 15 cars @ $100K/car and $18k installation per car
9 Close out TCM Project $5,000
TOTAL: $7,809,900

NETWORK LOGIC/SCHEDULING
ID WBS Task Name Duration Predecessors
1 Start 0d
2 1 TCM Contract Award 1d
3 2 Project Management 258d
4 2.1 Hold Kickoff Meeting 1d 2
5 2.2 Monitor Work 257d 4
6 2.3 Interface with Customer 257d 4
7 2.4 Supervise Customer Acceptance Test 1d 21
8 2.5 Close Out TCM Project 5d 7
9 3 Purchasing Support 240d
10 3.1 Procure Materials 102d
11 3.1.1 Order Track 5d 2
12 3.1.2 Order Cars 10d 2
13 3.1.3 Order HW Materials 10d 2, 64
14 3.1.4 Order MALLRIDE Software 10d 2
15 3.2 Procure Facilities and Equipment 10d
16 3.2.1 Lease Facility 10d 2
17 3.2.2 Lease Computer 10d 16
18 3.3 Monitor Contract 150d 85SS
19 4 Marketing Support 156d
20 4.1 Finalize User Manuals 10d 62, 80
21 4.2 Schedule Customer Acceptance Test 1d 60, 83, 85, 86
22 4.3 Obtain Hardware Closet 1d 55, 86
23 4.4 Obtain RAIL Car Storage Closet 1d 55, 86
24 5 Design Development 262d
25 5.1 Customer Negotiation and Design 18d
26 5.1.1 Conduct Initial Customer Meeting 2d 17
27 5.1.2 Determine Basic Design 12d 26
28 5.1.3 Confirm Parameters 3d 27
29 5.1.4 Conduct Site Survey 15d 2
30 5.2 Initial Project Layout 36d
31 5.2.1 Create Architectural Drawings 12d 28, 29
32 5.2.2 Create Electrical Schematics 12d 14, 31
33 5.2.3 Create Support Systems 12d 32

Network Logic/Scheduling Solution: Case Study 6-1

34 5.3 Customer Review and Redraft 27d
35 5.3.1 Conduct Customer Review 15d 31, 32, 33
36 5.3.2 Modify Designs 12d 35
37 5.4 Finalize Project Design 181d
38 5.4.1 Develop Final Layout 9d 36
39 5.4.2 Complete As-Built Drawings for System 10d 7
40 6 Software Development 176d
41 6.1 Initial Requirements Definition 15d
42 6.1.1 Requirements Definition 5d 14, 26
43 6.1.2 First Draft Functional Specifications 5d 42
44 6.1.3 Identify Initial Parameters 5d 43
45 6.2 Preliminary Design 25d
46 6.2.1 Prepare Initial Design Document 10d 44
47 6.2.2 Develop First Prototype 13d 46
48 6.2.3 Conduct Preliminary Design Review 2d 47
49 6.3 Detailed Design 40d
50 6.3.1 Identify Modules and Interfaces 30d 42, 48
51 6.3.2 Define Final Specifications 10d 50
52 6.4 Write Code and Test Modules 85d
53 6.4.1 Code Modules 80d
54 6.4.1.1 Code Speed Module 80d 50, 51
55 6.4.1.2 Code Stop Module 80d 50, 51
56 6.4.1.3 Code Distance Sensor Module 80d 50, 51
57 6.4.1.4 Code Alarm Module 80d 50, 51
58 6.4.2 Conduct SW Integration Test 5d 54, 55, 56, 57
59 6.5 Integration Testing 16d
60 6.5.1 Load SW on CPU 1d 58
61 6.5.2 Conduct HW/SW Integration Test 15d 60
62 6.6 Develop Software Maintenance Manual 10d 61, 80
63 7 Hardware Development 160d
64 7.1 Clarify Goals 2d 38, 44, 48
65 7.2 Establish Fundamental Parameters 3d 64
66 7.3 Design and Preparation 15d

Solution: Case Study 6-1 Network Logic/Scheduling

67 7.3.1 Design Harware Housing 5d 65
68 7.3.2 Design Backplane 3d 67
69 7.3.3 Design CPU 15d 65
70 7.3.4 Design Floor Control System (FCS) 10d 65
71 7.4 Material Development 50d
72 7.4.1 Build Hardware Frame 5d 13, 67
73 7.4.2 Build Hardware Backplane 5d 68, 72
74 7.4.3 Build CPUs 20d 69
75 7.4.4 Build FCSs 20d 74, 70
76 7.5 Hardware Installation and Testing 158d
77 7.5.1 Install Hardware Housing 7d 72, 73
78 7.5.2 Install CPUs and FCSs 10d 75, 77
79 7.5.3 Install Connecting Cables 15d 78
80 7.5.4 Prepare Draft Maintenance Manuals 3d 64
81 7.5.5 Develop Hardware Training 5d 64
82 7.5.6 Prepare Hardware As-Built Drawings 10d 79
83 7.5.7 Conduct System Integration Test 10d 79, 85, 86
84 8 Subcontractor Installation 150d
85 8.1 Install Tracks 150d 38, 11
86 8.2 Install Cars 20d 85SS+50d, 12FS+140d
87 9 Close Out Team Project 1d 8, 18, 20, 22, 23, 39, 62,
81, 82, 85, 86
88 End 87
89
90
91
92
93
94
95
96
97
98

Solution: Case Study 6-1 Network Logic/Scheduling
2.2
Start 1 2.1
2.3
5.1.4
5.1.2 5.1.2 5.1.3 5.2.1 5.2.2 5.2.3 5.3.1 5.3.2 5.4.1
3.21 3.2.2 5.1.1 7.1
6.1.1 6.1.2 6.1.3 6.2.1 6.2.2 6.3.3
3.1.4
3.1.3 7.4.1
7.3.1 7.3.2 7.4.2 7.5.1 7.5.2 7.5.3 7.5.6
7.2 7.3.3 7.4.3 7.4.4
7.3.4
4.1
7.5.4
7.5.5
6.3.1 6.3.2
6.4.1.4 6.6
6.4.1.3
6.4.2 6.5.1 6.5.2
6.4.1.1
3.1.2 8.2
6.4.1.2
4.4
3.1.1 8.1
4.3
9 End
3.3
4.2 2.4 2.5
7.5.7
5.4.2

BASELINING THE PROJECT
Cumulative Cost Curve for TCM Project
5
Cumulative
Cost ($) 4
0
0 40 80 120 160 200 240 260
Days

PROJECT REPORTING
Project Status Summary Report

Project Manager Phone E-mail

You (123) 456-9876 pm@tcm.com
Report Phase Period Date
Phase 1 Phase 1 Tomorrow
Summary of progress
Comments
$5,000 – Overtime two-week delay – customer vacations
25% – Software coding and testing over budget
$13,000 – Additional software
Problems encountered Actions taken

1. 1.
Small fire and “no-notice” inspection Drawings reproduced and back-up made
2. 2.
Customer vacations Delay of final design approval by two weeks
3. 3.
Software coding and testing Only 60% complete, working OT
4. 4.
$13,000 additional software purchase Purchase to not delay schedule

Project Reporting Solution: Case Study 8-1
Planned activities for next reporting period

Comments
1. Find alternate to approve drawings.
2. Utilize overtime to reduce delays.
Ongoing/Anticipated problems
Comments
1. Unscheduled vacations need to be scheduled.
Recommendations
Comments
1. Get everyone’s schedule and assign alternates if on vacation over a deadline.
2. Back up software regularly.

Exercise Solution Supplements
Exercise 1-1 Solution: The Importance of PMs
Exercise 2-1 Solution: Formulating Good Objectives
Exercise 2-2 Solution: Present Value
Exercise 3-1 Solution: Creating a WBS
Exercise 4-1 Solution: Basic Probability Concepts
Exercise 4-2 Solution: Expected Value
Exercise 4-3 (Optional) Solution : Decision Tree Diagramming
Exercise 6-1 Solution: Network Diagramming
Exercise 8-1 Solution: Earned Value Management

SOLUTION: EXERCISE 1-1
THE IMPORTANCE OF PMS
Here are some typical issues that may disrupt a project: (Note that each of these
issues can be in any of the four categories depending on the circumstances.
What may be a showstopper to one PM or situation, may not be for another.)
Showstoppers
Organizational factors such as no support from upper management, wrong
project manager assigned to the project, or team members not having skill and
knowledge to do the work
Poorly identified customer needs, which translates to incorrect or unclear

requirements
The project manager is in “grand denial” and simply not able to face or
recognize the signs of failure—or is afraid to admit it
Political administrative moves
Catastrophic disasters such as acts of God or terrorist attack
Project is inconsistent with organizational goals
Project does not have the support of functional managers or strong project
sponsor
Insufficient change management process
Caused severe replanning

Inadequately specified requirements and objectives
The project suffers from poor planning and control of budgets, schedules, and
resources
The project team lacks the experience and focus to quickly analyze the
problem, devise a workable plan, and deliver it
Lack of communication among team members, project manager, and

stakeholders
Insufficient reviews from auditors
© ESI September 2013 btv27-ae1-1.doc AE1-1.1

The Importance of PMs Solution: Exercise 1-1
Caused minor replanning

Small budget cuts
Changes in project team members
Lack of innovation among team members
Unavailable resource
Poor time management
Unorganized team status meetings
Were not a problem (not too many in this category!)

Change in minor technical requirements (if change management process used
correctly)
Suggestions for resolving

Assign the right resources to the job
Get the support of higher management and functional managers
Communicate with the stakeholders
Use tools such as change management and earned value correctly
Manage all aspects of the project as if it were a small business
Properly plan before executing the project
Use efficient time management in meetings and project work
Follow step-by-step process in managing the project and do not rely on blind
faith
Carefully evaluate all stages of the project before proceeding to the next stage
Return to exercise
AE1-1.2 © ESI September 2013 btv27-ae1-1.doc

FORMULATING GOOD OBJECTIVES
1. Original: Install new flooring in this room.
New: Install a new, nonwax, periwinkle-blue linoleum kitchen floor over

the weekend.
2. Original: Develop a database to monitor office vacation time requests.
New: Develop and implement a database by June 1 that captures and

prints weekly employee vacation schedule requests.
3. Original: Build your daughter’s new puppy a home.
New: Build a waterproof doghouse for daughter’s new cocker spaniel

puppy (dimension requirements are 2 ft wide, 2½ ft deep, and 20 inches
high at the lowest point) on Saturday.
Return to exercise

PRESENT VALUE
Sal should take advantage of the opportunity to avoid the up-front payment and
pay the additional $11,000 per year. The present value of $40,000 paid today
is, of course, $40,000 while the present value of the four payments of $11,000
(assuming a cost of capital of 10 percent) is only $34,869.
Using the present value formula, PV = FV  (1+ i )n , or in this case,

PV = $11, 000  (1.1)n , we calculate the following:
Year 1 Year 2 Year 3 Year 4

Present Value $11,000 $11,000 $11,000 $11,000
$10,000 ÷1.1
$9,091 ÷1.21
$8,264 ÷1.331
$7,514 ÷1.464
$34,869
Return to exercise

CREATING A WBS
Moving Project WBS
1.0 Project management

1.1 Conduct initial planning
1.2 Hold kickoff meeting
2.0 Premove activities

2.1 Decide on furniture
2.2 Prepare offices
2.3 Set up utilities
2.4 Conduct build-out of new building
3.0 Moving activities

3.1 Move
3.2 Install furniture, communications equipment, and computers
4.0 Postmove activities

4.1 Hang new signs
4.2 Close out project
Return to exercise

BASIC PROBABILITY CONCEPTS
1. What is the probability of—
1
Getting a six?
6
1
Getting a five?
6
5
Not getting a six?
6
1
On the second roll, getting a six?
6
1
On the second roll, getting a five?
6
5
On the second roll, not getting a six?
6
2. For two consecutive rolls of the single die, what is the probability of—
1 1 1
Getting two sixes in a row?  
6 6 36
1 1 1
Getting two fives in a row?  
6 6 36
1 1 1
Getting a five and then a six?  
6 6 36
5 5 25
Getting no sixes on either roll?  
6 6 36
11
36

Basic Probability Concepts Solution: Exercise 4-1
3. For six consecutive rolls of the single die, what is the probability of—
5 5 5 5 5 5 15,625
Getting no 6s?      = = ~1
6 6 6 6 6 6 46,656
3
2
Getting at least one 6? 46,656 15,625 = ~
– 3
46,656 46,656
1
If you do not roll a 6 in the first five rolls, getting a 6 on the sixth roll?
6
Return to exercise
AE4-1.2 © ESI September 2013 btv27-ae4-1.doc

EXPECTED VALUE
Fire Risk with No Insurance Purchased
Risk
Probability % Best Case Most Likely Worst Case
($Millions) ($Millions) ($Millions)
Construction Costs (100.00) (100.00) (100.00)

Profit ($40M/Yr x 10 years) 400.00 400.00 400.00
Decommissioning (35.00) (35.00) (35.00)
O & M ($10M/Yr x 10 years) (100.00) (100.00) (100.00)
Base Case Scenario Risks 165.00 165.00 165.00
Litigation 10% - (2.00) (20.00)

Price rise 25% 100.00 25.00 -
Real estate tax increase 40% - (8.00) (20.00)
Fire risk 25% - (2.50) (10.00)
Decommissioning cost increase 35% - (1.75) (5.00)
Expected Value Result 265.00 175.75 110.00
Return to exercise

ALTERNATE SOLUTION: EXERCISE 4-2
EXPECTED VALUE
Fire Insurance Purchased as Part of Base Case
Risk
Probability % Best Case Most Likely Worst Case
($Millions) ($Millions) ($Millions)
Construction Costs (100.00) (100.00) 100.00)

Profit ($40M/Yr x 10 years) 400.00 400.00 400.00
Fire Insurance Purchase (2.50) (2.50) (2.50)
Decommissioning (35.00) (35.00) (35.00)
O & M ($10M/Yr x 10 years) (100.00) (100.00) (100.00)
Base Dollar Value 162.50 162.50 162.50
Risks
Litigation 10% - (2.00) (20.00)

Price rise 25% 100.00 25.00 -
Real estate tax increase 40% - (8.00) (20.00)
Decommissioning cost increase 35% - (1.75) (5.00)
Expected Value Result 262.50 175.75 117.50
Return to exercise

SOLUTION: EXERCISE 4-3 (OPTIONAL)
DECISION TREE DIAGRAMMING
Ronco $20
Expected value = $12
Total expected value = $1,182 0.6
50 $1,050
$7 Expected value = $420
0.4
$20 Expected value = $18

$1
,0 0.9
00
$1,050
Total expected value = $1,123 Expected value = $105
0.1
Popeil
Based on the decision tree, Popeil is the more financially advantageous solution,
costing the organization $1,123 per average trip versus $1,182 using Ronco.
Return to exercise

NETWORK DIAGRAMMING
Critical Path
Float Float
0 0
20 65 65 75
Buildout Install F/C/C
t=45 t=10
20 65 65 75
Float
25 Float
19
0
0 0 20 20 21 21 46 75 80 80 85 85
Planning Kickoff Furniture Move Closeout
Start Finish
t=20 t=1 t=25 t=5 t=5
0 0 20 39 40 40 65 75 80 80 85 85
21 41
Float Float
Prep
0 0
t=20
55 75
21 36 Float
34
Signs
Float t=15
44
65 80
20 50
Utilities
t=30
45 75
Float
© ESI September 2013 btv27-ae6-1.doc 25 AE6-1.1
Return to exercise
EARNED VALUE MANAGEMENT
You have evaluated your project and have developed the following earned
value table from your analysis:
TASKS EV PV AC
Task A $10,000 $10,000 $11,000
Task B 12,000 11,000 13,000
Task C 9,000 8,000 8,500
Totals $31,000 $29,000 $32,500
Determine the total project status by calculating CV, SV, CPI, and SPI.
Calculations:
CV = EV – AC = 31,000 – 32,500 = -1,500
SV = EV – PV = 31,000 – 29,000 = 2,000
CPI = EV/AC = 31,000 /32,500 = .95
SPI = EV/PV = 31,000/29,000 = 1.07
How is the project doing based on these indicators?
The negative CV and positive SV indicate the project is over budget but ahead
of schedule. We have to investigate whether the project is actually over budget
because the fact that the project is ahead of schedule may indicate that the
project is actually going to meet the plan parameters. CPI and SPI confirm our
conclusions and provide information in a format that the financial and senior
management can easily understand.
Return to exercise

Appendix Supplements
Appendix A: Important PMBOK Guide Terms and Graphics

Appendix B: Organizational Influences
Appendix C: Representative Project Life Cycles
Appendix D: Crashing a Network
Appendix E: Risk Categorization
Appendix F: Decision Tree Analysis Guidelines
APPENDIX A
IMPORTANT PMBOK® GUIDE TERMS
AND GRAPHICS
Progressive Elaboration
“The iterative process of increasing the level of detail in a project
management plan as greater amounts of information and more accurate
estimates become available.” (PMBOK® Guide, p. 553)
Portfolio and Portfolio Management

“A portfolio refers to projects, sub portfolios, and operations managed as a
group to achieve strategic objectives. The projects or programs in the
portfolio may not necessarily be interdependent or directly related. Portfolio
management refers to the centralized management of one or more portfolios
to achieve strategic objectives” (PMBOK® Guide, p. 9-10)
Subproject
“A smaller portion of the overall project created when a project is subdivided
into more manageable components or pieces.” (PMBOK® Guide, p. 564)
Project Management Office (PMO)

“An organizational structure that standardizes the project-related governance
processes and facilities the sharing of resources, methodologies, tools, and
techniques” (PMBOK® Guide, p. 554)
Sponsor
“A person or group who provides resources and support for the project,
program, or portfolio and I accountable for enabling success” (PMBOK®
Guide, p. 563)
© ESI September 2013 btv27-xa A-1

Important PMBOK® Guide Terms and Graphics Appendix A
Enterprise Environmental Factors

“Conditions, not under the immediate control of the team, that influence,
constrain, or direct the project, program, or portfolio” (PMBOK® Guide, p. 539)
Organizational Process Assets

“Plans, processes, policies, procedures, and knowledge bases that are specific
to and used by the performing organization” (PMBOK® Guide, p. 548)
Work Breakdown Structure (WBS)

“A hierarchical decomposition of the total scope of work to be carried out by
the project team to accomplish the project objectives and create the required
deliverables” (PMBOK® Guide, p. 567)
WBS Dictionary
“A document that provides detailed deliverable, activity, and scheduling
information about each component in the work breakdown structure”
(PMBOK® Guide, p. 567)
Critical Chain Method

“Critical chain is a schedule method that allows the project team to place
buffers on any project schedule path to account for limited resources and
project uncertainty. It is developed from the critical path method approach
and considers the effects of resource allocation, resource organization,
resource levelling, and activity duration uncertainty on the critical path
determined using the critical path method” (PMBOK® Guide, p. 178)
Validate Scope
“The process of formalizing acceptance of the completed project deliverables”
A-2 © ESI September 2013 btv27-xa

Appendix A Important PMBOK® Guide Terms and Graphics
Typical Cost and Staffing Levels Across the Project Life

Cycle, Figure 2-8
Figure 2-8. Typical Cost and Staffing Levels Across the Project Life Cycle
The Relationship Between Stakeholders and the Project,

Figure 2-7
Figure 2-7. The Relationship Between Stakeholders and the Project

© ESI September 2013 btv27-xa A-3

APPENDIX B
ORGANIZATIONAL INFLUENCES
Functional Organization
Return to Slide
© ESI September 2013 btv27-xb B-1

Organizational Influences Appendix B
Projectized Organization
Strong Matrix Organization
B-2 © ESI September 2013 btv27-xb

Representative Project Life Cycles

PROJECT NAME PREPARED BY (PRINT) SIGNATURE DATE PREPARED DOCUMENT ID
CUSTOMER CONTACT CUSTOMER ACCOUNT
Construction
 Feasibility
 Planning and design
 Production
 Turnover and start-up
Defense Acquisition
 Determination of mission need
 Concept exploration and definition
 Demonstration and validation
 Engineering and manufacturing development
 Production and deployment
Pharmaceuticals
 Discovery and screening
 Preclinical development
 Registration workup
 Postsubmission activity
Software Development
 Feasibility
 Requirements
 Product design
 Detailed design
 Coding
 Integration
 Implementation
Return to slide
© ESI September 2013 btv27-xc C-1

Activities in Generic Project Life-Cycle Phases

PROJECT NAME PREPARED BY (PRINT) SIGNATURE DATE PREPARED DOCUMENT ID
CUSTOMER CONTACT CUSTOMER ACCOUNT
Initiation Phase
 Scope definition  Define requirements
 Project selection  Project charter
 Project relationship development  Benefit-cost analysis
 Needs analysis  Project approval
 Net present value
Planning Phase
 Requirements enhancement  Resource allocation
 Specification development  Scheduling
 WBS development  Budgeting
 Design reviews  Detailed SOW
 Change control process assessment  Procurement planning
Implementation Phase
 Change control  Team building  Monitor
 Task completion  Delegate work  Variance analysis
 Organizational structure  Earned value
Closeout Phase
 Reward and recognition  Delivery  Documentation
 Customer satisfaction  Get paid  Celebration
 Project enhancements  Lessons learned
© ESI September 2013 btv27-xc C-2

APPENDIX D
CRASHING A NETWORK
The following diagram shows how to identify the correct task to crash.
Compute normal time schedule
Compute expense at normal time
Is there more than No

one critical path?
Yes
Reduce lowest
Yes
Are there activities expense
common to all paths? activity by one
time unit
No
Search all parallel critical paths for lowest-expense

Identify low-
combination of activities that shorten project
cost activity
Select sets of activities that reduce duration one time

unit at lowest expense
Reduce schedule by one time unit; add expense to

total direct cost; recompute network critical path(s)
No Is duration reduced
to desired level?
Yes
Sum direct and indirect costs for each duration, and
determine optimum schedule
Return to slide
© ESI September 2013 btv27-xd D-1

APPENDIX E
RISK CATEGORIZATION
External Risks
Type of External Risk Unpredictable Predictable (but uncertain)
Examples  Regulatory  Market changes

 Natural hazards  Currency changes
 Environmental  Inflation
 Public Interest  Taxation
Risk Exposure  Corporate and organizational image

 Organizational mission and vision consistency
 Marketplace positioning
Risk Leverage  All idea-generation tools

 Customer, market, and general surveys
Tools and Techniques
 Expert interviews
 Historical data for physical, environmental, and market factors
© ESI September 2013 btv27-xe E-1

Risk Categorization Appendix E
Internal Risks
Type of Internal Financial Schedule Technical Legal
Risk
Examples  Start-up costs  Creeping customer  Technical  Contract

 Customer budget or requirements and expertise requirement
funding availability approval  Developmental ambiguity
 Accuracy and detail  Staff availability level or  Contractual

of requirements and mix technology failure to
Schedule realism maturity perform
 Pricing strategy 
Hardware  Size or complexity  Copyrights

 Current profit 
potential and future availability and  Integration  Trade secrets

business potential technology requirements  Patent rights
(Time to market)  Start-up difficulties  Installation  Licenses
 Contract type and  Cascading delays requirements
remedies  Inadequate  Customization
 Cash-flow planning  Maintenance
implications concerns
Risk Exposure  Potential monetary  Reality of stated  Internal and  Breach of

gains deadlines external contract and
 Potential monetary  Resource loading availability of terminations
losses technical expertise Patent
 Resource 
 Cash-flow profile availability  Organizational infringement

knowledge and Copyright
 Future business  Requirement 
familiarity with the violation
potential and flexibility
technology or
likelihood  Trade secret
subject
 Relative levels of disclosure or
 Availability of theft
required
training and
investments vs.  Contract claims
education
payback
 Relative level of
technical
complexity
 Technology
maturity
Risk Leverage  Expected monetary  Expert judgment  Expert judgment  Special contract
value (EMV)  Network (PERT,  Historical data clauses
Tools and
 Break-even analysis CPM, PDM) analysis Decision tree  Warranties
Techniques 
 Return-on-sales  Gantt chart analysis analysis  Insurance
(ROS)  Milestone chart  Arbitration
 Return-on-assets analysis  Litigation
(ROA)
 Return-on-
investments (ROI)
E-2 © ESI September 2013 btv27-xe

 Cash-flow analysis
 Life-cycle cost
analysis (LCC)
 Economic value
added (EVA)
Return to slide
© ESI September 2013 btv27-xe E-3

APPENDIX F
DECISION TREE ANALYSIS GUIDELINES
 A decision is represented by a box; events with multiple possible
outcomes are represented by circles
 The primary decision (root decision) evaluated is placed at the left

side of the decision tree; the tree is drawn from that root
 Find the most advantageous path at each decision node (box)
 What makes a path advantageous—lowest cost, greatest return,

and so on—depends on the specific situation
 Draw all possible paths for the scenario
 Place dollar values on each path segment, if appropriate
 Place probabilities on the path segments leading from events
 Determine the risk values for each path segment by multiplying all
probabilities to the left of the segment (including any probability for
the segment itself) by each other and then by the dollar value of the
segment (if any)
 Determine the most advantageous path by adding the risk values

for the alternatives for each decision node
 Work from right to left
 Determine the paths for the right-most decision nodes, and then
work your way to the left
 You pick one path because the paths are mutually exclusive
 You can pick only one path
 Consider each path and add results for event nodes
 Note that all paths are included because they are mutually inclusive;
together they form all possible outcomes
© ESI September 2013 btv27-xf F-1

Decision Tree Analysis Guidelines Appendix F
 Continue working to the left until you can determine the most
advantageous path for your root decision
Return to slide
F-2 © ESI September 2013 btv27-xf

Bibliography Supplements
Bibliography
BIBLIOGRAPHY
Suggested Readings
Books
Dinsmore, Paul C. AMA Handbook of Project Management. 2d ed. New York:
AMACOM, 2006.
Forsberg, Kevin, Hal Mooz, and Howard Cotterman. Visualizing Project

Management, 3d ed. New York: John Wiley & Sons, Inc., 2005
Kerzner, Harold. Project Management: A Systems Approach to Planning,

Scheduling, and Controlling, 10th ed. New York: Van Nostrand Reinhold,
2009.
Lewis, James P. Project Planning, Scheduling, and Control, 3rd ed. Chicago:
Irwin Publishing, 2000.
Meredith, Jack R., and Samuel J. Mantel. Project Management: A Managerial

Approach, 7th ed. New York: John Wiley & Sons, Inc., 2008.
Pinto, Jeffery K., and Jeffery W. Trailer. Essentials of Project Control. Newton
Square, Pa.: Project Management Institute, 1999.
Project Management Institute. A Guide to the Project Management Body of

Knowledge,5th ed. Newton Square, Pa.: Project Management Institute,
2013.
Ward, LeRoy, 3d ed. Dictionary of Project Management Terms. Arlington, Va.:

ESI, 2008.
Weiss, Joseph, and Robert K. Wysocki. 5-Phase Project Management: A

Practical Planning and Implementation Guide. Reading, Pa.: Addison
Wesley Publishing Company, 1992.
© ESI September 2013 btv27-bb BB-1

Bibliography
Magazines and Technical Journals

PM Network®, the professional magazine of the Project Management
Institute
Project Management Journal®, the professional research journal of the Project

Management Institute
ESI Horizons: Project Management Newsletter, free subscription at

www.esi-intl.com
World Wide Web Sites

Project Management Institute: http://www.pmi.org/
PM Forum®: http://www.pmforum.org/
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Project

Project Planning, Analysis, and Control

Project Planning, Analysis, and

Unit 4 Unit 5 Unit 6 Unit 7

Risk Baselining the

© ESI September 2013 btv27-in!.ppt IN-2

This course does not—

© ESI September 2013 btv27-in!.ppt IN-4

© ESI September 2013 btv27-in!.ppt IN-5

Unit 4 Unit 5 Unit 6 Unit 7

Risk Baselining the

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Project A Project B Project C

Ongoing Business Operation

Source: PMBOK® Guide, p. 553

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Sound project management helps ensure success.

*Source: PMBOK® Guide, p. 554

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Functional Matrixed Structure Projectized

Project Management Authority Project Management Authority

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 Know their goals

 Know your strengths and weaknesses

Source: Youker, 1977

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 Status and authority

 Competition for resources

 Reward and compensation programs

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 Changing competitive environment

 People changing their minds

 Changing macroeconomic forces

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 Measuring  Satisfying customers

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 The nine knowledge areas

 The five process groups

 The triple constraint

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Appendix C: Project Life Cycles

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The Importance of PMs

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 The project manager has a variety of

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Unit 4 Unit 5 Unit 6 Unit 7

Risk Baselining the

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 Calculate values used in project selection

 Project requirements document

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