Saturday, May 24, 2014

2) PMP – Terms and Concepts

PMI PMP – Terms and Concepts

Important Terms and Concepts

  • Process – a package of inputs, tools and outputs, there are 47 processes defined by PMI
  • Phases – a group of logically related activities, produces one or more deliverables at the end of the phase (maybe with exit gate/kill point [probably in a sequential relationship])
  • Phase-to-Phase relationship: sequential -> finish-to-start; overlapping -> for schedule compression (fast tracking); parallel
  • Project – a temporary endeavor to create a unique product, service or result (or enhancement of existing services/products (e.g v.2 development is a project) ) as opposed to operation, may hand over the product to operation teams
  • Operation manages process in transforming resources into output
  • projects have more risks and uncertainties than operations and require more planning
  • Program – a group of coordinated projects, taking operations into account, maybe with common goals, achieving benefits not realized by running projects individually, if only the client/technologies/resource are the same, then the projects should be managed individually instead of a program
  • Portfolio – group of programs/projects to achieve organizational strategic goals within the organization/operation management, all investments of the organization, maximize the value by examining the components of the portfolio and exclude non-optimal components
  • Why projects: market demand, organizational need, customer request, technological advance, legal requirements, to support organization strategic plan -> projects bring values
  • Business Value is the total values (tangible and intangible) of the organization
  • Organization Strategy may be expressed through mission and vision
  • Use of portfolio/program/project management to bridge the gap between organization strategy and business value realization
  • Progressive Elaboration (rolling wave planning is one of the methods used in activity planning) – analysis and estimation can be more accurate and elaborated as the project goes (usually in phased projects) such that detailed planning can be made at that point

Project Management

  • Project Management – the application of (appropriate) knowledge, skills, tools & techniques to project activities to meet the project requirements and achieve customer satisfactions
  • The most important task is to align stakeholder expectations with the project requirements, around 90% of the PM’s work is related to communication with stakeholders
  • PMBOK Guide is a framework/standard but not methodology (Agile, Scrum, PRINCE 2, etc.)
  • should be aligned with organization governance (through EEF and OPA)
  • Competing constraints: time, cost, scope, quality, risk, resources
  • Project Management Office (PMO) – standardizes governance, provides training, shares tools, templates, resources, etc. across all projects/programs/portfolios
  • 3 forms: supportive, controlling and directing (lead the project as PM)
  • functions: training, resource coordination, methodology, document repository, project management oversight, standards, career management of PMs
  • may function as a stakeholder / key decision maker (e.g. to terminate the projects)
  • align portfolios/programs/projects with business objectives and measurement systems
  • control shared resources / interdependence across projects at the enterprise level
  • play a decisive role in project governance
  • Organizational Project Management (OPM)
    • strategy execution framework utilizing portfolios, programs and projects and organizational enabling practices (technology, culture, etc.) for achieving organizational objectives
    • linking management principles with strategy, advance capabilities
  • Management by Objectives (MBO) : is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them.
  • Organizational Project Management Maturity Model (OPM3) : provides a method for organizations to understand their Organizational Project Management processes and measure their capabilities in preparation for improvement.

Project Manager

  • Project Manager: knowledge, performance, personal – general (organization, planning, meeting, control) management, interpersonal (communication, leadership, motivation, influence, negotiation, trust building, political and cultural awareness) skills
  • leader of the project irrespective of the authority
  • should consider every processes to determine if they are needed for individual projects
  • may report to the functional manager, program manager, PMO manager, operation manager, senior management, etc., maybe part-time or devoted
  • identifies and documents conflicts of project objectives with organization strategy as early as possible
  • skills: leadership, team building, motivation, influencing, coaching, trust building, communication, political awareness, cultural awareness, decision making, conflict management, negotiation
  • PM must balance the constraints and trade-offs, effectively communicate the info (including bad news) to the sponsor for informed decisions
  • PM need to involve project team members in the planning process
  • Project Team includes PM, project management staff, project staff, PMO, SME (subject matter experts can be outsourced), customer representative (with authority), sellers, business partners, etc., maybe virtual or collocated
  • Senior management must be consulted for changes to high-level constraints

Organization Types

  • Organization Types: Projectized (project manager has the ultimate authority over the project, team members are often collocated), Matrix (Strong, Balanced, Week), Functional
  • Composite – a combination of different types, depending on the actual need
  • Tight Matrix = co-location, nothing to do with the organization type (not necessarily a matrix org.)
  • Functional organizations => the project manager has little authority, often called project expeditor (no authority) or coordinator  (little authority), project coordination among functional managers
  • Matrix organization => multiple bosses and more complex
  • Project Based Organization (PBO) – conduct the majority of their activities as projects and/or privilege project over functional approaches, they can include: departments with functional organizations; matrix organizations; projectized organizations and other forms of organizations that privilege a project approach for conducting their activities, success is measured by final results rather than position/politics

Project Lifecycle vs Project Management Lifecycle vs Product Lifecycle

  • Project Lifecycle: initiating, planning and organizing, carrying out/executing work, closing the project
  • Predictive [plan driven/waterfall] [5th edt.]– scope, time and cost determined early in the life-cycle, may also employ rolling wave planning
  • Iterative [incremental] [5th edt.]– repeat the phases as understanding of the project increases until the exit criteria are met, similar to the rolling wave planning, high-level objectives, either sequential / overlapping phases, scope/time/resources for each phase may be different
  • Adaptive [change driven/agile] [5th edt.]– for projects with high levels of change, risk and/or uncertainty, each iterative is very short (2-4 weeks), work is decomposed into product backlog, each with a production-level product, scrum is one of the most effective agile methods, stakeholders are involved throughout the process, time and resources are fixed, allow low change cost/keep stakeholder influence high
  • each project phase within the product lifecycle may include all the five project management process groups
  • product lifecycle: development > production > adoption & growth > maturity > decline > end of life

Other Terms

  • Organization Process Assets is a major input in all planning process, which may be kept at PMO, directly related to project management, including Processess and Procedures (including templates (e.g. WBS, schedule network diagrams, etc.), procedures for issuing work authorizations, guidelines, performance measurements) and Corporate Knowledge Base
  • The Configuration Management Knowledge Bases contain baselines of all organization standards
  • Lessons Learned – focus on the deviances from plan (baseline) to actual results
  • Enterprise Environment Factors (often are constraints) are influences not in the immediate control of the project team that affect the project, intra-organization and extra-organization, e.g. organizational culture, organization structure (functional/matrix/projectized structure), existing human resources, work authorization system, PMIS
  • The work authorization system (WAS) is a system used during project integration management to ensure that work gets done at the right time and in the right sequence
  • EEF are inputs for all initiating, most planning process, not much in the executing/controlling process, none in closing process
  • Organization culture: process-oriented/results-oriented, job-oriented/employee-oriented, professional-oriented/parochial-oriented, open system/closed system, tight control/loose control, pragmatic/normative
  • Project Governance – for the whole project life-cycle, fits in the organization’s governance model, define responsibilities and accountabilities, controlling the project and making decisions for success, alignment of project with stakeholders’ needs/objectives, provides a framework for PM and sponsors to make decisions to satisfy both parties, should be described in the PM plan
  • Analytical Techniques: used to find the root cause or to forecast
  • PMIS includes configuration system and change control system
  • Never accept a change request to trim down one element of the triple constraint without changing the rest.
  • Sponsor – provides resources/support to project, lead the process through initiation (charter/scope statement) through formally authorized, later involved in authorizing scope/budget change/review
  • Customer – NOT necessarily provide the financial resources, maybe external to the organization, final acceptance of the product
  • Business Partners – certification body, training, support, etc.
  • Organizational Groups – internal stakeholders
  • Business Case : background, analysis of the business situation, costs and benefits (cost-benefit analysis), to help in selection of project created by the initiator
  • Project Statement of Work (SOW) : describes the business need, high level scope of deliverables and strategic plan of the organization, created by the sponsor/initiator/buyer
  • Project Charter : formally authorizes the project, includes all those from above plus approval criteria, preliminary budget, primary stakeholders, the name of PM, assumptions and decisions etc., usually created by PM (in develop project charter process) and signed by the sponsor, remains fairly the same during project lifecycle, except big changes like sponsor has resigned [the current sponsor should initiate the change to the charter before he leaves]
  • Project Charter is not a contract
  • Project Management Plan : how the project will be performed and managed - documents assumptions & decisions, helps communication between stakeholders, goals, costs & time scheduling (milestones), project management system and subsidiary management plans and documents
  • Project Management Plan is NOT a project schedule
  • Project Management System: includes a list of project management processes, level of implementation (what actions to take in the management processes), description of tools and techniques, resources, procedures, change control system [forms with tracking systems, approval levels]
  • Requirement Traceability Matrix (RTM) – a matrix connecting deliverables to requirements and their sources (for managing scope)
  • Work Breakdown Structure (WBS) – a hierarchal chart of decomposing deliverables into work packages
  • Activity List – a full list of all activities with indication of relationship to the work packages
  • Activity Attributes – further information (duration, start date, end date, etc.) of all the activities in the list (for scheduling)
  • Roles and Responsibilities (RAR) – a document listing all the roles and description of their responsibilities in the project (often by category)
  • Responsibility Assignment Matrix (RAM) – a matrix connecting people to work packages/activities, e.g. the RACI matrix (responsible, accountable, consult, inform), usually only one person is accountable for each activity
  • Resources Breakdown Structure (RBS) – a hierarchical chart listing all the resources by categories, e.g. marketing, design, etc.
  • Risk Breakdown Structure (RBS) – a hierarchical chart listing all risks by categories
  • Project Information
    • Work Performance Data - raw data collected
    • Work Performance Info - analyzed in context and integrated data, e.g. some forecasts
    • Work Performance Reports - work performance information compiled in report format
  • Sunk costs - money already spent, not to be considered whether to terminate a project, similar to committed cost (often through contracts)
  • Direct costs, indirect (shared) costs, Fixed costs, Variable costs
  • Law of diminishing returns – beyond a point, the more input, the less return
  • Working capital – assets minus liability, what the company has to invest in the projects
  • Payback period – a time to earn back capital investment
  • Benefit-cost ratio (BCR) - an indicator, used in the formal discipline of cost-benefit analysis, that attempts to summarize the overall value for money of a project
  • Depreciation - straight-line depreciation vs accelerated depreciation (the amount of depreciation taken each year is higher during the earlier years of an asset’s life)
  • Under double declining balance, the asset is depreciated twice as fast as under straight line. Using the example above, 10% of the cost is depreciated each year using straight line. Doubling the rate would mean that 20% would be depreciated each year, so the asset would be fully depreciated in 5 years, rather than 10.
  • Under sum-of-the-years-digits, the asset is depreciated faster than straight line but not as fast as declining balance. As an example of how this method works, let’s say an asset’s useful life is 5 years. Adding up the digits would be 5+4+3+2+1 or a total of 15. The first year, 5/15 is expensed; the next year 4/15 is expensed, and so on. So if the asset’s cost is $1000, 5/15, or $333.34 would be expensed the first year, $266.67 the second year, and so on.
  • Economic value added – the value of the project brought minus the cost of project (including opportunity costs) e.g. for a project cost of $100, the estimated return for 1st year is $5, assuming the same money can be invested to gain 8% per year, then the EVA is $5 – $100 * 8% = -$3
  • Net present value (NPV) - the sum of the present values (PVs) of the individual cash flows of the same entity
  • Present value (PV) – or called present discounted value, is a future amount of money that has been discounted to reflect its current value, as if it existed today (i.e. with inflation, etc.)
  • Future value (FV) - is the value of an asset at a specific date
  • Internal Rate of Return (IRR) - The inherent discount rate or investment yield rate produced by the project’s deliverables over a pre-defined period of time.
  • Forecast (future) vs Status Report (current status) vs Progress Report (what have been done/delivered)
  • Journey to Abilene (Abilene’s Paradox) - committee decisions can have a paradox outcome, the joint decision is not welcome by either party (because of fear of raising objections)
  • when something unusual happens, always refer to the PM Plan/Charter for instruction on how to proceed; if not found, ask for direction from the management
  • unresolved issues will lead to conflicts

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