PROJECT MANAGEMENT

Introduction
PMI & PMP

• The Project Management Institute (PMI) is project

management professional association with over
500,000 member. Established in 1969 and located in
US.

• Project Management Professional (PMP) credential

recognizes demonstrated knowledge and skill in
leading and directing project teams and in delivering
project results within the constraints of schedule,
budget and resources.
PROJECT MANAGEMENT FRAMEWORK

• Introduction
• Project Life Cycle and Organization
• Project Management Process for a Project
INTRODUCTION- PMBOK GUIDE-1

• Is a standard (formal document

that describes established
norms, methods, processes and
practices)
• Guidelines for managing
individual projects
• A good practices which are
applicable to most project most
of the time
INTRODUCTION- PMBOK GUIDE-2

• A common vocabulary within project

management profession
• A foundational project management reference

• PMI Code of Ethics and Professional Conduct

is also requirement for PMP certification
RELEVANCE OF USING FORMAL PROJECT
MANAGEMENT-1

• Better control of financial, physical, and human

resources
• Improved customer relations
• Shorter development times
• Lower costs
• Higher quality and increased reliability
RELEVANCE OF USING FORMAL PROJECT
MANAGEMENT-2

• Higher profit margins

• Improved productivity
• Improved productivity
• Better internal coordination
• Higher worker morale (less stress)
• WHAT IS A PROJECT ?
WHAT IS PROJECT?

• A Project is a temporary endeavor undertaken

to create a unique, product, service, or result.
WHAT IS PROJECT? -2

• Temporary = a definite beginning and end.

• Repetitive elements may be present but has
fundamental uniqueness
• Is progressively elaborated.
WHAT IS PROJECT? -3

• Distinguishing characteristics of each unique

project will be progressively detailed as the
project is better understood.
WHAT IS PROJECT? -4

• Unique Product Service or Result – no two

project are the same: they may be similar but
not the same
PROJECT ATTRIBUTES 1

• A project:
• Has a unique purpose
• Is temporary
• Is developed using progressive elaboration
PROJECT ATTRIBUTES 2

• Requires resources, often from various areas

• Should have a primary customer or sponsor
• The project sponsor usually provides the direction
and funding for the project
• Involves uncertainty
PROJECT VS OPERATIONS
• WHAT IS PROJECT
MANAGEMENT?
WHAT IS PROJECT MANAGEMENT? -1

The application of knowledge, skills, tools and

technique to project activities to meet project
requirements.
WHAT IS PROJECT MANAGEMENT? 2

Project Management is accomplished through the application and

integration of the processes which are grouped in the 5 process
groups:
• Initiating
• Planning
• Executing
• Monitoring and Controlling
• Closing
WHAT IS PROJECT MANAGEMENT? 3

Due to the nature of change, managing

project is iterative and goes through
progressive elaboration throughout the
project’s lifecycle
MANAGING PROJECT -1

The Project Manager is the person

responsible for accomplishing the project
objectives.
MANAGING PROJECT -2

The PM does this by :

• Identifying requirements.
• Establishing clear and achievable objectives.
• Balancing the competing demands of quality,
scope, time and cost.
• Adapting the specifications, plans, and approach
to the different concerns and expectations of the
various stakeholders.
PROGRESSIVE ELABORATION

Progressive Elaboration
•
Continuously improving and detailing a plan as
more detailed and specific information and
more accurate estimates become available as
the project progresses,

• producing more accurate and complete plans

that result from the successive iterations of the
planning process.
SOME FAILED PROJECTS
• 1. Airbus A380
• Failed projects, Airbus A380
• In 2004, Airbus set about piecing together parts of what they hoped
would become the largest passenger plane in the skies. Pieces were
shipped from Toulouse to the assembly site in Hamburg. As the pieces
were moved closer together, it soon became clear that they didn’t fit.
• We later learned that designers working on the parts of the plane had
been using a different CAD programmes which meant that the
measurements were all different.
• Even when working across borders and time zones, project
management teaches us the importance of keeping everyone on the
same page. And this should start with defining the programmes and
systems to be used
SOME FAILED PROJECTS
• 2. Challenger Space Shuttle
• Failed projects, Challenger Space Shuttle
• The most tragic failures are those that result in a loss of life. On
January 28 1986, the Challenger Space Shuttle exploded just 76
seconds after take off. It was later determined that a faulty seal on one
of the solid rocket boosters combined with the cold weather conditions
allowed the tragedy to unfold. Human error was also partly to blame, as
experts had warned that the weather conditions would make the launch
more risky.
• Human error can impact any project, big or small, but the role of project
management is to put systems in place to minimise the risk of human
error derailing a project.
PROJECT CONSTRAINTS-1

• If any one factor changes, at least one other factor is likely to be

affected.
• It is the project manager’s duty to balance these competing
constraints.
•
PROJECT CONSTRAINTS-2

• Every project is constrained in different ways by its:

• Scope
• Schedule/Time
• Cost/Budget
• Quality
• Resources
• Risk
•
AUTHORISING PROJECTS

• Projects are typically authorized as a result of one or

more of the following strategic considerations:
• Market demand
• Strategic opportunity/business need
• Customer request
• Technological advancement
• Legal requirements
• Ecological Impacts
• Social need
•
IMPORTANCE OF PROJECT IN ORGANISATION

• Projects are means of achieving organization’s

strategic plan.

• Help carry out activities that cannot be

addressed within the organizations normal
operational limits.
•
PROJECT MANAGEMENT-FRAMEWORK

•
PROJECT MANAGEMENT KNOWLEDGE AREAS

• Project Integration Management

• Project Scope Management
• Project Schedule Management
• Project Cost Management
• Project Quality Management
• Project Resource Management
• Project Communications Management
• Project Risk Management
• Project Procurement Management
• Project Stakeholder Management
PROJECT MANAGEMENT TOOLS AND
TECHNIQUES
• Assist project managers and their teams in various
aspects of project management.
• Specific tools and techniques include:

• Project charters, scope statements, and WBS

(scope)
• Gantt charts, network diagrams, critical path
analyses (time)
• Net present value, cost estimates, and earned
value management (cost)
PROJECT SUCCESS
• There are different ways to
define project success:

• The project met scope,

time, and cost goals.
• The project satisfied the
customer/sponsor.
• The project produced
the desired results .
PROJECT, PROGRAM AND PORTFOLIO
MANAGEMENT

• Project Management
• Program Management
• Portfolio Management
Portfolio

• Project Management Office

Program

PMO
Projects & Operation
WHAT IS A PROGRAM?

A program is:
• “a group of related projects managed in a
coordinated way to obtain benefits and control not
available from managing them individually.”
•

• ADVANTAGES
• Decreased risk
• Economies of Scale
PORTFOLIOS AND PORTFOLIO MANAGEMENT

• A portfolio is a collection of projects or programs

and other work that are grouped together to
facilitate effective management of that work to
meet strategic business objectives.

• Portfolio managers help their organizations

• make wise investment decisions
• by helping to select and analyze projects from
a strategic perspective
COMPARATIVE OVERVIEW
SUBPROJECTS

• Projects are frequently divided into more manageable

components or subprojects.

• Subproject are often contracted to an external

enterprise or to another functional unit in the
performing organization.
• Subprojects can be referred to as projects and
managed as such
PMO

• A department that centralizes the management of

projects.
A PMO usually takes one of three roles:

• Project Support: Provide project management

guidance to project managers in business
units.
• Project Management Process/Methodology:
Develop and implement a consistent and
standardized process.
• Training: Conduct training programs or collect
requirements for an outside company
ROLE OF A PROJECT MANAGER-1

• The Project Manager is the person

responsible for accomplishing the
project objectives.

• Project managers strive to meet the triple

constraint by balancing project scope,
time, and cost goals
ROLE OF A PROJECT MANAGER-2

• Depending on the organization structure , a

project manager may report to functional
manager.

• Works closely with the portfolio or program

manager to achieve the project objectives
PROJECT EXPEDITER AND COORDINATOR

• Project manager’s role can be very limited

in some instances:

• Project Expediter
• acts primarily as a staff assistant
• as communications coordinator.
• cannot personally make or enforce
decisions.

• Project Coordinator
• has some power to make decisions
• Has some authority
• reports to a higher-level manager
STAKEHOLDERS

• Stakeholders are persons or organizations who

are actively involved in the project or whose
interests may positively or negatively affected by
the performance or completion of the project.

• Stakeholders have varying levels of responsibility

and authority and can change over the project life
cycle

• Project management team must continuously

identify both external and internal stakeholders

• Project manager must manage the influence of

various stakeholders in relation to the
requirements and balance stakeholders’ interest
STAKEHOLDERS
Some examples of project stakeholders
ENTERPRISE ENVIRONMENTAL FACTORS

• Refer to both internal & external environmental factors that surround or influence a project’s success
• As an input in almost all project management process
• May enhance or constrain project management options
• May have positive or negative influence on the outcome
• Examples:

 Organizational culture, structure,  Stakeholder risk tolerances

and processes  Political climate
 Government or industry standards  Organization’s established
 Infrastructure communications channels
 Existing human resources  Commercial databases
 Personnel administration  Project management information
 Company work authorization
systems
 Marketplace conditions
SECTION 2

PROJECT LIFE CYCLE AND ORGANIZATION

THE PROJECT LIFE CYCLE

• The project life cycle is the agglomeration of all phases in the

project
• All projects are divided into phases, and all projects, large or
small, have a similar life cycle structure.: Starting the project ,
organizing and preparing , carrying out the project work and
closing the project
• At a minimum, project will have a beginning or initiation phase,
an intermediate phase or phases, and an ending phase.
• Each phase has a defined endpoint
CHARACTERISTICS OF PROJECT LIFE CYCLE
• Cost and staffing levels are low at the start,
peak as the work is carried out, and drop
rapidly as the project draws to a close.

• Stakeholder influences, risk, and

uncertainty, are greatest at the start of the
project. These factors decrease over the life
of the project.

• Ability to influence the final

characteristics of the project’s product,
without significantly impacting cost, is
highest at the start of the project and
decreases as the project progresses towards
completion.
…or…
The cost of changes and correcting errors
typically increases substantially as the project
approaches completion.
PROJECT PHASES AND THE PROJECT LIFE
CYCLE

• A project life cycle is a collection of project phases

that defines:
• What work will be performed in each phase
• What deliverables will be produced and when
• Who is involved in each phase
• How management will control and approve work
produced in each phase

• A deliverable is a product or service produced or

provided as part of a project
HANDOFFS

• Project phases evolve through the life cycle in a

series of phases sequences called handoffs, or
technical transfers. The end of one phase
sequence typically but not automatically marks
the beginning of the next.
PHASE-TO-PHASE RELATIONSHIPS-1

• There are three basic types of phase–to–phase

relationships :

• A Sequential relationship : where a phase

can only start once the previous phase is
complete
PHASE-TO-PHASE RELATIONSHIPS-2

• An Overlapping relationship : where

the phase starts prior to completion of
the previous one (Fast tracking).
Overlapping phase may increase risk
and can result in rework .
PHASE-TO-PHASE RELATIONSHIPS-3

• Iterative relationship : where only one

phase is planned at any given time and
the planning for the next is carried out
as work progresses on the current
phase and deliverables
SOME FAILED PROJECTS –HERE WE GO AGAIN

• SONY AND BETAMAX

• Sony launched its cassette

recording device known as
Betamax in the mid-1970s. It lost
the battle for market share to
JVC’s VHS technology, but Sony
didn’t stop making Betamax
tapes until 2016. In the age of
online streaming, very few us
realized it was still in production.
SOME FAILED PROJECTS –HERE WE GO AGAIN-2
• NEW COKE

• After testing a new recipe on 200,000

subjects and finding that people preferred
it over the traditional version, Coca-Cola
unveiled New Coke in 1985. That sounds
like a safe move, right? Wrong.

• Product loyalty and old-fashioned habit

got in the way and people didn’t buy New
Coke as expected, costing the company
$4 million in development and a loss of
$30 million in back stocked product it
couldn’t sell and becoming one of the
most famous failed project case studies
in history.
ORGANIZATIONAL INFLUENCES

• Some organizational aspects that influence

how project are performed:

• Culture and style (Cultural norms)

• Organizational structure
• Degree of project management maturity
• Project management systems
TYPES OF ORGANIZATIONAL STRUCTURES (1)
Functional
• Organization is grouped by
areas of specialization
• Project generally occur
within a single department

Projectized
• Entire company is organized
by projects
• Personnel are assigned and
report to a project manager
TYPES OF ORGANIZATIONAL STRUCTURES (2)
Weak Matrix
• Power rest with the
functional manager
• Power of project manager =
coordinator or expediter

Balanced Matrix
• Power is shared between
the project manager and the
functional manager
TYPES OF ORGANIZATIONAL STRUCTURES (3)
Strong Matrix
• Power rest with the project
manager

• Composite
ORGANIZATIONAL STRUCTURE

Influences of organizational structure on projects

ORGANIZATIONAL STRUCTURE
Advantages Disadvantages
Functional • Easier management of specialists • People place more emphasis on their
• Team members report to only one functional specialty to the detriment of the
supervisor project
• Similar resources are centralized, as the • No career path in project management
company is grouped by specialties • The project manager has little or no authority
• Clearly defined career paths in areas of
work specialization

Projectized • Efficient project organization • No “home” when project is completed

• Loyalty to the project • Lack of professionalism in disciplines
• More effective communication than • Duplication of facilities and job functions
functional • Less efficient use of resources

Matrix • Highly visible project objectives • Extra administration is required

• Improved project manager control over • More than one boss for project teams
resources • More complex to monitor and control
• More support from functional area • Tougher problems with resource allocation
• Maximum utilization of scarce resources • Need extensive policies and procedures
• Better coordination
ORGANIZATIONAL PROCESS ASSETS-1

• Processes & Procedures:

• Organizational standard processes such
as standards, policies, SOPs
• Standardized guidelines, work instruction,
proposal evaluation criteria, and
performance measurement criteria
• Templates
• Financial control procedures
• Procedures for prioritizing, approving, and
issuing work authorization
• Etc.
ORGANIZATIONAL PROCESS ASSETS-2

• Corporate Knowledge Base

• Process measurement databases
• Project files
• Historical information & lesson learned
knowledge bases
• Issue and defect management databases
• Configuration management knowledge
bases
• Financial databases
• Etc.
PROJECT MANAGEMENT PROCESSES
 PROJECT MANAGEMENT PROCESS
• Two categories of project process:
• Product-oriented process
 should be considered in project but not explained in PMBOK
• Project management process

Monitoring &
Controlling Processes
Planning
Processes

Enter phase/ Initiating Closing Exit phase/

Start project Processes Processes End project

Executing
Processes

Project
Boundaries
PROCESS INTERACTION

I P • Project management
E processes are
represented as discrete
elements with well-
defined interface
M&C C

• In practice, they overlap

and interact
 PROCESS GROUPS & KNOWLEDGE AREAS
MAPPING
Process
Knowledge Area
Initiating Planning Executing Monitoring & Control Closing
Integration Develop Project Develop Project Management Plan Direct and Manage Project Monitor and Control Project Work Close Project
Charter Execution Perform Integrated Change Control

Scope Collect Requirements Verify Scope

Define Scope Control Scope
Create WBS
Time Define Activities Control Schedule
Sequence Activities
Estimate Activities Resources
Estimate Activities Duration
Develop Schedule
Cost Estimate Costs Control Costs
Determine Budget
Quality Plan Quality Perform Quality Assurance Perform Quality Control

Human Develop Human Resources Plan Acquire Project Team

Resource Develop Project Team
Manage Project Team
Communication Identify Plan Communications Distribute Information Report Performance
Stakeholders Manage Stakeholders Expectations

Risk Plan Risk Management Monitor and Control Risks

Identify Risk
Perform Qualitative Risk Analysis
Perform Quantitative Risk Analysis
Plan Risk Response
Procurement Plan Procurements Conduct Procurements Administer Procurements Close
Procurements
PROJECT MANAGEMENT PRINCIPLES

• Principles can, but do not necessarily, reflect

morals. A code of ethics is related to morals. A
code of ethics for a profession can be adopted
by an individual or profession to establish
expectations for moral conduct.
PROJECT MANAGEMENT PRINCIPLES

• The PMI Code of Ethics and Professional Conduct is

based on four values that were identified as most
important to the project management community:

• ▶ Responsibility,
• ▶ Respect,
• ▶ Fairness, and
• ▶ Honesty.
PROJECT MANAGEMENT PRINCIPLES

The principles of project management and General

management overlaps in many ways:
PROJECT MANAGEMENT PRINCIPLES -1

The 12 principles of project management

• 1, Be a diligent, respectful, and caring

steward
• 2, Create a collaborative project team
environment
• 3, Effectively engage with stakeholders
• 4, Focus on value
PROJECT MANAGEMENT PRINCIPLES-2

The 12 principles of project management

• 5, Recognize, evaluate, and respond to system

interactions.
• 6, Demonstrate leadership behaviors
• 7, Tailor based on context
• 8, Build quality into processes and deliverables
PROJECT MANAGEMENT PRINCIPLES-3

The 12 principles of project management

• 9, Navigate complexity
• 10, Optimize risk responses
• 11, Embrace adaptability and resiliency
• 12, Enable change to achieve the
envisioned future state
MEDIA SNAT SHOT
• Berlin Brandenburg Airport
• Failed projects, Germany airport
• Germany may be known for its efficiency, but the
Berlin Brandenburg Airport has been anything
but. The Germans had hoped this airport would
put Berlin on the map as a centre of commerce.
After 15 years of planning, construction started
on the airport in 2006.
• The original opening date was supposed to be in
2011, but this date has come and gone. It is now
scheduled to be opened on 31st October 2020, in
the middle of the global COVID-19 pandemic, the
irony is certainly not lost on us!
MEDIA SNAT SHOT-2
• Berlin Brandenburg Airport
• Many of the issues with the Berlin airport
stem from having too many stakeholders
with conflicting visions. By allowing the
common goal to become diluted, it has
made it impossible to progress as a
normal rate. Ambition and scope creep
are primarily to blame for the delays.

• However, it’s also worth noting that the

2007 economic downturn didn’t help. But
when running successful projects, it’s
important to have a grasp on external
factors and ensure these can’t derail a
project.
MANAGING PROJECT SCOPE
 SCOPE MANAGEMENT PROCESSES
Process name The process group Key deliverables
to which

Scope Planning Requirement

planning(Collect Document
requirement )
Define Scope Planning Project Scope
Statement
Creat WBS planning WBS,WBS
dictionary
Verify Scope Monitoring & Accepted Scope
Control
Control Scope Monitoring & Change request
Control

77
Scope Mgt Processes

• Collect Requirement/ scope planning

Define and document the need of the
stakeholder
• Define Scope
Developing a detailed description of the
project and product
• Create Work Breakdown Structure
The process of subdividing work in
smaller more manageable Work
packages
Scope Mgt Processes

• Verify scope
Formalizing the acceptance of the
completed project deliverables
• Control Scope
Monitoring the status of the project
and product scope and managing
changes to the scope baseline
Project
Scope
Process • Helps the Project Manager
and Team :

• Know what is and what is

not included in the
deliverable(s)

• Determine which work is

or is not part of the
project work
The Purpose of
the Processes

• Collect Requirement: ensures that we

understand why the project is
undertaken and how success is defined
by finding out what the stakeholders
want

• Define Scope: focuses on describing

your scope and also what is not part of
your scope
Purpose Of
The
Processes
• Create WBS: create a Work Breakdown
Structure usually displayed as a
graphical presentation of your scope
so that you can more easily
communicate to stakeholder to ensure
that it meets their requirements.

• Verify scope: helps indicate whether

the stakeholder accepts or not what
the project has produced and to
obtain final sign off ,
WBS
WBS
Purpose Of
The Processes

• Scope Control : nothing

gets removed or added to
scope without a formal
process
• By applying these processes you
are making sure that
• you’ll deliver the scope

• That customer don’t

request incessant changes

• And that they concentrate

on only those changes that
are beneficial to the project
Product Scope & Project Scope

• Product Scope features and

functionalities that characterized a
product service or result

• Project Scope is the work that must be

performed to deliver a product , service
or result with specified functions and
features
Scope

• The sum products of services

and results that is to be
provided by a project.

• A scope change will result in an

update of at least on of other
competing constraints (time ,
cost, quality etc
Scope Change Control System

• Defines administrative requirements

and process by which changes
requests are documented and tracked

• Defines the various approval levels

• Note: Most change control systems are

integrated into the overall PMIS
Scope Creep

• It happens when features and functionalities

are added without addressing the effect on
other competing constraint: time, cost,
quality, resources ……etc

• But more importantly without formal approval

Scope Creep
• Waterworld
• When shooting started for the film Waterworld, the
director didn’t yet hold a finalised script. But this
wasn’t the only problem to plague the shoot. The
project was scheduled for 96 days of shooting, but
multiple rewrites led to multiple re-shoots and this
time frame was stretched out to 150 days. Making
movies isn’t cheap, so this pushed production costs
to $135 million over budget.

• Controlling the scope of a project is essential, but

this can’t be done without a proper plan in place. In
the case of a movie, this means signing off the
script before shooting can begin.
To Avoid Scope Creep

• clearly defined scope

• Implement a proper change

control system
Delivering The Scope

• We start out in the Project Charter with a

high level Product Description where initial
product description is documented

• Through progressive elaboration

- Progressively detailing of the project

scope as more and more information
becomes available
Delivering The Scope

• Decomposition- breaking things down

to more manageable components
• For two reason:

• 1, you can assign the work

package to a team member

• 2, can monitor the work

Decomposition

• One result of decomposition is the

Work Breakdown Structure :

• A deliverable-oriented hierarchical
decomposition of the work to be
executed by the project team to
accomplish the project objectives
and create the required deliverables.

• It organizes and defines the total

scope of the project
WBS
Work
Breakdown • One of the most important tools in
projected management
Structure • Its the primary output of the create
WBS process and becomes part of
our baseline
• Scope baseline will be used in

• Define project Activities

• Estimate Cost
• Determine budget
• Quality planning
• identify risk
• Planning procurement
The Scope Baseline

• The Project Scope Statement

• The WBS
• The WBS Dictionary
SCOPE MANAGEMENT

Plan Scope Management

• Deciding how the scope
will be defined, verified,
and controlled
• 7. The Garden Bridge
 • 7. The Garden Bridge
• Failed projects, The Garden Bridge

• The Garden Bridge has been dubbed a failed vanity project,

pushed by Boris Johnson when her was the Mayor of
London. The project cost £53m in total, despite never
actually being built. According to a report, the bridge was
over-optimistic both in terms of the fundraising possible
and the final cost. This led to a shortfall which could never
be overcome, despite surveying work on the riverbed
already getting underway.

• Ambition is a powerful thing, but it needs to be grounded in

reality, particularly when relying on fundraising to get
projects off the ground. In retrospect, it would have been
wise to establish if the project was feasible before
spending £161,000 for a website
PROJECT TIME MANAGEMENT
PROJECT TIME MANAGEMENT
• T

Project time management includes the

processes to manage the timely completion
of the project
PROJECT TIME MANAGEMENT
• T

Project time management includes the

processes to manage the timely completion
of the project
TIME MANAGEMENT-PROCESSES

• The Processes involved in project time management

include (PMP, 2012):
• - Define Activities.
• - Sequence Activities.
• - Estimate Activity Resources.
• - Estimate Activity Durations.
• - Develop Schedule.
• -Control Schedule.
KEY TERMS

• A MILESTONE is a significant point or event in a

project
• Completing key project deliverables
like the first version of your app
• The start date or end date of an
important project phase like the
‘planning phase’ or ‘designing phase’
• An important event that green lights
the project like project sponsor
approval
KEY TERMS

• DEPENDENCY
• A series of tasks that are interrelated. There are
several different types of dependencies in project
management:
KEY TERMS
TYPES
• Mandatory dependencies –
legally/contractually required or inherent in
the nature of work

• i.e. cannot test the product until prototype is

available.
KEY TERMS
TYPES
• Discretionary dependencies – a.k.a preferred
logic or soft logic based on established best
practices.
• An example of a discretionary dependency is if
you have two tasks that need to be completed,
but the order in which they are completed does
not matter. I.E., we will paint the house’s siding
before we paint the trim of the home.
KEY TERMS
TYPES

• External dependencies – relationship between

project activities & non project activities –
outside of PM’s control.
• Eg: an approval of building permit before
construction began
KEY TERMS
TYPES

• Internal dependencies – precedence relationship

between project activities within control of the
PM

• An internal dependency can be mandatory or

discretionary. If a dependency is internal-
mandatory, it means there are legal or physical
constraints on an activity starting. Meanwhile, an
internal-discretionary dependency is one where
the dependency is chosen by the project team
KEY TERMS
LEAD AND LAG
KEY TERMS

ACTIVITY DURATION ESTIMATES

Analogous estimating
a technique for estimating the duration of cost using
historical data from a similar activity/project.
It uses parameter from previous similar project such
as duration, budget, size, weight, & complexity.
KEY TERMS
ACTIVITY DURATION ESTIMATES

Parametric estimating

an algorithm is used to calculate cost or duration based on

historical data & project parameters.
It uses statistical relationship between historical data & other
variables.
Activity duration can be quantitatively determined by
multiplying the quantity of work to be performed by labor
hours per unit of work.
It has higher level of accuracy depending on the
sophistication & underlying data built into the model.
KEY TERMS
ACTIVITY DURATION ESTIMATES

Three-point estimating

The accuracy of single point activity duration estimate can be

improved by considering uncertainty & risk.
Most likely(TM) – most realistic given the duration,
availability of resources, dependencies & interruptions
Optimistic (TO) – based on best case scenario
Pessimistic (tp) – based on worst case scenario

Triangular distribution formula: TE = (TO + TM + TP) /3

KEY TERMS
ACTIVITY DURATION ESTIMATES

Reserve analysis

Duration estimates may include contingency reserves called time

reserves of buffers.

Contingency reserves are associated with “known-unknowns”

which may be estimated to account for this unknown amount of
rework. It may be a percentage of the estimated activity duration
or fixed & may be developed using monte-carlo simulation
quantitative analysis
KEY TERMS

ACTIVITY DURATION ESTIMATES

CRITICAL PATH
a critical path is the sequence activities that represents the
longest path through a project, which determines the shortest
possible project duration.
KEY TERMS

SCHEDULE COMPRESSION TECHNIQUES

A technique used to shorten the schedule duration

without reducing the project scope in order to meet
schedule constraints. They are:

CRUSHING
FAST-TRACKING
KEY TERMS

SCHEDULE COMPRESSION TECHNIQUES

CRASHING: used to shorten the schedule duration

for the least incremental cost by adding resources
by approving overtime, expedited shipping or
bringing in additional resources.

increases risks & costs.

KEY TERMS

SCHEDULE COMPRESSION TECHNIQUES

FAST TRACKING: a schedule compression

technique in which activities or phases normally
done is sequence are performed in parallel for at
least a portion of their duration.

Fast tracking may result on rework & increased risk

& only work on activities that can be overlapped
for example: construction of foundation before
completion of architectural drawing
FORD EDSEL
YET ANOTHER FAILED PROJECT

Ford Edsel
Ford spent a long time conducting research into
what the consumer wanted from a car. But by the
time Ford was ready to release the Edsel, the
market had already moved on to compact cars
and the Edsel was a flop.
While market research can be powerful, it is only
useful if it is also timely. Being quick to market with
fresh new ideas is essential or you run the risk of
being left behind. This is all the more relevant
today when public opinion and trends are moving
at breakneck speed
COST MANAGEMENT
PROJECT COST MANAGEMENT
Project Cost Management includes the processes involved in
Planning, Estimating, Budgeting, Financing, Funding, Managing,
and Controlling costs so that projects can be completed within
budget

• Plan Cost Management (Planning Process Group)

The process that establishes the policies, procedures, and
documentation for planning, managing, expending, and
controlling project costs.
• Estimate Cost (Planning Process Group)
The process of developing an approximation of the monetary
resources needed to complete project activities
PROJECT COST MANAGEMENT
Project Cost Management includes the processes
involved in Planning, Estimating, Budgeting, Financing,
Funding, Managing, and Controlling costs so that projects
can be completed within budget

• Determine Budget (Planning Process Group)

The process of aggregating the estimated costs of
individual activities or work packages to establish an
authorized cost baseline

• Control Costs (Monitoring & Controlling Process Group)

The process of monitoring the status of the project to
update the project costs & managing changes to the cost
baseline.
PROJECT COST MANAGEMENT

Project Cost Management must consider

stakeholder’s requirements for managing costs –
each stakeholder will measure costs differently.

Project Cost Management is primarily concerned

with the cost of the resources needed to complete
project activities & the subsequent costs in using
and supporting the deliverables.

The cost management planning effort occurs early in

the project & sets the framework for each of the cost
management processes so that performance will be
efficient.
COST MANAGEMENT PLAN
Describes how the project costs will be planned, structured & controlled.
Cost management plan can establish:

• Units of Measure
• Level of Precision
• Level of Accuracy
• Organizational Procedures Links
• Control Thresholds
• Reporting Formats
• Process Descriptions
• Additional details such as description of strategic funding choices, procedure to
account for fluctuation in currency exchange & cost reporting
DETERMINE BUDGET: INPUTS
1. Cost Management Plan – describes how project costs are managed & controlled
2. Scope Baseline:
Project Scope Statement; WBS; & WBS Dictionary.

3. Activity Cost Estimates – each activity in a work package are aggregated to get the cost estimate
4. Basis of Estimates – must specify basic assumptions related to inclusion, exclusion of indirect or other costs
5. Project Schedule – planned start & finish dates of activities, milestones, work packages & control accounts
6. Resource Calendars * – provide info on which resources are assigned and when they are assigned
7. Risk Register * – must be reviewed to consider how to aggregate the risk response cost.
8. Agreements *
Applicable agreement information and cost relating to products, services, or results that have been or will be purchased are included when
determining the budget.

9. Organizational Process Assets

such as Existing formal/informal cost-budgeting policies, procedures & guidelines; Cost budgeting tools; and Reporting methods.
CONTROL COSTS-1
Much of the effort of cost control involves analyzing
the relationship between the consumption of project
funds to the physical work being accomplish for such
expenditures that includes:

• Influencing the factors that created changes to

the authorized cost baseline;
• Ensuring that all change requests are acted on a
timely manner;
• Managing the actual changes when they occur;
CONTROL COSTS-2

• Ensuring that cost expenditures do not exceed

the authorized funding by period, by WBS
component, by activity, and in total for the
project;
• Monitoring cost performance to isolate and
understand variances from the approved cost
baseline;
• Monitoring work performance against funds
expended;
CONTROL COSTS-3

• Preventing unapproved changes from being

included in the reported cost of resource usage;
• Informing appropriate stakeholders of all
approved changes and associated costs; and
• Bringing expected cost overruns within
acceptable limits.