Unit 1

Introduction
Project Scope Management

• What is a Project and What is Project

Management?
• The Importance of Project Management
• Project Constraints
• Relationship of Project, Program, Portfolio, and
Operation Management
• Components of the Guide
• Tailoring
• Project Management Business Documents

1 2018 All Rights Reserved

 Projects
A project is a temporary endeavor undertaken to create
a unique product, service, or result.

• Unique product, service, or result

• Temporary endeavor
• Projects drive change
• Projects enable business value creation
• Project initiate context

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 A project can create…
Product
• A product can be either a component of another item or an end item in itself.

Service
• A capability to perform a service (e.g., a business function that supports
production or distribution).
Result
• A result, such as an outcome or document (e.g., a research project that develops
knowledge that can be used to determine the presence of a trend, or whether a
new process will benefit society).

Process Improvement
• An improvement to existing processes which are using Six Sigma, Lean, SDLC
(Software Development Life Cycle), etc.
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 Temporary and Unique
A project is a temporary endeavor undertaken to create a unique product,
service, or result
• Temporary effort that has a defined start and end date
• Temporary does not mean the duration of a project is short

• It produces a “unique” product, service, result or process improvement

• Repetitive elements may be present in some projects, but these do not
change the unique nature of each project.

Office buildings can be constructed with the same or similar materials and by the same or
similar teams. However, each building remains a unique project, with a different location,
different design, different circumstances and conditions, different stakeholders, and so on.
Examples of developing a new product, service, or result are: Constructing a building or
infrastructure; Conducting a research effort having a recorded outcome.

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 Projects Drive Change

A project is
undertaken to
move (change) an
organization from
one state to
another state, in
order to
achieve a specific
objective .

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 Projects Enable Business Value Creation
Business value is defined as the net quantifiable benefit derived
from a business endeavor. The benefit may be tangible, intangible,
or both.
Examples of tangible elements: Examples of intangible elements:

Monetary assets Good will

Fixtures Brand recognition

Stockholder equity Public benefit

Trademarks

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 Projects Initiate Context
Leaders initiate projects in response to four kinds of
factors acting upon their organization.

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 Projects Initiate Context (cont’d)

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 Project Management
Project management is the application of knowledge, skills, tools, and
techniques to project activities to meet the project requirements.
• Project management is accomplished through the appropriate application and
integration of the 49 logically grouped project management processes.
• Managing a project typically includes
• Identifying requirements
• Addressing the various needs, concerns, and expectations of the stakeholders
in planning and executing the project
• Setting up, maintaining, and carrying out communications among
stakeholders that are active, effective, and collaborative in nature
• Managing stakeholders toward meeting project requirements and creating
project deliverables

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 Importance of Project Management
• Poorly managed projects may result in
• Missed deadlines
• Cost overruns
• Poor quality or Rework
• Uncontrolled expansion of the project
• Loss of reputation
• Unsatisfied stakeholders
• Failure to achieve the objective of the project

• Effective and efficient project management enables organizations to

• Tie project results to business goals
• Compete more effectively in their markets
• Sustain the organization
• Respond to the impact of business environment change

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 Project Constraints

Scope

Budget Schedule

Project
Constraints

Risks Quality

Resources

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 Relationship between Portfolios, Programs, and Projects

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Relationship between Portfolios, Programs, & Projects (cont’d)

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Relationship between Portfolios, Programs, & Projects (cont’d)

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Relationship between Portfolios, Programs, & Projects (cont’d)
A program is defined as a group of related projects, subprograms,
and program activities managed in a coordinated way to obtain
benefits not available from managing them individually.

• Program management is defined as the application of knowledge, skills,

and principles to a program to achieve the program objectives and to
obtain benefits and control not available by managing program
components individually.
• Program management focuses on the interdependencies within a
project to determine the optimal approach for managing the project.

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Relationship between Portfolios, Programs, & Projects (cont’d)
A portfolio is defined as projects, programs, subsidiary portfolios,
and operations managed as a group to achieve strategic objectives.

Portfolio management is the centralized management of one or more

portfolios to achieve strategic objectives. The aim of portfolio management
is to
• Guide organizational investment decisions
• Select the optimal mix of programs and projects to meet strategic
objectives
• Provide decision-making transparency
• Prioritize team and physical resources allocation
• Increase the likelihood of realizing the desired return on investment
• Centralize the management of the aggregate risk profile of all components

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 Operations vs. Project Management
• Operations is the repetitive execution of ongoing activities and processes
that produce the same product, service, or result.
• Operations require business process management, whereas projects
require project management.

Project and Operations intersections

Projects and • At each closeout phase

operations • When developing a new product, upgrading a
intersect at product, or expanding outputs
various points • Improvement of operations or the product
during a development process
project’s life • Until the divestment of the operations at the end
cycle. of the product life

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 Organizational Strategies
Portfolios, programs, and projects are aligned with or driven by
organizational strategies and differ in the ways they contribute to
the achievement of strategic goals.

• Portfolio management aligns portfolios with organizational strategies by

selecting the right programs or projects, prioritizing the work, and
providing the needed resources.
• Program management harmonizes its program components and controls
interdependences in order to realize specified benefits.
• Project management enables the achievement of organizational goals and
objectives.

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 Organizational Project Management
Organizational Project
Management (OPM)
helps to ensure that all
levels in the
organization understand
the strategic vision, the
initiatives that support
the vision, the
objectives, and the
deliverables.

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 Projects and Strategic Planning
Projects are often sanctioned to achieve a strategic plan objective.
Typically, projects are initiated as a result of one of more of the
following:
1. A market demand
2. An organizational need/strategic opportunity
3. A customer request
4. A technological advance
5. A legal requirement
6. A social need
7. Environmental considerations

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 Components of the Guide

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 Project and Development Lifecycles
• A project lifecycle is the series of phases that a project passes through
from its start to its completion.
It is up to the
project
• Lifecycles can be predictive, iterative, adaptive, or hybrid: management
• Predictive - The project scope, time, and cost are determined in the early team to
phases of the life cycle. Any changes to the scope are carefully managed. determine the
It is also referred to as a waterfall lifecycle. best lifecycle for
• Iterative - The project scope is determined early in the project life cycle, each project.
but time and cost estimates are routinely modified as the project team’s
understanding of the product increases.
• Adaptive - Agile, iterative, or incremental. The detailed scope is defined
and approved before the start of an iteration. Agile or change driven.
• Hybrid – a combination of a predictive and adaptive.

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 Lifecycle – Process Groups – Knowledge Areas

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 Project Phases
A project phase is a collection of logically related project activities that
culminates in the completion of one or more deliverables.

• Can be described by a variety of attributes

Name | Number | Duration | Resource Requirements |
Entrance and Exit Criteria
• Projects can be separated into distinct phases or subcomponents
Concept development | Feasibility study | Customer requirements|
Solution development |Design |Prototype |Build |Test |Transition |
Commissioning | Milestone review |Lessons learned
• Phases may be established based on
Management needs | Nature of the project | Decision points |
Unique characteristics of the organization|
Project elements (technology, engineering, business process)
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 Phase Gates
A Phase Gate is held at the end of a phase. The project’s
performance and progress are compared to project and business
documents:
• Project business case
• Project charter
• Project management plan

A decision is then made regarding the status of the project:

• Continue to the next phase
• Continue the next phase with modification
• End the project
• Remain in the phase
• Repeat the phase or elements of it

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 Project Lifecycles – Phase to Phase Relationships

Sequential Overlapping
A phase starts
A phase starts
prior to the
after the previous
completion of the
phase is complete
previous one

This approach Allows for

reduces schedule
uncertainty but compression, but
does not give may increase risk
options to crunch and chances of
schedule rework

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 Project Lifecycles – Different types

Predictive Iterative and Incremental Adaptive (change-driven/agile)

Phases / iterations repeat project as Intended to respond to high levels

Scope, Time, and Cost are of change and ongoing stakeholder
determined early on the project team’s understanding of
the product increases activities involvement

Iterations develop the product Iterations are rapid and fixed in time
Preferred when the through repeated cycles while
deliverables are well and cost
increments add to the
understood functionality
Scope is decomposed into a Product
backlog
Preferred when an organization
Could be executed in Sequence needs to manage changing Preferred when dealing with a
or Overlapping phases objectives and scope changing environment

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 Project Management Processes

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 Processes
Project Management Institute has described the discipline of Project Key Points:
• All project management
Management by defining 49 “processes” of the discipline. work can be described by
one of the 49 processes.

• Each process belongs to

Inputs Process Outputs 1 of 5 Process Groups.

A process is characterized • Each process belongs to

1 of 10 Knowledge Areas.
by three elements:
• Inputs
Tools • A process is defined by
inputs, tools, and outputs.
• Tools and
• Every exam question will
techniques tie back to a process group
• Outputs or to Professional
Responsibility.
Several of them recur as Common Inputs, Tools, and Outputs.
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 Process Group Flow

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 Initiating Process Group
The first process group, Initiating, is where Purpose of this group
• Align the
• An idea is defined, or a vision is conceived stakeholders’
• Authorization to start the project is received expectations with the
project’s purpose,
• Initial high-level scope is defined • Give stakeholders
visibility about the
• Initial financial resource is committed project’s scope and
objectives.
• Project manager is assigned • Show how their
• Project charter and stakeholder register is created participation in the
project and its
• Project boundary is defined associated phases
can ensure that their
• Stakeholder’s expectations are aligned with the expectations are
achieved.
objective of the project
• Only two of the 49 processes are grouped here.

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 Planning Process Group
Purpose of this
The second process group, Planning, is where group
• Outline the
• Objectives are refined. strategy and tactics
to successfully
• Project Management Plan and other central complete the
project
documents are completed. • Identify risks that
are not visible

• Progress is elaborated to further refine the •

upfront
Document how to

requirements.
execute the other
processes in the
project
• 24 of the 49 processes are performed in
this process group.

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 Executing Process Group
The third process group, Executing, is where: Purpose of this group
• Produce the
Coordination of people and resources is undertaken
deliverables as per
• Stakeholder expectations are managed the plan by
• The project is executed • Coordinating
people and
• Risk, quality, and communication plans are updated resources
• Ten of the 49 processes are performed in this process group • Managing
stakeholder
expectations
• Integrating
• The executing process group consists of those processes performed and
to complete the work defined in the project management plan to performing
satisfy the project specifications. the project
activities
• This is where most of the project resources will be consumed
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 Monitoring & Controlling Process Group
The fourth process group, Monitoring and Controlling, is
where:
• Changes are controlled and corrective or preventative action
recommended.
• Factors that could circumvent integrated change control or configuration
management are influenced, so only approved changes are implemented.
• Ongoing project activities are monitored against the project
management plan and the performance measurement
baseline.
• Reviews of the initial plan are performed and issues resulting
during the execution of the project are identified.
• 12 of the 49 processes are performed.

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 Closing Process Group
The fifth process group, Closing, is where
• The defined processes within all of the process groups are verified to
be complete, OR
• The premature closure of the project is formally established
Tasks in this group include:
• Obtaining acceptance by the customer or sponsor to formally
close the project or phase
• Conducting a post-project or phase-end review
• Documenting lessons learned
• Updating organizational process
• Closing all procurement activities
One of the 49 processes are performed

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 Project Information
• During the lifecycle of the project various types of data are collected by the project
team.
• Establishing a centralized data repository is critical, to make sure that all members
use the same source for the project execution.
• Raw observations, measurements identified
Work Performance Data • Examples include reported percent of work physically completed,
number of change requests, number of defects, actual costs,
durations, etc.
• Performance data collected from various controlling processes,
Work Performance analyzed in context
Information • Examples include status of deliverables, implementation status for
change requests, and forecasted estimates

• Work performance information compiled documents, intended to

Work Performance generate decisions, raise issues, and awareness
Reports • Examples include status reports, memos, justifications,
information notes, dashboards, and recommendations

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 Project Data, Information, and Report Flow

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 Knowledge Areas
• All 49 processes are grouped into 10 knowledge areas based on their
natural fit and the flow of the process.
For more detail,
• A knowledge area represents a complete set of concepts, terms, and see page 553 of
activities that make up a professional field, project management field, or the PMBOK
area of specialization. Guide

• These knowledge areas are called

Integration Human Resources
Scope Communication
Time Risk
Cost Procurement
Quality Stakeholder Management

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 Common Inputs
• Work Performance Data
• The raw observations and measurements identified during activities performed to
carry out the project work.
• Used in Monitoring and Controlling process group (7 occurrences).
• Organizational Process Assets (OPAs)
• Includes previous plans, documents, analytical data, policies, and systems.
• Used heavily in all process groups (37 out of 49 occurrences).
• Enterprise Environmental Factors (EEFs)
• Anything external to the project that affects the project, like market conditions.
• Used heavily in Initiating, Planning, and Monitoring & Controlling process groups (27
occurrences).
• The Project Management Plan
• The primary project document directing execution, control, and closure.
• Used in all Executing, Monitoring and Controlling, and Closing process groups (19
occurrences).

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 Common Outputs
• Change Requests (Scope, Schedule, and Cost)
• Changes the plan or how the work is being performed
• Corrective actions
• Preventive actions
• Defect repairs
• From mostly Executing and Monitoring & Controlling processes (18 occurrences).
• Updates
• From Planning, Executing, and Monitoring & Controlling processes
• Organizational Process Assets Updates (17 occurrences)
• Project Management Plan Updates (19 occurrences)
• Project Document Updates (29 occurrences)
• Work Performance Information
• Information on how the work is being performed in areas such as
• Cost and schedule indicators
• Status of deliverables
• Defect repairs
• Technical indicators

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 Common Tools
• Expert Judgment
• Consulting with someone who has expertise in a particular area
• Used in all Integration processes, heavy in Planning and Monitoring & Controlling
process groups (28 occurrences).
• Meetings
• Discussing and addressing pertinent topics of the project. They vary in purpose and can
be for information exchange, brainstorming, option evaluation, design, decision making,
etc.
• Used in all Integration processes, heavy in Planning and Monitoring and Controlling
process groups (16 occurrences).
• Change Requests (Scope, Schedule, Cost)
• Change the plan or how the work is being performed: Corrective actions, Preventive
actions, and Defect repairs
• From mostly Executing and Monitoring & Controlling processes (18 occurrences).

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 Differentiate between PM Plan and Project Documents

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 Tailoring
• Is necessary, as not every process, tool, technique, input, or output
identified in the PMBOK Guide is required on every project Refer to page
• Should address the competing constraints of scope, schedule, cost, 679 of the
PMBOK
resource, quality, and risk for further
• In tailoring, the PM should consider the varying levels of governance that reading
may be required and within which the project will operate, as well as
consider the culture of the organization.
• Sound PM methodologies take into account the unique nature of projects
and allow tailoring to some extent.
• However, even the tailoring that is included in the methodology may yet
require additional tailoring for a given project .

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 Project Management Business Documents
Project management captures the intent of business through
project business cases and project benefit management plans.

• Project Business case: A documented economic feasibility study used to

establish the validity of the benefits of a selected component lacking
sufficient definition, and which is used as a basis for the authorization of
further project management activities
• Project benefits management plan: The documented explanation
defining the processes for creating, maximizing, and sustaining the
benefits provided by a project

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 Project Lifecycle

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 Project Success Measures
• In addition to measuring time, cost, scope, and quality, project
success also should be measured with consideration toward
achievement of the project objectives.
• Success criteria should include links to the organizational strategy
• Completing the project benefits management plan
• Meeting agreed-upon financial measures documented in the business
cases including
• Net Present value (NPV)
• Return on investment (ROI)
• Internal rate of return (IRR)
• Payback period (PBP)
• Benefit–cost ratio (BCR)
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 Project Selection - Return on Investment (ROI)
• Return on Investment (ROI): measures the profitability of an investment by
calculating the ratio of the benefit received from the investment to the money
invested in it.
• It is expressed as a percentage, and the higher the percentage, the better the
return:

• Present Value (PV): is the current worth of a future sum of money or stream of
cash flows, given a specific rate of return.
• Future cash flows are discounted at the discount rate, and the higher the
discount rate, the lower the present value of the future cash flows.
• Determining the appropriate discount rate is the key to properly valuing
future cash flow.

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 Project Selection - Net Present Value (NPV)
• Net Present Value (NPV) - is the difference between the present value of
cash inflows and the present value of cash outflows.
• NPV is used in capital budgeting to analyze the profitability of a projected
investment or project. 

Where:
Ct = net cash inflow during the period t
Co = total initial investment costs
r = discount rate
t = number of time periods 

• A positive net present value indicates that the projected earnings of a

project or investment (in present dollars) exceeds the anticipated costs.
• NPV is used by organizations to compare projects that involve different
timeframes or that are expected to start delivering value at different times.

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48 2017 All Rights Reserved

 Project Selection - Internal Rate of Return (IRR)
• Internal Rate of Return (IRR) - is a metric used in capital budgeting
measuring the profitability of a potential investment.
• It is a discounted rate that makes the net present value (NPV) of all
cash flows from a particular project equal to zero.
• It helps organizations simplify the evaluation of a project without
guessing the future interest and inflation rates.
• The higher a project's internal rate of return, the more desirable it
is to undertake the project.
• Although IRR is an appealing metric to many, it should always be
used in conjunction with NPV for a clearer picture of the value
represented by a potential project a firm may undertake.

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