© The Delos Partnership 2004

© The Delos Partnership 2004
Welcome to the Project Management Foundation Course Based on the Project Management Body of Knowledge (PMBOKTM) from the Project Management Institute (PMI®). © The Delos Partnership 2004

The Project Management Institute (PMI®) is project management’s leading global professional association, and as such, it administers a globally accepted and recognised, rigorous, examination-based, professional certification programme of the highest calibre. © The Delos Partnership 2004

The course is designed to support both the immediate practical challenges you face implementing projects within your organisation and also to provide you with a solid foundation in recognised good project management practice for all your future endeavours. © The Delos Partnership 2004

Expectations! © The Delos Partnership 2004

Course Objectives To provide you with a strong foundation in good project management practices To improve the management of the current projects you are working on for the benefit of the company To fulfil the eligibility criteria (and prepare students) for the PMI’s® Certified Associate in Project Management (CAPM®) Exam © The Delos Partnership 2004

Active Learning Approach – The Project Management Life Cycle
Presentation on Key Concepts/Techniques Case Study to reinforce key learnings Case Study Feedback with interactive Q&A Learning Review Theory & Practice © The Delos Partnership 2004

Introduction At the end of this session you will have an understanding of the following:- The definition of a project Projects versus Programmes The PMI lifecycle and knowledge areas © The Delos Partnership 2004

The Project Life Cycle Initiating Processes Planning Processes Controlling Processes Executing Processes Closing Processes © The Delos Partnership 2004

And The PMI® Project Management Knowledge Areas
Integration Management 5. Project Scope Management 6. Project Time Management 7. Project Cost Management 8. Project Quality Management 9. Project Human Resource Management 10. Project Communications Management 11. Project Risk Management 12. Project Procurement Management © The Delos Partnership 2004 All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

What is a Project? A project is a group of related work activities, organized under the direction of a project manager, which when carried out, will achieve certain objectives. A project has stated scope, deliverables, work steps, duration, and budget. © The Delos Partnership 2004

What is a Project? A project: Is unique Has a beginning and an end Is defined by specific objectives Is conducted by a well-defined organization Has a single project manager who is responsible for its success Is defined by identifying the starting point and the goal and the route between them © The Delos Partnership 2004

What is Project Management?
Project Management is the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project. Meeting or exceeding needs invariably involves balancing competing demands among: Scope, time, cost, and quality Stakeholders with differing needs and expectations Identified requirements (needs) and unidentified requirements (expectations) Source: Project Management Institute 1996 © The Delos Partnership 2004

Programme vs Projects A programme is a group of projects managed in a coordinated way A programme is a set of activities / initiatives that need to come together to achieve a major business change © The Delos Partnership 2004

Without a Programme Mgmt Framework
Change Drivers Strategic Imperatives Mergers & Acquisitions Business Process Changes Regulatory Changes Market Driven Changes Organisation Goal ? Many projects, little alignment Past Future © The Delos Partnership 2004 3 3

With a Programme Mgmt Framework
Change Drivers Strategic Imperatives Mergers & Acquisitions Business Process Changes Regulatory Changes Market Driven Changes Organisation Goal ? Focus on closing gap and seeking other improvement opportunities Programme Mgmt Programme co-ordination Past Future © The Delos Partnership 2004 5 6

Project Initiation At the end of this session you will have an understanding of the following:- 4 Stages within Project Initiation The Business Filters Project Charter(s) © The Delos Partnership 2004

The PMI® Project Management Life Cycle
Initiating Processes Planning Processes Controlling Processes Executing Processes Closing Processes © The Delos Partnership 2004

PMI® Initiating Processes
5.1 Initiation Idea Initial Invest. Business Case Charter © The Delos Partnership 2004

Ideas - Pick the Winners
UIs (Useless Ideas) GIs (Good Ideas) BIs (Business Imperatives) © The Delos Partnership 2004

Potential for Globalisation Supports Regional customer base Supports country customer base Local customers Geographic Scope Significantly enhances skills Builds on current skills to grow Contributes to strategic plan Does not enhance skills Competency Improve`t Could be applied widely across the business Could be adapted to several programmes Could be applied to another programme Single prog. Synergy with Other Progs Opens up new Opportunity Potential for diversification Opportunity for business extension Dead-end, Platform for Growth Strong Good Modest Peripheral Fit to Strategy RATING STRATEGIC FIT KEY FACTORS © The Delos Partnership 2004

Uses existing sales & distrib. Existing sales operations Existing skills in new channel Skills needed, in new channel Sales & Distribution Positive impact Favourable Neutral Negative Community Relations Large margins; large market Large margins; small market Small margins; large market Small margins; small market Target Market Opportunity Low Moderate/Low Moderate/High High Competitive Intensity High Growth expected Modest growth Mature or Embryonic Declining Market Maturity Ahead of market ‘me too’ Need must be highlighted. Little apparent need Market Need RATING MARKET ATTRACTIVENESS KEY FACTORS © The Delos Partnership 2004

Widely practised in the company Selectively practised in the company Some experience Technology new to business Technology Skill Base Available and ready Available, need advance planning Current systems require mods. No appropriate systems/ facilities Availability of Systems/ Facilities People immediately available People available Shortage in key areas No appropriate people Availability of People Straight Forward Challenge, but do-able Easy to define Difficult to define Project Complexity Incremental Improve`t Step change Major step change Large gap Technical Gap RATING TECHNOLOGY FIT KEY FACTORS © The Delos Partnership 2004

No detrimental effect. Rescheduling required Disruption. Inconvenient Major disruption Effect on Other Company Programmes Resouces immediately available. Could be rescheduled Some resource available No Resource Availability of People Clear Focused Commit. Functional commitment. Lukewarm. Little Business Commitment Detached from Prog. Stakeholder Commitment & Buy-In Quantifiable Attractive Benefits Quantifiable in specific areas Difficult to substantiate Cannot be substant-iated Benefits to the Company Available Could be made available Partially Available Not Available Availability of Funding RATING BUSINESS IMPACT KEY FACTORS © The Delos Partnership 2004

KEY FACTORS CHANGE ORIENTATION RATING Dissatisfaction with present It aint broke don’t fix it Partial recognition of problem Recognition of need to change Burning platform Attractiveness of Future No fit with values of company Uncertainty about final outcome Benefits agreed but not measurable Both Top Down and Bottom up desire Effort of Transition Mission impossible Difficult to predict Can do but resource conflicts not dealt with Aligned approach Sponsorship Commitment No resources available Partial Team in place but skills need to be developed Competent team up and running Cultural Fit Not available Partial From Compliance to Commitment Self Sustaining © The Delos Partnership 2004

First Cut Priority Check
3.4 7 3 2 9 5 4 6 8 5.6 6.2 6.6 7.2 7.6 10 1 Overall Average Change Orient. Bus. Impact Tech Fit Market Attract. Strategic Fit Prog © The Delos Partnership 2004

The PMI Project Management Life Cycle
Initiating Processes Planning Processes Controlling Processes Executing Processes Closing Processes Idea Initial Invest. Business Case Charter © The Delos Partnership 2004

Tech. Feasibility Study
Refine Scope of Activity Prepare Statement of Work. Make or Buy Rationale and Options Do we have or can we acquire the skills? Do we have a solution? Technical Issues & Risks Commercial Issues & Risks Rough Cut Costs Background & Experience © The Delos Partnership 2004

Business Attractiveness
87.5 100 25 1 Positioning 30 Growth 7.5 0.5 15 Route to Market 5 10 Competition 20 Market Size Score Rating* Weight Factor * High = 1.0; Medium = 0.5; Low = 0.0 © The Delos Partnership 2004

Operational Capability
30 100 6 0.3 20 Marketing 7.5 0.5 15 Infrastructure 4.5 Systems Capability 0.2 Capacity Score Rating* Weight Factor * Strong = 1.0; Average = 0.5; Weak = 0.0 © The Delos Partnership 2004

Resource Allocation No 2.2 0.4 20 15 7.2 4 1.8 0.2 45 5 8 1.6 50 40 5.6 7 1.2 6.2 6 Yes 1.0 nil 80 18 3.4 9 0.1 58 6.6 0.9 42 66 7.6 3 0.8 0.3 70 2 0.5 30 87 10 1 Commit Accum. Resource Critical Oper. Capability Business Attract. Overall Average Prog © The Delos Partnership 2004

Business Attractiveness
Prog.Portfolio Mgmt Business Attractiveness High Medium Low P2 P5 P9 Strong Operational Capability P7 P3 Average P1 P8 P6 P4 Weak © The Delos Partnership 2004

Tech. Feasibility Study
Refine Scope of Activity Prepare Statement of Work. Make or Buy Need for control, Intellectual Property Do we have or can we/do we want to acquire the skills? Do we have a solution? Technical Issues & Risks Commercial Issues & Risks Rough Cut Costs Background & Experience © The Delos Partnership 2004

Developing the Business Case
How ? What ? What will be the Business Benefit? Benefits Mgmt Process Benefits What must be achieved? Objectives Strategic / Tactical / Operational What must go right ? Critical Success Factors Pertaining to Overall Success What must we do at Deliverable Level ? Deliverable High Level Work plan What will it cost? Costs Cost +/- 10% / Risks/ Assumptions © The Delos Partnership 2004

Benefit Analysis Types
Discounted Cash Flow Types Net Present Value (NPV) Return on Investment (ROI) Non Discounted Case Flow Types Benefit Cost Analysis (BCA) Payback Period © The Delos Partnership 2004

Initiating the Project Input Process Output Develop goals and objectives Define project deliverables Define high level scope Identify high-level activities Document project assumptions Secure project sponsorship Obtain approval to proceed Initial Project Charter Business Case Initial Project Charter Major Constraints Identified Major Assumptions Listed Project Manager Assigned Authority to Proceed © The Delos Partnership 2004

What is a Project Charter?
The Project Charter provides authority for the project to proceed. The Charter documents the agreement between the Sponsor, the Programme Manager (if appropriate) and the Project Manager and provides a blueprint for the project Makes the project visible from “start” © The Delos Partnership 2004

The Charter Should Contain
A clear statement of the project’s objectives, High Level Scope and deliverables; The rationale for the project (headlines from the business case) Defining the project roles & responsibilities; Outlining the High Level Plan; Documenting related projects. Roles and Responsibilities © The Delos Partnership 2004

Initiating the Project Key Project Manager Activities Define Project Objectives & Major Deliverables; Define Project Structure & Resource Plan; Prepare High Level Project Budget; Prepare Business Case Compile Project Charter; © The Delos Partnership 2004

What is an Objective? Specific (What is it we are trying to do?) Measurable (How will we know we have achieved it?) Achievable (Can we do it?) Relevant (Is it the right thing to do?) Time-related (When will we do it?) A statement of a particular desired outcome supporting the Goal that is: © The Delos Partnership 2004

Case Study Breakout Session 1 © The Delos Partnership 2004

Planning At the end of this session you will have an understanding of the following:- The Planning Process The Planning Hierarchy WBS Plans Schedules Up, Down and Across the Company © The Delos Partnership 2004

Activity Duration Estimating Project Plan Development
Planning Processes 5.2 Scope Planning 6.2 Activity Sequencing 6.1 Activity Definition 6.4 Schedule Development 5.3 Scope Definition 6.3 Activity Duration Estimating 7.3 Cost Budgeting 4.1 Project Plan Development 7.1 Resource Planning 7.2 Cost Estimating © The Delos Partnership 2004 N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

Scope Planning Input Process Output Phases Objectives Deliverables Acceptance Criteria Project Charter Charter Scope Plan Wave 1 Wave 2 © The Delos Partnership 2004

Scope Definition Input Process Output Decomposition Charter Charter Scope Plan Scope Plan Work Breakdown Structure WBS Objective © The Delos Partnership 2004

Why Define the Work Breakdown Structure?
To manage a project successfully, you must first have a clear understanding of the amount of work you are required to complete Only then can the cost and schedule of your project be estimated and controlled with any confidence The WBS identifies all the work to be performed I.e. the Scope of the Project. If it is not in the WBS it is not part of the project It can often be as important to say what is not within scope If the WBS is poorly defined... The required work effort continues to grow without control Cost and schedule estimates are never achieved The real cost and completion date is unknown © The Delos Partnership 2004

Defining the WBS Goal Objective 1 Objective 2 Objective 3 Deliverable 1 Deliverable 2 Deliverable 3 Task Sub Tasks Sub Task Task Sub Tasks Sub Task Task Sub Tasks Sub Task What is a deliverable? The outputs (both interim and final) that each project will produce to achieve its objectives. For example: New recruit Information System Decision Report New organisation design Staff transfer scheme © The Delos Partnership 2004

Activity Definition Input Process Output Charter Activity Lists Charter Scope Plan Scope Plan WBS WBS Project Task List © The Delos Partnership 2004

Activity Sequencing Input Process Output Charter Dependencies Charter Scope Plan Scope Plan WBS WBS Project Task List Project Task List Network Diagram Project Visual (Network Diagram) © The Delos Partnership 2004

Creating the Project Visual (The Network Diagram)
3 Types of Dependencies Mandatory No choice e.g. the walls must go up before the roof can go on Discretionary Preferred by stakeholders e.g. like the kitchen done before the lounge External Legally required e.g. planning permission before you start © The Delos Partnership 2004

Facilitates engaging the project team and other stakeholders Sanity Check Helps determine the critical path 1 2 B C 1 2 F 2 2 A E H I 1 1 D G 2 6 Critical Path = A:D:E:F:H:I= = 16 (weeks) © The Delos Partnership 2004

Critical Path Method The focus on CPM is to determine float in order to determine which tasks have the most and the least scheduling flexibility 1 2 B C 1 2 F 2 2 A E H I 1 1 D G 2 6 Critical Path = A:D:E:F:H:I= = 16 (weeks) © The Delos Partnership 2004

Critical Path Method What is the critical path? (no scheduling flexibility) Where is the float/slack? (some scheduling flexibility) Start Finish A=1 F=1 B=4 P=3 M=3 I=3 D=2 O=2 G=1 N=1 Dummy C= 2 Q=3 L=6 H=2 © The Delos Partnership 2004

Network Diagram (AON, AOA) Shows interdependencies of all tasks Used for planning the project Used for crashing and fast tracking the project © The Delos Partnership 2004

Network Diagrams Aid Planning
Crashing Adding more resources to critical path tasks while maintaining scope E.g. move resources from non-critical tasks which have float or adding extra resources Fast Tracking Doing critical path tasks in parallel that were originally planned in series Resource Levelling Plans out time of tasks (and costs) in favour of a stable number of resources used consistently in full © The Delos Partnership 2004

Activity Duration Estimating
Input Process Output Charter Top Down (Analogous) Estimating Expert Judgement Monte Carlo Analysis Heuristic (Rule of Thumb Historical Information (Benchmarking) PERT a combination of the above…. Charter Scope Plan Scope Plan WBS WBS Project Task List Project Task List Network Diagram Network Diagram Duration Estimates & Assumptions © The Delos Partnership 2004

Estimating Estimating Should be done by people doing the work not just by project managers Estimating Methods CPM Has one task per estimate Emphasis on controlling costs and leaving time line flexible Can only be drawn on AOA Can have dummies PERT Has 3 estimates per activity Optimistic, pessimistic, most likely Can be used for time and cost Emphasis on time with flexibility on cost © The Delos Partnership 2004

PERT (Program Evaluation and Review Technique)
1. Estimate for 3 separate scenarios: Best Case (B), Most Likely (ML) and Worst Case (W) 2. Calculate Weighted average estimate by: (B + 4 ML + W ) / 6 © The Delos Partnership 2004

Pert Analysis - Example
1. Best Case estimate = 10 hours, Most Likely estimate = 15 hours, Worst Case estimate = 25 hours. 2. Average estimate = (10 + 4* ) / 6 = 16 hours. N.B. Standard Deviation = (Best Case + Worse Case) / 6 Variance = [(Best Case + Worse Case) / 6] 2 © The Delos Partnership 2004

PERT PERT Estimate = (P+4M+O)/6 Standard Deviation = (P-O)/6 Variance = [(P-O)/6]2 Task O M P Duration Standard Deviation Variance A 3 6 8 B 2 3 4 C 5 12 20 D 7 8 8 © The Delos Partnership 2004

Schedule Development Input Process Output
Charter PERT (Project Evaluation and Review Technique) CPM (Critical Path Method) Resource Levelling Charter Scope Plan Scope Plan WBS WBS Project Task List Project Task List Network Diagram Network Diagram Duration Estimates & Assumptions Duration Estimates & Assumptions Project Schedule © The Delos Partnership 2004

The Planning Hierarchy
WBS Project Plans A multi page document (not a Gantt chart) Down to the level that you are going to control at Project Schedule Activity List Rolling Weekly schedule of tasks (<4 weeks out) © The Delos Partnership 2004

Activity Lists Designed to reduce overhead associated with maintenance of more detailed project plan on a weekly basis Activity List is a detailed picture of the work assignments and schedule of activities over the coming weeks ( <4 weeks) It specifies tasks, resource assignments and the expected start and end dates It is updated on a weekly basis, based on actual performance during the preceding week Changes in the project work plan are reflected in the activity lists and vice-versa 9 12 3 6 © The Delos Partnership 2004

Scheduling Summary What is required?...………………... by when?……………………………. What must be done?…………………. in what order?…………………………. and by whom?………………………. How long will each activity (and therefore the whole project) take?... So how do I make it fit ?…………... Objectives and deliverables High level estimates/external milestones Activities Dependencies Resourcing Detailed work estimates Reconcile © The Delos Partnership 2004

Reconciling More resources De-scope Further breakdown - focus on what’s actually required Critical path analysis Re-time Levelling - better utilisation of existing resources Overtime! Crash Fast Track © The Delos Partnership 2004

What type of resources are required?
Resource Planning Input Process Output Charter What type of resources are required? How many? For how long? What % of time Charter Scope Plan Scope Plan WBS WBS Project Task List Project Task List Network Diagram Network Diagram Duration Estimates & Assumptions Duration Estimates & Assumptions Project Schedule Project Schedule Resource Requirements © The Delos Partnership 2004

Top Down (Analogous) Estimating Parametric Estimating
Cost Estimating Input Process Output Charter Charter Top Down (Analogous) Estimating Bottom Up Estimating Parametric Estimating Scope Plan Scope Plan WBS WBS Project Task List Project Task List Network Diagram Network Diagram Duration Estimates & Assumptions Duration Estimates & Assumptions Project Schedule Project Schedule Resource Requirements Resource Requirements Cost Estimates Resource Rates Chart of Accounts Historical Information © The Delos Partnership 2004

Cost Budgeting Input Process Output Charter Charter Grouping of estimates Scope Plan Scope Plan WBS WBS Project Task List Project Task List Network Diagram Network Diagram Duration Estimates & Assumptions Duration Estimates & Assumptions Project Schedule Project Schedule Resource Requirements Resource Requirements Cost Estimates Cost Estimates Baseline Budget © The Delos Partnership 2004

Project Management Information System
Project Plan Development Input Process Output Project Management Information System © The Delos Partnership 2004

External Resource Plan Project Management Information System
Project Plan Development Input Process Output Quality Plan Organisational Plan Communication Plan External Resource Plan Procurement Plan Risk Management Plan Initial Project Charter Initial Project Charter Project Management Information System Project Standards Stakeholder know how © The Delos Partnership 2004

Quality Plan Standards What requirements do you need to meet? Assurance how will you assure the requirements will be met? Control How will you verify that the requirements have been met? © The Delos Partnership 2004

Organisation Plan Responsibility Breakdown Structure Who does what? Staffing Management Plan When and how human resources will be taken on and off the project Organisational Chart © The Delos Partnership 2004

Communication Plan © The Delos Partnership 2004

Communication Plan Channel / Description Frequency Potential Audience Vehicle Project Plan Microsoft Project Plan with Ongoing Steering Committee, Key Stakeholders deliverables by stage Status Reports Progress against deliverables Weekly Project Office and identification of issues and risks Update Monthly summary of status Monthly All staff (via Key Process Presentations reports Owners) Info letter Update on schedule, benefits Every Quarter All Staff of Project One © The Delos Partnership 2004

Procurement Management Plan
Procurement Planning Solicitation Planning Solicitation Source Selection Contract Administration Contract Close Out © The Delos Partnership 2004

Procurement Planning Input Process Output Make or Buy Expert Judgement (internal capability / internal capacity / need for control/ Protection of Intellectual Property / Cost) Contract Type Selection (Fixed Cost / Cost Reimbursable / Unit Price Contract) Procurement Management Plan e.g. What type of contracts will be used? How will multiple suppliers be managed? Scope Statement Market Conditions Statement of Work © The Delos Partnership 2004

Solicitation Planning Input Process Output Procurement Management Plan e.g. What type of contracts will be used? How will multiple suppliers be managed? Standard Forms Expert Judgement Bid Documents Evaluation Criteria Statement of Work © The Delos Partnership 2004

Solicitation Input Process Output Bid Documents Evaluation Criteria Advertising Bidders Conference Agencies Internet Proposal © The Delos Partnership 2004

Organisational Policies
Source Selection Input Process Output Proposal Evaluation Criteria Organisational Policies Screening System Weighting System Contract Negotiation Contract © The Delos Partnership 2004

Performance Measurement
Contract Administration Input Process Output Change Control Performance Measurement Payment Contract Work Results Invoices Change Requests Contract Changes Payment Requests © The Delos Partnership 2004

Contract Documentation Formal Acceptance and Closure
Contract Close Out Input Process Output Procurement Audit Contract Documentation Contract File Formal Acceptance and Closure © The Delos Partnership 2004

Risk Management Plan Risk Identification Risk Quantification Risk Response Development Risk Response Control © The Delos Partnership 2004

What is a Risk? A condition or circumstance which may occur which could a negative affect on the success of your project at some point IN THE FUTURE EVERY project carries a number of risks... How likely is it to happen? How severe will the impact be if it does happen? How do we reduce the likelihood (mitigation)? How do we deal with the consequences if it occurs (contingency)? © The Delos Partnership 2004

Contract Documentation
Risk Identification Input Process Output Check Lists Interviewing Feedback Contract Documentation Sources of Risk Potential Risk Events Risk Symptoms © The Delos Partnership 2004

Stakeholder Tolerance
Risk Quantification Input Process Output Judgement Decision Trees Statistical Sums Stakeholder Tolerance Potential Risk Events Cost Estimates Duration Estimates Risks to Accept Risks to Pursue © The Delos Partnership 2004

Statistical Sums PERT Standard Deviation = (Worse Case - Best Case)/6 Variance = [(Worse Case - Best Case)/6]2 The higher the variance the greater the risk... © The Delos Partnership 2004

Risk Response Development Input Process Output Mitigating Approach Contingency Planning Insurance Procurement Risks to Accept Risks to Pursue Risk Management Plan Contingency Plans Reserves © The Delos Partnership 2004

Risk Response Control Input Process Output Risk Management Plan Actual Risks Work Arounds Corrective Action © The Delos Partnership 2004

Some Common Risk Factors
Project size and/or complexity External environment influences Technology (experience, reliability, etc) Availability of experienced resources Project sponsorship Clarity of project direction © The Delos Partnership 2004

Risk Management Plan (continued)
During the life of the project, the project manager should strive to reduce the: impact, and probability of all risks facing the project. Regular (at least monthly) review meetings should re-assess the probability and impact of all risks and the risk management plan should be updated accordingly. Severe risks should have a robust contingency plan and a comprehensive mitigation strategy, although a ‘wait and see’ policy may be appropriate in some circumstances. © The Delos Partnership 2004

Risk Management Plan (continued)
Rate Risks based on probability x Impact Risk Probability x Impact = Rating Mitigating Contingency Approach Plan a = 1 b = 9 c = 6 Tips: Avoid probability ratings of 2 (make a decision is it high or low) Convert low probability risks to assumptions based on mitigating approach Place mitigating approach to high probability risks into action plans Escalate risks to steering committee based on severity and/or lack of contingency plan © The Delos Partnership 2004

Planning the Project Key Project Manager Activities Review / Establish Project Standards & Procedures; Develop Project Management Information System Develop Project Plans © The Delos Partnership 2004

Executing The Project At the end of this session you will have an understanding of the following:- Status Reporting Issue Management Technical Change Management Knowledge Management Project Mgrs Responsibilities © The Delos Partnership 2004

PMI® Executing Processes
4.2 Project Plan Execution © The Delos Partnership 2004 N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

Maintained Project Work plan
Project Plan Execution Input Process Output Work Authorisation to Perform activities in plan For all issues, complete an issue report, including: Issue description Project impact Proposed resolution Develop mitigating approach and contingency plan for risks Review and approve resolution Assess change Develop team skills / knowledge Communicate for commitment Manage 3rd party relationships Manage Knowledge Work Results Maintained Project Work plan Status Reports Issues Risks Change Requests Changes © The Delos Partnership 2004

Status Reporting Communicate status and expectations to the Programme/ Project Office and therefore Management Inform team members and other Project Managers Communicate changes, issues, variances Facilitate coordination across the programme Share good news (as well as bad) Demonstrate that you are in control Why report project status? © The Delos Partnership 2004

Status Reporting (contd)
Make reports comprehensive Issues Progress Achieved Synthesise Status Report Time / Effort Risks Activities Planned © The Delos Partnership 2004

Report Project Status Guiding Principles
Be careful what you ask for -- if you are only concerned with task starts and completions, you will very likely get tasks that start and finish on time… but possibly at the expense of quality. If you ask for information, use it. Make sure your reporting periods are realistic. Be creative in designing your reports. Make use of exception reporting. © The Delos Partnership 2004

Issue Management An ISSUE is anything that is CURRENTLY or will SHORTLY affect the progress of a project or its ability to produce its stated deliverables, and about which no agreement has yet been reached. For example: Limited availability of resources Problems with technology Ambiguous business requirements As the Project Manager you own the issues and must address them early and drive them to resolution © The Delos Partnership 2004

Issue Management (contd)
Are issues being raised? Are the issues raised being rated appropriately? Are issues being assigned to appropriate people for resolution? Do all accepted issues have a reasonable resolution due date? Are any resolution due dates about to be missed? Are there any concerns with implementing the approved resolutions? Are there any issues you need to raise now before they become a change request? © The Delos Partnership 2004

Knowledge Management Knowledge should be centrally managed A repository should be developed for all the information gathered and produced over the life of the programme. Its purpose is to ensure that all information is: Readily accessible; Consistently presented; Protected from damage or loss; Coordinated and reused; Status Reports Correspondence Budgets Deliverables Project Plans Project Charters Working Papers Contracts Timesheets Expense Records © The Delos Partnership 2004

Knowledge Management What are we trying to avoid? Lost Information Duplicated Information Inconsistent Information Wasted Effort Lost Time © The Delos Partnership 2004

Technical Change Management
Scope: more; less; different Time: elapsed; actual effort Approach: sign-off/consultation; prototype/big bang Resource: team size; skill set Cost: budget Manage changes to: © The Delos Partnership 2004

Technical Change Management
Complete change request form Description of proposed change Benefits of change Implications of not making the change Log change request Assign change request and due date Investigate request and determine resolution Review resolution Approve resolution Update budget, scope and work plan Communicate © The Delos Partnership 2004

Assess Change Guiding Principles
Shift happens -- the project world is dynamic Set a tolerance level -- determine the amount of change you can safely accept without formal user approval. When you exceed your tolerance level, use the formal change request process Manage expectations as well as scope. © The Delos Partnership 2004

Executing the Project Key Project Manager Activities Periodically (weekly) assess and report the following project status: Schedule -- planned, current & forecast; Budget -- planned, current & forecast; Issues -- number, progress & age; Risk -- severity, likelihood & strategy; Deliverable -- completeness, quality; Change Request -- number, progress, impact © The Delos Partnership 2004

Executing the Project Key Project Manager Activities Identify variations in agreed project scope (deliverable, functional, organisational, etc); Analyse impact on project schedule, resource requirements and budget; Revise project schedule, budget and resource plan if change accepted; © The Delos Partnership 2004

Controlling The Project At the end of this session you will have an understanding of the following:- Earned Value Management Quality Management Stage and Gate Process Project Managers Responsibilities © The Delos Partnership 2004

PMI® Controlling Processes
10.3 Performance Reporting 4.3 Overall Change Control © The Delos Partnership 2004 N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

Maintained Project Work plan
Controlling the Project Input Process Output Capture actuals Evaluate actuals versus plan Manage Change Requests Stage and Gate review Update project scope, as required Update project work plan Project Actuals Performance Measures Change Requests Maintained Project Work plan © The Delos Partnership 2004

What are we Controlling?
Detailed project plan & Project charter Is the project progressing on schedule? Do actuals support estimates? How is the risk profile changing over the life of the project? Has contingency been used? What issues are hampering progress? Are deliverables being produced to the required levels of quality? Are changes being identified and how are these being managed? Deliverables & Achieved objectives © The Delos Partnership 2004

You only control three dimensions...
Dimensions of Control You only control three dimensions... Time Scope Quality Ask for comments on previous experience of TQC Cost © The Delos Partnership 2004

Progress Management Collect and verify project actuals Compare project actuals against plan Determine variances Update plan to reflect actuals Anticipate future impacts © The Delos Partnership 2004

Earned Value Management
Is a control mechanism to allow a contractor and client to monitor progress in terms of Cost Schedule Technical Performance Normally created and owned by the prime contractor Traditional project mgmt practice tends to compare actual costs with planned expenditure and confuses actual costs with actual progress. EVM provides a third reference point; an objective view of the status of the contract © The Delos Partnership 2004

It works by tracking 3 parameters Planned Value (PV): the budgeted costs of work scheduled Actual Costs (AC): the actual cost of work performed (ACWP) Earned Vale (EV): the budgeted cost of work performed It relies on the Work Breakdown Structure (WBS) establishing all the goods and services to be supplied…the deliverables! The WBS should go down to the level that earned value will be reported against (the more levels the more heavier the burden of reporting…3/4 levels should meet the needs of most reasonably complex projects) © The Delos Partnership 2004

Each deliverable/activity in the WBS can have a value (money/hours) estimated to it Value is “earned” by the completion of those deliverables or activities Estimate vs actual variances can then be generated Simple Example Project x 3 Stages 1 deliverables per stage 2 activities per deliverable What is the WBS? © The Delos Partnership 2004

Planned Completion Date Time Now Forecast Cost Overrun Original estimated project budget Budget at completion (BAC) (PV) Cost Variance Actual cost of work performed (AC) Schedule Variance (Cost) (EV) Schedule Variance (Time) © The Delos Partnership 2004

Backward looking measures Cost Performance Index = Earned Value / Actual Cost CPI = EV/AC Schedule Performance Index = Earned Value / Planned Value SPI = EV / PV Cost Variance = Earned Value - Actual Cost Cost Variance = EV - AC Schedule Variance = Earned Value - Budget Schedule variance = EV - PV Forward Looking Measures Final Cost = Budgeted Cost / CPI Final Project Duration = Planned Project Duration / SPI (time based) © The Delos Partnership 2004

Quality Management Quality management should not be something which starts ‘at the end’ - when a deliverable has been produced…rather a “stage and gate” approach should be taken over the entire live cycle © The Delos Partnership 2004

Quality Management Prevention Have quality criteria been defined for each stage/deliverable? Has the training, coaching and knowledge transfer prepared team members for their work? Are the estimates of effort and planned duration sufficient to produce acceptable quality work? Have standards and procedures been developed and are they being followed? © The Delos Partnership 2004

Quality Management (contd)
Inspection Is time being made for the assessment of deliverables against agreed quality criteria? Are team reviews working? Are both the project team and independent quality reviewers involved in assessment/sign off of deliverables? Are approvals of deliverables going smoothly? Have there been any change requests regarding defects in approved deliverables? © The Delos Partnership 2004

Quality Management (contd)
Cross functional review of deliverables by stage (Stage and Gate) Enforcement of formal standards and procedures Consistent application of PM processes and techniques Continuous improvement through training and skills transfer Provision of appropriately skilled people Key Components © The Delos Partnership 2004

Stage and Gate STAGES Gather information Multi-functional with parallel activities Drive uncertainty down Where work is done GATES Decision points for next stage - Go/ No Go,etc (‘GO’ authorises resources for next Stage) Serve as quality & prioritisation control Are predefined & specify a set of deliverables © The Delos Partnership 2004

Stage and Gate (contd) 1 2 3 4 5 6 7 1 2 3 4 5 6 7 © The Delos Partnership 2004

Stage and Gate (Functional Buy-In)
Initiate Plan Execute Control Close 1 2 3 4 5 6 7 Initial Invest. Business Case Plan Devel. Risk Assess. Produce Post Project Eval. Idea 1 2 3 4 5 6 7 Finance / Commercial Sales & Marketing/ Operations R & D / Medical © The Delos Partnership 2004

Control the Project Guiding Principles
Control the outcomes more than the process. Recognise the balance between formal and informal control. Project management software is not a replacement for a full-time project manager. © The Delos Partnership 2004

Controlling the Project Key Project Manager Activities Monitor & evaluate progress (schedule, budget); Make adjustments (schedule, resourcing, activity) necessary to achieve time, cost & quality targets; Identify and resolve all project issues © The Delos Partnership 2004

Controlling the Project Key Project Manager Activities Identify and manage project risks; Monitor status and impact of all related projects; Co-ordinate allocation of project resource; Review & approve quality of all deliverables; © The Delos Partnership 2004

Closing The Project At the end of this session you will understand the importance of :- Post-Project Evaluation Evaluation of Team & Individual Performance Project Managers Responsibilities © The Delos Partnership 2004

PMI® Closing Processes
12.6 Contract Close Out 10.4 Administrative Closure © The Delos Partnership 2004 N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

Closing the Project Input Process Output Objective Review and Scope Verifications Procurement Audit Update & Archive documentation Identify lessons learned and define future improvements Review team members Contract Files Project Charter Project Assessment Performance Measures Individual Performance Assessment Contracts Future Improvements © The Delos Partnership 2004

Conclude the Project Guiding Principles
This project management process provides the basis for continuous improvement. Get some input from outside the project team. This should not be your first attempt to document project information. Debrief before parting. © The Delos Partnership 2004

Closing the Project Key Project Manager Activities Obtain final review and approval of project deliverables; Assess performance against project schedule, and budget; Archive project information; Compile closure report; © The Delos Partnership 2004

Project Management Framework & Organisation – Key Concepts

Role of the Sponsor The Sponsor is the customer. The one who will pay for the product the project is going to deliver Must be visible and lead from the Top Own the Business Case Belief and energy to “Stay the course” Balance Priorities with Business-As-Usual Budget Holder Commitment to new ways of working Manage and Influence Stakeholders Ensure Resources are committed © The Delos Partnership 2004

Role of the Project Manager. Financial Well-Being Benefits Management Planning & Control Leadership Prog Office Change Management Business Review Team Building System Interface © The Delos Partnership 2004

Functional Organisation
Manager Chief Exec. Programme coordination Part-time programme manager Direct reporting of team members to functional mgrs Project manager has little or no authority Virtually none of the team assigned full-time © The Delos Partnership 2004

Functional Organisations
Advantages Easier management of specialists Team members report to only one supervisor Similar resources are centralised, companies are grouped by specialisation People place more emphasis on their functional speciality to the detriment of project No career path in project management Project manager has no authority Disadvantages © The Delos Partnership 2004

Matrix Organization Prog. Manager Project Manager Project Manager Function Manager Project Manager Function Manager TL Project Manager Function Manager TL TL TL TL TL TL TL TL © The Delos Partnership 2004

Matrix Organisations Advantages Highly visible project objectives Improved project manage control over resources More support from functional organisations Better coordination Better horizontal and vertical dissemination of information than functional Team members maintain a “home” Not cost effective because of extra administrative personnel More than one boss for project teams More complex to monitor and control Tougher problems with resource allocation Need extensive policies and procedures Functional managers may have different priorities than project managers Higher potential for conflict and duplication of effort Disadvantages © The Delos Partnership 2004

Projectised Organisation
Project coordination Prog. Manager Prog. Manager Full-time project manager Direct reporting of team members to PM Project manager has high or total authority 85-100% of team assigned full-time © The Delos Partnership 2004

Projectised Organisations
Advantages Efficient project organisation Loyalty to project More effective communications that functional No “home” when project complete Lack of professionalism in disciplines Duplication of facilities and job functions Less efficient use of resources Disadvantages © The Delos Partnership 2004

Organisational Structure Influences on Projects
Type Functional Matrix Projectised Project Characteristics Weak Matrix Balanced Matrix Strong Matrix Project Manager’s Authority Little or None Limited Low to Moderate Moderate to High High to Almost Total % of Performing Organisation’s Personnel Assigned Full Time to Project Work Virtually None 0-25% 15-60% 50-95% 85-100% Project Manager’s Role Part-time Part-time Full-time Full-time Full-time Common Title for Project Manager’s Role Project Coordinator/ Project Leader Project Coordinator/ Project Leader Project Manager/ Project Officer Project / Program Manager Project / Program Manager Project Management Administrative Staff Part-time Part-time Part-time Full-time Full-time Source: PMI® Project Management Body of Knowledge © The Delos Partnership 2004

Project Organisation No one “best” structure Major considerations are: Control Responsibility & Accountability Integration & Decision Making Communication & Visibility Priority & Trade-off Stakeholder Management © The Delos Partnership 2004

There are Two Life Cycles
Project Management Life Cycle This describes what you need to do to manage the project (Initiating, Planning, Executing, Controlling, Closing) You are concerned about this life cycle Product Life Cycle The deliverable of a project that will be used by the customer The project team is not responsible for the product life cycle © The Delos Partnership 2004

The Triple Constraint The three are so intertwined that a change in one will in most cases lead to a change in at least one of the others Management sets the priority of each constraint © The Delos Partnership 2004

Project Integration Management
During execution… The Project Team focus on completing tasks The sponsor and senior management protect the project from changes and loss of resources The project manager integrates all the pieces of the projects © The Delos Partnership 2004

Constraints Factors that limit the teams options Financial, time, human, technical, other Historical Information Can include tasks, WBS, Reports, Estimates, Plans, lessons learned, benchmarks, correspondence Lessons Learned Technical aspects Project Management Life Cycle © The Delos Partnership 2004

Project Management Methodology Organisations set of standards, templates for managing projects Project Management Information System The system set up in advance where the project manager goes to find all project related information, to know the status of the project etc Baseline The original plan plus any approved changes. Used to compare actuals with original to monitor variances to budget © The Delos Partnership 2004

Kick Off Meeting A communications and coordination meeting of all parties to ensure all are familiar with the details of the project and who will be responsible for what Includes team, sponsor, customers, sellers, senior management, functional managers) Work Authorisation System A formal procedure for sanctioning work Change Requests Formal changes to the project after it has been approved (during execution) by integrated change control The project plan is a formal document that needs to be controlled © The Delos Partnership 2004

Change Control System A collection of formal documented procedures and supporting organisation detailing how changes will be managed, approved, and implemented Corrective Action The project manager proactively looks for deviations rather than just waiting for them to be brought to their attention Corrective action may involve cause and effect analysis, changes to schedule, costs, quality and risks © The Delos Partnership 2004

Scope change control Measure performance Replanning Making changes and adjusting the baseline Taking corrective action Documenting lessons learned Schedule Control Cost Control Quality Control Performance Measurement Risk Monitoring © The Delos Partnership 2004

Managing Changes Influencing the factors that affect change Ensuring that change is beneficial Determining that a change has occurred Looking for alternatives to change Minimising the negative impact of change Notifying stakeholders affected by change Managing changes as they occur Configuration Management Managing the scope of the project so that the project delivers the product required by the customer © The Delos Partnership 2004

Back-Up Slides Optional slides to be used as required to support the Q&A session following the case study breakout sessions of to flex the course to meet a clients particular focus area © The Delos Partnership 2004

The PMI® Project Management Knowledge Areas – Key Concepts

Scope Management “Includes the processes required to ensure that the project includes all the work and only the work required to complete the project successfully. It is primarily concerned with controlling what is and what is not in the project” Check you are completing all the work Say no to additional work Prevent extra work or gold plating © The Delos Partnership 2004

Scope Management Project Selection Murder Board Peer Review Scoring Models Benefit compared to cost NPV, IRR, Payback, BCA © The Delos Partnership 2004

Scope Management Management by Objectives Establish objectives Periodically review Take corrective action Delphi Technique Obtain estimates from independent experts anonymously Used to reduce bias and build consensus © The Delos Partnership 2004

Scope Management Work Breakdown Structure The foundation of the project. All planning and controlling is based on the WBS Defines the scope of the project. If it is not in the WBS the team should not be working on it WBS Dictionary Created with the team to increase understanding of each task, who is going to do what, what they will need, what they will deliver © The Delos Partnership 2004

Time Management Activity A Activity B Activity on Node (AON) Four types of relationship Finish to start Finish to finish Start to Start Start to finish © The Delos Partnership 2004

Time Management Activity A Activity on Arrow (AOA) One type of relationship Finish to start Can use dummies to show dependencies between tasks PERT and CPM can only be drawn on AOA © The Delos Partnership 2004

Cost Management Cost Estimating Should be done by the person doing the work Should be based on the WBS to improve accuracy Historical information is key to improving accuracy © The Delos Partnership 2004

Cost Management Cost Estimating Analogous Estimating Top down expert judgement Quick and cheap to do Less accurate Bottom Up estimating Estimates based on WBS are rolled up to get a project total Takes time and more costly to do More Accurate Parametric Testing (Uses a mathematical model e.g.x hours per test) Regression analysis (Scatter Diagram) Learning Curve The 100th test will be quicker than the 1st © The Delos Partnership 2004

Cost Management Progress Reporting 50/50 Rule A task is considered 50% complete when it begins and only gets remaining 50% when task complete 20/80 Rule A task is considered 20% complete when it begins and only gets remaining 80% when task complete 0/100 Rule A task only gets credit when completed © The Delos Partnership 2004

Is a control mechanism to allow a contractor and client to monitor progress in terms of Cost Schedule Technical Performance Normally created and owned by the prime contractor Traditional project mgmt practice tends to compare actual costs with planned expenditure and confuses actual costs with actual progress. EVM provides a third reference point; an objective view of the status of the contract © The Delos Partnership 2004

It works by tracking 3 parameters Planned Value (PV): the budgeted costs of work scheduled Actual Costs (AC): the actual cost of work performed (ACWP) Earned Vale (EV): the budgeted cost of work performed It relies on the Work Breakdown Structure (WBS) establishing all the goods and services to be supplied…the deliverables! The WBS should go down to the level that earned value will be reported against (the more levels the more heavier the burden of reporting…3/4 levels should meet the needs of most reasonably complex projects) © The Delos Partnership 2004

Planned Completion Date Time Now Forecast Cost Overrun Original estimated project budget Budget at completion (BAC) (PV) Cost Variance Actual cost of work performed (AC) Schedule Variance (Cost) (EV) Schedule Variance (Time) © The Delos Partnership 2004

Acronym Term Meaning PV Planned Value What is the estimated vale of the work planned to be done? EV Earned Value What is the estimated vale of the work actually done? AC Actual Cost What is the actual cost incurred? BAC Budget at Completion What was the budget for the total job? EAC Estimate at completion What is now expected to be the total cost of the project? ETC Estimate to complete From today, how much more is the project expected to cost? VAC Variance at Completion How much under or over budget is the project now expected to be? © The Delos Partnership 2004

Acronym Term Meaning Cost Variance CV EV-AC Negative is over budget Positive is under budget Schedule Variance SV EV-PV Negative is behind schedule Positive is ahead of schedule Cost Performance Index CPI EV/AC The project is achieving $_ out of every $1spent Schedule Performance Index SPI EV/PV The project is progressing at _% of the rate originally planned Estimate at Completion EAC BAC/CPI What is now expected to be the total cost of the project? Estimate to Complete ETC EAC-AC From today, how much more is the project expected to cost? Variance at Completion VAC BAC-EAC How much under or over budget is the project now expected to be? © The Delos Partnership 2004

Tips EV comes at the beginning of every formula If it is a “variance” it is EV minus something If it is an “index” it is EV divided by something If the formula relates to cost use AC If the formula relates to schedule us PV Negative is bad; positive is good Greater than one is good; less than one is bad © The Delos Partnership 2004

Project Selection Project A Project B Which Project To Pick? Net Present Value $85,000 $75,000 IRR 14% 18% Payback Period 20 Months 25 Months Benefit Cost Ratio 2.43 1.23 © The Delos Partnership 2004

Project Cost Management
Sunk Costs A project with a budget of £300,000 is halfway through and has spent £600,000. Do you consider the £300,000 when deciding to continue? Accounting standards require that sunk costs are not considered when deciding whether to continue with a troubled project © The Delos Partnership 2004

Project Cost Management
Variable Costs Any cost that varies with the amount of work e.g. team wages, consultancy fees Fixed Cost Any cost that do not change, e.g. insurance Direct Costs Costs directly attributable to the work on the project Indirect Costs Overhead costs that are shared e.g. HR support © The Delos Partnership 2004

Quality Management Pareto Analysis Cause and Effect / Fishbone / Ishikawa Diagram Statistical Sampling Studying the whole population would take too long, cost too much, be destructive © The Delos Partnership 2004

Quality Management Find the following on the charts following Upper control Limit Lower Control Limit The process is out of control Assignable cause Normal and expected variation Rule of Seven Specification limits Three Sigma Six Sigma Normal Distribution Curve © The Delos Partnership 2004

The PMI® Project Management Knowledge Areas Key Concepts

Human Resource Management
Responsibility Exercise Handout Halo Effect Thinking someone will be good at everything just because they are very good at one thing MCGregor’s Theory X and Y x x X Y © The Delos Partnership 2004

Maslow’s Hierarchy of Needs
Growth, learning Accomplishment, appreciation Love, affection, friends, approval Security, stability, freedom Food, water, shelter © The Delos Partnership 2004

Sources of Conflict within Projects
Schedules Competing priorities Resources Technical Opinions Administrative procedures Cost Personality High Frequency as cause of conflict Low © The Delos Partnership 2004 Source: PMI Project Management Body of Knowledge

Conflict Resolving Techniques
Confronting (Problem Solving) Working a shared problem Smoothing Emphasizing common ground Compromising Bringing some degree of satisfaction to both sides Withdrawal (avoidance) Postponing/waiting for better timing Forcing Push your viewpoint at expense of others High Effectiveness in Project Situations Low © The Delos Partnership 2004

Power Types Expert Power based on knowledge/skills/experience Reward Power based on ability to reward Formal Power based on position Referent Power based on association with someone in a higher position Penalty Power based on ability to penalise High Effectiveness in Project Situations Low © The Delos Partnership 2004

Hertzberg's Motivation Theory
Hygiene factors cannot motivate but lack of them will de-motivate Working conditions, Salary, Personal life, Relationships at work, Security, Status Motivating agents motivate people Responsibility, Self Actualisation, Professional Growth, Recognition Design Jobs with right balance Stretch vs Comfort Zone vs Grunge “If you want people to do a good job give them a good job to do” (Hertzberg) © The Delos Partnership 2004

Project Communications Management
Can the project manager control all communications No Should the project manager try to control communications Yes, otherwise rumours and speculations and mis-understanding fill the vacuum 90% of a project managers time is spent communicating Communication is the single most important skill in project management © The Delos Partnership 2004

Communication Channels # Channels = (N2-N)/2 Where N is the number of people How many communication channels are there when there are 5 stakeholders involved in a project? How many are there when there 10? © The Delos Partnership 2004

Communications Planning Determining the information needs of the stakeholders Communications Management Plan What information do you need to send to who, when, how etc Information Distribution Implementing the communications management plan © The Delos Partnership 2004

Non-Verbal 55% of all communication is non-verbal Para lingual The pitch and tone of your voice which often conveys your real message Active Listening Confirming you are listening, paraphrasing back, asking for clarification Effective Listening Watching the speaker for body language, thinking about what you are going to say before responding, asking questions, providing feedback Feedback Checking understanding of the message © The Delos Partnership 2004

Performance Reporting Reports are communication tools and may include Status reports Progress reports Trend reports Variance reports Earned value reports Forecasting reports © The Delos Partnership 2004

Administrative Closure is part of communications All projects must be closed out At end of project At end of each phase When contract is terminated Administrative Closure includes Product Verification Financial closure Lessons Learned Update records Final project performance reporting Project Archives © The Delos Partnership 2004

Project Risk Management
Is there more risk at the start or the end of a project? Risk Management Involves Risk management planning Risk Identification Qualitative Risk Analysis Quantitative Risk Analysis Risk Response Planning © The Delos Partnership 2004

Step 1 – Risk Management Planning Formal or informal dependent on perceived risk of project Formal risk management plans may include Methodology Roles and Responsibilities Budget for risk Timing Risks thresholds Risk Tracking © The Delos Partnership 2004

Step 2 – Risk Identification Brainstorming Delphi Technique Interviewing stakeholders / experts SWOT During team meetings (status meetings) Outputs from Risk Identification Risks Risk triggers what will be the symptom or early warning sign © The Delos Partnership 2004

Step 3 – Qualitative Risk Analysis Probability and impact Assumption testing Too many guesses make the data unreliable Data Precision Ranking How reliable is our information Output from Risk Analysis Risk Rating Matrix © The Delos Partnership 2004

Step 4 – Quantitative Risk Analysis Expected value Which risks warrant a response Determine overall project risk Determine cost and schedule reserves © The Delos Partnership 2004

Step 4 – Quantitative Risk Analysis Decision Tree Would you volume test? Do Volume Test $100,000 Failure: 30% probability and $140,000 impact Pass: No impact Failure: 75% probability and $440,000 impact Do Not do Volume Test $0 Pass: No impact © The Delos Partnership 2004

Step 4 – Quantitative Risk Analysis Monte Carlo Simulation Evaluates the project not the task Provides the probability of completing the project on any specific day for any specific cost Determines probability of any given task being on the critical path Can be used to assess cost and schedule impacts © The Delos Partnership 2004

Step 5 – Risk Response Planning Assign Owner Decide risk response strategy Avoid Eliminate cause of risk Mitigate Reduce probability or impact Accept Do nothing and live with consequences if it happens Transfer Insure against © The Delos Partnership 2004

Procurement Management
Step What happens Output 1 Procurement Planning Make or Buy? Do it yourself or outsource. Select Contract Type. Draft scope of work 2 Solicitation Planning RFP created RFP 3 Solicitation Questions and Answers Proposal Created 4 Source Selection Pick One Contract Signed 5 Contract administration Make or Buy? Work completed 1 Procurement Planning Finish Done © The Delos Partnership 2004

1 Procurement Planning Make vs Buy Main reason to buy is to reduce risk (cost, performance, scope of work) Main reason to make is to utilise own resources, retain control, protect Intellectual Property © The Delos Partnership 2004

2 Solicitation Planning Evaluation Criteria Understanding or need Life cycle cost Technical ability Management approach Project Management ability Contract Type Selection 4 Main Contract Types Cost Reimbursable Time & Material Fixed Price Purchase Order © The Delos Partnership 2004

A contract is a formal agreement All requirements should be specifically stated in the contract All contract requirements must be met Changes must be in writing and formally documented © The Delos Partnership 2004

Contract Types Cost Reimbursable (risk mostly with the buyer) Cost plus fixed fee (CPFF) Most common form of fixed fee as seller incentivised to control project as extra work does not result in extra profit Cost plus percentage of costs (CPPC) Illegal in most governments. Why? Cost plus incentive/award fee (CPIF/CPAF) © The Delos Partnership 2004

Contract Types Time & Material (risk mostly with the buyer) Quick to arrange Suitable for low cost/short term contracts Simple to administer © The Delos Partnership 2004

Contract Types Fixed Price (Risk mostly with the seller) Fixed Price Incentive Fee (FPIF) E.g. Fixed fee plus $X for every month you finish early Fixed Price Economic Price Adjustment E.g. Annual adjustment based on inflation for long term contracts © The Delos Partnership 2004

Contract Types Purchase Order Unilateral (signed by one party only) Used for simple commodity items © The Delos Partnership 2004

Situation Type of Contract to Use You need work to start right away ? You want to buy expertise in determining what needs to be done ? You know exactly what needs to be done ? You are buying the services of a programmer to augment your staff ? You need work done but you do not have time to audit invoices on this work ? © The Delos Partnership 2004

4 Source Selection Presentations by sellers Negotiations with short listed sellers Main items to negotiate on a contract are Responsibilities Authority Applicable law Technical and management approaches Contract financing Price © The Delos Partnership 2004

5 Contract Administration FP Check to make sure work in scope is being done Watch for overpriced change orders Check for scope mis-understandings T&M Provide day to day direction Focus on deliverables and project schedule Decide if alternative contract type better CPFF Audit sellers costs Watch for seller adding resources that do not add value or part of scope © The Delos Partnership 2004

6 Contract Closeout (When a contract ends or when terminated before work completed Product Verification Financial closure make final payments Contract performance reporting Assess effectiveness of contract type chosen Contract File Archive documents Procurement Audits A structured review of the procurement process to capture lessons learned © The Delos Partnership 2004

Professional Responsibility 4. Project Integration Management 5. Project Scope Management 6. Project Time Management 7. Project Cost Management 8. Project Quality Management 9. Project Human Resource Management 10. Project Communications Management 11. Project Risk Management 12. Project Procurement Management © The Delos Partnership 2004 All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

Professional Responsibility
In a broad sense professional responsibility means Do the right thing Follow the right process Act ethically, fairly and professionally Watch for conflicts of interest Report violations Increase knowledge and practice Deal with problems © The Delos Partnership 2004

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