CONTENTS
Preface xv
Introduction to Project Management 1
What Is Project Management Anyway? 2
Standards and Regulations 2
A True Story 5
Advantages of Project Management 6
Organizing for Project Management 7
The Projectized Organization 7
The Functional or Traditional Organization 9
The Matrix Organization 11
The Project Office and the Project Management Office 12
How the Project Manager Makes Projects Successful 13
The Project Life Cycle 14
Project Management Processes 15
Summary 17
1. Scope Management 18
Initiation of the Project 19
Project Charter 19
Statement of Work 20
Business Need 20
Scope Description 20
Environmental and Organizational Factors 21
Organizational Process Assets 21
Change Management Procedure 21
Risk Control Procedures 21
Organizational Knowledge Bases 21
Constraints and Assumptions 22
Project Selection Methods 22
Who Are Those Stakeholders? 22
Cost and Its Relationship to Price 23
Overbid or Underbid: Which Is Better for Your Company? 24
Getting to the Scope Baseline 26
Work Breakdown Structure 28
Systems Approach to Work Breakdown Structure 31
Work Breakdown Structure Dictionary 32
Additional Project Breakdown Structures 32
Scope Verification 33
Change Management 33
Project Justifications 34
The Breakeven Chart 35
Problems with Breakeven Charts 36
Average Rate of Return on Investment 36
Present Value of Money 37
Internal Rate of Return on Investment 40
Summary 46
2. Time Management 47
Activity Definition 47
Activity Sequencing 48
Activity on Arrow Diagramming 49
Gantt Charts and Milestone Charts 50
Precedence Diagramming Method (PDM) 51
Logical Relationships 52
Finish-Start Relationship (FS) 52
Start-Start Relationship (SS) 52
Finish-Finish Relationship (FF) 54
Start-Finish Relationship (SF) 55
Leads and Lags 56
Diagramming Relationships 56
Project Start and Project Finish Events 57
Logical Precedence Diagram 57
Activity Durations 57
Building the Network Diagram 58
Buffering the Schedule 63
Reverse Resource Allocation Scheduling 67
Critical Path Method (CPM) 68
Program Evaluation and Review Technique (PERT) 68
Monte Carlo Simulation 73
The Simulation 73
Output from the Monte Carlo Simulation 74
Critical Chain Theory 74
Summary 76
3. Cost Management 77
Why We Need Cost Management 77
Project Life Cycle and Project Cost 78
Using the Work Breakdown Structure 78
Project 78
Cost Estimating 79
Types of Estimates 79
Top-Down Estimates 79
Bottom-Up Estimates 79
Analogous Estimates 80
Parametric Estimates 80
Control Estimates 81
Cost Budgeting 82
Cost Control 84
Earned Value Reporting 84
Cumulative Reporting 85
Earned Value Parameters 86
Difficulties in Data Collection 87
Reporting Work Complete 88
Examples 88
Calculated Values for Earned Value Reports 90
Financial Measures 93
Return on Sales 96
Return on Assets 96
Economic Value Added 97
Depreciation 98
Straight Line Depreciation 99
Accelerated Depreciation 99
Sum of the Years’ Digits 100
Double Declining Balances 101
Summary 101
4. Quality Management 103
Quality Planning 104
Quality Assurance 105
Cost of Quality 105
Deming’s Fourteen Points 107
Quality Control 107
Inspection 108
Sampling Inspection 108
Acceptable Quality Level (AQL) 109
Buyer’s Risk and Seller’s Risk 109
Other Quality Control Techniques 110
Flowcharts and Diagrams 110
Cause and Effect Diagrams 110
Pareto Charts 110
Control Charts 113
Run Charts 116
Checklists 116
Kaizen 116
Benchmarking 117
Summary 117
5. Human Resources Management 118
Project Manager Roles and Responsibilities 119
Responsibility-Accountability Matrix 119
Project Schedule 120
Staffing Plan 120
Training Plan 120
Organization Chart 121
Strong Matrix, Weak Matrix, and Balanced Matrix Organizations 121
Strong Matrix 121
Weak Matrix 122
Balanced Matrix 122
Making Matrix Management Work 123
Personnel and Personal Evaluations 124
Motivation 125
Importance of Motivation 125
Industrial Revolution 125
Scientific Management 125
Learning Curve Theory 125
Depression Era 126
World War II 126
Post–World War II 127
Motivational Ideas 127
Procedures vs. Motivation 127
Expectancy Theory 129
Maslow’s Hierarchy of Needs Theory 129
Hertzberg’s Motivation/Hygiene Theory 131
Supervisory Style and Delegation 132
Job and Work Design 132
Job Enlargement 133
Job Enrichment 134
Quality Circles 134
Power 135
Forms of Power 135
Coercive Power and Reward Power 135
Legitimate Power 136
Referent Power 136
Expert Power 136
Representative Power 137
Leadership 137
Theory X and Theory Y Managers 137
Conflict Resolution 137
Forcing 138
Smoothing 139
Compromise 139
Problem Solving 140
Withdrawal 140
Managing Meetings 140
Managing Meetings Effectively 142
Before the Meeting 142
Beginning the Meeting 142
Summary 143
6. Communications Management 144
Lessons Learned 144
General Model of Communications 146
Thinking 146
Encoding 146
Symbols 146
Transmitting 147
Perceiving 147
Decoding 147
Understanding 147
Barriers to Communications 147
Distorted Perceptions 147
Distrusted Sources 147
Transmission Errors 148
Improving Communications 148
Make the Message Relevant for the Receiver 148
Reduce the Message to Its Simplest Terms 148
Organize the Message into a Series of Stages 148
Repeat the Key Points 149
Verbal and Written Communications 149
Formal and Informal Communications 150
Formal Communications 150
Informal Communications 150
Improving Listening 151
Don’t Interrupt 151
Put the Speaker at Ease 152
Appear Interested 153
Cut Out Distractions 153
Periodically Sum Up What Was Said 153
Networking 153
Circular Networks 154
Chain Networks 154
The Wheel 155
Free and Open Communications 155
Management by Walking Around 157
Performance Reviews 157
Summary 158
7. Risk Management 160
When to Do Risk Management 161
The Risk Process 162
Risk Management Planning 162
Risk Breakdown Structure 162
Risk Identification 163
Documentation Reviews 163
Brainstorming 163
Delphi Technique 164
Nominal Group Technique 165
Crawford Slip 165
Expert Interviews 165
Root Cause Identification 166
Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis 166
Checklists 166
Analogy 167
Diagramming Techniques 167
Recording of Risks Identified 169
Risk Assessment 169
Qualitative Risk Analysis 170
Risk Tolerance 170
Risk Probability 172
The Addition Rule 174
The Multiplication Rule 176
Risk Impact 178
Expected Value 178
Decision Trees 180
Risk Quantification 183
Comparative Ranking 184
Sensitivity Analysis 184
Grouping the Risks 185
Affinity Diagramming 186
Risk Response Planning 186
Risk Response Strategies 186
Avoidance 187
Transfer 187
Contracting 188
Acceptance 188
Mitigation 189
Budgeting for Risk 189
Risk Monitoring and Control 190
Summary 191
8. Contract and Procurement Management 192
Contract Management 193
Make or Buy 194
Contract Life Cycle 194
Requirement Process 195
Requisition Process 195
Solicitation Process 196
Award Process 197
Trade-Off Studies 197
Contract Process 198
Contract Administration 198
Contract Types 199
Fixed-Price or Lump-Sum Contract 199
Firm Fixed-Price Contract 200
Fixed-Price Plus Economic-Adjustment Contract 200
Fixed-Price Plus Incentive Contract 201
Cost-Plus Contract 201
Cost Plus Fixed-Fee Contract 202
Cost Plus Award-Fee Contract 202
Cost Plus Incentive-Fee Contract 203
Time-and-Material Contract 203
Procurement Management 203
Commodities 203
Unique Products and Services 204
Forward Buying 204
Blanket Orders 205
Split Orders 205
Summary 206
9. Professional Responsibility 207
Task 1 208
Task 2 209
Task 3 209
Task 4 210
Task 5 211
Code of Professional Conduct 211
10. What Is the PMP Exam Like? 213
Domain 1: Initiating the Project 214
Domain 2: Planning the Project 215
Domain 3: Executing the Project 216
Domain 4: Controlling the Project 216
Domain 5: Closing the Project 217
Domain 6: Professional Responsibility 217
Types of Questions on the Exam 218
Taking the Exam 219
Use of Practice Questions 220
The Application for PMP Certification 221
The Education Qualification 223
Joining PMI 223
Recertification 224
Practice Questions 225
Practice Questions Answer Key 303
Appendix: Probability Distributions 357
Bibliography 365
Index 367
About the Author 379