Chapter 1— Project Management Framework

Overview 1
1.1 What is a Project?3
1.2 What is Project Management? 4
1.3 Portfolio, Program & Program Management Office
(PMO) 5
1.4 Projects and Strategic Planning 7
1.5 Project Management Body of Knowledge 10
1.6 Project Management Processes 10
1.7 Project Management Process Group 11
1.8 Project Management Knowledge Areas 15
1.9 Project Management Process Interactions 16
1.10 Project Management Process Mapping 16
1.11 Project Team 18
1.12 Project Life Cycle 18
1.13 Stakeholders 21
1.14 Organizational Influences on Project Management 22
1.15 Organizational Structure 23
1.16 Organizational Process Assets 28
1.17 Enterprise Environmental Factors 30
1.18 Summary 30
Practice Questions 31

Chapter 2— General Management
Overview 37
2.1 Definitions of Management 38
2.2 Planning 38
2.3 Organizing 43
2.4 Staffing 45
2.5 Leading 47
2.6 Motivation 50
2.7 Controlling 52
2.8 Summary 55

Chapter 3— Fundamentals of Costing &
Project Selection Methodology

Overview 57
Key Terms 58
3.1 Fundamentals of Cost Accounting 58
3.2 Types of Cost 60
3.3 Methods of Costing 62
3.4 Techniques Used in Costing 62
3.5 Elements of Costing 66
3.6 Types of Expenditure 67
3.7 Working Capital 68
3.8 Profit Calculation Method 69
3.9 Project Selection Methodologies 69
3.10 Summary 73

Chapter 4— Project Integration Management
Overview 75
Key Terms 76
4.0 Project Integration Management Processes 77
4.1 Develop Project Charter 77
4.2 Develop Project Management Plan 83
4.3 Direct and Manage Project Work 86
4.4 Monitor and Control Project Work 89
4.5 Perform Integrated Change Control 93
4.6 Close Project or Phase 95
4.7 Summary 97
Practice Questions 99

Chapter 5— Project Scope Management
Overview 105
Key Terms 106
5.0 Project Scope Management Processes 107
5.1 Plan Scope Management 108
5.2 Collect Requirements 111
5.3 Define Scope 117
5.4 Create WBS 120
5.5 Validate Scope 123
5.6 Control Scope 125
5.7 Summary 129
Practice Questions 131

Chapter 6— Project Time Management and
Introduction to Operation Research

Project Time Management
Overview 139
Key Terms 140
6.0 Project Time Management Processes 142
6.1 Plan Schedule Management 142
6.2 Define Activities 145
6.3 Sequence Activities 149
6.4 Estimate Activity Resources 154
6.5 Estimate Activity Durations 158
6.6 Develop Schedule 164
6.0 Project Time Management Processe 142
6.7 Control Schedule 174
6.8 Summary 178
Introduction to Operation Research
Overview 179
Key Terms 180
6.9 Development of Operation Research 183
6.10 Decision Analysis Models (Decision Theory) 184
6.11 Decision Tree 188
6.12 Network Analysis 190
6.13 Simulation 200
6.14 Summary 209
Practice Questions 211

Chapter 7— Project Cost Management and
Earned Value Management

Project Cost Management
Overview 219
What is Cost Management? 220
Key Terms 220
7.0 Managing Project Cost 222
7.1 Plan Cost Management 223
7.2 Estimate Costs 227
7.3 Determine Budget 234
7.4 Control Cost 238
7.5 Summary 242
Earned Value Management
Overview 243
7.6 History of EVM 244
Key Terms 246
7.7 Understanding EVM 248
7.8 Forecasting 253
7.9 To–Complete Performance Index (TCPI) 255
7.10 Summary 256
Practice Questions 257

Chapter 8— Project Quality Management
Overview 263
8.0 What is Quality? 264
Key Quality Terms 288
8.1 Plan Quality Management 291
8.2 Perform Quality Assurance 299
8.3 Control Quality 303
8.4 Summary 306
Practice Questions 307

Chapter 9— Project Human Resource Management
Overview 315
9.0 Project Human Resource Management Process 316
Key Terms 316
9.1 Project Human Resource Management Process 317
9.2 Acquire Project Team 322
9.3 Develop Project Team 325
9.4 Manage Project Team 328
9.5 Summary 334
Practice Questions 335

Chapter 10— Project Communications Management
Overview 341
10.0 What is Communication Management? 342
Key Terms 342
10.1 Plan Communication Management 344
10.2 Manage Communications 348
10.3 Control Communications 352
10.4 Summary 355
Practice Questions 357

Chapter 11— Project Risk Management
Overview 363
More on Risk 364
Key Terms 364
11.0 Project Risk Management Processes 365
11.1 Plan Risk Management 366
11.2 Identify Risks 370
11.3 Perform Qualitative Risk Analysis 375
11.4 Perform Quantitative Risk Analysis 379
11.5 Plan Risk Responses 384
11.6 Control Risks 387
11.7 Summary 390
Practice Questions 391

Chapter 12— Project Procurement Management
Overview 397
12.0 What is Project Procurement Management? 398
Key Terms 399
12.1 Plan Procurement Management 401
12.2 Conduct Procurements 407
12.3 Control Procurements 412
12.4 Close Procurements 417
12.5 Summary 423
Practice Questions 425

Chapter 13— Project Stakeholder Management
Overview 431
13.0 What is Project Stakeholder Management? 432
Key Terms 432
13.1 Identify Stakeholders 433
13.2 Plan Stakeholder Management 439
13.3 Manage Stakeholder Engagement 444
13.4 Control Stakeholder Engagement 446
13.5 Summary 448
Practice Questions 449

Chapter 14— Professional Ethics (PMI)® Standards
Vision and Applicability 455
14.0 Persons to Whom the Code Applies 456
Key Words 456
14.1 Responsibility 457
14.2 Respect 458
14.3 Fairness 459
14.4 Honesty 460
14.5 Business Ethics 461
14.6 How to Face a Public Crisis 463
14.7 Dos and Don’ts in Managing Global Projects 464
14.8 How to Develop Multicultural Excellence in
Global Projects 465
14.9 Across the Miles, Keep Team Members Feeling
Connected 466
14.10 Summary 466
Practice Questions 467

Chapters Answers for Practice Questions 473
Reference Books 533


Chapter 1— Project Management Framework
1.1 What is a Project?

A project is a temporary and finite effort, having a specific start and end date. Projects are undertaken to create a unique product or service which brings about beneficial change or added value to the performing organization. Though the work involved in projects may be temporary, the product or results or service created are not temporary. For example, a project to build a national monument will create a result lasting centuries. Projects can also have social, economic, and environmental impacts that will outlast the duration of the project itself. Every project will create a unique product, service or result, though there may be repetitive elements in some projects. This repetitive element does not change the fundamental uniqueness of the project.A project can create:
• A product that can be either a component of another item or
an item itself
• A capability to perform a service
• A result such as an outcome or document (a research project that develops knowledge)
Some examples of projects are:
• Developing a new product or service
• Effecting a change in the structure, staffing or style of an organization
• Developing or acquiring a new or modified information system
• Constructing a building or infrastructure or
• Implementing a new business process or procedure

1.2 What is Project Management?
Project management is the discipline of planning, organizing and managing resources to bring about the successful completion of specific project goals and objectives. The temporary and finite characteristic of projects stands in sharp contrast to processes or operations, which are permanent or semi–permanent functional works to repetitively produce the same product or service. In practice, the management of these two systems is often found to be quite different, and as such requires the development of distinct technical skills and the adoption of separate management. As per “A Guide to the Project Management Body of Knowledge (PMBOK® Guide)”, 5th edition, Project Management can be accomplished through the appropriate application and integration of logically grouped project management processes under 5 process groups.
The five process groups are:
• Initiating
• Planning
• Executing
• Monitoring and Controlling and
• Closing
Managing a project typically includes, but not limited to:
• 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 who are active, effective and collaborative in nature
• Managing stakeholders towards meeting project requirements and creating project deliverables
• Balancing the competing project constraints, which include but are not limited to Scope, Quality, Schedule, Budget, Resources and Risks

There exists a relationship between these constraints such that any change in one factor will affect one or more remaining factors. For example, if a schedule of a project is reduced, then the budget needs to be increased to add additional resources to complete the same amount of work in less time. If an increase in budget is not possible, either scope or quality must be reduced to complete the project in the shortened duration with the same budget. The constraints on which the project manager has to focus differ from one project to another. The project stakeholders may have different ideas as to which factors are the most important, thus presenting the project management team with a greater challenge. The project team should be able to assess the situation and balance the demands in order to achieve the project’s success.

Chapter 2— General Management Framework

In this chapter, we will look at some of the definitions of management, the various functions of management and the skills required by a manager to effectively manage these functions.

2.1 Definitions of Management
Harold Koontz and Heinz Weihrich define management as “the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.”
Louis E.Boone and David L.Kurtz define management as “the use of people and other resources to accomplish objectives”. Mary Parker Follet termed management as “the act of getting things done through people”. Henry Fayol was the first management thinker to propose the five basic functions carried out by managers. These are planning, organizing, staffing, leading and controlling. Management is essential for any kind of organization where people are working together in a group. Management is required at all levels of an organization. The type of skills required varies at each of these levels. In general, managers require technical, human, conceptual and design skills. The functions of a manager provide a useful framework for organizing management roles. The functions of a manager are planning, organizing, staffing, leading and controlling. Each of these functions is explained below.

2.2 Planning
Planning is deciding what action to take, how and when to take a particular action, and who the people responsible for these actions are. It involves anticipating the future and consciously making choices for the future course of action. Several management scientists have defined planning. According to Peter Drucker, “Planning is a continuous process of making present entrepreneurial decisions (risk taking) systematically and with best possible knowledge of futurity, organizing systematically the efforts needed to carry out these decisions and measuring the result of those decisions against the expectations through an organized systematic feedback.” Planning is important in all types of organizations. Organizations that plan in advance are more likely to succeed than those who fail to plan for their future. Planning makes organizations focus on their objectives, offsets risks and provides guidelines for decision–making. Planning also provides better coordination and facilitates control.

Chapter 3— Fundamentals of Costing and Project selection methodologies

3.1 Fundamentals of Cost Accounting
In today’s world, all projects are performed in a highly competitive global environment where there is a high degree of risk and uncertainty. As a result, organizations have to function more efficiently and offer their products and services at a competitive price. To ensure the sustenance of business, organizations are looking for ways to cut down its expenditure and increase their revenue. Hence, there is a need for a system to cut down costs whenever required. Cost accounting will help project managers to evaluate comprehensively on each cost associated with their project activity and find ways to eliminate the non–value added expenditures. Cost accounting is concerned with the ascertainment of costs for providing a service or delivering a product.

3.1.1 What is Cost?
Cost is generally defined as the amount of expenditure incurred on a specific work or an activity. Cost has many meaning depending on the context. From a manufacturing or service point of view, costing means the total cost of manufacturing or a service. From a selling point of view, the term cost means the cost of selling or distributing goods or service. From a buyer’s perspective, the term cost means the cost of acquiring a product or service.

3.1.2 Cost Concepts
Cost must be studied in relation to its purpose and conditions. The concepts of cost are not definite and care must be taken to qualify it. Some of the concepts used in cost management are:
Total Cost It is the sum of cost of all items, which have been incurred in production, sales or distribution, or providing of a service to a customer. Overheads Overheads are the aggregate of indirect materials, indirect wages and any other indirect expenses involved in producing the product or delivering a service. The aggregate of prime cost and overheads gives the total cost. Total cost = Prime cost + Overhead cost

3.1.3 Components of Cost
The cost of a product or service can be classified into three broad categories.
They are:
1. Material cost
2. Labor cost
3. Other cost

Material cost – Material cost is the cost associated with the raw materials used in the process of manufacturing a product or delivering a service.
Labor cost – The cost of wages associated with the manufacturing of a product or delivering services.
Other costs – Other costs are those that do not fall under any of the above two categories such as administrative costs, cost of rent, cost of power etc…

Chapter 4— Project Integration Management

4.1 Develop Project Charter
Develop Project Charter is the process of developing a formal document, authorizing a project or a phase. The project charter documents the initial requirement of the stakeholder or the customer. The project charter is the document which establishes the relation between the performing organization and the customer (Requesting organization).
The performing organization has to identify the project manager as early as possible and it is advisable that the project manager takes part in the preparation of the project charter. The project charter gives the authority to the project manager to assign resources to the project.

The project charter is usually authorized by someone who is external to the project, such as project sponsor, PMO or portfolio steering committee. The initiator of the project charter should be placed in a level to allocate funds to the project. The initiator creates the project charter or allocates the responsibility to the project manager, but their approval of the charter authorizes the project. Projects are normally authorized as a result of internal business needs or external influences.


Chapter 1 — Project Management Framework: PRACTICE QUESTIONS
1. During project planning in matrix organization, the project manager determines that additional Human resources are needed. From whom would the request these resources?
A. Project Manager
B. Functional Manager
C. Team
D. Project Sponsor

2. An activity needs more time and the project manager determines that there is enough reserve to accommodate the change. Who needs to approve the change?
A. Management
B. Project Manager
C. Team member
D. Functional Manager

3. Which of the following best describes the performance of the monitor and Control Project Work process?
A. Continuously throughout the project
B. As soon as every deliverable is completed
C. At scheduled milestones or intervals during the project
D. At the end of every project phase

4. Which of the following statements best describes project management ?
A. Project management is the application of knowledge, skills, tools, and techniques to project team members to meet project requirements.
B. Project management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements.
C. Project management is the collection of the project management process used on every project.
D. Project management is the application of the project management process that are used on every project.

1. The new CIO for Mega–Byte Compact Disk Corporation, George, brings John into his office to discuss a new project that has been approved to improve the security access to their corporate systems worldwide. George explains the key objectives of the project, general time frame, and business value. The CIO assigns John to be the project manager and ends the meeting. What is the first thing John needs to do?
A. Determine the key stakeholders to have a kick–off meeting.
B. Find out how much money is available for the project.
C. Order new business cards that show he is the project manager.
D. Begin developing the scope definition.

2. You are a project manager for a software project. As you are defining the high level description of the work you need to do, you sit down with all of the project’s stakeholders and record all of the requirements you can get from them. Which of the following is not a valid requirement from stakeholder analysis?
A. The work the team does must be better than they did on their last project
B. There can be no more than 5% schedule variance on the project
C. The quality of the product must fit within organizational metrics for software quality
D. The budget must be within 10% of our projected cost.

3. During the execution phase of the project, you realize the subcontractors are working with incomplete and different scope statements. As a project manager, what should you do first?
A. Check the work completed against the correct scope statements
B. Review the scope of work with the stakeholders
C. Document the inconsistencies to management, calculating the cost of non– conformance
D. Stop all activities until the scope of work is complete


Chapter 1 — Project Management Framework: ANSWERS

1. Answer: B
Did you forget that in a matrix organizational the functional manager controls the resources?
2. Answer: B
Project manager can take decision on contingency reserve. Only for accessing management reserve we need permission from top management.
3. Answer: A
One of the most important things that you do as a project manager is to
constantly monitor the project and take, appropriate action whenever there is a change.
4. Answer: B
Project management is the application of knowledge, skills, tools, and
techniques to project activities to meet project requirements. This is a direct quote from the PMBOK. A, C, and D do not describe what project management is.

Chapter 13 — Project StakeHolder Management: ANSWERS

1. Answer: A
A kick-off meeting is indeed one of the first things a project manager should schedule and is in fact the initial task in Define scope. Answer B is tempting, because the amount of money for use on the project could indeed be a constraint; ideally, however, a project manager will determine the scope, activities, and resources needed, and then develop the budget needed. Answer C is also tempting in terms of showing authority to do a project; however, John’s CIO just authorized him to execute the project, and a business card does not necessarily give him the authority. Answer D is incorrect because scope definition is after Define scope, and requires as input the scope statement, which is defined in Define Scope.
2. Answer: A
Saying that the work must be “better” is subjective. Requirements gathered during stakeholder analysis should be quantifiable. That way, the team has a goal they can shoot for and you can always tell how close or far from it you are.
3. Answer: B
Review the scope of work with the stakeholders

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L&TI’PM evaluated various course work books that are available in the market place for recommendation to certification aspirants. Evaluation of various books available led to the selection of the book created by Infocareer for PMP® examination as an ideal book for the certification examination preparation. This book is well structured with suitable quiz and examination focus. L&TI’PM decided to make it a standard text book for use in the certification course.

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