Life and Spiritual Coaching

July 14, 2008

Risk Response for PMP

Filed under: PMP — by Donna Ritter @ 12:37 pm

Risk Response Development

Responses to threats fall into the following categories:

·         Avoidance

Eliminating a specific threat, usually by eliminating the cause. The project management team can never eliminate all risk, but specific risk events can often be eliminated.

·         Mitigation

Reducing the expected monetary value of a risk by reducing the probability of occurrence, reducing the risk event value.

·         Acceptance

Accepting the consequences. Acceptance can be active (e.g. by developing a contingency plan to execute should the risk event occur) or passive (e.g., by accepting lower profit if some activities overrun).

1.      Inputs

a.      Opportunities to pursue, threats to respond to

List opportunities that should be pursued and threats that require attention.

b.      Opportunities to ignore, threats to accept

The duration of most activities will be significantly influenced by the resources assigned to them.

2.      Tools and Techniques

a.      Procurement

Acquiring outside sources for services and equipment is an appropriate tool.

b.      Contingency Planning

Making plans to take action if a risk arises.

c.       Alternative Strategies

Avoid risk by changing the planned approach.

d.      Insurance

3.      Outputs

a.      Risk Management Plan

This documents the procedures to be used to manage risk throughout the project. It should cover who is responsible for managing various areas of risk, how the initial identification and quantification outputs will be maintained, how contingency plans will be implemented and how reserves will be allocated.

b.      Inputs to other processes

Contingencies and plans must be feed back to other processes.

c.       Contingency plans

d.      Reserves

Examples are management reserve, schedule reserve, and contingency reserve.

e.      Contractual agreements

May be entered into for insurance, services, and other items as appropriate in order to avoid or mitigate threats. Contractual terms and conditions will have a significant effect on the degree of risk deduction.

Risk Response Control

1.      Inputs

a.      Risk management plan

b.      Actual risk events

When an event occurs, project management must recognize it so that the response plan can be implemented.

c.       Additional Risk identification

As performance is reported additional risks may surface and should be identified.

2.      Tools and Techniques

a.      Workarounds

These are unplanned responses to negative risk events.

b.      Additional risk response development

If event was not anticipated or effect greater than expected, then it may be necessary to repeat the response development and quantification process.

3.      Outputs

a.      Corrective Action

This is primarily the act of performing the planned risk response.

b.      Updates to the risk management plan


Risk Analysis Techniques

Filed under: PMP — by Donna Ritter @ 12:35 pm
Tags: ,

Risk Analysis Techniques

1.      Brainstorming

Is used extensively in formative project planning and can also be used to advantage to identify and postulate risk scenarios for a particular project. It is a simple but effective attempt to help people think creatively in a group setting without feeling inhibited or being criticized by others.

The rules are that each member must try to build on the ideas offered by preceding comments. No criticism or disapproving verbal or nonverbal behaviors are allowed. The intent is to encourage as many ideas as possible, which may in turn, trigger the ideas of others.

2.      Sensitivity Analysis

Sensitivity analysis seeks to place a value on the effect of change of a single variable within a project by analyzing that effect on the project plan. It is the simplest form of risk analysis. Uncertainty and risk are reflected by defining a likely range of variation for each component of the original base case estimate. In practice such an analysis is only done for those variables which have a high impact on cost, time or economic return, and to which the project is most sensitive.

Some of the advantages of sensitivity analysis include impressing management that there is a range of possible outcomes, decision making is more realistic, though perhaps more complex. And the relative importance of each variable examined is readily apparent. Some weaknesses are that variables are treated individually, limiting the extent to which combinations of variables can be assessed, and a sensitivity diagram gives no indication of anticipated probability of occurrence.

3.      Probability Analysis

Probability analysis overcomes the limitations of sensitivity analysis by specifying a probability distribution for each variable, and then considering situations where any or all of these variables can be changed at the same time. Defining the probability of occurrence of any specific variable may be quite difficult, particularly as political or commercial environments can change quite rapidly.

As with sensitivity analysis, the range of variation is subjective, but ranges for many time and cost elements of a project estimate should be skewed toward overrun, due to the natural optimism or omission of the estimator.

4.      Delphi Method

The basic concept is to derive a consensus using a panel of experts to arrive at a convergent solution to a specific problem. This is particularly useful in arriving at probability assessments relating to future events where the risk impacts are large and critical. The first and vital step is to select a panel of individuals who have experience in the area at issue. For best results, the panel members should not know each other identity and the process should be conducted with each at separate locations.

The responses, together with opinions and justifications, are evaluated and statistical feedback is furnished to each panel member in the next iteration. The process is continued until group responses converge to s specific solution.

5.      Monte Carlo

The Monte Carlo method, simulation by means of random numbers, provides a powerful yet simple method of incorporating probabilistic data. Basic steps are:

a.      Assess the range of the variables being considered and determine the probability distribution most suited to each.

b.      For each variable within its specific range, select a value randomly chosen, taking account of the probability distribution for the occurrence of the variable.

c.       Run a deterministic analysis using the combination of values selected for each one of the variables.

d.      Repeat steps 2 and 3 a number of times to obtain the probability distribution of the result. Typically between 100 and 1000 iterations are required depending on the number of variables and the degree of confidence required.

6.      Decision Tree Analysis

A feature of project work is that a number of options are typically available in the course of reaching the final results. An advantage of decision tree analysis is that it forces consideration of the probability of each outcome. Thus, the likelihood of failure is quantified and some value is place on each decision. This form of risk analysis is usually applied to cost and time considerations, both in choosing between different early investment decisions, and later in considering major changes with uncertain outcomes during project implementation.

7.      Utility Theory

Utility theory endeavors to formalize management’s attitude towards risk, an approach that is appropriate to decision tree analysis for the calculation of expected values, and also for the assessment of results from sensitivity and probability analyses. However, in practical project work Utility Theory tends to be viewed as rather theoretical.

8.      Decision Theory

Is a technique for assisting in reaching decisions under uncertainty and risk. All decisions are based to some extent on uncertain forecasts. Given the criteria selected by the decision-maker, Decision Theory points to the best possible course whether or not the forecasts are accurate.

The Quality Risk

This risk can best be expressed by the question: “What if the project fails to perform as expected during its operational life?” This may well be the result of less than satisfactory quality upon project completion, and is especially true if quality is not given due attention during the project life cycle. Since the in-service life of the resulting product is typically much longer than the period required to plan and produce that product, any quality shortcomings and their effects may surface over a prolonged period of time.

Consequently, of all the project objectives, conformance to quality requirement is the one most remembered long after cost and schedule performance have faded into the past. It follows that quality management can have the most impact on the long-term actual or perceived success of the project.

Risk Perceptions

1.      People do not, in fact, demand zero risk. They take risk every day, both consciously and subconsciously, and they are willing and able to take benefit/risk decisions, as in driving and speeding.

2.      Peoples’ judgment of degrees of risk is not, however, coincident with most methodologies for measuring risk statistically. The public may greatly underestimate familiar risks (e.g. driving) while greatly overestimating unfamiliar risks (e.g. buying a home near a nuclear facility).

3.      A variety of emotional, not logical, factors control risk perceptions:

a.      Primary is the sense of personal control and the ability to mange the risk

b.      Secondary are qualities of familiarity and conversely, dread. The greater the unfamiliarity and potential for connection to gruesome, the more it is likely to be judged as highly risky and therefore unacceptable.

4.      Once established, risk perceptions are extremely hard to change. New information may be absorbed by the intellect, but it is not readily absorbed at an emotional level.

5.      Risk perceptions reside fundamentally at an emotional level.


Expected Monetary Value

Filed under: PMP — by Donna Ritter @ 12:24 pm
Tags: ,



This is the process concerned with identifying, analyzing, and responding to project risk. (PMBOK)

It is also the art and science of identifying, assessing and responding to project risk throughout the life of a project and in the best interests of its objectives. Now in all of the projects I’ve managed in my 30 years of experience, there has always been risk.


The trick to the game is to figure out what the risk tolerance of your stakeholders is. How much risk are they willing to put up with and how much do they want solid fallback plans for?

In some cases, a level of uncertainty is acceptable and the level of contingency planning can be as simple as put another person on the project, or slip the schedule.


Sometimes it’s not so simple, and the stakeholders want to know the monetary value or expected value of the probability of a risk occurring. The basic level for excepted value is:


Expected monetary value (EMV) = probability * impact


The expected value result can either be added to the costs of the project or subtracted from the project’s profit. The project profit or cost is usually referred to as the baseline. The baseline is the initial approved cost or profit structure for the project.


Project EMV = project cost + risk expected value – opportunity expected value


                                 = project value/profit – risk expected value + opportunity expected value


Remember, risk increases the cost and decreases the profit; and opportunity increases the profit and decreases the cost. Risks are bad things that may (often do) happen to us on projects, sometimes expressed as “threats”. Opportunities are good things that may happen to us on projects and may enhance the overall situation.


With that in mind, let’s work through a few examples.


Example: You have a project with total planned costs of $100,000. What information of value to an expected monetary analysis do you have so far? The baseline ($100,000). Now with that bit of information, let’s add some more considerations and complexity to it. For this same project, with total planned costs of $100,000, there is a risk that one of your team members, Matthew, will be crowned Prince of Arabia! If that happens, we’ll lose $8,000 in the process of replacing him on the team.  Now what new information do you have that helps you out? You have the Risk Impact ($8000).

After checking with highly placed sources within Arabia, we have learned that there is about a 60% chance that Matthew will be approved as the new Prince. What new information do we have now? We have the probability (60%).

Now for this project we know that the cost is $100,000, and there is a 60% chance we’ll lose Matthew, costing the project $8000. What is the Expected Value of this risk happening to our project? In this instance, we are looking at the expected value of the risk. It has a potential cost of $8000. But, since the probability of it happening is only 60%, its EMV = $8000*.6 = $4800. We have now calculated the EMV for this risk event. We have to apply the EMV in the context of the project as a whole. What is the EMV of the cost of the whole project? The answer is $104,800 ($100,000 + $4,800).

We also need to consider any opportunities which may offset the cost of the risk. For this project, in addition to the potential concerns of Matthew’s leaving, we have just received some good news! We may have the opportunity of a bonus from the customer, which would reduce costs by $20,000. The chance of us getting the bonus is 30%. What is the expected value of this chance? It is $6000, 30%*$20,000. Are you still with me here?

Now we have a lot more information for the stakeholders. The project will cost $100,000. There is a risk of losing Matthew at an additional cost of $8000, but there is only a 60% chance of that occurring. There is also an opportunity for a bonus of $20,000, with a chance of 30% of that occurring. With all of these considerations, what is the Expected Monetary Value of this Project? It is $98,800. This is calculated by taking the cost baseline of $100,000 + $4800 (risk of losing Matthew) and subtracting the EMV of the opportunity because it will affect our costs. That is $6000. So the total Expected Monetary Value of this project is $98,800.  That incorporates both known risks and opportunities.

For our project we now have a new perspective. Nancy from accounting finally came through with the numbers on how we are expected to profit from the project. Specifically, she was able to establish that the project will yield about $210,000 in revenues. That will be offset by the cost of $100,000, but management is asking for a risk analysis. To review, what is the baseline profit of the project? It is $110,000 ($210,000 – $100,000).

Next we need to take into account the risk of losing Matthew which would increase cost by $8000. There is also an opportunity of a bonus that will increase revenues. Let’s list our information:

·         The project has a cost baseline of $100,000

·         Revenues are anticipated at $210,000

·         There is a 60% chance we’ll lose Matthew at a cost of $8000

·         There is a 30% chance we’ll earn a bonus of $20,000

·         For a few kickers, there is a 10% chance we’ll hit obstacles increasing costs by $30,000

·         There’s a %70 chance we’ll have a legal fight costing $10,000

With all of this new data, what is the new EMV? It is $100,000 (baseline cost) – $4800 ($8000 * %60) + $6000 ($20,000*30%)-$3000 ($30,000* %10) – $7000 ($10,000*70) = $101,200


So from a risk perspective, this project is worth doing.


July 3, 2008

Work Breakdown Structure

Filed under: PMP — by Donna Ritter @ 10:53 am
Tags: , ,

Have you ever mapped out a family tree? Our family has done this for years tracing us back to Charlemagne. Genealogy is favorite habit started my Grandfather.

A work breakdown structure (WBS) is very similar to a family tree. It maps out the deliverables of the project, with sub deliverables and activities stemming in a tree format. One of my favorite ways to do the WBS is with yellow post it’s so you can move them around to where they belong. Once I worked on a project where we had to tape together all of the papers that included the post it’s and it was at least 25 pages. This served us well when we showed management the magnitude of the scope of the project!

Doing this on large sheets of paper is useful so you can capture the finished product. A Guide to the PMBOK describes a WBS this way: “A WBS is a deliverable oriented grouping of project components that organizes and defines the total scope of the project; work not defined in the WBS is outside of the project”.

A Work Breakdown Structure is break down the work packages to enable you to roll them back up to a schedule that is complete. A work package is usually no more than 40 hours.

The WBS should detail the full scope of work needed to complete the project. Accuracy and completeness are required when composing your WBS.

Decomposition is one of the tools you will use when preparing your WBS. You should be able to break down the deliverables to a point where you can easily plan, execute, control and close out the project deliverables. Each work package should be able to be easily estimated in the Activity Definition Process.

You can think of this process in 4 major steps:

1.    Identify all of the major deliverables. The PMBOK is clear on noting that the deliverables should be defined according to the way the project is organized. One way is to organize a project in phases. The phases become the first level of decomposition, followed by the deliverables.

2.    Step2 involves estimating cost and duration. If that cannot be done, then you have to decompose further until the work package can be estimated. I usually use a work package of 20-40 hours at the most. Not all deliverables will have the same level of decomposition. In any case, a schedule cannot be made until the WBS is complete and has estimates that are as accurate as possible.

3.    Step 3 involves identifying components that make up the deliverables.

4.    Step 4 is the verification step. You need to determine that each component listed is clear, complete and necessary to fulfill the requirements of the deliverable. Also, you need to easily add up all the estimates, budget and assignments to create a solid schedule.

A WBS looks very much like a flow chart. The goal is to break down the work so that each work package can be assigned to a specific person for accountability and the Project Manager can easily manage the schedule knowing that all parts of the project have been broken down to their smallest part.

Each Work package is assigned a unique identifier and these are documented in the WBS dictionary. The dictionary includes a description of the work package, costs, budgets, schedule dates, resource assignments and activity descriptions.

This process sounds like a lot of work, but it is a known fact that the more you plan, the better you will be in the end.  I like to use SharePoint to keep this document and keep for the project records.

The WBS plays a major part of Project Management. For those taking the PMP certification course, I was told that if you didn’t know the answer to a question WBS probably was it!

June 18, 2008

PMP Notes for Scope Management

Filed under: PMP — by Donna Ritter @ 5:12 pm

Scope Management is the process of defining what work is required and then making sure that all of the work and only the work is done. This Process includes scope planning, scope defintion, creation of the Work Breakdown Structure (WBS), scope verification and scope control.

Any Project Manager will tell you that “scope creep”is one of the worst problems on a project. That means you must institute a formal Change Control mechanism. All scope must fit the Program’s charter (defined earlier in the process).

You should be giving the customer what he asked for; no more, no less. I heard someone once compare it to having a customer order a VW and the engineering team building a Cadillac. Giving away extras is a waste of time and adds to the risk of the project. Maybe it only takes 30 minutes to code; but what about testing, documentation, and training to name a few.

Scope Management involves mastering both product and project scope. Product Scope is another way to say “requirements that relate to the product of the project”. Project scope is the work you need to deliver that product.  This includes meetings, reports, analysis and any other project related activities.

Scope baseline: Measurements of success on the project include whether the requirements have been met and whether the scope baseline has been met. The scope baseline is the scope statement , the work breakdown structure and the work breakdown structure dictionary.

Scope planning is focused on thinking ahead and thinking “how will I do this” before doing the work and the Scope Management Plan.

The Scope Management Plan answers “how will I do scope? What tools should I use to plan how the project will accomplish the scope of this project?” The output of Scope Planning is the Project Scope Management Plan. It should contain 3 parts: how will the scope be planned, executed and controlled. It may be created in iterative steps during project planning. Once complete, it becomes part of the overall Project Plan and cannot be changed without going through a formal Change review process. Once you get to Risk Planning, it is possible that changes will have to be made to the Scope using the formal Change review process.

Scope definition: Scope definition is primarily concerned with what is and is not included in the project.  Scope definition takes into account constraints and assumptions. The result is used to manage and measure the project performance.

Stakeholder Analysis: This process makes sure the stakeholders’ needs are metm and turned into requirements.

Product Analysis: This analyzes the objectives stated by the customer or sponsor and turns them into tangible requirements.

Project Scope Statement: The preliminary scope statement is expanded into the “final” project scope statement to be used on the project. Different approaches to performing the work and incorporating the needs of the stakeholders are taken into consideration.

Scope planning inputs:

  • Product description
  • Project Charter
  • Project constraints
  • Project assumptions

The tools and techniques that may be used are benefit/cost analysis, expert judgement, product analysis and alternatives identification.

The main key message here is to have a clearly defined Change Management Plan to address any changes to the final scope. When a change is made, if it is deemed necessary, will cause many other plans and the schedule to be re-done. Changes should be documented as required, important, non-critical or nice to have.



June 7, 2008

PMP Notes for Risk Management

Filed under: PMP — by Donna Ritter @ 12:19 pm
  • Risk – uncertainty; good or bad
  • Project risk meetings should be an agenda item at each status team meeting
  • Risk Management – strategically fit; progressively monitored and controlled
  • Risks grouped, sorted and treated by experts
  • Risk management plan does to address responses to individual risks;
  • There is a separate Risk response plan for each risk
  • Risk identification – inputs from all areas; iterative
  • Risks evaluated and responses written and followed when needed
  • Brainstorming – most popular technique for identifying risk
  • Delphi technique – anonymous; facilitator required to analyze and categorize risks
  • The nominal group technique – participants self nominate and then have open discussion/clarification
  • Crawford slip – 10 times 10 different answers, less interactions
  • Checklist – quick and simple; danger of inconclusive and prejudgement
  • List of identified risks – progressively adjusted throughout project life cycle
  • Risk categories; technical, performance, management, organizational, external
  • Risk tolerance- willingness to accept risk; risk thresholds help to measure effectiveness of plan
  • Severity of risk – impact and probability; ranking; only to events
  • Risk scale – ordinal (L,M,H) or cardinal
  • Documenting the rationale of risk ranges is important component of risk interview
  • Data precision ranking – data about risk useful? Risk understanding, component of risk interview
  • Affinity diagramming – separate risks into groups treated by experts
  • Risk Response – avoidance, transfer (deflect), mitigation and acceptance take
  • Risk register – risk response plan – residual v. secondary risks
  • Risk avoidance – plan change; totally avoid by doing something; eliminate root cause; most preferable
  • Insurance and contracting are the methods of transferring (deflecting) risk. Splitting order is a method of risk mitigation.
  • Risk acceptance – setting up the risk tolerance first; within limit
  • Passive acceptance – do nothing, work around
  • Active acceptance – contingency plan, fullback plan, proactive, start early
  • Contingency planning is defining the steps to be taken if an identified risk event occurs
  • Risk mitigation – reduce the probability or impact; level to accept; change the conditions; planning for what to do in case the risk materializes – probability and impact; specific tasks dome regardless of whether a risk occurs
  • Risk taxonomy – identify risks, assess their probability and impact and understand the effectiveness of a particular mitigation strategy on a specific risk
  • Known risks- contingency budget or reserve set aside and approved by the project manager, reduced proportionally toward the end of the project
  • Unknown risks – management reserve
  • When a risk is identified, budget and schedule time are identified and put into the contingency reserve and added to the operating budget of the project
  • Corrective action – itself the output of all the controlling process; performing the workaround or the contingency plan in cost and risk control; performing expediting in schedule control
  • When the influence of standards and regulations is unknown or uncertain, they must be considered under Project Risk Management.

May 28, 2008

PMP Notes for Human Resource Management

Filed under: PMP — by Donna Ritter @ 6:44 pm
Tags: ,
  • Responsibility Assignment Matrix (RAM) – people who are working on tasks identified on the WBS
  • Staffing Management Plan – when and how you need to hire what kind of talent
  • Learning Curve Theory – the cost to produce an item will decrease each time the production is doubled
  • Leading – establishing direction, aligning people and motivating and inspiring the team
  • Staff selection – base on previous experience, personal interests, personal characteristics, availability, competencies and proficiency
  • Reward and recognition – based on separately budgeted controllable cost; clear, explicit, achievable and cultural
  • Scientific Management – clear and specific procedures result in effeciency and motivation
  • Expectancy theory – results can be applied bu treating people with encouragement, givings them a sense of recognition and achievement, and giving praise publicly and criticism privately
  • Maslov theory – hierarchy of needs; 5 levels (physiological, safety, love and affection, esteem and self actualization); lower needs met first
  • Hertzberg theory – motivation/hygiene;hygiene factors need to be maintained;motivators or satisfiers are a sense of achievement and a sense of recognition for things done, the work itself, responsibility, advancement, growth etc. the dis-satisfiers or hygiene factors are company policies, relationships with supervisor, personal factors, status, security,  and others. Maintain hygiene factors by having a good working personal policy and good leadership practices, feeling of achievement, and recognition for work done; responsibility and empowerment.  
  • McGregor theory – Theory X managers think that all people are basically lazy and that unless they are threatened or in some way forced to do work, they will not do any work. These managers work direct work to be done and do not allow very much participation in any decision making. Theory Y managers think that people will do a good job for the sake of doing it. They believe in participative management and sharing information with the worker. These managers also listen to problems that are brought by their staff.
  • Theory Z – this theory believes that high levels of trust, confidence and commitment to work on the part of management leads to high levels of motivation and productivity.
  • Job design – change negative attitudes
  • Job enrichment – plan and control included; for motivational effects; a lack of boredom, a feeling that the work is meaningful, a feeling of being responsible, for the consequences of what work is done and how it is done and a feeling of competence in accomplishing the task.
  • Quality Circles – ad-hoc; volunteer group; address quality problems
  • Outputs from team development – performance improvements and input to performance appraisals
  • Project required direct and indirect costs for training are generally paid by the performing organization
  • Coercive and reward power depends on the person being influenced believing that the the thing being requested can actually be done, that the reward or punishment can actually be given by the influencer, and that the reward or punishment is sufficient to motivate the person being influenced to do the work.
  • Legitimate power – formal authority
  • Referent power – charismatic and virtues of the leader give him power
  • Expert power – knowledge or ability
  • Representative power – delegated
  • Conflict resolution – frustration acceptable; 5 ways of resolving conflicts: forcing, smoothing, compromising, problem solving (confrontation), withdrawing.
  • Forcing – permanent solution, win-win lose approach, not good for building teams
  • Smoothing – minimizing disagreement by making differences seem less important; demphasize area of difference, good for team but conflict may return
  • Compromise – give up something to reach a common ground
  • Problem solving (confrontation) – all disagreements must have one correct solution
  • Withdraw – worst; negative; “Cooling off”
  • For most meetings 10 people are optimum. Have a clear agenda, facilitator and time keeper. Things off the agenda are not discussed but a new meeting will be scheduled to discuss.

PMP Notes for Quality Managment

Filed under: PMP — by Donna Ritter @ 6:38 pm
Tags: , , , , , ,
  • Quality – characteristics; ability to satisfy stated or implied needs; conformance to requirements; fitness for use
  • Grade – a category or rank given to entities having the same functional use but use different technical characteristics. Determining and delivering the required levels of both quality and grade are the responsibilities of the Project Manager and project management team.
  • Modern quality management complements project management in customer satisfaction, prevention over inspection, management responsibility and processes within phases (plan-do-act-check).
  • Quality planning – determine quality standards; may need to modify organization quality policy, stakeholders fully aware, have inputs from the scope statement, product description and other related processes; risks weighed.
  • Quality assurance – monitor overall quality; provide confidence that the project will satisfy the relevant quality standards; through the project; internal and external.
  • Quality Control – measure specific quality
  • The quality assurance and control processes share the same inputs as the quality management plan and operational definitions, which are outputs of the quality planning. The work results and checklists are inputs to the quality control while the results of quality control measurements input to quality assurance. The outputs of both have quality improvement.
  • Cost of quality – tools of quality planning, prevention, appraisal,  and failure (prevention, evaluation, repair)  costs the  the latter is broken down into internal and external costs; memeasurement and test equipment costs. Deming  said “85% of the cost of quality are the direct responsibility of management”.
  • Metrics – operational definitions; output of quality planning; specify what and how to measure.
  • Quality inspection – attributes or measurements
  • Attribute sampling – result can either conform or not; fast; cheap; accurate
  • Variables sampling – result rated in a continuous scale that measures the degree of conformity
  • AQL (acceptable quality level)- % limit to accept; AQL 5% in 100 means that among 100 tested, of no more than 5 unqualified are found it will be acceptable.
  • “Buyer’s Risk” – unqualified products are shipped to the customer as the result of sampling not being able to detect issues
  • “Seller’s Risk” – qualified products are rejected to ship to the customer as the result of sampling not treating the whole
  • In a control chart, the X is the mean value of the process data; X bar is the line. The Upper Control Limit (UCL) is 3* SD, the LCL (lower control limit is -3*SD.
  • R chart means the range chart. Usually the sample’s range is calculated and the R is the mean of the range. R bar is the line.
  • Usually the sample average ford not equal to the control average, X bar can be a calculated value or intentionally set up to manage the control.
  • “Rule of 7” – if there are 7 or more points in succession that are either above or below the mean value there is cause for concern about the process.
  • Special causes – unusual events; specific people operating; intermittent and unpredictable; output is not stable over time and unpredictable; output is not stable oer time and not predictable; all processes must be brought into statistical control by first detecting and removing the Special cause variation.
  • Common causes – system design; only corrected by  the management; output distribution stable over time; no adjustment; normal process variables
  • Kaizen – continuous quality improvement; even the processes are operating without problem


PMP Notes for Project Cost Managment

Filed under: PMP — by Donna Ritter @ 6:28 pm
Tags: ,

These are just notes I had during my PMP study sessions More can be said and examples given for all of these notes.

  • Price – what customer is willing to pay; justify the cost
  • Cost – resources consumed; spending –  time phased expenditures
  • “50 – 50 rule” – 50% of the earned value is credited as earned value when the activity begines. The remaining 50% is not credited until all the work is done.
  • Resource planning – affected by the nature of the project and organization.
  • Life cycle costing – product/ service future committments (guaruntees, warrenties and ongoing services)
  • Value engineering – creative approach used to optimize life cycle costs, save time, increase profits, improve quality, expand market share, solve problems, and/or use resources more effectively. It is used with life cycle costing to reduce cost and time, improve quality and performance and optimize the decision-making. A technique used in product analysis in the scope planning process.
  • “Order of magnitude scheduling” – beginnning; -25% to +75%
  • Budget scheduling  -10% to +25%
  • Definitive estimate  -5% to +10%
  • Bottom up scheduling – definitive; rolling up the items of the WBS, -5% to +10%; higher cost and longer time to get estimate
  • Top Down scheduling – limited infomrmation; on single estimate; not very accurate
  • Anallogous scheduling – top downl; use of experts; for example, a 1000 sq foot house costs $50 for each foot in the past, now a 1000 new one should have the same cost and a 3000 sq foot one should cost 3 times more.
  • Parametric – top down; use parameters; statistical relationsips; most likely to be reliable when 1) historical information used to develop the model is accurate; 2) the parameters used in the model are readily quantifiable; 3) the model is scalable (i.e. it works well for a very large project as well as a very small project). For example, a 1000 sq ft house costs $50 for each foot in the past and the new house has 3000 sq ft so the new cost should be 3000*$50.
  • Cost budgeting – allocating; include cost of risk reponses; contigency plans and management reserve for unidentified risks.
  • Variances many have differt impact over project phases. Earlier variances are more significant.
  • Earned Value – approved cost estimates for activities completed during a given period. IT usually comes from the budget unit cost with actual units.
  • Cost performance index (CPI) = Earned Value (EV) / Actual cost (AC), the amount of work accomplished per dollar spend.
  • Cost variance (CV) = EV – AC
  • Schedule Performance index (SPI) =  EV – Present Value (PV)
  • Critical ration = CPI * SPI
  • Estimate at completion (EAC) can be calculated different ways; When it is based on project performace and risk quatificaiton, current variances are typical. EAC = BAC/CPI or EAC = AC + (BAC-EV/(CPI * SPI)
  • A more optimistic calculation when current variances are atypical and similar variances are not likely to occur in the future: EAC = AC + BAC – EV
  • The estimate to complete (ETC) = EAC – EV = BAC/CPI – EV = BAC/EV*AC – EV
  • Estimated time to complete is the budgeted tome to complete / SPI
  • Variance at completion (VAC) = EAC – BAC
  • Project completed, EV = PV. All values available to e earned have been earned
  • Level of effort costs – AC = EV, earned on passage of time
  • Spending variance = Present value (PV) – Actual value (AC)
  • Project physical progress valued by schedule variance EV – PV. You are ahead of if this calculation is >0.
  • If a project is over budget 25% during project phases, the project wil be completed with an iver budget condition greater than 25%
  • Economic Value Added (EVA) – net profit compensates for cost of assets
  • Sum of hte year’s digits method – 5 year, total is 5+4+3+2+1=15, first year 5/15, second year 4/15, third yeat 3/15…
  • Double declining balances – 50% off the book value each year
  • The total project budget contains the operating project budget or baseline, the contingency reserve and the management reserve. The projet baseline is increased by the amount of risk although the total project budget stays the same.


PMP Project Time Management Notes

Filed under: PMP — by Donna Ritter @ 6:20 pm

My notes on Time Management for the PMP test.


     ·Baseline – original approved with approved change 

·Work Breakdown Structure: WBS – most central item; deliverable oriented;

 The WBS helps to define scope. One teacher told me if you do not know the answer to a

 question, it is probably WBS.

·Refinements = WBS updates; Revisions = Schedule updates

 (usually a result of scope/cost change, start/finish date)

·Work package – lowest level to manage; lowest level of WBS;

 assigned to one person; broken into activities, and then discrete tasks;

 level-of-effort, proportionate

·WBS dictionary – work package descriptions; schedules; budgets;

 and staff assignments

·CWBS, Contractual WBS – when and what information supplied

 to the buyer

·OBS, Organizational BS – relate work package to individuals and

 resources; organizational WBS

·Change control process – set up in scope definition; implemented with baseline;

 authorized change; itself need to be authorized

·Dependencies – mandatory, discretionary, or external; restricted by constraints

·Project network diagrams – activities and the logical relationships; explanation of their

 sequencing; PERT chart; PDM is a method

·Activity duration estimates – specific numbers, range, possibility; 2 weeks ± 2 days

 or 85% probability 3 weeks or less

·Leads – start earlier; -; FS –2 the successor start 2 days earlier before the finish of the


·Lags – more time needed, +; FS +2 the successor start 2 days later after the

 finish of predecessor

·Effort – people-hours; estimated cost

·Duration – time to do a task; only working time

·Span – time that elapsed between the start and finish; considered in activity

 duration estimating

·Total float, or Slack = LF – EF or LS – ES based on duration, not activity

·Total float (slack) – time of activity can be delayed without causing a delay in

 the overall project time; negative float not enough time; accident of the logic;

 no risk consideration involved; chain activity floats are all the same but can only

 be used once

· Free float – time of activity can be delayed without delaying the early start of

 any immediately following activities; no negative; occur when two or more

 activities share a common successor

·Float variance analysis – sorted sub critical activities analyzed

·Critical path – group of activities; “zero float”; longest path; shortest

 finish time; could not delay without delaying the project no resource constraints

 considered; deterministic numbers; not critical activities, just activity duration;

 may change as time progresses; may have more than 1

·Overloaded resources may result inefficiencies

·Resource leveling – accommodate resource constraint; result longer than

 preliminary schedule; adjustments to critical activities; reduce the over-utilization

 of resources. This is very easy to use with Microsoft Project Server.

·Critical chain – schedule with resource limits; buffers used; time/resource/risk

·Crashing – doing anything to reduce delay; often higher cost; time/cost optimization

·Fast tracking – overlapping of project phases or activities; often rework or higher risk.

· A project schedule should not be adjusted by lengthening the duration of the activities

·Buffering – increase schedule or reduce risk; using lags in the relationships

 or creating buffer activities (create a duplicate activity for each activity that is to be buffered)

·Gantt Charts – timing and orders; hide relationships and resource requirements

·PERT, Project Evaluation and Review Technique

·Expected Value = (Optimistic + 4*Most Likely + Pessimistic)/6

 Normally, the expected value is higher than the average value and  

 the most likely value because most activities take more time rather than less.

 The most likely value has a higher probability than the expected value (Standard Deviation =

(Pessimistic – Optimistic)/6

·95.5% probability of being within 2* Standard Deviation of the expected value (mean value)

·99.7% probability of being within 3*Standard Deviation of the expected value

·Project duration – only the critical path duration and SD

·In PERT, if the scheduled project completion time and sum of the average completion

 time for critical path activities are the same, the probability of completing the project

 on schedule is estimated at 50%, assuming no other paths are near-critical.

·PERT assumptions – stable critical path; “Beta” probability distribution; defined time;

 resource free; cost direct of time; no time value

·GERT, Graphic Evaluation and Review Technique – simulation; probability distributions

 and conditional logic; looping

·The result of CPM, PERT, GERT dates are not the schedule, but rather indicate the

 time periods within which the activity could be scheduled given resource limits and

 other known constraints.

·Monte Carlo – simulation; result probability of each possible date or cost;

 You need pessimistic, optimistic, and most likely values and likelihood of the estimate between

 the optimistic and most likely values

·Simulation – uncertainties translated into impacts and possibilities; used in schedule

 development & quantitative risk analysis; Monte Carlo, GERT, What-if;

·The project schedule remains preliminary until resource assignments have

  been confirmed. This would usually happen no later than the completion of project

  plan development.

·The supporting details of the project schedule – resource requirements by time period;

 Alternative schedules and schedule contingency reserves may be used.

·When risk occurs, schedule baseline will be adjusted to include the contingency

 reserve time, which will be deducted from the reserve pool.


« Previous PageNext Page »

Blog at