MARKS IN YOUR POCKET PMP for PMP Preparation

PMP Prep Notes

1. MARKS IN YOUR POCKET A BRAIN DUMP FOR PMP STUDIES Pic credit: Jenny goldstein

2. Scope management

3. UNDERSTANDING CODE OF ACCOUNTS We spent $90 on labor , $104 on materials, (cost) packed 55 boxes (scope) and took 9 hours to complete (schedule) under codes of accounts 2.1 to 2.4

4. PDM RELATIONSHIPS INSTAL OS PERFORM TESTS CONDUT LESSONS LEARNED MEETING COMPLETE PROJECT FILE BEGIN DAY SHIFT END NIGHT SHIFT FINISH TO START START TO START FINISH TO FINISH START TO FINISH CONFIGURE HARDWARE DOCUMENT TEST RESULTS

5. DEPENDENCY DETERMINATION DEPENDENCY DETERMINATION MANDATORY DEPENDENCY Relationship between activities that is legal, contractual Some times due to physical limitations inherent in the nature of work Also called hard logic Example : Activity 1: Scrap old paint; Activity 2: Apply new paint. DISCRETIONARY DEPENDENCY Based on subject matter expertise in application area and past experience Also called soft logic or preferred logic Discretionary dependencies should be fully documented so that fast tracking options can be explored later in project. Documenting a discretionary dependency as mandatory dependency, erroneously, can result in arbitrary float values in schedule. Example: Activity 1: Paint Interior Wall; Activity 2: Paint Exterior Wall.

6. DEPENDENCY DETERMINATION DEPENDENCY DETERMINATION EXTERNAL DEPENDENCY Involves relationship between project activities and non project activities. Could be beyond the control of project team EXAMPLE: Activity 1: Get townhall approval; Activity 2: Lay foundation INTERNAL DEPENDENCY Fully within control of project team Example: Activity A : Write Code; Activity B: Perform Unit Test

7. LEADS & LAGS Lead means advancing a successor activity by a certain amount of time. Lead could result in shortening of schedule Example: Activity A: Prepare Ground; Activity B: Landscape F –S 3 DAYS LEAD PREPARE GROUND LANDSCAPE LEAD: 3 DAYS 5 DAYS 5 DAYS

8. Lag means delaying successor activity. Lag could extend schedule duration S-S 3 DAYS LAG 5 DAYS PREPARE GROUND LANDSCAPE LAG : 3 DAYS 5 DAYS TOTAL : 5 +3 = 8 DAYS LEADS & LAGS

9. THREE POINT ESTIMATING Single point estimates do not consider uncertainty conditions. Three point estimates combines optimistic, most likely and pessimistic scenarios There are two types of three point estimates THREE POINT ESTIMATING

10. ANALOGOUS ESTIMATING Uses historical data of past similar projects, such as budget, duration, size etc. Adjusts the data based on the known differences of current project complexity Applied when there is limited amount of information Also called as gross value estimating approach Should be used by people with expertise in application knowledge area PARAMETRIC ESTIMATING Uses algorithm based on past projects to estimation durations. Example: No. of labour hours for constructing 1 metre of wall. Uses statistical relationships in past projects THREE POINT ESTIMATING

11. WHEN TO USE

12. RESERVE ANALYSIS – Used to determine amount of contingent and management reserves required in duration estimates. CONTINGENCY RESERVES: For identified, accepted, known risks which is part of cost baseline. (Known Unknown) This duration is estimated for unknown amount of rework Contingency reserve can be removed from individual activity and aggregated. Contingency reserve should be clearly identified in schedule documentation MANAGEMENT RESERVE: An amount of project budget or project schedule held outside of the performance measurement baseline (PMB) for management control purpose, that is reserved for unforeseen work that is within scope of the project. This is also for unknown risks (unknown unknowns) As these are for activities which cannot be scheduled, management reserve is not therefore part of schedule baseline, but is within the overall project duration or project budget. Use of management reserve may require a change to the baseline. RESERVE ANALYSIS

13. Fist of Five voting - The project manager asks the team to show their level of support. This is a method of getting quick vote. 1 finger : No Way. Block proposal. 2 fingers: I have some concerns. We must resolve it before I support it. 3 fingers: I will support this idea. But some concerns. Still will move on. 4 fingers: I support this idea, sounds Good 5 fingers: Absolutely best idea ever ! I will champion it. DECISION MAKING - VOTING

14. S 5 6 2 2 2 F A B C D E 5 F 1 5 6 11 12 13 1 2 3 4 14 18 14 18 12 13 6 11 1 5 10 11 12 13 FREE FLOAT = ff = Earliest start of all successor activities (-) ES of activity(-) Duration of activity TF = 0 FF = 6-1-5=0 TF = 0 FF =12-6-6=0 TF = 0 FF = 14-12-2=0 TF = 0 FF – 19 (?)-14-5=0 TF = 9 FF =3-1-2=0 TF = 9 FF =14-3-2=9 Free float is the amount of time you can delay any activity without delaying the earliest start of any succeeding activity . Notice that it doesn’t mention anything about the final end date of the project or duration. TOTAL FLOAT = tf = LF-EF or LS-ES Total float is the amount of time an activity can be delayed from its early start date without delaying the project finish date. DEVELOP SCHEDULE – TOTAL & FREE FLOATS

15. S 5 6 2 2 2 F A B C D E 5 F 1 5 6 11 12 13 1 2 3 4 14 18 14 18 12 13 6 11 1 5 10 11 12 13 Schedule constraint Causes : Resource levelling, must finish dates, multiple project calendars etc 9 9 POSITIVE TOTAL FLOAT or NEGATIVE TOTAL FLOAT is the difference between schedule constraint and early finish for project. DEVELOP SCHEDULE –POSITIVE & NEGATIVE TOTAL FLOATS

16. RESOURCE OPTIMIZATION RESOURCE LEVELLING Technique applied when Resource is over allocated for more than one activity during the same period or when there is a need to keep resource usage at constant level. Resource levelling can often cause critical path to change Available float is used for levelling resources. W T F S S M 8 8 8 8 W T F S S M 8 8 8 8 BOB BOB BOB Before levelling After levelling

17. M T W T 6 7 5 6 M T W T 6 6 6 6 No predetermined limits fixed Predetermined limit 6 hours fixed within available float RESOURCE SMOOTHING Method to ensure requirement for resource does not exceed certain pre-determined resource limits. It is done only within their total float. Since it is done within available float, schedule will not get delayed and critical path will not change. RESOURCE OPTIMIZATION BEFORE SMOOTHING AFTER SMOOTHING

18. SCHEDULE COMPRESSION FAST TRACKING : Performing activities in parallel. Increases risk of rework and quality. Involves greater coordination among activities being fast tracked. 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 3 4 5 6 7 NORMAL FAST TRACKING HIGH RISK

19. SCHEDULE COMPRESSION CRASHING : Shorten schedule duration by adding resources, Through approving overtime and adding resources. Crashing works only on critical paths. Crashing may increase cost. Crashing works only for activities that effort driven. Compare crashing with fast tracking 1 2 3 4 5 3 4 5 6 7 FAST TRACKING HIGH RISK 1 2 3 4 5 CRASHING HIGH COST

20. ANSWER: OPTION A IS THE LEAST EXPENSIVE PROBLEM IN CRASHING

21. RELEASE PLAN (FEATURES) RELEASE 1 FEATURES Iteration Iteration 1 Iteration 2 Iteration 3 Iteration n ITERATION PLAN FEATURE A FEATURE B FEATURE C FEATURE D USER STORY 1 (20 STORY POINTS ) USER STORY 2 ( 5 STORY POINTS) PRODUCT VISION DRIVES PRODUCT ROADMAP PRODUCT ROADMAP DRIVES RELEASE PLANS RELEASE PLAN ESTABLISHES ITERATIONS ITERATION PLANS SCHEDULE FEATURE DEVELOPMENT PRIORITIZED FEATURES DELIVERED BY USER STORIES (ESTIMATED IN STORY POINTS) TASKS (ESTIMATED IN HOURS) CREATED TO DELIVER USER STORIES PRODUCT ROAD MAP EPICS RELEASE 2 FEATURES RELEASE 3 FEATURES VISION AGILE RELEASE PLANNING TASK: BUSINESS RULES 18 HOURS TASK : U.I.PROTOTYPE 4 HOURS TASK : ACTIVITY DIAGRAM 2 HOURS TASK : REFACTORING 4 HOURS TASK: DATA BASE PROC 3 HOURS

22. PLAN QUALITY MANAGEMENT Benchmarking Involves comparing planned projects with comparable projects to identify best practices and set standards for improvement. Cost of quality Cost of conformance Prevention costs – documenting quality processes, giving right time, tools and investing in training team resources. Appraisal costs – Testing Cost of non conformance Internal failure costs – rework, scrap External failure costs – liability, lost business, warranty costs. Flow Charts Helps anticipate where quality problems could occur and incorporate quality checks. SPIOC model helps establish value chain. Helps establish monetary value of cost of quality.

23. PLAN QUALITY MANAGEMENT Quality & Grade Quality – conformance to requirements Grade – deliverables distinguished based on different technical specifications but having same functional use. Prevention over inspection Prevention is keeping errors out of the process, inspection is keeping errors out of the customers hands Attribute Sampling & Variable sampling Attribute sampling – Results either conform or does not confirm Variable sampling – Results are rated on a continuous scale to measure degree of conformity Tolerances and Control limits – Tolerances – specified range of acceptable limits Control limits – boundaries of common variation in a statistically stable process

24. PLAN QUALITY MANAGEMENT Logical data model Logical data model visually lays down organization’s data. This is independent of any technology Used to identify data integrity issues Matrix diagram Helps in identifying quality metrics for any quality management system Different quality attributes could be caused by different factors. The attributes and factors are laid down as rows and columns to indicate strength of relationship. Mind mapping Useful for rapid gathering information about quality requirements, constraints, dependencies and relationships.

25. MANAGE QUALITY Affinity diagram – shows potential causes of defects into groups showing areas that should be focussed most. Histogram – represents numerical defects data in histograms. Scatter diagram – shows relationship between process on one hand and quality defect on the other hand. DfX – technical guidelines that will help optimize specific aspects of design.

26. CONTROL QUALITY Check list – used to verify that quality processes have been performed or quality attributes are present in deliverables. Check sheet – also called Tally sheet – Structured template used to collect defect data. Statistical sampling – choosing a part of the population of deliverables for inspection. Questionnaires & Surveys –Used to gather customer feedback after deployment or delivery of a product. Control Charts – Used to verify stability and consistency of a process. Out of order – Process is out of order if 7 consecutive values occur on one side of the mean (or) if any value touches control limit. When process is out of order, special cause should be investigated. When values occur on both sides of the mean in random or chance, this is normal and can be ignored.

27. RESOURCE MANAGEMENT Resource management methods Lean Management – based on 3 principles Eliminate waste Deliver value from customer’s perspective Continuous improvement Just-in-time Manufacturing Production is done just for demand in hand and not in anticipation of need. 3 of the 7 forms of waste, viz;, over production, waiting time and excess inventory is avoided. Total Productive Maintenance Operators of machines maintain their own equipment. Traditional barriers between operations teams and maintenance crew is removed. Benefits: No breakdowns, no small stops, No defects, No accidents.

28. RESOURCE MANAGEMENT Resource management methods Theory of constraints In any production process there will be constraints TOC focusses on removing these constraints by focussing on the rest of the processes The rest of the processes are subordinated to remove the constraints If it still does not work, only then add capacity, no automatically. Repeat the process until all constraints are released. Constraints could be lack of machine capacity, lack of training, etc, that limits system capacity.

29. RESOURCE MANAGEMENT Tuckman’s Ladder Forming – Team members meet and learn about their roles – Team members tend to be independent and not open Storming – Team members start work on projects, discuss management and technical approaches. Team members must collaborate and be open to different perspectives, else will become counterproductive. Norming – team members start to worth together and support each other. Performing – Teams are well organized, inter dependent and work through issues smoothly and effectively. Adjourning – Team comples the work and moves on.

30. MARKS IN YOUR POCKET A BRAIN DUMP FOR PMP STUDIES Pic credit: Jenny goldstein COST MANAGEMENT

31. TRIANGULAR DISTRIBUTION (P + ML + O)/3 EXAMPLE You are driving to the airport to catch the 10 am flight to New York. You will be leaving to airport by 7 am. You are confident of reaching airport in 60 minutes. If the traffic is light you may reach there in 30 minutes. If there are too many vehicles on the road it is likely to take even 120 minutes. What is the expected time of your arrival at airport based on three point estimate (triangular distribution) ANSWER (120 + 60+ 30) /3 = 210/3 = 70 EXPECTED TIME OF ARRIVAL : 8.10 AM SCHEDULE MANAGEMENT

32. EXAMPLE You are driving to the airport to catch the 10 am flight to New York. You will be leaving to airport by 7 am. You are confident of reaching airport in 60 minutes. If the traffic is light you may reach there in 30 minutes. If there are too many vehicles on the road it is likely to take even 120 minutes. What is the expected time of your arrival at airport based on three point estimate (triangular distribution) ANSWER (120 +(4*60)+ 30) /6 = 390/6 = 65 EXPECTED TIME OF ARRIVAL : 8.05 AM PERT OR BETA DISTRIBUTION (P + (4*ML) + O)/6 SCHEDULE MANAGEMENT

33. STANDARD DEVIATION INDICATES THE RANGE OF VALUES THAT DEVIATE FROM THE MEAN (P-O)/6 EXAMPLE From the following values ascertain standard deviation Pessimistic 120; Optimistic 60; Most likely 30 The PERT is 70 ANSWER (120-30)/6 = 90/6 = 15 Standard Deviation = 70 +/- 15 SCHEDULE MANAGEMENT

34. S 5 6 2 2 2 F A B C D E 5 F 1 5 6 11 12 13 1 2 3 4 14 18 14 18 12 13 6 11 1 5 10 11 12 13 TF = 0 FF = 6-1-5=0 TF = 0 FF =12-6-6=0 TF = 0 FF = 14-12-2=0 TF = 0 FF – 19 (?)-14-5=0 TF = 9 FF =3-1-2=0 TF = 9 FF =14-3-2=9 FREE FLOAT = ff = Earliest start of all successor activities (-) ES of activity (-) Duration of activity NOTICE DIFFERENCE: Free float is the amount of time you can delay any activity without delaying the earliest start of any succeeding activity . It doesn’t mention anything about the final end date of the project or duration. TOTAL FLOAT = tf = LF-EF or LS-ES Total float is the amount of time an activity can be delayed from its early start date without delaying the project finish date. SCHEDULE MANAGEMENT

35. RANGE – BASIS OF ESTIMATES A range of 2 weeks +/- 2 days assuming a 5 day work week gives a range of __ ANSWER At least 8 days and not more than 12 days EXAMPLE SCHEDULE MANAGEMENT

36. 1 2 3 4 5 4 3 2 1 ES AT AC PV PD SV = EV-PV CV =EV-AC SPI(t) = ES/AT EV EAC (t) = PD/SPI BAC $ COST MANAGEMENT You must be able to interpret these lines : Planned value Earned Value Actual Cost BAC Earned Schedule Actual Time Planned Duration

37. FORMULAS CV = EV – AC CPI = EV/AC SV = EV – PV SPI = EV/PV EAC = BAC/CPI (If CPI is expected to be same for remainder project) EAC = AC (BAC-EV) (If future work is expected to be accomplished at planned rate) EAC = AC + (BOTTOM UP RE-ESTIMATE) (If actual plan is no longer valid) EAC = AC +(BAC-EV)/ (CPI * SPI) (When both CPI and SPI is expected to influence future performance) VAC = BAC – EAC TCPI = (BAC-EV)/(EAC-AC) TCPI = (BAC-EV)/BAC-AC) ABBREVIATIONS USED PV= Authorized budget for a given quantum of work. EV= Work performed measured against planned value (budget authorized) for that quantum of work. AC = Amount expended CV= Cost Variance CPI= Cost performance index SV = Schedule variance SPI = Schedule Performance index EAC = Estimate at Completion AC = Actual Cost VAC = Variance at completion TCPI = To Complete Performance Index COST MANAGEMENT-EVM

38. ABBREVIATIONS USED SAC – Schedule at Completion. This is the original planned completion date of the project. SAC is also referred as PD or Planned duration. ES – Duration from the beginning of the project till current date when earned value’s equivalent date in planned value will be established. AT – This is the duration from beginning of the project to status date. PAR – Planned Accomplishment Rate which is the average planned value period schedule period. PAR = BAC / SAC or BAC / PD SV can be transformed to time units by dividing SV by PAR SV(T) = SV/PAR SPI(T) = ES/AT COST MANAGEMENT - ES

39. EARNED VALUE MANAGEMENT CV POSITIVE – UNDER BUDGET NEGATIVE – OVER BUDGET ZERO – ON TARGET CPI >1 – UNDER BUDGET =1 – AS PLANNED <1 – OVER BUDGET EARNED SCHEDULE SV >1 AHEAD OF SCHEDULE =1 ON SCHEDULE <1 BEHIND SCHEDULE SPI >1 AHEAD OF SCHEDULE =1 ON SCHEDULE <1 BEHIND SCHEDULE COST MANAGEMENT

40. FORMULAS SV (t) = ES – AT SPI (t) = ES/AT IEAC (t) = PD/SPI (t) (when current SPI (t) is expected to continue. IEAC (t) AT + (PD-ES)/SPI(t) (when initially planned rate of performance will apply for future period) VAC (t) = PD – EAC (t) ETC = EAC (t) - PD ABBREVIATIONS USED ES = Earned Schedule. Amount of schedule work earned on a reference date. AT = Actual time. Duration from beginning of project till status date. PAR = BAC/ PD. Gives average PV per time period, called Planned Accomplishment Rate. PD – Planned Duration IEAC (t) Independent Estimate at Completion ( ttime ). VAC (t) = Variance at completion Time estimate is based on time, not cost. COST MANAGEMENT

41. RANGE – BASIS OF ESTIMATES A range of 2 weeks +/- 2 days assuming a 5 day work week gives a range of __ ANSWER At least 8 days and not more than 12 days EXAMPLE COST MANAGEMENT

42. COST MANAGEMENT Rough Order of Magnitude estimate (ROM) = -25% / + 75% (Initiation stage of project) Definitive range of estimates -5% / + 10% (when activity level details are understood)

43. CHANNELS OF COMMUNICATIONS C = N (N-1)/2 COMMUNICATIONS MANAGEMENT

44. EMV = PROBABILITY * IMPACT RISK MANAGEMENT

45. CONTRACTS – COST REIMBURSABLE COST REIMBURSABLE CONTRACTS All seller’s cost are reimbursed by the buyer, Seller’s profit stated as Fee is included. Cost is unknown at the beginning Buyer has the most cost risk, so generally bad for any buyer Used when precise description of goods or services cannot be developed Seller is responsible for detailing the scope of work

46. CONTRACTS – COST REIMBURSABLE CPFF : Actual Cost = $ 100,000 Fee = $ 10,000 Total buyer pays to Seller = 110,000 CPPC : Actual Cost = $ 100,000 Fee = 25% of the cost Total buyer pays to Seller = 100,000 + 25% of 100,000 = 125,000 Cost Plus Incentive Fee (CPIF) Target Cost: $100,000 Fee: $10,000 Share Ratio: 80/20 (Buyer/Seller) Actual Cost + Fee + ((Target Cost - Actual Cost) * Share Ratio) Scenario 1: Actual Cost: $80,000 Seller receives: $80,000 + $10,000 + (20,000 * 20%) = $ 94,000 Scenario 2 : If Actual Cost: $120,000 Seller receives: $120,000 + $10,000 + (-20,000 * 20%) = $126,000 CPAF – Cost Plus Award Fee Similar with CPIF, but the bonus is based on meeting specified performance metrics Based on sole discretion of buyer, generally not subject to appeals.

47. INCENTIVE WITH CEILING (Fixed Price, Incentive fee with ceiling) Target cost $ 5.00 M Target fee $ 1.00 M Target price $ 5.00 + $ 1.00 = $ 6.00 M Ceiling price $ 8.00 M Buyers/Sellers share ratio 80:20 Point of Total Assumption = Target cost + ( (Ceiling price - Target Price)*Buyers Share 5.00 + ((8.00 – 6.00)*80%) =5.00 + (2.00*80%) = 5.00 +1.60 = 6.60 Point of Total Assumption is $ 6.60 M Buyer need not pay beyond this limit. Seller assumes 100 % responsibility from this point. Target cost 5.00 Target fee 1.00 Target price 6.00 CEILING 8.00 OVERRUN PTA = 5 + (8.00 – 6.00) / 0.80 = 6.60 SELLER TAKES EVERY $ FROM THIS POINT

48. 49 CONTRACTS – FIXED PRICE FIXED PRICE CONTRACT The most common form of contract Appropriate when buyer can describe the scope of work Has the least cost risk for the buyer Types of FP contracts: FFP – Firm Fixed price FPIF – Fixed Price Incentive Fee with ceiling ( we will discuss Point of Total Assumption) FP-EPA – Fixed Price Economic Price Adjustment

49. CONTRACTS – FIXED PRICE FIXED PRICE FFP – Firm Fixed price The most common form of contract Appropriate when buyer can describe the scope of work Has the least cost risk for the buyer FPIF – Fixed Price Incentive Fee ( FIXED BECAUSE OF CEILING PRICE – see PTA slide) Allow flexibility. Permits deviation from a target price. Incentives for performing within targeted price, schedule or technical performance metrics. FP-EPA – Fixed Price Economic Price Adjustment When contracts are for long term Or When foreign currency is involved When allowance needs to be provided for inflation or cost increase beyond supplier’s control Allow for changes to final price based on economic indicators.

50. 51 CONTRACTS - HYBRID TIME & MATERIAL CONTRACT Sometimes called Unit Price The price is per hour or per item Usually used for small amounts A combination of Fixed Price and Cost Reimbursable Fixed price per item The total cost is unknown, varying with the amount of materials or time

51. CONTRACTS T&M CPFF CPAF CPIF FPIF FPEPA FFP Buyer Low High Seller Low High Risk by Type of Contract – Buyer Vs Seller

52. PROJECT PROCUREMENT MANAGEMENT - AGILE In traditional projects, scope can be determined early and SOW can also be drawn up at that time for the procurement work packages. In agile projects, scope is determined only at the beginning of iteration and light weight SOWs are drawn. Fitness for business purpose and not original specifications, will drive acceptance criteria. PARADIGM SHIFT

53. PROJECT PROCURMENT MANAGEMENT CONSIDERATIONS FOR AGILE Specific sellers may be used to form an agile team. Shared risk-reward models are used. In larger projects, a stable approach may be used for some deliverables and an adaptive approach for others. A Master Services Agreement (MSA) for the overall work with appendices for adaptive work could be used. Changes to adaptive work can progress without impacting overall contract. CONTRACT Master service agreement Part a: features (subject to review & change) Part b: Parties involved, terms & conditions PART A: Schedule of services PART B: Schedule of services Statement of work Statement of work Statement of work

54. 55 Contract Type Description Capped Time and Materials Contracts Works like traditional Time and Materials contracts. However, an upper limit is set on customers’ payment. Customers pay up for the capped cost limit. Suppliers benefit in case of early time-frame changes.(*) Incremental Delivery Contracts Customers review contracts during the contract life cycle at pre-negotiated designated points of the contract lifecycle. Customers can make required changes, continue or terminate the project at these points. Other Agile Contract Types *Money for nothing, change for free

55. INCENTIVE WITH CEILING (Fixed Price, Incentive fee with ceiling) Target cost $ 5.00 M Target fee $ 1.00 M Target price $ 5.00 + $ 1.00 = $ 6.00 M Ceiling price $ 8.00 M Buyers/Sellers share ratio 80:20 Point of Total Assumption = Target cost + ( (Ceiling price - Target Price)*Buyers Share 5.00 + ((8.00 – 6.00)*80%) =5.00 + (2.00*80%) = 5.00 +1.60 = 6.60 Point of Total Assumption is $ 6.60 M Buyer need not pay beyond this limit. Seller assumes 100 % responsibility from this point. Target cost 5.00 Target fee 1.00 Target price 6.00 OVERRUN SELLER TAKES EVERY $ FROM THIS POINT CEILING 8.00 PTA = 5 + (8.00 – 6.00) / 0.80 = 6.60