Professional and Social Responsibility
"If someone with a PMP certification does not act professionally and ethically, it diminishes the credibility of the certification and the practice of project management." states PMP Exam Prep. A project manager must remain responsible, respectful, fair, and honest throughout the entire project life.
Responsibility in regards to the ownership of decisions and actions means making decisions based off the interests of the company, as well as only accepting work you are qualified to do, protect information, and report unethical behavior. Respect includes, "maintaining a mutual cooperation attitude, respecting cultural differences, engaging in good faith negotiations, being direct in dealing with conflict, and not using your power or position to influence others for your own benefit." lists PMP Exam Prep.
Fairness does not include bribery, as it is unethical. If a conflict of interest arises, "you should disclose it to those affected and let them decide how to proceed." suggests PMP Exam Prep. Discrimination should be avoided and dealt with in the proper manner if it should so arise. Fairness includes treating everyone fairly. The last point listed under the fairness category is to not misuse your position. Your position in the project or company should not be used for personal or company gain.
Honesty in relation to Project Management involves accurately understanding the truth and situations, as well as being completely truthful. How can a team put trust in a project if the project manager is stretching the truth or flat out lying. PMP Exam Prep ends honesty with, "The consequences of being untruthful are less accurate information form others and poor cooperation."
Wednesday, November 2, 2011
PMP Exam Prep - Chapter 12
Procurement Management
The procurement management process includes Plan Procurements, Conduct Procurements, Administer Procurements, and Close Procurements. All of these processes occur in different groups. Planning procurements is done during the planning process group, while conducting procurements is done during the executing process group. Administering procurements is done during the monitoring and controlling process group, whereas the closing procurements process is done during the closing process group.
By PMP Exam Prep definition, "Procurement is a formal process to obtain goods and services." A project manager is usually not the one to handle things like managing the procurement process, but it is important for the project manager to understand all aspects of the procurement process. If you are familiar with the procurement process you will know what is happening, can possibly help the procurement manager, and could more easily identify risks. The project manager should be assigned to both parties in the procurement process, the seller's and buyer's sides. It is suggested in PMP Exam Prep to place yourself in the shoes of the buyer if no point of view is clearly defined. PMP Exam Prep also provides very useful tips on answering procurement questions:
Inputs to the Procurement Management Process include, "Enterprise environmental factors, organizational process assets, procurement manager assigned, scope baseline, risk register, procurements already in place, identification of resources not available within the performing organization, project schedule, initial cost estimates for work to be procured, and the cost baseline for the project.", lists PMP Exam Prep.
The Plan Procurements process is part of the planning process group and creates a procurement management plan. A Make-or-Buy analysis allows the company to determine if they would like to do the work themselves, or if they should outsource. If they outsource, it does not have to include all work, it can include portions of the project work. If a company is trying to decide to buy or lease, they can use a formula to calculate the decision. PMP Exam Prep provides the following formula in a buy-or-lease situation where the daily lease cost is $120 and the investment cost is $1,000 plus the daily cost of $20. D represents the number of days, $120D = $1, 000 + $20D. In this situation D would equal 10, so after 10 days the costs would be the same. That is when a company would decide which process would be the most cost efficient for them.
There are three types of procurement statements of work; performance, functional, and design. A performance SOW is about the final product and what it should accomplish. The functional SOW provides a statement of the end result, whereas the design SOW details the work to be done. PMP Exam Prep suggests remembering contract types in three broad categories, "Fixed price (FP), Time and Material (T&M), and cost reimbursable (CR)." A fixed price contract is the most common contract and it is used to acquire services or goods with specific requirements. A Fixed Price Incentive Fee contract falls under the fixed price contract category and includes a target cost, target fee, target price, sharing ratio, ceiling price, actual cost, final fee, and final price. A fixed price award fee differs from a FPIF, in that it includes a predetermined award amount. Fixed Price Economic Price Adjustments create a contract that includes an economic price adjustment. A purchase order is a simple contract that requires a signature of acceptance, in order for it to become an official contract.
A Time and Material contract is best used for small dollar amounts, as it is not based on performance. Cost Reimbursable contracts are used when, "the exact scope of work is uncertain and, therefore, costs cannot be estimated accurately enough to effectively use a fixed price contract." informs PMP Exam Prep. Privity is a word that PMP Exam Prep suggests remembering, as it is a contractual relationship. So if my company (A) were hired by company B, and I hired company C, company B could not discuss things with company C, they would need to go through my company (A).
The Conduct Procurements process is done during the executing process, as it "involves getting the procurement documents that were created in the Plan Procurements process to the sellers, answering the sellers' questions, having them prepare responses, and reviewing the responses to select a seller." explains PMP
A seller may be selected through a weighting system, independent estimates, a screening system, past performance history, or presentations. Negotiations may be necessary in the procurement process and should be focused on getting a fair price, while developing a "good relationship with the seller." states PMP Exam Prep. A contract should create an agreement between both parties. The purpose of a contract is to, "define roles and responsibilities, make things legally binding, and mitigate or allocate risk." explains PMP Exam Prep.
Administering procurements happens during monitoring and controlling. This process involves watching over the buyer and seller to make sure they are abiding by the contract. Any conflict or change in procurement must be approved by the procurement manager, not the project manager. The project manager on the buyer's team will perform a procurement performance review to make sure the procurement manager is on track, and if not, will make suggestions for improvement. Records of the contract should be kept, as it is a legal document and may be needed for future reference. "Contract interpretation is based on an analysis of the intent of the parties to the contract and a few guidelines." defines PMP Exam Prep. Termination of the contract is usually done by the buyer, for convenience or cause. Terminating a contract has lasting effects on a project and negotiations can continue even after the work is stopped.
The Close Procurements process is last in the Procurement Management process and occurs during the closing process group. PMP Exam Prep explains, "Procurements are closed when a contract is completed or when a contract is terminated before the work is completed." During procurement closure all work must be verified, a final settlement must be made, all finances must be closed, and the procurement process must be reviewed. "Record updates, final contract performance reporting, lessons learned, procurement file, and other." are a few more things involved in the close procurements process according to PMP Exam Prep. The procurement is official closed once formal acceptance and closure are made. The seller must receive a formal "sign-off" from the buyer, showing their acceptance of the products of procurement.
The procurement management process includes Plan Procurements, Conduct Procurements, Administer Procurements, and Close Procurements. All of these processes occur in different groups. Planning procurements is done during the planning process group, while conducting procurements is done during the executing process group. Administering procurements is done during the monitoring and controlling process group, whereas the closing procurements process is done during the closing process group.
By PMP Exam Prep definition, "Procurement is a formal process to obtain goods and services." A project manager is usually not the one to handle things like managing the procurement process, but it is important for the project manager to understand all aspects of the procurement process. If you are familiar with the procurement process you will know what is happening, can possibly help the procurement manager, and could more easily identify risks. The project manager should be assigned to both parties in the procurement process, the seller's and buyer's sides. It is suggested in PMP Exam Prep to place yourself in the shoes of the buyer if no point of view is clearly defined. PMP Exam Prep also provides very useful tips on answering procurement questions:
- "Contracts require formality."
- "All product and project management requirements for the procurement work should be specifically stated in the contract."
- "If it is not in the contract, it can only be done if a formal change order to the contract is issued."
- "If it is in the contract, it must be done or a formal change order must be approved by both parties."
- "Changes must be submitted and approved in writing."
- "Contracts are legally binding; the seller has no choice but to perform as agreed in the contract."
- "Contracts should help diminish project risk."
- "Most governments back all contracts that fall within their jurisdiction by providing a court system for dispute resolution."
Inputs to the Procurement Management Process include, "Enterprise environmental factors, organizational process assets, procurement manager assigned, scope baseline, risk register, procurements already in place, identification of resources not available within the performing organization, project schedule, initial cost estimates for work to be procured, and the cost baseline for the project.", lists PMP Exam Prep.
The Plan Procurements process is part of the planning process group and creates a procurement management plan. A Make-or-Buy analysis allows the company to determine if they would like to do the work themselves, or if they should outsource. If they outsource, it does not have to include all work, it can include portions of the project work. If a company is trying to decide to buy or lease, they can use a formula to calculate the decision. PMP Exam Prep provides the following formula in a buy-or-lease situation where the daily lease cost is $120 and the investment cost is $1,000 plus the daily cost of $20. D represents the number of days, $120D = $1, 000 + $20D. In this situation D would equal 10, so after 10 days the costs would be the same. That is when a company would decide which process would be the most cost efficient for them.
There are three types of procurement statements of work; performance, functional, and design. A performance SOW is about the final product and what it should accomplish. The functional SOW provides a statement of the end result, whereas the design SOW details the work to be done. PMP Exam Prep suggests remembering contract types in three broad categories, "Fixed price (FP), Time and Material (T&M), and cost reimbursable (CR)." A fixed price contract is the most common contract and it is used to acquire services or goods with specific requirements. A Fixed Price Incentive Fee contract falls under the fixed price contract category and includes a target cost, target fee, target price, sharing ratio, ceiling price, actual cost, final fee, and final price. A fixed price award fee differs from a FPIF, in that it includes a predetermined award amount. Fixed Price Economic Price Adjustments create a contract that includes an economic price adjustment. A purchase order is a simple contract that requires a signature of acceptance, in order for it to become an official contract.
A Time and Material contract is best used for small dollar amounts, as it is not based on performance. Cost Reimbursable contracts are used when, "the exact scope of work is uncertain and, therefore, costs cannot be estimated accurately enough to effectively use a fixed price contract." informs PMP Exam Prep. Privity is a word that PMP Exam Prep suggests remembering, as it is a contractual relationship. So if my company (A) were hired by company B, and I hired company C, company B could not discuss things with company C, they would need to go through my company (A).
The Conduct Procurements process is done during the executing process, as it "involves getting the procurement documents that were created in the Plan Procurements process to the sellers, answering the sellers' questions, having them prepare responses, and reviewing the responses to select a seller." explains PMP
A seller may be selected through a weighting system, independent estimates, a screening system, past performance history, or presentations. Negotiations may be necessary in the procurement process and should be focused on getting a fair price, while developing a "good relationship with the seller." states PMP Exam Prep. A contract should create an agreement between both parties. The purpose of a contract is to, "define roles and responsibilities, make things legally binding, and mitigate or allocate risk." explains PMP Exam Prep.
Administering procurements happens during monitoring and controlling. This process involves watching over the buyer and seller to make sure they are abiding by the contract. Any conflict or change in procurement must be approved by the procurement manager, not the project manager. The project manager on the buyer's team will perform a procurement performance review to make sure the procurement manager is on track, and if not, will make suggestions for improvement. Records of the contract should be kept, as it is a legal document and may be needed for future reference. "Contract interpretation is based on an analysis of the intent of the parties to the contract and a few guidelines." defines PMP Exam Prep. Termination of the contract is usually done by the buyer, for convenience or cause. Terminating a contract has lasting effects on a project and negotiations can continue even after the work is stopped.
The Close Procurements process is last in the Procurement Management process and occurs during the closing process group. PMP Exam Prep explains, "Procurements are closed when a contract is completed or when a contract is terminated before the work is completed." During procurement closure all work must be verified, a final settlement must be made, all finances must be closed, and the procurement process must be reviewed. "Record updates, final contract performance reporting, lessons learned, procurement file, and other." are a few more things involved in the close procurements process according to PMP Exam Prep. The procurement is official closed once formal acceptance and closure are made. The seller must receive a formal "sign-off" from the buyer, showing their acceptance of the products of procurement.
Tuesday, November 1, 2011
PMP Exam Prep - Chapter 11
Risk Management
The risk management process includes six processes. Plan risk management, identify risks, perform qualitative risk analysis, perform quantitative risk analysis, and plan risk response all occur in the planning process group. Monitor and control risks is the odd process out in risk management, as it occurs in the monitoring and controlling process group. "Through risk management, you work to increase the probability and impact of opportunities on the project (positive events), while decreasing the probability and impact of threats to the project (negative events)." defines PMP Exam Prep. Risk management deals with inputs in coordination with the entire risk management process, and inputs to individual processes involved in risk management. An example PMP Exam Prep provides as an input question is, "What do I need before I can begin..?" and an output question is, "What will I have when I am done with..?" Simple enough. The list of risk management processes I listed above should be remembered in that order, as they are done in that sequence.
Plan risk management is the first of the risk management processes. You need to plan out the structure of risk management before using it. Having a layout of the execution of risk management is going to be beneficial to the project as it creates a clear understanding for every person involved. The output of planning risk management is a risk management plan that may include, "Methodology, roles and responsibilities, budgeting, timing, risk categories, definitions of probability and impact, stakeholder tolerances, reporting formats, and tracking." lists PMP Exam Prep. A list of risk categories should be created to ensure no areas of risk are missed. PMP Exam Prep gives multiple examples of ways to classify risk, for example internal and external, specific categories, or by source. Business risk and pure risk are the two main types of risk listed in PMP Exam Prep.
In the planning process group, under risk management, is identifying risks. Identifying risks mainly occurs in the planning phase, but has the possibility to occur throughout the project. PMP Exam Prep suggests, "Risks should be continually reassessed." Documentation reviews is a helpful tool in identifying risks. Brainstorming, Delphi technique, interviewing, and root cause analysis are information gathering techniques that can also be helpful in the identifying risks process. Strength, Weaknesses, Opportunities, and Threats (SWOT) analysis, checklist analysis, assumptions analysis, and diagramming techniques are a few other risk identification techniques PMP Exam Prep provides. The risk register is the final output of the identify risks process and includes, "List of risks, list of potential responses, root causes of risk, and updated risk categories." lists PMP Exam Prep.
Perform Qualitative Risk Analysis occurs in the planning process group and in the risk management knowledge area, of course. This process involves figuring out which risks warrant a response and then creating a list of them. To do this you must rate the probability of each risk occurring and rate the impact of each risk occurring. This can be done using a standard 1 to 10 scale. A probability and impact matrix can be used to rate each risk, with probability on one side and impact on the lower portion of the graph. This matrix is useful in that it can be recycled throughout the project. A risk data quality assessment assesses the "accuracy and reliability of the data and determines whether more research is necessary to understand the risk before a qualitative assessment can be done." defines PMP Exam Prep. Categorizing risks can be a helpful tool in performing qualitative risk analysis, as it groups risks together and therefore allows you to eliminate an entire cause, instead of individual risks. A risk urgency assessment classifies risks on their urgency. The risk's probability and impact rating, as well as it's urgency can be helpful to a project manager in determining which risks are more severe than others.
As stated previously, the output of the identify risks process is a risk register, whereas the output of the perform qualitative risk analysis is updates to the risk register. Once qualitative risk analysis is complete, the following can be added to the risk register. "Risk rating for the project compared to other projects, list of prioritized risks and their probability and impact ratings, risks grouped by categories, list of risks for additional analysis and response, list of risks requiring additional analysis in the near term, watchlist, and trends." lists PMP Exam Prep.
The forth process in the risk management knowledge area is Perform Quantitative Risk Analysis. According to PMP Exam Prep, this process can be skipped over if it is not worth the time and money of your project. If you do perform quantitative risk analysis, PMP Exam Prep suggests remembering the following actions:
Like performing qualitative risk analysis, performing quantitative risk analysis results in the output of updates to risk register. Once quantitative risk analysis is complete, the risk register will be updated with, "Prioritized list of quantified risks, amount of contingency time and cost reserves needed, possible realistic and achievable completion dates and project costs, with confidence levels, versus the time and cost objectives for the project, the quantified probability of meeting project objectives, and trends in quantitative risk analysis." lists PMP Exam Prep.
The Plan Risk Responses process is part of the planning process group. It focuses on what should be done to take care of the risks involved. "Avoid, mitigate, or transfer." are the three risk response strategies PMP Exam Prep lists for threats. As for response strategies for opportunities, PMP Exam Prep includes, "Exploit (the reverse of avoid), enhance (the reverse of mitigate), or share." Accept is the one strategy for threats and opportunities.
The Plan Risk Responses process comes with two outputs: risk register updates and project management plan and project document updates. Updates to the risk register, once planning risk responses is complete, include, "Residual risks, contingency plans, risk response owners, secondary risks, risk triggers, contracts, fallback plans, and reserves (contingency)" lists PMP Exam Prep.
Monitor and Control Risks is the last process in Risk Management and it falls into the monitoring and controlling process group. Monitoring and controlling risks includes many processes, including noticing new risks and creating new responses. In this process you are monitoring the effectiveness of the risk management processes and correcting them, or taking action, when need be. Workarounds, risk reassessments, risk audits, reserve analysis, status meetings, and closing of risks that are no longer applicable are all part of the Monitor and Control Risks process and should be remembered. Workarounds are "unplanned responses developed to deal with the occurrence of unanticipated events or problems on a project." defines PMP Exam Prep. Reserve analysis is checking the amount of reserve available, and possibly, how much may be needed. Closing risks allows the team to focus on present risks. Monitoring and controlling risks results in risk register, project management plan, project document and organizational process assets updates, and change requests, recommended preventive and corrective actions.
Many people make mistakes when it comes to risk management. A few of these errors listed in PMP Exam Prep include, "risk identification ending too soon or being completed without much knowledge of the project, contracts being signed long before risks to the project are discussed, project managers not explaining the risk management process to their team during project planning, or the processes of Identify Risks through Perform Quantitative Risk Analysis are blended, resulting in risks that are evaluated or judged as they come to light." The last error, "decreases the number of total risks identified and causes people to stop participating in risk identification." reports PMP Exam Prep.
The risk management process includes six processes. Plan risk management, identify risks, perform qualitative risk analysis, perform quantitative risk analysis, and plan risk response all occur in the planning process group. Monitor and control risks is the odd process out in risk management, as it occurs in the monitoring and controlling process group. "Through risk management, you work to increase the probability and impact of opportunities on the project (positive events), while decreasing the probability and impact of threats to the project (negative events)." defines PMP Exam Prep. Risk management deals with inputs in coordination with the entire risk management process, and inputs to individual processes involved in risk management. An example PMP Exam Prep provides as an input question is, "What do I need before I can begin..?" and an output question is, "What will I have when I am done with..?" Simple enough. The list of risk management processes I listed above should be remembered in that order, as they are done in that sequence.
Plan risk management is the first of the risk management processes. You need to plan out the structure of risk management before using it. Having a layout of the execution of risk management is going to be beneficial to the project as it creates a clear understanding for every person involved. The output of planning risk management is a risk management plan that may include, "Methodology, roles and responsibilities, budgeting, timing, risk categories, definitions of probability and impact, stakeholder tolerances, reporting formats, and tracking." lists PMP Exam Prep. A list of risk categories should be created to ensure no areas of risk are missed. PMP Exam Prep gives multiple examples of ways to classify risk, for example internal and external, specific categories, or by source. Business risk and pure risk are the two main types of risk listed in PMP Exam Prep.
In the planning process group, under risk management, is identifying risks. Identifying risks mainly occurs in the planning phase, but has the possibility to occur throughout the project. PMP Exam Prep suggests, "Risks should be continually reassessed." Documentation reviews is a helpful tool in identifying risks. Brainstorming, Delphi technique, interviewing, and root cause analysis are information gathering techniques that can also be helpful in the identifying risks process. Strength, Weaknesses, Opportunities, and Threats (SWOT) analysis, checklist analysis, assumptions analysis, and diagramming techniques are a few other risk identification techniques PMP Exam Prep provides. The risk register is the final output of the identify risks process and includes, "List of risks, list of potential responses, root causes of risk, and updated risk categories." lists PMP Exam Prep.
Perform Qualitative Risk Analysis occurs in the planning process group and in the risk management knowledge area, of course. This process involves figuring out which risks warrant a response and then creating a list of them. To do this you must rate the probability of each risk occurring and rate the impact of each risk occurring. This can be done using a standard 1 to 10 scale. A probability and impact matrix can be used to rate each risk, with probability on one side and impact on the lower portion of the graph. This matrix is useful in that it can be recycled throughout the project. A risk data quality assessment assesses the "accuracy and reliability of the data and determines whether more research is necessary to understand the risk before a qualitative assessment can be done." defines PMP Exam Prep. Categorizing risks can be a helpful tool in performing qualitative risk analysis, as it groups risks together and therefore allows you to eliminate an entire cause, instead of individual risks. A risk urgency assessment classifies risks on their urgency. The risk's probability and impact rating, as well as it's urgency can be helpful to a project manager in determining which risks are more severe than others.
As stated previously, the output of the identify risks process is a risk register, whereas the output of the perform qualitative risk analysis is updates to the risk register. Once qualitative risk analysis is complete, the following can be added to the risk register. "Risk rating for the project compared to other projects, list of prioritized risks and their probability and impact ratings, risks grouped by categories, list of risks for additional analysis and response, list of risks requiring additional analysis in the near term, watchlist, and trends." lists PMP Exam Prep.
The forth process in the risk management knowledge area is Perform Quantitative Risk Analysis. According to PMP Exam Prep, this process can be skipped over if it is not worth the time and money of your project. If you do perform quantitative risk analysis, PMP Exam Prep suggests remembering the following actions:
- "Further investigate the highest risks on the project."
- "Determine the type of probability distribution that will be used, such as triangular, normal, beta, uniform, or log normal distributions."
- "Perform sensitivity analysis to determine which risks have the most impact on the project."
- "Determine how much quantified risk the project has through expected monetary value analysis or Monte Carlo analysis."
- "Is usually done with a computer based program because of the intricacies of the calculations."
- "Evaluates the overall risk in the project."
- "Determines the probability of completing the project on any specific day, or for any specific cost."
- "Takes into account path convergence."
- "Translates uncertainties into impacts to the total project."
- "Can be used to assess cost and schedule impacts."
- "Results in a probability distribution."
Like performing qualitative risk analysis, performing quantitative risk analysis results in the output of updates to risk register. Once quantitative risk analysis is complete, the risk register will be updated with, "Prioritized list of quantified risks, amount of contingency time and cost reserves needed, possible realistic and achievable completion dates and project costs, with confidence levels, versus the time and cost objectives for the project, the quantified probability of meeting project objectives, and trends in quantitative risk analysis." lists PMP Exam Prep.
The Plan Risk Responses process is part of the planning process group. It focuses on what should be done to take care of the risks involved. "Avoid, mitigate, or transfer." are the three risk response strategies PMP Exam Prep lists for threats. As for response strategies for opportunities, PMP Exam Prep includes, "Exploit (the reverse of avoid), enhance (the reverse of mitigate), or share." Accept is the one strategy for threats and opportunities.
The Plan Risk Responses process comes with two outputs: risk register updates and project management plan and project document updates. Updates to the risk register, once planning risk responses is complete, include, "Residual risks, contingency plans, risk response owners, secondary risks, risk triggers, contracts, fallback plans, and reserves (contingency)" lists PMP Exam Prep.
Monitor and Control Risks is the last process in Risk Management and it falls into the monitoring and controlling process group. Monitoring and controlling risks includes many processes, including noticing new risks and creating new responses. In this process you are monitoring the effectiveness of the risk management processes and correcting them, or taking action, when need be. Workarounds, risk reassessments, risk audits, reserve analysis, status meetings, and closing of risks that are no longer applicable are all part of the Monitor and Control Risks process and should be remembered. Workarounds are "unplanned responses developed to deal with the occurrence of unanticipated events or problems on a project." defines PMP Exam Prep. Reserve analysis is checking the amount of reserve available, and possibly, how much may be needed. Closing risks allows the team to focus on present risks. Monitoring and controlling risks results in risk register, project management plan, project document and organizational process assets updates, and change requests, recommended preventive and corrective actions.
Many people make mistakes when it comes to risk management. A few of these errors listed in PMP Exam Prep include, "risk identification ending too soon or being completed without much knowledge of the project, contracts being signed long before risks to the project are discussed, project managers not explaining the risk management process to their team during project planning, or the processes of Identify Risks through Perform Quantitative Risk Analysis are blended, resulting in risks that are evaluated or judged as they come to light." The last error, "decreases the number of total risks identified and causes people to stop participating in risk identification." reports PMP Exam Prep.
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