Project Management

Hello.

Here is a summary of all you need to know towards CompTIA or PMP project management examinations.

1.     Initiating a project

Summary

A project is a temporary endeavor that produces a unique product, service, or result. It has definitive start and finish dates.

Project management is the application of tools and techniques to organize the project activities to successfully meet the project goals.

A project manager is responsible for project integration and applying the tools and techniques of project management to bring about a successful conclusion to the project.

Organizational structures impact how projects are managed and staffed. The primary structures are functional, matrix, and project-based. The traditional departmental hierarchy in a functional organization provides the project manager with the least authority. The other end of the spectrum is the project - based organization, where resources are organized around projects; in these types of organizations, the project manager has the greatest level of authority to take action and make decisions regarding the project. The matrix organization is a middle ground between the functional organization and the project - based organization.

Project selection techniques involve the use of decision models, such as a cost - benefit analysis and expert judgment, to allocate limited resources to the most critical projects.

Project managers are individuals charged with overseeing every aspect of a given project from start to finish. A project manager needs not only technical knowledge of the product or service being produced by the project, but also a wide range of general management skills.

Key general management skills include leadership, communication, problem solving, negotiation, organization, and time management.

Exam Nuggets

Be able to define a project. A project brings about a unique product, service, or result and has definite beginning and ending dates.

Be able to identify the difference between a project and ongoing operations. A project is a temporary endeavor to create a unique product or service. Operational work is ongoing and repetitive.

Be able to understand the three types of organizational structures. The three types of organizational structures are functional, matrix, and project - based structures. Matrix organizations may be structured as a strong matrix, weak matrix, or balanced matrix organization.

Be able to define the role of a project manager. A project manager’s core function is project integration. A project manager leads the project team and oversees all the work required to complete the project goals to the satisfaction of the stakeholders.

Be able to identify the most common project selection methods. The most common project selection methods are benefit measurement methods such as cost - benefit analysis, scoring models, payback period, and economic models (which include discounted cash flows, NPV, and IRR), as well as expert judgment.

Understand what skills are needed to manage a project beyond technical knowledge of the product. Key general management skills include leadership, communication, problem solving, negotiation, organization, and time management

 2.  Project Process Groups and the Project Charter

Summary

Collectively, project management consists of five process groups: Initiating, Planning, Executing, Monitoring and Controlling, and Closing. Each of these process groups consists of individual processes that each have inputs, tools and techniques, and outputs. The primary output of the Initiating process group is the project charter.

Initiation is the formal authorization for the project to begin. It starts with a project request that outlines the high - level requirements, or the product description. There are three types of requirements: functional, business, and technical.

A Project stakeholder is anyone who has a vested interest in the outcomes of the project. Some project stakeholders you will likely encounter include the project sponsor, team members, functional managers, customers (both internal and external), and end users.

A project sponsor is an executive in the organization who has the authority to assign budget and resources to the project. Project sponsors serve as final decision makers on the project and sign and approve the project charter.

The output from the Initiating process is the project charter. This document becomes the basis for more-detailed project planning. It should contain the project description, project approach, stakeholders, goals and objectives, problem statement, high - level deliverables, milestones, costs, assumptions, constraints, and risk.

Exam nuggets

Be able to define the Initiating process. Initiation authorizes the project to begin.

Understand the three categories of requirements. Functional requirements define how the user will interact with the system. Business requirements are the big picture of what the business wants from the system. Technical requirements define what the system does to perform the functional requirements.

Be able to define a project sponsor and the stakeholders’ common to most projects. A project sponsor is an executive in the organization who has the authority to allocate funds and resources to the project.

A stakeholder is an organization or someone who has a vested interest in the project and has something to gain or lose from the project. Stakeholders include the sponsor, project manager, project team members, functional managers, customer, end users, and others with an interest in the project.

Be able to describe a project charter and list the key components. A project charter provides formal approval for the project to begin and authorizes the project manager to apply resources to the project. The key components are the problem statement, deliverables, milestones, costs, assumptions, constraints, risks, stakeholders, and project description.

3.  Planning a Project

Summary

Scope planning uses the output of the Initiating process, the project charter, to create the scope statement and the scope management plan. The scope management plan documents the process you’ll use to prepare the project scope statement and WBS, a definition of how the deliverables will be verified, and a description of the process for controlling scope change requests.

The project scope statement is the basis for many of the planning processes and future change decisions. It is also the basis for setting the boundaries of the project with the customer and stakeholders. A scope statement includes the product description, key deliverables, success and acceptance criteria, key performance indicators, exclusions, time and cost estimates, assumptions, and constraints.

The work breakdown structure (WBS) is created by taking the major deliverables from the scope statement and decomposing them into smaller, more manageable components. The breakdown continues through multiple levels until the components can be estimated and resourced. The lowest level of decomposition is the work package. The WBS includes all the work required to complete the project. Any deliverable or work not listed on the

WBS is assumed to be excluded from the project. The WBS is a critical component of project planning. A WBS is the basis for time estimates, cost estimates, and resource assignments.

The WBS dictionary should list every deliverable and each of their components contained in the WBS. It should include a description of the component, code of account identifiers, responsible party, estimates, criteria for acceptance, and any other information that helps clarify the deliverables and work components.

Exam nuggets

Describe the purpose of a scope management plan. A scope management plan documents the procedures for preparing the project scope statement and WBS, defines how the deliverables will be verified, and describes the process for controlling scope change requests.

Understand the purpose of the scope statement. The scope statement is the basis of the agreement between the project and the customer concerning what comprises the work of the project. It defines the deliverables and success criteria that will meet those objectives.

Be able to list the components of a scope statement. A scope statement includes a product description, key deliverables, success and acceptance criteria, key performance indicators, exclusions, assumptions, and constraints.

Know how to define and create a work breakdown structure (WBS). The WBS is a deliverable - oriented hierarchy that describes the work required to complete the project. The WBS is a multilevel tree diagram that starts with the project, includes the major deliverables, and decomposes the major deliverables into smaller units of work to the point where time and cost estimates can be provided and resources assigned.

Understand the levels in a WBS. The highest level of the WBS is the project name. The major deliverables, project phases, or subprojects make up the next level. The number of levels in a WBS will vary by project; however, the lowest level of the WBS is a work package.

Describe a WBS dictionary. The WBS dictionary describes each of the deliverables and their components and includes a code of accounts identifier, estimates, resources, criteria for acceptance, and any other information that helps clarify the deliverables.

4.  Schedule Planning

Summary

Many steps are involved in schedule planning. Activity Definition takes the work packages from your WBS and breaks them down into assignable tasks. Activity Sequencing looks at dependencies between tasks. These dependencies can be mandatory, discretionary, or external. A dependent task is either a successor or a predecessor of a linked task. There are four types of logical relationships: finish-to-start, start-to-start, start-to-finish, and finish-to-finish. A network diagram is a pictorial representation of the task-dependency (logical) relationships.

Activity Duration estimating is obtained using analogous (also called top - down) estimating, parametric estimating, expert judgment, three - point estimates, and PERT.

The most complex schedule planning process is Schedule Development. The critical path method (CPM) creates a schedule by calculating forward and backward passes through the network diagram and then determining float.

Float is the difference between the early and late start dates and the early and late finish dates. The critical path is the longest full path on the project.

Duration compression is the technique used to shorten a project schedule to meet a mandated completion date. Crashing shortens task duration by adding more resources to the project. Fast tracking is where two tasks are started in parallel that were previously scheduled to start sequentially.

A project schedule may be displayed as a milestone chart. Milestones mark major project events such as the completion of a key deliverable or project phase. Gantt charts are a common method to display schedule data as well. The completed, approved project schedule becomes the baseline for tracking and reporting project progress.

Exam nuggets

Describe the Activity Sequencing process. Activity Sequencing is the process of identifying dependency relationships between the project activities and scheduling activities in the proper order.

Name the two major relationships between dependent tasks. A predecessor is a task that exists on a path with another task and occurs before the task in question. A successor is a task that exists on a common path with another task and occurs after the task in question.

Name the four types of logical relationships. The four types of logical relationships are finish-to-start, start-to-start, start-to-finish, and finish-to-finish.

Know and understand the five most commonly used techniques to estimate activity duration. Expert judgment relies on the knowledge of someone familiar with the tasks. Analogous or top - down estimating bases the estimate on similar activities from a previous project. Parametric estimates are quantitatively based estimates that typically calculate the rate times quantity. Three - point estimates use the most likely, optimistic, and pessimistic estimates to determine an average estimate. PERT uses the same estimates as the three – point estimating technique, but it calculates an expected value or weighted average estimate.

Define the purpose of CPM. CPM calculates the longest path in the project. This path controls the finish date of the project. Any delay to a critical path task will delay the completion date of the project.

Explain a network diagram. A network diagram is used in Activity Sequencing to depict project activities and the interrelationships and dependencies among these activities.

Name the two most common ways project schedules are displayed. Project schedules are typically displayed as milestone charts or Gantt charts; a Gantt chart is a type of bar chart.

5.  Communication, Human Resources & Quality Plan

Summary

Most project managers spend the majority of their project management time in the act of communicating. Communication is performed using the sender - message – receiver model. Communications Planning is a process where you determine who needs what types of communication, when, and in what format, and how that communication will be disseminated. The network communication model shows the lines of communication that exist between any number of project participants.

Resource Planning involves determining all the materials, goods, equipment, and human resources you’ll need to perform the work of the project. You can depict the roles and responsibilities of human resources graphically in a RAM or a RACI chart.

Human Resource Planning identifies the specific resources that will be assigned to your project as well as how and when they will join the project team and be returned to their functional department. You’ll document the resources needed in the human resource management plan. Be aware of constraints that may impact the human resource management plan, such as labor union agreements, organizational structure, and economic conditions.

Staff acquisition is where you choose the team members (or organizations) who will work on the project. You should be prepared to negotiate with functional managers for resources and also be prepared to interview potential team members to determine experience levels, skill, and overall fit on the team.

Procurement planning is performed when goods or services for the project will be provided outside the organization. Procurement planning involves a make - or - buy analysis, SOW preparation, vendor solicitation, and vendor selection criteria. The typical solicitation vehicles for contracting include an RFQ, RFP, and RFI or IFB.

Exam nuggets

Describe the importance of Communications Planning. Communications Planning is the key to project success. It involves determining who needs information, when, and in what format, and the frequency of the communication.

Describe Resource Planning. Resource Planning determines what resources are needed for the project, including human, equipment, and material.

Describe a RAM. A RAM is a resource assignment matrix that shows the WBS identifier, the type of resource required, and the number of resources for each skill set. A RACI chart is a type of RAM that describes the resources and their level of responsibility, including responsible, accountable, consult, or inform.

Describe the two components of Human Resources Planning. The two components are organizational planning and staff acquisition.

Be able to describe make - or - buy analysis. Make - or - buy analysis is performed in order to determine the cost-effectiveness of either making or buying the goods and services you need for the project.

Be able to name the types of contracts. The contract types include fixed-price, cost- reimbursable, and time and materials.

6.  Defining the Cost, Quality, and Risk Plans

Summary

The Cost Estimating process is performed after the resources for the project have been determined. You can use several techniques to create project estimates.

Ø Analogous or top - down estimates use expert judgment and historical data to provide a high - level estimate for the entire project, a phase of the project, or a deliverable.

Ø Parametric estimating uses a mathematical model to create the estimates and, in its simplest form, multiplies the duration of the project task by the resource rate to determine an estimate.

Ø The bottom - up method creates the project estimate by adding up the individual estimates from each work package.

Cost estimates are used to make up the project budget. The project budget is established by using the organization’s chart of accounts and then documenting work effort, duration, equipment and material costs, and any other costs that may be incurred during the course of the project.

The cost baseline is the total approved expected cost for the project and is used for forecasting and tracking expenditures throughout the project.

Quality Planning identifies the quality standards that are applicable to the project and determines how the project will meet those standards. Some of the most common tools used in Quality Planning include cost - benefit analysis, benchmarking, flowcharting, and cost of quality.

Cost of quality is the total cost of all the work required to assure the project meets the quality standards. There are three types of quality costs: prevention, appraisal, and failure costs.

Risk Planning involves identifying potential risk events that could occur during the project, determining their probability of occurrence, and determining their impact to the project.

Probability is always expressed as a number between 0.0 and 1.0. Risk response plans should be developed for those risks that have a high probability of occurrence, have a significant impact to the project if they occur, or have an overall risk score that is high.

Risks must be analysed, qualitatively and quantitatively. Qualitative risk analysis involves multiplying the probability that a risk will occur by the impact when it occurs to create risk exposure. Quantitative risk analysis involves ranking of risks and finding their cost and time contingencies.

The final project management plan consists of all the documents created during the planning phase of the project. It’s good practice to obtain sign - off on the project plan from the sponsor and key stakeholders before proceeding. Once approval is obtained, the project management plan becomes the baseline for the project.

Exam nuggets

Know the difference between analogous, parametric, and bottom - up estimating techniques. Analogous, or top - down, estimates use expert judgment and historical data to provide a high - level estimate for the entire project, a phase of the project, or a deliverable. Parametric estimates use a mathematical model to create the estimates. The bottom - up method starts at the lowest level of the WBS and calculates the cost of each item within the work packages to obtain a total cost for the project or deliverable.

Name the two discretionary funding allocations a project may receive. The two types of discretionary funding are a contingency reserve and a management reserve. Contingency reserves are monies set aside to cover the cost of possible adverse events. Management reserves are set aside by upper management and are used to cover future situations that can’t be predicted during project planning.

Explain the purpose of a cost baseline. The cost baseline is the total approved, expected cost for the project. It’s used in the Executing and Monitoring and Controlling processes to monitor the performance of the project budget throughout the project.

Name the Quality Planning tools and techniques. The Quality Planning tools and techniques are cost - benefit analysis, benchmarking, flowcharting, and cost of quality.

Name the types of costs associated with the cost of quality. The types of costs associated with the cost of quality are prevention costs, appraisal costs, and failure costs. Failure costs include both internal and external failure costs.

Explain the three processes used to develop a risk management plan. Risk Identification is the process of identifying and documenting the potential risk events that may occur on the project. Risk analysis evaluates the severity of the impact to the project and the probability that the risk will actually occur. Risk response planning is the process of reviewing the list of potential risks impacting the project to determine what, if any, action should be taken and then documenting it in a response plan.

Name the negative risk response strategies. The negative risk response strategies are avoid, transfer, mitigate, and accept.

Name the positive risk response strategies. The positive risk response strategies are exploit, share, and enhance.

7.  Processing Change Requests

Summary

As is peculiar in all aspects of existence, things change. Changes come about for many reasons and may take the form of corrective actions, preventive actions, and defect repairs.

An integrated change control system manages change requests, determines the global impacts of a change, and updates all impacted portions of the project plan when a change is made. Typically, a change control board is established to review and either approve, deny, or delay change requests.

Scope Control involves reviewing and analyzing requests for scope changes, and updating the scope baseline documents if a scope change occurs. The scope baseline consists of the scope statement, WBS, and WBS dictionary.

Scope Verification is the process of formally accepting the deliverables of the project and obtaining sign - off from the stakeholders that they’re complete and acceptable.

Schedule Control involves determining the status of the project schedule, determining whether changes have occurred or should occur, and influencing and managing schedule changes. Particular emphasis should be placed on monitoring critical path tasks. Schedule updates may be required as a result of a schedule change. Schedule compression techniques (fast-tracking and crashing) can be used to help manage schedule changes.

Risk Monitoring and Control is when the risk response plans identified during planning are implemented if needed. Other activities that occur in this process include identifying and prioritizing new risks, implementing contingency plans based on a trigger event, and evaluating the effectiveness of response plans.

Reporting Performance is the process that involves collecting information regarding project progress and project accomplishments and reporting it to the stakeholders. Any project element that goes outside predefined limits requires action on the part of the stakeholder team. Trade - offs between quality, scope, schedule, and cost are presented by the project manager.

Cancellation of the project is also an action for consideration if the project is no longer viable.

Exam nuggets

Name and describe the three types of change requests. Corrective actions bring the work of the project into alignment with the project plan, preventive actions are implemented to help reduce the probability of a negative risk event, and defect repairs correct or replace components that are substandard or malfunctioning.

Describe the possible impacts to check for when evaluating a major change to the project scope. A major change to the project scope may impact the critical path, schedule end date, budget, and resources, as well as introduce new risks.

Describe the elements of a change management process. The elements of a change management process include change request forms, a change request log, analysis of changes, the CCB, coordination and communication with stakeholders, and updating the affected project planning documents.

Explain the purpose of a CCB. The change control board reviews, approves, denies, or delays change requests.

Describe the purpose for the Scope Control process. Scope Control involves monitoring the status of the project scope, monitoring changes to the project scope, and monitoring work results to ensure that they match expected outcomes.

Describe the purpose for the Scope Verification process. Scope Verification involves formally accepting completed deliverables and obtaining sign - off from the stakeholders indicating the deliverables are satisfactory and meet the stakeholders’ expectations.

Describe the purpose for the Schedule Control process. Schedule Control involves determining the status of the project schedule, determining whether changes have occurred or should occur, and influencing and managing schedule changes.

Describe the Risk Monitoring and Control Process. Risk Monitoring and Control is the process of implementing the risk response plan, tracking and monitoring identified risks, and identifying and responding to new risks as they occur.

8.  Executing the Project

Summary

Project execution is an exciting time because you finally get to see results of the hard work from the Initiating and Planning processes. But just because you are executing against a well - defined plan does not mean that you can sit back and watch the project pieces fall into place. You have a lot of work to do in this phase, including assembling and motivating the project team, holding the kickoff meeting, and determining the organizational oversight needed for the project.

Staffing issues may arise with the functional managers who provided you with resources for the project. You should attempt to resolve these issues with the functional manager directly, but if a compromise can’t be reached, escalation to the sponsor may be required.

Successful team development includes ongoing team building and management, training, and a meaningful rewards and recognition system. It’s also a time to build and establish an open, trusting environment and to encourage the free exchange of ideas.

As the work on the project progresses, you need to collect data from team members regarding their progress on the project and prepare status reports for the sponsor and stakeholders. It’s always important to understand any rules, regulations, or internal processes that you should adhere to when executing the work of the project.

Exam nuggets

Name some of the common causes of conflict. Common causes are competing resource demands, expert judgment, and varying work styles.

Name the conflict - resolution techniques. The techniques are smoothing, forcing, compromise, confronting, avoiding, and negotiating.

Name the conflict - resolution technique most often used by project managers. This is confronting, also known as problem solving. This technique involves discovering the facts regarding the issue and letting the facts help define the solution.

State the five stages of team development. They are forming, storming, norming, performing, and adjourning.

Understand the various means to recognize or reward team members. Team member contributions can be recognized with monetary rewards or prizes, a mention in the formal project review or status meeting, a letter to executive management, a thank - you, or a team celebration.

State the purpose of a project kickoff meeting. The project kickoff meeting is a way to formally introduce all project team members, to review the goals and the deliverables for the project, to discuss roles and responsibilities, and to review stakeholder expectations.

Explain the importance of organizational governance. Organizational governance recognizes the importance of regulations, laws, and other standards that may impact the project. This also involves internal processes, version control, and checkin/checkout processes.

9.  Controlling the Project

Summary

Quality Control is the process of reviewing project results and determining whether they comply with the standards documented in the quality management plan and making any appropriate changes to remove the causes of unacceptable quality when the standards are not met. Quality Control is performed throughout the life of the project. You can use several tools and techniques to perform Quality Control, including inspection, prevention, histograms, Pareto diagrams, control charts, statistical sampling, flowcharting, trend analysis, run charts, and Ishikawa diagrams.

Quality Control concerns identifying variances in the process or results. There are three common causes of variance: random variances, known or predictable variances, and variances that are always present in the system.

Cost Control involves managing changes to the project cost baseline. It’s also concerned with monitoring project budgets to prevent unauthorized or incorrect costs from getting included in the cost baseline.

Earned value measurement is a tool and technique that measures the value of the work completed to date by comparing what you’ve received or produced to what you’ve spent as of the measurement date by using measurements such as CV, SV, CPI, SPI, ETC, and EAC.

Managing Stakeholder Expectations involves making sure certain communication needs and expectations of the stakeholders are met, managing any issues stakeholders might raise that could become future issues, and resolving previously identified issues. One of the ways to manage expectations is to manage the information distribution process.

The Distribute Information process is concerned with making certain project information available to stakeholders at the right time and in the appropriate format. Distribute Information is performed throughout the life of the project.

Managing team members involves being aware of barriers and differences that may impact communication and the productivity of the team, including different time zones, communication and language barriers, cultural differences, technology barriers, and hierarchical barriers.

Earned Value Measurement

EVM looks at schedule, cost, and scope project measurements together and compares them to the actual work completed to date. It is the most often used performance measurement method. EVM is performed on the work packages and the control accounts of the WBS. To perform the EVM calculations, you need to first gather these three measurements: planned value, actual cost, and earned value.

Planned value: The planned value (PV) is the cost of work that has been authorized and budgeted for a schedule activity or WBS component during a given time period or phase. These budgets are established during the Planning processes. PV is also known as the budgeted cost of work scheduled (BCWS).

Actual cost: Actual cost (AC) is the actual cost of completing the work component in a given time period. Actual costs might include direct and indirect costs but must correspond to what was budgeted for the activity. If the budgeted amount did not include indirect costs, do not include them here. Later you’ll see how to compare this to PV to come up with variance calculation results. AC is also known as the actual cost of work performed (ACWP).

Earned value Earned value (EV) is the value of the work completed to date as it compares to the budgeted amount (PV) for the work component. EV is typically expressed as a percentage of the work completed compared to the budget. For example, if our budgeted amount is ₦1,000 and we have completed 30 percent of the work so far, our EV is ₦300. Therefore, EV cannot exceed the PV budget for the activity. EV is also known as the budgeted cost of work performed (BCWP).

PV, AC, and EV all include a cost component. When costs are displayed graphically, they form an S curve. The reason for this is that at the beginning of the project, spending is minimal; then it picks up once the work of the project is underway, and it tapers off at the end of the project as the work wraps up. Since earned value measurements include a cost component, they are also displayed in an S curve.

Cost Variance: Cost variance is one of the most popular EVM variances that project managers use. It tells you whether your costs are higher than budgeted (with a resulting negative number) or lower than budgeted (with a resulting positive number). It measures the actual performance to date against what’s been spent.

The cost variance (CV) formula is as follows:

CV = EV – AC

For the purposes of the remainder of this section, we’ll use some example figures so we can show how to calculate each of these measures. As of December 1, (our measurement date), the performance measurements are as follows:

PV = 75,000

AC = 71,000

EV = 70,000

Now let’s calculate the CV using these numbers:

70,000 – 71,000 = – 1,000

The result is a negative number, which means that costs were higher than what was planned for the work that was completed as of December 1. These costs are usually not recoverable. If the result was a positive number, it would mean that you spent less than what you planned for the work that was completed as of December 1.

Schedule Variance: Schedule variance, another popular EVM variance, compares an activity’s actual progress to date to the estimated progress and is represented in terms of cost. It tells you whether the schedule is ahead of or behind what was planned for this period. This formula is most helpful when you’ve used the critical path methodology to build the project schedule. The schedule variance (SV) is calculated as follows:

SV = EV – PV

Plug in the numbers:

70,000 – 75,000 = – 5,000

The resulting schedule variance is negative, which means you are behind schedule or behind where you planned to be as of December 1.

Together, the CV and SV are known as efficiency indicators for the project and can be used to compare the performance of all the projects in a portfolio.

Performance Indexes

Cost and schedule performance indexes are primarily used to calculate performance efficiencies, and they’re often used to help predict future project performance.

The cost performance index (CPI) measures the value of the work completed at the measurement date against the actual cost. It is the most critical of all the EVM measurements according to the PMBOK Guide because it tells you the cost efficiency for the work completed to date or at the completion of the project. If CPI is greater than 1, you are spending less than anticipated at the measurement date. If CPI is less than 1, you are spending more than anticipated for the work completed at the measurement date.

The cost performance index (CPI) is calculated this way:

CPI = EV / AC

Plug in the numbers to see where you stand:

70,000 / 71,000 = .99

Since the result is less than one, it means cost performance is worse than expected.

The schedule performance index (SPI) measures the progress to date against the progress that was planned. This formula should be used in conjunction with an analysis of the critical path activities to determine whether the project will finish ahead of or behind schedule. If SPI is greater than 1, your performance is better than expected, and you’re ahead of schedule. If SPI is less than 1, you’re behind schedule at the measurement date.

The schedule performance index (SPI) is calculated this way:

SPI = EV / PV

Again, let’s see where you stand with this example:

70,000 / 75,000 = .93

Schedule performance is not what you expected as of December 1.

Estimate at Completion

As your project progresses, you’ll be asked to predict the total cost of the budget. An estimate at completion (EAC) is a forecast of the total cost of the project based on both the current project performance and the remaining work. To understand how EAC works, you need to know two more terms:

Budget at completion (BAC) is the total amount of the budget for a work package, a control account, a schedule activity, or the project.

Estimate to complete (ETC) is the cost estimate for the remaining project work. This is typically provided by the team members actually working on the project activities.

EAC is calculated as follows:

EAC = AC + ETC

If you assume your BAC is 300,000 and your ETC is 230,000, then you can calculate EAC as follows:

71,000 + 230,000 = 301,000

As of December 1, our estimate at completion is $301,000, which is $1,000 more than the budgeted amount (BAC). At this point in the project, the variance is minimal but should still be a signal to the project manager to keep a close eye on spending and assure the value delivered matches the spending to date.

To - Complete Performance Index

To - complete performance index (TCPI) is the projected performance level that the remaining work of the project must achieve in order to meet the stated financial or schedule goals. It’s calculated by dividing the work that’s remaining by the funds that are remaining.

The formula for TCPI is as follows:

(BAC – EV) / (BAC – AC)

Given the measurements as of December 1, here’s the formula:

(300,000 – 70,000) / (300,000 – 71,000) = 1.0

This means you’ll need to keep performing at the same CPI rate you’ve experienced to date in order to meet the BAC goal. If the result is less than one, future work does not have to be performed as efficiently as past performance. If the result is more than one, future work will have to be performed more efficiently than past performance in order to meet the BAC goal.

Variance Analysis

Variance analysis is the comparison of planned project results with actual project results. Variance analysis is most frequently used to examine the project schedule and project budget. In the Cost Control process, variance analysis looks at the difference between the performance cost baseline and actual performance.

The variance at completion (VAC) formula is often used in this process. It calculates the difference between the budget at completion and the estimate at completion. The formula is as follows:

VAC = BAC – EAC

Exam nuggets

Be able to name the purpose of the Quality Control process. The purpose of the Quality Control process is to monitor work results to determine whether they comply with the standards set in the quality management plan.

Name the three common causes of variance. These are random variances, known or predictable variances, and variances that are always present in the process.

Name the tools and techniques for Quality Control. These are histograms, Pareto diagrams, control charts, statistical sampling, flowcharting, run charts, and Ishikawa diagrams.

Be able to describe earned value measurement techniques. Earned value measurement (EVM) monitors the planned value (PV), earned value (EV), and actual costs (AC) expended to produce the work of the project. Cost variance (CV), schedule variance (SV), cost performance index (CPI), and schedule performance index (SPI) are the formulas used with the EVM technique.

Define estimate to complete (ETC), estimate at completion (EAC), and budget at completion (BAC). Estimate to complete (ETC) is a forecast of the cost of all remaining project work and is usually provided by the project team members. Estimate at completion (EAC) is a projection of final project costs obtained by adding the ETC to the actual project costs to date. Budget at completion (BAC) is the total amount of the budget for the work package, control account, schedule activity, or project.

Define the purpose for the Managing Stakeholder Expectations process. Managing Stakeholder Expectations involves communicating, resolving issues, improving project performance by implementing change requests, and managing concerns.

Explain the purpose for the Distribute Information process. Distribute Information is concerned with getting stakeholders information about the project in a timely manner. This is accomplished using status reports, project meetings, review meetings, and so on, depending on their communication preferences.

Name the types of barriers a project manager might face when managing teams. Time zones, language and communication barriers, cultural differences, hierarchical barriers, and technology barriers are all types of barriers.

10.                    Closing the Project

Summary

Project closeout should be performed when the project ends, when a phase of a project ends, or when a project is killed or canceled. The Closing process group is the most often skipped on projects because project managers and team members are anxious to move on to their next assignments. It’s important to take the time to perform the steps in the Closing process group so that you can obtain sign-off on the project, turn over the product to the organization, release project resources, close out the contract, perform a post–project review, document lessons learned, and create a final project report.

Four types of project endings encompass the majority of reasons a project comes to an end. They are addition, starvation, integration, and extinction.

Close Procurements involves completing and settling the terms of the contract and documenting its acceptance. Product verification occurs here and that determines whether the work was completed accurately and satisfactorily.

Administrative Closure involves gathering and centralizing all the project documents, performing the post-project review, and writing the final project report.

The post-project review is conducted at the conclusion of the project, and its primary purpose is to collect and document lessons learned. Perhaps the most important element of project closure is the lessons learned document. This entails identifying where things went wrong, what things went well, and the alternatives you considered during the course of the project. Lessons learned are an extremely useful reference for future projects regarding what worked and what didn’t, for estimating techniques, for establishing templates, and more.

Post-mortem analysis is performed on projects that are canceled or end prematurely. This is much like the lessons learned process where information is gathered and recorded regarding what went wrong, the decisions for cancelation, and the plan for turning over completed deliverables.

The project close report is distributed to the stakeholders and includes several elements, including the project’s goal, the statement of acceptance, a summary of costs and schedule data, and lessons learned data.

Exam nuggets

Name the four reasons for project endings. They are addition, starvation, integration, and extinction.

Understand the steps involved in closing a project or phase. The steps include obtaining sign-off and acceptance, transferring the product to the organization, releasing project resources, closing out contracts, performing Administrative Closure, documenting historical information, conducting post-mortem analysis, and conducting post-project reviews.

Explain the purpose of obtaining formal customer or stakeholder sign-off. The formal sign-off documents that the customer accepts the project work and that the project meets the defined requirements. It also signals the official closure of the project and the transfer of the final product of the project to the organization.

Describe transferring the project results to the organization. Transferring the project results occurs once sign-off has been obtained. There should be a documented transition plan for transferring the project results, including describing the type of training or skills needed to maintain the product. License costs, warranty coverage and time period, user documentation, and any other materials needed by the organization should be included in the transfer.

Understand the key elements of the Close Procurements process. Contract closeout verifies that all the work described in the contract was completed satisfactorily per the contract terms and conditions. It includes notifying the vendor in writing that the work of the contract was accepted.

Name the procedures involved in Administrative Closure. Administrative Closure involves gathering and centralizing project documents, performing a post-project review, writing the final project close report, archiving project documents, and documenting lessons learned and historical information.

Describe lessons learned. Lessons learned describe the successes and failures of the project.

Good luck! You will need it.