Introduction 1
What Is Project Management Anyway? 2
Advantages of Project Management 6
Organizing for Project Management 7
The Projectized
... [Show More] Organization 7
The Traditional Organization 9
The Matrix Organization 10
The Project Office 12
How the Project Manager Makes Projects Successful 13
The Project Life Cycle 14
Project Processes 14
Summary 15
1. Scope Management 16
Initiation of the Project 17
Project Charter 17
Constraints and Assumptions 18
Who Are Those Stakeholders? 18
Cost and Its Relationship to Price 19
Overbid or Underbid: Which Is Better for Your Company? 20
Getting to the Scope Baseline 23
Work Breakdown Structure 25
Systems Approach to Work Breakdown Structure 28
Additional Project Breakdown Structures 30
Change Management 30
Project Justifications 31
The Break Even Chart 32
Problems with Break Even Charts 33
Average Rate of Return on Investment 34
Present Value of Money 34
Internal Rate of Return on Investment 39
Summary 44
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2. Time Management 46
Activity Definition 46
Activity Sequencing 47
Activity on Arrow Diagramming 48
Precedence Diagramming Method (PDM) 49
Logical Relationships 50
Finish-Start Relationship (FS) 50
Start-Start Relationship (SS) 52
Finish-Finish Relationship (FF) 53
Start-Finish Relationship (SF) 53
Leads and Lags 54
Diagramming Relationships 55
Project Start and Project Finish Events 55
Logical Precedence Diagram 56
Activity Durations 56
Building the Network Diagram 57
Buffering the Schedule 63
Reverse Resource Allocation Scheduling 67
Critical Path Method (CPM) 67
Program Evaluation and Review Technique (PERT) 68
Monte Carlo Simulation 73
The Simulation 74
Output from the Monte Carlo Simulation 75
Summary 75
3. Cost Management 77
Why We Need Cost Management 77
Project Life Cycle and Project Cost 78
Using the Work Breakdown Structure 78
Cost Estimating 79
Types of Estimates 80
Top Down Estimates 80
Bottom Up Estimates 80
Analogous Estimates 80
Parametric Estimates 81
Definitive Estimates 81
Cost Budgeting 83
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Cost Control 85
Earned Value Reporting 85
Cumulative Reporting 85
Earned Value Parameters 86
Difficulties in Data Collection 87
Reporting Work Complete 89
Examples 89
Calculated Values for Earned Value Reports 90
Financial Measures 94
Return on Sales 97
Return on Assets 98
Economic Value Added 99
Depreciation 100
Straight Line Depreciation 100
Accelerated Depreciation 101
Sum of the Years’ Digits 101
Double Declining Balances 102
Summary 102
4. Human Resources Management 104
Project Manager Roles and Responsibilities 104
Strong Matrix, Weak Matrix, and Balanced Matrix 106
Strong Matrix 106
Weak Matrix 106
Balanced Matrix 108
Making Matrix Management Work 109
Personnel and Personal Evaluations 109
Motivation 110
Importance of Motivation 110
Industrial Revolution 110
Scientific Management 111
Learning Curve Theory 111
Depression Era 112
World War II 112
Post–World War II 112
Motivational Ideas 112
Procedures versus Motivation 113
Expectancy Theory 113
Maslow’s Hierarchy of Needs Theory 115
Hertzberg’s Motivation/Hygiene Theory 117
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Supervisory Style and Delegation 118
Job and Work Design 118
Job Enlargement 119
Job Enrichment 120
Quality Circles 121
Power 121
Forms of Power 121
Coercive Power and Reward Power 121
Legitimate Power 122
Referent Power 122
Expert Power 123
Representative Power 123
Leadership 123
Theory X and Theory Y Managers 123
Conflict Resolution 124
Forcing 125
Smoothing 126
Compromise 126
Problem Solving 126
Withdrawal 127
Managing Meetings 127
Managing Meetings Effectively 129
Before the Meeting 129
Beginning the Meeting 129
Summary 130
5. Risk Management 132
When to Do Risk Management 133
The Risk Process 133
Risk Management Planning 133
Risk Identification 134
Documentation Reviews 135
Brainstorming 135
Delphi Technique 135
Nominal Group Technique 136
Crawford Slip 137
Expert Interviews 137
Checklists 138
Analogy 138
Diagramming Techniques 138
Recording of Risks Identified 138
TEAMFLY
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Risk Assessment 140
Risk Tolerance 141
Risk Probability 143
The Addition Rule 145
The Multiplication Rule 147
Risk Impact 149
Expected Value 150
Decision Trees 151
Risk Quantification 155
Comparative Ranking 157
Grouping the Risks 157
Affinity Programming 158
Risk Response Planning 158
Risk Strategies 159
Avoidance 159
Transfer 159
Contracting 160
Acceptance 160
Mitigation 161
Risk Opportunities 161
Budgeting for Risk 162
Risk Monitoring and Control 162
Summary 163
6. Quality Management 165
Quality Planning 166
Quality Assurance 167
Cost of Quality 167
Costs of Prevention 168
Costs of Defects 168
Deming’s Fourteen Points 169
Quality Control 169
Sampling Inspection 170
Acceptable Quality Level (AQL) 171
Buyer’s Risk and Seller’s Risk 171
Other Quality Control Techniques 172
Flowcharts and Diagrams 172
Cause and Effect Diagrams 172
Pareto Charts 172
Control Charts 175
Checklists 178
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Kaizen 179
Benchmarking 179
Summary 179
7. Contract and Procurement Management 181
Contract Management 182
Make or Buy 182
Contract Life Cycle 183
Requirement Process 183
Requisition Process 184
Solicitation Process 185
Award Process 185
Contract Process 185
Contract Types 185
Fixed Price Contract 186
Firm Fixed Price Contract 186
Fixed Price Plus Economic Adjustment Contract 187
Fixed Price Plus Incentive Contract 188
Cost Plus Contract 188
Cost Plus Fixed Fee Contract 189
Cost Plus Award Fee Contract 190
Cost Plus Incentive Fee Contract 190
Procurement Management 190
Commodities 190
Unique Products and Services 191
Forward Buying 192
Blanket Orders 192
Split Orders 193
Summary 193
8. Communications Management 195
General Model of Communications 195
Thinking 196
Encoding 196
Symbols 196
Transmitting 197
Perceiving 197
Decoding 197
Understanding 197
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Barriers to Communications 198
Distorted Perceptions 198
Distrusted Sources 198
Transmission Errors 198
Improving Communications 199
Make the Message Relevant for the Receiver 199
Reduce the Message to Its Simplest Terms 199
Organize the Message into a Series of Stages 199
Repeat the Key Points 199
Verbal and Written Communications 200
Formal and Informal Communications 201
Formal Communications 201
Informal Communications 201
Improving Listening 202
Don’t Interrupt 202
Put the Speaker at Ease 204
Appear Interested 204
Cut Out Distractions 204
Periodically Sum Up What Was Said 204
Networking 204
Circular Networks 205
Chain Networks 205
The Wheel 205
Free and Open Communications 206
Management by Walking Around 207
Performance Reviews 209
Summary 210
9. Professional Responsibility 211
Task 1 212
Task 2 213
Task 3 214
Task 4 214
Task 5 215
Code of Professional Conduct 216
10. What Is the PMP Exam Like? 218
Domain 1: Initiating the Project 219
Domain 2: Planning the Project 220
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Domain 3: Executing the Project 221
Domain 4: Controlling the Project 222
Domain 5: Closing the Project 222
Domain 6: Professional Responsibility 223
Types of Questions on the Exam 224
Taking the Exam 225
Use of Practice Questions 226
The Application for PMP Certification 228
The Education Qualification 229
Joining PMI 230
Recertification 230
Practice Questions 233
Practice Questions Answer Key 317
Appendix: Probability Distributions 375
Glossary 383
Bibliography 403
Index 405
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PREFACE
This book has been written to help those preparing for the Project Management
Professional Examination. It is intended to cover all of the
material that the Project Management Institute (PMI) considers important
enough to be included in the exam. This book has been revised to
reflect the changes in the Project Management Professional Examination put
into effect as of March 2002 and reflects the Guide to the Project Management
Body of Knowledge, 2000 edition.
I have been working in the field of project management for the past
twenty-five years and was managing projects long before that and long before
there was a methodology called project management. Once I became aware
of the work that PMI was doing in this area and started to consider project
management as a profession and a disciplined methodology, it became clear
to me what had gone wrong with some of my projects in the past.
From that point on I began applying the tools and techniques of project
management, and slowly the unification and completeness of the methodology
became clear. Project management works as a unified body of knowledge,
but all of the tools and techniques depend on one another to succeed.
You cannot do a good job of cost estimating if you have not developed a
good set of requirements and deliverables for the project any more than you
can produce a good schedule without taking the time necessary to develop
good estimates of the task durations.
If project management is practiced using the methodology outlined
in this book and the Project Management Institute’s Guide to the Project
Management Body of Knowledge, you will become a good project manager.
Learning project management is more than studying a book or even a group
of books. Project management must also be learned in the field with experience
and exposure to real responsibility on real projects. The Project Management
Professional (PMP) certification is designed to certify project
managers who meet the criteria for both knowledge and experience. To qualify
for certification you must have both. PMI requires that you have at least
4,500 hours of experience if you have a bachelor’s degree. Some of this
experience must extend past more than the last three years but not more
than past the last six years. There is a criterion for people not holding a [Show Less]