PMP Terminologies

PMP Terminologies
Here are a few terms related to the Cost Knowledge area.
Control Account vs Work Package


Once the scope is divided in the form of WBS, work
packages and activity level, when it comes to tracking or monitoring and
controlling, it is very difficult to track the project at very high level or
at the lowest leve which is activity level. So to manage better we take a
point between the WBS and work package, which we call it as Control Account.
Control Account is a management control point where scope,
cost and schedule are integrated and compared to the earned value for the
performance measurement. Control Account are placed at the selected
management points in the WBS. Each Control Account is defined with a unique
code or an accounting number which can be used to link to the performing
account system.
Work Package is a deliverable which is obtained after
decomposing the WBS. Further if required work packages are divided into
activity level. The control account is having one or more work packages. The
following figure shows about the relation or the hierarchy in which each of
the components placed.




















































Cost Baseline vs Cost Budget (Budget)
During the
cost estimation the Project Manager will come with some figure and will add
contingency reserve which will become the Cost Baseline.
On top of
cost baseline based on the risk assessment management reserve will be added.
Then it becomes the Budget of the project. So the difference between the cost
baseline and the budget us called the Management reserve which we call it as
unknown unknown (unknown).
Earned Value Management(EVM)
Let’s catch
up with some of the terms as well as formula used to find out the project
progress in terms of earnings. The following table provides both the definition
and the formula.


Acronym


Term


Explanation




PV


Planned
Value


How much
worth of work we have planned or supposed to complete as on day?




EV


Earned
Value


How much
worth of work we have achieved as on day.




AC


Actual
Cost


Actual
cost spent to complete the work as on day.




BAC


Budget
At Completion


The
Budgeted amount for the total work(Total value of the project)




EAC


Estimate
At Completion


The
current estimate for the total project cost




ETC


Estimate
to Complete


From
this point, how much more the project
would cost to complete




VAC


Variance
at Completion


How much
over or under budget we expect to be at the end of the project.









Acronym


Formula


Explanation




Cost
Variance (CV)


EV-AC


Negative is over budget, positive is under budget.




Schedule
Variance (SV)


EV-PV


Negative is behind schedule, Positive is ahead of schedule.




Cost
Performance Index (CPI)


EV/AC


We are getting $_____ worth of work out of every $1 spent.




Schedule
Performance Index (SPI)


EV/PV


We are progressing at ________ percent of the rate originally planned.





Estimate
At Completion (EAC)


BAC/CPI


How much more do we expect the Project to cost




Estimate
to complete (ETC)


EAC-AC


How much more the Project would cost.




Variance
at Completion


BAC-EAC


How much
over or under budget we expect to be at the end of the Project.



For example,
let’s take a project worth $4M to be completed over a span of 4 months. And it
is assumed that the planned or the estimated work roadmap is linearly
distributed, in the sense at the end of 1st month, it is supposed to
complete 25% of work and the cost should be $1M, at the end of 2nd
month, 50% to be completed and spending should be $2M and so on. Let’s take the
progress data of this project at the end of 3rd month. Assume the
project is completed 60% of the work and spent about $3.5M. What is the
condition of project?
From the
above case, we can define following values:
Actual Cost(AC)=$3.5M,
Earned Value(EV) is 60% of $4M= $2.4M and Planned value(PV) is 75% of 4$M=$3M.
Now rest of
the calculations are simple.
CV=EV-AC=2.4-3.5=-1.1,
SV=EV-PV=2.4-3=-0.6, CPI=EV/AC=2.4/3.5=0.69 and SPI=EV/PV=2.4/3=0.8. What is
the meaning of this? The bottom line is project is in the bad condition because
of negative values in case of variance and the performance indices are below 1.
The project is over budget, behind the schedule by values of $1.1M and $0.6M
respectively. And for every $1 spent we are getting only 69 cents and the
project is progressing at the rate of 80% originally planned.

PMP Terminologies

PMP Terminologies
Here are a few terms related to the Scope Knowledge area.
Control Scope vs Verify scope


Verify scope process is used to accept the completed deliverables




Control scope is used whenever there is a change or
corrective action is required to bring back the scope on track with respect
to the project. In other words is used
to manage the changes that are happening to the project from the scope point
of view.
There is one more process called perform Quality control.
This process is used to check for the correct results and assuring that
quality metrics or the requirements are met.



























Create WBS vs Decomposition
Create Work
Breakdown Structure (WBS) is the process
of subdividing the project deliverables and project work into smaller and more
manageable components.
Decomposition
is the technique to divide the
project scope and deliverables into smaller and more manageable components in
such a way that it can be detailed enough to execute, monitor and control the
work.


















Product Scope vs Requirements
Product is
the one which is characterised by the features and functionalities. And when we
are managing the scope we have to consider the product scope and of course the
project scope.
Requirements
are what customer expecting.
For example,
mobile phone is a product and is having functionalities like gaming
application, address book, other applications like sms, mms etc.. These are
product scope. Now the customer may require these functionalities with some
expectations like the quality, performance criteria, loading etc.. These aspect
becomes requirements.
Product scope vs Project scope
Product
scope is the features and functions that are characterised. Now to build this
product we need to carry out the work. The work that is needed to come out with
the product is called the project scope.
For example
when you want to construct a building, you decide to have cabin, conference
hall, rest room, elevator etc.. This is the product scope. To make it finish we
need to carry out work like hiring contractors, planning, estimation, hiring
people, managing them, payments etc.. These activities become the project
scope.

Project Scope Statement vs SOW (Statement
of Work)
Project
scope statement is the narrative description of project scope, major
deliverables, assumptions, constraints, which is useful for making future
decisions if any and also to have common understanding among the stake holders
Statement of
Work (SOW) is the narrative description of the product or service or result
that should be supplied.

PMP Terminologies

PMP Terminologies
Here are a few terms related to the Procurement Knowledge
area.
Administrative closure vs Contract
closure


The Closure process group is having only 2 processes




Out of 42 processes. One comes under the Integration
management knowledge area and the other one in the Procurement management
knowledge area. Under the Integration, it is Close Phase or Project and under
Procurement, it is Close Procurement.
Before the Project closure the lessons learnt are to be documented and
should go to the repository or the knowledge Management system. So the
closure takes in the following order.
1 Contract/Procurement closure
2 Administrative Closure(close project or phase)
The contract closure can happen multiple times (once for
each contract) where as the administrative closure happens only once per
phase or for the complete project.
































































Different types of Contracts:

Under the Procurement as we know there are 3 different
types of contracts, Fixed, Cost Reimbursable and Time & Material. Which one
has to be used when?
From the Buyer perspective if the scope of work is clear,
go for the Fixed Price (FP). If the scope is not clear then go for Cost Reimbursable
(CR) and if the project is of short duration or to be started immediately then
go for Time and Material (T& M). In
case of FP, the seller is having more risk in terms of over running the cost
where as in case of CR, the Buyer will have more risk compare to the seller. FP
and CR can be awarded with different flavours based on the situations or
understanding with the seller. Here are a few:
Fixed Price
Incentive Fee (FPIF): This type of contract is used to motivate the seller
in terms of getting the things done faster. For example, the FP is $10,000 and
for every month early the project is finished, an additional $100 is paid to
the seller.
Fixed Price Award Fee
(FPAF): Contract cost or the FP is $10,000 and for every month performance
exceeds the planned level by more than 15%, an additional $50 is awarded to the
seller, with maximum award of $700
Fixed Price Economic
Price Adjustment (FPEPA): In case of long term projects, say 10 years,
which are under contract, in case of fixed price the seller may not be able to
survive with inflation or rise in the material cost or fluctuation in the oil
prices due to economy. In this case Buyer will go for the economic price
adjustment type. For example the FP is $10,000, but a price increase will be
allowed based on the economy or inflation in the material cost
Purchase Order:
This is used for simple purchase of commodity available in the market. For
example, contract to purchase 100 metres of iron at the rate of $100 per metre.
Cost plus Fee (CPF)
or Cost plus percentage of Costs (CPPC): Here buyer has to all cost plus
percentage of fee. Contract=Cost plus 10% of cost as Fee.
Cost plus Fixed Fee
(CPFF): The seller receives the actual cost plus a negotiated fee that is
fixed before the start the work. For example: Contract=Cost plus a fee of $1000.
Cost Plus incentive Fee
(CPIF): The Buyer pays the actual cost plus the fee that will be adjusted
based on whether the specific objectives mentioned in the contract are met.
Cost plus Award Fee
(CPAF): The buyer pays the actual cost plus an award amount or bonus
depending on the performance. For example, Contract=Cost plus $50 for every
month production exceeds 100 units or if it is delivered 5 days earlier.
Time and Material
(T&M): In this type of contract, the buyer pays based on per hour or
per item basis. For example, Contract=$100 per hour plus the material cost or
Contract= $100 per hour and $10 per metre of iron rod.

PMP Terminologies

PMP Terminologies
Here is the continuation of terminologies. In this article
we are going to discuss about key words related to framework.
Project Co-ordinator vs Project
Expediter


The Project Expediter monitors and reports on the status
of the project to senior management. This role has no authority. The Project
Expediter acts as a communication coordinator only and cannot enforce any
decisions.
The Project Coordinator
role is similar to expediter, but has some authority to make decisions.
He/she reports to the senior Management.




























































Project lifecycle vs Product
lifecycle
Project lifecycle usually comprises of phases like
requirements, Design, development, Testing, deployment and maintenance. Now
each of these phases can have the 5 process groups which are Initiating,
Planning, Execution, Monitoring & control and Closure.
Product lifecycle is also industry specific. The product
lifecycle is about conceptualisation, Manufacturing, reaching market (usage,
upgrade) and then may be obsolete. Now each of these lifecycle have have
project lifecycle like concept, design, development etc..
So a product lifecycle can have multiple project
lifecycle.


Project Management Plan vs Project
Documents
Project Management Plan is
a detailed document comprising of all the plans related to the knowledge
areas like scope management plan, cost management plan, time management plan
etc.. Each section details about how to manage each of the knowledge area.
Project documents comprises of project charter, SOW, risk
register, project meeting minutes, Stakeholder register etc..

Subproject vs Subnetwork
In order to complete a job, project management might break
the larger job into a series of smaller tasks called subprojects. When project
management creates a work breakdown structure, the subprojects are likely to be
included in it, but they might be referred to as projects and treated as such.
This means that even though they are pieces of the overall task to be
completed, these subprojects can be considered projects on their own since they
are able to be managed and bought from a seller.
These smaller units also appear on project schedule network diagrams. There,
those in project management will refer to them as subnetworks. It is the same
piece of the larger overall assignment for the company which is seen as a
subproject in the work breakdown schedule

Tool vs Technique
Tools are devices, objects, or programs used to aid the
design process.
Technique though is the personal way in which each person
uses a tool to aid them in the design process.

PMPTerminologies

PMP Terminologies
In continuation of the terminology discussion we are going
to capture about Time Management knowledge area. Here are a few.
Duration vs Effort
When we are
estimating the time required to complete an activity, we use the words effort,
duration etc… Is duration and effort same? NO.
Effort is the actual amount of time spent
to carry out an activity. This can be expressed in terms of person hours, man
days or man months. It shows the total number of hours/days/months that each
person spent working on each of the activities.
Duration is the amount of time taken to carry
out an activity. That is the start time and end time which is nothing but the
time elapsed to complete the activity. Duration is measured in hours/days etc..
This doesn’t count the number of people working on the activity.
For example:
An activity takes 4 hours to work by one person. The person who is carrying out this activity
contributes one hour per day. So the total days taken will be 4 days. Here the
effort is 4 hours where as the duration is 4 days.


Resource


Effort(Hours)


Duration(Everyday effort)


Total duration(Days)




Day1


Day2


Day3


Day4




a


4


1


1


1


1


4




b


2





1


1





2




c


3


1





1


1


3



Crashing vs Fast tracking
After the
arrival of total duration of the project by estimation technique, the project
manager presents the schedule to the PMO/Sponsor/Customer. But the Customer says that the duration has
to be reduced without comprising on the scope of the work. Now what is the left
out option for Project Manager, either he/she has to add resources or has to
run the activities in parallel.
Crashing is nothing but adding resources. Of
course when the crashing happens, the cost increases, because you are adding
extra resources.


















Fast tracking represents the activities to be
carried out in parallel instead of series. Here the disadvantage is that, it
increases the risk in the area of may be quality as the activities are
performed parallel.


Forward Pass vs Backward Pass
After the
arrival of critical path in the given network diagram, we need to track closely
the activities which are coming under the critical path. And for the activities
which are not in the critical path the tracking can be the normal way. But when
we say normal, need to know what is the degree of level. This can be determined
by the parameter called float or slack. To find the float or the slack
we have to perform the Forward pass and Backward pass.
Forward pass is moving through the network
diagram from start to finish and covering all the paths.
Backward
pass is moving through the network diagram in the reverse way or from Finish to
start of the network diagram and covering all the paths.
When we do
the forward and backward pass, will end up with values of Late Start (LS), Late
Finish (LF), Early Start (ES) and Early Finish (EF).
Float is the
difference of LS and ES or LF and EF, i.e. LS-ES
or LF-EF.
Free float vs Total float
Free float is an
amount of time that a schedule activity can be delayed without delaying the
early start of any immediately following schedule activities.
Total float is
the total amount of time that a schedule activity may be delayed from its early
start date without delaying the project finish date, or intermediary milestone.
In the given example below the total float for activity 3 is
5 and the free float is also 5(ES of activity 5-EF of activity 3). Similarly
the free float for activity 2 is 0.


Lead vs Lag
Lead is advancing an activity in terms of
schedule to overcome the risk if anything that may happens to the project.
For example:
You need an equipment 20 days from now and you are importing from outside.
Assume that it takes 15 days from the day of order. Instead of waiting for 5
more days from now, order now itself so that you can avoid the possible delay.
That is advancing the order day by 5 days.
Lag is deliberately delaying the successor activity.
For Example:
There are two activities. The first one is painting and second one is framing.
After painting will give some time so that the paint will dry and then only
will start framing. Deliberate delay in the successor activity is called Lag.

PMP Terminologies

PMP Terminologies
Here is the continuation of Time Management knowledge area.
Precedence vs logical relationship
While developing the relationship between the work packages
or the activities, the Project Manager or the Project team members determine
the activities what should come first and what next. This is developed by the
method called the Precedence Diagramming Method or PDM. PDM graphically
represents the activities using boxes.
The boxes which are representing the activities are linked
based on the dependency. This is called logical relationship. There are four
types of dependencies. Finish to Start, Start to finish, Start to Start and
Finish to Finish.

Master schedule vs Milestone schedule
Summary level schedule which highlights the principal
activities and their estimated duration is called Master schedule. This
schedule helps in early communication among stakeholders in particular senior
management. The schedule is also useful for facilitating team brainstorming
during the initial phrases of the project to work out logistics.

Master schedule
A milestone is a significant event in the project usually
marked by the completion of a major deliverable. The milestone schedule is used
for reporting status reports to top level management and external
stakeholders. And also the milestone
schedule allows the project team leader to review and identify all of the
significant and major project related milestones that may come during the
course of a project.

Progressive elaboration vs Rolling
wave planning
At the beginning of the project, near term deliverables are
decomposed into individual components and defined at the greatest level of
detail while the deliverables that comes later will be defined at a higher
level.
For example a project having 4 phases, may be phase 1 and 2
are decomposed in detailed and while the activities are in progress that is
during execution phase, the details of phase 3 and phase 4 deliverables are
defined. This type of project management
approach is particularly useful when the availability of information needed to
plan future work packages in detail is predicated on the successful completion
of previous project phases. This is called Rolling Wave Planning.
Progressive elaboration is used in which the plan for the
particular and designated project is being continuously and constantly
modified, detailed, and improved as newer and more sets of information becomes
available to the project management team.
Progressive elaboration is a form of Rolling Wave Planning.


Project Buffer vs Feeding buffer
A project buffer is inserted at the end of the project
network between the last task and the completion date. Any delays on the
longest chain of dependant tasks will consume some of the buffer but will leave
the completion date unchanged and so protect the project.
Delays on paths of tasks feeding into the longest chain can
impact the project by delaying a subsequent task on the Critical Chain. To
protect against this, feeding buffers are inserted between the last task on a
feeding path and the Critical Chain

Resource Loading vs Resource
Levelling
Resource loading is assigning activities to resource/man
power. In resource loading, each employee is assigned a task or a percentage of
a project. With resource loading, a project manager can predict an employee's
hours for the year and see how tasks can be assigned. This also allows the
project manager to decide whether or not additional employees or contractors
are needed to complete the scheduled projects.

Resource Loading
Resource leveling deals with both time (starting and ending
date) and resources, including manpower and budget. Resource leveling tries to
balance the conflicting interests of projects with the available resources. Resource
levelling generally breaks things down into two categories: time and available
resources. Some projects need to be finished within a certain timeframe. These
projects will use all the available resources (money and manpower) to complete
the project by a certain date.
􀂄Advantages
– Less day day-to to-day manipulation
– Better morale, fewer problems/costs
– Levels costs, simplifies budgeting and funding

Resource levelling
Work Performance Information vs Work
Performance Measurement
Work performance Information is the output of execution like
status of deliverables, schedule progress, cost incurred, implementation of the
corrective/changed requests, risk status, seller’s information in terms of
procurement etc…
Work Performance Information
Work Performance Measurement is the output of Monitoring and
control. They are used to generate graph or metrics like Cost Variance (CV),
Schedule Variance (SV), forecasts like ETC, EAC