PMP Project Management Professional Study Guide, Third Edition

PMP Project Management Professional Study Guide, Third Edition Joseph Phillips McGraw-Hill is an independent entity from the Project Management Institute, Inc. and is not affiliated with the Project Management Institute, Inc. in any manner.this publication and CD may be used in assisting students to prepare for the Project Management Institute's PMP Exam. Neither the Project Management Institute, Inc. nor McGraw-Hill warrant that use of this publication and CD will ensure passing the relevant exam. PMI, the PMBOK, and PMP are trademarks or registered trademarks of the Project Management Institute, Inc. in the United States and other countries. Me Graw Hill New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto

CONTENTS About the Contributors Acknowledgments Preface Introduction iv xxiii xxv xxviii ParU Project Initiation I Introducing Project Management 3 The PMBOK Guide, This Book, and the PMP Exam 4 All About the PMBOK Guide 5 All About This Book 5 All About the PMP Exam 6 Defining What a Project Is and Is Not 10 Projects Are Temporary 10 Projects Create Unique Products, Services, or Results 11 Progressive Elaboration 11 Projects vs. Operations 13 Projects and Strategic Planning 14 Defining Project Management 16 Project Management Application Areas 18 Management by Projects 18 Understanding the Project Environment 19 Relying on General Management Skills 20 Relying on Interpersonal Skills 21 Examining Related Areas of Project Management 22 Program Management 22 Subproject Implementation 24 Working with a Project Management Office 24 / Two-Minute Drill 29 Q&A Self Test 31 Self Test Answers 36 ix

X PMP Project Management Professional Study Guide Examining the Project Life Cycle and the Organization 45 Revving Through Project Life Cycles 46 Working with Project Life Cycles 47 Project Phase Deliverables 52 Meeting the Project Stakeholders 56 Managing Stakeholder Expectations 60 Identifying Organizational Models and Attributes 61 Considering Organizational Systems 63 Considering Organizational Culture 64 Completing Projects in Different Organizational Structures 64 Relying on Organizational Process Assets 70 The Project Management Office 71 Defining Key General Management Skills 71 Managing Social, Economic, and Environmental Project Influences 76 Dealing with Standards and Regulations 76 Considering International Influences 77 Cultural Influences 77 / Two-Minute Drill 82 Q&A Self Test 85 Self Test Answers 90 Adapting the Project Management Processes 99 Learning the Project Processes 101 Identifying the Project Management Process Groups 102 Identifying the Initiating Process Group 105 Identifying the Planning Process Group 108 Managing the Executing Processes 116 Monitoring and Controlling the Project 120 Closing the Project 124 How Process Groups Interact 125 Customizing Process Interactions 126 Plotting the Processes 126

Contents* / Two-Minute Drill : 132 Q&A Self Test 135 Self Test Answers 140 Part II PMP Exam Essentials 4 Implementing Project Integration Management... 151 Developing the Project Charter 153 Creating the Project Charter 154 Examining Benefit Measurement Methods 158 Examining Constrained Optimization Methods 163 Developing the Project Plan 165 Understanding the Project Plan's Purpose 166 Preparing to Develop the Project Plan 166 Applying Tools and Techniques for Project Plan Development 167 Examining the Typical Project Plan 169 Executing the Project Plan 175 Implementing Tools and Techniques for Project Execution 177 Examining the Outputs of Project Plan Execution 178 Monitoring and Controlling the Project Work 180 Using Monitoring and Controlling Tools and Techniques 180 Examining the Results of Project Work 182 Reacting to Change 183 Implementing Tools and Techniques for Integrated Change Control 183 Closing the Project or Phase 188 Preparing to Close the Project or Phase 188 Completing Contract Closure 189 / Two-Minute Drill 198 Q&A Self Test 200 Self Test Answers 205

PMP Project Management Professional Study Guide Managing the Project Scope 215 Collecting and Eliciting Project Requirements 216 Interview the Stakeholders 218 Leading a Focus Group 218 Hosting a Requirements Workshop 218 Using Group Creativity Techniques 219 Using Group Decisions 221 Relying on Surveys 222 Observing Stakeholders 222 Creating Prototypes 222 Managing the Project Requirements 223 Defining Project Scope Management 224 Project Scope vs. Product Scope 225 Planning the Project Scope 226 Using Scope Planning Tools and Techniques 227 Creating the Scope Management Plan 227 Defining the Project Scope Statement 228 Examining the Inputs to Scope Definition 228 Using Product Analysis 229 Finding Alternatives 230 Performing Stakeholder Analysis 230 Examining the Scope Statement 230 Creating the Work Breakdown Structure 234 Using a Work Breakdown Structure Template... 235 Decomposing the Project Deliverables 236 Updating the Scope Statement 23 7 Verifying the Project Scope 238 Examining the Inputs to Scope Verification 239 Inspecting the Project Work 239 Formally Accepting the Project Deliverables 240 Protecting the Project Scope from Change 240 Examining the Inputs to Scope Change Control 241 Implementing a Change Control System 242 / Two-Minute Drill 249 Q&A Self Test 252 Self Test Answers 258

Contents 6 Introducing Project Time Management 269 Defining the Project Activities 270 Getting to Work: Defining the Activities 271 Decomposing the Project Work Packages 272 Using Rolling Wave Planning 273 Relying on Templates 273 Using Planning Components 273 Compiling the Activity List 274 Documenting the Activity Attributes 275 Sequencing Project Activities 276 Considering the Inputs to Activity Sequencing 277 Creating Network Diagrams 277 Using the Precedence Diagramming Method 278 Determining the Activity Dependencies 280 Considering Leads and Lags 280 Utilizing Network Templates 281 Examining the Sequencing Outputs 282 Using a Project Network Diagram 282 Updating the Work Breakdown Structure 283 Considering the Resource Requirements 284 Considering Resource Availability 284 Considering the Calendars 286 Creating a Resource Breakdown Structure 287.' Updating the Activity Lists 287 Estimating Activity Durations 287 Considering the Activity Duration Estimates Inputs 288 Applying Expert Judgment 290 Creating an Analogy 290 Applying Parametric Estimates 291 Creating a Three-Point Estimate 292 Factoring in Reserve Time 292 Evaluating the Estimates 294 Developing the Project Schedule 295 Revisiting the Project Network Diagram 295 Relying on Activity Duration Estimates 296 Evaluating the Project Constraints 296 Reevaluating the Assumptions 298

X I V PMP Project Management Professional Study Guide Evaluating the Risk Management Plan 298 Examining the Activity Attributes 298 Defining the Project Timeline.. 299 Performing Schedule Network Analysis 299 Calculating Float in a PND 300 Using the Critical Chain Method 303 Encountering Scheduling on the PMP Exam 304 Applying Duration Compression 304 Using a Project Simulation 306 Using Resource-Leveling Heuristics 307 Using Project Management Software 308 Relying on a Project Coding Structure 308 Examining the Project Schedule 309 Utilizing the Schedule Management Plan 310 Updating the Resource Requirements 311 Controlling the Project Schedule 311 Managing the Inputs to Schedule Control 311 Applying a Schedule Control System 312 Measuring Project Performance 312 Examining the Schedule Variance 312 Updating the Project Schedule 313 Applying Corrective Action 313 Writing the Lessons Learned 313 / Two-Minute Drill 318 Q&A Self Test 321 Self Test Answers 328 7 Introducing Project Cost Management 339 Estimating the Project Costs 340 Considering the Cost Estimating Inputs 341 Estimating Project Costs 346 Using Analogous Estimating 346 Using Parametric Estimating 347 Using Bottom-Up Estimating 349 Creating a Three-Point Cost Estimate 349 Using Computer Software 349 Analyzing Vendor Bids 350

Contents XV Analyzing Cost Estimating Results 351 Refining the Cost Estimates 351 Considering the Supporting Detail 352 Developing the Cost Management Plan 353 Creating a Project Budget 353 Developing the Project Budget 353 Creating the Cost Baseline 354 Establishing Project Funding Requirements 355 Implementing Cost Control 355 Considering Cost Control Inputs 356 Creating a Cost Change Control System 357 Measuring Project Performance 358 Finding the Variances 359 Calculating the Cost Performance Index 360 Finding the Schedule Performance Index 361 Preparing for the Estimate at Completion 361 Finding the Estimate to Complete 363 Calculating the To-Complete Performance Index 364 Finding the Variance at Completion 365 The Five EVM Formula Rules 365 Additional Planning 366 Using Computers 367 Considering the Cost Control Results 367 Revising the Cost Estimates 367 Updating the Budget 368 Applying Corrective Actions 368 Updating Lessons Learned 369 / Two-Minute Drill 374 Q&A Self Test 377 Self Test Answers 383 8 Introducing Project Quality Management 393 The Big Quality Picture 395 Accepting the Quality Management Approach 395 Quality vs. Grade 396 Implementing Quality Project Management 396

Project Management Professional Study Guide Preparing for Quality 397 Determining the Quality Policy 398 Reviewing the Scope Baseline 398 Reviewing the Standards and Regulations 399 Planning for Quality 399 Using a Benefit/Cost Analysis 400 Applying Benchmarking Practices 401 Design of Experiments, 402 Considering the Cost of Quality 403 Creating the Quality Management Plan 403 Identifying the Operational Definitions 404 Applying Checklists 404 Creating the Process Improvement Plan 405 Executing Quality Assurance 405 Preparing for Quality Assurance.' 406 Applying Quality Assurance 407 Completing a Quality Audit 407 Improving the Project 407 Implementing Quality Control 408 Preparing for Quality Control 409 Inspecting Results 409 Creating a Flow Chart 410 Creating a Control Chart 411 Creating Pareto Diagrams 414 Creating a Histogram 414 Creating a Run Chart 414 Creating a Scatter Diagram 415 Completing a Statistical Sampling 415 Revisiting Flowcharting 415 Applying Trend Analysis 416 The Results of Quality Control 416 / Two-Minute Drill 422 Q&A Self Test 424 Self Test Answers 430 9 Introducing Project Human Resource Management... 441 Preparing for Human Resource Planning 443 Identifying the Project Interfaces 444

Contents XVH Identifying the Resource Requirements 444 Identifying the Project Constraints 445 Completing Organizational Planning 446 Relying on Templates 446 Applying Human Resource Practices 447 Relating to Organizational Theories 447 Networking with Stakeholders 451 Charting the Project Resources 451 Preparing for Project Team Management 452 Creating the Role and Responsibility Assignments 452 Creating an Organizational Chart 452 Creating a Staffing Management Plan 453 Documenting the Supporting Detail 455 Acquiring the Project Human Resources 456 Referring to the Staffing Management Plan 456 Examining the Staffing Pool 456 Recruiting Project Team Members 457 Working with Preassigned Staff 457 Negotiating for Resources 457 Acquiring Staff 458 Working with Virtual Teams 458 Assembling the Project Team 459 Developing the Project Team 459 Preparing to Develop the Project Team.. 460 Leading Project Team Development 460 Creating Team-Building Activities 461 Naturally Developing Project Teams 461 Relying on General Management Skills 462 Rewarding the Project Team 463 Dealing with Team Locales 463 Training the Project Team 464 Examining the Results of Team Development 464 Managing the Project Team 465 Communicating with the Project Team 465 Completing Project Performance Appraisals 465 Dealing with Team Disagreements ' 466 / Two-Minute Drill 476 Q&A Self Test 479 Self Test Answers 484

X V i i i P^P Project Management Professional Study Guide 10 Introducing Project Communications Management 495 Identifying Project Stakeholders 497 Performing Stakeholder Analysis 497 Creating a Stakeholder Register 498 Communications Planning 499 Leveraging Project Inputs 499 Evaluating the Project Constraints and Assumptions 500 Identifying Communication Requirements 501 Exploring Communication Technologies 502 Creating the Communications Plan 503 Preparing for Information Distribution 504 Examining Communication Skills 504 Creating Successful Communications 506 Creating Information Retrieval Systems 507 Creating Lessons Learned 507 Distributing Information 508 Examining the Results of Information Distribution 508 Managing Stakeholder Expectations 509 Preparing for Stakeholder Expectations Management 510 Performing Stakeholder Expectations Management 511 Managing Project Stakeholders 511 Communicating with Stakeholders 512 Reporting Project Performance 512 Reviewing Project Performance 513 Analyzing Project Variances 513 Completing Trend Analysis 514 Examining the Results of Performance Reporting 514 / Two-Minute Drill 519 Q&A Self Test 521 Self Test Answers 526 11 Introducing Project Risk Management 535 Planning for Risk Management 537 Examining Stakeholder Tolerance 537 Relying on Risk Management Policies 538

Contents Creating the Risk Management Plan 538 Examining the Risk Management Plan 539 Creating Risk Categories 541 Using a Risk Management Plan Template 542 Identifying Risks 543 Preparing for Risk Identification 543 Relying on Project Planning 543 Identifying the Project Risks 544 Reviewing Project Documents 544 Testing the Assumptions 544 Brainstorming the Project 545 Using the Delphi Technique 546 Identifying Risks'Through Interviews 546 Analyzing SWOT 546 Utilizing Diagramming Techniques 547 Creating a Risk Register 548 Using Qualitative Risk Analysis 549 Preparing for Qualitative Risk Analysis 549 Completing Qualitative Analysis 550 Applying Probability and Impact.. 551 Creating a Probability-Impact Matrix 551 Relying on Data Precision 553 Examining the Results of Qualitative Risk Analysis 554 Preparing for Quantitative Risk Analysis 555 Considering the Inputs for Quantitative Analysis 556 Interviewing Stakeholders and Experts 557 Applying Sensitivity Analysis 557 Finding the Expected Monetary Value 558 Using a Decision Tree 558 Using a Project Simulation 559 Examining the Results of Quantitative Risk Analysis 559 Planning for Risk Responses 560 Preparing for Risk Response 560 Creating Risk Responses 561 Avoiding the Negative Risk and Threats 561 Transferring the Negative Risk 562 Mitigating the Negative Risk 564

X X P^P Project Management Professional Study Guide Managing the Positive Risk and Opportunities 564 Accepting the Risks 565 Examining the Results of Risk Response Planning 566 Working with Residual Risks 566 Accounting for Secondary Risks 567 Creating Contracts for Risk Response 567 Justifying Risk Reduction 567 Updating the Project Plan 568 Implementing Risk Monitoring and Control 568 Preparing for Risk Monitoring and Control 569 Completing Risk Monitoring and Control 569 Completing Risk Response Audits 570 Completing Periodic Risk Reviews 570 Using Earned Value Analysis 570 Measuring Technical Performance 570 Completing Additional Risk Planning 571 Examining the Results of Risk Monitoring and Control... 571 </ Two-Minute Drill 576 Q&A Self Test 579 Self Test Answers 585 12 Introducing Project Procurement Management... 595 Planning for Purchases.... ; 596 Evaluating the Market Conditions 597 Referring to the Scope Baseline 598 Relying on the Project Management Plan 598 Teaming with Other Organizations 599 Completing Procurement Planning, 599 Determining to Make or Buy 599 Using Expert Judgment 601 Determining the Contract Type 601 Summary of Contract Types 606 The Procurement Management Plan 607 Using the Statement of Work 608 Preparing for Contracting 608 Organizing Contracting Materials 608 Creating the Procurement Documents 609

Contents XXJ Determining the Source Selection Criteria 610 Updating the Contract Statement of Work 610 Completing Procurement Purchasing 611 Procuring Goods and Services 611 Examining the Results of Contracting 612 Selecting the Seller 612 Preparing for Source Selection 613 Completing the Seller Selection Process 613 Examining the Results of Seller Selection 615 Performing Contract Administration 616 Preparing for Contract Administration 616 Completing Contract Administration 619 Reviewing the Results of Contract Administration 620 Performing Contract Closure 621 Reviewing Contract Documentation : 621 Auditing the Procurement Process 622 Negotiated Settlements 622 Completing Contract Closeout 622 / Two-Minute Drill 628 Q&A Self Test 630 Self Test Answers 635 13 The PMI Code of Ethics and Professional Conduct 645 Responsibilities to the Profession 646 Complying with Rules and Policies 647 Applying Honesty to the Profession 647 Advancing the Profession 648 Responsibilities to the Customer and to the Public 649 Enforcing Project Management Truth and Honesty 649 Eliminating Inappropriate Actions 650 Respecting Others 650 / Two-Minute Drill 653 Q&A Self Test 654 Self Test Answers 661

X X i i PMP Project Management Professional Study Guide PartJM Appendices A About the CD 675 System Requirements 676 LearnKey Online Training 676 Installing and Running MasterExam 676 MasterExam 677 PMP Video Training 677 Electronic Book 677 Help 677 Removing Installation(s) 678 Technical Support 678 LearnKey Technical Support 678 B Critical Exam Information 679 Exam Test-Passing Tips 680 Days Before the Exam 680 Practice the Testing Process 680 Testing Tips 681 Answer Every Question Once 682 Use the Process of Elimination 682 Everything You Must Know 683 The 42 Project Management Processes 683 Magic PMP Formulas 685 Earned Value Management Formulas 685 Quick PMP Facts 686 Glossary 695 Index 729