Table Of Content

Y L F M A E T ® Team-Fly Preparing for the Project Management (cid:1) Professional (PMP ) Certification Exam ..........................9618$$ $$FM 09-06-0214:57:59 PS This Page Intentionally Left Blank ..........................9618$$ $$FM 09-06-0214:57:59 PS Preparing for the Project Management (cid:1) Professional (PMP ) Certification Exam Second Edition Michael W. Newell, PMP, ENP American Management Association NewYork•Atlanta•Brussels•BuenosAires•Chicago•London•MexicoCity SanFrancisco•Shanghai•Tokyo•Toronto•Washington,D.C. ..........................9618$$ $$FM 09-06-0214:58:00 PS SpecialdiscountsonbulkquantitiesofAMACOMbooksare availabletocorporations,professionalassociations,andother organizations.Fordetails,contactSpecialSalesDepartment, AMACOM,adivisionofAmericanManagementAssociation, 1601Broadway,NewYork,NY10019. Tel.:212-903-8316 Fax:212-903-8083 Website:www.amacombooks.org Thispublicationisdesignedtoprovideaccurateandauthoritative informationinregardtothesubjectmattercovered.Itissoldwiththe understandingthatthepublisherisnotengagedinrenderinglegal, accounting,orotherprofessionalservice.Iflegaladviceorotherexpert assistanceisrequired,theservicesofacompetentprofessionalperson shouldbesought. ‘‘PMI’’andthePMIlogoareserviceandtrademarksregisteredinthe UnitedStatesandothernations;‘‘PMP’’andthePMPlogoare certificationmarksregisteredintheUnitedStatesandothernations; ‘‘PMBOK’’,‘‘PMNetwork’’,and‘‘PMIToday’’aretrademarks registeredintheUnitedStatesandothernations;and‘‘Project ManagementJournal’’and‘‘Buildingprofessionalisminproject management’’aretrademarksoftheProjectManagementInstitute,Inc. LibraryofCongress-Cataloging-in-PublicationData Newell,MichaelW.,1945– Preparingfortheprojectmanagementprofessional(PMP)certification exam/MichaelW.Newell.—2nded. p. cm. Includesbibliographicalreferencesandindex. ISBN0-8144-7172-2(pbk.:alk.paper) 1. Projectmanagement—Examinations,questions,etc. I. Title. HD69.P75 N49 2002 658.4(cid:1)04(cid:1)076—dc21 2002010223 (cid:3)2002MichaelW.Newell. Allrightsreserved. PrintedintheUnitedStatesofAmerica. Thispublicationmaynotbereproduced, storedinaretrievalsystem, ortransmittedinwholeorinpart, inanyformorbyanymeans,electronic, mechanical,photocopying,recording,orotherwise, withoutthepriorwrittenpermissionofAMACOM, adivisionofAmericanManagementAssociation, 1601Broadway,NewYork,NY10019. Printingnumber 10 9 8 7 6 5 4 3 2 1 ..........................9618$$ $$FM 09-06-0214:58:00 PS This book is dedicated to my wife, Saralee, who corrects my spelling and puts up with all my foolishness. ..........................9618$$ $$FM 09-06-0214:58:01 PS This Page Intentionally Left Blank ..........................9618$$ $$FM 09-06-0214:58:01 PS Contents Preface xv Introduction 1 WhatIsProjectManagementAnyway? 2 AdvantagesofProjectManagement 6 OrganizingforProjectManagement 7 TheProjectizedOrganization 7 TheTraditionalOrganization 9 TheMatrixOrganization 10 TheProjectOffice 12 HowtheProjectManagerMakesProjectsSuccessful 13 TheProjectLifeCycle 14 ProjectProcesses 14 Summary 15 1. Scope Management 16 InitiationoftheProject 17 ProjectCharter 17 ConstraintsandAssumptions 18 WhoAreThoseStakeholders? 18 CostandItsRelationshiptoPrice 19 OverbidorUnderbid:WhichIsBetterforYourCompany? 20 GettingtotheScopeBaseline 23 WorkBreakdownStructure 25 SystemsApproachtoWorkBreakdownStructure 28 AdditionalProjectBreakdownStructures 30 ChangeManagement 30 ProjectJustifications 31 TheBreakEvenChart 32 ProblemswithBreakEvenCharts 33 AverageRateofReturnonInvestment 34 PresentValueofMoney 34 InternalRateofReturnonInvestment 39 Summary 44 vii ..........................9618$$ CNTS 09-06-0214:58:10 PS viii Contents 2. Time Management 46 ActivityDefinition 46 ActivitySequencing 47 ActivityonArrowDiagramming 48 PrecedenceDiagrammingMethod(PDM) 49 Logical Relationships 50 Finish-StartRelationship(FS) 50 Start-StartRelationship(SS) 52 Finish-FinishRelationship(FF) 53 Start-FinishRelationship(SF) 53 LeadsandLags 54 Diagramming Relationships 55 ProjectStartandProjectFinishEvents 55 LogicalPrecedenceDiagram 56 ActivityDurations 56 BuildingtheNetworkDiagram 57 BufferingtheSchedule 63 ReverseResourceAllocationScheduling 67 Critical PathMethod(CPM) 67 Program EvaluationandReviewTechnique(PERT) 68 MonteCarloSimulation 73 TheSimulation 74 OutputfromtheMonteCarloSimulation 75 Summary 75 3. Cost Management 77 Why WeNeedCostManagement 77 ProjectLifeCycleandProjectCost 78 UsingtheWorkBreakdownStructure 78 CostEstimating 79 TypesofEstimates 80 TopDownEstimates 80 BottomUpEstimates 80 AnalogousEstimates 80 ParametricEstimates 81 DefinitiveEstimates 81 CostBudgeting 83 ..........................9618$$ CNTS 09-06-0214:58:11 PS Contents ix CostControl 85 EarnedValueReporting 85 CumulativeReporting 85 EarnedValueParameters 86 DifficultiesinDataCollection 87 ReportingWorkComplete 89 Examples 89 CalculatedValuesforEarnedValueReports 90 FinancialMeasures 94 ReturnonSales 97 ReturnonAssets 98 EconomicValueAdded 99 Depreciation 100 StraightLineDepreciation 100 AcceleratedDepreciation 101 SumoftheYears’Digits 101 DoubleDecliningBalances 102 Summary 102 4. Human Resources Management 104 ProjectManagerRolesandResponsibilities 104 StrongMatrix, WeakMatrix,andBalancedMatrix 106 StrongMatrix 106 WeakMatrix 106 BalancedMatrix 108 MakingMatrixManagementWork 109 PersonnelandPersonalEvaluations 109 Motivation 110 ImportanceofMotivation 110 IndustrialRevolution 110 ScientificManagement 111 LearningCurveTheory 111 DepressionEra 112 WorldWarII 112 Post–WorldWarII 112 MotivationalIdeas 112 ProceduresversusMotivation 113 ExpectancyTheory 113 Maslow’sHierarchyofNeedsTheory 115 Hertzberg’sMotivation/HygieneTheory 117 ..........................9618$$ CNTS 09-06-0214:58:11 PS