Contract Statement of Work

What are the specifications of a Contract Statement of Work :

• are detailed descriptions that define the requirements of a service or a product.
• can be in the form of words, pictures or diagrams.

What is Procurement Management Plan in PMP?

Procurement Management Plan:

• may be formal or informal
• should specify the types of contracts
• should obtain and evaluate bids
• should manage multiple providers
• should state procurement activities

Disadvantages of Fixed Price Contract

Disadvantages of Fixed Price Contract include:

• Seller may under-price the work and try to make up profits on change orders
• Seller may not complete some of the contract statement of work if they begin losing money
• More work for buyer to write the contract statement of work
• Can be more expensive than Cost Reimbursable Contract if the contract statement of work is incomplete
• Seller will need to add to the price for their increase of risk

Advantages of Fixed Price Contract

Advantages of Fixed Price Contract includes:

• Less work for buyer to manage
• Seller has a strong incentive to control costs
• Companies have experience with tis type of contract
• Buyer knows the total price at project starts

Disadvantages of Time & Material Contract

Disadvantages of Time & Material Contract include:

• Profit is in every billed
• Seller has no incentive to control costs
• Appropriate only for small projects
• Requires the most day to day oversight from the buyer

Advantages of Time & Material Contract

Advantages of Time & Material Contract include:

• Quick to create
• Contract duration is brief
• Good choice when you are hiring "bodies" or people to augment your staff

Disadvantages of Cost Reimbursable Contract

Disadvantages of Cost Reimbursable Contract include:

• Require auditing seller's invoices
• Require more work for the buyer to manage
• Seller has only a moderate incentive to control costs
• Total price is unknown

Advantages on Cost Reimbursable Contract

The Advantages on Cost Reimbursable Contract are:

• Simpler contract statement of work
• usually requires less work to work the scope that fixed price
• Generally lower cost than fixed price because the seller does not have add as much for risk.

Point of Total Assumption (PTA in FPI

What is Point of Total Assumption in FPI?

• Point of Total Assumption is the point at which the share ratio ceases to operate and $1 of added cost result in $1 decrease in payment to the contractor.

What are the three types of FPI?

The three types of FPI include:

• Firm Target
• Successive Target
• Fixed Price and Award Fee

What are the elements of FPI Contracts?

The elements of FPI contracts include:

• Target Cost
• Fee / Profit
• Price
• Ceiling Price
• Government / Contractor Share Ratio

Fixed Price Incentive Contracts

What is a Fixed Price Incentive Contract:

• Contract such that all allowable cost is paid and final price is based on total final cost relative to total target cost.
• Final price subject to a ceiling price which is negotiated at the outset.

What is an Incentive Contract?

An Incentive Contract is such that the fee is structured on the basis of the contractor meeting targets int he performance of the contract.

Incentive Contracts:

• motivate contractor efforts that might not otherwise be emphasized
• discourage contractor inefficiency and waste
  
  

Incentive Contracts incentivize efficiency.

Incentive Contracts: Point of Total Assumption

That is a component of US FAR 16.4 related to Fixed-Price Incentive Fee Contracts.

• It covers a variety of incentive contracts, presented here only to provide perspective.
• Notes: US Federal Acquisition Regulation (FAR) 16.4

What is Fixed Price?

What is Fixed Price?

• It is also called Lump Sum, Firm Fixed Price
• Is one price that is agreed upon for all the work.
• Has least cost risk for buyer if he has a completely defined scope.
• Is most appropriate when the buyer can completely describe the contract statement of work

What is Time and Material (T&M)

Time and Material is:

• also called Unit Price
• used for small dollar amounts
• price on per hour or per item basis

What is Cost Plus Incentive Fee (CPIF)?

What is Cost Plus Incentive Fee (CPIF)?

• Pays all cost an agreed upon fee plus a bonus for beating the performance objective stated in the contract.

What is Cost Plus Fix Fee (CPFF)?

What is Cost Plus Fix Fee (CPFF)?

• The buyer pays all cost but the fee is at a specific dollar amount.
• Help to keep the seller's costs in line because a cost overrun will not generate any additional fee or profit.

What is Cost Plus Fee (CPF) or Cost Plus Percent of Cost (CPPC)?

What is Cost Plus Fee (CPF) or Cost Plus Percent of Cost (CPPC)?

• Requires the buyer to pay for all cost plus a percentage of cost as a fee.
• Sellers are not motivated to control costs because the seller will get paid profit on every cost without limit.

What is Cost Reimbursable?

Cost Reimbursable:

• Provides sellers a refund of expenses incurred while providing a service, plus a fee presenting seller profits.
• Includes incentives for meeting certain objectives.
• Is most suitable if project parameters are uncertain.

Matrix Organizations, What Are They?

From PMP Resources, they email me a very good article on Matrix Organization and you can find the information below.

Until the 1970's, typical, large organizations tended to function in "silos", logical divisions where essentially isolated groups of workers reported to a line manager or functional manager. Imagine columns on a page with a line manager at the top of each column and a group of workers inside each column under the manager.

As these groups operated autonomously, it was not unusual to find functions replicated in each silo.

In an Information Technology company for example, you might find software programmers in the development area, some more in the customer support area, and yet more in the quality assurance area, because each of these functional units had a programming need.
If your organisation still operates in this manner, give your boss a copy of this article.

And so it was in the 1970s that attempts to improve traditional organization structures, led to the creation of the “Matrix" organizational structure.

In the matrix organisation, considering our IT example above, all programmers are now in a separate programming department and report to a functional manager in charge of programming, and that manager would control almost all of their work. In a matrix we usually refer to the line manager as a functional manager because all of their workers perform similar functions.

So workers in a matrix organisation are compartmentalized by their required skills into silos, like columns in a matrix, each with its dedicated manager. The workers report to and are responsible to their functional manager, who in turn usually has sole responsibility for the advancement of their workers, as well as the administration of their area, including budgeting.

So far the matrix organization sounds much like the traditional organization, except that all workers within a silo (a column in the matrix) are partitioned by a particular skill-set.

The other difference between traditional organisations and matrix organisations is that matrices have rows (lines running across the columns, not fights).

Traditional organizations operated quite well, but they were inefficient, with lots of duplication of skills around the company. But their major weakness was when they tried to manage projects.

The problem was that in the traditional organisation, the concept of a project team, which is my nature cross-functional, did not exist, because the project manager's "team" team comprised of people from different functional areas, managed and controlled by different functional managers -- not by the project manager. And this is not a recipe for successful projects.

So we have our columns of functionally similar workers in each column of our matrix, with a functional manager at the head of each column.
Now picture rows running across the page, with a project manager at the "head" (i.e. the left hand side) of each row. The rows intersect the columns and so intersect the columns of workers. So each row is a silo of workers of differing functionality, headed by a project manager.
In such a matrix structure there is an obvious tension between the project managers at the head of each row (each project) and the managers at the head of each column (each functional area) as they are sharing the same workers, and as each manager (project and functional) has a job to do, we have a conflict of interest.

There are different types of matrix organization, designed to balance the power struggle-struggle between the managers conflicting needs. The main types are listed below.

The Weak Matrix

This type of organizational structure is a bit of a nightmare for Project Managers because they are effectively reduced to being project facilitators. They make plans and monitor the execution, but they have no real authority over staff, and are almost totally reliant upon the functional managers to provide resources.

The workers have little loyalty to the project managers (or the project), because it is the functional managers who decide the advancement of the workers within the organization. And the workers' performance is usually measured only on the work that they do for their functional manager -- not on their project work -- so in fact working on a project may be seen by the worker as undesirable as they will have less time to do their regular work, so the project manager may find them unmotivated.

And as the PM has no real authority over the team members, then they often have to report the problem of workers not performing, to the functional managers in the hope that they will encourage the workers to work more on the project.

But remember that the functional managers are primarily responsible for the performance of their own functional areas, so their workers performing project tasks can actually reduce the productivity of their area (often projects are ignored in the benchmarks). So this leads to a clear conflict of interest between the PM, the functional managers and the various workers.

In this situation the PM usually loses -- and that’s the easy to remember it -- the PM is weak in a weak matrix.

The Strong Matrix

All these problems led to the creation of the “strong matrix” organization

In the strong matrix the tables are turned, it is the project managers that have responsibility for the workers, not the line managers. But the PMs are not responsible for the human resource administration.

This empowers the project managers to manage the workers directly, and thus properly manage the whole project, but without tying the PMs up in HR administration.

I have worked in organizations like this, where I managed my teams and was responsible for everything except the HR functions, and I found it a very satisfying environment from a project point of view. So my teams would have me as project manager and I had sole authority and responsibility to direct their work, but they also had staff managers who looked after anything that was not project-related, i.e. performance reviews (but I provided the key input to these) training, vacation administration, employment contracts etc. And this meant that I could focus on the projects.

So when a project manager starts a new project, they discuss their staffing requirement with the functional managers and the functional managers try to make the resources available (and provide training fro them, where necessary). Usually the functional managers will draw up plans and charts (e.g. Gantt charts) of how “their people” will fit inside projects, and they might move staff between projects and project managers as required (after consulting with the project managers).

Effectively the PM and the functional managers work together, but overall control of everything project-related is the function of the project manager -- so in a strong matrix, the project manager is the stronger party.

The Balanced Matrix

There is an old saying, “power corrupts, and absolute power corrupts absolutely”. In each type of matrix organization there is a struggle for power, and so there needs to be some way to bring this into balance, otherwise one group will dominate the other, to the detriment of the project, and ultimately to the detriment of the organization as a whole (although individual projects or functional areas may blossom for a while). A very dominant project manager for example may bully the functional managers into always giving them the best team members for their projects.

One way of reducing the problem is to make rules within the organization that varies who can manage a worker, depending upon certain circumstances. For example there could be a rule that says if an worker is to work on a project for less than one week then the functional manager (or project manager) has sole control over the worker, but if the requirement is for more than one week, control changes hands.
Or there may be rules that the same worker can’t work for the same PM, on two consecutive projects.

There are many possible rules that could be made of course, but the goal is to balance the power between the PM and the functional managers so that we don’t have a win/lose situation, and I’m sure you can guess that this type of organizational structure is called a “balanced matrix”.

So weak, strong, or balanced, the "strength" is always from the viewpoint of the project manager.

Summary
Until the 1970's, typical, large organizations tended to function in "silos", logical divisions where essentially isolated groups of workers would report to a line manager or functional manager. Matrix organisations are an attempt to restructure to make project management possible.

PMP Exam: The 5 Secret Keys to PMP Exam Success

I received the following tips from PMP Exam Resources and I believe this will benefit all of you.

--------------------------------------------------------------

For full detail, visit
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Dear Group Member,

"How to Ace the Project Management Professional (PMP) Credential Examination, using easy step-by-step PMP
test study guide, without weeks and months of endless studying..."

Before we go any further, let me clarify what PMP Exam Secrets is not. It is not a stale rehash of all of the things you have already learned.

PMP Exam Secrets is our exclusive collection of tips and information specially selected to give you the best results on the PMP test for the least time spent studying. It's written in everyday language and is easy to use.

We cover the 5 essential skills necessary to do well on the PMP test, plus comprehensive reviews covering all the essential test sections individually.

Warning: Always Look for These 6 Criteria

There is a lot of confusion surrounding studying for the PMP test, and standardized tests in general. In our opinion, these are the 6 criteria you should always look for in a study guide for the PMP test:

One: It must be written by writers who have painstakingly researched the topics and concepts needed to succeed on the PMP test. The blind cannot hope to lead the blind.

Two: It must be written in easy-to-use everyday language so all test takers can access the information.

Three: It should be to-the-point, with no fluff to distract the test taker from the truly important information.

Four: It must address the test first, the material second. If the material was the only thing that was important, then every test taker that understood he material should get a perfect score- that doesn't happen because there's a difference between simply knowing what's on the test and test performance. You want a study guide to close that gap.

Five: It must motivate the test taker to actually study. If it's hard to read, studying is slow and painful, and will produce meager results.

Six: The guide must be guaranteed- if you don't pass with flying colors, you get your money back-no questions asked. You get at least 10 times your money's worth!

When you consider what's at stake with your exam, we believe the value of our study guide gives you at least ten times your money's worth.

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When you buy PMP Exam Secrets, it includes-

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What is a Make-or-Buy Analysis?

Make-or-Buy Analysis:

• is a technique used to determine whether it would be more cost effective to produce a prudct or service in-house or from an outside vendor.
• can significantly impact project time, cost, quality, scope, etc.

Introduction on Plan Purchase and Acquisitions

Plan Purchase and Acquisitions is a critical process that involves acquiring goods and services from outside the organization.

What is a Letter of Intent?

Letter of Intent is:

• normally NOT a contract but simply a letter with legal binding that says the buyer intends to hire the seller.

What is a Non-Disclosure Agreement?

Non-Disclosure Agreement is:

• an agreement between the buyer and any prospective sellers stating what information or document they will hold confidential and control.

What is a Contract?

A contract refers to the entire agreement between both parties (Buyer and Seller).

It includes business terms regarding:

• Payment
• Reporting requirement
• Proposal
• Contract statement of work
• Others

Project Manager's Role in Procurement

The project manager must be involved in the creation of contracts and fulfills the following key roles:

• Understand contract terms and conditions
  
  
• Identify risks and incorporate mitigation and allocation of risks into the contract
  
  
• Fit the schedule for completion of the procurement process into the schedule for the project
  
  
• Be involved during contract negotiation to project relationship with the seller
  
  
• Work with contract manager to manage changes to the contract

Project Procurement Management in PMP

Project Procurement Management in PMP consists of:

• Plan Purchase and Acquisitions
  Determining what to purchase or acquire and determining when and how.
  
  
• Plan Contracting
  Documenting products, services and results requirements and identifying potential sellers.
  
  
• Request Seller Response
  obtaining among potential sellers and negotiating a written contract with each sellers.
  
  
• Contract Administration
  Managing the contract and relationship between the buyer and seller.  Reviewing and documenting how a seller is performing.  Managing contract related changes.
  
  
• Contract Closure
  Completing and setting each contract, including the resolution of any open items and closing each contract applicable to the project or project phases.

Lessons Learned while studying for the PMP Exam (Best Sample I found from the internet)

<<<<>PMP Exam Resource >>>>>>

Overview

In this document I will explain the following:

• My plan for preparing for the PMP exam.
• The materials I used while studying.
• The difference between my expectations and what I found on the exam.
• What I would do different if I did this again.
• My thoughts on the PMI-OC class.

 

Proposed Study Methods

I began studying for the PMP examination by reading Kim Heldman’s PMP Project Management Professional Study Guide. As I read, I began to grasp the breadth of the material. From prior experience I know that my studying is most efficient when I begin with a framework, and then fill in the spaces within that framework. Based upon those experiences, I established the following plan:

• Read Heldman to get an outline of the scope required.
• Find a diagram that shows the framework for how all the processes fit together.
• Read the PMBOK searching for details.
• Memorize the framework.
• Use the PMP class to add content to the framework.
• Read peripheral material to verify the breadth of my studies.

 

What I Accomplished

I came close to accomplishing what I had planned.

• I read Heldman, twice (electronic version once and hardcopy once).
• I read the PMBOK (electronic version) twice.
• I created wall charts to illustrate the Core and Facilitating processes.
• I memorized the framework, meaning that I could visualize the interconnections between the processes in my mind and re-create it on paper.
• I learned a great deal from the PMP class.
• I read the following peripheral materials:
  • PMI Compendium of Project Management Practices,
  • PMP Role Delineation Study
  • OuterCore study guide (twice)
  • Practice Standard for Work Breakdown Structures
  • And I read the first several chapters of Kerzner’s Project Management, A Systems Approach to Planning, Scheduling and Controlling.
• I also purchased the Rita Mulcahy Hot Topics: Audio Flashcards for Passing the PMP and CAPM Exams. I listened to these CDs at least a dozen times because I wanted to have a precise understanding of the core vocabulary.
• I took notes and then organized those notes into a study guide. I would glance through those notes when time permitted. I even went all the way through them one last time at a Starbucks just before taking the test.
• I used the on-line practice exams in the Heldman book to help me understand the format of the test material and the structure of the test questions. I found that once I took one of the Heldman exams, I did not benefit from re-taking it because I remembered the questions. Even the random tests were useless to me on my third try. Nonetheless, these tests helped because they taught me about the format and style of the exam.
• My final preparation was to run through a 200-question random test concocted by using questions from Heldman and Exam Cram 2. From this I learned that I could finish in about 2 hours. I also learned that I was likely to have the wrong answer on about 50% of the questions that I marked for review.

 

What I Found on the Test

There were a few things about the test that surprised me:

• All of the questions seemed to be in order from Initiation to Planning to Execution to Controlling to Closure and finally Professional Responsibilities. I had expected more randomness.
• I had at least six CPM questions on my exam. I had only expected one or two.
• There were several questions where I wanted to write-in “none of the above” as the best answer. Specifically, a couple of the professional responsibility questions seemed likely to elicit a lawsuit no matter which of the four answers I picked.

There were also some aspects of the test that did not surprise me.

• The look and feel of the exam was very similar to the Heldman practice exams.
• The questions were generally of better quality than the practice questions I had seen in Exam Cram, OuterCore and Heldman. Heldman was the closest to the actual questions, but few of the Heldman questions were as complex as some of the real questions. OuterCore had a better selection of complex questions; the type of questions that took 5 or more minutes each. Exam Cram had little resemblance to the real test.
• I took 2:20 to go through the exam. So my practice run of 200-questions was good preparation. Confidence that I would finish and still have time to review allowed me to pace myself and not stress when I hit time-consuming CPM questions.
• I then spent about 45 minutes going back through the 39 questions that I had marked for review. It worried me that I had marked 39 questions and it bothered me that even reading a second time shed little light on some of them. Generally, I just did not like any of the possible answers on about 10 of the ones I marked. Another 10 seemed to be designed to challenge me to find the least objectionable answer. Others I realized were probably straight out of an auxiliary PMI book that I had not read.
• My estimate that I would miss about 50% of the ones I marked for review suggested that I was likely to get about a 180 on the test. So, after this one review I submitted my exam for grading, and waited for the answer. I passed with a score of 180. My time and accuracy estimates were good.
• Altogether, I spent 3:05 on the test.

 

What Would I Do Different If I Did This Again?

I am not sure that I would do much of anything differently. There are other areas that I would like to have studied, but I ran out of time. I was given a new project a couple days before the PMI-OC class ended. That project required a lot of overtime. Then the afternoon after I took the test another project went badly awry so it was transferred to me. I suddenly found myself working 18 hour days. If I had waited to do more studying, I would have missed this chance. I was lucky that I took the test on the day that I took it, even if it meant that I did not have the time to finish Kerzner or read anything by Verma.

 

Based upon my experience, here are a few things that I recommend to others:

• Take the test as quickly as you can after you finish your class because you never know what might happen.
• I am not sure that reviewing the questions that I marked helped at all. I only changed the answers on about 4 out of the 39 I had marked, and I am not sure whether my changes helped or hurt.
• Ignore some of the peripheral materials that I read. I do not believe that either the PMP Role Delineation Study or the Practice Standard for Work Breakdown Structureshelped my preparation.
• Focus your time wisely. I pulled the CD from the Exam Cram book to get the test questions, but I did not spend time reading that book. I also borrowed a copy of Mulcahy’s book, looked at it for about five-minutes, and returned it. It may be the best book on the market, but it’s style was not to my taste.
• Get more breadth in your studies. Although this point seems to contradict the prior two points, all three are actually recommendations to use your time wisely. I missed three out of the seven questions on “corrective actions”. I believe that I would have gotten most of those correct if I had been able to read one or two of the books by Verma. They are short, and can probably be skimmed through in one or two evenings. I wish I had done that instead of reading the role delineation or WBS books.
• Memorize even more. I know all of the process names and I can draw them on paper from memory. I memorized about 50% of the inputs and about 75% of the outputs. Even so I had to guess at the answer on two or three of the questions on tools and techniques. There were a couple questions where two answers both sounded reasonable. If I had memorized the tools and techniques I would have known those answers.
• I have an engineering background so CPM was easy for me. I was lucky because there were a lot of CPM questions on my test. Each of those questions takes a lot of time.

 

My Thoughts on the PMI-OC Class

The Orange County, California chapter of PMI (PMI-OC) hosts PMP preparation workshops. When I read the PMP application I discovered that I need 35-hours of classroom instruction on project management. As I went through my college transcripts I was surprised to see that I have never taken a class on project management. I taught several classes in graduate software engineering, but I have never taken a class in the subject. So, I searched for a way to get that 35-hours. Fortunately, I found the PMI-OC class.

 

That class was a wonderful experience for me. The key things it provided were:

• That essential 35-hours of classroom time.
• A group of people all trying to do the same thing, with the same misconceptions and struggles.
• A rigid schedule that meant I could not put off until next week what had to be finished before Saturday.
• We used the OuterCore study material. I frequently argued with the quiz questions in OuterCore and questioned the value of those practice exams. I was surprised on the real exam to find that the CPM questions were much more like those in OuterCore than in any of the other materials that I used. I was also surprised to find a large number of questions on the exam where I did not feel like any of the answers were the “right” answer. OuterCore helped me through that because I had come to accept that the right answer is not always among the choices, so all you can do is to pick the least objectionable answer. Interestingly, the exam tutorial even gave a question with a similar theme. That question asked about the color of some object, and none of the answers were right. The tutorial then explained that sometimes you just have to pick the best one out of a sorry lot. So now I am grateful for the OuterCore quizzes.
• Most importantly, I heard the stories of quite a few people that have gone through the same experience, and passed. Those stories helped me refine my study plan and gave me good advice on how to make the best use of my study time.

 

So, what would I like to see changed about the class?

• I would like to have all 9-hours filled every Saturday. Alright, so I was one of the first people out the door when we finished early, but I really wish that we had filled in a few more of those sessions with one more example. My suggestion, for what it is worth, is to have one or two filler topics on standby in case the main topic ends early. For example, since the topic of Human Resources is fairly short, drop in another CPM example on that day. Or, plan in advance for the lunch session to be two-hours instead of one-hour.
• I would also like the instructors to branch out a bit. All of the instructors have read a wide variety of material on their lecture topics. So, get through the packaged material, and then spend a few minutes talking about some of the recommended readings.

 

In conclusion, I recommend the following:

• Know your own study method and follow it.
• Discipline yourself to a schedule and stick with it.
• Take the test as soon as you can after your class ends.
• Look at the PMI study kit. The people at PMI put a lot of thought into the books they selected. Perhaps you prefer Heldman over Mulcahy, or Verma over Kerzner, but stay close to those recommendations.
• Find a good class. I personally recommend the PMI-OC PMP workshops. Maybe your local chapter has a program of similar quality.

What is Project Risk Response Audit in PMP

A project risk response audit:

• is an examination of the effectiveness of risk response plans and of the performance of the risk owner.
• may be conducted by a third party, by the project's risk officer or by other qualified personnels.
  
  

The Auditor:

• reviews the risk response plan and data concerning project work results.
• evaluates the performance of the risk owner in implementing the response plan.
• documents the results of the audit and makes recommendations for improvement in the project's risk response efforts.

Introduction to Risk Monitoring and Control

Risk monitoring and control:

• is the process of responding to idenified and unforeseen risks.
• involves tracking identified risks, identifying new risks, implementing risk response plans and monitoring their effectiveness.

What is Contingency Reserve

Contingency Reserve is:

• established to deal with unknown risks and accepted known risks.
• may be in the form of additional time, money or resources.
• covers risk events that are not accounted for int he project baseline duration and cost estimations.
• determined by the potential impact of the risk but should include enough to implement any contingency plans as well as a buffer for dealing with unidentified risks.

Help to prepare and fill PMP exam form

I read a very good article on how to prepare and fill the PMP exam form.  You can find the article in the link below.

http://www.ehow.com/how_4825646_prepare-fill-pmp-application-form.html

PMBOK 3rd Edition or 4th Edition?

This is a very good article in PM-Best.com on which PMBOK you should refer to for the exam.  It is very informative and worth a read.  You can find the information in the link below:

PMBOK 3rd Edition or 4th Edition?

What are the differences between the third edition and the fourth edition of the PMBOK Guide?

What are the differences between the third edition and the fourth edition of the PMBOK Guide? 

The Fourth Edition continues to reflect the evolving knowledge within the profession of project management. Like previous editions, it represents generally recognized good practice in the profession.However, the Fourth Edition also reflects a focus on improved consistency and clarity. Great consideration was given by the project teams to remove redundant information and add clarifying statements where needed. 

Terminology was updated only to present process names consistently in a verb-noun format. The PMBOK Guide—Fourth Edition continues the tradition of excellence in project management with a standard that is easy to understand and implement. 

The major differences between the Third Edition and the Fourth Edition are summarized below: 

PMBOK Guide 

• All process names are in a verb-noun format
  
  
• Enterprise Environmental Factors were more clearly defined to avoid confusion with Organizational Process Assets. 
  
  
• A standard approach for discussing requested changes, preventive actions, corrective actions and defect repairs was employed.
  
  
• The processes decreased from 44 to 42. Two processes were deleted, two processes were added and 6 processes were reconfigured into 4 processes in the procurement Knowledge Area. 
  
  
• To provide clarity a distinction was made between the project management plan and project documents used to manage the project. 
  
  
• The distinction between the information in the Project Charter and the Project Scope Statement was clarified. 
  
  
• The process flow diagrams at the beginning of chapters 4-12 have been deleted and replaced with data flow diagrams. 
  
  
• A data flow diagram for each process has been created. 
  
  
• A new appendix was added that addresses key interpersonal skills that a project manager utilizes when managing a project. 
  

A complete list of changes can be found in Appendix A of the Fourth Edition. 

Downloading PMBOK Guide 4th Edition

Did you know that the digital version of the PMBOK Guide, 4th edition is available to all PMI Members for FREE? 

To access the digital edition of the PMBOK® Guide:
--------------------------------------------------
Visit www.PMI.org
Logon to Your Members Area
Select the Resources tab
Go to Global Standards Library
Click on "Library of PMI Global Standards"
Click on "Projects (View Details)
Right Click on Language and select "Save Target As.."

You may also want to check the link "PMBOK Guide 4th edition" on the right hand column.

What is a Contingency Plan?

In PMP, contingency plan is:

• a strategy developed in advance for dealing with the occurrence of identified risks.
  
  
• performed to construct a strategy before things go wrong.
  
  
• to include a fallback plan for risks with a high impact.  A fallback plan is to be implemented if the initial contingency plan is ineffective in responding to the risk event.

What is Risk Acceptance?

Risk Acceptance is:

• any decision not to change the project plan to deal with a risk.
  
  
• performed either passively by doing nothing or actively by creating a contingency plan to deal with the risk.
  
  
• to include contingency plan and contingency reserve.

Positive Risk Strategies

Corrective action in Positive Risk Strategy:

• Risk Exploitation
  - Used when a project team wants to make sure that a positive risk is fully realized
  - Done by hiring the best experts in a field or ensuring the most technologically advanced resources are available to the project team.
  
  
• Risk Sharing
  - Entails partnering up with another party in an effort to give your team the best chance of seizing the opportunity.
  - Joint ventures are a common example of risk sharing.
  
  
• Risk Enhancement
  - increase the probability that an opportunity will occur.
  - Done by focusing on the trigger conditions of the opportunity and trying to optimise their chances of occurrence.

Negative Risk Strategies

Preventive Action in Negative Risk Strategies include:

• Risk avoidance
  Attempts to eliminate the risk altogether.
  
  
• Risk Transference
  Passes the liability of a risk to another party.
  
  
• Risk Mitigation
  Reduces the probability and/or impact of the occurences of a risk event.

Introducing Risk Response Planning

Risk Response Planning is:

• the process of examing each risk and corresponding resonse alteratives
• determining which response will improve the likelihood of a positive outcome.