Projekto.Biz | Advanced Terminology for Project Management
We have included herewith below a large number of frequently asked questions (FAQs) by client managers, officers, company owners, and the like and put them all here in our guide.
What is Change Management in Project Management?
Change management refers to the tools and processes used to manage change within a project and its project team. To fully understand the definition of change management, you must break it up into its two components: change and project management: Change: This is anything that transforms or impacts projects, tasks, processes, structures, or even job functions Project management: This refers to the process of managing a project team and monitoring their activities to meet project goals The change management process often consists of a project manager and a dedicated change management team. The manager will oversee the work of the team members to ensure they successfully incorporate change into their practices and achieve the overall project objectives. Team activities can include liaising with stakeholders, developing training programs, and tracking engagement.
Types of change management
There are many different ways to categorize the types of change management in an organization. It is generally understood, however, that there are four main types, which can be adapted to suit varying areas of project management. They are: Anticipatory: This involves the planning of changes in advance of an expected situation. Once the project manager affirms the likelihood or even inevitability of such an occurrence, they can set plans in place for when it arises. An example could be a change management plan for when a senior employee hands in their notice. Reactive: A reactive approach is necessary when an unforeseen event occurs. This type of change management is often employed in crisis situations, where there is little time to plan and so the project manager must think on their feet. Reactive change management is not ideal but it is often necessary. Incremental: This refers to the introduction of gradual changes over a prolonged period of time, such as the ongoing addition of new features to an existing app. As these alterations are small, they are unlikely to cause any upheaval in the overall project. Incremental changes are closely linked to scope creep in project management. Strategic: These changes are much larger and can affect the overall direction of an organization. A strategic change in project management specifically could involve the implementation of brand-new technology, requiring a rewrite of the original project plan to achieve objectives and ensure success.
What is Cost Control in Project Management?
It is the task of overseeing and managing project expenses as well as preparing for potential financial risks. This job is typically the project manager's responsibility. Cost control involves not only managing the budget, but also planning, and preparing for potential risks. Risks can set projects back and sometimes even require unexpected expenses. Preparation for these setbacks can save your team time and potentially, money.
What is Cost Benefit Analysis in Project Management?
It is a tool used when evaluating the costs vs. benefits in an important business proposal. A formal CBA lists all of the project expenses and tangible benefits then calculates the return on investment (ROI), internal rate of return (IRR), net present value (NPV), and payback period. Then, the difference between the costs and the benefits from taking action are calculated. A general rule of thumb is the costs should be less than 50% of the benefits and the payback period shouldn't exceed past a year. Some people also refer to cost benefit analysis as benefit cost analysis (BCA).
What is Earned Value in Project Management?
Earned value refers to a value assigned to work, which can be stated in hours and/or dollars. Earned value management (EVM), on the other hand, is a tool used to measure and predict project performance by comparing planned versus actual earned value. Because EVM can be used to track cost and schedule, it is quite useful for forecasting future projects. Earned value management provides stakeholders with additional insight into a project's status since it compares actual time and money spent versus the planned hours and budget. Historically, earned value and EVM were first developed and used in the 1960s by the US Department of Defense to track its various programs including NASA.
What is a Gantt Chart in Project Management?
A Gantt Chart is a table that illustrates the course of a project and all the elements involved. This visual was first developed by Karol Adamiecki in 1896, then Henry Gantt devised his own version which illustrates a project schedule in the 1910s. Gantt Charts are a useful tool when you want to see the entire landscape of either one or multiple projects. It helps you view which tasks are dependent on one another and which milestones are coming up.
What is PERT in Project Management?
PERT is a project management planning tool used to calculate the amount of time it will take to realistically finish a project. PERT stands for Program Evaluation Review Technique. PERT charts are tools used to plan tasks within a project - making it easier to schedule and coordinate team members accomplishing the work. PERT charts were created in the 1950s to help manage the creation of weapons and defense projects for the US Navy. While PERT was being introduced in the Navy, the private sector simultaneously gave rise to a similar method called Critical Path. PERT is similar to critical path in that they are both used to visualize the timeline and the work that must be done for a project. However with PERT, you create three different time estimates for the project: you estimate the shortest possible amount time each task will take, the most probable amount of time, and the longest amount of time tasks might take if things don't go as planned. PERT is calculated backward from a fixed end date since contractor deadlines typically cannot be moved.
What is SMART in Project Management?
SMART refers to criteria for setting goals and project objectives, namely that these goals are: Specific, Measurable, Attainable, Relevant, and Time-bound. The idea is that every project goal must adhere to the SMART criteria to be effective. Therefore, when planning a project's objectives, each one should be: # Specific: The goal should target a specific area of improvement or answer a specific need. # Measurable: The goal must be quantifiable, or at least allow for measurable progress. # Attainable: The goal should be realistic, based on available resources and existing constraints. # Relevant: The goal should align with other business objectives to be considered worthwhile. # Time-bound: The goal must have a deadline or defined end.
What is Program Management vs. Project Management?
To understand what is program management vs. project management, you must first understand the difference between a program and a project. A program is a large project that is made up of several smaller projects that are dependent on each other. Since programs are so large, they are often managed by a team of people, with projects and tasks delegated across team member. Some functions involved in launching a successful program might include outlining objectives, planning execution, managing operations, and reporting on status. Projects are bundled together into a program when the benefits of managing the collection outweigh managing projects as individual units. Projects are generally smaller, and often come with cost, date, and resource constraints. Project goals are normally short term, whereas the objectives of a program are focused on carrying out a company mission or overarching goal. So, now that you know the difference between a program and a project, what is program management vs. project management? Program Management A program manager needs to articulate the goals and objectives of the program and how it will impact the business. Program management is mapping out and defining the list of dependent projects that need to be completed to reach an overall goal. When it comes to the program, a program manager needs to focus on strategy and implementation, and how to delegate projects appropriately. Project Management Project management involves managing the operations of an individual project within the program. The project manager coordinates time, budget, resources and delegates tasks across the team. He reports to the program manager on progress and changes made to the initial project plan. Project management is a bit more tactical than program management: it mainly focuses on the operational elements of the project such as meeting deadlines, staying within budget, and completing deliverables.
What is Contingency Plan in Project Management?
A contingency plan is essentially a “Plan B.” It’s a backup plan in place for when things go differently than expected. In other words, a contingency plan in project management is a defined, actionable plan that is to be enacted if an identified risk becomes a reality. For a more “official” version of the term, the Project Management Institute defines it as, “Contingency planning involves defining action steps to be taken if an identified risk event should occur.” Contingency plans in project management are a component of risk management, and they should be part of the risk management plan. When to use a contingency plan Contingency plans can only be created for identified risks, not unidentified or unknown risks. Since, if you don’t know what your risk is, it’s impossible to plan for it. It should be noted that contingency plans are not only put in place to anticipate when things go wrong. They can also be created to take advantage of strategic opportunities.For example, you’ve identified that a new training software should be released soon. If it occurs during your project, you may have a contingency plan on how to incorporate it into the training phase of your project. The difference between a contingency plan and a mitigation plan A mitigation plan attempts to decrease the chances of a risk occurring, or decrease the impact of the risk if it occurs. It is implemented in advance. A contingency plan explains the steps to take after the identified risk occurs, in order to reduce its impact. Think of a contingency plan as the last line of defense. How to prepare your contingency plan # When preparing your contingency plan, consider these four guidelines:Identify what specific event or events need to happen to trigger the implementation of the plan. # Cover the five bases in each step of your plan: who will be involved, what do they need to do, when does it need to happen, where will the plan take place, and how will it be executed. # Have clear guidelines for reporting and communication during the implementation of the plan. How will internal and external stakeholders be notified? Who will draft and send the notice, and how soon after the incident will it be released? How often will updates be provided? # Monitor the plan on a regular basis to ensure it is up-to-date. # In addition, you should be aware of these four common challenges that Project Managers face with contingency planning:Contingency planning is viewed as a low priority. Since the plan may never be needed, there can be a tendency to put off the creation of it. However, not having a properly planned out contingency can lead to project failure. # Team members may be overconfident or overly-invested in Plan A. Therefore, they may not be motivated to create a detailed, actionable Plan B. # Lack of enterprise-wide plan awareness and buy-in can hinder implementation. Projects do not happen in isolation. If all stakeholders in the organization are not aware of and bought into the plan, there may be delays in enacting it. # Not spending enough time identifying all risks. If a risk has not been properly identified, it’s impossible to prepare a viable contingency plan.
What is the S-Curve in Project Management?
In project management terms, an s-curve is a mathematical graph that depicts relevant cumulative data for a project—such as cost or man-hours—plotted against time. The reason it’s called an s-curve is because the shape of the graph typically forms a loose, shallow “S.” (The shape depends on the type of project, though, so other formations are possible.)An s-curve in project management is typically used to track the progress of a project. In today’s fast-paced business climate, ensuring that a project is on schedule and on budget is paramount to its success. Why an “S”? The s-curve often forms the shape of an “s” because the growth of the project in the beginning stages is usually slow: The wheels are just beginning to turn; team members are either researching the industry or just starting to engage in the first phase of execution, which can take longer at first, before they get the hang of it or before there are kinks to work out. Then, as more progress is made, the growth accelerates rapidly—creating that upward slope that forms the middle part of the “s.” This point of maximum growth is called the point of inflexion. During this period, project team members are working heavily on the project, and many of the major costs of the project are incurred.After the point of inflexion, the growth begins to plateau, forming the upper part of the “s” known as the upper asymptote—and the “mature” phase of the project. This is because the project is mostly finished at this point and is winding down: Typically only tasks such as finishing touches and final approvals are left at this point. Common uses for the s-curve in project management Some of the most common uses for s-curves are to measure progress, evaluate performance and make cash-flow forecasts. An s-curve is helpful in monitoring the success of a project because actual, real-time cumulative data of various elements of the project—such as cost—can be compared with projected data. The degree of alignment between the two graphs reveals the progress—or lack thereof—of whichever element is being studied. If corrections need to be made to get back on track, the s-curve can help identify them.
What Is a Feasibility Study in Project Management?
Before any executive gives the green light to a project that could cost thousands (or millions) of dollars, you can bet he or she will want to see a feasibility study. So what is a feasibility study in project management?A feasibility study determines whether the project is likely to succeed in the first place. It is typically conducted before any steps are taken to move forward with a project, including planning. It is one of the—if not the—most important factors in determining whether the project can move forward. The study identifies the market for the project (if applicable); highlights key goals for the project based on market research; maps out potential roadblocks and offers alternative solutions; and factors in time, budget, legal and manpower requirements to determine whether the project is not only possible but advantageous for the company to undertake. Although project managers are not necessarily the ones conducting the feasibility study, it can serve as a critical guideline as the project gets underway. Project managers can use the feasibility study to understand the project parameters, business goals and risk factors at play. Key points of a feasibility study A feasibility study in project management usually assesses the following areas: Technical capability: Does the organization have the technical capabilities and resources to undertake the project? Budget: Does the organization have the financial resources to undertake the project, and is the cost/benefit analysis of the project sufficient to warrant moving forward with the project? Legality: What are the legal requirements of the project, and can the business meet them? Risk: What is the risk associated with undertaking this project? Is the risk worthwhile to the company based on perceived benefits? Operational feasibility: Does the project, in its proposed scope, meet the organization’s needs by solving problems and/or taking advantage of identified opportunities? Time: Can the project be completed in a reasonable timeline that is advantageous to the company? Conducting a feasibility study Anyone conducting a feasibility study will take several steps to put together the report. These research actions typically include: # Preliminary analysis: Before moving forward with the time-intensive process of a feasibility study, many organizations will conduct a preliminary analysis, which is like a pre-screening of the project. The preliminary analysis aims to uncover insurmountable obstacles that would render a feasibility study useless. If no major roadblocks are uncovered during this pre-screen, the more intensive feasibility study will be conducted. # Define the scope: It’s important to outline the scope of the project so that you can determine the scope of the feasibility study. The project’s scope will include the number and composition of both internal stakeholders and external clients or customers. Don’t forget to examine the potential impact of the project on all areas of the organization. # Market research: No project is undertaken in a vacuum. Those conducting the feasibility study will delve into the existing competitive landscape and determine whether there is a viable place for the project within that market. # Financial assessment: The feasibility study will examine the economic costs related to the project, including equipment or other resources, man-hours, the proposed benefits of the project, the break-even schedule for the project, the financial risks associated with the proposal, and—very important—the potential financial impact of the project’s failure. # Roadblocks and alternative solutions: Should any potential problems surface during the study, it will look at alternative solutions for the project to go ahead successfully. # Reassessment of results: A holistic look at the feasibility study with fresh eyes, particularly if any significant amount of time has passed since it was first undertaken, is essential. # Go/no-go decision: The final aspect of a feasibility study is the recommended course of action—in other words, whether the project should proceed or not.
What Is Net Present Value (NPV) in Project Management?
Net present value (NPV) refers to the difference between the value of cash now and the value of cash at a future date. Net present value in project management is used to determine whether the anticipated financial gains of a project will outweigh the present-day investment — meaning the project is a worthwhile undertaking. Generally speaking, an investment with a positive NPV will be profitable and therefore given a green light for consideration, while an investment with a negative NPV will result in a financial loss, and may not be undertaken.
How to Calculate NPV
To understand how to calculate NPV, first consider the following: Money is worth more now than it is later. So, for example, $1,000 today is worth more than $1,000 in three years. Why? Because you could take that $1,000 today and invest it, earning a modest 4 percent each year. In three years, that $1,000 will be worth $1,124.86. (Note that this does not factor in inflation, which we’ll address momentarily). That means the “present value” of $1,000 after three years of investment is $1,124.86.
Another factor contributing to this dynamic is inflation. Say the inflation rate is 3 percent. If you did not invest your money, your $1,000 would be worth $915.14 in three years. So the “future value” of $1,000 today is $915.14 in three years. These numbers are calculated using the following formula, where PV stands for “present value,” FV stands for “future value,” r stands for the interest rate in decimal format, and n stands for the number of years: PV = (FV)/(1+r)n
What Is Monte Carlo Analysis in Project Management?
Monte Carlo Analysis is a risk management technique that is used for conducting a quantitative analysis of risks. This mathematical technique was developed in 1940, by an atomic nuclear scientist named Stanislaw Ulam. It’s meant to be used to analyze the impact of risks on your project. For example, if this risk occurs, how will it affect our schedule and/or the cost of the project? Monte Carlo gives you a range of possible outcomes and probabilities to allow you to consider the likelihood of different scenarios. For example, let’s say you don’t know how long your project will take. You have a rough estimate of the duration of each project task. Using this, you also come up with a best-case scenario (optimistic) and worst case scenario (pessimistic) duration for each task. You can then use Monte Carlo to analyze all the potential combinations and give you probabilities on when the project will complete. The results would be something like this: # 2% chance of completing the project in 12 months. (In other words, if every single task finished by the optimistic timeline.) #15% chance of completion within 13 months. # 55% chance of completion within 14 months. # 95% chance of completion within 15 months. # 100% chance of completion within 16 months. (If everything took as long as the pessimistic estimates.) Using this information, you can now better estimate your timeline and plan your project. Benefits of Monte Carlo analysis in project management The primary benefits of using Monte Carlo analysis on your projects are: # Provides early identification of how likely you are to meet project milestones and deadlines. # Can be used to create a more realistic budget and schedule. # Predicts the likelihood of schedule and cost overruns. # Quantifies risks to assess impacts better. # Provides objective data for decision making. Limitations of Monte Carlo analysis in project management You must provide three estimates for every activity or factor being analyzed. The analysis is only as good as the estimates provided. The Monte Carlo simulation shows you the overall probability for the entire project or a large subset of it (such as a phase). It can’t be used to analyze individual activities or risks.
What Is Configuration Management in Project Management?
A configuration is the set of characteristics that define a final product or deliverable. This includes all functional and physical specifications. Physical specifications may include the color, size, weight, shape, and materials. Functional specifications dictate the ability for the product to achieve a certain outcome. Take a car for example. Physical specs may call for a red, 4-door vehicle. Functional specs could include the ability to reach 60 mph in 10 seconds and meet emissions standards. What is project configuration management? Project configuration management is managing the configuration of all of the project’s key products and assets. This includes any end products that will be delivered to the customer, as well as all management products, such as the project management plan and performance management baseline. Implementation of configuration management and project change management need to occur hand-in-hand. Any change must be monitored and assessed to determine its impact on project configuration. The two processes are so interrelated that project configuration management has been said to be “kind of like change management on steroids.” 5 steps of the configuration management process There are five key steps to project configuration management: Planning. A configuration management plan details how you will record, track, control, and audit configuration. This document is often part of the project quality management plan. Identification. All configuration requirements on a project should be identified and recorded. That includes functionality requirements, design requirements, and any other specifications. The completion of this process results in the configuration baseline for the project. Control: As the project scope is altered, the impact to the configuration must be assessed, approved, and documented. This is normally done within the project change control process. Status accounting: Track your project’s configuration at all times. You should be able to tell what version your configuration is on, and have a historical record of the old versions. It’s crucial to have an account of all versions so you can trace changes throughout the project. Audit: This includes any tests to prove that the product conforms with the configuration requirements. Let’s say you built a report that must run within 10 seconds. The audit tests to see if the finished report actually runs that fast. Often, audits and checks will be built in at the completion of major project phases. This is so you can identify issues early. The key difference to configuration management for Agile projects is in the identification step. Using Agile, the initial identification of specifications will be very general. It will be modified and updated frequently as the project progresses.
What is BAC (Budget at Completion) in Project Management?
Budget at Completion (BAC) is a measure that is often used in earned value management to track the actual cost of a project against its forecasted budget. It is calculated at the start of a project based on the project work and its individual components.