CHAPTER

 1,2,3  
 
Project  Management  Institute  (PMI®)  is  a  Worldwide  organization  which  was  
established  in  1969  
“PMI  is  one  of  the  world's  largest  not-­‐for-­‐profit  membership  associations  for  the  
project  management  profession,  with  more  than  700,000  members  and  credential  
holders  in  more  than  185  countries”  (PMI  official  website)  
 
 
Certifications  
– PMP  certification  started  in  1984  for  Scope,  Time,  Cost,  Quality,  HR  
and  Communication  
– In  1987  Risk,  Procurement,  and  Framework  were  added  
– PMBOK®  Guide  was  first  published  in  1996    
– Mandatory  training  started  in  2002  
– On-­‐line  exam  started  in  2002  
 
– Gain  exclusive  access  to  PMI  publications  
– Gain  access  to  Global  standards    
– Networking  options  
– With  chapters  and  online  communities  of  practice  
– Leadership  &  Volunteer  opportunities.    
– Discounts  on  certification  exams  and  renewals  &  Professional  development  
 
PMI  Publications  
1. Foundational  Standards  
2. Practice  Standards  and  Frameworks  
3. PMI  Standards  Extensions  
 
PMI  Standards  Extensions  
1. Construction  Extension  to  the  PMBOK®  Guide    
2. Government  Extension  to  the  PMBOK®  Guide    
 
Foundational  Standards  
• A  Guide  to  the  Project  Management  Body  of  Knowledge  (PMBOK®  Guide)  —  5th    
Edition    
• Organizational  Project  Management  Maturity  Model  (OPM3®)  
• The  Standard  for  Program  Management  —  3rd    Edition  
• The  Standard  for  Portfolio  Management  —  3rd    Edition  
 
Work  on  developing  a  Project  Management  Standards  was  initially  started  in  
1983  by  PMI  volunteers    
– 1st  Edition  –  1996  
– 2nd  Edition  –  2000  
– 3rd  Edition  –  2005  
– 4th  Edition  –  2009  
 – 5th  Edition  –  2013  <Current>  
 
 
Practice  Standards  and  Frameworks  
1. Practice  Standard  for  Project  Risk  Management    
2. Practice  Standard  for  Project  Configuration  Management    
3. Practice  Standard  for  Scheduling    
4. Project  Manager  Competency  Development  Framework  
5. Practice  Standard  for  Earned  Value  Management    
6. Practice  Standard  for  Work  Breakdown  Structures    
7. Practice  Standard  for  Project  Estimating    
8. Practice  Standard  for  Requirements  (under  review)  
 

PROCESS  GROUPS  DOMAIN Percentage    /    Questions

Initiation 13  %                                            26

Planning 24  %                                            48

Executing 30  %                                            60

Monitoring  and  Controlling 25  %                                            50

Closing 8  %                                                16

Total 100  %                            200

 
Basic  Strategy  
• Study  plan  with  dedication  
• Study  in  parts  35+35+35  hours  
• Formulate  a  study  group  &  discuss  
• PMBOK®  Guide  is  the  Main  resource  
• Scenario-­‐based  paper,  so  conceptual    
Additional  resources    
• Text  Books  
• Exam  Preparation  Guides  
 • Web  Resources  ([Link])  
• Simulators  
• It  identifies  ‘knowledge  and  practices’  generally  recognized  as  ‘good  
practices  in  Project  Management’.    
• Provides  guidelines  for  ‘skills,  tools,  and  techniques’  that  increase  the  
chances  of  project  success  
• Promotes  a  ‘common  vocabulary  used  in  Project  Management’  
• Processes  described  can  be  used  in  wide  range  of  projects  
• It  is  a  reference  ‘guide  for  standard’  
• Not  to  be  considered  as  complete  or  includes  everything  
• Does  not  include  all  aspects  of  Project  Management  
• Should  not  be  considered  as  a  ‘methodology’  
 
Examples  of  Project?  
 
i. Developing  a  new  course  
ii. Running  PTCL  routine  activities  
iii. Change  in  training  culture  
iv. Investing  in  Training  
v. Maintaining  a  car    
vi. Building  home  or  buying  a  car  
vii. Election  year  activities  
viii. Research  &  Development  
 
 
 
CHAPTER  4  &  Ethics  
 
Nothing  New  or  special  
All  from  PMI  
 
 
CHAPTER  5    
 
5.5  
Process  of  self-­‐assuring  the  conformance  of  the  validated  deliverable  received  by  
Quality  Control  by  using  multiple  review  &  measurement  techniques  to  determine  
whether  the  deliverable  is  acceptable  to  the  client  as  well  and  subsequently  
proceeding  the  accepted  deliverable  to  the  Close  Project  process  for  final  hand-­‐
over/delivery  to  customer/client  
 
5.6  
Process  of  keeping  track  of  performance  indicators  (Work  Performance  
Information)  to  assess  the  magnitude  of  variation  from  the  original  scope  baseline    
and  to  decide  whether  to  intervene  or  simply  raise  concern  by  corrective  and/or  
preventive  actions  and  referring  to  Integrated  Change  Control    
Organizational  Process  Assets  Updates  of  5.6  
-­‐  Control  Processes  are  crucial  and  critical  instrument  for  PM  organization  
-­‐  OPA  needs  to  carefully  updated  based  on  recent  project’s  adjustments  
-  OPA  updates  acts  like  lesson  learnt  for  future  projects  
!  Causes  of  variances,  
!  Corrective  action  chosen  and  the  reasons,  and  
!  Other  types  of  lessons  learned  from  project  scope  control  
 
CHAPTER  6  
" Project  time  management  includes  the  processes  required  to  manage  timely  
completion  of  the  project  
" There  has  to  be  a  sequence  among  the  project  time  management  processes  
" In  fact  the  initial  process  of  Plan  Schedule  Management  (6.1)  sets  the  plan  for  
schedule  management  followed  by  the  subsequent  four  processes  (6.2,  6.3,  
6.4,  6.5)  contributing  one  each  critical  deliverable  
" Eventually  the  first  five  processes  of  Time  Management  Knowledge  Area  
blend  into  Project  Schedule  in  the  sixth  process  of  Develop  Schedule  (6.6)  
" This  developed  Schedule  is  controlled  in  last  process,  Control  Schedule  (6.7)  
 
 
 
6.3  
Process  of  identifying  and  documenting  relationships  among  the  project  
activities.  This  involves  the  order  in  which    the  activities  will  be  performed    
and  how  many  activities  can  be  done  at  the  same  time  (also  known  as  parallel  
paths).    Aim  is  to  achieve  realistic  and  achievable  project  schedule    
by  manual  or  software  based  techniques  
 
6.5  
Process  requires  that  the  amount  of  work  effort  and  the  amount  of  resources  
required  to  complete  the  activity  is  estimated.  Further  used  to  approximate  
the  number  of  the  work  periods  (activity  duration)  needed  to  complete  
activity.  Work  periods  are  expressed  as  elapsed  time  
 
6.6  
Process  of  analyzing  activity  sequencing,  durations,  resource  requirements,  
and  schedule  constraints  to  create  the  project  schedule.  Schedule  
development  determines  the  start  and  finish  dates  for  the  project  and  is  
generally  an  iterative  process.  Revising  and  maintaining  a  realistic  schedule  
continues  throughout  the  project  as  project  progresses,  the  project  
management  changes,  and  the  nature  of  risk  events  evolves  
Note:  another  term  for  iteration  is  ‘progressive  elaboration’  
 
 
6.7  
Process  of  monitoring  the  status  of  project  to  update  project  progress  and  
manage  changes  to  the  schedule  baseline.  Baseline  should  never  be  changed  
without  proper  review  and  approval  and  it  has  to  go  through  integrated  change  
control.  Process  is  concerned  with  
# Determining  the  current  status  of  the  project  schedule  
# Influence  the  factors  that  create  schedule  changes  
# Determining  that  the  project  schedule  has  changed  
 
 
CHAPTER  7  
Levels  of  accuracy  
Rounding  off    of  data  e.g.  Pak.  Rs.  10,  Pak.  Rs.  100,    Pak.  Rs.  1,000,  etc  
Units  of  measure  defined  for  recourses  
Staff  hours,  staff  days,  weeks,  or  lump-­‐sum    
Organizational  procedure  links  provides  framework  for  estimation  
WBS  is  considered  a  Control  account  and  is  assigned  a  unique  code  
Control  thresholds  used  for  monitoring  cost  performance  
They  indicate  the  allowable  variation  expressed  as  percentage  deviations  from  base  
line.  
Reporting  Formats    
Formats  and  frequency  to  be  used  for  generating  reports  
Process  Descriptions  
Description  of  the  three  processes  
 
 
Rules  of  performance  measurement  
– Rules  for  Earned  Value  Management  (EVM)  are  set.  
– Define  the  point  where  the  measurement  of  control  account  will  be  
performed  
– Earned  Value  technique  to  be  used.    (weight,  milestones,  fixed  
formula,  percentage)  
– EVM  computation  equations  for  forecasts  to  be  used  
Stakeholder  requirement  
– Cost  Management  Plan  should  consider  stakeholders  requirements.  
– Stakeholders  may  measure  cost  in  different  ways.  
•  e.g.,  cost  of  a  purchase  can  be  recorded  at  commitment,  order,  
delivery  or  based  on  actual  costs.    
– Also  consider  cost  implications  on  recurring  costs  such  as  
maintenance,  supporting  the  product,  or  service  after  the  project  is  
completed.    
 
 
 
Project  Management  Question     EVM  Performance  Measures    
-­‐  How  are  we  doing  time  wise?     -­‐  Schedule  Analysis  (SV  &  SPI)  

-­‐  Are  we  ahead  or  behind  schedule?     -­‐  Schedule  Variance  (SV)    

-­‐  How  efficiently  are  we  using  time?     -­‐  Schedule  Performance  Index  (SPI)    

-­‐  When  are  we  likely  to  cost?     -­‐  Time  Estimate  at  Completion  (EAC)  

-­‐  How  are  we  doing  cost  wise?     -­‐  Cost  Analysis  (CV  &  CPI)  

-­‐  Are  we  under/over  or  at  budget?     -­‐  Cost  Variance  (CV)    

-­‐  How  efficiently  are  we  using  cost  head?     -­‐  Cost  Performance  Index  (CPI)    

-­‐  How  efficiently  must  we  use  our  resources?     -­‐  To-­‐Complete  Performance  Index  (TC

-­‐  Will  we  be  under  or  over  budget?     -­‐  Variance  at  Completion  (VAC)    

-­‐  What  will  the  remaining  work  cost?     -­‐  Estimate  to  Complete  (ETC)    

 
 
Chapter  8  
 
Processes  and  activities    
of  the  performing  organization  that  determine    
quality  policies,  objectives,  and  responsibilities    
so  that  the  project  will  satisfy    
the  needs  for  which  it  was  undertaken  
Quality  is  conformance  to  requirements  or  specifications  
Degree  to  which  a  set  of  inherent  characteristics  fulfill  requirements  
 
 
Quality  complements  Project  Management  by  recognizing  importance  of  
– Customer  satisfaction  
• Understanding  and  managing  the  needs  and  expectations  of  
customers    
– Prevention  over  inspection  
• Quality  is  planned  and  built  in  -­‐  not  inspected  in  
– Continuous  improvement  
• Plan-­‐do-­‐check-­‐act  cycle  (Shewhart,  Deming)  
• Malcolm  Baldrige  Award  
• Organizational  Project  Management  Maturity  Model  (OPM3  ®)  
 • Capability  Maturity  Model  Integrated  (CMMI  ®)          
– Management  responsibility  
• Management  is  responsible  to  provide  resources  
– Cost  of  Quality  (COQ)  
• Total  cost  of  conformance  work  &  non-­‐conformance  work  
 
 
– Prevention  –  keeping  errors  out  of  a  process  prior  to  happening  
– Inspection  –  keeping  errors  away  from  customers  by  inspecting  and  
sorting  out  defected  products  
– Audit  –  keeping  track  of  the  procedures  of  process  in  addition  to  
quality  control  of  the  product  &/or  machines  
– Attribute  sampling  –  result  conforms  or  doesn’t  
– Variables  sampling  –  result  is  rated  on  continuous  scale  
– Tolerance  –  threshold  indicating  out  of  control  process  
– Quality  control  -­‐  sampling  &  tools  at  product  or  machine  level  
– Statistical  process  control  -­‐  sampling  and  probability  
 
 
Quality  and  Grade  are  not  same.    
• Quality:  Degree  to  which  the  characteristics  fulfill  the  requirements  
• Grade:  Category  assigned  to  products  or  services  having  same  functional  use  
but  different  technical  characteristics  
 
 
Chapter  9  
 
Processes  that    
Plan,  Acquire,  Develop  and  Manage  the  Project  Team  
Roles  of  Project  Manager  
• Leader  
• Communicator  
• Negotiator  
• Problem  Solver  
• Influencer  
• Integrator    
 
 
I.      Organizational  Charts  and  Position  Description  
" Hierarchical  Type  Charts  
" Matrix  Based  Charts  
" Responsibility  Assignment  Matrix  (RAM)  
" Text  oriented  format  
" Other  Sections  of  the  Project  Management  Plan    
" Risk  Register,  Risk  Owners,  Quality  Assurance,  QC  Activity  
II. Networking  
 III. Organizational  Theory  
IV. Expert  Judgment  
V. Meetings  
 
 
I. Organizational  Charts  and  Position  Description  
II.        Networking  
  Formal  &  informal  interactions  with  others  in  an  Organization,  Industry  or  
Professional  Environment  
III.      Organizational  Theory  
    Provide  information  regarding  the  way  in  which  People,  Teams  &  
  Organization  behave  just  like  living  organisms  
IV.      Expert  Judgment  
    Required  skills  preliminary  requirement,  Level  of  Effort  analysis  
V.        Meetings  
    PM  team  will  hold  planning  meetings  
    Meetings  leverage  a  combination  of  other  tools  and  techniques  
    Reaches  to  consensus  on  HRM  plan  
 
 
Human  Resource  Management  Plan  
" Roles  &  Responsibilities  
" Role:    Label  describing  the  portion  of  a  project  a  person  is  accountable  
for  
" Authority:  Right  to  apply  project  resources,  make  decisions    
" Responsibility:  Work  that  a  project  team  member  is  expected  to  
perform  
" Competency:    Skill  &  capacity  required  to  complete  project  activities  
" Project  Organization  Charts  
Graphic  display  of  project  members  relationship;  formal  or  informal  
" Staffing  Management  Plan  
" Staff  Acquisition,  describes  when  and  how  human  resources  will  be  
brought  onto  and  taken  off  the  project  team  
" Resource  Calendar    (Resource  Histogram);  Compliance  
" Staff  Release  Plan  &  Training  needs;  Recognition  &  rewards  
 
 
I.        Pre-­‐assignment  
II.      Negotiations  
With  responsible  functional  managers  &  other  project  management  teams  
External  Organizations  
III.    Acquisition  
Full-­‐time  &  Sub-­‐contracting  
IV.    Virtual  Teams  
Communication  Plan  is  critical  for  success  
V.      Multi-­‐criteria  decision  analysis  
Criteria  is  weighted  according  to  relative  importance  of  needs  within  team  
Examples  of  selection  criteria:    
Availability,  Cost,  Experience,  Ability,  Knowledge,    
Skills,  Attitude,  &  International  Factors  
 
 
I.      Interpersonal  Skills  
Soft  Skills    
(empathy,  influence,  creativity,  group  facilitation)  
II.    Training  
To  enhance  competencies  of  team  member:  Formal/informal  
III.  Team  Building  Activities  
Resolve  collaboratively  (crucial  to  project  success)  
Management  support,  Introduce  rewards,  Managing  conflicts    
Promote  trust  and  provide  good  team  leadership  
Five  stages  of  team  development  
Forming   Team  meets  &  learn  about  project  
Storming   Team  begin  to  address  project  work  
Norming  Member  begin  to  work  together  
Performing  Performing  stage  as  a  well  organized  unit  
Adjourning  Complete  the  work  
 
 
IV.   Ground  Rules  
  Clear  expectations  regarding  acceptable  behavior  
V.   Co-­‐location  
  Locating  all  resources  at  one  point  convenient  for  effective  PM  
VI.   Recognition  &  Rewards  
  Recognizing  &  rewarding  desirable  behavior    
  At  times,  even  intangible  rewards  are  also  effective  
VII.   Personnel  Assessment  Tools  
  Insight  into  areas  of  strengths  &  weaknesses  to  better  manage  them  
  Examples  of  such  tools;  attitudinal  surveys,  structured  interviews,  etc  
 
Sources  of  Conflict  
• Schedules  
• Project  priorities  
• Manpower  resources  
• Procedures  
• Technical  opinions  
• Cost  systems  
• Personality  conflicts  
 
CHAPTER  10  
 
Modes  
–  Internal  and  External  
 –  Formal  and  Informal  
 –  Vertical  and  Horizontal  
 –  Official  and  Unofficial  
 –  Written  and  Oral  
 –  Verbal  and  Non-­‐verbal  
 
 
Characteristics  
–  Listening  Actively  
–  Questioning/Probing    
  (for  better  understanding)  
–  Educating  
–  Fact  finding  to  confirm  information  
–  Setting  and  Managing  expectations  
–  Persuading  to  perform  action  
–  Negotiating  
–  Resolving  Conflict  
 
 
" Information  requirements  of  the  project  stakeholders  
"  Type  and  format  of  information  required  with  analysis  
"  Organizational  structure  &  Communication  Channels  
"  Communication  Requirement  Analysis  ‘Checklist’  can  be  prepared  
"  Checklist  develops  relationship  between  project  organization  &  
stakeholders  
"  Checklist  is  developed  by  answering  the  following  questions  
•  Who  is  involved    
•  Where  are  the  stakeholders  located/situated/present  
•  What  are  the  true/logical/exact  informational  requirement  of  
each  stakeholder  
•  What  are  the  external  informational  needs  (e.g.  Communicating  
with  the  media)  
•  When  is  information  needed  (timing)  
•  What  format  would  be  acceptable  or  should  be  triggered  and  
transmitted    
 
 
Communications  Management  Plan    
"  Reason  for  information  distribution  &  Stakeholder  Communication  
Requirements  
"  Resources  allocated  (time  and  budget)  &  Type  (push,  pull,  push-­‐pull)  
"  Responsible  for  communication  &  Recipients  of  information  
"  Methods/technologies  used  and  backup  modes  
"  Method  for  further  updates  to  communications  management  plan  
"  Flow  charts  of  the  communication  information  flow  
 "  Glossary  of  common  terminology  
"  Information  to  be  communicated    
  (language,  format,  content,  and  level  of  detail)  
"  Communication  constraints    
  (legislation  or  regulation,  technology,  and  organizational  policies)  
Project  Documents  Updates  
"  Project  Schedule  &  Stakeholder  Register  
"  Stakeholder  Management  Strategy  
 
 
ESSENTIALS  
" Sender-­‐receiver  models;  Choice  of  media;  Writing  style  
" Meeting  management  techniques;  Presentation  techniques  
" Facilitation  techniques;  Listening  techniques  
 
I. Communication  Technology    
II. Communication  Models  
III. Communication  Methods  
IV. Information  Distribution  Tools  
Hard  copy,  Manual  filing  system,    Press  releases,  Shared  access,    
Electronic  databases,  E-­‐mail,  Fax,  Voice  telephone,    Video,  Web  conferencing,  
Website,  Web  publishing,  Web  interfaces  to  scheduling,    PM  software,  
Meeting  and  Virtual  Office  Support  Software,      
Portals  &  Collaborative  Works  Management  Tools  
V.      Performance  Reporting  
Act  of  collecting  and  distributing  performance  information,  including  status  
reports,  progress  measurements,  and  forecasts.    
Performance  reporting  involves  the  periodic  collection  and  analysis  of  
baseline  versus  actual  data  to  understand  and  communicate  the  project  
progress  and  performance  as  well  as  to  forecast  the  project  results.  
 
 
 
 
CHAPTER  11  
 
Shewaz  you  need  nothing  as  far  as  RISK  is  concerned  
 
 
• Risk  is  an  uncertain  event  or  condition,  that  if  it  occurs,  has  an  effect  on  
at  least  one  project  objectives  (scope,  schedule,  cost  and  quality).    
• Project  risk  is  always  in  future.    
• Risks  should  be  managed  proactively  and  consistently  throughout  
project.  
 • Known  risks  can  be  identified  and  managed.  Unknown  risks  cannot  be  
managed.  Project  Team  should  create  contingency  plan  for  unknown  
risks.    
• Organizations  are  willing  to  accept  varying  degree  of  risks  which  are  
within  the  tolerance  level,  known  as  risk  appetite.  Risk  exists  right  from  
the  conception  of  the  project.    
 
 
 
• Objective  of  Risk  Management  is  to                  increase  the  
probability  and  impact  of  positive  events  and  decrease  the  probability  
and  impact  of  negative  events  
 
 
 
 
• Positive  Factors  
– Upfront  proactive  information  is  made  available  in  planning  
– Helping  in  cautious  and  well  calculated  decision-­‐making  
– Project  objectives  are  re-­‐verified    
– Project  management  processes  are  re-­‐viewed  
– Better  probability  of  optimal  project  realization  
– Increased  chance  of  project  success  
• Negative  Factors  
– Misconception  that  our  project  is  risk-­‐free  after  this  exercise  
– Project  risk  management  might  have  in-­‐adequately  planned  
– Definite  needs  resource  commitment  by  management  
11.4  
• Continuous  probability  distributions  are  excessively  used  in  modeling  
&  simulations.  
• Discrete  distribution  can  be  used  to  represent  uncertain  events  such  as  
outcome  of  test  or  scenario  in  a  decision  tree    
• Represent  the  uncertainty  in  values  e.g.,  durations  of  schedule  activities  
&  cost  of  project  components.  
 
 
CHAPTER  12  
 
• Processes  to  purchase  or  acquire  the  products,  services,  or  results  needed  
from  outside  the  performing  organization.  
• Includes  contract  management.  
• The  project  team,  which  is  part  of  the  ‘performing  organization’,  can  be  
either  the  buyer  or  the  seller.    
• Perception  matters  for  Procurement  as  both  the  parties  are  
collaborating  each  other  on  the  basis  of  mutual  respect  &  trust.  
 
  
• Purchasing  is  part  of  Procurement  
• Procurement  process  can  be  outsourced  
• Procurement  is  highly  specialized  job  and  needs  technical  know  how  and  
trust  and  ethics  
• Even  HR  is  procured  
• Procurements  in  conjunction  with  HR  constitute  the  Resource  Calendars  
• Risk  related  contract  decisions  are  important  input  of  procurements  that  
is  coming  from  the  Risk  
• Procurements  is  external  focused  knowledge  area  
• Procurement  can  involve  settlements  with  negotiations,  arbitration  
and/or  even  legal  involvements  
• Claims  settlements  are  the  important  job  of  the  Project  Manager  
 
 
  Documenting  purchasing  decisions,    
planning  approach,    
identifying  potential  sellers.  
Determining    
" Whether  to  get  outside  support  or  not  
" What,  how,  how  much,  when  &  who  will  ensure  seamless  
procurement  
" Identifying  potential  suppliers  
" Consideration  of  legislations,  regulation,  policies,  etc.  
" Consideration  of  risks  involved    
" Type  of  contracts  to  be  used.  
 
 
I.i.  Firm  fixed  price  –  FFP  
• Price  of  goods  are  fixed  at  the  outset.    
• No  change  unless  scope  changes.  
• Buyer  must  precisely  specify  the  product.  
• Changes  in  scope  can  be  accommodated,    
  but  generally  at  an  increase  in  contract  price  
I.  ii.  Fixed  Price  Incentive  Fee  –  FPIF  
• Financial  incentives  are  tied  to  achieving  certain  metrics  
• Targets  are  established,  final  contract  price  is  determined  after  
completion  
• Price  ceiling  is  set  and  costs  above  the  ceiling  is  sellers  
responsibility.  
I.  iii.  Fixed  Price  with  Economic  Price  Adjustment  Contracts  –        
        (FP-­‐EPA)  
• Long  term  contracts  
• Aimed  at  protecting  both  buyer  and  seller  from  external  conditions  
beyond  their  control.  
 • Fixed  price  with  special  provision  allowing  for  pre-­‐defined  final  
adjustments,  such  as  inflation,  cost  increase  or  decrease.  
• FP-­‐EPA  is  intended  to  protect  both  buyer  and  seller  from  external  
conditions  beyond  their  control.  
 
 
II. Cost-­‐reimbursable  contracts  
• Payments  to  the  seller  for  all  legitimate  actual  costs  plus  a  fee  for  
sellers  profit.  
• Used  where  the  scope  of  work  cannot  be  precisely  defined  at  the  
start  and  needs  to  be  altered.    
II.  i.  Cost  Plus  Fixed  Fee  Contracts  –  CPFF  
• Seller  is  reimbursed  for  all  allowable  costs  plus  a  fixed  fee  
calculated  as  a  percentage  of  the  initial  estimated  project  cost.  
• Fee  amounts  do  not  change  unless  the  project  scope  changes  
II.  ii.  Cost  Plus  Incentive  Fee  Contracts  –  CPIF  
• Seller  is  reimbursed  all  allowable  costs  and  get  a  predetermined  
incentive  fee  based  on  achieving  certain  performance  objectives.  
• e.g.  80/20  split  over/under  target  cost  on  the  actual  performance  
II.  iii.  Cost  plus  Award  Fee  Contracts  –  CPAF  
• Seller  is  reimbursed  all  legitimate  costs.      
• Fees  is  given  based  on  performance  determined  by  the  buyer.  
• Determination  of  the  fees  solely  on  the  determination  of  sellers  
performance  by  the  buyer,  and  is  generally  not  subject  to  appeals.  
III.   Time  and  Material  Contracts  –  T&M  
• Hybrid  type  of  contract  
  Contains  both  cost-­‐reimbursable  and  fixed  priced    
• Used  when  exact  quantities  are  not  known  
• Rates  are  agreed  between  buyer  and  seller    
  (Service  charges  of  engineer  commissioning  3  G  project  $77  per  hr)  
 
 
Fixed  Price  
-­‐  Firm  Fixed  Price  (FFP)  
- Fixed  Price  Incentive  Fee  (FPIF)  
- Fixed  Price  with  Economic  Price  Adjustment  Contracts  (EP-­‐EPA)  
Cost  Reimbursable  
-­‐    Cost  Plus  Fixed  Fee  (CPFF)  
- Cost  Plus  Incentive  Fee  (CPIF)  
- Cost  plus  Award  Fee  Contracts  (CPAF)  
- Time  and  Materials  (T&M)  
 
 
 
 
 
Selected  Sellers  
List  of  sellers  who  have  been  judged  to  be  in  the  competitive  range  based  on  
bid  evaluation  
 
Agreements  
• Can  be  a  simple  Purchase  Order  or  a  complex  contract  
• Legally  binding  agreement  
• Obligates  the  seller  to  provide  products  or  services  
• Obligates  the  buyer  to  compensate  the  seller  
• Includes  SOW  or  deliverables,  schedule  baseline,  pricing,  payment  
terms,  inspection,  acceptance  criteria,  warranty,  product  support,  
penalties,  incentives,  many  more  items  
 
12.3  
Can  be  taken  care  of  by  a  ‘separate  entity’  
Contract  administration  can  be  taken  as    
an  administrative  function  separate  from  project  organization.  
Scenario  is  viable  when  performing  organization    
is  seller  of  the  project  to  an  external  customer  
 
12.4  
Process  of  completing  (close  out)  each  project  procurement  
" Supports  the  Close  Project  or  close  phase  process  
" Finalizing  open  claims  &  updating  records  
" Archiving  information  for  future  use  as  lesson  learnt  
" Unresolved  claims  may  be  subjected  to  litigation  as  a  separate  project  
" Multiple  contracts  may  close  at  various  times  during  the  project  
Early  termination  of  a  contract  is  a  special  case  
• Mutual  agreement  of  both  parties  
• Default  of  one  party  
• Buyer  may  have  to  compensate  for  the  work  performed  by  seller  
 
Review  Close  Procurements  Process  of  your  organization  
Compare  it  with  PMBOK®  suggested  Close  Procurements  Process  
Point  out  discrepancies  and  enlist  them  with  probable  solution  
 
 
CHAPTER  13  
 
Almost  same  as  that  of  PMBOK