1)We all sign contracts, even your employment agreement with

your Employer is also a kind of contract, which mentions how long

you need to work and how much you will get paid for that work,
how many paid holidays you will have etc. A contract always has
a minimum of two parties. The party that provides the goods or
service is called the Seller and the party that buys the goods or
service is called the Buyer. A contract is a mutually agreed legal
agreement that mandates the seller to provide its goods or
services to the buyer for a pre-agreed compensation. The
compensation can be monetary or in some other form. It's
important to note that a contract must be written and it must have
legal remedies. So if either party fails to honor their commitment,
the other party can go to the court and appeal against the
misdeeds. However, in reality the legal processes are so
cumbersome that both the parties in case of dispute should try
settling the differences among themselves or through a mutually
agreed mediator. Larger Organizations have full time managers
called Contract Managers or Procurement Managers. They take
care of creating and managing contracts. There are two ways of
contract such as Centralized and Decentralized. If all the
contracts of the organizations are managed by creating a central
contracting or purchasing department, in that case it's called
"centralized contracting" and if there can be a separate contract
manager assigned to each of the projects, in that case it's called
"decentralized contracting". Centralized vs. Decentralized
Contracting: In case of decentralized contracting, the contract
manager is assigned to the project and reports to the project
manager. Since there are two ways the contracting workforce can
be organized, While centralized contracting helps in standardizing
the best practices, in decentralized contracting the project
manager has more control and the procurement process can be
sped up . In some cases, both types of contracting are used. For
example, suppose British Petroleum wants to set up a new
Refinery plant in Nigeria and this is a project. In such a case, they
might procure key machinery through their centralized purchasing
department and they can also have a full time contract manager
for this refinery project who can procure some items locally in
Nigeria. In this case, both the centralized and decentralized
contracting methods are being used.

Bottom-up budgeting If you are bottom-up budgeting, you begin

by identifying all of the different tasks and steps that are involved
in a particular project. Then go through and write down all of the
different resources and all of the money that will be needed for
each step. Then, to determine the budget for the entire project,
the funding needed for each step is added together. To come up
with a budget for the level above individual projects, all of the
projects are added together. All of the steps are added together
higher and higher until you come up with a complete budget for
either the entire project or the entire company. When you are
determining costs for lower-level tasks, it is usually done by the
normal method of cost estimation. If estimates are made in terms
of materials or man hours, then they must be converted to cash.
Cost negotiations will be required between those who are in
charge of each task and the project manager, or the business
owner.
Top-down budgeting :works the opposite direction of bottom-up
budgeting. Top-down budgeting begins by estimating the costs of
higher level tasks, and then those estimates will constrain the
estimates for costs of lower level tasks. So the entire process of
coming up with a budget will begin with upper-level management
and an overall estimate of the entire project. Then the overall
budget is divided among the first level of tasks, and then the
budget is divided among lower level tasks and then lower level
tasks. This continues until funding has been given to all of the
tasks necessary for a project. It is important that those managers
who are in charge of determining the overall budget for a project
have enough experience that they will be able to come up with an
adequate and accurate budget that will give enough money to
each level of tasks, yet will not ask for too much money
CRITICAL CHAIN METHOD:was developed and published by Dr. Eliyahu
M. Goldratt in 1997. The Critical Chain Method (CCM) is one of the
methods used to perform Schedule Network.Analysis that takes into
account task dependencies, limited resources availability, and buffers. It's
used to prepare the project schedule when limited or restricted resources
are available. In this method, the Program Manager (PM) usually schedules
all or most of the high risk or critical activities in the earlier stage of the
project schedule. This allows the critical tasks to be completed early as well
as gives buffers to handle unexpected problems if they arise. Also, the PM
will combine several tasks into one task and assign one resource to handle
all. The goal of the Critical Chain Method (CCM) is to eliminate project
schedule delays due to uncertainties, overestimation of task duration, and
wasted internal buffers.
CRITICAL CHAIN METHOD (CCM) BUFFERS: Project Buffer: Protects
the project from missing its scheduled end date and keeps the completion
date unchanged. It is inserted at the end of the project network diagram,
between the last task and the completion date. It protects project
completion date, which might vary due to the changes in activity durations
in the critical chain. Feeding Buffer: It is inserted between the last task on
a non-critical chain and the critical chain. These buffers are typically added
to a non-critical chain so that any delays on a non-critical chain don't affect
the critical chain. Resource Buffer: These are added on the Critical Chain
to ensure appropriate resources (people, equipment) are available
throughout the project when needed. These resources are commonly
known as Critical Resources. Capacity Buffer: It is added on call
resources necessary in case unforeseen budget issues arise.
THREE CONSTRAINTS is a model of the constraints of project
management. Like any human undertaking, projects need to be
performed and delivered under certain constraints. Traditionally,
these constraints have been listed as "scope" (quality), "time",
and "cost". These are also referred to as the "Project
Management Triangle", where each side represents a constraint.
One side of the triangle cannot be changed without affecting the
others. A further refinement of the constraints separates product
"quality" or "performance" from scope, and turns quality into a
fourth constraint.
Time: This refers to the actual time required to complete a
Project. This will be the end result of the project .Naturally, the
amount of time required to complete a Project will be directly
related t o the amount of requirements that are part of the end
result (scope) along with the amount of resources allocated to the
project (cost).
II) Cost: This is the estimation of the amount of money that will be
required to complete the project . Cost itself encompasses various
things, such as, resources, labor rates for contractors, risk
estimates, bills of materials, etc.
All aspects of the project that have a monetary component are
made part of the overall cost structure.
Ill) Scope: The goal could be specific product, service, or internal
improvement.A project's scope is the concise statement of the
effort to achieve that goal. It articulates the work that needs to be
done. Some examples include, construct a building, install new
servers, implement a new customer service program, and
improve the human resource management system.
ROLES OF PROJECT SPONSOR: The project sponsor is
responsible for many aspects of the project, from initiating
and ensuring the
success in approving and establishing parts of the project.
The role can be broken into three parts: vision,
governance and value or benefits realization.
I) Vision: Make sure the business case is valid and in step
with the business proposition. Aligns projects with
business strategy, goals and objectives. Stays informed of
project events to keep project viable. Defines the criteria
for project success and how it fits with the overall
business.
II) Governance: Ensures the project is properly launched
and initiated. Maintains organizational priorities throughout
the project. Offers support for project organization. Defines
project roles and reporting structure. Acts as an escalation
point for issues when something is beyond the project
manager's control. Gets financial
resources.Decision-maker for progress and phases of
project.
Ill} Values & Benefits
Make sure that risks and changes are managed.Helps to
ensure control and review processes. Overseas delivery of
project value. Evaluates status and progress. Approves
deliverables. Helps with decision making. Responsible for
project quality throughout project phases.
A Gantt chart is a horizontal bar chart used in project management to
visually represent a project plan over time. Modern Gantt charts typically
show the timeline and status as well as who's responsible for each task in
the project. Gantt chart was developed as a production control tool in 1917
by Henry L. Gantt. A Gantt chart is used for the following activities:
a. Establish the initial project schedule. b. Allocate resources.
c. Make project adjustments. d. Monitor and report progress.
e. Control and communicate the schedule. f. Display milestones.
g. Identify and report problems.
ELEMENTS OF GANTT CHART: Reading a gantt chart really comes down
to understanding how the different elements come together to make it work
Task list: Runs vertically down the left of the gantt chart to describe project
work and may be organized into groups and subgroups.
Timeline: Runs horizontally across the top of the gantt chart and shows
months, weeks, days, andyears.
Dateline: A vertical line that highlights the current date on the gantt chart.
Bars: Horizontal markers on the right side of the gantt chart that represent
tasks and show progress, duration, and start and end dates.
Milestones: Yellow diamonds that call out major events, dates, decisions,
and deliverables. Dependencies: Light gray lines that connect tasks that
need to happen in a certain order.Progress: Shows how far along work is
and may be indicated by percent complete and/or bar shading.
Resource assigned: Indicates the person or team responsible for
completing a task. ADVANTAGES:It Provides a High-Level Overview. It
Improves Efficiency and Helps Manage Resources. It Allows for Better
Tracking.It Illustrates Overlaps and Dependencies.It Boosts Productivity.
LIMITATIONS:Require more efforts for Creating and Managing the Chart.
Updating a Chart is Very Time Consuming. All Tasks are not visible in a
single view of a Gantt. Need to scroll and click additional buttons to view
remaining items.Stacks represents only the time and not the hours of the
work.
Non Numeric project selection models have 6 types: The Sacred Cow: In
this case the project is suggested by a senior and powerful official in the
organization. Often the project is initiated with a simple comment such as,
“If you have a chance, why don’t you look into…,” The project is created as
an immediate result of this bland approach for investigating whatever the
boss has proposed. The sacredness of the project reflects the fact that it
will be continued until it ends or until the boss himself announces the failure
of the idea & ends it.
The Operating Necessity: Certain questions coming in front of the project
are needed in order to keep the system functioning like is the estimated
cost of the project effective for the system? If the answer to such an
important question is yes, then the project costs should be analyzed to
ensure that these are maintained as the minimum and compatible with the
success of the project. However, the project should be financed.
The Competitive Necessity: In the late 1960s, XYZ Steel considered an
important plant rebuilding project by using this criterion in its steel bar
producing facilities near Chicago. It was clear to the management of the
company that certain modernization is required in its bar mill in order to
keep the current competitive position in the market area of Chicago.
Perhaps the project has a modern planning process, the desire to keep the
competitive position of the company in the market provide a basis for
making such a decision to carry on the project.
The Product Line Extension:a project considered for development &
distribution of new products will be evaluated on the basis of the extent to
which it suits the company’s current product lines, fortify a weak line, fills a
gap, or enhanced the line in a new & desirable direction
Comparative Benefit Model: According to this selection model, there are
several projects that are being considered by the organization. That subset
of the projects that are selected by the senior management of the
organization can provide the most benefits to the company. But comparing
various projects is not an easy task.
Q-Sort Model: is one of the most straightforward techniques for ordering
projects. The projects are first divided into three groups which are Good,
Fair and Poor. The main group is further subdivided into the two types of
fair-minus and fair-plus if any group has more than eight members.
PROJECT TERMINATION:
Termination by Extinction:Project termination by extinction is
when a project is stopped due to either its successful or
unsuccessful conclusion. Project termination by extinction could
happen in the following cases: The project has met its scope and
the client or end-user has accepted the project outcome.The
project has been superseded by external developments like a
market crisis, technological advancements, etc. The project has
failed to achieve its goal.
Project Termination by Addition: The majority of projects that
are undertaken are done so ‘in-house’, which means that they are
worked on by the project team for the project outcome to be used
by the parent organization. In addition, if a project is a success,
the project may be terminated by institutionalizing it as a formal
part of that parent organization.
Project Termination by Integration: In the case of project
termination by integration, the project that is being aborted is
either integrated into other larger projects that are underway or
becomes part of the ongoing operation of the organization.Project
resources in this case are redistributed and the project as a whole
loses both its purpose and identity as an individual project.
Project Termination by Starvation:Project termination by
starvation can occur for several reasons. These reasons could
include things such as politics, placated sponsors, or even just
general budget cuts. Many argue that project termination by
starvation is not an act of termination at all. Many believe that
termination by starvation is in reality a willful form of neglect.
Termination by starvation, therefore, is the act of depriving a
project of necessary resources it needs to sustain its ongoing
activities. This leads to the inevitable cease of function.
A risk register is a document that is used as a risk management tool to
identify potential setbacks within a project. This process aims to collectively
identify, analyze, and solve risks before they become problems.A risk
register document, otherwise known as a risk register log, tracks potential
risks specifically within a project. It also includes information about the
priority of the risk and the likelihood of it happening.
List of identified risks. The identified risks are described in as much detail
as is reasonable. A structure for describing risks using risk statements may
be applied, for example, EVENT may occur causing IMPACT, or If CAUSE
exists, EVENT may occur leading to EFFECT. In addition to the list of
identified risks, the root causes of those risks may become more evident.
List of potential responses. Potential responses to a risk may sometimes
be identified during the Identify Risks process. These responses, if
identified in this process, should be used as inputs to the Plan Risk
Responses process
FUNCTIONS OF RISK REGISTER:
Perform Qualitative Risk Analysis: In the Perform Qualitative Analysis
process, details are added to the existing list of risks in the risk register
including the priority of risks, the urgency of the risks, the categorization of
risks, and any trends that were noticed while performing this process. Risks
that have been managed, avoided, or are no longer relevant can be
removed from the risk register.
Perform Quantitative Risk Analysis: In the Perform Quantitative Risk
Analysis process, the risk register is updated with the
probabilities associated with each identified risk and the probability of
meeting the cost and time projections.
Plan Risk Response: In the Plan Risk Response process, a specific
response plan is created to manage each risk.While managing risks,
remember that not all risks are negative-positive risks are opportunities.
Accordingly, a project manager should devise strategies for managing
negative risks or threats as well as positive risks or opportunities.
Monitor and Control Risk: In the Monitor and Control risks process, plans
are re-assessed and re-evaluated. The risk register is updated with
information on new risks as an output of this process. This information
should be regularly updated in the risk register.
The Probability and Impact Matrix is one the most commonly used
qualitative assessment methods. It is based on the two components of
risk, probability of occurrence and the impact on objective(s) if it
occurs. The matrix is a two-dimensional grid that maps the likelihood
of the risks occurrence and their effect on the project objectives. The
risk score, often referred to as risk level or the degree of risk, is
calculated by multiplying the two axes of the matrix. Risk = Impact x
Probability. As the impact and probability can be described in both a
relative and numerical manner so can the risk score. The higher the
combined ratings are, the higher the score and thus the risk level.
These ratings are generally defined from low to high or from very low
to very high. The ratings for likelihood and impact are made using
gathered opinions from interviews. These ratings must be classified by
each organization,specific for each activity. The organizations must
define their risk tolerance. Creating these definitions of impact and
probability levels can help reduce the influence of bias. The results
from these risk matrices are used to prioritize the risks, plan the risk
response, identify risks for quantitative assessment and guide
resource allocations. However, the objective affected by the risk must
also be considered. E.g a risk event which has high safety or health
risk would be prioritized over a risk event which would have very high
financial risk.
Low impact - Low probability: The risks that are characterized as
low, or very low, risks have both a low impact and likelihood of
occurrence. For negative risks, threats, the response required is not
necessarily as proactive management action. However, they should
be included within the risk register for future monitoring. Positive risks,
opportunities within the low-risk category should be monitored or just
simply accepted.
High impact – Low probability: Risks with high impact but low
likelihood of occurrence can be characterized from low to high risks
but most often within the moderate category. The characterization is
dependent on the organization's defined threshold. These events
rarely occur, defined as rare catastrophes. It is difficult to determine
the probability based on historical records due to lack of data.
Therefore, the probabilities must be estimated subjectively.
Low impact – High probability: Risks with low impact but high
likelihood of occurrence can be characterized from low to high risks
but most often within the moderate category. The characterization is
dependent on the organization's defined threshold. These risks are
mostly due to uncertainties of numerous elements that individually, are
minor risks but combined, could amount to higher risks.
High impact – High probability: The risks that are characterized as
high risks have both a high impact and likelihood of occurrence. A risk
which has a negative impact, is a threat to the objective, may need
priority actions and aggressive responses. These aggressive
responses could be mitigation of the risk or even terminating the
project if the risk is to great. A risk that has a positive impact, is an
opportunity, is most likely obtained easily, with the greatest benefits
and should thus be targeted first
The Project Management Institute (PMI) created the PMBOK
(Project Management Body of Knowledge). It consists of
guidelines, recommended practices, standard principles, and
common terminology for managing projects.The PMBOK guide
embraces a process-based approach to project management. It
breaks down project management into 49 processes, which are
then grouped under PMBOK process groups and knowledge
areas. Think of process groups as what you need to do and the
knowledge areas as what you need to know.
Process Groups bundle together processes that often operate
around the same time on a project or with similar input and
outputs. Once you've got comfortable with them they are actually
a very logical way of grouping together the things you have to do.
The five PMBOK process groups are:
1. Initiating Process Group: Processes required to launch a new
project or a new project phase.
2. Planning Process Group: Processes related to defining and
planning the extent of the project, as well as planning how it will
be executed.
3. Executing Process Group: Processes related to the actual
completion of project activities and tasks.
4. Monitoring & Controlling Process Group: Processes
covering everything related to tracking, monitoring, reporting on,
and controlling project performance and progress.
5. Closing Process Group: Processes required to finalize and
complete a project or project phase
Knowledge Areas: Integration Management - is the processes
required to ensure that the various elements of the project are
properly coordinated. Scope Management - the processes
required to ensure that the project includes all the work required,
and only the work required, to complete the project successfully.
Time Management - the processes required to ensure the timely
completion of the project.
Cost Management - the processes required to ensure the project
is completed within the approved budget.
Quality Management - the processes required to ensure the
project will satisfy the needs for which it was undertaken.
Human Resource Management - the processes required to
make the most effective use of people involved with the project.
Communications Management - the processes required to
ensure the timely and appropriate generation, collection,
dissemination, storage, and ultimate disposition of project
knowledge.
Risk Management - the processes concerned with identifying,
analyzing, and responding to project risk.
Procurement Management - the processes required to acquire
the goods and services from outside the performing organization.
Stakeholder Management - the processes that identifies and
develops relationships with those people and organizations which
are impacted by the project and which influence or determine how
the team works.
NUMERIC METHODS:
Payback Period: The payback period for a project is the initial fixed
investment in the project divided by the estimated annual net cash
inflows from the project. The ratio of these quantities is the number of
years required for the project to repay its initial fixed investment. For
example, assume a project costs $100,000 to implement and has
annual net cash inflows of $25,000. Then Payback period
$100,000/$25,000 = 4 years This method assumes that the cash
inflows will persist at least long enough to pay back the investment,
and it ignores any cash inflows beyond the payback period.
2. Discounted Cash Flow Also referred to as the net present value
(NPV) method, the discounted cash flow method determines the net
present value of all cash flows by discounting them by the required
rate of return (also known as the hurdle rate, cutoff rate, and similar
terms) as follows:
3. Internal Rate of Return: If we have a set of expected cash inflows
and cash outflows, the internal rate of return is the discount rate that
equates the present values of the two sets of flows. If At is an
expected cash outflow in the period t and Rt is the expected inflow for
the period t, the internal rate of return is the value of k that satisfies
the following equation (note that the A0 will be positive in this
formulation of the problem)
4. Numeric Models: Scoring These models involve multiple decision
criteria for selecting a project. In scoring models, the decisions are
taken after discussions between the project team and the top-level
management. Following are the types of scoring models:
Unweighted 0-1 factor: The management lists the factors that are
considered in rating a project. Management consists of a team of
raters who help select the project.
Unweighted factor scoring: In this model, the raters can select any
of the values on a scale of 1 to 5 in which 5 is very good, 4 is good, 3
is fair, 2 is poor and 1 is very poor.
a) Project Auditing.
The project audit is a thorough examination of the management of a
project, its methodology and procedures, its records, its properties, its
budgets and expenditures, and its degree of completion. It may deal
with the project as a whole, or only with a part of the project
1. Current status of the project. Does the work actually completed
match the planned level of completion? 2. Future status. Are
significant schedule/cost/scope changes likely? If so, indicate the
nature of the changes. 3. Status of crucial tasks. What progress has
been made on tasks that could decide the success or failure of the
project? 4. Risk assessment. What is the potential for project failure or
monetary loss? 5. Information pertinent to other projects. What
lessons learned from the project being audited can be applied to other
projects being undertaken by the organization? 6. Limitations of the
audit. What assumptions or limitations affect the data in the audit?
Timing of the Audit:Given that all projects of significant size or
importance should be audited, the first audits are usually done early in
the project’s life. The sooner a problem is discovered, the easier it is
to deal with.
Format and Use of the Audit Report: The type of project being
audited and the uses for which the audit is intended dictate some
specifics of the audit report format
Responsibilities of the Project Auditor/Evaluator
• Assemble a small team of experienced experts
• Familiarize the team with the requirements of the project
• Audit the project on site
• After completion, debrief the project’s management
• Produce a written report according to a pre specified format
• Distribute the report to the PM and project team for their response
• Follow up to see if the recommendations have been implemented
Project procurement management is the creation and maintenance of
relationships with external resources needed to complete a project. A
PPM communicates with vendors to buy, rent or contract products and
services needed to achieve project objectives.
Purpose: Projects in a variety of industries require external materials
and resources to successfully achieve their objectives. Project
procurement management is the selection, coordination and
maintenance of these goods and services and is an important part of
successful project completion. Understanding the processes, benefits
and uses of project procurement management can help you more
effectively achieve your project goals
The following industries commonly use project procurement
management to meet their project objectives:
Construction Manufacturing Engineering Technology Finance
Healthcare.
Processes in project procurement management(steps)
There are four key processes involved in product procurement
management:
1. Planning procurement 2. Conducting procurement
3. Controlling procurement 4. Closing procurement

Project manager responsibilities during procurement

1. Project initiation
2. Procurement planning
3. Stakeholder coordination
4. Vendor coordination
5. Communication of progress