PMBOK 5th edition changes

Here are the changes and additions in 4^th and 5^th edition.

PMBOK 5^th edition: Total 47 processes

1. Adds 4 new processes to plan the management of knowledge areas
2. Introduces 2 new controlling processes:

Control communications & control stakeholder management

1. Merges 2 processes (Distribute information and report performance) into a revisited process (Manage Communications)
2. Re-allocates 2 processes in the new stakeholder knowledge areas

PMBOK 4^th edition: 42 processes

 

	PMBOK 4th Edition	PMBOK 5th   Edition
Process Groups	5	5
Knowledge   Areas	9	10
Processes	42	47

 

Knowledge   Areas
PMBOK 4th Edition	PMBOK 5th Edition
Integration	Integration
Scope	Scope
Time	Time
Cost	Cost
Quality	Quality
Human Resource	Human Resource
Communications	Communications
Risk	Risk
Procurement	Procurement
	Stakeholders

Please click on the link , to find out comparision between PMBOK 4th edition and PMBOK 5th edition processes

 

Project Margin Formula

I have always been weak in calculations and mathematics and all the streams where it is applicable.

But to be fortunate, I have again been pushed to do something in the same field at my work place. So now, when it has been a lot of running away and I do not have any option any more rather than  taking the bull from horns, I have accepted the challenge. God may want me to learn and master and may be calculate, calculate and calculate.

Alright!! Let me share me first writing for those who would like to learn some financial part of a PMO. I am sharing this fact to keep you motivated, “Finance PMO are highly paid resources in program management domain”. So if you want to be best in PMO domain and become highly paid then this writing is definitely going to add to your knowledge.

We’ll be explaining you about ‘project margins’ in this article.

Why do we need to understand project margin? What is so important about it? Why not simply calculate the project revenue? You will be able to answer all these questions after reading the complete article.

We all work in software industry today and run software development projects. So how do we find out whether the project is profitable as planned or all your effort is going in vain. Here is the simple way to find out, just calculate the project margin. If the project margin is high, your project is definitely running in profit.

Let us have a look on what other things you need to know to calculate project margins.

We must have Total Revenue, Resource Cost and any other project expenses details.

Talking about total revenue first,

You’ll have the total revenue detail as per the project plan if you are in the middle of the execution of the project. It is the best time when you take the target/planned revenue and start measuring the project health by calculating the project margin at that point of time. Now to go more into detail, how do you plan project’s total revenue. It is very very simple. You know the total project effort and the project effort at any given instance in the project duration. So you do plan that how many resource you would want to deploy against that project effort. Also, you do know the resource cost of each resource as per your discussion with the client.

Hence use an easy formula, Total Revenue = Total Resource* Resource Cost

Here you go, you have total revenue with you now.

You can also, calculate the total revenue for any week or at any particular time in project duration to check how much would be your project’ margin at that time.

Secondly, you need to have the total resource cost and the total project expenses.

Project expenses may be calculating depending on your other project needs like ‘travel expense’ ,canteen expenses’, client visits, hardware or software procurement costs etc.

Now, that  you  have everything in hand, use a simple calculation to calculate project margin.

Project Margin = Project Revenue – Total Project’s Resource cost – Project Expenses.

We are done learning of calculation project margins. I hope it helped all of you who are struggling to learn finance like me. I am completely confident that tomorrow is brighter for you as a PMO in financial domain.  Keep learning happily and if this article helped you, please share your views on how you used it in your practical life.

Project Scope Management

Project Scope Management:
Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. It is primarily concerned with defining and controlling what is or is not included in the project.
The Project Scope Management plan is included in as one of the sections in the overall Project Management plan. It is very detailed document explaining each and every aspect of the deliverables/services depending upon the project communication plan.

Project Scope and Scope Creep

Scope Creep

We all are busy doing different projects and related work in our daily work life. We have been given deadlines to meet client expectations. It is really important for us to know, how deadlines are defined. It is critical for all of us to know, what and when to deliver. To define the deadline to any of the task, first of all we must know the scope of the task. Let us think of ‘Scope’ as a box. The boundary walls of the box actually decide what to do and what not to do. Anything which is out of boundaries of the box, falls out of the scope of our work. Now, to identify the boundaries of the box, we have to define two things: Project Scope and Product Scope. Project Scope – It defines ‘how to deliver’ most of the work. It should mention all the processes, number of deliverables and the deadlines to deliver that work. It should also document the project requirements, which are agreed upon by the client once the project scope is decided and signed off by both the parties. Product Scope – It defines the features and functions that characterize a product, service, or result. It includes the functional specifications of the product/ service to be delivered. If the project scope is not completely discussed and agreed upon with the Project team and the client, it may end up in Scope Creep. Scope creep is a term which refers to the incremental expansion of the scope of a project, which may include and introduce more requirements that may not have been a part of the initial planning of the project, while nevertheless failing to adjust schedule and budget. For an instance client may ask for few changes in the product later on. She/he may want to add more functionality, which was not decided at the beginning of the project. There could be several losses to the project team, if the scope creep is too high and if we do not document and manage it at the first go. Features (Technology) scope creep occurs when the scope creep is introduced by technologists adding features not originally contemplated. Customer-pleasing scope creep occurs when the desire to please the customer through additional product features adds more work to the current project rather than to a new project proposal. Gold-plating scope creep occurs when technologists augment the original requirements because of a bias toward “technical perfectionism” or because the initial requirements were insufficiently clear or detailed One of the most efficient ways to manage the scope creep is “Change Control Management”. All these methodologies must be well thought off before we start the project and must be included in the ‘Scope management plan’. Few more ways to prevent scope creep: 1. Address the problem of ‘Scope Creep’ immediately. 2. Conduct a Scope of Work before beginning the project 3. Build a provision into your proposal addressing scope creep 4. Include a strong terms and conditions section along with your proposal 5. Have a plan 6. Explain scope creep to the client Scope management plan is one of the major project planning documents. The Project Scope Management Plan documents how the project scope will be defined, managed, controlled, verified and communicated to the project team and stakeholders/customers. It also includes all work required to complete the project. The documents are used to control what is in and out of the scope of the project by the use of a Change Management system. Items deemed out of scope go directly through the change control process and are not automatically added to the project work items. The Project Scope Management plan is included in as one of the sections in the overall Project Management plan. It is very detailed document explaining each and every aspect of the deliverables/services depending upon the project communication plan.

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What is a Contract?

Contract is a document which has elements of legal binding, mutually agreed between two or more parties. It is exchange of promises with specific legal remedies for breach. This is a very important step before you think of appropriate project to be a success.
You need to understand different types of contracts and then decide which contract type you are going with, for your project. Mostly, choice of contract depends on the mode and method of payment by the client. Hence, if you really want some stringent guidelines for all the stakeholders, prepare a contract as you begin with the project planning and publicize it. It will help you manage the stakeholders in a disciplined way by making them adhere to the legal terms & conditions mentioned in the contract.
We can definitely start planning a project and execute it without a contract. But it is always advisable to have a legal document ready as a contract between 2 parties.
Lets us think of a scenario, where in you are the project manager. You want to execute a software project which could last for one year. Your client suggests you to deliver the project in 10 months but there is no legal document involved. There could be several issues that both the parties might face in the last stage of the project.
 No clarity on the scope of the project. Client may demand for more deliverables which were not agreed upon earlier.
 No deadlines for delivery. It might drift to 2 years and there won’t be any context to refer for earlier commitments
 Client might not pay on time as there are no specific deadlines and So on.
 All these issues are also applicable the other way around. Project teams may not adhere to any schedule and may not deliver on time.
Hence, it is extremely important have a context of all the promises on a legal document in the form of a contract with terms & conditions.
As long as the good or service provided is legal, any oral agreement between two parties can constitute a binding legal contract. There are many different types of contracts and they vary between industry and according to the type of goods supplied or services performed. Contracts are usually categorized according to the type of payment but can be tailored to incorporate common elements from several different contract types. We’ll discussing the types of contracts in another article.