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Avoiding risk

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Elimination of the risk cause before the project begins.

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Budget reserve

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Reserve setup to cover identified risks that may occur and influence baseline tasks or costs. These reserves are typically controlled by the project manager and the project team. See management reserve.

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Change management system

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A defined process for authorizing and documenting changes in the scope of a project.

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Contingency plan

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A plan that covers possible identified project risks that may materialize over the life of the project.

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Management reserve

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A percentage of the total project budget reserved for contingencies. The fund exists to cover unforeseen, new problems—not unnecessary overruns. The reserve is designed to reduce the risk of project delays. Management reserves are typically controlled by the project owner or project manager. See budget reserve.

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Mitigating risk

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Action taken to either reduce the likelihood that a risk will occur and/or the impact the risk will have on the project.

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Opportunity

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An opportunity is an event that can have a positive impact on project objectives.

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Retaining risk

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Simply accepting the risk and not taking any pre-emptive action to mitigate the risk.

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Risk

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The chance that an undesirable project event will occur and the consequences of all its possible outcomes.

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Risk breakdown structure (RBS)

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A hierarchical depiction of the identified project risks arranged by risk category and subcategory that identifies the various areas and causes of potential risks.

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Risk register

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A risk register details all identified risks, including descriptions, category, and probability of occurring, impact, responses, contingency plans, owners, and current status.

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Risk profile

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A list of questions that addresses traditional areas of uncertainty on a project.

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Risk severity matrix

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A tool used to assess the impact of risks on a project.

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Scenario analysis

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Scenario analysis is the easiest and most commonly used technique for analyzing risks.

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Time buffer

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A contingency amount of time for an activity to cover uncertainty—for example, availability of a key resource or merge event.

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Transferring risk

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Shifting responsibility for a risk to another party.

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Heuristic

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A rule of thumb used to make decisions. Frequently found in scheduling projects. For example, schedule critical activities first, then schedule activities with the shortest duration.

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Leveling

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Techniques used to examine a project for an unbalanced use of resources, and for resolving resource over-allocations.

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Planned value (PV)

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The planned time-phased baseline of the value of the work scheduled. Previously this was called budgeted cost of work scheduled (BCWS).

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Resource-constrained projects

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A project that assumes resources are limited (fixed) and therefore time is variable.

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Resource Smoothing

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If resources are adequate but the demand varies widely over the life of the project, it may be desirable to even out resource demand by delaying noncritical activities (using slack) to lower peak demand and, thus, increase resource utilization. This process is called resource smoothing.

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Splitting

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A scheduling technique in which work is interrupted on one activity and the resource is assigned to another activity for a period of time, then reassigned to work on the original activity.

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Time-constrained projects

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A project that assumes time is fixed and, if resources are needed, they will be added.

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Time-phased budget baseline

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Planned costs that are broken down by distinct time periods (e.g., $5,000 per week) for a work package, as opposed to a budget for a whole job/project (6 months for a total of $130,000). Time phasing allows better cost control by measuring the actual rate of expenditure versus the planned expenditure rate over small pieces of the project.

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Crashing

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Shortening an activity or project.

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Crash point

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The most a project activity time can realistically be compressed with the resources available to the organization.

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Direct costs

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Costs that are clearly charged to a specific work package—usually labor, materials, or equipment.

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Fast-tracking

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Accelerating project completion typically by rearranging the network schedule and using start-to-start lags.

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Indirect costs

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Costs that cannot be traced to a particular project or work package.

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Outsourcing

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Contracting for the use of external sources (skills) to assist in implementing a project.

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Project cost-duration graph

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A graph that plots project cost against time; it includes direct, indirect, and total cost for a project over a relevant range of time.

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Crash time

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The shortest time an activity can be completed (assuming a reasonable level of resources).

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Emotional intelligence (EQ)

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The ability or skill to perceive, assess, and manage the emotions of one's self and others.

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Inspiration-related currencies

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Influence based on inspiration (opportunity to do good, be the best, etc.).

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Law of reciprocity

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People are obligated to grant a favor comparable to the one they received.

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Leading by example

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Exhibiting the behaviors you want to see in others.

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Management by wandering around (MBWA)

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A management style in which managers spend the majority of their time outside their offices interacting with key people.

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Personal-related currencies

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Influence based on enhancing another person's self-esteem.

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Position-related currencies

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Influence based on the ability to enhance someone else's position within an organization.

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Proactive

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Working within your sphere of influence to accomplish something.

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Relationship-related currencies

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Influence based on friendship.

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Social network building

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The process of identifying and building cooperative relationships with key people.

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Stakeholder

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Individuals and organizations that are actively involved in the project, or whose interests may be positively or negatively affected as a result of project execution or completion. They may also exert influence over the project and its results.

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Systems thinking

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A holistic approach to viewing problems that emphasizes understanding the interactions among different problem factors.

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Task-related currencies

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Influence based, helping someone else do their work.

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Brainstorming

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Generating as many ideas/solutions as possible without critical judgment.

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Dysfunctional conflict

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Disagreement that does not improve project performance.

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Functional conflict

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Disagreement that contributes to the objectives of the project.

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Groupthink

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A tendency of members in highly cohesive groups to lose their critical evaluative capabilities.

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Nominal group technique (NGT)

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A structured problem-solving process in which members privately rank-order preferred solutions.

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Positive synergy

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A characteristic of high-performance teams in which group performance is greater than the sum of individual contributions

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Project kick-off meeting

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Typically the first meeting of the project team.

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Project vision

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An image of what the project will accomplish.

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Team building

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A process designed to improve the performance of a team.

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Team rituals

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Ceremonial actions that reinforce team identity and values.

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Virtual project team

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Spatially separated project team whose members are unable to communicate face to face. Communication is usually by electronic means.

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Best alternative to a negotiated agreement (BATNA)

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Strong or weak BATNA indicates your power to negotiate with the other party.

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Co-location

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A situation in which project members including those from different organizations work together in the same location.

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Escalation

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A control mechanism for resolving problems in which people at the lowest appropriate level attempt to resolve a problem within a set time limit or the problem is "escalated" to the next level of management.

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Met-expectations model

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Customer satisfaction is a function of the extent to which perceived performance exceeds expectations.

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Outsourcing

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Contracting for the use of external sources (skills) to assist in implementing a project.

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Partnering charter

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A formal document that states common goals as well as cooperative procedures used to achieved these goals, which is signed by all parties working on a project.

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Principled negotiation

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A process of negotiation that aims to achieve win/win results.

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Baseline budget

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A concrete document and commitment; it represents the first real plan with cost, schedule, and resource allocation. The planned cost and schedule performance are used to measure actual cost and schedule performance. Serves as an anchor point for measuring performance.

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Budget at completion (BAC)

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Budgeted cost at completion. The total budgeted cost of the baseline or project cost accounts.

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Control chart

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This chart is another tool used to monitor past project schedule performance and current performance and to estimate future schedule trends.

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Cost performance index (CPI).

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The ratio of work performed to actual costs (EV/AC).

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Cost variance (CV)

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The difference between EV and AC (CV = EV - AC). Tells if the work accomplished cost more or less than was planned at any point over the life of the project.

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Earned value (EV)

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The physical work accomplished plus the authorized budget for this work. Previously this was called the budgeted cost of work performed (BCWP).

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Estimated cost at completion (EAC)

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The sum of actual costs to date plus revised estimated costs for the work remaining in the WBS. The text uses EACre to represent revisions made by experts and practitioners associated with the project. A second method is used in large projects where the original budget is less reliable. This method uses the actual costs to date plus an efficiency index (CPI = EV/AC) applied to the remaining project work. When the estimate for completion uses the CPI as the basis for forecasting cost at completion, we use the acronym EACf, where EACf = estimated costs at completion. Includes costs to date plus revised estimated costs for the work remaining. (Uses formula to compute EAC.)

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Estimated cost at completion—Forecasted (EACf)

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Estimated cost to complete (uses formula to compute estimates).

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Estimated cost at completion—Revised (EACre)

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Estimated cost to complete (uses expert estimates).

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Percent complete index—budget costs (PCIB)

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Percentage of work accomplished to date based on original budget of the project (EV/BAC).

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Percent complete index—actual costs (PCIC).

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Percentage of work accomplished to date based on expected cost of the project. (AC/EAC).

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Schedule performance index (SPI)

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The ratio of work performed to work scheduled (EV/PV).

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Schedule variance (SV)

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The difference between the planned dollar value of the work actually completed and the value of the work scheduled to be completed at a given point in time (SV = EV - PV). Schedule variance contains no critical path information.

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Scope creep

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The tendency for the scope of a project to expand once it has started.

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To complete performance index (TCPI)

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The value each remaining dollar in the budget must earn to stay within budget (BAC-EV/BAC-AC).

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Tracking Gantt chart

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A Gantt chart that compares planned versus actual schedule information.

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Variance at completion (VAC)

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Indicates expected actual cost over- or under run at completion (VAC = BAC − EAC).

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Lessons learned

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Lessons learned represent an analysis carried out during and shortly after the project life cycle; they attempt to capture positive and negative project learning.

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Performance review

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In general, all review methods of individual performance center on the technical and social skills brought to the project and team. These reviews stress personal improvement and are frequently used for salary and promotion decisions.

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Project closure

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All of the activities of shutting down a project. The major activities are evaluation of project goals and performance, developing lessons learned, releasing resources, and preparing a final report.

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Project evaluation

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The process of assessing, verifying, and documenting project results.

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Project facilitator

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A guide who leads the project team through an analysis of project activities that went well, what needs improvement, and development of a follow-up action plan with goals and accountability.

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Retrospective

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A methodology that analyzes a past project event to determine what worked and what didn't, develops lessons learned, and creates an action plan that ensures lessons learned are used to improve management of future projects.

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Team evaluation

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Evaluating the performance of the project team using a minimum core of conditions in place before the project began. Evaluation practices should emphasize the team as a whole, while minimizing individual performance.

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360-degree review (feedback)

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A multirater appraisal system based on performance information that is gathered from multiple sources (superiors, peers, subordinates, customers).

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