APPENDIX B
Glossary

Activity. A unit of work performed during a project. An activity usually has a duration, a cost, and resource requirements. Also called task.

Activity estimate sheet. A form used to gather information needed to estimate a project activity.

Activity-on-node. A diagramming method that shows the activities in a node (box) with arrows showing the dependencies. Also called precedence diagramming method.

Actual cost (AC). The cost incurred to complete the work that was actually performed in a given time period. Also called actual cost of work performed (ACWP).

Alternative course of action review. A review to identify other things that could be done to solve the problem or take advantage of the opportunity instead of the approach being taken by the proposed project.

Analogous estimate. A method of estimating that uses the actual costs and durations of previous, similar projects as the basis for estimating the current project. Also called top-down estimating.

Baseline. The original schedule or cost plan for the project, including approved changes. This is the basis from which actual performance is measured to determine variances.

Benchmarking. The process of defining a standard or point of reference to measure quality or performance.

Bottom-up estimate. A method of estimating that sums the cost and duration of the individual work packages.

Budget at completion (BAC). The estimated total cost of the project when completed.

Budgeted cost of work performed (BCWP). See earned value (EV).

Budgeted cost of work scheduled (BCWS). See planned value (PV).

Budgeting. The process of allocating the cost estimates to work items to establish a cost baseline for measuring project performance.

Cause-and-effect diagram. A graphical representation of the relationships that exist between factors. Used to explore a wide variety of factors and the relationships among them that may cause them. Also called a fishbone diagram.

Change control. A formal process to manage proposed changes to the project plan. Includes processes for submitting, evaluating, approving, and communicating changes.

Client. The person or group that requests a project.

Conceptual review. A review to determine whether the project fits within the organization’s goals and whether the project will solve the stated problem or appropriately take advantage of the current opportunity.

Contingency plan. A plan that describes the actions to be taken if a risk event should occur.

Contingency reserve. See reserves.

Contract, cost-plus. See cost-plus contract.

Contract, cost-reimbursable. See cost-plus contract.

Contract, firm-fixed-price. See fixed-price contract.

Contract, fixed-price. See fixed-price contract.

Contract incentives. Additional payments included in contract terms, such as completing work before a given date or controlling costs to a given level.

Contract, time-and-materials. See cost-plus contract.

Control charts. Graphs that display periodic results along with established control limits. They are used to determine whether a process is in control or in need of adjustment.

Cost. The money and resources required to complete a project.

Cost budgeting. See budgeting.

Cost control. The process of comparing actual expenditures to the baseline cost plans to determine variances, evaluate possible alternatives, and take the appropriate action.

Cost performance index (CPI). A ratio that measures cost efficiency by comparing budgeted costs to actual costs. In earned value analysis, the budgeted cost of work performed divided by the actual cost of work performed.

Cost-plus contract. A contract in which the vendor agrees to do the work for the cost of time and materials, plus an agreed amount of profit. Also called cost-plus-fixed-fee, cost-reimbursable, or time-and-materials contract.

Cost-reimbursable contract. See cost-plus contract.

Cost variance (CV). The difference between the planned and actual cost of an activity. In earned value analysis, the difference between the budgeted cost of work performed and the actual cost of work performed.

CPM. See critical path method.

Crashing the schedule. Taking action to decrease the total project duration after analyzing the options to determine how to get the maximum compression for the least cost.

Critical activity. An activity on the critical path.

Critical path. The path through the network that takes the longest total time, and therefore determines the earliest possible time the project can be completed. All activities on this path generally have zero float, meaning that the early and late start (and early and late finish) are the same.

Critical path method (CPM). A technique used to estimate project duration. It analyzes which sequence of activities (which path) has the least amount of scheduling flexibility (the least amount of float).

Customer. A person or group that will use the result of the project (the product, service, process, or plan).

Deliverable. Something delivered at the end of a project, such as a product, service, process, or plan.

Duration. The number of work periods (such as hours, days, or weeks) required to complete an activity. Does not include holidays or other nonworking periods. Not the same as effort.

Early finish. The earliest date an activity can end.

Early start. The earliest date an activity can begin.

Earned value (EV). The planned cost of work actually performed in a given time period. Also called budgeted cost of work performed (BCWP).

Earned value analysis. A method of measuring and evaluating project performance. It compares the amount of work planned with what is actually accomplished to determine whether the project is on track. Earned value analysis is also known as variance analysis.

Effort. The number of labor units required to complete an activity. Also called work effort. Not the same as duration.

Enterprise portfolio management. Managing all projects of the organization as a portfolio.

Estimate at completion (EAC). The expected total cost of the project when completed, including adjustments to the original estimate based on project performance to date. In earned value analysis, AC + ETC.

Estimate to complete (ETC). The expected additional cost needed to complete the project, including adjustments to the original estimate based on project performance to date. In earned value analysis, (BAC – EV)/CPI.

Exception report. A report that shows only major deviations from the project plan, rather than all deviations.

Fast-tracking. Compressing the project schedule by changing the sequence of activities to allow activities to be done in parallel (at the same time) or to allow some overlap.

Feasibility study. A review to determine whether the project can realistically be accomplished.

Finish-to-finish activity relationship. A dependency between activities where one activity must finish before the other can finish.

Finish-to-start activity relationship. A dependency between activities where one activity must finish before the other can begin.

Firm-fixed-price contract. See fixed-price contract.

Fishbone diagram. See cause-and-effect diagram.

Fixed-price contract. A contract in which the vendor agrees to do the total work for a fixed price. Also called firm-fixed-price contract or lump-sum contract.

Float. The time an activity can slip without delaying the project finish date. It is equal to the difference between the early start and late start (or the difference between the early finish and late finish). Also known as slack, total float, and path float. See also free float.

Flowchart. A quality control tool that provides information about process flow.

Free float. The amount of time an activity can slip without delaying the early start of any activity that immediately follows it. See also float.

Functional manager. A person assigned to manage a specific function (such as accounting, manufacturing, or marketing) and to provide technical direction. Also called resource manager.

Functional organization. A hierarchical organizational structure where each functional division has its own project managers who operate independently from project managers in other divisions.

Gantt chart. A bar chart of schedule information, typically with dates across the horizontal axis, activities listed down the vertical axis, and activity durations shown as horizontal bars under the appropriate dates.

Incentives. See contract incentives.

Integration management. The processes required to ensure that the various elements of the project are properly coordinated.

Internal rate of return. A profitability measure that represents an average rate of return for the project, expressed as a percentage.

Lag. The time delay between the start or finish of one activity and the start or finish of another activity. When expressed as a negative number, lag indicates an overlap in the activities and is also called lead.

Late finish. The latest date an activity can end and still allow the project to be completed on time.

Late start. The latest date an activity can begin and still allow the project to be completed on time.

Lead. The time overlap between the start or finish of one activity and the start or finish of another activity. See also lag.

Logic network diagram. See network diagram.

Lump-sum contract. See fixed-price contract.

Management reserves. See reserves.

Matrix organizational structure. An organizational structure that is a blend of functional and project. The project team reports both to a project manager (who provides project management skills) and to a functional manager (who provides specific job-related skills).

Milestone. An activity that defines the completion of a major deliverable or group of activities. A milestone has no duration, cost, or resource requirements.

Milestone schedule. A schedule that includes only significant (milestone) activities. Also called a summary schedule.

Mitigation plans. Steps taken to lower the probability of the risk event happening or to reduce the impact should it occur.

Network diagram. A graphical flow plan of the activities that must be accomplished to complete the project. It shows the planned sequence of steps, time requirements, interdependencies, and interrelationships. Also called precedence diagram.

Objectives. The statement of cost, time, and scope required to complete a project.

Opportunity cost. The cost of choosing one alternative (project) and, therefore, giving up the potential benefits of another alternative (project).

Parallel activities. Two or more activities that occur at the same time. Also called concurrent or simultaneous activities.

Parametric estimate. A method of estimating that uses mathematical parameters (such as a dollar amount per square foot) to predict project costs.

Pareto chart. A bar chart with elements arranged in descending order of importance, generally by magnitude of frequency, cost, or time. Used to focus attention on the most critical issues.

Pareto Principle. A vital few elements (20 percent) account for the majority (80 percent) of the problems.

Path float. See float.

Payback period. The number of periods (usually years) until cumulative revenues exceed cumulative costs, and, therefore, the project has “turned a profit.”

Percent complete. A method of reporting where the amount of work completed on an activity is expressed as a percentage of the total work required for the activity.

PERT. See Program evaluation and review technique.

Planned value (PV). The planned cost of work scheduled to be done in a given time period. Also called budgeted cost of work scheduled (BCWS).

Portfolio. A collection of projects or programs that are managed together and usually prioritized against larger strategic organizational objectives.

Precedence diagram. See network diagram.

Precedence diagramming method (PDM). A network diagramming method that shows the activities in a node (box) with arrows showing the dependencies. Also called activity-on-node.

Predecessor activity. An activity that occurs before another activity in a project.

Preliminary risk review. An initial review of the potential risks involved in a project to determine whether the expected benefits of the project are worth the risk.

Program. A group of related projects that are managed together for increased benefit and control.

Program evaluation and review technique (PERT). A technique used to estimate project duration. It uses the critical path method and a weighted average of estimates for Pach activity. See also Three-Point Estimate.

Program management. The centralized or coordinated management of a program (or group of related projects). Programs are often tied to larger organizational objectives.

Project. “A temporary endeavor undertaken to create a unique product, service, or result.” A project has a definite beginning and end. (See A Guide to the Project Management Body of Knowledge (PMBOK^® Guide), p. 4.)

Project charter. A document that formally authorizes the project, explains the business need the project addresses, states the project objectives (time, cost, and scope), and defines the approvals and authority granted by the client or senior management.

Project closure. Formal steps taken at the conclusion of a project to get acceptance of the final product, close project records, and reallocate personnel and other resources.

Project management. A set of principles, methods, and techniques used to effectively plan and control project work.

Project manager. The person assigned to manage a specific project, and expected to meet the approved objectives of the project, including project scope, budget, and schedule.

Project objectives. See objectives.

Project organization. An organizational structure in which an autonomous division of project managers is responsible for planning, controlling, managing, and reporting the progress of all projects in the organization.

Project plan. A document or Web site that contains the project charter, schedules, project scope statement, resource plans, budget plans, risk management plans, monitoring and control plan, change control processes, project evaluation plan, project reporting plan, project closure plan, etc.

Project scope statement. The documented narrative description of the scope of a project.

Quality assurance. The process of evaluating project performance to ensure compliance with quality standards.

Reserves. Provisions in the project plan to mitigate the impact of risk events. Usually in the form of contingency reserves (funds to cover unplanned costs), schedule reserves (extra time to apply to schedule overruns), or management reserves (funds held by general management to apply to projects that overrun).

Resource control. The process of comparing actual performance to the resource plans to determine variances, evaluate possible alternatives, and take the appropriate action.

Resource histogram. A chart showing the commitment of resources over a period of time.

Resource leveling. Taking action to minimize the peaks when resources are overallocated.

Resource manager. See functional manager.

Resources. Funds, personnel, equipment, facilities, or materials needed to complete an activity or a project.

Responsibility assignment matrix. A chart that relates skill requirements to people (or groups of people).

Return on assets. A measure of net profit divided by total assets.

Return on investment. A measure of net profit divided by total investment.

Return on sales. A measure of net profit divided by total sales.

Risk management. The process of identifying possible risks, making preventive and contingency plans, and executing those plans when risk events occur.

Risk management plan. A plan that documents the procedures that will be used to manage risk throughout the project.

Risk review, preliminary. See preliminary risk review.

Rolling wave estimate. A method of estimating that provides a gross estimate for the entire project and periodically calculates detailed estimates for the next short period of time.

Rule of Seven. A rule of thumb in control charting indicating that when seven or more points in a row occur on the same side of the mean, or when they tend in the same direction—even though they may be within the control limits—they should be investigated.

Schedule performance index (SPI). A ratio that measures schedule efficiency by comparing work performed to work scheduled. In earned value analysis, the budgeted cost of work performed divided by the budgeted cost of work scheduled.

Schedule reserves. See reserves.

Schedule variance (SV). The difference between the scheduled and actual completion of an activity. In earned value analysis, the difference between the budgeted cost of work scheduled and the budgeted cost of work performed.

Scope. A description of the features and functions of the end products or services to be provided by the project.

Scope control. The process of comparing actual performance to the scope statement to determine variances, evaluate possible alternatives, and take the appropriate action.

Scope creep. The tendency for scope to increase during the course of the project without proportionate increases in time or cost.

Scope statement. A narrative description of the project objectives, including justification for the project, a description of the product or service to be created, and a list of the project deliverables.

Scope verification. Verifying that all project deliverables have been accomplished as agreed upon.

Sequential activities. Two or more activities that occur one after the other. Also called consecutive activities.

Simulation estimate. A method of estimating that calculates multiple costs or durations with different sets of assumptions.

Slack. See float.

Stakeholders. People who are affected by or have an interest in the project, including clients, senior management, middle management, functional managers, project managers, project team members, customers, and vendors.

Start-to-finish activity relationship. A dependency between activities where one activity must begin before the other can finish.

Start-to-start activity relationship. A dependency between activities where one activity must begin before the other can begin.

Statement of work. A narrative description of the work to be accomplished. A general statement of work may apply to the entire project, while a more specific statement of work may apply to a project activity or the work of an individual team member.

Successor activity. An activity that occurs after another activity in a project.

Summary schedule. A schedule that includes only significant (milestone) activities. Also called a milestone schedule.

Task. See activity.

Team members. The people who work with the project manager directly or indirectly to accomplish project goals and complete project activities.

Three-point estimate. A weighted estimating formula that uses three points: most likely (m), optimistic (o), and pessimistic (p), with an emphasis on the most likely. The formula is (o + 4m + p)/6.

Time. The time required to complete a project.

Time-and-materials contract. See cost-plus contract.

Time control. The process of comparing actual schedule performance to the baseline schedule to determine variances, evaluate possible alternatives, and take the appropriate action.

Total float. See float.

Trend analysis. Using mathematical techniques to forecast future outcomes based on historical results.

Trigger. An occurrence or a condition that causes an event to happen.

Unit-price contract. A contract in which the vendor agrees to a preset amount per unit of service (for example, $90 per hour).

Workaround. The response to an unplanned risk event.

Work breakdown structure. A hierarchical breakdown of activities and end products that organizes and defines all work to be completed in a project.

Work effort. The number of labor units required to complete an activity. Also called effort. Not the same as duration.

Work packages. The deliverables in the lowest level of the work breakdown structure. A work package may be divided into the specific activities to be performed.