,

Chapter 7

Planning Project Resources

The PMP® exam content from the Planning the Project performance domain covered in this chapter includes the following:

• Task: 5: Develop a human resource management plan by defining the roles and responsibilities of the project team members in order to create an effective project organization structure and provide guidance regarding how resources will be utilized and managed.
• Task 7: Develop a procurement plan based on the project scope and schedule in order to ensure that the required project resources will be available.
• Task 8: Develop a quality management plan based on the project scope and requirements in order to prevent the occurrence of defects and reduce the cost of quality.
• Task 9: Develop a change management plan by defining how changes will be handled in order to track and manage changes.
• Task 11: Present the project plan to the key stakeholders (if required) in order to obtain approval to execute the project.
• Knowledge and Skills:
  • Resource planning process
  • Elements, purpose, and techniques of project planning
  • Elements, purpose, and techniques of procurement planning
  • Elements, purpose, and techniques of quality management planning

We’re closing in on finishing up the Planning group processes. We’re at a place where we need to talk about some processes that aren’t necessarily related to each other but need to be completed before you can construct the project schedule and budget. So, we’ll start out this chapter by discussing resources.

All projects require resources. Some may require materials or goods, but all projects require human resources to perform the activities to bring them to completion. We’ll discuss the Plan Procurements process, which deals with the goods and services procurements and then move on to Develop Human Resource Plan, where you will develop the staffing management plan. This plan will help guide you later when acquiring your project team members in the Executing processes.

We’ll wrap up the chapter with the Plan Quality process. This process focuses on determining the quality standards that are necessary for the project and for documenting how you’ll go about meeting them. Let’s get going.

Procurement Planning

Plan Procurements is a process of identifying what goods or services you’re going to purchase from outside the organization and which needs the project team can meet. Part of what you’ll accomplish in this process is determining whether you should purchase the goods or services and, if so, how much and when. Keep in mind that I’m discussing the procurement from the buyer’s perspective, because this is the approach used in the PMBOK® Guide.

The Plan Procurements process can influence the project schedule, and the project schedule can influence this process. For example, the availability of a contractor or special-order materials might have a significant impact on the schedule. Conversely, your organization’s business cycle might have an impact on the Plan Procurements process if the organization is dependent on seasonal activity. The Estimate Activity Resources process can also be influenced by this process, as will make-or-buy decisions (I’ll get to those shortly).

Sometimes, you’ll procure all the materials and resources for your project from a vendor. In cases like these, the vendor will have a project manager assigned to the project. Your organization might choose to have an internal project manager assigned as well to act as the conduit between your company and the vendor and to provide information and monitor your organization’s deliverables. When this happens, the vendor or contracting company is responsible for fulfilling all the project management processes as part of the contract. In the case of an outsourced project, the seller—also known as the vendor, supplier, or contractor—manages the project and the buyer becomes the stakeholder. If you’re hiring a vendor, don’t forget to consider permits or professional licenses that might be required for the type of work you need them to perform.

Several inputs are needed when planning for purchases. You’ll look at them next.

Plan Procurements Inputs

The Plan Procurements process has eleven inputs:

• Scope baseline
• Requirements documentation
• Teaming agreements
• Risk register
• Risk-related contract decisions
• Activity resource requirements
• Project schedule
• Activity cost estimates
• Cost performance baseline
• Enterprise environmental factors
• Organizational process assets

The scope baseline includes the project scope statement that describes the need for the project and lists the deliverables and the acceptance criteria for the product or service of the project. Obviously, you’ll want to consider these when thinking about procuring goods and services. You’ll also want to consider the constraints (issues such as availability and timing of funds, availability of resources, delivery dates, and vendor availability) and assumptions (issues such as reliability of the vendor, assuming availability of key resources, and adequate stakeholder involvement). The product scope description is included in the project scope statement as well and might alert you to special considerations (services, technical requirements, and skills) needed to produce the product of the project.

As part of the scope baseline, the WBS and WBS dictionary identify the deliverables and describe the work required for each element of the WBS.

Teaming agreements are contractual agreements between multiple parties that are forming a partnership or joint venture to work on the project. Teaming agreements are often used when two or more vendors form a partnership to work together on a particular project. If teaming agreements are used on the project, typically the scope of work, requirements for competition, buyer and seller roles, and other important project concerns should be predefined.

The risk register and risk-related contract decisions will guide you in determining the types of services or goods needed for risk management. For example, the transference strategy might require the purchase of insurance. You should review each of these elements when determining which goods and services will be performed within the project and which will be purchased.

Marketplace conditions are the key element of enterprise environmental factors you should consider for this process. The organization’s guidelines and organizational policies (including any procurement policies) are the elements of the organizational process assets you should pay attention to here.

It’s important for the project manager to understand organizational policies because they might impact many of the Planning processes, including the Procurement Planning processes. For example, the organization might have purchasing approval processes that must be followed. Perhaps orders for goods or services that exceed certain dollar amounts need different levels of approval. As the project manager, you need to be aware of policies like this so you’re certain you can execute the project smoothly. It’s frustrating to find out later that you should have followed a certain process or policy and now, because you didn’t, you’ve got schedule delays or worse. You could consider using the “Sin now, ask forgiveness later” technique in extreme emergencies, but you didn’t hear that from me. (By the way, that’s not a technique that’s authorized by the PMBOK® Guide.)

The project manager and the project team will be responsible for coordinating all the organizational interfaces for the project, including technical, human resources, purchasing, and finance. It will serve you well to understand the policies and politics involved in each of these areas in your organization.

Tools and Techniques for Plan Procurements

The Plan Procurements process consists of three tools and techniques. They are make-or-buy analysis, expert judgment, and contract types. I’ve already covered expert judgment, so you’ll look at make-or-buy analysis next, and then I’ll cover contract types.

Make-or-Buy Analysis

The main decision you’re trying to get to in make-or-buy analysis is whether it’s more cost effective to buy the products and services or more cost effective for the organization to produce the goods and services needed for the project. Costs should include both direct costs (in other words, the actual cost to purchase the product or service) and indirect costs, such as the salary of the manager overseeing the purchase process or ongoing maintenance costs. Costs don’t necessarily mean the cost to purchase. In make-or-buy analysis, you might weigh the cost of leasing items versus the cost of buying them. For example, perhaps your project requires using a specialized piece of hardware that you know will be outdated by the end of the project. In a case like this, leasing might be a better option so that when the project is ready to be implemented, a newer version of the hardware can be tested and put into production during rollout.

Other considerations in make-or-buy analysis might include elements such as capacity issues, skills, availability, and trade secrets. Strict control might be needed for a certain process and, therefore, the process cannot be outsourced. Perhaps your organization has the skills in-house to complete the project but your current project list is so backlogged that you can’t get to the new project for months, so you need to bring in a vendor.

Make-or-buy analysis is considered a general management technique and concludes with the decision to do one or the other.

Contract Types

A contract is a compulsory agreement between two or more parties and is used to acquire products or services from outside the organization. Typically, money is exchanged for the goods or services. Contracts are enforceable by law and require an offer and an acceptance.

There are different types of contracts for different purposes. The PMBOK® Guide divides contracts into three categories:

• Fixed price or lump sum
• Cost reimbursable
• Time and materials (T&M)

Within the fixed-price and cost-reimbursable categories are different types of contracts. You’ll look at each in the following sections. Keep in mind that several factors will impact the type of contract you should use. The product requirements (or service criteria) might drive the contract type. The market conditions might drive availability and price—remember back in the dot-com era when trying to hire anyone with programming skills was next to impossible? Also, the amount of risk—for the seller, the buyer, and the project itself—will help determine contract type.

Fixed-Price or Lump-Sum Contracts

Fixed-price contracts (also referred to as lump-sum contracts) can either set a specific, firm price for the goods or services rendered (known as a firm fixed-price contract, or FFP) or include incentives for meeting or exceeding certain contract deliverables.

Fixed-price contracts can be disastrous for both the buyer and the seller if the scope of the project is not well defined or the scope changes dramatically. It’s important to have accurate, well-defined deliverables when you’re using this type of contract. Conversely, fixed-price contracts are relatively safe for both buyer and seller when the original scope is well defined and remains unchanged. They typically reap only small profits for the seller and force the contractor to work productively and efficiently. This type of contract also minimizes cost and quality uncertainty. For the exam, you should know three types of fixed-price contracts:

Firm Fixed-Price (FFP) In the FFP contract, the buyer and seller agree on a well-defined deliverable for a set price. In this kind of contract, the biggest risk is borne by the seller. The seller—or contractor—must take great strides to assure they’ve covered their costs and will make a comfortable profit on the transaction. The seller assumes the risks of increasing costs, nonperformance, or other problems. However, to counter these unforeseen risks, the seller builds in the cost of the risk to the contract price.

Fixed-Price Incentive Fee (FPIF) Fixed-price incentive fee (FPIF) contracts are another type of fixed-price contract. The difference here is that the contract includes an incentive—or bonus—for early completion or for some other agreed-upon performance criterion that meets or exceeds contract specifications. The criteria for early completion, or other performance enhancements, are typically related to cost, schedule, or technical performance and must be spelled out in the contract so both parties understand the terms and conditions.

Another aspect of fixed-price incentive fee contracts to consider is that some of the risk is borne by the buyer, unlike the firm fixed-price contract where most of the risk is borne by the seller. The buyer takes some risk, albeit minimal, by offering the incentive to, for example, get the work done earlier. Suppose the buyer really would like the product delivered 30 days prior to when the seller thinks they can deliver. In this case, the buyer assumes the risk for the early delivery via the incentive.

Fixed-Price with Economic Price Adjustment (FP-EPA) There’s one more type of fixed-price contract, known as a fixed-price with economic price adjustment contract (FP-EPA). This contract allows for adjustments due to changes in economic conditions such as cost increases or decreases, inflation, and so on. These contracts are typically used when the project spans many years. This type of contract protects both the buyer and seller from economic conditions that are outside of their control.

Cost-Reimbursable Contracts

Cost-reimbursable contracts are as the name implies. The allowable costs—allowable is defined by the contract—associated with producing the goods or services are charged to the buyer. All the costs the seller takes on during the project are charged back to the buyer; therefore, the seller is reimbursed.

Cost-reimbursable contracts carry the highest risk to the buyer because the total costs are uncertain. As problems arise, the buyer has to shell out even more money to correct the problems. However, the advantage to the buyer with this type of contract is that scope changes are easy to make and can be made as often as you want—but it will cost you.

Cost-reimbursable contracts have a lot of uncertainty associated with them. The contractor has little incentive to work efficiently or be productive. This type of contract protects the contractor’s profit because increasing costs are passed to the buyer rather than taken out of profits, as would be the case with a fixed-price contract. Be certain to audit your statements when using a contract like this so that charges from some other project the vendor is working on don’t accidentally end up on your bill.

Cost-reimbursable contracts are used most often when the project scope contains a lot of uncertainty, such as for cutting-edge projects and research and development. They are also used for projects that have large investments early in the project life. We’ll look at four types of cost-reimbursable contracts:

Cost Plus Fixed Fee (CPFF) Cost plus fixed fee (CPFF) contracts charge back all allowable project costs to the buyer and include a fixed fee upon completion of the contract. This is how the seller makes money on the deal; the fixed fee portion is the seller’s profit. The fee is always firm in this kind of contract, but the costs are variable. The seller doesn’t necessarily have a lot of motivation to control costs with this type of contract, as you can imagine, and one of the strongest motivators for completing the project is driven by the fixed fee portion of the contract.

Cost Plus Incentive Fee (CPIF) The next category of cost-reimbursable contract is cost plus incentive fee (CPIF). This is the type of contract in which the buyer reimburses the seller for the seller’s allowable costs and includes an incentive for meeting or exceeding the performance criteria laid out in the contract. An incentive fee actually encourages better cost performance by the seller, and there is a possibility of shared savings between the seller and buyer if performance criteria are exceeded. The qualification for exceeded performance must be written into the contract and agreed to by both parties, as should the definition of allowable costs; the seller can possibly lose the incentive fee if agreed-upon targets are not reached.

There is moderate risk for the buyer under the cost plus incentive fee contract, and if well written, it can be more beneficial for both the seller and the buyer than a cost-reimbursable contract.

Cost Plus Percentage of Cost (CPPC) In the cost plus percentage of cost (CPPC), the seller is reimbursed for allowable costs plus a fee that’s calculated as a percentage of the costs. The percentage is agreed upon beforehand and documented in the contract. Because the fee is based on costs, the fee is variable. The lower the costs, the lower the fee, so the seller doesn’t have a lot of motivation to keep costs low.

Cost Plus Award Fee (CPAF) This is the riskiest of the cost plus contracts for the seller. In this contract, the seller will recoup all the costs expended during the project but the award fee portion is subject to the sole discretion of the buyer. The performance criteria for earning the award is spelled out in the contract, but these criteria can be subjective and the awards are not usually contestable.

Time and Materials (T&M) Contracts

Time and materials (T&M) contracts are a cross between fixed-price and cost-reimbursable contracts. The full amount of the material costs is not known at the time the contract is awarded. This resembles a cost-reimbursable contract because the costs will continue to grow during the contract’s life and are reimbursable to the contractor. The buyer bears the biggest risk in this type of contract.

T&M contracts can resemble fixed-price contracts when unit rates are used, for example. Unit rates might be used to preset the rates of certain elements or portions of the project. For example, a contracting agency might charge you $135 per hour for a .NET programmer, or a leasing company might charge you $2,000 per month for the hardware you’re leasing during the testing phase of your project. These rates are preset and agreed upon by the buyer and seller ahead of time. T&M contracts are most often used when you need human resources with specific skills and when you can quickly and precisely define the scope of work needed for the project.

Plan Procurements Outputs

The Plan Procurements process consists of six outputs. The first is the procurement management plan. You’ve seen a few of the other management plan outputs, so you’re probably already ahead of me on this one. But hold the phone—I’ll make sure to touch on the important points. The other outputs are the procurement statements of work, make-or-buy decisions, procurement documents, source selection criteria, and change requests.

Procurement Management Plan

The procurement management plan details how the procurement process will be managed. The procurement management plan is based primarily on the project scope and schedule. According to the PMBOK® Guide, it includes the following information:

• The types of contract to use
• The authority of the project team
• How the procurement process will be integrated with other project processes
• Where to find standard procurement documents (provided your organization uses standard documents)
• How many vendors or contractors are involved and how they’ll be managed
• How the procurement process will be coordinated with other project processes, such as performance reporting and scheduling
• How the constraints and assumptions might be impacted by purchasing
• How multiple vendors or contractors will be managed
• The coordination of purchasing lead times with the development of the project schedule
• The schedule dates that are determined in each contract
• Identification of prequalified sellers (if known)
• Risk management issues
• Procurement metrics for managing contracts and for evaluating sellers

The procurement management plan, like all the other management plans, is a component of the project management plan.

Procurement Statements of Work

A procurement statement of work (SOW) contains the details of the procurement item in clear, concise terms. It includes the following elements:

• The project objectives
• A description of the work of the project and any post-project operational support needed
• Concise specifications of the product or services required
• The project schedule, time period of services, and work location

The procurement SOW might be prepared by either the buyer or the seller. Buyers might prepare the SOW and give it to the sellers, who in turn rewrite it so that they can price the work properly. If the buyer does not know how to prepare a SOW or the seller would be better at creating the SOW because of their expertise about the product or service, the seller might prepare it and then give it to the buyer to review. In either case, the procurement statement of work is developed from the project scope statement and the WBS and WBS dictionary.

The seller uses the SOW to determine whether they are able to produce the goods or services as specified. In addition, it wouldn’t hurt to include a copy of the WBS with the SOW. Any information the seller can use to properly price the goods or services helps both sides understand what’s needed and how it will be provided.

Projects might require some or all of the work of the project to be provided by a vendor. The Plan Procurements process determines whether goods or services should be produced within the organization or procured from outside, and if goods or services are procured from outside, it describes what will be outsourced and what kind of contract to use and then documents the information in the SOW and procurement management plan. The SOW will undergo progressive elaboration as you proceed through the procurement processes. There will likely be several iterations of the SOW before you get to the actual contract award.

Make-or-Buy Decisions

The make-or-buy decision is a document that outlines the decisions made during the process regarding which goods and/or services will be produced by the organization and which will be purchased. This can include any number of items, including services, products, insurance policies, performance, and performance bonds.

Procurement Documents

Procurement documents are used to solicit vendors and suppliers to bid on your procurement needs. You’re probably familiar with some of the titles of procurement documents. They might be called request for proposal (RFP), request for information (RFI), invitation for bid (IFB), request for quotation (RFQ), and so on.

Procurement documents should clearly state the description of the work requested, they should include the contract SOW, and they should explain how sellers should format and submit their responses. These documents are prepared by the buyer to assure as accurate and complete a response as possible from all potential bidders. Any special provisions or contractual needs should be spelled out as well. For example, many organizations have data concerning their marketing policies, new product introductions planned for the next few years, trade secrets, and so on. The vendor will have access to this private information, and in order to ensure that they maintain confidentiality, you should require that they sign a nondisclosure agreement.

A few terms that you should understand are used during this process; they are usually used interchangeably even though they have distinct definitions. When your decision is going to be made primarily on price, the terms bid and quotation are used, as in IFB or RFQ. When considerations other than price (such as technology or specific approaches to the project) are the deciding factors, the term proposal is used, as in RFP. These terms are used interchangeably in practice, even though they have specific meanings in the PMBOK® Guide.

Procurement documents are posted or advertised according to your organizational policies. This might include ads in newspapers and magazines or ads/posts on the Internet.

Source Selection Criteria

The term source selection criteria refers to the method your organization will use to choose a vendor from among the proposals you receive. The criteria might be subjective or objective. In some cases, price might be the only criteria, and that means the vendor that submits the lowest bid will win the contract. You should use purchase price (which should include costs associated with purchase price, such as delivery and setup charges) as the sole criteria only when you have multiple qualified sellers from which to choose.

Other projects might require more extensive criteria than price alone. In this case, you might use scoring models as well as rating models, or you might utilize purely subjective methods of selection. I described an example weighted-scoring method in Chapter 2, “Creating the Project Charter.” You can use this method to score vendor proposals.

Sometimes, the source selection criteria are made public in the procurement process so that vendors know exactly what you want in a vendor. This approach has pros and cons. If the organization typically makes known the source selection criteria, you’ll find that almost all the vendors that bid on the project meet every criteria you’ve outlined (in writing, that is). When it comes time to perform the contract, however, you might encounter some surprises. The vendor might have done a great job of writing the bid based on your criteria, but in reality they don’t know how to put the criteria into practice. On the other hand, having all the criteria publicly known beforehand gives ground to great discussion points and discovery later in the procurement processes.

The following list includes some of the criteria you can consider using for evaluating proposals and bids:

• Comprehension and understanding of the needs of the project as documented in the contract SOW
• Cost
• Technical ability of vendor and its proposed team
• Technical approach
• Risk
• Experience on projects of similar size and scope, including references
• Project management approach
• Management approach
• Financial stability and capacity
• Production capacity
• Reputation, references, and past performance
• Intellectual and proprietary rights

You could include many of these in a weighted scoring model and rate each vendor on how well they responded to these issues.

Change Requests

As you perform the Plan Procurements process, the project management plan, including its subsidiary plans, may require changes due to vendor availability, vendor capability, or the vendor’s proposed solution, as well as cost and quality considerations. Change requests must be processed through the Perform Integrated Change Control process that we’ll discuss in Chapter 10, “Measuring and Controlling Project Performance.”

Now we’ll switch our focus to the human resource needs for the project and discuss the Develop Human Resource Plan process next.

Developing the Human Resource Plan

All projects require human resources, from the smallest project to the largest. The Develop Human Resource Plan process documents the roles and responsibilities of individuals or groups for various project elements and then documents the reporting relationships for each. Reporting relationships can be assigned to groups as well as to individuals, and the groups or individuals might be internal or external to the organization or a combination of both. Plan Communications goes hand in hand with Develop Human Resource Plan because the organizational structure affects the way communications are carried out among project participants and the project interfaces.

When developing the human resource plan, the only output of this process, you’ll have to consider factors such as the availability of resources, skill levels, training needs, and more. Each of these factors can have an impact on the project cost, schedule, and quality and may introduce risks not previously considered.

Develop Human Resource Plan Inputs

Develop Human Resource Plan has three inputs: activity resource requirements, enterprise environmental factors, and organizational process assets. We’ll look at the key elements of each of these next.

Activity Resource Requirements

Human resources are needed to perform and complete the activities outlined in the activity resource requirement output of the Estimate Activity Resources process. During the Develop Human Resource Plan process, you’ll define those resource needs in further detail.

Key Environmental Factors

Enterprise environmental factors play a key role in determining human resource roles and responsibilities. The type of organization you work in, the reporting relationships, and the technical skills needed to complete the project work are a few of the factors you should consider when developing the staffing management plan. Here is a list of some of the factors you should consider during this process:

Organizational factors Consider what departments or organization units will have a role in the project, the interactions between and among departments, organizational culture, and the level of formality among these working relationships.

Existing human resources and marketplace conditions The existing base of human resources that are employed, or available to, the organization should be considered when developing the human resource plan. Marketplace conditions will dictate the availability of resources you’re acquiring outside the organization and their going rate.

Personnel policies Make certain you have an understanding of the personnel policies in the organization regarding hiring, firing, and tasking employees. Other considerations include holiday schedules, leave time policies, and so on.

Technical factors Consider the types of specialized skills needed to complete the work of the project (for example, programming languages, engineering skills, knowledge of pharmaceuticals) and any technical considerations during handoff from phase to phase or from project completion to production.

Interpersonal factors Interpersonal factors have to do with potential project team members. You should consider their experience, skills, current reporting relationships, cultural considerations, and perceptions regarding their levels of trust and respect for coworkers and superiors.

Location and logistics Consider where the project team is physically located and whether they are all located together or at separate facilities (or cities or countries).

Political factors Political factors involve your stakeholders. Consider the amount of influence the stakeholders have, their interactions and influence with each other, and the power they can exert over the project.

In addition to these factors, you should also consider constraints that pertain to project teams, including the following:

Organizational structures Organizational structures can be constraints. For example, a strong matrix organization provides the project manager with much more authority and power than the weak matrix organization does. Functional organizations typically do not empower their project managers with the proper authority to carry out a project. If you work in a functional organization as I do, it’s important to be aware that you’ll likely face power struggles with other managers and, in some cases, a flat-out lack of cooperation. Don’t tell them I said this, but functional managers tend to be territorial and aren’t likely to give up control easily. The best advice I have for you in this case is as follows:

• Establish open communications early in the project.
• Include all the functional managers with key roles in important decisions.
• Get the support of your project sponsor to empower you (as the project manager) with as much authority as possible. It’s important that the sponsor makes it clear to the other managers that their cooperation on project activities is expected.

Collective bargaining agreements Collective bargaining agreements are actually contractual obligations of the organization to the employees. Collective bargaining is typically associated with unions and organized employee associations. Other organized employee associations or groups might require specialized reporting relationships as well—especially if they involve contractual obligations. You will not likely be involved in the negotiations of collective bargaining agreements, but if you have an opportunity to voice opinions regarding employee duties or agreements that would be helpful to your project or future projects, by all means take it.

Economic conditions These conditions refer to the availability of funds for the project team to perform training, hire staff, and travel. If funds are severely limited and your project requires frequent trips to other locations, you have an economic constraint on your hands.

Organizational Process Assets

You should consider three primary elements of the organizational process assets input during this process. They are organizational processes and standardized role descriptions, templates and checklists, and historical information.

The term templates, in this case, refers to documentation such as project descriptions, organizational charts, performance appraisals, and the organization’s conflict management process. Checklists might include elements such as training requirements, project roles and responsibilities, skills and competency levels, and safety issues.

Develop Human Resource Plan Tools and Techniques

The Develop Human Resource Plan process consists of three tools and techniques. Remember that your goal is to produce the human resource plan output of this process that includes a description of the team’s roles and responsibilities, organizational charts, and a staffing management plan. You’ll see that the tools and techniques of this process directly contribute to the components of the human resource plan. They are organization charts and position descriptions, networking, and organizational theory. We’ll look at each of these in the following sections.

Organization Charts and Position Descriptions

We’ve all seen an organization chart. It usually documents your name, your position, your boss, your boss’s boss, your boss’s boss’s boss, and so on. The important point to note about this tool and technique is that this information might be presented in one of four ways:

Hierarchical charts Hierarchical charts, like a WBS, are designed in a top-down format. For example, the organization or department head is at the top, the management employees who report to the organization head are next, and so on, descending down the structure. An organization breakdown structure (OBS) is a form of organization chart that shows the departments, work units, or teams within an organization (rather than individuals) and their respective work packages.

A resource breakdown structure (RBS) is another type of hierarchical chart that breaks down the work of the project according to the types of resources needed. (RBS also stands for risk breakdown structure, as you learned in the previous chapter.) For example, you might have programmers, database analysts, and network analysts as resource types on the RBS. However, they won’t all necessarily work on the project team. You might have programmers reporting to the project team, the finance department, and the customer service department, for example. An RBS can help track project costs because it ties to the organization’s accounting system. Let’s suppose you have programming resources in the RBS at the junior, advanced, and senior levels. Each of these levels of programmer has an average hourly salary recorded in the accounting system that makes it easy for you to track project costs. Ten senior programmers, 14 advanced, and 25 junior-level programmers are easy to calculate and track.

Matrix-based charts Matrix-based charts are used to show the type of resources and the responsibility they have on the project. Many times a project manager will use a responsibility assignment matrix (RAM) to graphically display this information. A RAM is usually depicted as a chart with resource names listed in each row (for example, programmers, testers, and trainers) and project phases or WBS elements listed as the columns. (It can also be constructed using team member names.) Indicators in the intersections show where the resources are needed. However, the level of detail is up to you. One RAM might be developed showing only project phases; another RAM might show level-two WBS elements for a complex project, with more RAMs subsequently produced for the additional WBS levels; or a RAM might be constructed with level-three elements only.

Table 7-1 shows a sample portion of a type of RAM called a RACI chart for a software development team. In this example, the RACI chart shows the level of accountability each of the participants has on the project. The letters in the acronym RACI are the designations shown in the chart:

R = Responsible for performing the work

A = Accountable, the one who is responsible for producing the deliverable or work package and approves or signs off on the work

C = Consult, someone who has input to the work or decisions

I = Inform, someone who must be informed of the decisions or results

Table 7-1: Sample RAM*

In this example, Olga is responsible for design, meaning she creates the software programming design document, but Rae is accountable and is the one who must make certain the work of the project is completed and approved. This is a great tool because it shows at a glance not only where a resource is working but what that resource’s responsibility level is on the project.

Text-oriented formats Text-oriented formats are used when you have a significant amount of detail to record. These are also called position descriptions or role-responsibility-authority forms. These forms detail (as the name implies) the role, responsibility, and authority of the resource, and they make great templates to use for future projects.

Other sections of the project management plan Don’t forget that other subsidiary plans of the project management plan might also describe roles and responsibilities. For example, you’ll recall from Chapter 6, “Risk Planning,” that the risk register lists the risk owners and their responsibility, so be certain to check these documents when outlining roles and responsibilities as well.

Networking

Networking in this process doesn’t refer to the technical kind of networking with servers, switches, and fiber. It means human resource networking; that is, you know someone who knows someone and you can share information, learn new techniques, and interact with each other. According to the PMBOK® Guide, several types of networking activities exist including: proactive communication, lunch meetings (my personal favorite), informal conversations (ah, the information you learn by hanging out at the espresso machine), and trade conferences (another favorite because they get you out of the office). Networking might help when you have a specific resource need on the project but can’t seem to locate someone with that set of skills.

Organizational Theory

Organizational theory refers to all the theories that attempt to explain what makes people, teams, and work units perform the way they do. I’ll talk more about motivation techniques (which are a type of organizational theory) in Chapter 8, “Developing the Project Team.” Organizational theory improves the probability that planning will be effective and helps shorten the amount of time it takes to produce the Develop Human Resource Plan outputs.

Develop Human Resource Plan Outputs

The Develop Human Resource Plan process has one output, the human resource plan. According to the PMBOK® Guide, the human resource plan, a subsidiary or component of the project management plan, documents how human resources should be defined, staffed, managed and controlled, and released from the project when their activities are complete. It also helps in establishing an effective project team by defining the types of resources needed during the project, documenting when they’re needed, and providing direction regarding how the resources should be managed. Even though this output is called the human resource plan, you can think of it much like the other management plans we’ve discussed so far, that is, the human resource management plan.

This output has three components that we’ll look at:

• Roles and responsibilities
• Project organizational charts
• Staffing management plan

I’ve already covered organizational charts in detail, so we’ll look at the other two components of the human resource plan now.

Roles and Responsibilities

This output is the list of roles and responsibilities for the project team. It can take the form of the RAM or RACI chart I talked about earlier, or the roles and responsibilities can be recorded in text format. According to the PMBOK® Guide, the following are the key elements you should include in the roles and responsibilities documentation:

Role Describes the parts of the project for which the individuals or teams are accountable. This should also include a description of authority levels, responsibilities, and what work is not included as part of the role.

Authority Describes the amount of authority the resource has to make decisions, dictate direction, and approve the work.

Responsibility Describes the work required to complete the project activities.

Competency Describes the skills and ability needed to perform the project activities.

Staffing Management Plan

The staffing management plan documents how and when human resources are introduced to the project and the criteria for releasing them. As with the other management plans I’ve discussed, the level and amount of detail contained in this plan are up to you. It can be formal or informal, and it can contain lots of detail or only high-level detail.

The staffing management plan should be updated throughout the project. According to the PMBOK® Guide, you should consider several elements for inclusion in the staffing management plan, including the following:

Staff acquisition This describes how team members are acquired (from inside or outside the organization), where they’re located, and the costs for specific skills and expertise. I’ll talk more about staff acquisition in Chapter 8.

Resource calendars This describes the time frames in which the resources will be needed on the project and when the recruitment process should begin. The resources can be described individually, by teams, or by function (programmers, testers, and so on). Many staffing management plans use a resource histogram. This is usually drawn in chart form, with project time along the horizontal axis and hours needed along the vertical axis. The following example histogram shows the hours needed for an asphalt crew on a construction project.

Staff release plan Attention should be given to how you’ll release project team members at the end of their assignments. You should have reassignment procedures in place to move folks on to other projects or back to assignments they had before the project. This reduces overall project costs because you pay them only for the time they work and then release them. You won’t have a tendency to simply keep them busy between assignments or until the end of their scheduled end date if they complete their activities early. Having these procedures in place will also improve morale because everyone will be clear about how reassignment will occur. This should reduce anxiety about their opportunities for employment at the conclusion of the project or their assignments.

Training needs This describes any training plans needed for team members who don’t have the required skills or abilities to perform project tasks.

Recognition and rewards This describes the systems you’ll use to reward and reinforce desired behavior. I’ll talk more about recognition and rewards in Chapter 8.

Compliance If your project involves regulations that must be met or contractual obligations (such as union contracts), the staffing management plan should detail these and any human resource policies the organization has in place that deal with compliance issues.

Safety Any safety policies and procedures that are applicable to the project or industry you work in should be included in the staffing management plan.

In the next section, we’ll shift our focus once again but to a completely new topic. We’ll look at quality and its effect on the project planning processes.

Quality Planning

Quality is affected by the triple constraints (project scope, schedule, and cost), and quality concerns are found in all projects. Quality typically defines whether stakeholder expectations were met. Being on time and on budget is one thing; if you deliver the wrong product or an inferior product, on time and on budget suddenly don’t mean much.

The Plan Quality process is concerned with targeting quality standards that are relevant to the project at hand and devising a plan to meet and satisfy those standards. The quality management plan is an output of this process that describes how the quality policy will be implemented by the project management team during the course of the project. Another key output of this process is the process improvement plan, which documents the actions for analyzing processes to ultimately increase customer value. Everything discussed in this section, including the inputs and tools and techniques of this process, will be used to help develop these two primary outputs.

Plan Quality Inputs

The Plan Quality process has several inputs:

• Scope baseline
• Stakeholder register
• Cost performance baseline
• Schedule baseline
• Risk register
• Enterprise environmental factors
• Organizational process assets

We talked about the scope baseline in Chapter 3, “Developing the Project Scope Statement,” but I want to put in a reminder here that the scope baseline consists of the approved project scope statement, the WBS, and the WBS dictionary. For the exam, remember that the scope baseline is based on the project scope and requirements.

The two key elements I’ll cover regarding inputs are standards and regulations, which are part of the enterprise environmental factors input, and the quality policy, which is part of the organizational process assets input.

Standards and Regulations

The project manager should consider any standards, regulations, guidelines, or rules that exist concerning the work of the project when writing the quality plan. A standard is something that’s approved by a recognized body and that employs rules, guidelines, or characteristics that should be followed. For example, the Americans with Disabilities Act (ADA) has established standards for web page designers that outline alternative viewing options of web pages for people with disabilities. PMI® guidelines regarding project management are another example of standards.

Standards aren’t legally mandatory, but it’s a good idea to follow them. Many organizations (or industries) have standards in place that are proven best practice techniques. Disregarding accepted standards can have significant consequences. For example, if you’re creating a new software product that ignores standard protocols, your customers won’t be able to use it. Standards can be set by the organization, independent bodies, organizations such as the International Organization for Standardization (ISO), and so on. ISO develops and publishes international standards on various subjects including mathematics, information technology, railway engineering, construction materials and building, and much more. There are 160 countries that have participating members (one member per country) in ISO’s national standards institutes. ISO is not a government organization, but they work closely with government and private sector to establish standards in many disciplines to meet the needs of business and society. You can find out more about ISO at www.iso.org. According to the PMBOK® Guide, the Project Quality Management Knowledge Area is designed to be in alignment with the ISO.

A regulation is mandatory. Regulations are almost always imposed by governments or institutions such as the American Medical Association. However, organizations might have their own self-imposed regulations that you should be aware of as well. Regulations require strict adherence, particularly in the case of government-imposed regulations, or stiff penalties and fines could result—maybe even jail time if the offense is serious enough. Hmm, it might be tough to practice project management from behind bars—not a recommended career move.

If possible, it’s a good idea to include information from the quality policy (I’ll cover this in the next section) and any standards, regulations, or guidelines that affect the project in the quality management plan. If it’s not possible to include this information in the quality management plan, then at least refer to the information and where it can be found. It’s the project management team’s responsibility to be certain all stakeholders are aware of and understand the policy issues and standards or regulations that might impact the project.

Quality Policy

The quality policy is part of the organizational process assets input. It’s a guideline published by executive management that describes what quality policies should be adopted for projects the company undertakes. It’s up to the project manager to understand this policy and incorporate any predetermined company guidelines into the quality plan. If a quality policy does not exist, it’s up to the project management team to create one for the project.

Tools and Techniques for Plan Quality

The Plan Quality process has nine tools and techniques used to help construct the quality management plan:

• Cost-benefit analysis
• Cost of quality
• Control charts
• Benchmarking
• Design of experiments
• Statistical sampling
• Flowcharting
• Proprietary quality management methodologies
• Additional quality planning tools

Make sure you understand each of these tools and techniques and its purpose for the exam. We’ll take a look at them now with the exception of flowcharting. We discussed that tool and technique in Chapter 6.

Cost-Benefit Analysis

You’ve seen the cost-benefit analysis technique before in the Initiating process group. In the case of quality management, you’ll want to consider the trade-offs of the cost of quality. It’s cheaper and more efficient to prevent defects in the first place than to spend time and money fixing them later. The benefits of meeting quality requirements are as follows:

• Stakeholder satisfaction is increased.
• Costs are lower.
• Productivity is higher.
• There is less rework.

The PMBOK® Guide notes that the primary cost of meeting quality requirements for a project is the expense incurred while performing project quality management activities.

Cost of Quality

The cost of quality (COQ) is the total cost to produce the product or service of the project according to the quality standards and/or the cost to make a product or service that does not meet the quality requirements. These costs include all the work necessary to meet the product requirements whether the work was planned or unplanned. It also includes the costs of work performed due to nonconforming quality requirements, assessing whether the product or service meets requirements, and rework.

Three costs are associated with the cost of quality:

Prevention costs Prevention means keeping defects out of the hands of customers. Prevention costs are the costs associated with satisfying customer requirements by producing a product without defects. These costs are manifested early in the process and include aspects such as Plan Quality, training, design review, and contractor and supplier costs.

Appraisal costs Appraisal costs are the costs expended to examine the product or process and make certain the requirements are being met. Appraisal costs might include costs associated with aspects such as inspections and testing. Prevention and appraisal costs are often passed on to the acquiring organization because of the limited duration of the project.

Failure costs Failure costs are what it costs when things don’t go according to plan. Failure costs are also known as cost of poor quality. Two types of failure costs exist:

Internal failure costs These result when customer requirements are not satisfied while the product is still in the control of the organization. Internal failure costs might include corrective action, rework, scrapping, and downtime.

External failure costs These occur when the product has reached the customer who determines that the requirements have not been met. Costs associated with external failure costs might include inspections at the customer site, returns, and customer service costs.

There are two categories of costs within COQ, the cost of conformance and the cost of nonconformance. Conformance costs are associated with activities undertaken to avoid failures, while nonconformance costs are those undertaken because a failure has occurred. All of the types of costs of quality we just covered fall into one of these categories. Table 7-2 is a quick reference.

Table 7-2: Cost of Conformance and Nonconformance

Conformance Costs	Nonconformance Costs
Prevention costs	Internal failure costs
Appraisal costs	External failure costs

Cost of quality is a topic you’ll likely encounter on the exam. The following sections will discuss some of the pioneers in this field. To make certain the product or service meets stakeholders’ expectations, quality must be planned into the project and not inspected in after the fact.

Four people in particular are responsible for the rise of the modern quality management movement and the theories behind the cost of quality: they are Philip B. Crosby, Joseph M. Juran, W. Edwards Deming, and Walter Shewhart. Each of these men developed steps or points that led to commonly accepted quality processes that we use today and either developed or were the foundation for the development of quality theories such as Total Quality Management, Six Sigma, cost of quality, and continuous improvement. I’ll also cover a quality technique called the Kaizen approach that originated in Japan.

Philip B. Crosby

Philip B. Crosby devised the zero defects practice, which means, basically, do it right the first time. (Didn’t your dad use to tell you this?) Crosby says that costs will increase when quality planning isn’t performed up front, which means you’ll have to engage in rework, thereby affecting productivity. Prevention is the key to Crosby’s theory. If you prevent the defect from occurring in the first place, costs are lower, conformance to requirements is easily met, and the cost measurement for quality becomes the cost of nonconformance rather than the cost of rework.

Joseph M. Juran

Joseph M. Juran is noted for his fitness for use premise. Simply put, this means the stakeholders’ and customers’ expectations are met or exceeded. This says that conformance to specifications—meaning the product of the project that was produced is what the project set out to produce—is met or exceeded. Fitness for use specifically reflects the customers’ or stakeholders’ view of quality and answers the following questions:

Did the product or service produced meet the quality expectation?

Did it satisfy a real need?

Is it reliable and safe?

Juran also proposed that there could be grades of quality. However, you should not confuse grade with quality. Grade is a category for products or services that are of the same type but have differing technical characteristics. Quality describes how well the product or service (or characteristics of the product or service) fulfills the requirements. Low quality is usually not an acceptable condition; however, low grade might be. For example, your new Dad’s Dollars Credit Card software tracking system might be of high quality, meaning it has no bugs and the product performs as advertised, but of low grade, meaning it has few features. You’ll almost always want to strive for high quality, regardless of the acceptable grade level.

W. Edwards Deming

W. Edwards Deming suggested that as much as 85 percent of the cost of quality is management’s problem and responsibility. Once the quality issue has hit the floor, or the worker level, the workers have little control. For example, if you’re constructing a new highway and the management team that bid on the project proposed using inferior-grade asphalt, the workers laying the asphalt have little control over its quality. They’re at the mercy of the management team responsible for purchasing the supplies.

Deming also proposed that workers cannot figure out quality on their own and, therefore, cannot perform at their best. He believed that workers need to be shown what acceptable quality is and that they need to be made to understand that quality and continuous improvement are necessary elements of any organization—or project, in your case.

Many consider Deming to be a major contributor to the Total Quality Management (TQM) theory. TQM, like Deming, says that the process is the problem, not people. Every person and all activities the company undertakes are involved with quality. TQM stipulates that quality must be managed in and that quality improvement should be a continuous way of doing business, not a one-time performance of a specific task or process.

Walter Shewhart

Some sources say that Walter Shewhart is considered the grandfather of TQM, which was further popularized by Feigenbaum and Deming. Shewhart developed statistical tools to examine when a corrective action must be applied to a process. He invented control chart techniques (control charts are a tool and technique of the Perform Quality Control process) and was also the inventor of the Plan-Do-Check-Act cycle that I talked about in Chapter 1, “What Is a Project?”

Kaizen Approach

The Kaizen approach is a quality technique from Japan. In fact, Kaizen means continuous improvement in Japanese. With this technique, all project team members and managers should be constantly watching for quality improvement opportunities. The Kaizen approach states that you should improve the quality of the people first and then the quality of the products or service.

Continuous improvement involves everyone in the organization watching for ways to improve quality, whether incrementally or by incorporating new ideas into the process. This involves taking measurements, improving processes by making them repeatable and systemized, reducing variations in production or performance, reducing defects, and improving cycle times. TQM and Six Sigma are examples of continuous improvement.

Capability Maturity Model Integration

The Capability Maturity Model Integration (CMMI) is used to help organizations assess and improve performance. CMMI is used in many areas such as engineering, project management, organizational development, and more. CMMI models are based on five stages of development ranging from almost no formal processes to the fifth stage where a state of continuous, sustained improvements is reached. You may have heard about CMMI as it relates to project management. There are differing measures and stages of development depending on the industry, but most CMMI models have the following stages:

You can measure your organization’s maturity regarding project management practices as a whole, and or you can take it one step further and measure maturity in each of the nine Knowledge areas. Since we’re discussing quality in this chapter, remember that CMMI can also be used to measure quality processes.

Control Charts

Control charts help you determine if a process is stable and whether process variances are in control or out of control. We will discuss control charts in more depth in Chapter 9, “Conducting Procurements and Sharing Information.”

Benchmarking

Benchmarking is a process of comparing previous similar activities to the current project activities to provide a standard to measure performance against. This comparison will also help you derive ideas for quality improvements on the current project. For example, if your current printer can produce 8 pages per minute and you’re considering a new printer that produces 14 pages per minute, the benchmark is 8 pages per minute.

Design of Experiments

Design of experiments (DOE) is a statistical technique that identifies the elements—or variables—that will have the greatest effect on overall project outcomes. It is used most often concerning the product of the project but can also be applied to project management processes to examine trade-offs. DOE designs and sets up experiments to determine the ideal solution for a problem using a limited number of sample cases. It analyzes several variables at once, allowing you to change all (or some of) the variables at the same time and determine which combination will produce the best result at a reasonable cost.

Statistical Sampling

Statistical sampling involves taking a sample number of parts from the whole population and inspecting them to determine whether they fall within acceptable variances. We will discuss statistical sampling in more detail in Chapter 9.

Flowcharting

A flowchart graphically depicts the relationships between and among steps. They typically show activities, decision points, and the flow or order of steps in a process. Flowcharts may point out possible quality issues and are a great tool for the project team to use when reviewing quality results.

Proprietary Quality Management Methodologies

We covered most of these during our discussion of cost of quality. Proprietary quality management methodologies include Six Sigma, Lean Six Sigma, Total Quality Management, Quality Function Deployment, Just in Time, and others.

Additional Quality Planning Tools

The last tools and techniques of the Plan Quality process are the additional quality-planning tools. The PMBOK® Guide lists these additional tools as follows:

• Brainstorming
• Affinity diagrams
• Force field analysis
• Nominal Group technique
• Matrix diagrams
• Prioritization matrices

We’ve already covered brainstorming and the Nominal Group technique. Let’s briefly look at the remaining tools next.

Affinity diagrams are used to group and organize thoughts and facts and can be used in conjunction with brainstorming. After you’ve gathered all ideas possible with brainstorming, you group similar ideas together on an affinity diagram.

Force field analysis is a method of examining the drivers and resistors of a decision. You could use the old T-square approach and list all the drivers down the left column and all the resistors in the right. Determine which of the elements in the list are barriers and which are enablers to the project. Assign a priority or rank to each, and develop strategies for leveraging the strengths of the high-priority enablers while minimizing the highest-ranked barriers.

Matrix diagrams are also used as a decision-making tool, particularly when several options or alternatives are available. Using a spreadsheet format, you list common elements down the rows in the first column and then list each alternative in its own column to the right of this one. Then rank each alternative in the corresponding cell where the common element and the alternative intersect.

Prioritization matrices are useful when you need to prioritize complex issues that have numerous criteria for decision making. They’re best used in situations where you can use data or inputs to score the criteria. They work similarly to a weighted scoring model (I talked about those in Chapter 2) in that the most important criteria carry the greatest weight.

You should memorize the names of these additional Plan Quality tools for the exam, but more important, you should understand both the names and concepts of the other tools and techniques I talked about earlier in this chapter, as well as when to use them.

Plan Quality Outputs

Plan Quality uses many techniques to determine the areas of quality improvement that can be implemented, controlled, and measured throughout the rest of the project, as you’ve seen. These are recorded in the primary output of this process, which is called the quality management plan. The following list includes all the outputs of this process:

• Quality management plan
• Quality metrics
• Quality checklists
• Process improvement plan
• Project document updates

Project document updates include updates to the stakeholder register and the RAM and may also involve updates to the quality management plan and process improvement plan as a result of changes or corrections that result from the Perform Quality Assurance process. We’ll talk about the Perform Quality Assurance process in Chapter 9. We’ll look at the remaining outputs of Plan Quality next.

Quality Management Plan

The quality management plan describes how the project management team will carry out the quality policy. It should document the resources needed to carry out the quality plan, the responsibilities of the project team in implementing quality, and all the processes and procedures the project team and organization should use to satisfy quality requirements, including quality control, quality assurance techniques, and continuous improvement processes.

The project manager, in cooperation with the project staff, writes the quality management plan. You can assign quality actions to the activities listed on the WBS based on the quality plan requirements. Isn’t that WBS a handy thing? Later in the Perform Quality Control process, measurements will be taken to determine whether the quality to date is on track with the quality standards outlined in the quality management plan.

Quality Metrics

A quality metric, also known as an operational definition, describes what is being measured and how it will be measured during the Perform Quality Control process. For example, let’s say you’re managing the opening of a new restaurant in July of next year. Perhaps one of the deliverables is the procurement of flatware for 500 place settings. The operational definition in this case might include the date the flatware must be delivered and a counting or inventory process to ensure you received the number of place settings you ordered. Measurements of this variable consist of actual values, not “yes” or “no” results. In our example, receiving the flatware is a “yes” or “no” attribute result (you have it or you don’t), but the date it was delivered and the number of pieces delivered are actual values. Failure rates are another type of quality metric that is measurable, as are reliability, availability, test coverage, and defect density measurements.

Quality Checklists

If you’re like me, you start your day at the office with a big to-do list that has so many items on it you won’t be able to finish them all. Nevertheless, you faithfully write the list every day and check off the items that you accomplish throughout the day. Checklists are like this in that they provide a means to determine whether the required steps in a process have been followed. As each step is completed, it’s checked off the list. Checklists can be activity specific or industry specific and might be very complex or easy to follow. Sometimes, organizations might have standard checklists they use for projects. You might also be able to obtain checklists from professional associations.

Process Improvement Plan

The process improvement plan focuses on finding inefficiencies in a process or activity and eliminating them. The idea here is that if you’re doing activities or performing processes that don’t add any value, you’ll want to either stop doing what you’re doing or modify the process so that you are adding value. You should note that the process improvement plan is a subsidiary plan of the project management plan. Some of the elements you should consider when thinking about process improvement are the process boundaries, which describe the purpose for the process and its expected start and end dates; the process configuration so that you know what processes are performed when and how they interact; the process metrics; and any specific elements you want to target for improvement.

Quality Baseline

The quality baseline is not a listed output of this process. But almost everything you’ve done throughout the Plan Quality process culminates in the quality baseline. The quality baseline is the quality objective of the project. It’s what you’ll use to measure and report quality against as you perform the remaining Quality processes.

Bringing It All Together

Believe it or not, you have officially completed the Planning process group. Along the way, I’ve mentioned gaining approvals for portions of the project plan such as the schedule and budget.

The project plan is the approved, formal, documented plan that’s used to guide you throughout the project Executing process group. The plan consists of all the outputs of the Planning process groups, including the project management plan. It’s the map that tells you where you’re going and how to perform the activities of the project plan during the Direct and Manage Project Execution process. It serves several purposes, the most important of which is tracking and measuring project performance through the Executing and Monitoring and Controlling processes and making future project decisions. The project plan is critical in all communications you’ll have from here forward with the stakeholders, management, and customers. The project plan also documents all project planning assumptions, all project planning decisions, and important management reviews needed.

The project plan encompasses everything I’ve talked about up to now and is represented in a formal document, or collection of documents. This document contains the project scope statement, deliverables, assumptions, risks, WBS, milestones, project schedule, resources, and more. It becomes the baseline you’ll use to measure and track progress against. It’s also used to help you control the components that tend to stray from the original plan so you can get them back in line.

The project plan is used as a communication and information tool for stakeholders, team members, and the management team. They will use the project plan to review and gauge progress as well.

Don’t forget that sign-off of the project plan is important to the project’s success. It isn’t necessary for the sponsor and key stakeholders to sign off on every individual project document, but you should obtain signatures on the project management plan. PMI® notes that the project management plan should be signed off, “if required.” In reality, I would never embark on a project of any size without signoff from at least the project sponsor and maybe a few key stakeholders depending on the size, risk, and complexity of the project as well. If they’ve been an integral part of the Planning processes all along (and I know you know how important this is), obtaining sign-off of the project management plan should simply be a formality.

The project management plan consists of several components and I’ve recapped them below for your reference. You can find the differences between project management plan components and project documents on a handy chart in the PMBOK® Guide on page 350.

• Change Management Plan
• Communications Management Plan
• Configuration Management Plan
• Cost Management Plan
• Cost Performance Baseline
• Human Resource Plan
• Process Improvement Plan
• Procurement Management Plan
• Quality Management Plan
• Requirements Management Plan
• Risk Management Plan
• Schedule Baseline
• Schedule Management Plan
• Scope Baseline
• Scope Management Plan

“But wait,” I hear you saying, “we didn’t discuss the change management plan or the configuration management plan.” In a nutshell, the change management plan describes how you will document and manage change requests, the process for approving changes, and how to document and manage the final recommendation for the change requests. Configuration management is very similar, but configuration changes deal with the components of the product of the project such as functional ability or physical attributes, rather than the project process itself. I will cover these topics in much more depth in Chapter 10, “Measuring and Controlling Project Performance.”

Note that you will use all the management plans I discussed during the Planning processes—all those just listed—throughout the Executing process group to manage the project and keep the performance of the project on track with the project objectives. If you don’t have a project plan, you’ll have no way of managing the process. You’ll find that even with a project plan, project scope has a way of changing. Stakeholders and others tend to sneak in a few of the “Oh, I didn’t understand that before” statements and hope that they slide right by you. With that signed, approved project management plan in your files, you are allowed to gently remind them that they read and agreed to the project plan and you’re sticking to it.

Understanding How This Applies to Your Next Project

In my organization, the Plan Procurements process comes right after finalizing project scope because it takes a great deal of time and effort to procure goods and services. That means we have to start procuring resources as early in the project as possible in order to meet the project deadlines.

In all the organizations I’ve worked in, someone has always been responsible for procurement—whether it was a single person or an entire department. Typically, the procurement department defines many elements of the procurement management plan. Sure, the project team determines how many vendors need to be involved and how they’ll be managed along with the schedule dates, but many other elements are predetermined, such as the type of contract to use, the authority of the project team regarding the contract, how multiple vendors will be managed, and the identification of prequalified sellers.

The procurement department also determines what type of procurement document you should use depending on the types of resources you’re acquiring and the amount of money you’re spending. Typically, they’ll have a template for you to use with all the legalese sections prepopulated, and you’ll work on the sections that describe the work or resources you need for the project, milestones or schedule dates, and evaluation criteria.

Don’t make the mistake of thinking your procurement department will take care of all the paperwork for you. At a minimum, you will likely be responsible for writing the statement of work, writing the RFP, writing the contract requirements (as they pertain to the work of the project), creating the vendor selection criteria, and determining the schedule dates for contract work.

Develop Human Resource Plan is a process you might not need to complete, depending on the size and complexity of the project. I typically work with the same team members over and over again, so I know their skills, capabilities, and availability. However, if you’re hiring contract resources for the project or you typically work with new team members on each project, I recommend creating a staffing management plan.

The quality management plan is another important element of your project plan. You should take into consideration the final result or product of the project and the complexity of the project to determine if you need a multipage document with detailed specifications or if the plan can be more informal and broad in nature. Again, depending on the project complexity, the measurements or criteria you’ll use to determine the quality objective could be a few simple sentences or bullet items or a more formal, detailed document. The quality baseline should be documented during this process as well.

Summary

This chapter’s focus was on planning for project resources. Several aspects are involved in these planning activities, including procuring goods and services, planning human resources, and defining the activities in which human resources will be involved.

This chapter started with the Plan Procurements process. This process identifies the goods or services you’re going to purchase from outside the organization and determines which goods or services the project team can meet. This involves tools and techniques such as make-or-buy decisions, expert judgment, and contract types. The procurement management plan is one of the outputs of this process and describes how procurement services will be managed throughout the project. The procurement SOW (another output of this process) describes the work that will be contracted.

In our discussion of contract types, we covered fixed-price, cost plus, and time and materials contracts and the benefits and risks of using them.

The Develop Human Resource Plan process identifies and assigns roles and responsibilities and reporting relationships. Many times the roles and responsibilities assignments are depicted in a responsibility assignment matrix (RAM) or a RACI chart. The staffing management plan describes how and when project team members will be acquired and is part of the human resource plan output of this process.

Plan Quality targets the quality standards that are relevant to your project. The quality management plan outlines how the project team will enact the quality policy.

You need to consider the cost of quality when considering stakeholder needs. Four men led to the rise of the cost of quality theories. Crosby is known for his zero defects theory, Juran for the fitness for use theory, Deming for attributing 85 percent of cost of quality to the management team, and Shewhart for the Plan-Do-Check-Act cycle. The Kaizen approach says that the project team should continuously be on the lookout for ways to improve the process and that people should be improved first and then the quality of the products or services. TQM and Six Sigma are examples of continuous improvement techniques.

Cost-benefit analysis considers trade-offs in the Plan Quality process. Benchmarking compares previous similar activities to the current project activities to provide a standard to measure performance against. Design of experiments is an analytical technique that determines what variables have the greatest effect on the project outcomes. This technique equips you with a statistical framework, allowing you to change all the important variables at once instead of changing one variable at a time.

Cost of quality involves three types of costs: prevention, appraisal, and failure costs; the latter is also known as the cost of poor quality. Failure costs include the costs of both internal and external failures.

The process improvement plan is a subsidiary plan of the project management plan and targets inefficiencies in a process or activity. The quality baseline is used to document the quality objectives of the project and is used as a basis for future Quality processes.

Exam Essentials

Be able to name the purpose of the Plan Procurements process. The purpose of the Plan Procurements process is to identify which project needs should be obtained from outside the organization. Make-or-buy analysis is used as a tool and technique to help determine this.

Be able to identify the contract types and their usage. Contract types are a tool and technique of the Plan Procurements process and include fixed-price and cost-reimbursable contracts. Use fixed-price contracts for well-defined projects with a high value to the company, and use cost-reimbursable contracts for projects with uncertainty and large investments early in the project life. The three types of fixed-price contracts are FFP, FPIF, and FP-EPA. The four types of cost-reimbursable contracts are CPFF, CPIF, CPF (or CPPC), and CPAF. Time and materials contracts are a cross between fixed-price and cost-reimbursable contracts.

Be able to name the outputs of the Plan Procurements process. The outputs of Plan Procurements are procurement management plan, procurement statements of work, make-or-buy decisions, procurement documents, source selection criteria, and change requests.

Be able to name the purpose of the Develop Human Resource Plan process. Develop Human Resource Plan involves determining roles and responsibilities, reporting relationships for the project, and creating the staffing management plan, which describes how team members are acquired and the criteria for their release.

Be able to identify the benefits of meeting quality requirements. The benefits of meeting quality requirements include increased stakeholder satisfaction, lower costs, higher productivity, and less rework and are discovered during the Plan Quality process.

Be able to define the cost of quality. The COQ is the total cost to produce the product or service of the project according to the quality standards. These costs include all the work necessary to meet the product requirements for quality. The three costs associated with cost of quality are prevention, appraisal, and failure costs (also known as cost of poor quality).

Be able to name four people associated with COQ and some of the techniques they helped establish. They are Crosby, Juran, Deming, and Shewhart. Some of the techniques they helped to establish are TQM, Six Sigma, cost of quality, and continuous improvement. The Kaizen approach concerns continuous improvement and says people should be improved first.

Be able to name the tools and techniques of the Plan Quality process. The Plan Quality process consists of cost-benefit analysis, cost of quality, control charts, benchmarking, design of experiments, statistical sampling, flowcharting, proprietary quality management methodologies, and additional quality planning tools.

Key Terms

In this chapter, you began to see just how important communication is to every successful project. You learned about planning what work needs to be done, how you will communicate during the project, and how you will judge whether or not the project is successful. The processes that follow allow you to accomplish those portions of project planning. Understand them well, and know each process by the name used in the PMBOK® Guide:

Plan Quality	Plan Procurements
Develop Human Resource Plan

Before you take the exam, also be certain you are familiar with the following terms:

appraisal costs	operational definition
benchmarking	organization breakdown structure (OBS)
Capability Maturity Model Integration (CMMI)	prevention
checklists	process improvement plan
continuous improvement	procurement documents
cost of quality (COQ)	procurement management plan
cost plus fee (CPF)	procurement statement of work (SOW)
cost plus fixed fee (CPFF)	quality baseline
cost plus incentive fee (CPIF)	quality management plan
cost plus percentage of cost (CPCC)	quality metric
cost-reimbursable contract	RACI chart
design of experiments (DOE)	regulation
failure costs	resource breakdown structure (RBS)
firm fixed-price contracts (FFP)	responsibility assignment matrix (RAM)
fitness for use	Six Sigma
fixed-price plus incentive fee contract (FPIF)	standard
fixed-price with economic price adjustment (FP-EPA)	time and materials (T&M) contract
Kaizen approach	Total Quality Management (TQM)
lump-sum contract	zero defects
make-or-buy analysis

Review Questions

1. You are the project manager for an upcoming outdoor concert event. You’re working on the procurement plan for the computer software program that will control the lighting and screen projections during the concert. You’re comparing the cost of purchasing a software product to the cost of your company programmers writing a custom software program. You are engaged in which of the following?

A. Procurement planning

B. Using expert judgment

C. Creating the procurement management plan

D. Make-or-buy analysis

2. You are the project manager for an outdoor concert event scheduled for one year from today. You’re working on the procurement documents for the computer software program that will control the lighting and screen projections during the concert. You’ve decided to contract with a professional services company that specializes in writing custom software programs. You want to minimize the risk to the organization, so you’ll opt for which contract type?

A. FPIF

B. CPFF

C. FFP

D. CPIF

3. You are the project manager for the Heart of Texas casual clothing company. It’s introducing a new line of clothing called Black Sheep Ranch Wear. You will outsource the production of this clothing line to a vendor. The vendor has requested a procurement SOW. All of the following statements are true except for which one?

A. The procurement SOW contains a description of the new clothing line.

B. As the purchaser, you are required to write the procurement SOW.

C. The procurement SOW contains the objectives of the project.

D. The vendor requires a procurement SOW to determine whether it can produce the clothing line given the detailed specifications of this product.

4. You are the project manager for the Heart of Texas casual clothing company. It’s introducing a new line of clothing called Black Sheep Ranch Wear. You will outsource the production of this clothing line to a vendor. Your legal department has recommended you use a contract that reimburses the seller’s allowable costs and builds in a bonus based on the vendor achieving the performance criteria they’ve outlined in their memo. Which of the following contract types will you use?

A. CPIF

B. CPFF

C. CPF

D. FPIF

5. All of the following statements are true regarding the Develop Human Resource Plan process except for which one?

A. The Develop Human Resource Plan process involves determining roles and responsibilities.

B. Included in the Develop Human Resource Plan output are project organization charts that show the project’s reporting relationships.

C. The staffing management plan created in this process describes how and when resources will be acquired and released.

D. A RAM (or RACI chart) is an output of this process that allows you to see all the people assigned to an activity.

6. Sally is a project manager working on a project that will require a specially engineered machine. Only three manufacturers can make the machine to the specifications Sally needs. The price of this machine is particularly critical to this project. The budget is limited, and there’s no chance of securing additional funds if the bids for the machine come in higher than budgeted. She’s developing the source selection criteria for the bidders’ responses and knows all of the following are true except for which one?

A. Sally will use understanding of need and warranties as two of the criteria for evaluation.

B. Sally will review the scope baseline, teaming agreements, and risk register as some of the inputs to this process.

C. Sally will base the source selection criteria on price alone because the budget is a constraint.

D. Sally will document a SOW, the desired form of response, and any required contractual provisions in the RFP.

7. Which of the following are constraints that you might find during the Develop Human Resource Plan process?

A. Organizational structures, collective bargaining agreements, and economic conditions

B. Organizational structures, technical interfaces, and interpersonal interfaces

C. Organizational interfaces, collective bargaining agreements, and economic conditions

D. Organizational interfaces, technical interfaces, and interpersonal interfaces

8. You have been hired as a contract project manager for Grapevine Vineyards. Grapevine wants you to design an Internet wine club for its customers. Customers must register before being allowed to order wine over the Internet so that legal age can be established. You know this project will require new hardware and an update to some existing infrastructure. You will have to hire an expert to help with the infrastructure assessment and upgrades. You also know that the module to verify registration must be written and tested using data from Grapevine’s existing database. This new module cannot be tested until the data from the existing system is loaded. You are going to hire a vendor to perform the programming and testing tasks for this module to help speed up the project schedule. The vendor will be reimbursed for all their costs, and you want to use a contract type that will allow you to give the vendor a little something extra if you are satisfied with the work they do. You know all of the following apply in this situation except for which one?

A. Contract type is determined by the risk shared between the buyer and seller.

B. You’ll use a CPAF contract for the programming vendor.

C. Fixed-price contracts can include incentives for meeting or exceeding performance criteria.

D. Each procurement item needs a SOW.

9. You are the project manager for BB Tops, a nationwide toy store chain. Your new project involves creating a prototype display at several stores across the country. You are using a RACI chart to display individuals and activities. What does RACI stand for?

A. Responsible, accountable, consult, inform

B. Responsible, assignment, control, inform

C. Resource, activity, control, identify

D. Resource, accountable, consult, identify

10. This process has the greatest ability to directly influence the project schedule.

A. Develop Human Resource Plan

B. Plan Procurements

C. Plan Communications

D. Plan Quality

11. You are the project manager for BB Tops, a nationwide toy store chain. Your new project involves creating a prototype display at several stores across the country. You are hiring a contractor for portions of the project. The contract stipulates that you’ll pay all allowable costs and a 6 percent fee over and above the allowable costs at the end of the contract. Which of the following describes this contract type?

A. CPPF

B. CPPC

C. CPF

D. CPIF

12. All of the following are true regarding the Plan Quality process except for which one?

A. DOE is a tool and technique of this process that provides statistical analysis for changing product or process elements one at a time to optimize the process.

B. This is one of the key processes performed during the Planning process group and during the development of the project management plan.

C. Changes to the product as a result of meeting quality standards might require cost or schedule adjustments.

D. The tools and techniques of this process are cost-benefit analysis, COQ, control charts, benchmarking, DOE, statistical sampling, flowcharting, proprietary quality management methodologies, and additional quality planning tools.

13. Four people are responsible for establishing cost of quality theories. Crosby and Juran are two them, and their theories are ___________________, respectively.

A. grades of quality, fitness for use

B. fitness for use, zero defects

C. zero defects, fitness for use

D. cost of quality, zero defects

14. The theory that 85 percent of the cost of quality is a management problem is attributed to ___________________?

A. Deming

B. Shewhart

C. Juran

D. Crosby

15. All of the following are benefits of meeting quality requirements except which one?

A. An increase in stakeholder satisfaction

B. Less rework

C. Lower risk

D. Higher productivity

16. Which of the following describes the cost of quality associated with scrapping, rework, and downtime?

A. Internal failure costs

B. External failure costs

C. Prevention costs

D. Appraisal costs

17. The quality management plan documents how the project team will implement the quality policy. It must address at least all of the following except which one?

A. Quality control

B. Quality metrics

C. Quality assurance

D. Continuous process improvement

18. You work for a furniture manufacturer. Your project is going to design and produce a new office chair. The chair will have the ability to function as a regular chair and also the ability to move its occupant into an upright, kneeling position. The design team is trying to determine the combination of comfort and ease of transformation to the new position that will give the chair the best characteristics while keeping the costs reasonable. Several different combinations have been tested. This is an example of which of the following tools and techniques of Plan Quality?

A. Benchmarking

B. Quality metrics

C. COQ

D. DOE

19. Which of the following best characterizes Six Sigma?

A. Stipulates that quality must be managed in

B. Focuses on process improvement and variation reduction by using a measurement-based strategy

C. Asserts that quality must be a continuous way of doing business

D. Focuses on improving the quality of the people first, then improving the quality of the process or project

20. Your organization is embarking on a long-term project that will require additional human resources on a contract basis to complete the work of the project. Since the project will span several years, you know one vendor probably can’t supply all the resources you’ll need over the course of the contract. However, you only want to work with one vendor throughout the project to minimize the amount of procurement documents you’ll have to produce. So, you’ll specify in your procurement documents that contractors will have to form partnerships to work on this project. You know all of the following are true regarding this question except for which one?

A. You will use an RFP, which is an output of the Plan Procurements process, as your procurement document for this project.

B. You’ll use an FP-EPA contract, which is described in the contract types tool and technique of the Plan Procurements process.

C. You should consider teaming agreements, which are an input to the Develop Human Resource Plan process.

D. Some of the quality metrics you’ll use for this project include on-time performance, failure rates, budget control, and test coverage. Quality metrics are an output of the Plan Quality process.

Answers to Review Questions

1. D. Make-or-buy analysis is determining whether it’s more cost effective to purchase the goods or services needed for the project or more cost effective for the organization to produce them internally.

2. C. Firm fixed-price contracts have the highest risk to the seller and the least amount of risk to the buyer. However, the price the vendor charges for the product or service will compensate for the amount of risk they’re assuming.

3. B. Either the buyer or the seller can write the SOW. Sometimes the buyer will write the SOW and the seller might modify it and send it back to the buyer for verification and approval.

4. A. The cost plus incentive fee contract reimburses the seller for the seller’s allowable costs and includes an incentive or bonus for exceeding the performance criteria laid out in the contract.

5. D. The RAM and RACI charts are tools and techniques of this process.

6. C. Source selection criteria can be based on price alone when there are many vendors who can readily supply the goods or services. The question states that only three vendors make the machine, which means source selection criteria should be based on more than price.

7. A. A constraint can be anything that limits the option of the project team. Organizational structures, collective bargaining agreements, and economic conditions are all constraints that you might encounter during this process.

8. C. Fixed-price contracts can include incentives for meeting performance criteria, but the questions states the vendor helping with the programming task will be reimbursed for their costs and, depending on your satisfaction with their results, may receive an additional award. This describes a cost plus award fee contract.

9. A. RACI stands for responsible, accountable, consult, and inform.

10. B. Plan Procurements can directly influence the project schedule, and the project schedule can directly influence this process.

11. B. This is a cost-reimbursable contract that includes a fee as a percentage of allowable costs. This type of contract is known as a cost plus percentage of cost (CPPC) contract.

12. A. Design of experiments is a tool and technique of the Plan Quality process that provides statistical analysis for changing key product or process elements all at once (not one at a time) to optimize the process.

13. C. Philip Crosby devised the zero defects theory, meaning do it right the first time. Proper Plan Quality leads to less rework and higher productivity. Joseph Juran’s fitness for use says that stakeholders’ and customers’ expectations are met or exceeded.

14. A. W. Edwards Deming conjectured that the cost of quality is a management problem 85 percent of the time and that once the problem trickles down to the workers, it is outside their control.

15. C. The benefits of meeting quality requirements are increased stakeholder satisfaction, lower costs, higher productivity, and less rework.

16. A. Internal failure costs are costs associated with not meeting the customer’s expectations while you still had control over the product. This results in rework, scrapping, and downtime.

17. B. Quality metrics are an output of the Plan Quality process.

18. D. This is an example of design of experiments.

19. B. Six Sigma is a measurement-based strategy that focuses on process improvement and variation reduction by applying Six Sigma methodologies to the project.

20. C. Teaming agreements are an input of the Plan Procurements process.