5

Planning Process Group

The processes in the Planning Process Group are shown in Table 5-1.

Table 5-1. Planning Process Group Processes

The Planning Process Group consists of those processes that establish the total scope of the effort, define and refine the objectives, and develop the course of action required to attain those objectives. The processes in the Planning Process Group develop the components of the project management plan and the project documents used to carry out the project. The nature of a project may require the use of repeated feedback loops for additional analysis. As more project information or characteristics are gathered and understood, additional planning will likely be required. Significant changes that occur throughout the project life cycle may initiate a need to revisit one or more of the planning processes and, possibly, one or both of the Initiating processes. This ongoing refinement of the project management plan is called progressive elaboration, indicating that planning and documentation are iterative or ongoing activities. The key benefit of this Process Group is to define the course of action to successfully complete the project or phase.

The project management team seeks input and encourages involvement from relevant stakeholders while planning the project and developing the project management plan and project documents. When the initial planning effort is completed, the approved version of the project management plan is considered a baseline. Throughout the project, the Monitoring and Controlling processes compare the project performance to the baselines.

The Planning Process Group project management processes are described in Sections 5.1 through 5.24.

5.1 DEVELOP PROJECT MANAGEMENT PLAN

Develop Project Management Plan is the process of defining, preparing, and coordinating all plan components and consolidating them into an integrated project management plan. The key benefit of this process is the production of a comprehensive document that defines the basis of all project work and how the work will be performed.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-1. Figure 5-2 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-1. Develop Project Management Plan: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-2. Develop Project Management Plan: Data Flow Diagram

The project management plan defines how the project is executed, monitored and controlled, and closed. The project management plan's content varies depending on the application area and complexity of the project.

The project management plan may be either summary level or detailed. Each component plan is described to the extent required by the specific project. The project management plan should be robust enough to respond to an ever-changing project environment. This agility may result in more accurate information as the project progresses.

The project management plan should be baselined; that is, it is necessary to define at least the project references for scope, time, and cost, so that the project execution can be measured and compared to those references and performance can be managed. Before the baselines are defined, the project management plan may be updated as many times as necessary. No formal process is required at that time. But, once it is baselined, it may only be changed through the Perform Integrated Change Control process. Consequently, change requests will be generated and decided upon whenever a change is requested. This results in a project management plan that is progressively elaborated by controlled and approved updates extending through project closure.

5.2 PLAN SCOPE MANAGEMENT

Plan Scope Management is the process of creating a scope management plan that documents how the project and product scope will be defined, validated, and controlled. The key benefit of this process is that it provides guidance and direction on how scope will be managed throughout the project.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in in Figure 5-3. Figure 5-4 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-3. Plan Scope Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-4. Plan Scope Management: Data Flow Diagram

The scope management plan is a component of the project or program management plan that describes how the scope will be defined, developed, monitored, controlled, and validated. The development of the scope management plan and the detailing of the project scope begin with the analysis of information contained in the project charter, the latest approved subsidiary plans of the project management plan, historical information contained in the organizational process assets, and any other relevant enterprise environmental factors.

5.3 COLLECT REQUIREMENTS

Collect Requirements is the process of determining, documenting, and managing stakeholder needs and requirements to meet objectives. The key benefit of this process is that it provides the basis for defining the product scope and project scope.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-5. Figure 5-6 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-5. Collect Requirements: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-6. Collect Requirements: Data Flow Diagram

This practice guide does not specifically address product requirements since those are industry specific. Note that Business Analysis for Practitioners: A Practice Guide [3] provides more in-depth information about product requirements. A project's success is directly influenced by active stakeholder involvement in the discovery and decomposition of needs into project and product requirements and by the care taken in determining, documenting, and managing the requirements of the product, service, or result of the project. Requirements include conditions or capabilities that are required to be present in a product, service, or result to satisfy an agreement or other formally imposed specification. Requirements include the quantified and documented needs and expectations of the sponsor, customer, and other stakeholders. These requirements need to be elicited, analyzed, and recorded in enough detail to be included in the scope baseline and to be measured once project execution begins. Requirements become the foundation of the work breakdown structure (WBS). Cost, schedule, quality planning, and procurement are all based on these requirements.

5.4 DEFINE SCOPE

Define Scope is the process of developing a detailed description of the project and product. The key benefit of this process is that it describes the product, service, or result boundaries and acceptance criteria.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-7. Figure 5-8 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-7. Define Scope: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-8. Define Scope: Data Flow Diagram

Since all of the requirements identified in Collect Requirements may not be included in the project, the Define Scope process results in the selection of the final project requirements from the requirements documentation developed during the Collect Requirements process. It then develops a detailed description of the project and product, service, or result.

The preparation of a detailed project scope statement builds upon the high-level project description that is documented during project initiation. During project planning, the project scope is defined and described with greater specificity as more information about the project is known. Existing risks, assumptions, and constraints are analyzed for completeness and added or updated as necessary. The Define Scope process can be highly iterative. In iterative life cycle projects, a high-level vision will be developed for the overall project, but the detailed scope is determined one iteration at a time, and the detailed planning for the next iteration is carried out as work progresses on the current project scope and deliverables.

5.5 CREATE WBS

Create WBS is the process of subdividing project deliverables and project work into smaller, more manageable components. The key benefit of this process is that it provides a framework of what has to be delivered.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-9. Figure 5-10 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-9. Create WBS: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-10. Create WBS: Data Flow Diagram

The WBS is a hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables. The WBS organizes and defines the total scope of the project and represents the work specified in the current approved project scope statement.

The planned work is contained within the lowest level of WBS components, which are called work packages. A work package can be used to group the activities where work is scheduled and estimated, monitored, and controlled. In the context of the WBS, work refers to work products or deliverables that are the result of activity and not to the activity itself.

5.6 PLAN SCHEDULE MANAGEMENT

Plan Schedule Management is the process of establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule. The key benefit of this process is that it provides guidance and direction on how the project schedule will be managed throughout the project.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-11. Figure 5-12 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-11. Plan Schedule Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-12. Plan Schedule Management: Data Flow Diagram

5.7 DEFINE ACTIVITIES

Define Activities is the process of identifying and documenting the specific actions to be performed to produce the project deliverables. The key benefit of this process is that it decomposes work packages into schedule activities that provide a basis for estimating, scheduling, executing, monitoring, and controlling the project work.

This process is performed throughout the project. The inputs, tools and techniques, and outputs are shown in Figure 5-13. Figure 5-14 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-13. Define Activities: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-14. Define Activities: Data Flow Diagram

5.8 SEQUENCE ACTIVITIES

Sequence Activities is the process of identifying and documenting relationships among the project activities. The key benefit of this process is that it defines the logical sequence of work to obtain the greatest efficiency given all project constraints.

This process is performed throughout the project. The inputs, tools and techniques, and outputs are shown in Figure 5-15. Figure 5-16 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-15. Sequence Activities: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-16. Sequence Activities: Data Flow Diagram

Every activity except the first and last should be connected to at least one predecessor and at least one successor activity with an appropriate logical relationship. Logical relationships should be designed to create a realistic project schedule. It may be necessary to use lead or lag time between activities to support a realistic and achievable project schedule (see leads and lags in Section 10). Sequencing can be performed by using project management software or by using manual or automated techniques. The Sequence Activities process concentrates on converting the project activities from a list to a diagram to act as a first step to publish the schedule baseline.

5.9 ESTIMATE ACTIVITY DURATIONS

Estimate Activity Durations is the process of estimating the number of work periods needed to complete individual activities with estimated resources. The key benefit of this process is that it provides the amount of time each activity will take to complete.

This process is performed throughout the project. The inputs, tools and techniques, and outputs are shown in Figure 5-17. Figure 5-18 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-17. Estimate Activity Durations: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-18. Estimate Activity Durations: Data Flow Diagram

Estimating activity durations uses information from the scope of work, required resource types or skill levels, estimated resource quantities, and resource calendars. Other factors that may influence the duration estimates include constraints imposed on the duration, effort involved, or type of resources (e.g., fixed duration, fixed effort or work, fixed number of resources), as well as the schedule network analysis technique used. The inputs for the estimates of duration originate from the person or gro up on the project team who is most familiar with the nature of the work in the specific activity. The duration estimate is progressively elaborated, and the process considers the quality and availability of the input data. For example, as more detailed and precise data are available about the project engineering and design work, the accuracy and quality of the duration estimates improve.

The Estimate Activity Durations process requires an estimation of the amount of work effort required to complete the activity and the amount of available resources estimated to complete the activity. These estimates are used to approximate the number of work periods (activity duration) needed to complete the activity using the appropriate project and resource calendars. In many cases, the number of resources that are expected to be available to accomplish an activity, along with the skill proficiency of those resources, may determine the activity's duration. A change to a driving resource allocated to the activity will usually have an effect on the duration, but this is not a simple “straight-line” or linear relationship. Sometimes, the intrinsic nature of the work (i.e., constraints imposed on the duration, effort involved, or number of resources) will take a predetermined amount of time to complete regardless of the resource allocation (e.g., a 24-hour stress test). Other factors for consideration when estimating duration include:

▶Law of diminishing returns. When one factor (e.g., resource) used to determine the effort required to produce a unit of work is increased while all other factors remain fixed, a point will eventually be reached at which additions of that one factor start to yield progressively smaller or diminishing increases in output.

▶Number of resources. Increasing the number of resources to twice the original number of the resources does not always reduce the time by half, as it may increase extra duration due to risk, and at some point adding too many resources to the activity may increase duration due to knowledge transfer, learning curve, additional coordination, and other factors involved.

▶Advances in technology. This may also play an important role in determining duration estimates. For example, an increase in the output of a manufacturing plant may be achieved by procuring the latest advances in technology, which may impact duration and resource needs.

▶Motivation of staff. The project manager also needs to be aware of Student Syndrome—or procrastination—when people start to apply themselves only at the last possible moment before the deadline, and Parkinson's Law where work expands to fill the time available for its completion.

All data and assumptions that support duration estimating are documented for each activity duration estimate.

5.10 DEVELOP SCHEDULE

Develop Schedule is the process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create a schedule model for project execution and monitoring and controlling. The key benefit of this process is that it generates a schedule model with planned dates for completing project activities.

This process is performed throughout the project. The inputs, tools and techniques, and outputs are shown in Figure 5-19. Figure 5-20 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-19. Develop Schedule: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-20. Develop Schedule: Data Flow Diagram

Developing an acceptable project schedule is an iterative process. The schedule model is used to determine the planned start and finish dates for project activities and milestones based on the best available information. Schedule development can require the review and revision of duration estimates, resource estimates, and schedule reserves to establish an approved project schedule that can serve as a baseline to track progress. Key steps include defining the project milestones, identifying and sequencing activities, and estimating durations. Once the activity start and finish dates have been determined, it is common to have the project staff assigned to the activities review their assigned activities. The staff confirms that the start and finish dates present no conflict with resource calendars or assigned activities on other projects or tasks and thus are still valid. The schedule is then analyzed to determine conflicts with logical relationships and if resource leveling is required before the schedule is approved and baselined. Revising and maintaining the project schedule model to sustain a realistic schedule continues throughout the duration of the project.

For more specific information regarding scheduling, refer to the Practice Standard for Scheduling [8].

5.11 PLAN COST MANAGEMENT

Plan Cost Management is the process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled. The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-21. Figure 5-22 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-21. Plan Cost Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-22. Plan Cost Management: Data Flow Diagram

The cost management planning effort occurs early in project planning and sets the framework for each of the cost management processes so that performance of the processes will be efficient and coordinated. The cost management processes and their associated tools and techniques are documented in the cost management plan. The cost management plan is a component of the project management plan.

5.12 ESTIMATE COSTS

Estimate Costs is the process of developing an approximation of the cost of resources needed to complete project work. The key benefit of this process is that it determines the monetary resources required for the project.

This process is performed periodically throughout the project as needed. The inputs, tools and techniques, and outputs are shown in Figure 5-23. Figure 5-24 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-23. Estimate Costs: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-24. Estimate Costs: Data Flow Diagram

A cost estimate is a quantitative assessment of the likely costs for resources required to complete the activity. It is a prediction that is based on the information known at a given point in time. Cost estimates include the identification and consideration of costing alternatives to initiate and complete the project. Cost trade-offs and risks should be considered, such as make versus buy, buy versus lease, and the sharing of resources in order to achieve optimal costs for the project.

Cost estimates should be reviewed and refined during the course of the project to reflect additional detail as it becomes available and assumptions are tested. The accuracy of a project estimate will increase as the project progresses through the project life cycle. For example, a project in the start-up phase may have a rough order of magnitude (ROM) estimate in the range of −25% to +75%. Later in the project, as more information is known, definitive estimates could narrow the range of accuracy to −5% to +10%. In some organizations, there are guidelines for when such refinements can be made and the degree of confidence or accuracy that is expected.

Costs are estimated for all resources that will be charged to the project. This includes but is not limited to labor, materials, equipment, services, and facilities, as well as special categories such as an inflation allowance, cost of financing, or contingency costs. Cost estimates may be presented at the activity level or in summary form.

5.13 DETERMINE BUDGET

Determine Budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. The key benefit of this process is that it determines the cost baseline against which project performance can be monitored and controlled.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-25. Figure 5-26 presents the data flow diagram for this process.

A project budget includes all of the funds authorized to execute the project. The cost baseline is the approved version of the time-phased project budget that includes contingency reserves but excludes management reserves.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-25. Determine Budget: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-26. Determine Budget: Data Flow Diagram

5.14 PLAN QUALITY MANAGEMENT

Plan Quality Management is the process of identifying quality requirements and/or standards for the project and its deliverables. This process documents how the project will demonstrate compliance with quality requirements and/or standards. The key benefit of this process is that it provides guidance and direction on how quality will be managed and verified throughout the project.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-27. Figure 5-28 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-27. Plan Quality Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-28. Plan Quality Management: Data Flow Diagram

Quality planning should be performed in parallel with the other planning processes. For example, changes proposed in the deliverables in order to meet identified quality standards may require cost or schedule adjustments and a detailed risk analysis of the impact to plans.

The quality planning techniques discussed here are those used most frequently on projects. There are many others that may be useful on certain projects or in specific application areas.

5.15 PLAN RESOURCE MANAGEMENT

Plan Resource Management is the process of defining how to estimate, acquire, manage, and use team and physical resources. The key benefit of this process is that it establishes the approach and level of management effort needed for managing project resources based on the type and complexity of the project.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-29. Figure 5-30 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-29. Plan Resource Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-30. Plan Resource Management: Data Flow Diagram

Resource planning is used to determine and identify an approach to ensure that sufficient resources are available for the successful completion of the project. Project resources may include team members, supplies, materials, equipment, services, and facilities. Effective resource planning should consider and plan for the availability of, or competition for, scarce resources.

5.16 ESTIMATE ACTIVITY RESOURCES

Estimate Activity Resources is the process of estimating team resources and the type and quantities of materials, equipment, and supplies necessary to perform project work. The key benefit of this process is that it identifies the type, quantity, and characteristics of resources required to complete the project.

This process is performed periodically throughout the project as needed. The inputs, tools and techniques, and outputs are shown in Figure 5-31. Figure 5-32 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-31. Estimate Activity Resources: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-32. Estimate Activity Resources: Data Flow Diagram

The Estimate Activity Resources process is closely coordinated with other processes, such as the Estimate Costs process. For example:

▶A construction project team will need to be familiar with local building codes. Such knowledge is often readily available from local sellers. If the internal labor pool lacks experience with unusual or specialized construction techniques, the additional cost for a consultant may be the most effective way to secure knowledge of the local building codes.

▶An automotive design team will need to be familiar with the latest automated assembly techniques. The requisite knowledge could be obtained by hiring a consultant, by sending a designer to a seminar on robotics, or by including someone from manufacturing as a member of the project team.

5.17 PLAN COMMUNICATIONS MANAGEMENT

Plan Communications Management is the process of developing an appropriate approach and plan for project communications activities based on the information needs of each stakeholder or group, available organizational assets, and the needs of the project. The key benefit of this process is a documented approach to effectively and efficiently engage stakeholders by presenting relevant information in a timely manner.

This process is performed periodically throughout the project as needed. The inputs, tools and techniques, and outputs are shown in Figure 5-33. Figure 5-34 presents the data flow diagram for the process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-33. Plan Communications Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-34. Plan Communications Management: Data Flow Diagram

An effective communications management plan that recognizes the diverse information needs of the project's stakeholders is developed early in the project life cycle. It should be reviewed regularly and modified when necessary, when the stakeholder community changes or at the start of each new project phase.

On most projects, communications planning is performed very early, during stakeholder identification and project management plan development.

While all projects share the need to communicate project information, the information needs and methods of distribution may vary widely. In addition, the methods of storage, retrieval, and ultimate disposition of the project information need to be considered and documented during this process. The results of the Plan Communications Management process should be reviewed regularly throughout the project and revised as needed to ensure continued applicability

5.18 PLAN RISK MANAGEMENT

Plan Risk Management is the process of defining how to conduct risk management activities for a project. The key benefit of this process is that it ensures that the degree, type, and visibility of risk management are proportionate to both risks and the importance of the project to the organization and other stakeholders.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-35. Figure 5-36 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-35. Plan Risk Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-36. Plan Risk Management: Data Flow Diagram

The Plan Risk Management process should begin when a project is conceived and should be completed early in the project. It may be necessary to revisit this process later in the project life cycle, for example at a major phase change, if the project scope changes significantly, or if a subsequent review of risk management effectiveness determines that the Plan Risk Management process requires modification.

5.19 IDENTIFY RISKS

Identify Risks is the process of identifying individual project risks as well as sources of overall project risk and documenting their characteristics. The key benefit of this process is the documentation of existing individual project risks and the sources of overall project risk. It also brings together information so the project team can respond appropriately to identified risks.

This process is performed throughout the project. The inputs, tools and techniques, and outputs are shown in Figure 5-37. Figure 5-38 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-37. Identify Risks: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-38. Identify Risks: Data Flow Diagram

Identify Risks considers both individual project risks and sources of overall project risk. Participants in risk identification activities may include the following: project manager, project team members, business analyst, project risk specialist (if assigned), customers, subject matter experts from outside the project team, end users, other project managers, operations managers, stakeholders, and risk management experts within the organization. While these personnel are often key participants for risk identification, all project stakeholders should be encouraged to identify individual project risks. It is particularly important to involve the project team so they can develop and maintain a sense of ownership and responsibility for identified individual project risks, the level of overall project risk, and associated risk response actions.

When describing and recording individual project risks, a consistent format should be used for risk statements to ensure that each risk is understood clearly and unambiguously in order to support effective analysis and risk response development. Risk owners for individual project risks may be nominated as part of the Identify Risks process and will be confirmed during the Perform Qualitative Risk Analysis process. Preliminary risk responses may also be identified and recorded and will be reviewed and confirmed as part of the Plan Risk Responses process.

5.20 PERFORM QUALITATIVE RISK ANALYSIS

Perform Qualitative Risk Analysis is the process of prioritizing individual project risks for further analysis or action by assessing their probability of occurrence and impact as well as other characteristics. The key benefit of this process is that it focuses efforts on high-priority risks.

This process is performed throughout the project. The inputs, tools and techniques, and outputs are shown in Figure 5-39. Figure 5-40 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-39. Perform Qualitative Risk Analysis: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-40. Perform Qualitative Risk Analysis: Data Flow Diagram

Perform Qualitative Risk Analysis assesses the priority of identified individual project risks using their probability of occurrence, the corresponding impact on project objectives if the risks occur, and other factors. Such assessments are subjective as they are based on perceptions of risk by the project team and other stakeholders. Effective assessment therefore requires explicit identification and management of the risk attitudes of key participants in the Perform Qualitative Risk Analysis process. Risk perception introduces bias into the assessment of identified risks, so attention should be paid to identifying bias and correcting for it. Where a facilitator is used to support the Perform Qualitative Risk Analysis process, addressing bias is a key part of the facilitator's role. An evaluation of the quality of the available information on individual project risks also helps to clarify the assessment of each risk's importance to the project.

Perform Qualitative Risk Analysis establishes the relative priorities of individual project risks for Plan Risk Responses. It identifies a risk owner for each risk who will take responsibility for planning an appropriate risk response and ensuring that it is implemented. Perform Qualitative Risk Analysis also lays the foundation for Perform Quantitative Risk Analysis if this process is required.

5.21 PERFORM QUANTITATIVE RISK ANALYSIS

Perform Quantitative Risk Analysis is the process of numerically analyzing the combined effect of identified individual project risks and other sources of uncertainty on overall project objectives. The key benefit of this process is that it quantifies overall project risk exposure, and it can also provide additional quantitative risk information to support risk response planning.

This process is not required for every project, but where it is used, it is performed throughout the project. The inputs and outputs are shown in Figure 5-41. Figure 5-42 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-41. Perform Quantitative Risk Analysis: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-42. Perform Quantitative Risk Analysis: Data Flow Diagram

Perform Quantitative Risk Analysis is not required for all projects. Undertaking a robust analysis depends on the availability of high-quality data about individual project risks and other sources of uncertainty, as well as a sound underlying project baseline for scope, schedule, and cost. Quantitative risk analysis usually requires specialized risk software and expertise in the development and interpretation of risk models. It also consumes additional time and cost. The use of quantitative risk analysis for a project will be specified in the project's risk management plan. It is most likely appropriate for large or complex projects, strategically important projects, projects for which it is a contractual requirement, or projects in which a key stakeholder requires it. Quantitative risk analysis is the only reliable method to assess overall project risk through evaluating the aggregated effect on project outcomes of all individual project risks and other sources of uncertainty.

Perform Quantitative Risk Analysis uses information on individual project risks that have been assessed by the Perform Qualitative Risk Analysis process as having a significant potential to affect the project's objectives.

Outputs from Perform Quantitative Risk Analysis are used as inputs to the Plan Risk Responses process, particularly in recommending responses to the level of overall project risk and key individual risks. A quantitative risk analysis may also be undertaken following the Plan Risk Responses process to determine the likely effectiveness of planned responses in reducing overall project risk exposure.

5.22 PLAN RISK RESPONSES

Plan Risk Responses is the process of developing options, selecting strategies, and agreeing on actions to address overall project risk exposure as well as to treat individual project risks. The key benefit of this process is that it identifies appropriate ways to address overall project risk and individual project risks. This process also allocates resources and inserts activities into project documents and the project management plan as needed.

This process is performed throughout the project. The inputs, tools and techniques, and outputs are shown in Figure 5-43. Figure 5-44 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-43. Plan Risk Responses: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-44. Plan Risk Responses: Data Flow Diagram

Effective and appropriate risk responses can minimize individual threats, maximize individual opportunities, and reduce overall project risk exposure. Unsuitable risk responses can have the converse effect. Once risks have been identified, analyzed, and prioritized, plans should be developed by the nominated risk owner for addressing every individual project risk the project team considers to be sufficiently important, either because of the threat it poses to the project objectives or the opportunity it offers. The project manager should also consider how to respond appropriately to the current level of overall project risk.

Risk responses should be appropriate for the significance of the risk, cost effective in meeting the challenge, realistic within the project context, agreed upon by all parties involved, and owned by a responsible person. Selecting the optimal risk response from several options is often required. The strategy or mix of strategies most likely to be effective should be selected for each risk. Structured decision-making techniques may be used to choose the most appropriate response. For large or complex projects, it may be appropriate to use a mathematical optimization model or real options analysis as a basis for a more robust economic analysis of alternative risk response strategies.

Specific actions are developed to implement the agreed-upon risk response strategy, including primary and backup strategies, as necessary. A contingency plan (or fallback plan) can be developed for implementation if the selected strategy turns out not to be fully effective or if an accepted risk occurs. Secondary risks should also be identified. Secondary risks are risks that arise as a direct result of implementing a risk response. A contingency reserve is often allocated for time or cost. If developed, it may include identification of the conditions that trigger its use.

5.23 PLAN PROCUREMENT MANAGEMENT

Plan Procurement Management is the process of documenting project procurement decisions, specifying the approach, and identifying potential sellers. The key benefit of this process is that it determines whether to acquire goods and services from outside the project and, if so, what to acquire as well as how and when to acquire it. Goods and services may be procured from other parts of the performing organization or from external sources.

This process is performed once or at predefined points in the project. The inputs, tools and techniques, and outputs are shown in Figure 5-45. Figure 5-46 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-45. Plan Procurement Management: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-46. Plan Procurement Management: Data Flow Diagram

Defining roles and responsibilities related to procurement should be done early in the Plan Procurement Management process. The project manager should ensure that the project team is staffed with procurement expertise at the level required for the project. Participants in the procurement process may include personnel from the purchasing or procurement department as well as personnel from the buying organization's legal department. These responsibilities should be documented in the procurement management plan.

The requirements of the project schedule can significantly influence the strategy during the Plan Procurement Management process. Decisions made in developing the procurement management plan can also influence the project schedule and are integrated with the Develop Schedule process, the Estimate Activity Resources process, and make-or-buy decisions.

5.24 PLAN STAKEHOLDER ENGAGEMENT

Plan Stakeholder Engagement is the process of developing approaches to involve project stakeholders based on their needs, expectations, interests, and potential impact on the project. The key benefit is that it provides an actionable plan to interact effectively with stakeholders.

This process is performed periodically throughout the project as needed. The inputs, tools and techniques, and outputs are shown in Figure 5-47. Figure 5-48 presents the data flow diagram for this process.

Note: This figure provides the inputs, tools and techniques, and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9. Descriptions for tools and techniques appear in Section 10.

Figure 5-47. Plan Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs

Note: This figure provides the inputs and outputs that may be used for this process. Descriptions for inputs and outputs appear in Section 9.

Figure 5-48. Plan Stakeholder Engagement: Data Flow Diagram

An effective plan that recognizes the diverse information needs of the project's stakeholders is developed early in the project life cycle and is reviewed and updated regularly as the stakeholder community changes. The first version of the stakeholder engagement plan is developed after the initial stakeholder community has been identified by the Identify Stakeholder process. The stakeholder engagement plan is updated regularly to reflect changes to the stakeholder community.