Chapter 1 Key Terms and Introduction to Project Management

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PMP Chapter 1: Detailed Study Guide

Chapter 1

Key Terms and Introduction to Project Management

A Comprehensive Guide by Parag Pal

Chapter 1 lays the groundwork for understanding project management by defining core concepts and distinguishing projects from other organizational activities. It introduces the fundamental vocabulary and frameworks essential for anyone pursuing project management knowledge.

This detailed guide will elaborate on each key term, providing context and examples to ensure a thorough grasp of the foundational principles.

1.1 Project vs. Operations

The distinction between a project and an operation is fundamental in project management. While both are essential for an organization, their characteristics differ significantly.

🚀 Project

  • Temporary: Has a definite start and end date.
  • Unique: Creates a distinct product, service, or result.
  • Goal-Oriented: Undertaken to achieve specific objectives.

⚙️ Operations

  • Ongoing: Continuous, day-to-day business activities.
  • Repetitive: Produces standardized outputs.
  • Sustaining: Maintains business functions.

Key Takeaway:

Projects are about change and creating something new, while operations are about maintaining and sustaining existing processes.

1.2 Progressive Elaboration (Rolling Wave Planning)

Progressive elaboration is the iterative process of increasing the level of detail in a project management plan as more information and more accurate estimates become available. It is also known as "rolling wave planning."

This concept acknowledges that in complex projects, it's impossible to know all details upfront. Planning is done in waves:

High-Level Plan
More Details Emerge
Refined Specifics (Just-in-Time)

Example:

When building a house, you might initially have a high-level plan for the entire construction. As you approach the foundation phase, you'll develop very detailed plans for excavation, concrete pouring, and rebar placement. Later, as you move to interior finishing, you'll elaborate on paint colors, fixture types, and flooring materials.

1.3 Project Management

Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.

It's fundamentally about effectively managing people, resources, and processes to accomplish the project's scope within the given constraints of time and costs. The goal is to get work done within a specific budget and timeframe, while meeting scope and quality expectations.

1.4 Value

The primary reason any company undertakes a project is to derive value from its output. No company would spend money on a project that does not return any value.

  • Tangible Value: Measurable and quantifiable benefits, such as money (increased revenue, cost savings), physical assets, or market share.
  • Intangible Value: Non-quantifiable benefits that still contribute to the organization's success, such as improved brand reputation, increased customer satisfaction, enhanced employee morale, or acquisition of new knowledge.

Project Manager's Role:

A main task of the project manager is to ensure that the project and its completed deliverables are always delivering value to the business.

1.5 Process

A process is a set of interrelated actions and activities performed to achieve a pre-specified set of products, results, or services. We execute a process because we want the output.

Every process follows an ITTO (Inputs, Tools & Techniques, Outputs) structure:

Inputs
Tools & Techniques
Outputs
  • Inputs: The documents, plans, data, or agreements that are needed to start the process. These are the "ingredients."
  • Tools and Techniques: The mechanisms, methods, or skills used to transform the inputs into outputs. These are the "actions" or "methods."
  • Outputs: The products, services, or results that are produced by the process. This is the "result" or "deliverable."

1.6 Phase and Deliverable

1.6.1 Phase

A phase is a division within the project where extra control is needed to effectively manage the completion of one or more deliverables.

  • A project can have many phases (e.g., Feasibility, Design, Development, Testing, Deployment). The project manager determines the phases.
  • Every phase within a project will create a specific deliverable or deliverables.
  • Crucially, each phase contains all five Process Groups (Initiating, Planning, Executing, Monitoring & Controlling, Closing) relevant to that phase's activities.

1.6.2 Deliverable

A deliverable is a part of the product that is presented to the customer or stakeholders for acceptance. It is a unique and verifiable product, result, or capability to perform a service.

1.7 Process Groups and Knowledge Areas

1.7.1 Process Groups

The five Process Groups are a logical grouping of project management processes. They are:

  • Initiating: Processes performed to define a new project or a new phase of an existing project by obtaining authorization to start.
  • Planning: Processes required to establish the scope of the project, refine the objectives, and define the course of action required to attain the objectives.
  • Executing: Processes performed to complete the work defined in the project management plan to satisfy the project requirements.
  • Monitoring and Controlling: Processes required to track, review, and regulate the progress and performance of the project; identify any areas in which changes to the plan are required; and initiate the corresponding changes.
  • Closing: Processes performed to formally complete or close the project, phase, or contract.

Important Note:

A process group is NOT a phase, but all phases on a project will contain these five process groups relevant to that phase's work.

1.7.2 Knowledge Areas

A knowledge area is a certain set of processes that are usually defined by the knowledge needed to manage that area. There are 10 Knowledge Areas:

  • Integration Management
  • Scope Management
  • Schedule Management
  • Cost Management
  • Quality Management
  • Resource Management
  • Communications Management
  • Risk Management
  • Procurement Management
  • Stakeholder Management

1.8 Project Life Cycles

A project life cycle describes the series of phases that a project passes through from its start to its completion.

📈 Predictive Life Cycle (Waterfall)

  • Fixed Scope: Known early, defined upfront.
  • Fixed Time/Cost: Determined early.
  • Sequential Phases: Complete one before starting next.
  • Less Customer Interaction: Primarily at start & end.
  • Best Suited For: Stable requirements, low uncertainty.

🌊 Iterative, Incremental, or Adaptive Life Cycle (Agile)

  • Variable Scope: Refined through iterations.
  • Fixed Time/Cost: Within short sprints.
  • Iterative Delivery: Incremental product builds.
  • High Customer Interaction: Continuous feedback.
  • Best Suited For: Evolving requirements, high uncertainty.

Scrum Overview:

A popular Agile framework. The Product Owner creates a prioritized Product Backlog. The Development Team selects items for a Sprint (1-4 weeks) during Sprint Planning, creating a Sprint Backlog. Daily Standup Meetings track progress. Sprint Review Meetings demo features and gather feedback.

1.9 Program and Portfolio

Projects often exist within larger organizational structures like programs and portfolios.

1.9.1 Program

A program is a collection of related projects, subsidiary programs, and program activities managed in a coordinated way to obtain benefits not available from managing them individually.

  • Managed by a program manager.
  • Projects within a program are related by a common goal or strategic objective.

1.9.2 Portfolio

A portfolio is a collection of projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic business objectives.

  • Managed by a portfolio manager.
  • Portfolios identify, prioritize, authorize, manage, and control these collections to meet a strategic business goal (often a three-to-five-year goal).
  • They aggregate all resources to accomplish the strategic goal.

1.10 Baselines

A baseline is the approved version of a work product (e.g., a plan, a specification) that is formally established and can only be changed through formal change control procedures. It serves as a basis for comparison.

There are three core baselines on all projects:

  • Scope Baseline: The approved version of the project scope statement, WBS, and WBS Dictionary. It defines what work needs to get done.
  • Schedule Baseline: The approved version of the project schedule. It is used to measure and monitor schedule performance.
  • Cost Baseline: The approved version of the time-phased project budget. It is used to measure and monitor cost performance.

Key Point:

All projects are measured against these three baselines. A baseline is the original plan plus any approved changes.

1.11 Historical Information & Lessons Learned

1.11.1 Historical Information (Organizational Process Assets - OPAs)

Historical information refers to data from previous projects, phases, or organizational processes. It is a critical component of Organizational Process Assets (OPAs).

  • It is one of the most common inputs to many project management processes.
  • Includes project files (e.g., scope statements, budgets, schedules), performance data, risk data, and lessons learned from past projects.
  • Used to improve accuracy of planning, estimate durations/costs, and identify risks.

1.11.2 Lessons Learned

Lessons learned are the knowledge gained during a project that can be applied to future projects or phases to improve performance.

  • They are identified and documented throughout the project, not just at the end.
  • Stored in the lessons learned register, which is a living document updated as new insights are gained.
  • Examining lessons learned ensures that future endeavors are done better, avoiding past mistakes and replicating successes.

1.12 Regulations, Standards, and System

1.12.1 Regulations

Regulations are official documents that provide guidelines that must be followed. They are generally imposed by law or by a governing authority.

  • Compliance is mandatory.
  • Example: Environmental protection laws, building codes.

1.12.2 Standards

A standard is a document approved by a recognized body that provides guidelines, rules, or characteristics for activities or their results.

  • You don't need to follow a standard, but it is generally considered best practice to do so.
  • Example: ISO 9001 (Quality Management System), PMBOK Guide (a standard for project management).

1.12.3 System

A system includes all formal procedures and tools put in place to manage something. This refers to the structured approach and infrastructure used for management.

1.13 Project Governance

Project governance is the framework, functions, and processes that a company will follow in order to complete a project.

  • It provides a structure for decision-making, roles, responsibilities, and accountability within a project.
  • Developed internally in a business to meet its strategic and operational goals and ensure projects align with organizational objectives.

1.14 Project Management Office (PMO)

A PMO is an organizational structure that standardizes project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques. PMOs are generally broken into three types based on their level of authority and control:

Supportive PMO

Provides templates & training.

⬇️ Low Authority

Controlling PMO

Enforces frameworks & compliance.

↔️ Moderate Authority

Directive PMO

Directly manages projects & PMs.

⬆️ High Authority

1.15 Key Project Roles

Effective project management relies on clear understanding of various roles and their responsibilities.

1.15.1 Stakeholder

A stakeholder is any individual, group, or organization who may be positively or negatively affected by the project.

  • This includes anyone on the project, such as the project manager, project team, customers, sponsors, functional managers, and even external parties.
  • Stakeholders are identified when the project is initiated.

1.15.2 Sponsor

The sponsor is the person who provides the financial resources for the project.

  • Helps to initiate and authorize a project.
  • Authorizes changes and approves the project deliverables.
  • Acts as a key advocate for the project.

1.15.3 Customers

Customers are the people who will use the project deliverables.

  • They are key stakeholders whose needs and expectations the project must meet.
  • Customers may also need to formally accept a deliverable.

1.15.4 Functional Managers

Functional managers are individuals who are heads of different organizational functions or departments (e.g., sales, HR, legal, IT).

  • They have control over organizational resources (personnel, equipment) within their specific functional area.
  • In some organizational structures (e.g., functional or weak matrix), the project manager's authority over resources may be very limited, and they might even report to a functional manager.

1.16 Organizational Structures

The structure of an organization significantly impacts the project manager's authority, control over resources, and the overall project environment. The contention of power is generally between the project manager and the functional manager.

Name Project Manager Authority Who Controls Resources PM Work Shift
Organic or Simple Little or none Owner Little or no time
Virtual Low to moderate Mixed Full-time or part-time
Functional Little or none Functional Manager Part-time
Project-Oriented (Projectized) High to full control Project Manager Full-time
Weak Matrix Low Functional Manager Part-time
Balanced Matrix Low to moderate Shared Part-time
Strong Matrix Moderate to high Project Manager Full-time

Exam Tip:

All questions on a PMP exam are generally based on a strong matrix organization unless otherwise noted in the question.

1.17 Project Constraints

All projects are limited by a set of interconnected constraints. These limitations define the boundaries within which the project must operate.

The six primary project constraints are:

🔍 Scope
Time
💰 Cost
Quality
👥 Resources
⚠️ Risk

Interconnectedness:

These constraints are interdependent. A change in one constraint often affects one or more of the others. For example, increasing the scope of the project may require an increase in budget and schedule.

1.18 Product Life Cycle vs. Project Life Cycle

It's important to distinguish between the life cycle of a product and the life cycle of a project.

1.18.1 Product Life Cycle

This is the life cycle that a product goes through from its conception to its eventual retirement or disposal.

  • Includes stages like introduction, growth, maturity, and decline.
  • One product life cycle may encompass many projects (e.g., a project to develop the product, a project to upgrade it, a project to decommission it).

1.18.2 Project Life Cycle

These are the phases that a project goes through from initiating the project to its closing.

  • It is the breakdown of the work needed to complete the deliverable.
  • Sometimes referred to as the organization's methodology for managing projects.

1.19 Project Success

Project success is ultimately measured by finishing the project within the given limitations of scope, cost, time, quality, resources, and risk. Meeting these constraints while delivering the intended value is the hallmark of a successful project.

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