PMP Definitions: PMBOK 6th Edition Glossary (part 1)

Hello and welcome everyone. In this lecture, we are going to go over the glossary and definitions that you will need to know for your upcoming PMP or CAPM exams. PMP stands for Project Management Professional and it is one of the leading certifications for project managers worldwide. This is a part 1 of several videos on all of the definitions because we have a lot to cover. This video is based on the PMBOK 6th edition, and if you want to learn more tips like this, be sure to check out our free course on how to pass your PMP or CAPM in the next 6 weeks at www.examspm.com/free. We'll also include a link to this in the comments below. So now let's jump right into our definitions that you need to know. These terminologies are sorted by alphabetical order. The first one is 880 rule. This is a planning heuristic for creating the work breakdown structure. This rule states that the work package in the work breakdown structure must take no fewer than 8 hours of labor to create and no more than 80 hours of labor to create, so it's between 8 to 80 hours long. Active listening: the receiver confirms that the message is being received through feedback, questions, prompts for clarification, and other signs of confirmation. Activity list is the primary output of breaking down the work breakdown structure's work packages. So once you decompose the work packages into activities, and make them into a list, you have your activity list. Activity network diagram— this is a diagram that shows the flow of the project work, so which activity comes first, then which activity follows, and so forth. Actual cost— this is the actual amount of money spent on the project to date. Adjourning— once the project is done, the project team is disbanded and team members go on to other work. Affinity diagram. This is a diagram that breaks down ideas, solutions, causes, and project components and groups them together with other similar ideas and components. When stakeholders create a large number of ideas, you can use an affinity diagram to cluster similar ideas together for further analysis. Alternatives analysis. This is, this is the identification of more than one solution. Alternative dispute resolution. When an issue or claim must be settled before the contract can be closed, the parties involved in the issue or claim will try to reach a settlement through mediation or arbitration rather than litigation. Analogous estimation. This is an estimating approach that relies on historical information to predict what the current activity duration or cost should be. It is a form of expert judgment. Assumptions log: an assumption is something that you believe to be either true or false, but you can't prove whether it's true or false yet. You want to document all of your identified assumptions in the assumption log for testing and analysis. Autocratic: a decision method where only one individual makes the decision for the entire Avoidance— a risk strategy that avoids the risk. Benchmarking— comparing any 2 similar entities to measure their performance. Bidders conference— a meeting of all the potential vendors for the project to clarify the contract statement of work and the details of the contracted work. It's important that you invite all of your vendors to the bidders conference so that everyone have access to the same information. Bottom-up estimating— this is an estimation approach that starts from the bottom of each component of your work breakdown structure and arrives at the sum of your project cost or your project schedule estimates. Brainstorming— this is the most common approach to risk identification, usually completed by the project team with the help of subject matter experts to identify risks throughout the project. Cause and effect diagrams. These diagrams show the relationship between variables within a process and how those relationships can contribute to inadequate quality or problems. So this can also be called an Ishikawa diagram or a fishbone diagram. Essentially, the effect that you see is put at the head of this diagram and possible causes are traced in the quote-unquote bones of this fishbone diagram. And then when you go several layers deep, you can find the root cause of the problem, correct it from the root cause so that the problem doesn't appear again. This diagram can help organize both processes and your team's opinions. The Change Control Board, or the CCB— this is a committee that evaluates the worthiness of the proposed change and either approves or rejects the proposed change. A changelog is a log in which all the changes that enter into your project are recorded. A claim is a disagreement between the buyer and the seller. Claims can turn into disputes and appeals. They are monitored and controlled through the project in accordance with the contract terms. Code of accounts— this is a numbering system for each item in the work breakdown structure. Cohesive power— the power of the project manager to discipline the project team members if they don't follow orders. It is also called penalty power. Collaborate— problem solving. This is the preferred method for conflict resolution that confronts the problems heads-on. Multiple viewpoints and perspectives contribute to the solution. Collective bargaining agreement constraints. Contracts and agreements with unions or other employee groups may serve as constraints on the project. Commercial databases. A cost estimating approach that uses a database, typically software-driven, to create a cost estimate for the project. Communication barrier: anything that prohibits communication from occurring. Communication channels: the formula to calculate the number of communication channels on your project is n times brackets n minus 1 divided by 2, where n represents the number of stakeholders. Compromising: a negotiating approach that requires that both parties give up something. Configuration identification: this includes the labeling of the components, how changes are made to the product, and the accountability of the changes. Configuration management system: this is a system that defines how stakeholders are allowed to submit change requests, the conditions for approving a change request, and how approved change requests are validated in the project scope. Configuration management also documents the characteristics and functions of the project's product and any changes of the product's characteristics. Configuration status accounting. This is the organization of the product materials, details, and prior product documentation. Configuration verification and auditing. The scope verification and auditing of the project in order to ensure that they are in alignment with the project plan. Context diagram. This is a diagram that shows the relationship between elements of the environment. For example, a context diagram would illustrate the network, servers, workstations, and people that interact with the elements of the environment. Contingency reserve. The contingency allowing to account for overruns in cost. Contingency reserves are used at the project manager's discretion and with the management's approval to counteract cost overruns for scheduled activities and risk events. This is basically the money that you set aside for risks that become issues. A contract is a formal agreement between the buyer and the seller. A control account is a certain point at the work breakdown structure that you use for reporting. For example, if you report at the project level, that might be too broad for the stakeholders, and if you report at the individual work package level, might be too granular for your project stakeholders. So control account is different branches within your work breakdown structure that's relevant and that makes sense for your project, and you use this mostly for accounting or reporting purposes. A control chart is a quality control chart that maps the performance of the project work over time. Control quality, an inspection-driven process that measures work results to confirm that the project is meeting the relevant quality standards. A control threshold is a predetermined range of acceptable variances, such as plus/minus 10% off schedule is okay. Should the variance exceed the threshold, the project control processes and correction actions will be enacted. Cost aggregation. Costs are parallel to each work breakdown structure work package. The costs of each work package are aggregated to their corresponding control accounts. Each control account is then aggregated to sum up the project cost. Cost baseline— so this is how much you estimate the total budget of the work that you have to do on your project will cost. This is the cumulative cost to complete your project. This is the aggregated cost of all the work packages within your work breakdown structure. Cost management plan is a plan that details how the project cost will be planned for, estimated, budgeted, and then monitored and controlled. Cost of conformance to quality— this is the cost or the money spent in order to attain an expected level of quality. It is also called the cost of quality. Cost of non-conformance to quality— this is the cost associated with not satisfying the quality expectations. It includes the cost of rework, defect repairs, loss of customers and loss of sales. It is also called the cost of poor quality. The cost performance index, or CPI, a formula that measures the project based on its financial performance. The formula for CPI is EV divided by AC. EV stands for earned value and AC stands for actual cost. We have a separate video on all of the earned value management formulas if you want to take a look at that. It is beyond the scope of this Cost plus award fee contract. This is a contract type that pays the vendor all costs for the project but also includes a buyer-determined award fee for the project work. Cost plus fixed fee contract. This is a contract type that requires the buyer to pay for the cost of the goods and services procured plus a fixed fee for the contracted work. The buyer assumes the risk of the cost overrun. Cost plus incentive fee contract. This is a contract type that requires the buyer to pay a cost for the procured work plus an incentive fee or a bonus for the work if terms and conditions are met. Cost plus percentage of cost. A contract type that requires the buyer to pay for the cost of the goods and services procured plus a percentage of the cost. The buyer assumes all of the risk of the cost overrun. Cost variance, or CV. This is the difference between the earned value amount and the cumulative actual cost of the project. The formula for CV is EV, earned value, minus AC, actual cost. Cost-benefit analysis. This is a process to study the trade-offs between cost and the benefits realized from those costs. Crashing. A schedule compression approach that adds more resources to activities on the critical path to complete the project earlier. When crashing, crashing a project, costs are added because the associated labor and sometimes resources such as faster equipment cause costs to increase. The critical path is the path in the project network diagram that cannot be delayed without affecting the project completion date. There could be more than one critical path on the project. If any activity on the critical path is delayed, the entire project will be delayed. Activities on the critical path have zero float. Cultural norms: the culture and the styles that exist within the organization. Cultural norms such as work ethics, hours, view on authority, and shared values can affect how the project is managed. Decision tree: decision tree is a method to determine which of the 2 or more decisions is the best one. The model examines the cost and benefit of each decision's outcome and weighs the probability of success of each of the decisions. Decoder, a device that decodes the message as it is being received. Definitive estimate. This is one of the most accurate estimate types. It's used late in the planning processes and it's usually associated with bottom-up estimation. You need the WBS in order to create the definitive estimate. The range of the variance for the estimate can be -5% to +10%. A deliverable is a product, service, or result created by the project. Projects can have multiple deliverables. The Delphi technique— this is when you will send out surveys to all of your stakeholders and they will respond back anonymously, so no one knows what the other person is saying, and you might have to do several rounds of this in order to achieve consensus on an issue. The benefit of using the Delphi technique is that your stakeholders do not have to fear backlash or offending other participants They can give you their real responses. The con of using this technique is that it could take a very long time. Design of Experiments is an approach that relies on statistical scenarios to determine what variables within a project will achieve the best outcome. Discretionary dependencies— dependencies that determine the preferred order of activities. The project manager should use relationships at their discretion and should document the logic behind the decision. Discretionary dependencies enable activities to happen in a preferred order because of best practices, conditions unique to the project work, or external events. For example, if your project was to paint a house, you could decide to paint the living room first, then the dining room, or the dining room first, then the living room. This is a discretionary dependency because this order does not have to be one way or the other. Earned value, or EV, is the physical work completed to date and the authorized budget for that work. It is a percentage of the BAC, or budget at completion, that represents the actual work completed in the project. Earned value management, or EVM, we have a separate video just dedicated to this topic if you want to take a look. This is a process of measuring the performance of the project work against a what was planned to identify variances and to note opportunities to improve the project or just to check up on the overall health of the project. Essentially, you're using numbers, formulas, and calculations to see how well your project is performing. Encoder, a device that encodes the message being sent. Enterprise environmental factors or EEFs, the conditions that can affect how the project manager may manage the project. The enterprise environmental factors come from within the project such as policies, or they may be external to the organization such as law or regulations. So essentially, this is the environment in which you have to manage your project. It could be within the organization or external to the organization. You need to be aware of what they are because they could affect the success of your project. Expert power— this refers to the project manager's authority that comes from his experience with technology and his expertise in managing projects. Explicit knowledge. This is knowledge that can be quickly and easily expressed and communicated through conversation, documentation, figures, or numbers. Exploit. This is a risk response that takes advantage of the positive risk within a project. A positive risk is also known as an opportunity. External dependencies. Dependencies outside of the project's control. For example, the delivery of the equipment from a vendor, the decision from a committee, or a new law that's being enacted. Fast-tracking is a schedule compression methodology that changes the relationship of activities. With fast-tracking, the activities that would be normally done in sequence are allowed to be done in parallel in order to speed up the schedule. Finish-to-finish or FF relationship This is an activity relationship type that requires the current activity to be finished before its successor can finish. Finish-to-start, or FS. This is an activity relationship type that requires the current activity to be finished before its successor can start. This is the most common type of activity relationship. Fixed-price contracts. This is an agreement that defines the total price of the product the seller is to provide. It is also called a firm fixed price or lump sum. Fixed price plus incentive fee contracts: a fixed price contract with opportunities for bonuses for meeting goals on cost, schedule, or other objectives. These contracts usually have a price ceiling for cost and associated bonuses. Fixed price with economic price adjustment contracts: so this type of contract allows for prices to increase based on economic reasons such as inflation or cost of raw materials. It's usually used for longer-term fixed-price contracts where the cost of the raw materials cannot be predicted today. For example, the cost of oil. A focus group is where you gather a group of your stakeholders together and you have a trained moderator to lead the discussions, and your goal is to elicit requirements or gather all the requirements from your stakeholders in a controlled setting. A force majeure is an act of God that may have negative impacts on your project. This can include fires, hurricanes, tornadoes, or earthquakes. Free float is the amount of time a single activity can be delayed without affecting the early start of its immediate following successor activities. Funding limit reconciliation, an organization's approach to managing cash flow against the project deliverables based on the schedule milestone accomplishments or data constraints. Hard logic. This is a logic that can describe activities that must happen in a particular order. For example, the dirt must be excavated before the foundation can be built. So this describes the order of the activities that must happen in a particular order. Herzberg's theory of motivation. This theory is a theory of motivating agents and hygiene agents that affects a person's willingness to excel in his career. Hybrid structure: an organization that creates a blend of functional, matrix, and project-oriented structures. Incremental lifecycle: the project deliverable is created through a series of functional increments. Each increment adds value to the project deliverables. This is used in Agile. Influence diagram: This is a diagram that charts out the decision problem. It identifies all of the elements, variables, decisions, and objectives, and also how each factor may influence another. Influence-Impact Grid. This is a grid in which stakeholders are mapped based on their influence over the project in relation to their influence over the project execution. Interactive Communication. A type of communication in which information is happening among stakeholders. This includes meetings, video conferencing, phone calls, etc. So it is where 2 people are talking to each other and they're getting feedback from each other right away. Internal dependencies: internal relationships that can affect the project or the organization. For example, the project team must create the software as part of the project's deliverables before the software can be tested for quality control. Interpersonal skills. This is the ability to interact, lead, motivate, and manage people. Iterative lifecycle. This is where the project work is divided into chunks of time called iterations. The iteration of the project is the same length throughout the entire project. It's usually between 2 to 4 weeks long. After you finish an iteration, you'll have a chance to reflect upon the iteration and apply the lessons learned to future iterations. Iteration cycles have predefined types of work to create the project's requirements, such as features defined, designed, developed, and tested. So this is used in Agile project management. All right, so we're done with part 1 of our terms and definitions and glossary from the PMBOK 6th edition. So if you like this, be sure to check out our free 1.5-hour course on how you can obtain your PMP or CAPM certification in the next 6 weeks. To sign up, simply go to the URL on this slide, which is www.examspm.com/free. I can't wait to see you in our live classes, and thank you so much for joining us today, and I'll see you in part