Master Project Integration Management for the CAPM Exam

1. Section Overview

We're now ready to go into a section about project integration management. This is chapter four in the Pinball Manual. This is one of the biggest knowledge areas. In fact, it's the only knowledge area that has a process in every process group and involves initiating, planning, executing, monitoring, controlling, and closing. So, project integration management is a pretty significant part of your exam. What is project integration management? It's basically that the actions that you take in one part of your project will affect all other parts of your project. In this section we're going to talk about, first off, choosing a project. Even before a project begins,we think about opportunities. Why are we doing this project? Is the problem solved as a customer requested? Is it an opportunity? Is it to make more money or to reduce costs and drive revenue? Reduce costs is a fairly common reason for undertaking a project. We're also going to look at some of our first formulas. Here is a little bit of math on the future value of money that predicts what the money we have today will be worth in the future. So this helps us to make a decision as to whether we should invest in a project, so that's present value, and then we also look at future value. So we have present value, which is what some amount in the future is worth today. And then we have future value; what some amount today will be worth in the future. So that little formula there, they're very similar. It's just, are you reducing or are you multiplying? So we'll take a look at that. In this section, you'll also get an introduction to a couple of other time value of money formulas. You don't have to know these formulas, but you should be familiar with concepts like present value and internal rate of return. In this section we're going to talk about developing the project charter, one of the first things you do in a project. This will help us to authorise the project, get us going, and get the project manager the resources that she needs to launch the project and be in charge of the project. We'll talk about the business case and then that will set us up once we have the charter to go and develop the project management plan, where the plan is our intention of what we want to do. Once we have a plan, then we move into executing to direct and manage the work. And so some actions and execution that are taking actions to get things done in tandem with execution. We do monitoring and controlling. So we will monitor and control the project work. This is also where a really important exam topic will be covered, and that is to perform integrated change control. So we're going to talk about what is integrated changecontrol and how we go about doing it. A theme that you'll see throughout this course is to manage project change. So we're going to talk about scope creep and gold plating. Something to look forward to And then our last process in this section is to closeout the project or phase, so you can see it's. There is a lot of information here. I'm not going to Terry, in our introduction,you've got an idea of what's coming. Let's get ready and hop in and learn all about project integration management. Keep going. You're doing great.

2. Master Project Integration Management

All right, we're now ready to move into Chapter Four in the Pinbach Guide, Fifth Edition,which is to master Project Integration Management. Project integration management. Management is a way of describing that what we do in one area of our project has an indirect effect on the other areas of our project. So if I do a really poor job of planning for risk, that's going to affect my scope,my cost, my time, and quality could affect HR communications. It could even affect procurement. So what I do in one area of the project affects the other areas of the project. Now, in this knowledge area, we're going to actually look at what happens before the project all the way to the end of the project. This is a special knowledge area because it's really about coordinating the activities of all of the other knowledge areas. This is the only knowledge area where we will see a process in each of the process groups. So this is the only knowledge area where we'll see activities in initiating, planning,executing, monitoring, controlling, and closing. The other knowledge areas don't necessarily do that. So this one is special. It's a really big chunk of the pinballand. It covers a lot of ground. So hang in there. Knock this one out. Maybe a good one to look at more than once in your study efforts. Let's hop in and talk about what happens even before a project gets initiated,and that is choosing a project. So why do projects get initiated? Why does your company do a project? Well, probably it's for one of these reasons that you're going to earn an income. So your company does projects for other people, and that's how they make a profit. Or you've recognised a problem; something's taking too long, is defective, or not working properly. So there's a problem that you have to solve. Reducing costs is a problem that you're solving. So that's one reason why you might do a project. Other companies will do a project because of a customer's request. That means their whole business model is Hey, do projects for other people. I want to build a house for you, design a website for you, create a piece of software for you. So a customer requests that they hire our company to do these types of projects. So it's a customer request. Now, whenever we go to start a project,we often have to do some benefits measurement. A benefit measurement means that we are comparing the benefits of one project against another. So here's the benefits measurement. I'm going to compare the benefits of a project. So what is the value? What's the profit margin? What's the schedule? What's the experience level? What benefits will projects A, B,and C bring to our company? So this is often something that you don't necessarily do as a project manager. It might be done by a project steering committee or a portfolio selection committee. You might be involved and contribute, or a business analyst might be involved. But typically, the decision to launch a project is not with a project manager. So we talk about benefit measurement. Let's look at another one. cost-benefit analysis This is where we take a project and examine the cost of the project. So it has four costs to three benefits, or maybe it has three costs to five benefits, but we always want the benefits to be more. So a cost-benefit ratio of three to five would be good. Three costs for five advantages. We have to pay attention to this CBR cost-benefits ratio because sometimes you might encounter a question where benefits are the cost is the ratio.You always want the benefits to be more than the cost. So pay attention to that idea of a cost-benefit ratio. Typically, that's what it is. It's called a CBR. But it's possible to reverse those and have a benefits-to-cost ratio. Our next one here that's pretty popular is a scoring model. A scoring model is where we have several projects listed and then we examine or score the cost,the schedule, the benefits, the references, the resources, any attribute that you want to score. And then you can compare these against each other and find the one that has the best average score of these different items that you have laid out. Now, it's also possible to do a weighted scoring model. So a weighted scoring model means that one of these factors that you're measuring gets more points than the other factors. So, on a scale of 100, cost may be worth 80 points, the schedule ten points, and benefits five points. So you're putting more value as far as your decision goes on cost in that scenario. Or they could all be equal. So it could just be a scoring model. But a weighted scoring model means that you're putting more weight or preference on one characteristic of a potential project. A murder board sounds just awful. And that's because it is. A murder board is where you go before a group of executives and you have to pitch your proposal for a project. And then the executives sit back and they ponder it, and they ask you all sorts of terrible questions about why your project is going to fail and ruin the company. And so it's pretty awful. So you have to go in and be prepared to basically debate with this murder board about why your project should get initiated and sometimes why your project should continue. But a murder board generally happens before project selection and it's just part of the approach of looking at the pros and cons of investing in your project. It's not a pleasant process. So when boards are murdered, they kill your project before it even starts. A payback period is a way to identify when the organisation will recoup the investment in your project. So if we have to invest $300,000 in your project, and your project is going to take six months to be completed, How long after month six will it take to recoup that cost? So we go from being in the redneck to being in the black positive so that we have a return on investment. Now we have a profit and that's the payback period. Sometimes that's called management horizon, that point in the distance of when we break even. So payback period, break even period, and management horizon are all the same thing. Another benefit comparison method that you have to know for your exam is the future value of money. Future value of money is where we take current value, a present amount of money, and predict how much that's worth in the future. So this is important to know for project selection because if you come to me, I've got to make the decision and you say, "Joe, I want you to invest $500,000 in my project and it's going to take three years to get done." But when we get done, it's going to be worth $580,000 in just three years. So then I would say, alright, I could take $500,000 for three years and put that into the stock market or into savings or CDs or bonds and would earn more in your project or in a safer investment, so that's the future value of money. So the formula for that is the future value. That point in the distance equals the present value,$500,000 times one plus I, where I is the interest that I would earn and the safer investment to the power of N, where N is the number of time periods for your project. And we said three years. So here's what that would look like,or one of these would look like. So in this instance, I need$100,000 to invest in your project. Okay? So future value equals 1000 times one plus I,where in this case i, the interest rate of return is 6% and in five years, this project is going to last for five years. So here's what the formula looks like. five times the number five So, 100,000 times 1.33, it would be $133,822.60. What does that mean for a project manager or a selection? The project that you want me to invest in has to be worth more than $133,822.60. If your project is worth less than that, it's not a wise investment for me to make because there's a lot of risk associated with your project. So if your project were to beat that amount, you say, hey, $100,000 in five years is going to be worth $280,000. That's fantastic. Let's do it. So the future value of money is a way of seeing how much my investment could be worth in a safer environment versus with your project. And your project has to beat the rate of return that I could get in an investment, and that's the future value of money. Well, if we can do a future valuation of money, we can do the inverse. We can say, what's the present value of money? So if someone promises, "Hey, my project will be worth $600,000 in three years, so I need to consider what $600,000 is worth today." So we reduced that. So it's a very similar formula, but instead of multiplying, we're reducing it. We're dividing, bringing it closer. And this tells me again, how much should I invest in your project? So, present value, that is what we start with. For instance, what we're trying to calculate is a future value with this. For instance, what we start with I is the interest rate,and N is the number of time periods. So let's look at a sample. Here we have the future value, which in this case is 160,000. The interest rate we're saying is 6%. Now, they always have to tell you the interest rate might be 5%, might be 3%. 6% is what I'm going with. I'm pretty optimistic. So five years is because this project is going to last for five years. So it would be 160,000 divided by 1.33 and some change there. And that tells us it's $119,561. So what this tells me is that your project had better not cost more than about $120,000. If it costs more than that, it's not a great investment for me because it's basically a break even if it's about 120K. So there better be some pretty significant rewards for doing that project. You'll probably have one question about this business on your exam. In terms of resources You'll see, I've got an Excel spreadsheet that we'll use in another chapter as well. And I have these formulas built into Excel. So if you want to do some practice, you can do this by hand and then plug the values into the Excel spreadsheet, and it'll calculate that for you. So it's up in the resources if you want to check that out. Net present value is where you have a project that's going to have multiple returns over the next year. So, for example, let's say we're going to do an upgrade at 100 different facilities. As soon as we upgrade that first facility, it can begin to return on investment in a second facility, and so on. I don't have to wait until all 100 facilities are upgraded to realise a return on my investment. So that's net present value. It really helps find the true value of a project. And it also considers what's your initial out of pocket expense, what's your initial cash outlay. So net present value is how you do it. You calculate the return for each time period. So let's say in year one, you've got 600 sites that you have to upgrade. In the first year, you visit 200 sites. In Year two, you do 200, and in year three, you do 200. Okay, Each year you're going to have a return on investment because you have upgraded and can start using those deliverables. So you calculate each time period's present value. Then you'll sum up that present value for each of those years three, two, and one, and you'll sum that up minus your out of pocket expense, your initial investment. And then that tells you your net present value. Basically, anything better than zero is good. So a dollar is good, but it just shows you that you are earning something back each year. You don't have to wait until the very end, but it also takes into account the money you have to spend to finance the project over three years. Another one you want to be familiar with is Oh, here you go. I got ahead of myself. Here's an example of NPV. All right, so this one has five years, and it's the cash flow, or the return from each one of those years. So you can see the cash flow for year one is $15,000, all the way to year five is $18,000. And then it calculates the present value in the last column for each year. I sum that up minus my original investment of $78,000. So my NPV in this example was almost $6,000. So that's pretty good. That's pretty good. Once we get beyond year five, it's just going to keep increasing and increasing because we're going to have a return on investment. All right, you won't have to do that on your exam. It's just that I've had some questions about what's on TV. Show me one. Well, there you go. I hope you can sleep well tonight now that you've seen that, or some of you might have nightmares now that you've seen it on your exam. You'll probably have one or two questions about this business. So I would be familiar with these formulas. If you have the formulas in front of you,you're going to be able to answer these questions. The internal rate of return is where we take the present value, which equals our cash inflow. Basically, an internal rate of return with a higher value is good. It means you're getting your money back faster. Your investment comes back to you faster. An internal rate of return with a lower value is probably poor because it takes longer to recoup your investment. All right, good job. I know a lot of the math in this particular lecture. If you want to go back and watch it again,you can play with that Excel spreadsheet if you want,or go ahead and move on to the next lecture. We're going to talk a little bit more about launching a new project and what your role and responsibilities are as a project manager. So I'll see you coming up.

3. Launch a New Project

We're going to talk about launching a new project. So we're going to really take a look at the documents that you need to gather and create to launch a new project. You can probably guess that the primary document we're talking about here is the project charter. So our first process, our entire project, we examine many processes, but our very first process is to develop the project charter. Now consider Chapter Three. We talked about all of the different processes. Well, this is one of our two initiation processes. So really pay attention here. To develop the charter, you really want to hone in on this activity and know how to develop the charter. It's half of the originating processes. All right, so to develop the project charter, it's authorised by someone who is external to the project. Now, what that means is, if you and I are at the same level in the company, I can't write an application to use your resources in Bob's project. I would need someone who has more authority, someone that's over me and you in our.org chart. And then that individual could say, "Yes, we're going to use your resources on Bob's project." So it has to be someone that has the appropriate power and that's external to the project. The project manager can't write and sign their own charter. It would be nice if it worked that way,but we really need someone outside of the project. Now, the portfolio steering committee, who may be the individuals that sign and write the charter for you, talked about portfolio management and programme management. Well, if you're operating with an organisation that has a portfolio, this would be a group of executives that would decide what goes into the portfolio and what gets initiated in the charter. So that's why they're considered here as part of developing the project charter because they may be the ones that sign the charter and actually launch the project for you, the PM. Every process that we look at now has EDOs. Remember, with EDOs, that we have inputs,tools, techniques, and outputs. So to develop the charter, we have EDOs,we have a project statement of work, business case agreements, like contractual agreements, and then we have EEF and OPA. And remember that enterprise, environmental factors, and organisational process assets are all assets. So these are the inputs that we need to develop the project charter. And every process is going to have its own inputs, tools, techniques, and outputs. One thing to get really clear on right now: do I have to use all of these inputs in order to develop the project charter? The answer is no. You've used the most appropriate inputs. So if I don't have a contract or an agreement with a vendor, I don't need an agreement as one of my inputs. But these are the generally recognised items that you'll need as inputs or for any of our processes as we go through the course. You'll see this. In order to do that process now, with tools and techniques here, I need expert judgment, someone's smarter than me, someone that's closer to the work that I do, that I'm using their brainpower, their competency, and their skill set to better do my job. And we're going to see expert judgement a lot. So we'll look at that in more detail in a moment. And then, through facilitation techniques, we're going to bring people together. We're going to do some brainstorming,some negotiating, just some meeting management. And then our output here is to create the project charter. So that's our whole goal for this process. Now, a new term that you've never heard of is the Project Statement of Work. The Project Statement of Work is a document that gives a description of the business need. Why are we doing this? The product scope description: what are we creating? How do we know when we're done? What does the end result of this look like? And in the strategic plan, how does our project fit and support the company or organisation's strategy, our vision and tactics? And remember, that was functional management. So that's what goes into the project statement of work. You don't always have to have one, but if you do, this is what that document would address. the business case. Remember, I said it's all financial. We've seen the business case a couple of times. This will probably be one of the last times that we see it through the course. the business case. This is frequently written by a business analyst and determines the value of the project or the financials. It's justifying the investment. Why do we want to spend the time, money, and resources in order to create this thing? Now, the business case is created as a result of the market demand. So should that launch your project? Was there an organisational need, a customer request,an advancement in technology, a legal requirement for your project, ecological impacts, or a social need? So the business case looks at the financials of the project, but it also considers why this project might be initiated. So typically, this, well, not typically,but always, precedes the charter. the business case. I'm going to hop back a couple of slides here, river there's.Our input was the business case. So we're considering the business case in order to create the charter in order to initiate the project. All right, I'm going to move forward with creating the project charter. We said expert judgement and facilitation techniques were our tools and techniques here. Internal organisation resources, expert judgement consultants Your stakeholders sneeze within your company. Industry groups could come in. You could hire a consultant from an industry group in your application area or in your discipline. Or the PMO could help write the charter and serve as expert judgment. Now, facilitation techniques I mentioned brainstorming, some conflict resolution, and negotiating where we have competingobjectives, but we have to nail it down before the project can realistically begin. Like, some people want this room gray, and other people want it yellow. So those are competing objectives. You can't have it both ways. And then meeting management, where we need to be able to keep meetings moving forward, do an agenda,keep people on task and have a time limit. And we'll see meeting management come up from time to time throughout the course. So what goes into the charter? We're either writing the charter or using a template for the charter. These are some pretty typical characteristics of your project charter. In any project, we begin by understanding the requirements for satisfaction. How do I know I'm done and what I've created is good and acceptable? So, requirements for satisfaction are very important. approval requirements. Who will approve the project deliverables? Who will approve the financials or the schedule or other elements of my project? I need to know that upfront. Who's the project manager and what level is their authority? So how much authority do you have as the PM? Who's the project sponsor? We need to have the right project sponsor. That person is named in the charter and they typically sign the charter. And then what's the high-level purpose? Why are we doing this project? So we can borrow that from the business case. The purpose of the project: why are we doing this project? What's our milestone schedule? So at the end of our phases, we have a milestone. So you may not know an exact date for when you're going to finish these phases, but you have a general idea. So what's the milestone schedule? What about stakeholder influence? Who are your key stakeholders (a prioritisation of stakeholders)? And then, are there any risks in the project? Any obvious risks? Now we'll do risk identification inplanning, and so that's coming up. But right now we're just talking about some very obvious risks. Like in construction, you always have a risk that life or someone could get injured. So there could be some risk there, or the weather is always a risk. So what are some real obvious risks you've identified in this project just at the onset? So that is all the information that goes into our charter. Three more things. What are the functional organizations? "Functional organizations" is a way to describe different lines of business or different departments. So how will your project interact with those functional organizations? Are they going to disrupt work? Do you need to make sure they're aware of the project that's coming? So what are the functional organizations? Those are stakeholders, and then you need to communicate with those people and make sure they're involved in this project as early as possible. What's the summary budget for the project? So how much money do you have? And then, as we get deeper into planning,we can have a more precise estimate. So the summary budget is usually pretty high at this point. And then, if necessary, you have a contract. If you're dealing with a vendor like, I'm going to build a house for you, you and I would have a contract. All right. That brings us to the end of this discussion about developing the project charter. One of our first processes. I'll see you in the next lecture. Bye.

4. Plan the Project

Now we're going to talk about the planning process. Group planning is an iterative activity. It happens throughout the project. And I always say that projects fail at the beginning, not the end. And it's typically some poor planning that sets up the project for failure. So we don't want that to happen to us. Let's take a look at the edo for planning. So, our inputs, in order to create the project management plan, this is a process, we need our project charter. Remember that whoever authorises the project, thePM maps out the business case. How does this fit into the strategy? So our project charter is pretty important here. The next one gets a lot of people, and that's the output from other processes. Well, if we're just starting to plan, how do I have outputs from other processes? Planning is iterative. So on day one, when we start planning our project,we may not have any outputs from other processes, but as we begin to do quality planning or quality control or risk identification, that then triggers more planning. So the plan is not a museum piece. This is something we'll come back to and edit and update as we move through the project. So the plan is a fluid document and this is an iterative activity. So outputs from other processes mean that as we do other work, we can come back and do more planning. And this has happened not just in the planning process, but execution can cause us to come back to do more planning. Monitoring and controlling can cause us to do more planning. And we'll see this throughout the course. So just watch for that. You've got it, no worries. And then, of course, two other inputs: enterprise environmental factors, any rules or procedures that you have to follow, and organisational process assets. So, I have templates and forms, project files from previous projects that I can adapt. That's OPA's two tools and techniques. Here we have expert judgement and facilitation techniques. We've seen that already, right? With creating the charter, expert judgment, ourSneeze, our stakeholders, industry groups, things like that, they can serve as experts. And then facilitation techniques, brainstorming, conflict resolution, meeting management, negotiating with people,those are tools and techniques. So we'll see that a few times throughout our course. Now, as for the output of developing the project management plan, here's a big surprise. It's the project management plan. All right, so why do we need a plan? What's the purpose of this plan? Well, it communicates our intention. It communicates: why are we doing this project and how will we achieve the results that the project is trying to achieve for the customer? So it communicates our intention. It serves as a road map or guide for the project manager. It's how we get from A all the way to Z. So how do we get from here to there? It gives us some structure and some framework for our project. What are our expectations What are we going to do when we do these different processes? This provides critical documentation. A lot of PMS don't like documentation. And I know that writing is hard and it's no fun, but it's so important to put things in writing in your project. There's really something magical that happens when you put something in writing. One, it makes it official. Two, people take you seriously because you've taken the time to put your thoughts and intent into writing. And three, it ensures that everyone can have the same message that we're all in agreement with what we are about to do. And then the last thing here is that it gives baselines. Now, there are three baselines for getting this one of those instances. We've got to jump ahead to explain what's happening here. There are three baselines that we'll talk about in detail, but for now we have a scope baseline,a cost baseline, and a scheduled baseline. And we're going to look at all of those in detail,I promise, when we get into chapter five in the pinbox on scope and then time and then cost. So we'll see all of those baselines coming up a little bit more about developing a project management plan. I just mentioned the three baselines; time, cost, and scope. Well, that is the same thing. Remember the triple constraints of project management, that those three things have to be in balance and they create an iron triangle, meaning that if one side is out of balance with the others, your project is not going to be successful. So we have to balance these constraints, time, cost, and scope. So that's a theme that we'll see a lot in any project when it comes to baselines and constraints. We're always bound by time, cost, and scope. All right, so with that in mind, let's talk about who helps develop and plan the project. What we typically have is just four categories of participants. The project manager is going to provide leadership. They're going to organise the meeting direction and expert judgment. Then we have our project team members. They are the individuals that are closest to the project work. So they are to contribute to what activities need to be done, risk, time, things like that. They're very close to the work. They are also a form of expert judgement because they understand the work. They are experts in what we are trying to create. Your customers are now involved because they're setting the vision, the objectives, and the quality requirements that your project must achieve in order to be successful. And they have a big influence on time and money. And then management may be involved, especially in amatrix or a functional structure, because they help set the budget, identify and plan for resources. Resources aren't just people. It could be materials, equipment, facilities, or project management methodologies that are accepted in your organization. Quality management could influence those requirements for your project. And then they approve the project plan. So those are the four big groups of people that are involved with planning. So what goes into a typical project management plan? Well, I'm glad you asked. A whole bunch of stuff. So, a typical project management plan Now these are in alphabetical order because you can treat these in just about any order that's appropriate. So let me help you out here. The ten knowledge areas are project integration, management, scope,time, cost, quality, HR, communications risk, procurement, stakeholdermanagement, all of those have a plan and that's what we're seeing here. Now there are a few extra documents,but generally these are the plans that correlate to our ten knowledge areas. So let's go through these. We have a Change Management Plan and we'll see that with scope Time, Cost, and Procurement communications management plan, and configuration management plan that addresses the product's scope, features, and functions We've seen the cost baseline or talked about it. cost management plan. HR management plan. process improvement plan. This is quality. So this is chapter eight in the Pinbock procurement management plan, scope baseline, chapter five onScope quality management plan, so that's chapter eight. That goes along with process improvement, requirements management plan, that's part of scope. So we'll see that coming up in chapter five. Our risk management plan That's chapter eleven in the Pinbach. And then we have our schedule and schedule management plan. And we'll have that chapter coming up here in chapter six, our scope management plan from chapter five, and then our stakeholder management plan. So what do you need to know for your exam? You want to know the characteristics of each of these plans. So as we move through the course, we're going to see all of these items and then we're going to talk about what is in these individual plans. The project management plan is not just one plan. As you can see, it is a collection of subsidiary plans. That's what all of these items are. Now in addition to all of these different plans, which you need to know for your exam, you also need to know what they do, what you are planning, and we're going to see it throughout the course. So don't be overwhelmed. Now we're just in chapter four and we have a long way to go. So this is still a little high level. However, all of these plans communicate your intent for how you will carry out processes in that knowledge area. So, for example, the risk management plan, what does that do? It defines how you will do risk identification and how you will do risk analysis. So, how will you do risk response planning, both qualitative and quantitative, and then how will you monitor and control risk events? So it doesn't necessarily identify risk; it communicates how you will identify risk. So as we move through the course, we're going to look at all of these plans in detail. But for now, just know that all of my knowledge areas have at least one plan. Quality gets two things: quality management and process improvement. Okay, now with this next slide, you're going to feel overwhelmed, but don't let it bother you. These are all of the possible pieces of paper, all of the possible documents that you could have in your project plan. So I'm not going to read these to you because we're going to see them throughout the course. But these are listed here. They're listed in your course workbook. If you haven't printed it out already,it's a nice, neat list. But these are all of the possible documents that you could have in your plan. So it's a good idea to know all of these documents, add them to your flashcards, understand what they do, and pay attention to them as we move throughout the course. We're going to see all of these in this course,but they are all part of the project management plan. I know it's a lot of information. There's a lot of stuff. But I also want you to realise that, one, the PMP isn't easy. If it were easy, everyone would do it. Two, you will know these items based on your experience and then based on your study. Don't get discouraged that you can do this. I know it's a lot of information, but we're also very early in our course. We've had some preliminary chapters, and now we're just starting to really rev up and get into the details that you have to know to pass your exam. So you can do this. Keep moving forward. I'll see you in the next lecture.

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