Tools and Techniques
Used for Quality Management
80% of complaints will be caused by 20% of defects
The Pareto diagram is useful for determining the priorities between possible underlying causes.
Helps in finding most critical issues
Give clear picture of how data breaks down
It helps you to compare characteristic of data and make more informed decisions
Also known as vertical bar chart
Used for group decision making
The Delphi technique is a quick way to reach a consensus for any decision making.
Better utilizes the collective wisdom of the group by maintaining anonymity and removing the fear of contradiction by seniors.
The control or run chart is useful for determining the measured output over the manufacturing process for acceptable and failed products.
Out of control - 7 data points on one side of the mean that are outside of upper or lower control limits
Zero-based budgeting is a repeatable process that organizations use to rigorously review every dollar in the annual budget
Each item of budget has to be justified afresh
The flowchart is a diagram that displays the connectivity between pieces of a system
It shows trends in your project in a line chart
Cause and Effect / Ishikawa / Fish bone Diagrams
Used for RCA
SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face.
The balanced scorecard was developed by Kaplan and Norton to be able to serve as such a strategic performance measurement tool. It tracks the execution of activities of staff members and the impact arising from these actions.
Six thinking hats
Earned Value Management
CV = EV - AC
SV = EV - PV
CPI = EV/AC
CPI > 1: Underbudget
CPI < 1: Overbudget
SPI = EV / PV
SPI > 1: Ahead of schedule
SPI < 1: Behind schedule
EAC = BAC / CPI
BAC = Total budget for Program
EAC = AC + (BAC - EV) / CPI
Costs up to now plus what's left to earn divided by CPI
VAC = BAC - EAC
VAC > 0: Underbudget
VAC < 0: Overbudget
TCPI = (BAC - EV) / (EAC - AC)
This is the CPI that will get us to complete on budget
PERT estimate = (O + 4M +P) / 6
Standard Deviation, σ = (P - O) / 6
SD = Square root of Variance
Variance = Square of the distance from the mean / (n-1)
Normal distribution with 2 x σ = 68.27%, 4 x σ = 95.45% and 6 x σ = 99.73%
Watch the project with highest Standard Deviation to PERT Estimate
Earned value reporting
Fixed formula progress reporting
Fast Tracking - activities are performed in parallel
Crashing - resources are added
Defined by the Project Team.
Legally or contractually required. Inherent in the nature of the work.
Defined between two project activities.
Risk Response Strategies
Assign better quality resource to reduce time to complete
Facilitate cause of the opportunity targeting its trigger
Increase the size of the opportunity
Types or Risks
Risk left after responses to original risk were implemented
Risk arising from response to original risk
Tools and Tecnhniques
Monte Carlo Simulation
Practical tool used in determining contingency
Used with Expected Monetary Value
Use probability of events time impact to arrive to EMV
Time and Material
Buyer pays at a certain rate
Seller doesn't have to worry about scope - buyer is in control
Used for small assignments or to get started or staff augmentation
Buyer pays a fixed fee
Cost risk lies with the seller
Used when the scope is well known and stable
Cost risk lies with the buyer
Used when the scope and duration are certain
Buyer pays all costs plus a profit
Total Quality Management
Assure that an awareness of quality is embedded in all phases of the project from conception to completion
Involves being proactive, utilizing accountability and leadership, and continuously improving as a company
Embraces management ownership for quality
Zero defects involves establishing what the customer wants and providing it the first time without waste or having to repeat work
Implement consistent and incremental improvement
Request for Quote
The RFQ is a lot like the Tender, however typically smaller in size and scope. They’re often more geared towards clients who are seeking pricing information for a defined scope of work or supply of materials or equipment.
Request for Proposal
A request for proposal (RFP) is a document that an organization posts to elicit bids from potential vendors for a desired IT solution. The RFP specifies what the customer is looking for and establishes evaluation criteria for assessing proposals.
These are typically more openly written so as to push the definition of work down to the vendor. RFPs are used in situations where the client either can’t – or doesn’t want to – define the Scope of Work up front to an adequate level of detail.
Invitation to Tender
These are typically used in major construction projects where the Owner knows in detail what they want. The invitation to tender document contains detailed specifications for the performance of the work as well as detailed qualifications and requirements for the Bidders to meet.
IRR, Rate at which the value of NPV is zero.
=>PV of cash inflows = PV cash outflows
=> $110,000/(1+R) = $100,000
=> 1 + R = $110,000/$100,000
=> R = ($110,000/$100,000) – 1 = $10,000/$100,000 = 1/10
Or R in percentage terms = (1/10) * 100 = 10%
Operating Income $20
Less Depreciation 3
Profit Before Tax 17
Less Tax Charge 6.8
Income After Tax 10.2
Plus Depreciation 3
Cash Flow After Tax $13.2
Discounted Profitability Index (DPI) is a measure that relates returns to risk and hence a better method that NPV or IRR for comparing 2 projects financially.
The program architecture defines the structure of the program components by identifying the relationships among the components and the rules for their inclusion.
Program architecture establishes the correlation between the components and how they contribute to the benefits.
Project Selection Methods
Benefit measurement (comparative approach)
Scoring models, cost-benefit analysis, review board, economic models.
Constrained optimization (mathematical approach)
Linear programming, nonlinear programming, integer programming, dynamic programming, multi-objective programming.