resource planning - augusta state...

Resource Planning 687

Resource Planning The following exercises are presented here:

Exercise 6. 1: Deciding on Contract Types

Exercise 6.2: Creating a Procurement Management Plan

Exercise 6.3: Creating a Contract Statement of Work (SOW)

Exercise 6.4: Evaluating and Selecting the Vendor

Exercise 6.5: Creating a Responsibility Assignment Matrix (RAM )

Exercise 6.6: Creating a Staffing Management Plan

Exercise 6.7: Sequencing Work

Exercise 6.8: Estimating Activity Resources

Exercise 6.1: Deciding on Contract Types The objectives for Exercise 6.1 are as follows:

Introduce contract concepts .

Understand the most common contract types .

Practice recognizing contract types .

Practice applying contract types to different situations .

Background Often, project teams cannot do all the work that must be performed to accomplish the scope of the work. The project needs someone else to do the work because it might be more cost effective, the organization lacks a particular expertise, or another organization simply has the goods you need for the product. Whenever you have someone outside your organization (also known as a vendor, contractor, or supplier) provide goods or services on your projcct, you will need to create processes to manage them and create agreements to set expectations for the work they will provide. When the vendor is not a part of your own company, the agreements must be made via a contract. A contract provides an agreement that one party will supply goods or services and the other party will pay for them (in money or some other kind of trade of equal value) . The contract also provides for legal recou rse for disputes that might occur between the two parties. Most of us don't really think about contracts as anything but a lot of "legalese," but you can actually choose the type of contract for your project to help create the results you want. Your understanding of the different types might help you create the best contract for your project .

Contracts have a certain amount of risk associated with them for the contractor, the buyer of the services or goods. That is, based on whether the contract is fixed fee or cost reimbursable, either the contractor or the buyer might have more risk in recouping their costs or making a profit. These days, you'll find many creative variations of contracts, especially if you want to create

688 Workbook Exercises

incentives for your contractors, but most contractS arc based on tWO basic contract types: fixed price (also known as IlImp slim) and cos( reimburs::able. A fixed·priu contr::ac( involves one predetermined fee for (he goods or services you and the contractor agree on. You can set incemives or penalties in addition to that fixed price. Cost reimbursable is a floating-price contract, based on the costs the contractor incurs. Again, you can set up incentives or penalties in addition to the costs. You can also have a third kind of contract type c::a11cd time and materials, which is a hybrid of the fixed-price and cost-reimbursablecomract types. The fo11owingscctions describe each contract type.

Fixed Price or lump Sum

The fixed-price (a lso known as fixed-fee ) or lump-sum contract sets a fixed fee for the work the contractor provides. This means that if the fcc is $10,000, the contractor must get all the work done before their costs exceed that amount. If, for some reason, there a re delays and the cont ractor's costs exceed $10,000, the contr::actor loses money. If the contractor's costs are less than $ 10,000, then the contractor makes even more money than expected . Because of this, most of the risk for this type of cont r::ac t is on the contractor. If the contractor has done this kind of work freq uently or understands the scope of the work very well, this can be a very good contract for the contracror. If the scope of the work is not well defined or this is a research project, it wou ld be very risky for the contr::actor to bid using a fixed price. And for these projects, the seller should be wary o f such ::a bid . This is the most common kind of contract, but again, it is used usually for well-defined work .

For this kind of contract, you might add incentives to reward the contractor with earlier delivery or better performance than the agreed-to terms of the contract. You might wam the cont ractor to complete the project sooner but know it might not be possible under normal circumstances. So, you motivate the contractor wi th a bonus of 10 percem of the cont ract ro fi nish 10 days early. When you add an incentive, you ::are taking on more risk than a usual fixedprice contract, because you might have to pay more (which you are willing to risk) or the work might not be completed when you really hope it will (which you must accept if the contracror cannot make the earlier date). You could also add a penalty for the product or service being delivered late or with lower than agreed-ro quali ty as a contract clause.

Cost Reimbursable

A cost-reimbursable contract reimburses the contractor for all their costs (direct and indirect, wi th the indirect costs being figured as a percent::age of the direct costs) in producing the goods or services for you. Since you don't know how much the total costs will be, this provides a lot of risk for you and your project and less risk for the contractor, who can just keep working and charging you for all the work they do. YOlL might insert checkpoints along the way in the contract to audit what is going on-to make sure the project does not keep growing. Although this might seem to be a less than desirable contract type, it is quite necessary for projects with a lot of uncertainty. Good contractors require a cost-reimbursable contract when you require research and development on something never done before or when the scope of your project is poorly defined. You can also add incentives or ::awards to cost-reimbursable contracts. This often helps reduce the risk to the buyer because it motiva tes the contractor to get done as soon


as possible, depending on how the incentive or award is written in the contract. Some major cost-reimbursable contracts are cost plus fee, cost plus fixed fee, and cost plus incentive fee .

Time and Materials

The time and materials contract is a mixture of fixed fee and cost reimbursable. The price of the units is fixed, but the cost is not known when the contract is awarded . Some people use this type to get work started before the contract is awarded since finalizing a contract can take so long but the work must get started.

To create the right kind of contract, you and your organization must decide what you expect of your contractors and how much risk you need to take on . The following lists the contract types from highest risk to lowest risk to you:

Cost reimbursable (highest risk to you )

Cost reimbursable plus incentive or award

Time and materials

Fixed price plus incentive

Fixed price (lowest risk to you)

In this exercise, you will help the Creative Cartoon Company decide on the contract types for the products and services it needs to acquire for creating its first fu ll-length feature film .

Scenario Recently, the Creative Cartoon Company (CCC ) obtained enough capital to create its first feature-length animated film. Investors were impressed with its most recent short film, which won several major entertainment awards . CCC hired you several months ago to help it improve its project management processes. Now, because CCC must subcontract some of the work to outside organizations in order to complete the film, company executives have asked you to help them with their procurement management processes. For the new feature film, CCC has decided that they need outside services for sound production, an overseas ca rtoon firm to create background artwork, a marketing firm, and an animation software development firm to implement an idea that the producer has for advancing the animation industry to the next level. Marcus Manning is the producer of the film, tentatively titled Bouncing with Bob. He and the film's director, Sheila Wong, have high aspirations-they want the featurelength film to win an Oscar for best animated film, and they want their new animation technique to win a technical Oscar. They want you to help them create good vendor relationships so that the vendors can help them create the best possible film .

Testing Your Knowledge of Deciding on Contract Types Use your knowledge of contract types and their inherent risks, vendor relationships, and the Bouncing with Bob project to answer the questions that follow:

1. Marcu s wants to incent the marketing company to create a great marketing campaign for the film . \'Vhat kind of contract type might you recommend to Marcus, and why?


2. After some discussion, you and Marcus decide that the overseas contract for artwork shou ld be based on time and materials. Describe how CCC might implement the pricing for the time and materials contract.

3. What is the riskiest contract rype for CCC? What is the riskiest type of contract for the contractor? Why?

4. What contract type would yo u recommend to Marcus for the sound production company? Why?

5. What contract type would you recommend to Marcus for the animation software development firm? Why?

Exercise 6.2: Creating a Procurement Management Plan The objectives for Exercise 6.2 are as follows:

Understand the need for a procurement management plan.

Understand the elements of a procurement management plan.

Practice creating parts of a procurement management plan.

Background The PMBOK G"ide recommends a plan to set the strategy for managing the processes for each knowledge area for your project. For procurement management, you create a plan to describe how you will manage the different processes and standards for your contracts and vendors. Some of the processes you need to document are the following: how you will manage vendor solicitations, including describing the documents and evaluation criteria; how you will obtain contract vendors; and how you will evaluate proposals and make your final vendor selection. You might also describe how you want your conrracts negotiated and how you will manage and administer your project's contracts. If your projCCt is going to have contracts, this plan is ext remely important so that you can be efficient and objective in selecting your contractors. Also, with this early planning, you can direct the lawyers responsible for preparing and reviewing contract documents to include items important to your project's success. This allows you to manage the contractors, once they are chosen, using a more organized approach. Your plan should accomplish the following:

Justify why you have decided to purchase the services or goods via a contract .

Describe the types of contracts you r project requires and why you chose each. Describe how you will control the costs/prices of the contracts.

Describe any organizational policies you have for creating and managing contracts. Include a reference to standard procurement documents for your organization.

Describe the documentation/specifications required for each contract, includi ng who creates the contract statemenl of work (SOW). Describe what particular goods or services each vendor provides under their contract, what format the specifications for the SOW


will use, and to what extent the SOW specifications will be documented and used in the request for proposa l.

Discuss how processes in procurement and solici tation planning will be managed and integrated with orher project processes. You want to make sure you describe your strategies for the following lOpics:

\'Vill you create evaluation criteria for the contract bids or use standard evaluation criteria already established hy your organization? Do you plan lo provide the criteria direcdy lo vendors? If you do create evaluation criteria, who will create it, and on what will it be based? If you choose standard criteria, provide a reference to the standard criteria you plan lo use.

\'Vhat procurement documents do you need? Do you need a request for proposal (RFP), invitation for bid (IFB), request for quotation (RFQ), or some other document prompt contract hids?

How will you solicit bids for your contracts? Will you hold bidder conferences, will you advertise in industry publications, or will you use some other format? Are you constrained in some way on how you obtain bids?

Can you identify prequalified sellers? Who are they?

Once you obtain the bids or proposals, what will the evaluation process be? Be sure lo

document who will evaluate and how you will use the evaluation criteria you have prepared. Will you use any screening or weighting systems or independent estimates to

help you evaluate the bids?

Will you accept bid protem? If so, how will you handle them?

How will you deal with lead time needed for purchases on each contraCl and expected schedu le dates?

\'ViH assumptions and constraints be impaCled by purchasing goods and services? How will you manage risks for each contract and protect your organization from vendor actions? Include insurance, bond, and other protection information .

Describe the management strategies and actions for administering each contract, including the change control and payment systems required. Describe how you plan to coordinate contract status reporting with your regular project performance reporting and metrics, especially scheduling and performance status. You also might include a description of any differences in the way you manage the contracts differently during various phases of the project. Describe how you will manage multiple providers, if you have them-will you require joint meetings, separate meetings, or a combination of both?

Document the roles and responsibilities for managing each contract. What authority does your project team have? Will the project manager be the contract manager, or will a procurement specialist manage rhecontraCl? You might describe the roles and responsibilities of the procurement department and the project team procurement duties-what actions can the project team take without working through lawyers or the procurement management department?


Describe how you recommend that your project proceed with each contract negotiation, including who will manage the negotiations ::and who will particip::ate in them. Discuss how dispules might be negotiated.

Document what constitutes closeout of each contract.

Make sure the procurement management plan is well documented and reviewed by the procuremen t department, if you have one. Although much of the contract is written by lawyers, you can have a great deal of influence on what is expected o f Ihe vendor and the product, service, or result 10 be delivered by setting up thi s plan early in the project.

In this exercise, you will help the Creative Ca rtoon Company creale portions of a procurement management plan based on the need for different contract types and vendors it will require to produce its first full-length feature film.

Scenario As you continue your work with the Creative Cartoon Company (Ccq, producer Marcus Manning and director Sheila Wong are ready to create a procurement management plan for the Bouncing with Bob film project. They need 10 procure and manage sound production, background animation, and marketing services. They also need to hire an outside vendor and create a contract for softwa re development 10 implement their new ::anim::ation ideas. Because this development is expected to create an Oscar-worthy technological ::adv::ancement for animated films, Ihey will need to maintain good vendor relationships and control over the new technology.

Testing Your Knowledge of Creating a Procurement Management Plan Use your knowledge of sound procurement management planning, the Bouncing with Bob project, ::and vendor relationships to answer the questions that follow and prepare for your next meeting wi th Marcus and Sheila :

1. Describe how you would recommend that CCC manage the scheduling and performance of the contracts for sound production, overseas artwork production, software development, ::and marketing in unison.

2. Describe how Marcus should manage CCC's procurement processes for the sound prodUClion contract. What procurement document should he use? Should he use eval uation criteri::a? How should he solicit bids? Once CCC receives the bids, who do you recommend should ev::aluate the bids and use the evallialion criteri::a?

3. Do you recommend th::at CCC use evaluation criteri::a for each contract? If not, why not? If so, explain your reasoning, and describe (hecriteri::a you recommend CCC focus on. Do you recommend CCC obtain some independelU estimates? Why?

4. Describe wh::at constitutes closeout for each contr::act.

5. Who should be in the negotiations for each contr::act?

6. What are some import::a1U items (h::at the project manager needs to consider in administering the contract?

Resource Plann ing 693

Exercise 6.3: Creating a Contract Statement of Work (SOW) The objectives for Exercise 6 .3 are as follows:

Justify the need for a contract statement of work (SOW).

Understand the elements of a contract SOW.

Practice creating parts of a contract SOW.

Background The contract statement of work (SOW) is perhaps the single most important output from your project procurement management process . A well-written contract SOW fu lly describes the results, services, or products the vendor is responsible for and can help you obtain the best product, service, or resul t from your contractor. You need a contract SOW for each product, service, or result that you will procure for your project. The contract SOW might he derived from the scope statement and, if you are procuring the entire product, service, or result, might actually be the same as the scope statement. Some people might call the contract SOW a scope statement or the scope of work . In fact, the contract SOW is a scope statement focused on just the work required of an individual vendor. In procurement management, the contract SOW is written so contractors understand the expectations for the work you are requesting. The contract SOW often follows the same pattern of information the scope statement provides: objectives; a description of the product, service, or resul t and operational support needed; deliverables required; requirements or specifications; assumptions and constraints; and time estimates . The only element you might not provide is the cost estimate because you usually expect the bidder to provide that. The contract SOW needs to be written well enough so the vendor knows whether they want to bid on the job and can actually do the work . Vagueness sometimes leads to false optimism by vendors-if the contract SOW isn't clear, they think they can take on the work and figure out how to produce it along the way. This could be very dangerous for your project.

As the project manager, it is useful to get involved in the writing of the contract SOW as soon as possible so you understand the scope and how you need to manage the work. Often, though, you might not be involved up front. Whenever you do become involved, make sure you read and understand the contract SOW thoroughly. This might require reviews with both your team and the vendor's team to make sure everyone understands the requirements and expectations.

Once you have chosen a contractor, you can use the initial contract SOW you created for the hidding, or you might need to create a more detailed contract SOW for the contract. The closer you can get the contract SOW you create for the bidding to what you end up with in the contract, the closer your contract pricing and contract contents will be.

You or members of your project team might choose to write the contract SOW, but sometimes the vendor is better equipped to write it, and therefore you might just review it. It is important that the contract SOW be as clear and detailed as possible . If the vendor or the customer misunderstands any part of it, then disputes are more likely to occur. Initially, if the contract

694 Workbook Exerc ises

SOW is not well defined, the vendor might underbid, and if a poorly defined contract SOW is used in the contract, it might produce unpredictable results. For instance, if the contract SOW says the widget needs to be slim and economical, the vendor could interpret this requirement as being as slim as a ruler and about $S each when you were thinking as slim as a measuring tape and about $3 each. At times, the work might simply need creativity and flexibility, so the contract SOW might focus more on the skills, anitude, and tedmical expertise of the vendor.

You can use a template, a check list, or previous contract SOWs to hel p you prepare a good contract SOW. The following are some major elements you need to consider in your contract SOW:

Roles and responsibilities Make sure that it is clear who is doing what. Define who is responsihle for each action (such as who performs product testing) and who participates in reviews (such as who reviews deli vera hies such as specifications). If specific people are needed at certain meetings or in particular roles, make sure that is clear. For instance, if you need rhe project's architect in a technical review, make sure the SOW states that a project architect needs to be in the technical reviews.

Security Discuss any security specifications . Will the product or fac ilities need any specific security processes or procedures during production, during transportation, and on delivery?

Location of work Make sure you describe where the work needs to be done. Can the vendor work on its own premises, work at the project site, or maybe work in both places, depending on the work or phase of the project? If work will be done in different locations, define it in the SOW.

Milestones/deliverables List all expected milestones and deliverables. Include descriptions and formats, where necessary, so each party is clear about the expectations . Can a weekly status report take the form of a quick "We're working on it" message left with your assistant? Or do you require something more specific in writing?

Quantities Make sure you specify quantities for everything needed . Perhaps you specify that you need a repon. Does the vendor deliver a single copy that you can duplicate and deliver to

the reviewers? Or do you want the vendor to provide a copy for each reviewer? Details such as this might seem minor, but for a 7S0-page report, the difference can be hundreds of dollars.

Vendor payments Define vendor payment and invoicing processes. Make sure it is clear how often payment occurs, what constitutes payment, and what constitutes fina l payment.

Progress reponing Be specific about when and how you want the work's progress to be reviewed . For instance, state that you want a report every week showing schedule/budget and that you want a monthly review meeting with the ma jor vendor team members attending if you think that is important for pro ject success.

T esting Describe the testing requirements for the work, if any. Do you need an independent testing group, or does the vendor provide the testing? Who provides the testing plans and approves the results?


Q uality Describe the quality required . For example, you might describe that you will accept no more than a 0.05 percent error rate for order processing and leave it up to the vendor to provide that. Or you might require a major quality plan and processes.

Change control Descrihe change control requirements, including a general description of the change process for the project.

When you create requests for proposals, invitations to bids, or any procurement documents, always include the contract SOW. Without it, you might not get the kinds of bids that give you a clear understanding of the work the vendor can provide.

In this exercise, you will help Creative Cartoon Company begin to define a statement of work so that vendors know what is required. Help CCC understand whether the descriptions in its SOW are specific enough for a vendor to hid on or perform their work .

Scenario The Creative Cartoon Company (Ccq has approved the preliminary procurement management plan that you, producer Marcus Manning, and director Sheila Wong created for the Bouncing with Bob full-length animated film project. Your task now is to assist with the creation of the contract SOWs needed to procure and manage sound production, background animation, marketing, and software development services .

In particular, they are looking to you for recommendations on what items they need to include in the SOWs for sound production and the overseas background animation production . CCC has never done sound production, so they need to be sure that the SOW is comprehensive and clear, hut they aren't quite sure how to get enough background information to do that . They are a lso concerned ahout the content of the animation software work description. This project will include the development of new animation technology that they hope will give them their second Oscar. The new technology needs to he protected, and the software development firm will need to work closely with Marcus and Sheila to ensure that the new technology meets expectations.

Finally, they want to be sure that the description of quali ty of work they've developed for marketing contractors is included in the contract SOW. They've drafted the following: " Marketing materials must be of the highest quality as expected in the entertainment industry."

Testing Your Knowledge of Creating a Statement of Work (SOW) Use what you've learned ahout CCC's expectations for work and your knowledge of creating contract SOWs to answer the questions that follow:

1. Descrihe three elements in the contract SOW you recommend that CCC requires from the sound production company. Describe why they would be important in the contract SOW.

2. Will CCC's draft description of the quality of work it expects from the marketing firms he a good enough description of quality? What might you do to improve this if you could?


3. What three elements of the contract SOW might you recommend as the most important for the animation software development firm? Why?

4. What are some of the deliverables that might be required in the contract SOW for the overseas contractors?

5. How would you recommend that CCCcrcate the contract SOW for the sound production vendor?

6. For the software development, sound production, and overseas artwork contract SOWs, describe any security considerations .

Exercise 6.4: Evaluating and Selecting the Vendor The objectives for Exercise 6.4 are as follows:

Introduce eval uation criteria and why you need it.

Describe how you use evaluation criteria in selecting a vendor.

Practice creating and using evaluation criteria.

Background If you are requesting a proposal or bid from a vendor for a complex product or service, your chances of getting what you want dramatically increase if you have criteria to evaluate the vendors prior to creating the request for proposal, the invitation to bid, or any other kind of procurement document. If you focus on what is important to you, you will be more objective when the proposals or bids are returned to you. You can choose to share the evaluation criteria with the vendors, or you can choose to use it for your internal evaluation processes only. The evaluation criteria can be subjective or objective. You might create the eval uation criteria using weighting factors and scoring to help you decide what is most important to you. Note that if you are procuring a product or service that is well established on the market, you can create evaluation criteria but in a simplified manner-the best price might be the only evaluation criteria required.

Whell YOll plan evaluation criteria, first decide on the tools and techniques you want to use. You can document this information in your procurement management plan, as described in Exercise 6.2:

What criteria are most important to you? Is quality, technical expertise, price, on-time delivery, company experience and culture, previous references, or the vendor understanding your needs most important? For each criterion, describe the standards and processes the vendor must deliver.

Decide whether you are going to use an independent estimate to compare the estimates you receive from the vendors. If you do not choose to, document why and how you will know whether you have a fair estimate. If you choose to use an independent estimate, describe how you will obtain it and when. Don't forget to put it into your project plan and schedule the activity.


Document whether you will use a screening system. Wil! you use some minimum-level requirements or threshold you expect to be met or exceeded in an acceptable bid or proposal? For instance, you might accept only those companies with a demonstrated annual profit because you do not want to take a chance on a sta rt-up or floundering company. Document what you are ~reening, and elimi nate anyone not meeting the requi rements immediately. You mayor may not want to share this requirement in the bid or proposal request .

If you decide to weight the criteria, create and document the numerical ra tings for each criterion. Again, you mayor may not choose to share these weighting factors with the vendors .

Your criteria should be specific to the product or service you are procuring. You also might need to include genera l criteria. The following are some general evaluation criteria you might use:

Does the vendor demonstrate the best value, lowest price, or some other price comparison advantage? Make sure you distinguish what is more important and evaluate it for the overal! life cycle of your project . Don't forge t to include operational and maintenance activities in the consideration .

Does the vendor demonstrate an understanding of your expectations of the product and service, as weI! as how you expect the vendor to work with you during the project?

Does the vendor clearly demonstrate the a bili ty to carry out the technical or operational processes needed to perform the work? Use references, previous performance, skill sets of the employees within the organization assigned to the project, and any awards or technical achievements the vendor can demonstrate to make the determination .

Wil! your project team be able to work with the vendor management team? This criterion is sometimes overlooked . AI! other qualifications might look terrific, but the management itself might be difficult to work with. Perhaps the company processes for invoicing, status reporting, treatment of its employees, and documenting financ ial transactions are lax or difficul t. Sometimes contracts are rewarded solely because of the relationships between the management personnel of each firm . Although the project manager might have to setde for this kind of decision, it is stil! important to document evaluation criteria to ensure that the vendor can fulfil! the work and arrempt to make sure the vendor submits a bid or proposa l.

Does the vendor have the financial capability to fulfill contract obligations? If you choose a vendor that is relying on your project to stay afloat, your project could face a very large risk if it lays off employees during the project.

What intellectual property or proprietary rights does the vendor expect or need, and what do you need from the vendor? Some contracting organizations, especial!y in creative or services projects, require that the contractor assume ownership of the product and the vendor keep the work produced for the project confidential. Some vendors ha ve issues with this, since they believe they own all intel!ectual work they produce. Perhaps they need to discuss the work as part of their marketing strategies. The needs of each party must be evaluated and negotiated up front so the issues do not become damaging during execution or support.


Some evaluation criteria might be of a more personal nature; in other words, is this vendor a good match for your organization's culture and personnel? You might decide that a vendor needs to come in for face-to-face interviews to make sure your project team and management feel comfortable with the vendor's team and management methods. No matter how good the proposal or bid looks, if your team and the vendor team are at odds and uncomfortable with each other, think long and hard before awarding the contract.

Once you have created the evaluation criteria, use it in the executing process of source selection. Even with rigorous evaluation criteria, it is possible that, once you receive the proposals, you find some vendors are srrongcandidates based on criteria you did not consider or that are hard to measure. Levels of creativity and reputation fall into this category. You might decide that new criteria outweigh the criteria you initially believed most important .

In this exercise, you will help Creative Cartoon Company create some evaluation criteria for a few of its contracts.

Scenario You continue your work with producer Marcus Manning, director Sheila Wong, and Creative Cartoon Company (Ccq on the Bouncing with Bob project. Your next task is to help them determine the most important characteristics of each evaluation criterion and how to input those criteria and characteristics into their requests for proposal. They have just begun to

understand what kind of help they need in creating their first full-length feature film . CCC has never needed sound production before, but Marcu s has a golfing buddy, Davis Neely, who is one of the co-owners of Thundering Sound Productions. Marcus would like Davis, whom he trusts and has worked with before, to receive the sound production contract.

Testing Your Knowledge of Evaluating and Selecting a Vendor Use your knowledge of vendor evaluation and selection processes and what you've learned about CCC and the Bouncing with Bob project to answer the following questions:

1. List the five general evaluation criteria CCC should consider for each contract.

2. You wi!! help Marcus create criteria for the animation software development vendor. List four of the top criteria, and rank them in importance.

3. You will help Marcus create criteria for the overseas artwork vendor. List four of the top criteria, and rank them in importance.

4. Why should CCC create evaluation criteria before sending out the requests for proposals?

5. Would you recommend that Marcus still develop and useevaluation criteria, even though he trusts Davis Neely and already knows he wants to grant the sound production contract to Thundering Sound Productions?

6. Would you recommend that CCC include its evaluation criteria in each RFP? Why or why not?


Exercise 6.5: Creating a Responsibility Assignment Matrix (RAM)

You've finished four exercises concerning procurement resource planning. Now you'll do several exercises that wi!! cover resource planning for all project resources.

The objectives for Exercise 6 .5 are as follows:

Create a responsibility assignment matrix (RAM ).

Describe the components of a RAM .

Background Previous exercises covered procuring outside resources in a proiect. This exercise continues with planning a project's human resources. The responsibility assignment matrix combines an organization chart with project ta sks and creates a planning [001 that describes who is responsible for proiect tasks. To create a RAM, you combine an organization breakdown structu re with [he work breakdown structure. The integration of many different types of information often is required to plan a project effectively. Let's examine the two components of a RAM more closely:

Organization breakdown structure An organization breakdown structure is really nothing more than a project organization chart. It depicts who is working on the project and the departments they represent. The diagram shown here represents a typical organization breakdown structure .

Project Manager Project Assistant

Subteam lead 1 Subteam lead 2 Subteam lead 3 Subteam lead 4 IT Finance Operations l.."

Team member L Team member Team member

Team member Team member

Team member

li m m m ea e be , Work breakdown structure A WBS is an output of the Create WBS process . It includes the decomposed project scope components of smaller and more manageable components or work packages . The project manager creates it with project team members . We covered


work breakdown structures in Chapter4 . Th e diagram shown here represents a typical work breakdown structure.

Project

Summary 1.0 Summary 2.0 Summary 3.0

I

Task 1.1 Task 2.1 Task 3.1

Task 1.2 Task 3.2

Task 1.3 Task 3.3

These two charts now come together to create the RAM . Table 6.1 shows a RAM based on the previous illustrations.

TABLE 6 . 1 Respo nsibility Assignment Matrix (RAM )

IT Finance Operations legal

Task'.1 , ,

Task '. 2 , , Task 1.3 ,

Task 2.1 ,

Task 3.1 ,

Task 3.2 , , , ,

Task 3.3 ,

You can now see that the RAM explains who will work on each project task of the projecr.


You can also use RAMs 10 describe the responsibilities of team members on specific ta sks. Crea ting a legend and applying it to the RAM allows team members to understand their roles on the same task . In Table 6 .2, we have added a legend to indicate which grou p is accountable, who creates the task output, who updates it, and who reviews it.

In this exercise, you' ll get a chance to answer some questions regarding responsibility assignment matrixes.

TABLE 6 . 2 Specific Task Responsibility Assignment Matrix

IT Finance Operations Legal

Task 1.1 a

Task 1.2 , Task 1.3 ,

Task 2.1 ,

Task 3.1 , Task 3.2 ,

Task 3.3 , a., accountable, c ., creator, u., updater, r., reviewer

Scenario You just began work with Affordable Sweeping, Inc., an up-and-coming property maintenance company. The company has just been awarded the contract to prepare a local NFL stadium for the current football season. Affordable Sweeping named the project Operation : NFL and named you the project manager. You will have more than 100 people working on the project. The team leads and subteam leads are employees of Affordable Sweeping; most others are subcontractors . You have created the RAM shown in Table 6 .3 for this project.

TABLE 6 . 3

Task A. 1

Task B.2

Operation : NFL - Responsibility Assignment Matrix

Groundskeepers

, Turf Prep

,

Game Operations

Power Washers

702 Wo rkbook Exe rcises

TAB L E 6 . 3 Ope ration: NFL- Responsibili ty Assig nment Matrix (co ntinued)

Game Power Groundskeepers Turf Prep Operations Washers

Task A.3 ,

Task B.1 , Task C.1 , Task A. 2 , , Task B.3 , a .. accountable, C .. creator, u .. updater, r .. reviewer

Testing Your Knowledge of Creating a RAM Use the information you've gathered for Operation: NFL and your knowledge of sound project management practices to answer the following questions:

1. What does the acronym RAM stand for?

2. What is a RAM?

3. What two components are integrated to create a RAM?

4. The RAM created for Operation: NFL is an example of what type of RAM? Why would you use this type of RAM ?

Exercise 6.6: Creating a Staffing Management Plan The objectives for Exercise 6.6 are as follows:

Describe a staffing management plan.

Describe the inputs for a staffing management plan.

Describe contents of a staffing management plan.

Background The staffing management plan documents for the project team exactly when the resources are needed and how the human resource needs wilt be managed during a project. A staffing management plan can be general or very detailed. Regardless of the approach you take, you need to

work through the process for creating this plan. In this exercise, you will examine the inputs to

creating a staffing management plan, as well as the thought process for creating it. You'll start with the inputs.


Inputs for a Staffing Management Plan

A proiect manager needs to have three pieces of information at their fingertips in order to create a staffing management plan . These are enterprise environmenta l factors, organizational process assets, and the proiect management plan :

Enterprise environmental facto rs As you think through the staffing management plan, you need to understand the enterprise environmental factors that affect your proiect. Organiza tional, technical, logistical, political, or interpersonal could all be included . Organizational factors involve coordinating proiect work across multiple vendors, departments, or both . Technical factors involve the way the work must be done. Logistical factors have to do with co-location and can include time zones and the countries that proiect team members might work in. Political factors involve informal power and the alliances of the people on the team and their effect on the proiect. And, finally, interpersonal fan ors involve the reporting relationships among all of the proiect's personnel. Some typical constraints found in enterprise environmental factors are organizational structure, co llective bargaining agreements, and economic conditions . Document the types of enterprise environmental factors you identify, and explain how you will manage each of them for your staffing management plan.

Organizational process assets Be on the lookout for templates and checklists that might be useful while creating your staffing management plan. Another organizational process asset is the lessons learned documentation from other proiects that might apply to your proiect.

Pro ject management plan Other sections of the proiect management plan can help you create the staffing management plan . Be sure to investigate any sections that refer to the human resources requirements for the proiect. You typica lly find them in areas such as procurement, quality assurance, and risk management .

Contents of a Staffing Management Plan

Once you have your inputs, it is time to construct your staffing management plan . These plans can be as individual as your organization or your proiect. Here are some ideas for sections that might be included in a staffing management plan:

Organization charts An organization chart is a graphical depiction of the hierarchy of the project team . It is used to depict the reporting relationships of the team members to the project manager. Figure 6 .1 shows a sample organization chart.

Responsibility assignment matrix (RAM ) A RAM is a diagram that merges an organization breakdown structure and the work breakdown structure . We dedicated an entire exercise to RAMs earlier in this chapter.

Roles and responsibili ties A roles and responsibilities matrix lists each team member or resource grouping and their responsibilities. This matrix makes it clear who is accountable for what on the proiect . In Table 6 .4, we note the general responsibili ties.

Sta ff acquisition T his portion of the staffing management plan addresses all the ways that staff will be added to the proiect . It should include the sources for proiect staff. If they are internal resources, what department needs to authorize participation? It also should include workplace logistics and COSts. If they are external resources, where they will work, and what costs are associated with each level of expertise?

704 Workbook Exe rc ises

FIGURE 6 . 1 Sample organization chart

Project Manaoer Project Assistant

Subteam lead 1 Subteam lead 2 Subteam lead 3 Subteam lead 4

Team member L Team member Team member

I- Team member Team member

Team member

Team member

Release criteria This portion of the staffing management plan explains how project vacancies will be managed . It should cover how key personnel and team memhers are replaced, as well as how all project personnel will be reassigned at the end of the project.

TAB L E 6 . 4 Roles and Responsibility Matrix

Role Responsibility

Executive sponsor Chairs the steering committee

Champions the project

Resolves issues escalated from the steering committee

Project manager Organ izes the team structure

Manages the project

Tracks progress

Creates p roject plan

Project team member Completes assig ned tasks and their associated deliverables

Adheres to project standards and methodology

Meets status and ti me reporti ng obligations


Training needs Review the credentials of each human resource on your team . You might need to provide training in order for personnel to work effectively on your project. Document training needs as pan of rhe staffing management plan .

Recognition and rewards Each project manager should document exactly how rewards and recognition will be handled on their project. This also should be covered in the staffing management plan . Include an end-of-project "thank you" for you team members . Plan ahead so you don't forge t in the chaos of closing one project while you plan the next.

Compliance Document any policies, rules, and regulations that impact the treatment of team members in the staffing management plan .

Safety Your organization's safety policies can impact how your resources are managed. Also, particular aspects of your project might require special safety precautions, equipment, and training. Does the project require that team memners work with or near high-power lasers, cryogens, high voltage, or other hazards? Will they need eye protection, exposure monitors, or protective clothing to work safely? (An injured team member can't work on your project.) Document these concerns and requirements in the staffing management plan.

In this exercise, you' ll answer some questions regarding the staffing management plan .

Scenario You continue to work with Affordable Sweeping's Operation: NFL project. As part ofthis upand-coming property maintenance company, you are project manager for the contract to prepare a local NFL stadium for the current football season. You will have more than 100 people working on the project. The team leads and subteam leads are employees of Affordahle Sweeping; most others are subcontractors. Each of these subcontracting companies has its own project managers and team leads, basica lly its own organization structure. Also, many of these subcontractors are protected by collective bargaining agreements. You are running into some issues creating your staffing management plan.

Testing Your Knowledge of Creating a Staffing Management Plan Use your knowledge of staffing management, human resource planning, and the Operation : NFL project to answer the following questions and sort through your staffing management planning problems:

1. What is the defini tion of a staffing management plan?

2. What are the three constraints typically found in enterprise environmental factors that hinder a project manager's ability to perform human resource planning? Which t\\fO are affecting your ability to plan this project, and why?

3 . What are the three inputs into a staffing management plan?

4. For Operation : NFL, why would you include an organization chan in your staffing management plan?

5. For Operation: NFL, why would you include a roles and responsibilities matrix in your staffing management plan?


Exercise 6.7: Sequencing the Work We talked about resource planning in the previous twO exercises. Now you 'll look at how that resou rce information is used to determine how the work is seq uenced and how resource estimating is accomplished.

The objectives for Exercise 6.7 are as follows:

Describe the different types of dependencies.

Describe the differences between the precedence diagramming method (PDM) and the aTrow diagramming method (A DM).

Define the four types of dependency relationships.

Create a pro ject schedule network diagram.

Background Once you have completed the human resource planning, you can look at the work that needs to be performed. Activity Sequencing is a time management planning process used to determine how the work of the project will progress. In other words, it is the sequence of the tasks of the project. In Activity Sequencing, you take the act ivity list created from the work breakdown structure and then use tools and techniques to decide the progression of the work . This results in the creation of a project schedule network diagram.

Compone nts of Activity Sequencing

To begin the seq uencing process, you must first understand the elements that make it possible, including activity lists, dependencies, and diagramming methods.

Act ivit y list

In Chapter 4, we tal ked about the lowest level of work on the WBS. That lowest level is called a work package. That level of the work breakdown structure should be decomposed one more time to create an activity list for each work package.

Dependencies

A tool and technique of Activity Sequencing is determin ing the dependencies of the work to

be done. A dependency is the relationship between two tasks. There are three types of dependencies:

Mandatory dependencies Mandatory dependencies arc dependencies inherent in the work to be done. You cannot road test a new tire until the tire is manufactured.

Discret ionary dependencies Discretionary dependencies are created by the project team. Say you r team chose a III-inch tread for the new tire you are crea ting. Because the tread size is nonstandard, you need a new tire mold that has a lead time of six weeks. You've just created


a discretionary dependency. You could have chosen a standard !read size, but you and the team determined that this choice is the right one for your proiecl.

External dependencies External dependencies come from outside your project . On your new tire, you are using a special rubber formula that is being shipped from Japan . T he next shi p to leave for the United States doesn't leave for two more days. You now have an external dependency on that shipment.

Diagramming Methods

Once you understand dependencies, you are ready to choose a tool and technique to use [0

depict the sequence of the work . Two diagramming methods are most commonly used for sequencing. The first is the precedence diagramming method (POM ), also known as activity on node (AON). In this type of diagram, the nodes (boxes) depict rhe task, and the arrows depict the dependency.

Act;,;~ A H Act;,;~ B

Precedence diagramming uses four types of logical relationships [0 determine the depen-dencies between the activi ties:

In the finish-to-s tart relationship, illustrated in the preceding diagram, Activity B cannot start until Activity A is completed .

In rhe start-to-finish relationship, illustrated in the following diagram, Activity B cannot finish until Activity A has started .

r Activity A

Activity B W

In rhe finish-to-finish relationship, pictured in the following diagram, Activity Bcannot be completed until Activity A is completed .

Activity A

Activity B


Finall y, in the start-to-start relationship, Activity B cannot start until Activity A starts. The following is an example of the start-to-start relationship .

Activity A

Activity B

The other commonly used diagramming method is the arrow diagramming method (ADM), also known as activity on arrow (AOA). In this method, the lines are the activities, and the circles are the nodes that depict the relationship. The arrow diagramming method uses a finish-to-start relationship.

0-Activity A-0-ActiVily B-o

The Project Schedule Network Diagram

Once you know the components of Activity Sequencing, you can create a project schedule network diagram. A project schedu le network diagram depicts the progression of work on a project . Be sure to create a start and finish node so that all nodes on the network d iagram are connected . Always connect all tasks on a project schedu le network d iagram . To complete the d iagram, you need to understand exactly what has to he done in what order. You might see this referred to as a predecessor and a successor to each piece of work . Without this knowledge, you might miss an important step, resu lting in rework and lost time. Here is an example of a schedule network diagram.

S~rt H ActNl~A H A~ B ~G Here are the steps to make a project schedule net\vork diagram using Activity Sequencing:

1. Determine whether the WBS work packages need to be decomposed into smaller activities. These should be small activities that can be assigned to one person.

2. Understand each activity well enough to determine the dependencies between them . Are they mandatory, discretionary, or external?

3. Determine the method of diagramming you will use: precedence or arrow diagramming.

4. Understand the dependencies well enough to know the type of logical relationship between the activities .

Resource Plann ing 709

5. Create a Start and Finish node .

6. Sequence the lowest-level activi ties o r tasks between the Start and Finish nodes. Do not sequence the higher levels of the work breakdown structure, that is, the summary-level activi ties .

In this exercise, you'll work with SystemsDelivery on the credit card validation project to determine dependencies and logical relationships and to choose a diagramming method to create a network diagram .

Scenario Your company has just placed you at SystemsDelivery, Inc., as a temporary project manager. You've been assigned the credit card validation project. This project is designed to be the next big thing in credit card fraud prevention . The management of SystemsDelivery believes that this product will be in high demand at every major retailer in rhe country. Of course, the management needs this product to go to market as quickly as possible. You have been on the project for two weeks now. You have created the work breakdown structure in the following illustration for producing the Canadian version of rhe product. You created the WBS using the activity list, the lowest level of a WBS.

Credit Card Validation Project

• 2.0 Canadian

Market

2.1 Canadian 2.2 Canadian Device Software

2. 1.1 DesiDn 2.2.1 DesiDn Device Software

2.1.2 Prototype 2.2.2 Code Device Software

2.1.3 Produce 2.2.3 Test Device Software

71 0 Workbook Exercises

Testing Your Knowledge of Activity Sequencing Use your knowledge of activity sequencing and the information you've developed for the credit card validation project to answer the following questions:

1. How many activi ties have been created at the lowest level of the work breakdown structure (the activity list level)?

2. Analyze the dependencies between tbe activities . Are tbese dependencies mandatory, discretionary, or external?

3. Analyze the dependencies again . This time determine what is the one logical relationship between each activi ty for the Canadian software.

4. Determine the best method to diagram these activi ties. Will you use the precedence diagramming method or the arrow diagramming method?

5. Sequence the lowest·level activities between a Start and Finish node. Draw your answer.

Exercise 6.8: Estimating Activity Resources The objectives for Exercise 6.8 are as follows:

Describe the three types of resources.

Understand how the activity list from the WBS, organizational process assets, and resource availability contribute to activi ty resource estimating.

Background Activity Resource Estimating is a Time Management planning process. It is done early in the planning processes to establish the resource costs of a project. Before you can estimate activity resources, you need to determine what types of resources (a nd how many of each type) are needed for the project.

The Activity Resource Estimating process incorporates the work breakdown structure, the scope statement, and the resource pool descriptions into resource activity estimates. Using expert judgment, alternatives analysis, published estimating data, project management software, and bottom-up estimating, the project manager can determine the resource requirements for the project.

When we talk about resources in Activity Resource Estimating, we are not talking about actual people. Instead, with Activity Resource Estimating, we are talking about types of resources. There are three commonly known types of resources : people, equipment, and materials. People can be individuals from your organization or vendors you hire-basically any skilled resource . Equipment refers to items such as a forklift, a dump truck, a computer, or other nonconsumable resources. Materials are consumables, such as water, power, spe· cial paper, and other items that cannot be reused.


Let's examine each of the primary inputs to the Activity Resource Estimating process. The first input is the activity list from the WBS, which you learned about in Chapter 4. Here is a typical WBS with duration estimates in days .

Project Name

Summary 1.0 Summary 2.0 Summary 3.0

,----' ~

Task 1.1 ~k2 1 Task 3.1 Duratioo,. 3 Duratioo,. 7 uration,. 1

Task 1.2 Task 3.2 Duratioo,. 2 Duratioo,. 7

Task 3.3 Duratioo,. 1

Organizational process assets, the second input to the Activity Resource Estimating process, provide the policies concerning staffing and the acquisi tion of materials and equipment . The last input into the Activity Resource Estimating process is resource availability. Resource availabili ty is sometimes referred toas a resource pool description. Resource pool information mayor may not exist at your company. Look carefully; it might exist hidden under another name. You'll want to create or modify it depending on what you find . It should contain a list of the resource types in the company as well as the actual number of resources for each category. Table 6 .5 shows a sample resource pool description .

TABLE 6 . 5 Resource Pool Description

Resource Type Name Number

Skilled resources Accountant 2

Office manager

Forklift operator 4

71 2 Workbook Exerc ises

TABLE 6 . 5 Resource Pool Description (con tinued)

Resource Type N am e Num ber

Warehouse supervisor

Heavy-equipment operator 5

Equipment Backhoe 2

Forklift 3

Materials Water 100 gallons

1,000 gallons

Electricity 10 kilowatt hou rs

Once you have collected your inputs, you are ready to use your expert judgment along with other tools and techniques to determine the types of resources required for each task of your project. When you finish, you might add resource type names to your WBS or perhaps create a table that shows the assignments, such as in Table 6.6 . The major output of Activity Resource Estimating is activity resource requirements.

TAB L E 6 . 6 Activity Resource Requirements

Task Resource Number Required

1.1 Forkli ft

Forkli ft operator

1.2 Backhoe 2

Heavy-equipment operator 2

Water 50 gallons

2.1 Accountant

3.1 Office manager


TAB L E 6 . 6 Activity Resource Requireme nts (continued)

Task Resource Number Required

3.2 Warehouse supervisor

3.3 Forklift

Forklift operator

In this exercise, you' ll apply what you've learned about Activity Resource Estimating to another scenario.

Scenario You are a temporary project at the Pinnacle Candy Company assigned the EspressoFix Bar project. This project creates a new candy intended to satisfy every coffee addict's need for coffee all wrapped up in a candy bar and tests its marketability. Production will be undertaken in another project initiated later. You have been on the job long enough to have created a scope statement and the work breakdown structure that is shown in the following diagram . You and your team have also completed the duration estimates for each task .

ESj)ressoFIX Bar Project

Research Bar Creation Marteting Strateoy

Martet Survey Create Rocipe Focus Group Duration" Duration" Taste Testing

30 days 15 days Duration" 10 days

"'" C"""," Create Product Marteting Plan

on Name Duration" Duration" Duration" 10 days 30 days

20 days

Internal Taste Ad Campaign Testing Duration"

Duratioo " 30 days 2",,,


When you asked the proiect team whether Pinnacle has a documented resource pool, the team members looked at you blankly. After further inquiries, you find that they don'r. But you did discover that the company usually suhcontraClS the focus group work with Focused Marketing, Inc., and got some reports from human resources . With that information in hand, you call another team meeting, brainstorm with your team, and create a resource pool for the proiect, which is shown in Table 6 .7.

TABLE 6 . 7 EspressoFix Bar Project - Resource Pool

Resource Type Nam e Number

Skilled resources Marketing 5

Advertising 4

Legal 2

Chefs 2

Employees 35

Vendor-Focused Marketing, Inc. Unlimited

Eq uipment Test kitchen

Testing Your Knowledge of Activity Resource Estimating Consider the information you and the Pinnacle team have developed through the EspressoFix Bar proiect planning processes and use your expert iudgment to answer the following questions:

1. Activity Resource Estimating is what process step in the Time Management process?

2. What are the three types of resources?

3. What are some examples of a material resource?

4. What are the three primary inputs used in Activity Resource Estimating?

5. What is the maior output of Activity Resource Estimating?

6. In Table 6.8, create a resource requirement table for the EspressoFix Bar with the resource pool shown in Table 6.7.


TABLE 6 . 8 EspressoFix Bar Project - Acti .... ity Resource Requirements

Task Resource Number of Resources

resource planning - augusta state...

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