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Friday, May 6, 2011

Chapter 14: Other Terms Related to Project Management

As part of your preparation for the Project Management Professional certification, you will be encountering terms like Probability, Baseline, Project Team, Project Management Team etc. Even though these are straight forward terms and a majority of us already know what these are, it is best to cover them to help those few of us who don't know these terms.

So, lets get started!!!

What is Probability?

I do not want to relive the pain of studying Mathematics in School or College because math wasn't my strongest subject and most importantly I did not like my Math teacher. Jokes apart, certain terms related to probability are part and parcel of the life of a project manager. So, if you are someone like me who doesn't like math, just learn the basics that are required to carry out your job as the project manager and move on. Atleast that's what am gonna do!!!
Probability is defined as a chance that something will happen. The simplest example of probability is tossing a coin. The question is, when you toss a coin, what is the probability that the coin will land heads up? When you toss a coin, there are only two possibilities: It will land either heads up or tails up. So, either heads or tails will come up unless you cheat. The probability here is a 50-50 because there are only two options. In general, if there are ‘N’ possible outcomes of an event, and each outcome is equally likely, then the probability of one specific outcome is 1/N. So for 2 outcomes it is ½ or 0.5

Another useful concept in probability is the combined probability of several events. For example, if you toss two coins, the probability that the first coin will land heads up and the second coin will land tails up is 0.5×.05=0.25.

In general, to calculate the combined probability, you multiply the individual probabilities. If the probability that an event X will happen is a, the probability that event Y will happen is b, and the probability that event Z will happen is c, then the probability that all the three events (X, Y, and Z) will happen is a×b×c.

To summarize, the probability that a number of independent events will occur is calculated by multiplying the probabilities of occurrence of all the individual events.

Some other Probability Related Terms:

Random variable

A random variable can acquire any value within a given range or out of a set of values. For example, you can use a random variable to represent the results of rolling a fair die, which has six sides numbered by dots from 1 to 6. The possible outcome of rolling a die could be any number from the set of outcomes: 1, 2, 3, 4, 5, 6

Expected value

This is the expected value of an outcome. As an example, assume you get into a bet that you will win $10 if a coin toss results in heads, and you will lose $5 if it results in tails. Given that the probability for heads or tails is 0.5 for each, the expected value for the money that you will win is $10×0.5=$5, and the expected value for the money that you will lose is $5×0.5=$2.5.

Variance

The variance of a random variable is the deviation from the expected value. It is computed as the average squared deviation of each number from its mean. For example, assume that the values of a random variable are 2, 4, 5, 7, and 2 in five measurements. The mean value for these measurements is:
(2+4+5+7+2)/5=4

The variance of the spread of these values is:

V=σ2=[(2-4)2+(4-4)2+(7-4)2+(2-4)2]/5=3.4

Standard deviation

This is the square root of the variance—that is, σ. So, in our example, the standard deviation is the square root of 3.4—that is, 1.84.

Algebraic equations

Some questions in the PMP Exam will assume that you can do simple mathematical calculations. You should also have a very simple understanding of algebraic equations. You should be able to make simple manipulations, such as the following:

x = y/z implies y = x * z


Global Project Variables

There are some significant factors in projects and project management that vary their values throughout the project lifecycle. You must keep your eyes on these variables from the very beginning of the project:

Cost and number of team members (staff)

1. Usually Low in the beginning, maximum when the project is being executed, with a rapid drop when the project draws to a close.
2. Ability to influence the characteristics of the project product without significantly changing the cost.
3. Highest in the beginning and gradually decreases as the project progresses.

Risk and stakeholder influences.

Highest in the beginning and decreases as the project progresses. This is true about uncertainty, too, as risks arise from uncertainty.

Baseline

The project baseline is defined as the approved plan for the cost, schedule, and scope of the project. The project performance is measured against this baseline. The project baseline is also referred to in terms of its components:
1. cost baseline
2. schedule baseline and
3. scope baseline.

How would you know how your project is performing? You compare the performance against the baseline. Approved changes in cost, schedule, and scope will also change the baseline.

Previous: Relationship between Project, Program and Portfolio

Next: Project Management Office

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