ETM 3550 – Lecture Notes (06 / 27 / 2025): PMBOK 7th Edition Overview & Project Selection

PMBOK Guide – 7th Edition: Macro-Level Shifts

  • Earlier editions (1–6)
    • Roughly 47 processes, grouped into 5 process groups (Initiating, Planning, Executing, Monitoring & Controlling, Closing) and 10 knowledge areas (Time, Cost, Scope, Quality, HR → later renamed Resource, Procurement, Risk, Communications, Stakeholder, Integration)
    • Strongly prescriptive and process-focused
    • Very large books (≈700 + pages) because each process contained detailed “Inputs–Tools & Techniques–Outputs (ITTO)” tables
    • Target audience almost exclusively project managers
  • Seventh edition
    • Paradigm shift from prescriptive “how-to” to principle-driven guidance
    • Outcome-focused rather than process-focused; emphasis on value delivery and product outcomes
    • Removes the 5 process groups and 10 knowledge areas; replaces them with 12 Principles + 8 Performance Domains
    • Eliminates exhaustive ITTO explanations; instead supplies a categorized list of tools as Models, Methods & Artifacts
    • Adds explicit Tailoring Guidance so organizations can build their own PM methodology
    • Thinner volume, easier to navigate; intended for PMs, team leads, sponsors, product owners, etc.

Twelve Project Management Principles

  1. Stewardship – act responsibly & ethically
  2. Team – build a collaborative, motivated unit
  3. Stakeholders – actively engage all stakeholders
  4. Value – optimize value delivery, not just deliverables
  5. Systems Thinking – view the project holistically within bigger systems
  6. Leadership – demonstrate & adapt leadership behaviors
  7. Tailoring – adapt processes, tools, cadence to context
  8. Quality – focus on fitness-for-purpose & excellence
  9. Complexity – recognize & manage complexity drivers
  10. Risk – address uncertainty proactively
  11. Adaptability & Resiliency – pivot and recover quickly
  12. Change – enable beneficial change effectively

Eight Performance Domains (What We Measure)

  • Stakeholders – identification, analysis, prioritization, continual engagement cycle
  • Team – high-performing traits: open communication, shared ownership, psychological safety, etc.
  • Development Approach & Life-cycle – predictive, adaptive, or hybrid; cadence of delivery
  • Planning – scope, schedule, resources, budgeting; techniques such as crashing & fast-tracking
  • Project Work – execution, procurement, issue logs, knowledge management
  • Delivery – scope definition, acceptance, Cost of Quality (Prevention, Appraisal, Failure)
  • Measurement – metrics, KPIs, dashboards, Earned Value, etc.
  • Uncertainty – risk, opportunity, ambiguity management

Systems for Value Delivery

  • Vehicles: single project → multiple projects → program (set of projects) → portfolio (sets of programs/projects)
  • Supported by ongoing Operations
  • Operate within Internal Environment (process assets, governance, data, infrastructure, capabilities) & External Environment (market, socio-cultural factors, regulations, climate)

Product Life-cycle vs. Project Type (Smart-phone Example)

  • Introduction – project type: make the phone work
  • Growth – add major new features
  • Maturity – incremental improvements (camera, water resistance)
  • Decline – cost-reduction, replacement-product projects

Tailoring Guidance (4-Step Cycle)

  1. Select an initial approach (predictive, agile, hybrid)
  2. Tailor to organization (culture, governance, capabilities)
  3. Tailor to the specific project (size, complexity, risk)
  4. Implement ongoing improvement (remove waste, refine docs/processes)

Models, Methods & Artifacts

  • Models (thinking strategies): motivation theories, change models, Tuckman team development, situational leadership, negotiation, etc.
  • Methods (means to an end): IRRIRR, NPVNPV, ROI, SWOT, root-cause analysis, Monte Carlo simulation, parametric & analogous estimating, life-cycle assessment, etc.
  • Artifacts (outputs/templates): WBS, RBS, Gantt chart, burn-down chart, change log, risk register, stakeholder register, RFQ/RFP/RFI, lessons-learned register, etc.

Stakeholder Analysis Attributes (Illustrative)

  • Power, Impact, Interest, Influence, Attitude, Beliefs/Expectations
  • Low-power–high-influence example: social-media “influencers”

Development Approaches & Cadence Matrix (Examples)

  • Building – single release – predictive
  • Senior-care services – frequent cycles – iterative
  • Website creation + continuous enhancement – adaptive/agile
  • Community patrol training – incremental deliveries – incremental

Chapter 2 – Organizational Strategy & Project Selection

Why PMs Must Understand Strategy

  • Make day-to-day decisions that align with corporate direction
  • Defend or advocate projects through a strategic lens

Sacred Cow – project championed by powerful executive; politically untouchable

Project Categories

  • Compliance/Mandatory – must be done to meet regulations
  • Operational – sustains current operations
  • Strategic – moves the organization toward long-term goals

Phase-Gate (Stage-Gate) Model

At each gate the sponsor decides: Go / Kill / Recycle based on evidence from prior phase.

Financial Selection Models

  • Simple Payback Period
    • Formula: Payback=Initial InvestmentAnnual Savings\text{Payback} = \frac{\text{Initial Investment}}{\text{Annual Savings}} (works only for single lump-sum outflow + uniform inflows)
    • Limitations: ignores time-value of money & post-payback cash flows
    • When cash flows vary, compute cumulative cash flow each year until it turns positive
  • Net Present Value (NPV)
    • Formula: NPV=C<em>0+∑</em>t=1nFt(1+k)tNPV = C<em>0 + \sum</em>{t=1}^{n} \frac{F_t}{(1+k)^t}
    • C<em>0C<em>0 = initial investment (negative), F</em>tF</em>t = net inflow at end of year tt, kk = discount/required return
    • Use Excel: =C0 + NPV(k, F1:F_n)
    • Considers time value & full life-cycle
  • Example (constant inflows)
    • Project A: Invest $700,000\$700{,}000, save $220,000\$220{,}000/yr → Payback ≈ 3.1 yrs; NPV≈$54,000NPV≈\$54{,}000 @ 15 %
    • Project B: Invest $400,000\$400{,}000, save $110,000\$110{,}000/yr → Payback ≈ 3.6 yrs; NPV≈−$31,000NPV≈-\$31{,}000
    • Both criteria select Project A
  • Example (variable inflows)
    • Use cumulative cash-flow table in Excel to locate year when cumulative turns ≥ 0

Non-Financial Criteria

  • Strategic alignment, brand/image, safety, environmental impact, employee morale, etc.

Multi-Weighted Scoring Model

  • Same rating scale (e.g., 0–10) applied to each criterion; multiply by weight; sum to obtain Weighted Total
  • Weights can sum to 1.01.0 or be raw numbers (2, 3, 2.5…)—consistency is key
  • Excel tips:
    • Anchor weight row/column with \ (e.g., $C$2) before drag-copying formulas
    • Weighted Total = SUMPRODUCT(criteria range, weight range)
  • Provides transparency; final decision may still consider factors outside the model

Risk-Based Project Typology

  • Bread-and-Butter – evolutionary improvements, low risk/return
  • Pearls – revolutionary gains using proven tech, moderate risk
  • Oysters – high-risk technological breakthroughs, potentially huge return
  • White Elephants – once‐promising, now poor prospects but too large to abandon easily

Cost of Quality (Delivery Domain Detail)

  • Prevention Cost – design reviews, training, robust processes (usually cheapest long-term)
  • Appraisal Cost – inspections, testing, audits
  • Failure Cost – Internal (found before release) & External (found by customers → recalls, warranty claims)

Measurement Domain – KPIs

  • On-time completion %, Earned Value metrics (CPI, SPI), customer satisfaction index, defect density, etc.

Uncertainty Domain – Risk Concepts

  • Identifying, analyzing, prioritizing, responding, monitoring risks & opportunities
  • Emphasis on adaptability & resiliency (bounce-back speed)

Team & Leadership Nuances

  • High-performing teams show: shared vision, psychological safety, clear roles, collective ownership, frequent feedback
  • Leadership style must be tailored (no one-size-fits-all): directive, participative, servant, transformational, situational

Assignment Reminder (Car Selection Project)

  • Budget baseline $100,000\$100{,}000 over 10 yrs (justify if different)
  • Compare ≥ 4 EV/Hybrid models
  • Build 10-yr cash-flow sheet (purchase, energy, maintenance, insurance, resale, …)
  • Use Multi-Weighted Scoring Model with ≥ 4 criteria (include Payback, NPV, plus ≥ 1 qualitative factor)
  • Cite all data; upload spreadsheet + 3–5 min video (voice & face) by Jun 30
  • Comment on ≥ 2 peers’ posts

Administrative Notes

  • Quiz 1 on Monday Jun 30 – no additional lecture that day; focus on quiz
  • Watch recordings rather than relying solely on slides/Google to capture Excel techniques (cumulative cash flow, SUMPRODUCT, anchoring cells)