Monk 1: BUSINESS FUNCTIONS AND BUSINESS PROCESSES

 Enterprise Resource Planning (ERP) systems are core software programs used by companies to
integrate and coordinate information in every area of the business.
 A business process is a collection of activities that takes one or more kinds of input and creates an
output, such as a report or forecast, that is of value to the customer.
 Functional areas of operation are broad categories of business activities.
 Most companies have four main functional areas of operation: Marketing and Sales (M/S), Supply
Chain Management (SCM), Accounting and Finance (A/F), and Human Resources (HR).
 Business functions, which are activities specific to that functional area of operation.
 An information system (IS) includes the people, procedures, software, and computers that store,
organize, analyze, and deliver information.
 Information systems that are designed so functional areas share data are called integrated
information systems.
 Marketing and Sales (M/S) functions include developing products, determining pricing, promoting
products to customers, and taking customers’ orders.
 Inputs for Marketing and Sales: • Customer data • Order data • Sales trend data • Per-unit cost
• Company travel expense policy
 Outputs for Marketing and Sales: • Sales strategies • Product pricing • Employment needs
 Supply Chain Management (SCM) include developing production plans, ordering raw materials
from suppliers, receiving the raw material into the facility, manufacturing products, maintaining
facilities, and shipping products to customers.
 Inputs for Supply Chain Management: • Product sales data • Production plans • Inventory levels
• Layoff and recall company policy
 Outputs for Supply Chain Management: • Raw material orders • Packaging orders • Resource
expenditure data • Production and inventory reports • Hiring information
 Sales forecasts are estimates of future product demand, which is the amount of a product
customers will want to buy.
 Accounting and Finance (A/F) performs financial accounting to provide summaries of operational
data in managerial reports, and it is also responsible for tasks such as controlling accounts, planning
and budgeting, and cash-flow management.
 Inputs for Accounting and Finance: • Payments from customers • Accounts receivable data •
Accounts payable data • Sales data • Production and inventory data • Payroll and expense data
 Outputs for Accounting and Finance: • Payments to suppliers • Financial reports • Customer
credit data
 Raw data are simply numbers collected from sales, manufacturing, and other operations—without
any manipulation, calculation, or arrangement for presentation.
 Business must recruit, train, evaluate, and compensate employees. These are the functions of
Human Resources (HR).
 Inputs for Human Resources: • Personnel forecasts • Skills data
 Outputs for Human Resources: • Regulation compliance • Employee training and certification •
Skills database • Employee evaluation and compensation
 Manufacturing may run out of raw material or packaging; such a shortfall is called a stockout.
Shortages of this type can shut down production and cause the company to miss delivery dates.
 To avoid stockouts, management might choose to carry extra raw material and packaging, known
as safety stock, which can result in an overinvestment in inventory.

Monk 2: DEVELOPMENT OF ENTERPRISE RESOURCE PLANNING SYSTEMS

 Until recently, most companies had unintegrated information systems that supported only the
activities of individual business functional areas. Information systems configured in this way are
known as a silos because each department has its own stack, or silo, of information that is
unconnected to the next silo; silos are also known as stovepipes.
 Moore’s Law: In 1965, Intel employee Gordon Moore observed that the number of transistors that
could be built into a computer chip doubled every 24 months.
 ERP systems evolved as a result of three things: (1) the advancement of the hardware and software
technology (computing power, memory, and communications) needed to support the system, (2)
the development of a vision of integrated information systems, and (3) the reengineering of
companies to shift from a functional focus to a business-process focus.
 This central computer–local computer arrangement is now called a client-server architecture.
 Scalability means that the capacity of a piece of equipment can be increased by adding new
hardware.
 ERP programs help organizations manage company-wide business processes using a common
database, which holds a very large amount of data. The software that holds that data in an
organized fashion, and that allows for the easy retrieval of data, is the database management
system (DBMS).
 Manufacturing software advanced during the 1960s and 1970s, evolving from simple inventory-
tracking systems to material requirements planning (MRP) software. MRP is a production-
scheduling methodology that determines the timing and quantity of production runs and purchase-
order releases to meet a master production schedule.
 Electronic data interchange (EDI)—the direct computer-to-computer exchange of standard
business documents
 Software modules are individual programs that can be purchased, installed, and run separately, but
all of the modules extract data from a common database.
 In open architecture, third-party software companies are encouraged to develop add-on software
products that can be integrated with existing software.
 These programmers never imagined that software written in the 1970s would still be running major
companies and financial institutions in 1999. These old systems were known as legacy systems.
(Y2K upgrade era)
 SAP ERP software (previous versions were known as R/3, and later, mySAP ERP) has changed over
the years, owing to product evolution—and for marketing purposes.
 Modules of SAP ERP:
o Sales and Distribution (SD) module records sales orders and scheduled deliveries.
o Materials Management (MM) module manages the acquisition of raw materials from
suppliers (purchasing) and the subsequent handling of raw materials inventory, from
storage to work-in-progress goods to shipping of finished goods to the customer.
 o Production Planning (PP) module maintains production information.
o Quality Management (QM) module plans and records quality control activities, such as
product inspections and material certifications.
o Plant Maintenance (PM) module manages maintenance resources and planning for
preventive maintenance of plant machinery in order to minimize equipment breakdowns.
o Asset Management (AM) module helps the company manage fixed-asset purchases (plant
and machinery) and related depreciation.
o Human Resources (HR) module facilitates employee recruiting, hiring, and training. This
module also includes payroll and benefits.
o Project System (PS) module facilitates the planning for and control over new research and
development (R&D), construction, and marketing projects.
o Financial Accounting (FI) module records transactions in the general ledger accounts. This
module generates financial statements for external reporting purposes.
o Controlling (CO) module serves internal management purposes, assigning manufacturing
costs to products and to cost centers so the profitability of the company’s activities can be
analyzed.
o Workflow (WF) module is not a module that automates a specific business function.
 Total cost of an ERP system implementation includes the following: • The scale of the ERP software
(corresponds to the size of company) • The need for new hardware capable of running complex
ERP software • Consultants’ and analysts’ fees • Length of time required for implementation (which
causes disruption) • Training (which costs both time and money)
 Programmers can write specific routines for special applications in SAP’s internal programming
language, called Advanced Business Application Programming (ABAP).
 A return on investment (ROI) is an assessment of an investment project’s value, calculated by
dividing the value of the project’s benefits by the project’s costs.

Monk 3: MARKETING INFORMATION SYSTEMS AND THE SALES ORDER PROCESS

 SAP ERP defines up to six events for any sale: • Presales activities • Sales order processing •
Inventory sourcing • Delivery • Billing • Payment
 A range of information is stored about each customer in multiple tables. These data are referred to
as customer master data. Master data are data that remain fairly stable, such as customer name
and address. Master data are maintained in the central database, and are available to all SAP ERP
modules.
 Information about materials is in tables—collectively called material master data— which are used
by the MM (Materials Management) and PP (Production Planning) modules in addition to the Sales
and Distribution module.
 ERP system allows a company to define various ways to group its customers and salespeople. These
groupings are called organizational structures.
 Mechanism for keeping track of the document numbers associated with each sales order so
employees can track the status of an order while it is in process or research it after shipping. The
linked set of document numbers related to a sales order, also known as the audit trail, is called the
document flow in ERP.
 To accommodate the various ways that companies offer price discounts, SAP has developed a
control mechanism it calls the condition technique.
 Customer relationship management (CRM) software can help companies streamline their
interactions with customers to ensure a consistent message.
 On-demand CRM, the software and computer equipment reside with the CRM provider; it is not
installed in-house.
 Core CRM Activities include: • One-to-one marketing • Sales force automation (SFA) • Sales
campaign management • Marketing encyclopedias • Call center automation
 Data mining is the statistical and logical analysis of large sets of transaction data, looking for
patterns that can aid decision making and improve customer sales and service.
 CRM software can provide companies with the following benefits: • Lower costs • Higher revenue •
Improved strategy and performance measurement

Monk 4: PRODUCTION AND SUPPLY CHAIN MANAGEMENT INFORMATION SYSTEMS

 Three general approaches to production: • Make-to-stock • Make-to-order • Assemble-to-order
 Capacity is the maximum amount of product that can be produced.
 Standard Costs, which are the normal costs of manufacturing a product; standard costs are
calculated from historical data, factoring in any changes in manufacturing that have occurred since
the collection of the historical data.
 Production planners follow three important principles:
o Using a sales forecast, and considering current inventory levels, create an aggregate
(combined) production plan for all products.
o Break down the aggregate plan into more specific production plans for individual products
and details
o Use the production plan to determine raw material requirements
 Production process information flow:
 Sales forecasting is the process of predicting future demand for a company’s products.
 Sales and operations planning (SOP) is determining what the company will produce.
 In Demand management, the production plan is broken down into smaller time units, such as
weekly or even daily production figures, to meet demand for individual products
 Materials requirements planning (MRP)
 Purchasing step, the quantity and timing information from the MRP process is used to create raw
materials purchase orders.
 Detailed scheduling process uses the production plans developed during the demand management
step as an input for a production schedule
 Production process uses the detailed schedule to manage daily operations
 Rough-cut planning is a common term in manufacturing for aggregate planning. Rough-cut plans
are disaggregated to generate detailed production schedules.
 The output of the demand management process is the master production schedule (MPS), which is
the production plan for all finished goods.
 The bill of material (BOM) is a list of the materials (including quantities) needed to make a product.
 The lead time is the cumulative time required for the supplier to receive and process the order,
take the material out of stock, package it, load it on a truck, and deliver it to the manufacturer.
 Lot sizing refers to the process of determining production quantities (for raw materials produced
in-house) and order quantities (for purchased items).
 MRP record: the standard way of viewing the MRP process on paper.
 Repetitive manufacturing environments typically have production lines that are switched from one
product to another similar product.
 Supply chain describes all the activities that occur between the growing or mining of raw materials
and the appearance of finished products on the store shelf.
 Performance measurements (sometimes referred to as metrics) have been developed to show the
effects of better supply chain management.
o Cash-to-cash cycle time: This term refers to the time between paying for raw materials and
collecting cash from the customer.
o Initial fill rate is the percentage of an order that the supplier provided in the first shipment.
o Initial order lead time is the time needed for the supplier to fill the order.
o On-time performance measurement tracks how often the supplier met agreed-upon
delivery dates.

Monk 5: ACCOUNTING IN ERP SYSTEMS

 Financial accounting consists of documenting all the transactions of a company that have an
impact on the financial state of the organization and then using those documented transactions to
create reports for investors and external parties and agencies.
 The balance sheet is a summary of account balances such as cash held; amounts owed to the
company by customers; the cost of raw materials and finished-goods inventories; the value of fixed
assets such as buildings; amounts owed to vendors, banks, and other creditors; and amounts that
the investors have investedin the company.
 The income statement, or profit and loss (P&L) statement, shows the company’s revenue and
expenses and the profit or loss for a period of time (typically a quarter or a year).
 Managerial accounting deals with determining the costs and profitability of a company’s activities.
 In accounting, a company’s accounts are kept in a record called the general ledger.
 Accounts receivable entry (a general ledger document that indicates a customer owes money for
the goods received by the customer).
 Accounts payable entry in the general ledger, which indicates the company has an obligation to
pay for goods it has received.
 Many SAP ERP modules cause transaction data to be entered into the general ledger, including:
o Sales and Distribution (SD), Materials Management (MM), Financial Accounting (FI),
Controlling (CO), Human Resources (HR), and Asset Management (AM)
 A manufactured item’s cost has three elements: (1) the cost of raw materials, (2) the cost of labor
employed directly in the production of the item, and (3) all other costs, which are typically called
overhead.
 Materials and labor are often called direct costs because the constituent amounts of each in a
finished product can be estimated fairly accurately.
 On the other hand, the overhead items are indirect costs, which are difficult to associate with a
specific product or a batch of specific products.
 The differences between actual costs and standard costs are called cost variances.
 In the SAP ERP system, a product cost is based on a product cost variant. In SAP ERP, the term
variant is used to mean a version of a plan or analysis.
 A trend in inventory cost accounting is toward activity-based costing. In activity-based costing,
overhead costs are assigned to products based on the manufacturing activities that gave rise to the
costs.
 The following scenario illustrates the problems of currency translation, which is the process of
converting account balances expressed in one currency into balances expressed in another
currency.
 The current reporting standard for financial statements in the United States is U.S. GAAP
(Generally Accepted Accounting Principles), created by the Financial Accounting Standards Board.
 International Financial Reporting Standards (IFRS), which are a set of international accounting
standards issued by the International Accounting Standards Board (IASB).
 Transactions that occur between a parent company and one of its subsidiaries (or between
different subsidiaries), known as intercompany transactions, must be eliminated from the books of
the parent company because the transaction does not represent any transfer of funds into or out
of the company.
 The term drill down refers to the ability to view the details behind a summary of information.
 This permanently stored data, or archive, allows auditors to reconstruct the company’s financial
position at any point in the past.
 Extensible Business Reporting Language (XBRL) is a standards-based language for the electronic
communication of business and financial data.
 XBRL is a subset of Extensible Markup Language (XML), the new programming language of the
Internet. XML uses tags that define the data contained within them. Similar to data types assigned
to records in a database, XML tags apply specific meaning to the data within a Web page.

Monk 6: HUMAN RESOURCE PROCESSES IN ERP

 Human capital management (HCM) term used to describe the tasks associated with managing a
company’s workforce.
 Short list of candidates for the position by selecting up to three applicants, based on the data
provided by the Human Resources Department.
 SAP ERP distinguishes between a person, task, job, and position. In SAP, a person is a unique
individual who holds a position and who performs tasks, which are the assigned responsibilities
related to a specific job or position.
 A job is a general classification of tasks that are routinely performed together.
 A position is an individual employee assignment within the organization.
 The remuneration elements of an employee’s pay include the base pay, bonuses, gratuities,
overtime pay, sick pay, and vacation allowances the employee has earned during the pay period.
 The statutory and voluntary deductions are paycheck withholdings, including taxes (federal, state,
local, Social Security, and Medicare), company loans, and benefit contributions.
 The process of determining each employee’s pay is called a payroll run.
 In the payroll run, the ERP system evaluates the input data and notes any discrepancies in an error
log. Payroll employees review the error log, make any necessary corrections, and repeat the payroll
run until no errors are recorded.
 In the ERP system, employee development is driven by qualifications and requirements.
Requirements are skills or abilities associated with a position, while qualifications are skills or
abilities associated with a specific employee.
 A succession plan outlines the strategy for replacing key employees when they leave the company
or move to another position within the company.
 The concept of management by objectives (MBO) was first outlined by Peter Drucker in his 1954
book The Practice of Management.

Monk 7: PROCESS MODELING, PROCESS IMPROVEMENT, AND ERP IMPLEMENTATION

 We will use the term process model to describe any abstract representation of a process. A process
model can be as simple as a diagram with boxes and arrows or as complex as computer software
that allows for process simulation.
 A flowchart is any graphical representation of the movement or flow of concrete or abstract
items—materials, documents, logic, and so on.
 Today the term process mapping is often used interchangeably with flowcharting, the distinction
being that process mapping refers specifically to the activities occurring within an existing business
process.
 Gap analysis is an assessment of disparities between how the process currently works and how the
organization wants it to work.
 Establishing process boundaries is one of the most important steps in process mapping. The
process boundaries define which activities are to be included in the process, and which are
considered part of the environment—external to the process.
 One helpful tool is hierarchical modeling, which is a type of process mapping in which a business
process can be described in greater or less detail, depending on the task at hand.
 Another widely used and widely recognized type of process-mapping technique is deployment
flowcharting (also known as swimlane flowcharting). This type of flowchart depicts team members
across the top, with each step aligned vertically under the appropriate employee or team.
 SAP’s ERP software supports hundreds of business processes, and SAP has developed graphical
models for many of these business processes using the event process chain (EPC) format. The EPC
format uses only two symbols to represent a business process.
 The basic EPC diagram can be augmented with additional information. In EPC terminology, this
additional information is called a data element.
 Using the simple technique of value analysis can also generate process-improvement ideas. In
value analysis, each activity in the process is analyzed for the value it adds to the product or
service. The value added is an increase in a product’s or service’s value, from the perspective of the
customer. Activities can add:
o Real value, Business value, No value
 H. James Harrington, in his book Business Process Improvement, suggests that companies ask the
following questions about their business processes to identify areas for improvement: unnecessary
 checks/balances, Multiple copies, stored copies for no reason, duplication, unnecessary
correspondence.
 Dynamic process modeling takes a basic process flowchart and puts it into motion, using computer
simulation techniques to facilitate the evaluation of proposed process changes.
 Workflow tools are software programs that automate the execution of business processes and
address all aspects of a process, including the process flow (the logical steps in the business
process), the people involved (the organization), and the effects (the process information that
documents the process steps).
 Workflow tasks are email messages that can include basic information, notes, and documents, as
well as direct links to business transactions.
 The costs of an ERP implementation include the following:
o Software licensing fees, Consulting fees, Project team member time, Employee training, and
Productivity losses.
 Managing the human behavior aspects of organizational change is called organizational change
management (OCM).
 A common problem in ERP implementations is scope creep, which is the unplanned expansion of
the project’s goals and objectives.
 The Development (DEV) system is used to develop configuration settings for the system, as well as
special enhancements using ABAP code.
 These changes are automatically recorded in the transport directory, which is a special data file
location on the DEV server.
 Changes recorded in the DEV system are imported into the Quality Assurance (QAS) system, where
they are tested to make sure they function properly.
 Once the configuration settings and ABAP programs pass testing in the QAS system, all settings,
programs, and changes are transported to the Production (PROD) system, which is the system the
company will use to run its business processes.

Monk 8: RFID, BUSINESS INTELLIGENCE (BI), MOBILE COMPUTING, AND THE CLOUD
 Radio frequency identification technology, known commonly as RFID, is becoming an increasingly
efficient tool for tracking items through a supply chain.
 Business intelligence (BI), also referred to as business analytics, is a term used to describe a range
of different applications and technologies used to extract and analyze large amounts of data to aid
in decision making. BI includes data-mining tools and querying tools, which are often interactive
and visual.
 Enterprise information management is a relatively new term that describes the business and
technology functions that manage information as a corporate asset.
 To speed access to this data, the data in a data warehouse are structured as multidimensional data
cubes, which allow for relationships in the data to be analyzed quickly.
 Cloud computing can be defined in simple terms as the delivery of a software product to a user via
the Internet.
 With the introduction of NetWeaver, SAP announced that it was planning its future initiatives
around the concept of enterprise service-oriented architecture (enterprise SOA), with a goal of
 making all its business applications service based —to provide its customers with the most
flexibility possible.
 The combination of software tools that enables an organization’s various systems and applications
to communicate with other applications is called Web services.
 Software as a service (SaaS) is a software delivery model in which a software product is hosted by
a company—such as SAP—on its servers and is accessed by customers via a Web browser.
 Advantages of Using SaaS:
o Initial affordability, Shorter implementation time, Lower support costs/complexity
 Disadvantages of Using SaaS:
o Security, Bandwidth/response time, Flexibility, No frills, Technical/not business focus

Schwalbe 1: Introduction to Project Management

 Many organizations assert that using project management techniques provides advantages, such as
the following:
o Better control of financial/physical/human resources, Improved customer relations, Shorter
development times, Lower costs and improved productivity, Higher quality and increased
reliability, Higher profit margins, Better internal coordination, Positive impact on meeting
strategic goals, and Higher worker morale
 A project is “a temporary endeavor undertaken to create a unique product, service, or result.” The
success rate of IT projects has more than doubled since 1995, but still only about one-third are
successful in meeting scope, time, and cost goals.
 For example, in software development, DevOps is a fairly new term used to describe a culture of
collaboration between software development and operations teams to build, test, and release
reliable software more quickly.
 The following attributes help define a project further:
○ Has a unique purpose, temporary, drives change and enables value creation, developed
using progressive elaboration, requires resources, often from various areas, should have a
primary customer or sponsor, involves uncertainty
 An IT project involves the use of hardware, software, and networks. Projects are unique,
temporary, and developed incrementally; they require resources, have a sponsor, and involve
uncertainty.
 Project Constraints (Triple Constraints): Scope, Time, Cost
o The triple constraint of project management refers to managing the scope, time, and cost
dimensions of a project. It is important to address these dimensions as well as other
constraints (such as quality, resources, and risks) and to satisfy the project sponsor.
 Project management is the application of knowledge, skills, tools, and techniques to project
activities to meet project requirements.
 Stakeholders are the people involved in or affected by project activities.
 A framework for project management includes the project stakeholders, project management
knowledge areas, and project management tools and techniques.
 The 10 knowledge areas are project integration management, scope, schedule, cost, quality,
resource, communications, risk, procurement, and stakeholder management.
 A program is a group of related projects, subsidiary programs, and program activities managed in a
coordinated way to obtain benefits and control that are not available from managing the projects
individually.
 Project portfolio management involves organizing and managing projects and programs as a
portfolio of investments that contribute to the entire enterprise’s success.
 In the United States, the military took the lead in project management and developed many tools
such as Gantt charts and network diagrams, but today people use project management in virtually
every industry around the globe. The Project Management Institute (PMI) is an international
professional society that provides several certifications and upholds a code of ethics.

Schwalbe 2: Project Management and Information Technology

 Organizations have four different frames: structural, human resources, political, and symbolic.
Project managers need to understand all these aspects of organizations to be successful.
 The structural frame focuses on different groups’ roles and responsibilities to meet the goals and
policies set by top management.
 The human resources frame focuses on producing harmony between the needs of the organization
and the needs of people.
 The political frame addresses organizational and personal politics.
 The symbolic frame focuses on symbols and meanings.
 The structure of an organization has strong implications for project managers, especially regarding
the amount of authority they have. The three basic organizational structures are functional,
matrix, and project.
 Project managers have the most authority in a pure project organization, an intermediate amount
of authority in a matrix organization, and the least amount of authority in a functional organization.
 Projects are more likely to succeed in a culture where employees have a strong identity with the
organization, where work activities emphasize groups, and where there is strong unit integration,
high risk tolerance, performance-based rewards, high conflict tolerance, an open-systems focus,
and a balance among the dimensions of people focus, control, and means orientation.
 Project stakeholders are individuals and organizations who are actively involved in the project or
whose interests may be positively or negatively affected by the project’s execution or successful
completion.
 A project life cycle is a collection of phases. Traditional project phases include concept,
development, implementation, and close-out.
 A deliverable is a product or service, such as a technical report, a training session, a piece of
hardware, or a segment of software code, produced or provided as part of a project.
 Projects often develop products, which follow product life cycles. Project managers must
understand the specific life cycles of their products as well as the general project life cycle model.
Waterfall, RAD, and Spiral are all IT product life cycles.
 A systems development life cycle (SDLC) is a framework for describing the phases of developing
information systems.
 A management review should occur at the end of each project phase, and more frequent
management inputs are often needed. These management reviews and inputs are important for
 keeping projects on track and determining if projects should be continued, redirected, or
terminated.
 Recent trends have affecting IT project management: Increased globalization, outsourcing, virtual
teams, and agile project management have changed the way many IT projects are staffed and
managed.

Schwalbe 5: Project Scope Management

 Project scope management includes the processes involved in defining and controlling what work
is or is not included in a project.
 Scope refers to all the work involved in creating the products of the project and the processes used
to create them.
 Six main processes are involved in project scope management: 1. Planning scope management 2.
Collecting requirements 3. Defining scope 4. Creating the WBS 5. Validating scope 6. Controlling
scope
 Scope management plan includes the following: How to prepare a detailed project scope
statement, How to create a WBS, How to maintain and approve the WBS, How to obtain formal
acceptance of the completed project deliverables, How to control requests for changes to the
project scope
 Requirement is “a condition or capability that is necessary to be present in a product, service, or
result to satisfy a business need.”
 For software projects, it is helpful to divide requirements development into the software
engineering steps called elicitation, analysis, specification, and validation.
 The requirements management plan documents how project requirements will be analyzed,
documented, and managed.
 A requirements traceability matrix (RTM) is a table that lists requirements, their various attributes,
and the status of the requirements to ensure that all are addressed.
 Project scope statements should include at least a product scope description, product user
acceptance criteria, and detailed information on all project deliverables.
 A work breakdown structure (WBS) is a deliverable-oriented grouping of the work involved in a
project that defines its total scope. Because the WBS defines the total scope of the project, some
project management experts believe that work should not be done on a project if it is not included
in the WBS. Therefore, it is crucial to develop a complete WBS.
 Decomposition is, subdividing project deliverables into smaller pieces. Primary technique for WBS
creation.
 The scope baseline includes the approved project scope statement and its associated WBS and
WBS dictionary
 A work package is a task at the lowest level of the WBS. A work package also represents the level
of work that the project manager monitors and controls.
 Approaches to develop a WBS: Using guidelines, the analogy approach, the top-down approach,
the bottom-up approach, the mind-mapping approach
 In the analogy approach, you use a similar project’s WBS as a starting point.
 To use the top-down approach, start with the largest items of the project and break them into
subordinate items.
 In the bottom-up approach, team members first identify as many specific tasks related to the
project as possible.
 Mind mapping is a technique that uses branches radiating from a core idea to structure thoughts
and ideas.
 A WBS dictionary is a document that provides detailed information about each WBS item.
 Scope creep is the tendency for project scope to keep getting bigger and bigger.
 Scope validation involves formal acceptance of the completed project deliverables. This
acceptance is often achieved by a customer inspection and then sign-off.
 Variance is the difference between planned and actual performance.  Controlling scope

Schwalbe 6: Project Schedule Management

 Project schedule management, simply defined, involves the processes required to ensure timely
completion of a project.
 Six main processes are involved in project schedule management: 1. Planning schedule
management 2. Defining activities 3. Sequencing activities 4. Estimating activity durations
5. Developing the schedule 6. Controlling the schedule
 Schedule management plan includes the following information: Project schedule model
development, Level of accuracy and units of measure, Control thresholds, Rules of performance
measurement, Reporting formats, Process descriptions
 The activity list is a tabulation of activities to be included on a project schedule. The list should
include the activity name, an activity identifier or number, and a brief description
 The activity attributes provide schedule-related information about each activity
 A milestone on a project is a significant event that normally has no duration.
 A dependency or relationship pertains to the sequencing of project activities or tasks.
 Types of dependencies among project activities: Mandatory dependencies, Discretionary
dependencies, External dependencies, and Internal dependencies
 A network diagram is a schematic display of the logical relationships among project activities and
their sequencing.
 Activity-on-arrow (AOA) or arrow diagramming method (ADM) is a network diagramming
technique in which activities are represented by arrows and connected at points called nodes to
illustrate the sequence of activities.
 A node is simply the starting and ending point of an activity.
 Bursts occur when two or more activities follow a single node. A merge occurs when two or more
nodes precede a single node.
 Precedence diagramming method (PDM) is a network diagramming technique in which boxes
represent activities.
 The four types of dependencies between activities: Finish-to-start, Start-to-start, Finish-to-finish,
and Start-to-finish
 It is important to note that duration includes the actual amount of time worked on an activity plus
elapsed time. Do not confuse duration with effort, which is the number of workdays or work hours
required to complete a task.
 A three-point estimate includes an optimistic, a most likely, and a pessimistic estimate
 Gantt charts provide a standard format for displaying project schedule information by listing
project activities and their corresponding start and finish dates in calendar form.
 SMART criteria are guidelines suggesting that milestones should be: Specific, Measurable,
Assignable, Realistic, and Time-framed
 A slipped milestone means the milestone activity was completed later than originally planned.
 Critical path method (CPM), also called critical path analysis —is a network diagramming
technique used to predict total project duration.
 A critical path for a project is the series of activities that determine the earliest time by which the
project can be completed.
 Slack or float is the amount of time an activity may be delayed without delaying a succeeding
activity or the project finish date.
 The early start date is the earliest possible time an activity can start based on the project network
logic. A forward pass determines the early start and early finish dates for each activity.
 A backward pass through the network diagram determines the late start and late finish dates for
each activity in a similar fashion. The late start date is the latest possible time an activity might
begin without delaying the project finish date. The late finish date is the latest possible time an
activity can be completed without delaying the project finish date.
 Crashing is a technique for making cost and schedule trade-offs to obtain the greatest amount of
schedule compression for the least incremental cost.
 Fast tracking involves doing activities in parallel that you would normally do in sequence.
 The Theory of Constraints is based on the metaphor of a chain and its weakest link: Any complex
system at any point in time often has only one aspect or constraint that limits the ability to achieve
more of the system’s goal.
 Critical chain scheduling is a method that considers limited resources when creating a project
schedule and includes buffers to protect the project completion date.
 Multitasking occurs when a resource works on more than one task at a time. This situation occurs
frequently on projects.
 Buffer is additional time to complete a task.
 Program Evaluation and Review Technique (PERT) can be used to estimate project duration. PERT
applies the critical path method (CPM) to a weighted average duration estimate.

Schwalbe 7: Project Cost Management

 Cost overrun is the additional percentage or dollar amount by which actual costs exceed estimates.
 Project cost management includes the processes required to ensure that a project team completes
a project within an approved budget.
 Four processes for project cost management: 1. Planning cost management, 2. Estimating costs,
3. Determining the budget, and 4. Controlling costs
 Profits are revenues minus expenditures. Profit margin is the ratio of profits to revenues.
 Life cycle costing provides a big-picture view of the cost of a project throughout its life cycle.
 Cash flow analysis is a method for determining the estimated annual costs and benefits for a
project and the resulting annual cash flow.
 Tangible costs or benefits are easy to measure in dollars, intangible costs or benefits are difficult
to measure in dollars
 Direct costs can be directly related to creating the products and services of the project, Indirect
costs are not directly related to the products or services of the project but are indirectly related to
performing work on the project. Sunk cost is money that has been spent in the past.
 Learning curve theory states that when many items are produced repetitively, the unit cost of
those items decreases in a regular pattern as more units are produced.
 Reserves are dollar amounts included in a cost estimate to mitigate cost risk by allowing for future
situations that are difficult to predict.
 Cost management plan includes the following information: Level of accuracy, Units of measure,
 Organizational procedures links, Control thresholds, Rules of performance measurement, Reporting
formats, and Process descriptions
 Cost Estimates: A rough order of magnitude (ROM) estimate provides an early estimate of what a
project will cost, a budgetary estimate is used to allocate money into an organization’s budget, and
a definitive estimate provides an accurate estimate of project costs.
 Methods of Cost estimates: Analogous estimates, also called top-down estimates, use the actual
cost of a previous. Bottom-up estimates involve estimating the costs of individual work items or
activities and summing them. Three-point estimates involve estimating the most likely, optimistic,
and pessimistic costs. Parametric estimating uses project characteristics (parameters) in a
mathematical model to estimate project costs
 Typical Problems with IT Cost Estimates: Estimates are done too quickly, People lack estimating
experience, Human beings are biased toward underestimation, Management desires accuracy.
 A cost baseline is a time-phased budget that project managers use to measure and monitor cost
performance.
 Earned value management (EVM) is a project performance measurement technique that
integrates scope, time, and cost data. Involves calculating 3 values: planned value, actual cost, and
earned value
 Cost variance (CV) is the earned value minus the actual cost.
 Schedule variance (SV) is the earned value minus the planned value.

Schwalbe 9: Project Resource Management

 Project resource management includes the processes required to make the most effective use of
the human and physical resources (facilities, equipment, materials, supplies, etc.) involved with a
project.
 Project resource management includes the following four processes: 1. Planning resource
management, 2. Estimating activity resources, 3. Acquiring resources, 4. Developing the project
team, 5. Managing the project team
 Motivation Theories: Intrinsic motivation causes people to participate in an activity for their own
enjoyment. Extrinsic motivation causes people to do something for a reward or to avoid a penalty.
 Maslow’s hierarchy of needs, which states that people’s behaviors are guided or motivated by a
sequence of needs.
 Herzberg’s Motivation-Hygiene Theory referred to factors that cause job satisfaction as motivators
and factors that could cause dissatisfaction as hygiene factors.
 McClelland’s Acquired-Needs Theory proposed that a person’s specific needs are acquired or
learned over time and shaped by life experiences. The main categories of acquired needs include
achievement, affiliation, and power.
 Theory X and Theory Y: Theory X (sometimes referred to as classical systems theory) people
believe that workers dislike and avoid work if possible. Managers who believe in Theory Y (human
relations theory) assume that employees do not inherently dislike work but consider it as natural as
play or rest.
 Nine influence bases that are available to project managers: 1. Authority, 2. Assignment, 3. Budget
4. Promotion, 5. Money, 6. Penalty, 7. Work challenge, 8. Expertise, 9. Friendship
 Seven habits to improve effectiveness on projects (Stephen Covey): 1. Be proactive. Project
managers must be proactive in anticipating and planning for problems and inevitable changes on
projects. 2. Begin with the end in mind. Covey suggests that people focus on their values, what
they want to accomplish, and how they want to be remembered in their lives. 3. Put first things
first. Covey developed a time management system and matrix to help people prioritize their time.
4. Think win/win. Covey presents several paradigms of interdependence; think win/win is the best
choice in most situations. 5. Seek first to understand, then to be understood. Empathic listening is
listening with the intent to understand. 6. Synergize. A project team can synergize by creating
collaborative products that are much better than a collection of individual efforts. 7. Sharpen the
saw. When you practice sharpening the saw, you take time to renew yourself physically, spiritually,
mentally, and socially.
 Emotional intelligence is knowing and managing one’s own emotions and understanding the
emotions of others for improved performance
 An organizational breakdown structure (OBS) is a specific type of organizational chart that shows
which organizational units are responsible for which work items.
 A responsibility assignment matrix (RAM) maps the work of the project, as described in the WBS,
to the people responsible for performing the work.
 A staffing management plan describes when and how people will be added to the project team
and taken off it.
 A resource breakdown structure is a hierarchical structure that identifies the project’s resources by
category and type.
 Resource loading refers to the amount of individual resources that an existing schedule requires
during specific time periods.
 Overallocation means that not enough resources are available to perform the assigned work
during a given time period.
 Resource leveling is a technique for resolving resource conflicts by delaying tasks.