Key Definitions of Project Management

Activity

An element of work performed during the course of a project. An activity normally has an expected duration,an expected cost, and expected resource requirements. Activities can be divided into tasks. 

Amount at Stake

The extent of adverse consequences which could occur to the project. (Also referred to as risk impact).

Arrow Diagram Method (ADM)

A network diagramming technique in which activities are represented by arrows. The tail of the arrow represents the start and the head of the arrow represents the end of the activity. Activities are connected at points called nodes to illustrate the sequence in which activities are expected to be performed. Also called Activity-On-Arrow (AOA).

Backward Pass

The calculation of late finish and start dates for the uncompleted portions of all network activities. Determined by working backwards through the network logic from the project's end date.

Baseline

The original plan plus or minus approved changes.

Bill of Lading

A receipt issued by a carrier for merchandise to be delivered to a party at some destination.

Budget At Completion (BAC)

The estimated total cost of the project when done.

Budgeted Cost of Work Performed (BCWP)

The sum of the approved cost estimates for activities completed during a given period (usually project-to-date).

Budgeted Cost of Work Scheduled (BCWS)

The sum of the approved cost estimates for activities scheduled to be performed during a given period.

Chart of Accounts

Any numbering system used to monitor project costs by category (e.g., labor, supplies, materials). The project chart of accounts is usually based upon the corporate chart of accounts of the primary performing organization.

Contingency Planning

The development of a management plan that identifies alternative strategies to be used to ensure project success if specified risk events occur.

Contingency Reserve

A separately planned quantity used to allow for future situations which may be planned for only in part ("known unknowns"). Contingency reserves are intended to reduce the impact of missing cost or schedule objectives. Contingency reserves are normally included in the project's cost and schedule baselines.

Cost Budgeting

Allocating the cost estimates to individual project components.

Cost Control

Controlling changes to the project budget.

Cost Estimating

Estimating the cost of the resources needed to complete project activities.

Cost Performance Index (CPI)

The ratio of budgeted costs to actual costs (BCWP / ACWP). CPI is often used to predict the magnitude of a possible cost overrun using the following formula: original cost estimate/CPI = projected cost at completion.

Cost Variance (CV)

Any difference between the estimated cost of an activity and the actual cost of that activity. In earned value, CV = BCWP-ACWP.

Concurrent Engineering

Generally speaking, an approach to project staffing that calls for the implementors to be involved in the design phase. (sometimes confused with fast tracking.)

Crashing

Taking action to decrease the total project duration after analyzing a number of alternatives to determine how to get the maximum duration compression for the least cost.

Critical Path

The series of activities which determines the earliest completion of the project. The critical path is usually defined as those activities with float less than or equal to a specified value (usually zero).

Critical Path Method (CPM)

A network analysis technique used to predict project duration by analyzing which path has the least amount of scheduling flexibility. Early dates are calculated using a forward pass; late dates are calculated using a backwards pass.

Constructive Change

Occurs when the PM's conduct enables performance differing from that prescribed by the contract. The PM's conduct in effecting constructive change may either be affirmative or a failure to act. Not part of change control of contract: For instance, if final product performs better than standard specified in contract, or if the PM increases the quality over and beyond what's stated in the contract.

Contract

A legal document of purchase or sale which is binding on both parties. When entering into a contract, the people involved must have legal capacity to do so. (the definition of legal capacity varies from state to state). Consideration must be provided to both parties (in other words, there must be sufficient cause to contract). There must be mutual assent.

Change Control Board (CCB)

A formally constituted group of stakeholders responsible for approving or rejecting changes to the project baselines.

Code of Accounts

Any numbering system used to uniquely identify each element of the work breakdown structure.

Deflection

The act of transferring all or part of a risk to another party, usually by some form of contract.

Deliverable

Any measurable, tangible, verifiable outcome, result, or item that must be produced to complete a project or sub-project.

Delphi Technique

A forecasting technique used to gather information about future events on a project. It relies on gathering expert opinions.

Data Date (DD)

The point in time that separates actual (historical) data from future (scheduled) data. Also called as-of date.

Dummy Activity

An activity of zero duration used to show a logical relationship in the arrow diagramming method. Dummy activities are used when logical relationships cannot be completely or correctly described with regular activity arrows. Dummies are shown graphically as a dashed line headed by an arrow.

Duration (DU)

The number of work periods (not including holidays and other non-working periods) required to complete an activity or other project element.

Early Start Date (ES)

In the critical path method, the earliest possible date in which the uncompleted portions of an activity or project can start Can change as the project progresses.

Early Finish Date (EF)

In the critical path method, the earliest possible date in which the uncompleted portions of an activity or project can complete. Can change as the project progresses.

Earned Value

A method for measuring project performance. It compares the amount of work that was planned with what was actually accomplished to determine if cost and schedule performance is as planned.

Estimate at Completion (EAC)

The expected total cost of an activity, a group of activities, or of the project when the defined scope of work has been completed. Most techniques for forecasting EAC include some adjustment of the original cost estimate based on project performance to date. 

EAC = Actuals-to-date + ETC. 
(Also known as Forecast Final Cost)

Estimate To Complete (ETC)

The expected additional cost needed to complete an activity, a group of activities, or the project. Most techniques for forecasting ETC include some adjustment to the original cost estimate based on project performance to date.

Expected Monetary Value

The product of an event's probability of occurrence and the gain or loss that will result. For example, if there is a 50% probability it will rain, and rain will result in a $100 loss, the expected monetary value of the rain event is $50 (.5 * $100).

Event-on-Node

A network diagramming technique in which events are represented by boxes (or nodes) connected by arrows to show the sequence in which the events are to occur.

Fast Tracking

Compressing the project schedule by overlapping activities that would normally be done in sequence (such as design and construction).

Float

The amount of time that an activity may be delayed from its early start without delaying the project finish date. (Also called slack, total float, and path float).

Forward Pass

The calculation of the early start and early finish dates for the uncompleted portions of all network activities.

Free Float (FF)

The amount of time an activity can be delayed without delaying the early start of any immediately succeeding activities.

Fast Tracking

Compressing the project schedule by overlapping activities that would normally be done in sequence. Also used to imply overlapping of normally sequential phases in a project life cycle.

Fixed Costs

Costs that do not change based on the number of units. These costs are nonrecurring.

Functional Manager

A manager responsible for activities in a specialized department or function. (e.g., engineering, manufacturing, marketing)

Functional Organization

An organization structure in which staff are grouped hierarchically by specialty.

Gantt Chart

A graphic display of schedule-related information using bars.

Invitation for Bid (IFB)

PMBOK equates this with Request for Proposal and recognizes that it may have a more specific meaning in certain application areas. (appropriate for high dollar, standard items.)

Impact Analysis

The mathematical examination of the nature of individual risks on the project, as well as potential arrangements of interdependent risks. It includes the quantification of their respective impact severity, probability, and sensitivity to changes in related project variables, including the project life cycle.

Insurable Risk

A particular type of risk which can be covered by an insurance policy. Also referred to as a pure risk.

Life Cycle Costing

The concept of including acquisition, operating, and disposal costs when evaluating various alternatives. Also known as the total cost of ownership.

Lag

A modification of a logical relationship which directs a delay in the successor task.

Late Finish Date (LF)

In the critical path method, the latest possible date that an activity may be completed without delaying a specified milestone (usually the project finish date).

Late Start Date (SF)

In the critical path method, the latest possible date that an activity may begin without delaying a specified milestone (usually the project finish date).

Lead

A modification of a logical relationship which allows an acceleration of the successor task. For example, in a FS relationship with a 10 day lead, the successor can start 10 days prior to the completion of the predecessor.

Logical Relationship

A dependency between two project activities or between an activity and a milestone. Four possible types: FS, FF, SS, and SF. (see logical relationships under concepts).

Milestone

A significant event in the project, usually completion of a major deliverable.

Milestone Schedule

A summary level schedule which identifies the major milestones.

Management By Objectives (MBO)

A system of managerial leadership that defines individual managerial responsibilities in terms of corporate objectives.

Management Reserve

A separately planned quantity used to allow for future situations which are impossible to predict. ("unknown unknowns") Management reserves are intended to reduce the risk of missing cost or schedule objectives. Use of management reserves requires a change to the project's cost baseline.

Matrix Organization

Any organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of individuals assigned to the project.

Management Reserve

A separately planned quantity used to allow for future situations which are impossible to predict. ("unknown unknowns") Management reserves are intended to reduce the risk of missing cost or schedule objectives. Use of management reserves requires a change to the project's cost baseline.

Mitigation

Taking steps to lessen risk by lowering the probability of a risk event's occurrence or reducing its effect should it occur.

Monte Carlo Analysis

A schedule risk assessment technique that performs a project simulation many times in order to calculate a distribution of likely results.

Organizational Breakdown Structure

A depiction of the project organization arranged so (OBS) as to relate work packages to organizational units.

Project Management Team

The members of the project team who are directly involved in project management activities. On some smaller projects, the project management team may include virtually all of the project team members.

Project Manager

The individual responsible for managing a project.

Project Team Members

The people who report either directly or indirectly to the project manager.

Projectized Organization

Any organizational structure in which the project manager has full authority to assign priorities and to direct the work of individuals assigned to the project.

Parametric Estimating

An estimating technique that uses a statistical relationship between historical data and other variables to calculate an estimate.

Payback Period

The number of time periods up to the point at which cumulative revenues exceed cumulative costs and, therefore, the project has turned a profit.

Percent Complete (PC)

The percentage of the amount of work which has been completed on an activity or group of activities.

Project Cost Management

A subset of project management that includes the processes required to ensure that the project is completed within the approved budget.

Program

A group of related projects managed in a coordinated way. Programs usually include an element of ongoing activity.

Project

A temporary endeavor undertaken to create a unique product or service.

Project Charter

A formal document issued by senior management which explains the purpose of the project including the business needs the project and the resulting product. It provides the project manager with the authority to apply organizational resources to project activities.

Project Life Cycle

A collection of generally sequential project phases whose name and no. are determined by the control needs of the organization(s) involved in the project.

Project Phase

A collection of logically related project activities, usually culminating in the completion of a major deliverable.

Project Plan

A formal, approved document used to guide both project execution and project control. The primary uses of the project plan are to document planning assumptions and decisions, to facilitate communication among stakeholders, and to document approved scope, cost, and schedule baselines. A project plan may be summary or detail.

Project Management

The application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project.

Plan

Scope change will be integrated into the project. Includes an assessment of how likely and frequently the project scope may change and a description of how scope changes will be identified and classified.

Project Scope

The work that must be done in order to deliver a product with the specified i features and functions.

Path Convergence

In mathematical analysis, the tendency of parallel paths of approximately equal duration to delay the completion of the milestone where they meet.

Precedence Diagram Method (PDM)

A network diagramming technique in which activities are represented by nodes. Activities are linked by precedence relationships to show the sequence in which the activities are to be performed.

Program Evaluation and Review Technique (PERT)

An event-oriented network analysis technique used to estimate project duration when there is a high degree of uncertainty with the individual activity duration estimates.

Project Network Diagram

Any schematic display of the logical relationships of project activities. Always drawn from left to right to reflect project chronology. Often incorrectly referred to as a "PERT chart".

Risk Event

A discrete occurrence that may affect the project for better or worse.

Risk Identification

Determining which risk events are likely to affect the project.

Risk Management Plan

A subsidiary element of the overall project plan which documents the procedures that will be used to manage risk throughout the project. Also covers who is responsible for managing various risk areas; how contingency plans will be implemented, and how reserves will be allocated.

Risk Quantification

Evaluating the probability of risk event occurrence and effect.

Risk Response Control

Responding to changes in risk over the course of the project.

Risk Response Development

Defining enhancement steps for opportunities and mitigation steps for threats.

Request for Proposal (RFP)

A type of bid document used to solicit proposals from prospective sellers of products or services. In some application areas, it may have a more specific meaning. (appropriate for high dollar, non-standard items).

Request for Quotation (RFQ)

PMBOK does not distinguish between RFQ and RFP. However, PMBOK does recognize that some application areas have a more specific meaning for RFQ (appropriate for low dollar items such as supplies and materials).

Responsibility Assignment Matrix (RAM)

A structure which relates the project organization structure to the WBS to help ensure that each element of the project's scope of work is assigned to a responsible individual.

Resource Leveling

Any form of network analysis in which start and finish dates are driven by resource management concerns.

Resource-Limited Schedule

A project schedule whose start and finish dates reflect expected resource availability. The final project schedule should always be resource limited.

Stakeholder

Individuals and organizations that are actively involved in the project, or whose interests may be positively or negatively affected as a result of project execution or project completion. They may also exert influence over the project and its results.

Statement of Work (SOW)

Describes the portion of the product to be contracted. In general, this is different from the product description (which tends to be more broader). Under the circumstance where the seller is producing the entire product, the distinction between SOW and the product description becomes moot. Government terms: SOW is reserved for a procurement item that is a clearly specified product or service, and Statement of Requirements (SOR) is used for procuring an item that is presented as a problem to be solved. 

Scope Statement

A documented description of the project as to its output, approach, and content. (What is being produced?, How is it being produced?, and What is included?)

Scope Planning

Developing a written scope statement that includes the project justification, the major deliverables, and the project objectives.

Stakeholder

Individuals and organizations who are involved in or may be affected by project activities.

Scheduled Finish Date (SF)

The point in time work was scheduled to finish on an activity. The scheduled finish date is normally within the range of dates delimited by the early finish date and the late finish date.

Scheduled Start Date (SS)

The point in time work was scheduled to start on an activity. The scheduled start date is normally within the range of dates delimited by the early start and late start dates.

Schedule Performance Index (SPI)

The ratio of work performed to work scheduled. (BCWP / BCWS)

Schedule Variance (SV)

Any difference between the scheduled completion of an activity and the actual completion of that activity. In earned value, BCWP - BCWS.

Team Development

Developing individual and group skills to enhance project performance.

Work Authorization/Release

In cases where work is to be performed in segments due to technical or funding limitations, work authorization / release authorizes specified work to be performed during a specified period.

Work Package

A deliverable at the lowest level of the work breakdown structure. A work package may be divided into activities.

Work Breakdown Structure (WBS)

A deliverable-oriented grouping of project elements which organizes and defines the total scope of the project.

Value Analysis

A cost-reduction tool that involves careful analysis of a design or item to identify all the functions and the cost of each. It considers whether the function is necessary and whether it can be provided at a lower cost without degrading performance or quality.