PMGT1860 · Project Initiation and Scope
Schedule, Budget, Resources, Quality, Risk & Procurement
Week 7 covers establishing the project's resources: estimating time, cost and resources and the methods of estimation, plus first principles of quality, risk and procurement management, and the RACI matrix for clarifying responsibility. The RACI, risk register and estimation logic strengthen the resourcing sections of the group initiation plan, and the RACI roles and estimation methods are common quiz items.
What this chapter covers
- 01Estimate defined (PMBOK) — a quantitative assessment of likely cost, resources, effort or duration; duration vs effort
- 02Methods of estimation — analogous (top-down), parametric (unit rate), bottom-up (roll up work packages), three-point (PERT), Wideband Delphi
- 03Quality in projects — plan quality → manage/assure quality → control quality; conformance, verification vs validation
- 04Risk defined — an uncertain event with a positive (opportunity) or negative (threat) effect on objectives
- 05Risk process — identify → analyse (probability × impact; Expected Monetary Value) → plan responses → monitor
- 06Threat responses (avoid, mitigate, transfer, escalate, accept) and opportunity responses (exploit, enhance, share, escalate, accept)
- 07Contingency reserve (known risks) vs management reserve (unknown work); procurement planning and contract types
- 08The RACI matrix — Responsible, Accountable (exactly one), Consulted, Informed
Applied: choose an estimation method, size a risk, and read a RACI cell
- +1(a) Bottom-up estimating fits — it estimates each work package and rolls them up, giving the most accurate figure at the cost of most effort, and it builds directly on the WBS.
- +1The fastest but least accurate early method is analogous (top-down) estimating, which uses actuals from a similar past project when little detail exists.
- +1(b) Expected Monetary Value = probability × monetary impact = 0.20 × $50,000 = $10,000 (a threat, so a negative expected value).
- +1A valid threat-response strategy is any of: avoid, mitigate, transfer, escalate or accept. (Opportunities instead use exploit, enhance, share, escalate, accept.)
- +1(c) Exactly one person can be Accountable for a task (the single owner who approves). Consulted means someone who provides input through two-way communication (distinct from Informed, who is only kept up to date one-way).
Key terms
- Estimation methods
- Analogous/top-down (from a similar past project — fast, rough), parametric (a unit rate × quantity), bottom-up (estimate each work package and roll up — most accurate), three-point/PERT (E = (O + 4M + P) ÷ 6), and Wideband Delphi (expert consensus over anonymous rounds).
- Duration vs effort
- Duration = the total number of work periods to complete an activity; effort = the number of labour units required. They differ when more or fewer resources work in parallel.
- Quality management
- Plan quality (set standards/metrics) → manage/assure quality (audit processes) → control quality (inspect deliverables). Verification checks against specification; validation checks it meets stakeholder needs.
- Project risk
- An uncertain event or condition that, if it occurs, has a positive (opportunity) or negative (threat) effect on project objectives. Managed by identify → analyse (probability × impact, EMV) → plan responses → monitor.
- Contingency vs management reserve
- Contingency reserve is time/money set aside for known risks with active responses; management reserve is for unknown, unforeseen in-scope work.
- RACI matrix
- A responsibility-assignment grid mapping tasks (rows) to roles (columns): Responsible (does the work), Accountable (ultimately answerable/approves — exactly one per task), Consulted (input, two-way) and Informed (kept up to date, one-way).
Schedule, Budget, Resources, Quality, Risk & Procurement FAQ
Which estimation method should I use — and which is most accurate?
It depends on how much detail you have. Analogous (top-down) estimating is fast and useful early when little is known, but least accurate; parametric uses a unit rate; bottom-up estimates each work package and rolls them up for the most accurate figure with the most effort; three-point (PERT) blends optimistic, most-likely and pessimistic estimates. Once your WBS has defined work packages, bottom-up is the accurate choice.
What is Expected Monetary Value and how do I calculate it?
EMV is a quantitative risk measure: probability multiplied by the monetary impact. A risk with a 20% chance of a $50,000 loss has an EMV of 0.20 × $50,000 = $10,000. It lets you compare and prioritise risks in money terms; for threats it is negative, for opportunities positive.
What do the four RACI letters mean, and what's the one strict rule?
Responsible does the work, Accountable is ultimately answerable and approves it, Consulted provides input through two-way communication, and Informed is kept up to date one-way. The strict rule is that exactly one person is Accountable for each task — split accountability is the classic RACI error. It maps tasks to roles to remove ambiguity over who does what.
What's the difference between contingency reserve and management reserve?
Contingency reserve is time or money set aside for known, identified risks that have active response plans. Management reserve is for unknown, unforeseen in-scope work that could not be identified in advance. Distinguishing them shows you understand that some risk is anticipated and planned for, while some is genuinely unexpected.
Assessment move
Organise this week around three quick-win concepts: the estimation methods (know the accuracy/effort trade-off and the PERT formula), the risk process (identify → analyse with probability × impact/EMV → respond → monitor, plus the threat and opportunity response lists), and the RACI matrix (exactly one Accountable; Consulted two-way vs Informed one-way). Sketch a small RACI for a project you know and a two-row risk register with EMV. Note the contingency-vs-management-reserve distinction. Add a journal line on estimating under uncertainty, and confirm quiz timing on Canvas.
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