Contract

Contract. A contract is a mutually binding agreement that obligates the seller to provide the specified productor service or result and obligates the buyer to pay for it.contract.Control. Comparing actual performance with planned performance, analyzing variances, assessing trends toeffect process improvements, evaluating possible alternatives, and recommending appropriate corrective actionas needed.Control Account. A management control point where scope, budget, actual cost, and schedule are integrated andcompared to earned value for performance measurement.Control Chart. A graphic display of process data over time and against established control limits, which has acenterline that assists in detecting a trend of plotted values toward either control limit.Control Communications. The process of monitoring and controlling communications throughout the entire projectlife cycle to ensure the information needs of the project stakeholders are met.GlossaryControl Costs. The process of monitoring the status of the project to update the project costs and managingchanges to the cost baseline.Control Limits. The area composed of three standard deviations on either side of the centerline or mean of anormal distribution of data plotted on a control chart, which reflects the expected variation in the data. See alsospecification limits.Control Procurements. The process of managing procurement relationships, monitoring contract performance,and making changes and corrections as appropriate.Control Quality. The process of monitoring and recording results of executing the quality activities to assessperformance and recommend necessary changes.Control Risks. The process of implementing risk response plans, tracking identified risks, monitoring residualrisks, identifying new risks, and evaluating risk process effectiveness throughout the project.Control Schedule. The process of monitoring the status of project activities to update project progress and managechanges to the schedule baseline to achieve the plan.Control Scope. The process of monitoring the status of the project and product scope and managing changes tothe scope baseline.Control Stakeholder Engagement. The process of monitoring overall project stakeholder relationships andadjusting strategies and plans for engaging stakeholders.Corrective Action. An intentional activity that realigns the performance of the project work with the projectmanagement plan.Cost Aggregation. Summing the lower-level cost estimates associated with the various work packages for agiven level within the project?s WBS or for a given cost control account.Cost Baseline. The approved version of the time-phased project budget, excluding any management reserves,which can be changed only through formal change control procedures and is used as a basis for comparison toactual results.Cost Management Plan. A component of a project or program management plan that describes how costs willbe planned, structured, and controlled.GlossaryCost of Quality. A method of determining the costs incurred to ensure quality. Prevention and appraisal costs(cost of conformance) include costs for quality planning, quality control (QC), and quality assurance to ensurecompliance to requirements (i.e., training, QC systems, etc.). Failure costs (cost of nonconformance) include coststo rework products, components, or processes that are non-compliant, costs of warranty work and waste, and lossof reputation.Cost Performance Index (CPI). A measure of the cost efficiency of budgeted resources expressed as the ratio ofearned value to actual cost.Cost Plus Award Fee Contracts (CPAF). A category of contract that involves payments to the seller for all legitimateactual costs incurred for completed work, plus an award fee representing seller profit.Cost Plus Fixed Fee Contract (CPFF). A type of cost-reimbursable contract where the buyer reimburses the sellerfor the seller?s allowable costs (allowable costs are defined by the contract) plus a fixed amount of profit (fee).Cost Plus Incentive Fee Contract (CPIF). A type of cost-reimbursable contract where the buyer reimburses theseller for the seller?s allowable costs (allowable costs are defined by the contract), and the seller earns its profit ifit meets defined performance criteria.Cost Variance (CV). The amount of budget deficit or surplus at a given point in time, expressed as the differencebetween the earned value and the actual cost.Cost-Benefit Analysis. A financial analysis tool used to determine the benefits provided by a project against itscosts.Cost-Reimbursable Contract. A type of contract involving payment to the seller for the seller?s actual costs, plusa fee typically representing seller?s profit. Cost-reimbursable contracts often include incentive clauses where, if theseller meets or exceeds selected project objectives, such as schedule targets or total cost, then the seller receivesfrom the buyer an incentive or bonus payment.Crashing. A technique used to shorten the schedule duration for the least incremental cost by addingresources.Create WBS. The process of subdividing project deliverables and project work into smaller, more manageablecomponents.GlossaryCriteria. Standards, rules, or tests on which a judgment or decision can be based or by which a product, service,result, or process can be evaluated.Critical Chain Method. A schedule method that allows the project team to place buffers on any project schedulepath to account for limited resources and project uncertainties.Critical Path. The sequence of activities that represents the longest path through a project, which determines theshortest possible duration.Critical Path Activity. Any activity on the critical path in a project schedule.Critical Path Method. A method used to estimate the minimum project duration and determine the amount ofscheduling flexibility on the logical network paths within the schedule model.Customer. Customer is the person(s) or organization(s) that will pay for the project?s product, service, or result.Customers can be internal or external to the performing organization.Customer Satisfaction. Within the quality management system, a state of fulfillment in which the needs of acustomer are met or exceeded for the customer?s expected experiences as assessed by the customer at themoment of evaluation.Data Date. A point in time when the status of the project is recorded.Data Gathering and Representation Techniques. Techniques used to collect, organize, and present data andinformation.Decision Tree Analysis. A diagramming and calculation technique for evaluating the implications of a chain ofmultiple options in the presence of uncertainty.Decomposition. A technique used for dividing and subdividing the project scope and project deliverables intosmaller, more manageable parts.Defect. An imperfection or deficiency in a project component where that component does not meet itsrequirements or specifications and needs to be either repaired or replaced.Defect Repair. An intentional activity to modify a nonconforming product or product component.Define Activities. The process of identifying and documenting the specific actions to be performed to produce theproject deliverables.GlossaryDefine Scope. The process of developing a detailed description of the project and product.Deliverable. Any unique and verifiable product, result, or capability to perform a service that is required to beproduced to complete a process, phase, or project.Delphi Technique. An information gathering technique used as a way to reach a consensus of experts on asubject. Experts on the subject participate in this technique anonymously. A facilitator uses a questionnaire tosolicit ideas about the important project points related to the subject. The responses are summarized and arethen recirculated to the experts for further comment. Consensus may be reached in a few rounds of this process.The Delphi technique helps reduce bias in the data and keeps any one person from having undue influence onthe outcome.Dependency. See logical relationship.Dependency Determination. A technique used to identify the type of dependency that is used to create the logicalrelationships between predecessor and successor activities.Design of Experiments. A statistical method for identifying which factors may influence specific variables of aproduct or process under development or in production.Determine Budget. The process of aggregating the estimated costs of individual activities or work packages toestablish an authorized cost baseline.Develop Project Charter. The process of developing a document that formally authorizes the existence of a projectand provides the project manager with the authority to apply organizational resources to project activities.Develop Project Management Plan. The process of defining, preparing, and coordinating all subsidiary plans andintegrating them into a comprehensive project management plan.Develop Project Team. The process of improving competencies, team member interaction, and overall teamenvironment to enhance project performance.Develop Schedule. The process of analyzing activity sequences, durations, resource requirements, and scheduleconstraints to create the project schedule model.Diagramming Techniques. Approaches to presenting information with logical linkages that aid in understanding.Dictatorship. A group decision-making technique in which one individual makes the decision for the group.GlossaryDirect and Manage Project Work. The process of leading and performing the work defined in the projectmanagement plan and implementing approved changes to achieve the project?s objectives.Discrete Effort. An activity that can be planned and measured and that yields a specific output. [Note: Discreteeffort is one of three earned value management (EVM) types of activities used to measure work performance.]Discretionary Dependency. A relationship that is established based on knowledge of best practices within aparticular application area or an aspect of the project where a specific sequence is desired.Document Analysis. An elicitation technique that analyzes existing documentation and identifies informationrelevant to the requirements.Documentation Reviews. The process of gathering a corpus of information and reviewing it to determine accuracyand completeness.Duration (DU or DUR). The total number of work periods (not including holidays or other nonworking periods)required to complete a schedule activity or work breakdown structure component. Usually expressed as workdaysor workweeks. Sometimes incorrectly equated with elapsed time. Contrast with effort.Early Finish Date (EF). In the critical path method, the earliest possible point in time when the uncompletedportions of a schedule activity can finish based on the schedule network logic, the data date, and any scheduleconstraints.Early Start Date (ES). In the critical path method, the earliest possible point in time when the uncompletedportions of a schedule activity can start based on the schedule network logic, the data date, and any scheduleconstraints.Earned Value (EV). The measure of work performed expressed in terms of the budget authorized for that work.Earned Value Management. A methodology that combines scope, schedule, and resource measurements toassess project performance and progress.Effort. The number of labor units required to complete a schedule activity or work breakdown structure component,often expressed in hours, days, or weeks.Emotional Intelligence. The capability to identify, assess, and manage the personal emotions of oneself and otherpeople, as well as the collective emotions of groups of people.GlossaryEnterprise Environmental Factors. Conditions, not under the immediate control of the team, that influence,constrain, or direct the project, program, or portfolio.Estimate. A quantitative assessment of the likely amount or outcome. Usually applied to project costs, resources,effort, and durations and is usually preceded by a modifier (i.e., preliminary, conceptual, feasibility, order-ofmagnitude,definitive). It should always include some indication of accuracy (e.g., ñ x percent). See also budgetand cost.Estimate Activity Durations. The process of estimating the number of work periods needed to complete individualactivities with estimated resources.Estimate Activity Resources. The process of estimating the type and quantities of material, human resources,equipment, or supplies required to perform each activity.Estimate at Completion (EAC). The expected total cost of completing all work expressed as the sum of the actualcost to date and the estimate to complete.Estimate Costs. The process of developing an approximation of the monetary resources needed to completeproject activities.Estimate to Complete (ETC). The expected cost to finish all the remaining project work.Execute. Directing, managing, performing, and accomplishing the project work; providing the deliverables; andproviding work performance information.Executing Process Group. Those processes performed to complete the work defined in the project managementplan to satisfy the project specifications.Expected Monetary Value (EMV) Analysis. A statistical technique that calculates the average outcome whenthe future includes scenarios that may or may not happen. A common use of this technique is within decision treeanalysis.Expert Judgment. Judgment provided based upon expertise in an application area, knowledge area, discipline,industry, etc., as appropriate for the activity being performed. Such expertise may be provided by any group orperson with specialized education, knowledge, skill, experience, or training.GlossaryExternal Dependency. A relationship between project activities and non-project activities.Facilitated Workshops. An elicitation technique using focused sessions that bring key cross-functionalstakeholders together to define product requirements.Failure Mode and Effect Analysis (FMEA). An analytical procedure in which each potential failure mode inevery component of a product is analyzed to determine its effect on the reliability of that component and, byitself or in combination with other possible failure modes, on the reliability of the product or system and on therequired function of the component; or the examination of a product (at the system and/or lower levels) for allways that a failure may occur. For each potential failure, an estimate is made of its effect on the total systemand of its impact. In addition, a review is undertaken of the action planned to minimize the probability of failureand to minimize its effects.Fallback Plan. Fallback plans include an alternative set of actions and tasks available in the event that the primaryplan needs to be abandoned because of issues, risks, or other causes.Fast Tracking. A schedule compression technique in which activities or phases normally done in sequence areperformed in parallel for at least a portion of their duration.Fee. Represents profit as a component of compensation to a seller.Finish Date. A point in time associated with a schedule activity?s completion. Usually qualified by one of thefollowing: actual, planned, estimated, scheduled, early, late, baseline, target, or current.Finish-to-Finish (FF). A logical relationship in which a successor activity cannot finish until a predecessoractivity has finished.Finish-to-Start (FS). A logical relationship in which a successor activity cannot start until a predecessoractivity has finished.Firm-Fixed-Price Contract (FFP). A type of fixed price contract where the buyer pays the seller a set amount(as defined by the contract), regardless of the seller?s costs.Fishbone diagram. See Cause and Effect Diagram.Fixed Formula Method. An earned value method for assigning a specified percentage of budget value for awork package to the start milestone of the work package with the remaining budget value percentage assignedwhen the work package is complete.GlossaryFixed Price Incentive Fee Contract (FPIF). A type of contract where the buyer pays the seller a set amount (asdefined by the contract), and the seller can earn an additional amount if the seller meets defined performancecriteria.Fixed Price with Economic Price Adjustment Contracts (FP-EPA). A fixed-price contract, but with a specialprovision allowing for predefined final adjustments to the contract price due to changed conditions, such as inflationchanges, or cost increases (or decreases) for specific commodities.Fixed-Price Contracts. An agreement that sets the fee that will be paid for a defined scope of work regardless ofthe cost or effort to deliver it.Float. Also called slack. See total float and free float.Flowchart. The depiction in a diagram format of the inputs, process actions, and outputs of one or more processeswithin a system.Focus Groups. An elicitation technique that brings together prequalified stakeholders and subject matter expertsto learn about their expectations and attitudes about a proposed product, service, or result.Forecast. An estimate or prediction of conditions and events in the project?s future based on information andknowledge available at the time of the forecast. The information is based on the project?s past performance andexpected future performance, and includes information that could impact the project in the future, such as estimateat completion and estimate to complete.Forward Pass. A critical path method technique for calculating the early start and early finish dates by workingforward through the schedule model from the project start date or a given point in time.Free Float. The amount of time that a schedule activity can be delayed without delaying the early start date of anysuccessor or violating a schedule constraint.Functional Manager. Someone with management authority over an organizational unit within a functionalorganization. The manager of any group that actually makes a product or performs a service. Sometimes called aline manager.Functional Organization. A hierarchical organization where each employee has one clear superior, and staff aregrouped by areas of specialization and managed by a person with expertise in that area.GlossaryFunding Limit Reconciliation. The process of comparing the planned expenditure of project funds against anylimits on the commitment of funds for the project to identify any variances between the funding limits and theplanned expenditures.Gantt Chart. A bar chart of schedule information where activities are listed on the vertical axis, dates areshown on the horizontal axis, and activity durations are shown as horizontal bars placed according to start andfinish dates.Grade. A category or rank used to distinguish items that have the same functional use (e.g., ?hammer?) but donot share the same requirements for quality (e.g., different hammers may need to withstand different amounts offorce).Ground Rules. Expectations regarding acceptable behavior by project team members.Group Creativity Techniques. Techniques that are used to generate ideas within a group of stakeholders.Group Decision-Making Techniques. Techniques to assess multiple alternatives that will be used to generate,classify, and prioritize product requirements.Guideline. An official recommendation or advice that indicates policies, standards, or procedures for howsomething should be accomplished.Hammock Activity. See summary activity.Hard Logic. See mandatory dependency.Histogram. A special form of bar chart used to describe the central tendency, dispersion, and shape of astatistical distribution.Historical Information. Documents and data on prior projects including project files, records, correspondence,closed contracts, and closed projects.Human Resource Management Plan. A component of the project management plan that describes how theroles and responsibilities, reporting relationships, and staff management will be addressed and structured.Idea/Mind Mapping. Technique used to consolidate ideas created through individual brainstorming sessions intoa single map to reflect commonality and differences in understanding and to generate new ideas.Identify Risks. The process of determining which risks may affect the project and documenting their characteristics.GlossaryIdentify Stakeholders. The process of identifying the people, groups, or organizations that could impact or beimpacted by a decision, activity, or outcome of the project; and analyzing and documenting relevant informationregarding their interests, involvement, interdependencies, influence, and potential impact on project success.Imposed Date. A fixed date imposed on a schedule activity or schedule milestone, usually in the form of a?start no earlier than? and ?finish no later than? date.Incentive Fee. A set of financial incentives related to cost, schedule, or technical performance of the seller.Incremental Life Cycle. A project life cycle where the project scope is generally determined early in the projectlife cycle, but time and cost estimates are routinely modified as the project team?s understanding of the productincreases. Iterations develop the product through a series of repeated cycles, while increments successively add tothe functionality of the product.Independent Estimates. A process of using a third party to obtain and analyze information to support predictionof cost, schedule, or other items.Influence Diagram. A graphical representation of situations showing causal influences, time ordering of events,and other relationships among variables and outcomes.Information Gathering Techniques. Repeatable processes used to assemble and organize data across a spectrumof sources.Information Management Systems. Facilities, processes, and procedures used to collect, store, and distributeinformation between producers and consumers of information in physical or electronic format.Initiating Process Group. Those processes performed to define a new project or a new phase of an existing projectby obtaining authorization to start the project or phase.Input. Any item, whether internal or external to the project that is required by a process before that processproceeds. May be an output from a predecessor process.Inspection. Examining or measuring to verify whether an activity, component, product, result, or service conformsto specified requirements.Inspections and Audits. A process to observe performance of contracted work or a promised product againstagreed-upon requirements.GlossaryInterpersonal Skills. Ability to establish and maintain relationships with other people.Interrelationship Digraphs. A quality management planning tool, the interrelationship digraphs provide aprocess for creative problem-solving in moderately complex scenarios that possess intertwined logicalrelationships.Interviews. A formal or informal approach to elicit information from stakeholders by talking to them directly.Invitation for Bid (IFB). Generally, this term is equivalent to request for proposal. However, in some applicationareas, it may have a narrower or more specific meaning.Issue. A point or matter in question or in dispute, or a point or matter that is not settled and is under discussion orover which there are opposing views or disagreements.Issue Log. A project document used to document and monitor elements under discussion or in dispute betweenproject stakeholders.Iterative Life Cycle. A project life cycle where the project scope is generally determined early in the project lifecycle, but time and cost estimates are routinely modified as the project team?s understanding of the productincreases. Iterations develop the product through a series of repeated cycles, while increments successively add tothe functionality of the product.Lag. The amount of time whereby a successor activity is required to be delayed with respect to a predecessoractivity.Late Finish Date (LF). In the critical path method, the latest possible point in time when the uncompleted portionsof a schedule activity can finish based on the schedule network logic, the project completion date, and any scheduleconstraints.Late Start Date (LS). In the critical path method, the latest possible point in time when the uncompleted portionsof a schedule activity can start based on the schedule network logic, the project completion date, and any scheduleconstraints.Lead. The amount of time whereby a successor activity can be advanced with respect to a predecessor activity.Lessons Learned. The knowledge gained during a project which shows how project events were addressed orshould be addressed in the future with the purpose of improving future performance.Lessons Learned Knowledge Base. A store of historical information and lessons learned about both the outcomesof previous project selection decisions and previous project performance.GlossaryLevel of Effort (LOE). An activity that does not produce definitive end products and is measured by the passageof time. [Note: Level of effort is one of three earned valued management (EVM) types of activities used to measurework performance.]Leveling. See resource leveling.Life Cycle. See project life cycle.Log. A document used to record and describe or denote selected items identified during execution of a process oractivity. Usually used with a modifier, such as issue, quality control, action, or defect.Logical Relationship. A dependency between two activities, or between an activity and a milestone.Majority. Support from more than 50 percent of the members of the group.Make-or-Buy Analysis. The process of gathering and organizing data about product requirements and analyzingthem against available alternatives including the purchase or internal manufacture of the product.Make-or-Buy Decisions. Decisions made regarding the external purchase or internal manufacture of a product.Manage Communications. The process of creating, collecting, distributing, storing, retrieving, and the ultimatedisposition of project information in accordance with the communications management plan.Manage Project Team. The process of tracking team member performance, providing feedback, resolving issues,and managing team changes to optimize project performance.Manage Stakeholder Engagement. The process of communicating and working with stakeholders to meet theirneeds/expectations, address issues as they occur, and foster appropriate stakeholder engagement in projectactivities throughout the project life cycle.Management Reserve. An amount of the project budget withheld for management control purposes. Theseare budgets reserved for unforeseen work that is within scope of the project. The management reserve is notincluded in the performance measurement baseline (PMB).Management Skills. The ability to plan, organize, direct, and control individuals or groups of people to achievespecific goals.Mandatory Dependency. A relationship that is contractually required or inherent in the nature of the work.GlossaryMarket Research. The process of gathering information at conferences, online reviews, and a variety of sourcesto identify market capabilities.Master Schedule. A summary-level project schedule that identifies the major deliverables and work breakdownstructure components and key schedule milestones. See also milestone schedule.Material. The aggregate of things used by an organization in any undertaking, such as equipment, apparatus, tools,machinery, gear, material, and supplies.Matrix Diagrams. A quality management and control tool used to perform data analysis within the organizationalstructure created in the matrix. The matrix diagram seeks to show the strength of relationships between factors,causes, and objectives that exist between the rows and columns that form the matrix.Matrix Organization. Any organizational structure in which the project manager shares responsibility with thefunctional managers for assigning priorities and for directing the work of persons assigned to the project.Methodology. A system of practices, techniques, procedures, and rules used by those who work in a discipline.Milestone. A significant point or event in a project, program, or portfolio.Milestone List. A list identifying all project milestones and normally indicates whether the milestone is mandatoryor optional.Milestone Schedule. A summary-level schedule that identifies the major schedule milestones. See also masterschedule.Monitor. Collect project performance data with respect to a plan, produce performance measures, and report anddisseminate performance information.Monitor and Control Project Work. The process of tracking, reviewing, and reporting the progress to meet theperformance objectives defined in the project management plan.Monitoring and Controlling Process Group. Those processes required to track, review, and regulate the progressand performance of the project; identify any areas in which changes to the plan are required; and initiate thecorresponding changes.GlossaryMonte Carlo Simulation. A process which generates hundreds or thousands of probable performance outcomesbased on probability distributions for cost and schedule on individual tasks. The outcomes are then used to generatea probability distribution for the project as a whole.Most Likely Duration. An estimate of the most probable activity duration that takes into account all of the knownvariables that could affect performance.Multi-Criteria Decision Analysis. This technique utilizes a decision matrix to provide a systematic analyticalapproach for establishing criteria, such as risk levels, uncertainty, and valuation, to evaluate and rank many ideas.Near-Critical Activity. A schedule activity that has low total float. The concept of near-critical is equally applicableto a schedule activity or schedule network path. The limit below which total float is considered near critical issubject to expert judgment and varies from project to project.Negotiated Settlements. The process of reaching final equitable settlement of all outstanding issues, claims, anddisputes through negotiation.Negotiation. The process and activities to resolving disputes through consultations between involved parties.Network. See project schedule network diagram.Network Analysis. See schedule network analysis.Network Logic. The collection of schedule activity dependencies that makes up a project schedule networkdiagram.Network Path. Any continuous series of schedule activities connected with logical relationships in a projectschedule network diagram.Networking. Establishing connections and relationships with other people from the same or other organizations.Node. One of the defining points of a schedule network; a junction point joined to some or all of the other dependencylines.Nominal Group Technique. A technique that enhances brainstorming with a voting process used to rank themost useful ideas for further brainstorming or for prioritization.GlossaryNonconformance Work. In the cost of quality framework, nonconformance work is done to deal with theconsequences of errors and failures in doing activities correctly on the first attempt. In efficient quality managementsystems, the amount of nonconformance work will approach zero.Objective. Something toward which work is to be directed, a strategic position to be attained, a purpose to beachieved, a result to be obtained, a product to be produced, or a service to be performed.Observations. A technique that provides a direct way of viewing individuals in their environment performing theirjobs or tasks and carrying out processes.Opportunity. A risk that would have a positive effect on one or more project objectives.Optimistic Duration. An estimate of the shortest activity duration that takes into account all of the knownvariables that could affect performance.Organizational Breakdown Structure (OBS). A hierarchical representation of the project organization thatillustrates the relationship between project activities and the organizational units that will perform those activities.Organizational Process Assets. Plans, processes, policies, procedures, and knowledge bases that are specific toand used by the performing organization.Organizational Project Management Maturity. The level of an organization?s ability to deliver the desired strategicoutcomes in a predictable, controllable, and reliable manner.Output. A product, result, or service generated by a process. May be an input to a successor process.Parametric Estimating. An estimating technique in which an algorithm is used to calculate cost or durationbased on historical data and project parameters.Pareto Diagram. A histogram, ordered by frequency of occurrence, that shows how many results weregenerated by each identified cause.Path Convergence. A relationship in which a schedule activity has more than one prede