Step 2
Principles & Leadership — Illustrated Study Guide
Risk & Issues, Leadership vs Management, the 6 Leadership Styles, and the 6 Project Management Principles — full notes, an illustration for every topic, and a 100-question practice quiz.
Risk Risk & Issues
Risk
- A potential event or situation that may occur in the future and impact project success.
- Negative risks are threats; positive risks are opportunities.
- Stored in the risk register.
- In short: an uncertain future event that might happen.
Issue
- A problem or challenge that arises during the project — typically negative.
- Hinders progress or impacts objectives.
- Stored in the issue log.
- In short: a problem that has already happened.
Handling an issue
- When an issue matches a risk you already planned for, check the risk register and apply the already-planned response — don't start from scratch.
Visual recap
Leadership Leadership vs Management
Leadership
- Inspires and influences others.
- Sets direction, motivates, and empowers individuals.
- Encourages collaboration, trust, and empowerment.
- Guides, influences, and collaborates using relational power.
- Keywords: develop, innovate, focus on the horizon, challenge status quo.
Management
- Focuses on tasks, processes, and operations for execution.
- Plans, organizes, coordinates, and controls resources.
- Has formal authority and responsibility in the organization.
- Directs using positional power.
- Keywords: maintain, administer, focus on the bottom line, accept status quo.
Visual recap
Leadership Leadership Styles
1Laissez-Faire
- Hands-off leadership — the team makes decisions on its own.
- Best with an experienced, self-motivated team.
- Example: a PM lets senior developers decide how to complete the work.
2Servant Leadership
- Supports the team, removing obstacles and helping the team succeed.
- Common in Agile PM roles.
- Example: a PM gets the team the help it needs to keep velocity up.
3Charismatic
- Inspires through personality and communication.
- Builds excitement and motivation.
- Example: a PM gives an inspiring speech during a difficult project.
4Transactional
- Based on rewards, rules, and performance.
- Rewarded for meeting specific goals.
- Example: the team gets a bonus for finishing a milestone early.
5Transformational
- Motivates the team with a bigger vision.
- Inspires innovation and change.
- Example: helps the team see how their project benefits customers.
6Interactional
- Adjusts style based on the situation.
- Different approaches depending on team needs.
- Example: coaches a new hire but gives experts more freedom.
Visual recap
Principles & Mindset
Principles The 6 Principles & PM Mindset
- Principles are foundational guidelines that help guide strategy, decisions, problem-solving, and behaviours.
- They are not strict values or laws.
- They are broad, so people can apply them in different ways.
- Always stay aligned to the values while making any decision.
The 6 principles, grouped by theme
Proactive
- 1. Holistic View
- 2. Focus on Value
- 3. Embed Quality
Ownership
- 4. Accountable Leader
- 5. Integrate Sustainability
- 6. Empowered Culture
Value Driven
- The overarching theme spanning all 6 principles.
Project Management Mindset
- Falls into 3 main dimensions: Proactive, Ownership, and Value Driven.
- It's more than just processes, methods, and performance domains.
- Helps a PM execute strategy, adapt to change, solve problems, and deliver value.
- Includes the beliefs, thinking patterns, and habits that guide how project managers understand people, make decisions, and handle different situations.
- Project managers must balance customer needs, business goals, and stakeholder expectations.
- Sustainability is becoming more important and should be considered throughout the project.
Principles Principle 1 — Adopt a Holistic View
- Looks at the project as one connected system, not separate parts.
- Understands how project components depend on and affect each other.
- Helps identify the root cause of a problem, not just treat symptoms.
- Improves decision-making by considering different perspectives across the whole project.
- Helps manage uncertainty, complexity, and risk by identifying problems, threats, and opportunities early.
- Also supports sustainability by considering both positive and negative impacts of project work.
Impact on Performance Domains
Governance, Scope, Schedule & Finance
Improves decision-making, prevents misalignment, helps maximize project investment.
Stakeholders & Resources
Improves collaboration and participation.
Risk
Helps the team identify and manage risk across all project areas before problems get bigger.
Visual recap
Principles Principle 2 — Focus on Value
- Project success is measured by the value the project delivers, not just by completing tasks.
- Value can be measured using numbers (e.g. ROI) or through qualitative benefits (e.g. customer satisfaction, testimonials, social impact).
- Project value includes the final deliverables and the outcomes they create for key stakeholders.
- Desired outcomes should be reviewed and updated throughout the project using feedback, reviews, and quality gates.
- The project should deliver required functionality and quality while avoiding waste, rework, and unnecessary resource use.
- Value helps an organization decide which project to start, continue, change, or stop.
Impact on Performance Domains
Scope
Helps prevent scope creep and gold-plating by ensuring all work supports the intended outcomes.
Schedule & Finance
Helps manage time and money efficiently so the project remains viable and valuable.
Stakeholders & Resources
Aligns stakeholder needs, team talent, and physical resources with project value and goals.
Risk
Helps respond to threats and opportunities in a practical, efficient, and transparent way.
Visual recap
Principles Principle 3 — Embed Quality into Process & Deliverables
- Project deliverables and processes should meet or exceed the project's target objectives.
- Embedding quality means building quality into the work from the start, not just checking at the end.
- Continuous improvement helps teams reduce waste and deliver better outcomes.
Impact on Performance Domains
Scope
Ensures deliverables meet requirements and standards, preventing rework and increasing stakeholder satisfaction.
Schedule
Adds reviews, quality milestones, and early quality checks.
Finance
Helps control cost by reducing waste, defects, and rework.
Stakeholders & Resources
Helps meet stakeholder expectations and ensures the right people, tools, and resources are available.
Risk
Reduces the chance of defects, non-compliance, and other quality-related problems.
Visual recap
Principles Principle 4 — Be an Accountable Leader
- Project managers influence the project through their behaviour, communication, decisions, and leadership style.
- Strong leadership shapes team dynamics, motivation, and overall performance.
Key characteristics
1Integrity, Honesty, Fairness
- Make ethical decisions, build trust with stakeholders.
2Self-Awareness
- Understand your own emotions, values, strengths, and actions to lead effectively.
3Respect, Humility & Availability
- Support the team, listen to feedback, remove barriers, practice servant leadership.
4Flexibility & Adaptability
- Adjust leadership style based on the situation, team, and project needs, while staying true to core values.
Impact on Performance Domains
Scope & Schedule
Helps resolve disagreements, align stakeholders, and keep the project plan realistic.
Finance
Helps leaders manage cost pressure, reserves, and financial challenges responsibly.
Stakeholders & Resources
Helps leaders build relationships, gain support, and manage people with integrity.
Risk
Helps leaders adapt to threats and opportunities while staying accountable for project outcomes.
Visual recap
Principles Principle 5 — Integrate Sustainability within all Project Areas
- Meeting today's needs without harming the ability of future generations to meet theirs.
- Responsible use of technology to support a better future.
- Identify and reduce negative impact on the organization, community, and environment.
- Consider any external effects the project may create.
- Support the triple bottom line by balancing social, environmental, and economic outcomes.
The Sustainability Pyramid — most to least desirable
1
Avoid
Best option — prevent problems before they happen.
2
Minimize
Reduce the harm if it cannot be avoided.
3
Restore
Fix or repair the damage after it happens.
4
Compensate
Make up for damage that cannot be avoided, minimized, or restored.
Impact
- Unlike the other principles, sustainability affects all performance domains at once.
Visual recap
Principles Principle 6 — Build an Empowered Culture
- Built on mutual trust between stakeholders and the team.
- Everyone should clearly understand their roles, responsibilities, and expectations.
- Team agreements and guiding processes help people work together more effectively.
- A strong project culture encourages collaboration and better communication.
- Empowered teams create synergy — people working together produce better results than working alone.
- Diversity brings different perspectives and helps create a more inclusive and effective project environment.
- Strong interpersonal skills — honesty, respect, empathy, collaboration, confidence — support team success.
Visual recap
Practice Time
Recall Recall Quiz
Straight recall — definitions, styles, and principles straight from the notes above.
Scenario Case Study Quiz
Short, standalone situational questions — apply the concepts above to one scenario at a time.
New Format Long Case Studies
Matches the newer PMI exam format: one longer scenario, several linked questions. 5 case studies, 4 questions each.
Mixed Bag Random Mix
A quick mix pulled from every topic above, in no particular order.
Advanced Step 1 + Step 2 Combined
The toughest round — pairs a Step 1 fundamental with a Step 2 concept in each question.