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17 PMP Formulas mentioned in the PMBOK Guide
BAC
Budgeted at completion
PV c
Planned Value ( Costs )
PV = Planned % complete x BAC ( Project budget )
EV
Earned Value
EV = Actual % complete x BAC ( Project budget )
------
EV = Total months completed / Total months project x Total cost
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Actual % complete =
EV / BAC
AC
Actual Cost
CV
Cost Variance
CV = EV – AC
EV = Earned Value
AC = Actual Cost
< 0 Over budget= 0 On budget> 0 Budget budget
SV
Schedule Variance
SV = EV – PV
EV = Earned ValuePV = Planned Value
< 0 Behind schedule= 0 On schedule> 0 Ahead of schedule
SPI
Schedule Performance Index
SPI = EV/PV
EV = Earned ValuePV = Planned Value
< 1 behind schedule= 1 on schedule> 1 ahead of schedule
CPI
Cost Performance Index
CPI = EV/AC
EV = Earned ValueAC = Actual Cost
< 1 Over budget= 1 On budget> 1 Under budget
sometimes the term ‘cumulative CPI’ would be shown, which actually is the CPI up to that moment
CPIc
Cost Performance Index
CPIc = EVc/ACc
EV = Earned ValueAC = Actual Cost
< 1 Over budget= 1 On budget> 1 Under budget
sometimes the term ‘cumulative CPI’ would be shown, which actually is the CPI up to that moment
TCPI
To-Complete Performance Index
TCPI = (BAC – EV)/(BAC – AC)
Or
TCPIϲ = Remaining Work ÷ Remaining Funds
BAC = Budget at completionEV = Earned valueAC = Actual Cost
TCPI = Remaining Work
< 1 Under budget= 1 On budget> 1 Over budget
/Remaining Funds
BAC = Budget at completionEV = Earned valueCPI = Cost performance index
TCPIc
To-Complete Performance Index
TCPIc = (BAC – EV)/(BAC – AC) ?????
BAC = Budget at completionEV = Earned valueCPI = Cost performance index
< 1 Under budget= 1 On budget> 1 Over budget
TCPIs
To-Complete Performance Index
TCPIs= (BAC – EV)/(BAC – AC) ?????
BAC = Budget at completionEV = Earned valueCPI = Cost performance index
< 1 Under budget= 1 On budget> 1 Over budget
EAC no variance
Estimate at Completion
if CPI remains the same
EAC = BAC/CPI
BAC = Budget at completionCPI = Cost performance index
if the CPI would remain the same till end of project, i.e. the original estimation is not accurate
EAC typical
Estimate at Completion
if substandard performance
EAC = AC + (BAC -EV)/(CPI*SPI)
AC = Actual CostBAC = Budget at completionEV = Earned Value
use when the question gives all the values (AC, BAC, EV, CPI and SPI), otherwise, this formula is not likely to be used
continues
CPI = Cost Performance IndexSPI = Schedule Performance Index
EAC atypical
Estimate at Completion
if BAC remains the same
EAC = AC + BAC – EV
AC = Actual CostBAC = Budget at completionEV = Earned Value
the variance is caused by a one-time event and is not likely to happen again
EAC flawed
Estimate at Completion
if original is flawed ( fr: est défectueux )
EAC = AC + New ETC
AC = Actual CostNew ETC = New Estimate to Completion
if the original estimate is based on wrong data/assumptions or circumstances have changed
ETC
Estimate to Completion
ETC = EAC -AC
EAC = Estimate at CompletionAC = Actual Cost
ETC flawed
Estimate to Completion
reestimate
VAC
Variance at Completion
VAC = BAC – EAC
BAC = Budget at completionEAC = Estimate at Completion
< 0 Under budget= 0 On budget> 0 Over budget
(Valid) ETC = EAC-AC(atypical) ETC = BAC-EV(typical) ETC = (BAC-EV) / CPI
Formulas / Math for PMP
If you think a formula is missing here but required in PMP exam. Post a comment and we will add to this table.
1. PERT (P + 4M + O )/ 6 Pessimistic, Most Likely, Optimistic
2. Standard Deviation (P - O) / 63. Variance [(P - O)/6 ]squared4. Float or Slack LS-ES and LF-EF5. Cost Variance EV - AC6. Schedule Variance EV - PV7. Cost Perf. Index EV / AC8. Sched. Perf. Index EV / PV9. Est. At Completion (EAC) BAC / CPI,
AC + ETC -- Initial Estimates are flawed
AC + BAC - EV -- Future variance are Atypical
AC + (BAC - EV) / CPI -- Future Variance would be typical
10. Est. To Complete
Percentage complete
EAC - AC
EV/ BAC11. Var. At Completion BAC - EAC12. To Complete Performance Index TCPI
Values for the TCPI index of less then 1.0 is good because it indicates the efficiency to complete is less than planned. How efficient must the project team be to complete the remaining work with the remaining money?
( BAC - EV ) / ( BAC - AC )13. Net Present Value Bigger is better (NPV)14. Present Value PV FV / (1 + r)^n15. Internal Rate of Return Bigger is better (IRR)16. Benefit Cost Ratio Bigger is better ((BCR or Benefit / Cost) revenue
or payback VS. cost)
Or PV or Revenue / PV of Cost17. Payback Period Less is better
Net Investment / Avg. Annual cash flow.18. BCWS PV19. BCWP EV20. ACWP AC21. Order of Magnitude Estimate -25% - +75% (-50 to +100% PMBOK)22. Budget Estimate -10% - +25%23. Definitive Estimate -5% - +10%24. Comm. Channels N(N -1)/225. Expected Monetary Value Probability * Impact26. Point of Total Assumption (PTA)
((Ceiling Price - Target Price)/buyer's Share Ratio) + Target Cost
Sigma σ
1σ = 68.27% 2σ = 95.45% 3σ = 99.73% 6σ = 99.99985%
Return on Sales ( ROS ) Net Income Before Taxes (NEBT) / Total Sales OR
Net Income After Taxes ( NEAT ) / Total SalesReturn on Assets( ROA ) NEBT / Total Assets OR
NEAT / Total AssetsReturn on Investment ( ROI ) NEBT / Total Investment OR
NEAT / Total InvestmentWorking Capital Current Assets - Current Liabilities
Discounted Cash Flow Cash Flow X Discount Factor
Contract related formulas
Savings = Target Cost – Actual Cost
Bonus = Savings x Percentage
Contract Cost = Bonus + Fees
Total Cost = Actual Cost + Contract Cost
Critical Path formulas
Forward Pass: (Add 1 day to Early Start) EF = (ES + Duration - 1)Backward Pass: (Minus 1 day to Late Finish)LS = (LF - Duration + 1)ES = Early Start; EF = Early Finish;LS = Late Start; LF = Late Finish
EVA = Net Operating Profit After Tax - Cost of Capital (Revenue - Op. Exp - Taxes) - (Investment Capital X % Cost of Capital) EVA - Economic Value Add Benefit Measurement - Bigger is better
Source Selection = (Weightage X Price) + (Weightage X Quality)
EVM Formulas, How to Understand?
The following are EVM formulas. For EVM formulas description, read the article Definition of EVM formulas.
SV = EV – PV + ve good
CV = EV – AC + ve good
SPI = EV/PV greater than 1 is good
CPI = EV/AC greater than 1 is good
EAC = AC + BAC – EV budgeted, atypical, no variation in future
EAC = BAC/CCPI no variation in BAC, same rate spending
EAC = AC + (BAC-EV)/CCPI typical, same variation in future
TCPI = (BAC – EV)/(BAC-AC) must meet BAC
TCP I = (BAC – EV)/(EAC-AC) not meet BAC, CPI decreased
VAC = BAC - EAC
ETC = EAC – AC
% Complete = EV/BAC
EV = Total months completed / Total months project x Total cost
PV = Planned % complete x Project budget
EV = Actual % complete x Project budget
- See more at: http://innovativeprojectguide.com/pmp-exam/6-PMP%20EXAM/3-what-is-evm-whatis-earned-value-management-and-evm-formulas.html#sthash.nzxXKGx1.dpuf
No. of Communication Channels
n (n-1)/2
n = number of members in the team
n should include the project manager
e.g. if the no. of team members increase from 4 to 5, the increase in communication channels:5(5-1)/2 – 4(4-1)/2 = 4
PERT Estimation (O + 4M + P)/6
O= Optimistic estimateM= Most Likely estimateP= Pessimistic estimate
Standard Deviation
(P – O)/6
O= Optimistic estimateP= Pessimistic estimate
this is a rough estimate for the standard deviation
Float/Slack
LS – ES
LS = Late startES = Early start
LF – EF
LF = Late finishEF = Early finish
= 0 On critical path< 0 Behind schedule
Project Selection >
Future Value
Present Value
NPV – Net Present Value
ROI – Rate of Interest
IRR – Internal Rate of Return
Payback Period
BCR – Benefit Cost Ratio
CBR – Cost Benefit Ratio
Communications > Communication Channels
Procurement > PTA – Point of Total Assumption
Risk > EMV – Expected Monetary Value
Cost & Schedule > EVM – Earned Value Management
CV – Cost Variance
SV – Schedule Variance
AC – Actual Cost
PV – Present Value
CPI – Cost Performance Index
SPI – Schedule Performance Index
EAC – Estimate at Completion
BAC – Budget at Completion
TCPI – To Complete Performance Index
PERT(Program Evaluation and Review Technique) >
EAD – Expected Activity Duration
Standard Deviation
Variance of an activity
Network Diagram > Activity Duration
Total Float
Free Float
Miscellaneous > Average(Mean)
Median
Mode
Sigma Values
Rough Order of Magnitude(ROM) estimate
Preliminary estimate
Budget estimate
Definitive estimate
Final estimate