PMP Formulas 5th Edition
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Communication Channels Fx
where "n" is the number of stakeholders. You always include yourself in the total
When do we use n(n-1)/2?
a. It helps project manager understand the complexity of the project communications and assess whether communication plan is appropriate
1. Result to High –communication management plan is too complex or detailed for the project. identify too many stakeholders
2. Results to Low – plan is too simple and you need to reassess your draft communication management plan and perhaps expand it. Perhaps you have not accounted for a stakeholder group or individual that really need to be included in the communications management plan.
What BAC stands for?
Budget at Completion
What is the Fx for BAC?
1. There is no formula
2. This is the total authorized budget for the project
What PV stands for?
What is the formula for PV?
BAC * (time passed/total schedule time)
What is Planned Value?
2. Is the approved budget assigned to schedule work.
What EV stands for?
What is the Fx for EV?
1. There are 2 formulas:
a. BAC * (work completed / Total work required)
b. EV = ACE * % worked completed
What SV stands for?
What is the Fx for SV?
SV = EV - PV
What is SV use for?
1. Schedule Variance (SV) is the difference between what a project has actually earned by a specific date and what the Planned Schedule and Budget say it should be. If SV is:
- i. Positive = Ahead of schedule
- ii. Neutral = On schedule
- iii. Negative = Behind schedule
What CV stands for?
What is the Fx for CV?
CV = EV - AC
What is Cost Variance (CV) use for?
1. Use to monitor Project Cost. CV is the difference of what a project has earned to date and what it has cost. If CV is:
- i. Positive = Under Planned Cost
- ii. Neutral = On planned Cost (Good)
- iii. Negative = Over Planned Cost
What SPI stands for?
Schedule Performance Index
What is the Fx for SPI?
SPI = EV/PV
What is the Schedule Performance Index (SPI) use for?
1. To monitor project cost and ensure project is on schedule; is the ratio between earned value and planned value. If SPI is:
- i. SPI > 1 = Ahead Schedule
- ii. SPI = 1 On Schedule
- iii. SPI< 1 = Behind Schedule
What CPI stands for?
Cost Performance Indicator
What is the Fx for Cost performance Indicator?
CPI = EV / AC
What is the Cost Performance Index use for?
To monitor project performance in terms of cost. If CPI is:
- i. CPI > 1 = Under Planned Cost
- ii. CPI = 1 = On Planned Cost
- iii. CPI < 1 = Over Planned Cost
What EAC stands for?
Estimate at Completion
What is the Fx for Estimate at Completion (EAC) using the bottom-up ETC?
EAC = AC + Buttom-up ETC
When do we use the formula EAC = AC + Bottom-up ETC?
When the future pl;an is no longer valid and you need to forecast EAC based on the bottom-up ETC.
What is the EAC formula when the Cost Variance of a project is unlikely to change?
EAC = AC + BAC - EV
When do we use the formula EAC = BAC / Cumulative CPI?
We use it if the CPI us expected to be the same for the remainder of the project.
When do we use EAC = AC +[(BAC-EV) / (CPI * SPI)]?
When we have to take both indexes into consideration and the project schedule is a factor likely to impact the ETC
What are the EAC formulas?
There are 4 different formulas:
1. EAC = AC + Bottom-Up ETC
2. EAC = AC + BAC - EV
3. EAC = AC +[(BAC - EV) / (CPI * SPI)]
4. EAC = BAC / CPI
What ETC stands for?
Estimate to Complete
What is the Estimate to Complete (ETC) used for?
1. Includes the actual cost incurred for work completed, plus an estimate to complete for the remaining work
2. Its and informed estimation about what the remaining work on a project will cost to complete.
What is the formula for ETC?
1. ETC = New estimate of the remaining of the work from bottom up
2. ETC = EAC - AC
What TCPI stands for?
To Complete Performance Indicator
What is the "To Complete Performance Indicator (TCPI)"?
A measure of the cost performance that MUST BE ACHIEVED with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available
What is the Estimate To Complete (ETC) formula?
1. There are 2 formulas to calculate ETC
i. TCPI = (BAC - EV) / (BAC - AC)
ii. TCPI = (BAC - EV) / (EAC - AC)
2. If TCPI is:
- i. TCPI > 1, indicates that future cost performance needs to be at planned
- ii. TCPI < 1, indicates future cost may be less than planned.
- iii. TCP = 1, indicates future cost is the same as planned.
What CPM stands for?
Critical Path Method
What do you need to remember when calculating the CPM?
- Float (F)
- DU: Duration
- ES: Early Start
- EF: Early Finish
- LS : Late Start
- LF: Late Finish
- TF: Total Float
2. Be careful with the selection of days between 2 precedent activities.
- i. If going forward choose greater days --->>
- ii. If going backwards choose the lesser days <<---
What PERT stands for?
Program Evaluation Review Techniques
What are the variables to calculate PERT'?
Note: When calculating PERT calculate each activity individually.
- P = Pessimistic Estimate
- M = Most likely Estimate
- O = Optimist Estimate
- σ = Standard Deviation
What is the Expected Duration formula for a Beta Distribution?
Expected Duration = (P + 4(M) + O) / 6
What is the Expected Duration formula for a Triangular Distribution?
Expected Duration = (P + O + M) / 3
What is the formula for Standard Deviation?
σ = (P - O) / 6
What is Variance formula for PERT?
There are 2 formulas:
i. Variance = (( P - O) / 6)^2
ii. Variance = σ^2
During the Project Selection, what is the formula for Present Value (PV)?
PV = FV/(1 + r)^n
- Where, r: rate of return
- n: number of periods
What is the formula for Future Value?
FV = PV * (1 + r)^n
What ROI stands for?
Return Of Investment
What is the formula for ROI?
ROI = Fx not req, select biggest #
What NPV stands for?
Net Present Value
What is the formula for NPV?
NPV = Fx not req, select biggest #
What is the formula for IRR?
IRR = Fx not req, select biggest #
What IRR stands for?
Internal Rate of Return
What BCR stands for?
Benefit Cost Ratio
What is the formula for BCR?
BCR = Benefit / Cost
Note: if BCR > 1 means that the benefits are greater than the cost (good)
What CBR stands for?
Cost Benefit Ratio
What is the formula for CBR?
CBR = Cost / Benefit
Note: DO NOT confuse with BCR
What is the Opportunity Cost?
1. OP = The value of project not chosen
2. The opportunity given up by selecting one project over another
What is the Payback Period?
1. PP = Amount Invested / Estimated Annual Net Cash Flow
2. Select the one that pays back sooner
Note: Add up the projected cash inflow minus expenses until you reach the initial investment
What EVM stands for?
Expected Monetary Value
What is the formula for EVM?
EMV = Probability * Impact in currency
What PTA stands for?
Points of Total Assumption
During the Procurement process, what is formula for PTA?
PTA = (( Ceiling Price - Target) / Buyer's share Ratio) + Target Cost
What is the Avg Mean?
The Sum of all the items divided by the number of items
What is the Median?
Arrange values from lowest to highest and select the middle one. If there is an even number of values, calculate the mean of the 2 middle values
What is the Mode?
Find the value in a data set that occurs most often.
What are the values of sigma?
1. One Sigma = 34%
2. Two Sigma = 68%
3. Three Sigma = 95%
4. Four Sigma = 99%
What is the Control Limit of a distribution?
3 sigma from mean
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