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 )

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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