PMP Formulas & Exam Tips- Cheat Sheet
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Integration Management – Develop Project Charter process –
Project Selection Methods (>> Benefit Measurement Methods
>> Economic Models 1-7)
S# What? Formula Additional Notes
PV FV The result – amount of money to invest today (PV) for
n
1
Present Value (PV)
years at r % interest in order to end up with the target sum
1 Rn
(FV – Future Value). bigger the better.
Length of time it takes the company to get back the initial 2
Payback Period Net Investment / Average Annual cash flow cost of
producing a product/service. shorter the better
3 Net Present Value (NPV) The PV of the total benefits (income
or revenue) less the costs. NPV is a much more precise capital
budgeting method than payback period. bigger the better
4 Internal Rate of Return (IRR) The interest rate at which the
present value of the cash flows IRR is a more precise (and more
conservative) capital equals the initial investment. Tip: Interest
from Bank A/c budgeting method than NPV. bigger the better 5
Benefit Cost Ratio BCR = (Revenue / Cost) Cost Benefit Analysis.
bigger the better 6 Return on Invested Capital Net Income (after
tax) from proj / Total Capital invested in the proj bigger the
better
7 Economic Value Add Benefit EVA = Net Operating Profit After
Tax – Cost of Capital – bigger is better Measurement (Investment
Capital X % Cost of Capital) Cost of Capital = (Revenue - Op. Exp -
Taxes) 8 Opportunity Cost value of the project not selected smaller
the better 9 Working Capital Current Assets – Current Liabilities
10 Return on Sales (ROS) NIBT / Total Sales (OR) NIAT / Total Sales
NIBT - Net Income Before Taxes 11 Return on Assets (ROA) NIBT /
Total Assets (OR) NIAT / Total Assets NIAT - Net Income After Taxes
12 Return on Investment (ROI) NIBT / Total Investment (OR) NIAT /
Total Investment bigger the better 13 Discounted Cash Flow Cash
Flow X Discount Factor
Schedule Management Finish-to-Start(FS): An activity must finish
before the successor can start. (dig hole; plant tree)(most common)
Precedence Diagramming Start-to-Start (SS): An activity must start
before the successor can start. Finish-to-Finish (FF): An activity
must finish before the successor can finish. Method (PDM / AON)
Start-to-Finish (SF): An activity must start before the successor
can finish. (rarely used)
Sequence Activities Lead: A lead can be added to start an
activity before completion of the predecessor (Ex: Start writing
Training Material before completion Process of Testing)
Lag: is inserted waiting time b/w activities (Ex: needing to
wait 3 days after pouring concrete before constructing the frame of
the house) S# What? Formula Additional Notes 1 Triangular
Distribution / 3P Estimate (P + M + O) / 3 Estimate Activity
Durations Process
Weighted 3P Estimate / PERT (Program P 4M O
Duration/Cost :– * P – Pessimistic; M - Most Likely (Realistic);
O – Optimistic 2 Evaluation & Review Technique) / Expected *
PERT is probabilistic, using statistical estimates of durations
(left) 6 Value (modified BETA distribution) * Estimate range for an
activity = PERT duration +/- standard deviation
P O 2
* Std deviation tells the amt of uncertainty/risk involved in
the estimate for the activity 3 Standard Deviation (σ) σ = P O v =
* There is 68% probability that the work will finish within +/- one
std deviation (1 σ) 4
Variance (v)
6
* There is 95% probability that the work will finish within +/-
two std deviations (2 σ) 6 * There is 99% probability that the work
will finish within +/- three std deviations (3 σ)
5 Total Float / Slack (There is a start formula (LS – ES) or (LF
- EF) Develop Schedule Process – Critical Path Method & a
finish formula; & both begin with Late) (CPM is deterministic ,
using specific durations) 6 Activity Duration (EF – ES) or (LF –
LS)
ES – Early Start; EF – Early Finish;
7 Forward Pass: (Add 1 day to Early Start) EF = (ES + Duration -
1) LS – Late Start; LF – Late Finish;
8 Backward Pass: (Minus 1 day to Late Finish) LS = (LF -
Duration + 1) TF – Total Float
Procurement Management S# What? Formula Additional Notes CPPC –
CPFF – CPAF – CPIF – T&M – FPEPA – FPAF – FPIF – FFP
Contract Types –
Cost Reimbursable (CR) – (Cost Plus Award Fee/CPAF, Cost Plus
Incentive 1 Fee/CPIF, Cost Plus Fixed Fee/CPFF) Risk Levels Time
& Material (T&M)
Fixed Price (FP) – (Fixed Price Economic Price
Adjustment/FP-EPA, Fixed Price Incentive Fee/FPIF, Firm Fixed
Price/FFP)
2 Sharing Ratio Y% / Z% (eg. 80%/20%) How cost savings or
overrun will be shared. Y% – buyer’s share ratio & Z% –
seller’s share ratio 3 Target Price (TP) TP = TC + TF 4 Final Price
(FP) FP = AC + AF TC – Target Cost 5 Actual Fee (AF) Actual Fee
(AF) = TF + Z% * (TC-AC) TF – Target Fee Savings = TC – AC AC –
Actual Cost Contract related Bonus = Savings x Percentage (Seller’s
Share Ratio) 6 AF – Actual Fee (Profit) formulas Contract Cost =
Bonus + Fees
Total Cost = AC + Contract Cost = AC + Fees + Bonus Point of
Total CP TP PTA only relates to FPIF contracts. 7
Assumption (PTA)
Y%
((Ceiling Price - Target Price)/buyer's Share Ratio) + Target
Cost
8 Source Selection (Weightage X Price) + (Weightage X Quality)
Conduct Procurements – Selection of Vendor using 'Weighing
System’
PMP Formulas & Exam Tips- Cheat Sheet
www.ecostarplan.com
Cost Management – Earned Value Measurement (EVM) – Control Costs
Process
Term Expansion Interpretation PV Planned Value (Budgeted As of
today, What is the estimated value of the work planned to be done?
(BCWS) Cost of Work Scheduled) How much work (value) was expected
to be finished at this point of time? EV Earned Value (Budgeted As
of today, What is the estimated value of the work actually
accomplished? (BCWP) Cost of Work Performed) How much work (value)
has actually been completed at this point of time? AC Actual Cost
(Actual Cost of As of today, What is the actual cost incurred for
the work accomplished? (ACWP) Work Performed) BAC Budget At
Completion How much did we BUDGET for the TOTAL project effort? CV
Cost Variance How much more/less has the completed work cost
compared to what was planned? SV Schedule Variance How much
more/less work has been accomplished compared to what was planned?
CPI Cost Performance Index How much is the work being completed
costing compared to what was planned? Know whether over or under
budget? SPI Schedule Performance Index How does the work being
completed compare to what was planned in the schedule? Know if
ahead or behind schedule? EAC Estimate At Completion What do we
currently expect the TOTAL project (at completion) to cost (a
forecast)? ETC Estimate To Complete From now on, how much MORE
money will it take to finish the project (a forecast)? VAC Variance
At Completion As of today, How much over or under budget (will the
total project cost be?) do we expect to be at the end of the
project? TCPI To Complete Performance What level of performance
must future project work meet in order to meet the budget (BAC)?
What level of performance Index (Based on BAC & EAC) must
future project meet in order to meet the project’s cost based on
past performance (EAC)?
Alphabetical Order (A,E,P) (C,S) ----- >
Data AC op EV op PV Variances
CV = =SV ---- ----(-)
Indices
CPI= =SPI ---- ----(/)
Tips: Most formulas start with EV -EV is bad; +EV is good If
Variance: EV “–”Something If Cost related use AC If Index: EV “/”
Something If Schedule related use PV Notes: CV & SV are known
as progress formula.
CPI & SPI are known as efficiency indicators.
FRs occur in incremental amounts (steps) that are not
continuous
S# What? Formula Additional Notes 1 PV (P%C) * BAC P%C – Planned
% Complete. PV is also called BCWS. 2 EV (A%C) * BAC A%C – A ctual
% Complete. EV is also called BCWP. 3 CV EV – AC NEGATIVE is over
budget, POSITIVE is under budget. @ End of project, CV = BAC – AC 4
SV EV – PV NEGATIVE is behind schedule, POSITIVE is ahead of
schedule
Efficiency in usage of Funds. We are getting $ __ worth of work
out of every $1 spent. 5 CPI EV / AC CPI > 1, Efficiency in
utilizing the resources allocated to the project is good
< 1, Efficiency in utilizing the resources allocated to the
project is bad
6 SPI EV / PV We are (only) progressing at __ % of the rate
originally planned. SPI > 1 Mean more work was completed than
was planned; < 1 Mean less work was completed than was planned
(BAC / CPI) Used if no variances from BAC (or) proj will continue
at the same rate of spending. = same as AC + ((BAC – EV) / CPI) AC
+ Bottom-up ETC Used when original estimate was fundamentally
flawed. AC + a new estimate for remaining work 7 EAC AC + (BAC –
EV) Used when current variances are thought to be atypical of
future. AC + (remaining value of work @ budgeted rate)
AC (BAC EV) Used when current variances are thought to be
typical of future. AC + remaining budget modified by performance
CPI * SPI 8 ETC EAC – AC A more accurate way is to re-estimate cost
of the remaining work from the bottom-up. 9 VAC BAC – EAC How much
over or under budget will we be at the end of the project?
10 TCPIBAC (BAC – EV) / (BAC – AC) Values for the TCPI index of
less than 1.0 is good because it indicates the efficiency to
complete is less than planned. TCPIEAC (BAC – EV) / (EAC – AC) How
efficient must the project team be to complete the remaining work
with the remaining money?
Estimate Estimate Costs Process Order of Magnitude (Oh) –
Initiating (Its): -25% to +75% or (ROM: -/+ 50%; PMBOK 7.1 P168) 11
(Oh Boy Dave – Budget(ary) (Boy) – Planning (Pepperoni): -10% to
+25% Ranges Its Pepperoni Pizza) Definitive (Dave) – Planning
(Pizza): -5% to +10% (-10% to +15% PMBOK) Contingency Reserves: to
address cost impacts of remaining risks after risk response
planning (known risks).
12 Cost Determine Budget Project Estimates + Contingency
Reserves = Cost Baseline Aggregation Process Management Reserves:
extra funds set aside to cover unforeseen risks (unknown risks).
Cost Baseline + Management Reserves = Cost Budget / Project Funding
Requirement Rules Based on 80 Hour Rule – Max size of work packages
13 80/20 Rule – Pareto’s Law – 80% of problems are due to 20% of
causes Numbers 0/50/100 – Work Package completion. No credit until
50% complete. No additional credit until 100% complete
Quality Management S# What? Formula 1 Standard Deviation / Sigma
σ 1σ = 68.27%; 2σ = 95.45%; 3σ = 99.73%; ---------- 6σ =
99.99985%
Communication Management S# What? Formula
1 Number of Communication Channels (N - # of project NN 1
members including Project Manager) 2
Risk Management S# What? Formula Expected Monetary Value / EMV
(or)
1 Contingency Reserve ( P*I of known Risks) Probability *
Impact
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