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PMP Exam Mentor

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Formulas with Examples

Present day value of an amount that is received at a future date= FV/(1+ r) where FV = Future Value, r = Interest Rate and n = Time in years Example: The Present Value (PV) of $10,000 to be received 3 years from now, with interest rate of 4% would be:= $10,000/(1+4/100)= $10,000/(1.04)= $8,889.96Present Value(PV)

The value at a specified date in the future that is equivalent in value to a specified sum today= PV x (1+ r) where PV = Present Value, r = Interest Rate and n = Time in years Example: The Future Value (FV) of $15,000 invested for 3 years with interest rate of 4% would be:= $15,000 x (1+4/100)= $15,000 x (1.04)= $16,872.96Future Value(FV)

The ratio of the benefits of a project relative to its costs = Benefit/CostRepresents return for every $1 spentExample: To a project with total cost of $85,000 resulting into a benefit of $102,000 for the year, the Benefit Cost Ratio (BCR) would be: = $102,000/$85,000= 1.20Benefit Cost Ratio(BCR)

Planned Value (PV) is the authorized budget assigned to scheduled work. = Planned% complete x BACwhere BAC = Budget at CompletionExample: For a project having a budget of $10,000 where 30% of the work has been completed against planned 40% and $4,000 spent so far, Planned Value (PV) would be:= Planned% complete x BAC= 40/100 x $10,000= $4,000Planned Value (PV)

Earned Value (EV) is a measure of work performed expressed in terms of the budget authorized for that work. = Actual% complete x BACwhere BAC = Budget at CompletionExample: For a project having a budget of $50,000 where 60% of the work has been completed against planned 80% and $45,000 spent so far, Earned Value (EV) would be:= Actual% complete x BAC= 60/100 x $50,000= $30,000 Earned Value (EV)

Earned Value (EV) is a measure of work performed expressed in terms of the budget authorized for that work. = Actual% complete x BACwhere BAC = Budget at CompletionExample: For a project having a budget of $50,000 where 60% of the work has been completed against planned 80% and $45,000 spent so far, Earned Value (EV) would be:= Actual% complete x BAC= 60/100 x $50,000= $30,000 Earned Value (EV)

Schedule Variance (SV) is the amount by which the project is ahead or behind the planned delivery date, at a given point in time, expressed as the difference between the earned value and the planned value. = EV PVwhere EV = Earned Value and PV = Planned Value Example: For a project having a budget of $100,000 where 60% of the work has been completed against planned 50% and $140,000 spent so far, Schedule Variance (SV) would be:= EV - PV= $60,000 - $50,000= $10,000 Schedule Variance (SV)

Cost variance (CV) is the amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost. = EV - ACwhere EV = Earned Value and AC = Actual Cost Example: For a project having a budget of $50,000 where 40% of the work has been completed against planned 60% and $100,000 spent so far, Cost Variance (CV) would be:= EV - AC= $20,000 - $100,000= -$80,000Cost Variance (CV)

Estimate At Completion (EAC) is the expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete. = BAC/CPIwhere BAC = Budget at Completion and CPI = Cost Performance IndexEAC when the CPI is expected to be the same for the remainder of the project. Example: For a project having a budget of $100,000 where 40% of the work has been completed against planned 50% and $200,000 spent so far, (If the CPI is expected to be the same for the remainder of the project) Estimate At Completion (EAC) would be:= $100,000/0.20= $500,000.00Estimate At Completion (EAC)

Variance at Completion (VAC) is a projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion. = BAC - EACwhere BAC = Budget at Completion and EAC = Estimate at Completion Example: For a project having a budget of $10,000 where 40% of the work has been completed against planned 30% and $3,000 spent so far, Variance at Completion (VAC) would be:= BAC - EAC= $10,000 - $7,500= $2,500.00Variance at Completion (VAC)

The three-point estimate is simply the average of the pessimistic (P), most likely (M), and optimistic (O) estimate. = (P + (4 x M) + O)/6where P = Pessimistic value, M = Most Likely value and O = Optimistic valueExample: For a project network having the activity Pessimistic value = 12, Most Likely value = 10 and Optimistic value = 8, PERT 3-point estimate would be:= (P + (4 x M) + O)/6= (12 + (4 x 10)+8)/6= 60/6= 10.00PERT 3-point estimate

Standard Deviation. = (P - O)/6where P = Pessimistic value, M = Most Likely value and O = Optimistic valueExample: For a project network having the activity Pessimistic value = 8, Most Likely value = 3 and Optimistic value = 2, PERT would be:= (P - O)/6= (8 - 2)/6= 6/6= 1PERT

The total number of Communication Channels. = n x (n - 1)/2where n = total number of team members/stakeholders including the Project ManagerExample: For a project with team of 6 people, the number of communication channels would be:= n x (n - 1)/2= 6 x (6 - 1)/2= 6 x 5/2= 30/2= 15Communication Channels

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Byte AppStudioDisclaimer:This software is provided AS IS and the author assumes no guarantee for the content.The following sections of the app have been derived from A Guide to the Project Management Body of Knowledge (PMBOK Guide) Fifth Edition with the permission of PMI- Project Framework, Knowledge areas, Process groups, and Glossary.

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