PMP Formulas
PMP New Horizon
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Cost Variance Earned Value - Actual Cost (EV-AC) Schedule Earned Value -Planned Value (EV-PV)
(CV) If the variance is positive, Project is under Variance If the variance is positive, Project is ahead of
budget (SV) schedule
If the variance is neutral, Project is within the If the variance is neutral, Project is on schedule
budget
If the variance is negative, Project is over If the variance is negative, Project is behind
budget schedule
Cost Earned Value/ Actual cost Schedule EV/PV
Performance IF CPI is >1, Project is under budget Performanc IF SPI is >1, Project is ahead of schedule
Index (CPI) IF CPI is =1, Project is within the budget e Index IF SPI is =1, Project is on schedule
(SPI)
IF CPI is <1, Project is over budget IF SPI is <1, Project is behind schedule
EAC
EAC if BAC remains the same(Future Work at AC+(BAC-EV) the variance is caused by a one time event and
planned Rate) not likely to happen again
EAC if CPI remains the same BAC/CPI If the CPI remains the same till end of project
i.e. the original estimate is not accurate
EAC if substandard performance continues AC+(BAC- use when the question gives all values (AC, EV,
EV)/(CPI*SPI) BAC, SPI, CPI)
Estimate at Completion (EAC) Actual cost+ New If the estimate is based on wrong assumptions
ETC
VAC
Variance at BAC - EAC Estimate to ETC= EAC- AC
completion completion
(ETC)
(VAC)
IF VAC is >0, Project is over budget Schedule at SAC= BAC/CPI
completion
IF VAC is =0, Project is on budget
IF VAC is <0, Project is under budget Return of Net Income/Total Investment
Investment
(ROI)
Working Current Assets - Current Liabilities
Capital
To-complete (BAC-EV)/(BAC-AC) Internal rate Bigger is better
Performance of return (IRR)
Index (TCPI) IF TCPI is >1.0, Harder to complete Benefit Cost Benefit/Cost
IF TCPI is =1.0, Same to complete Ratio (BCR)
Cost Benefit Cost/Benefit
IF TCPI <1.0, Easier to complete Ratio (CBR)
Opportunity The value of the option not chosen
Cost
PERT
PERT 3-point (Pessimistic+(4*Most Likely)+Optimistic)/6 O = Optimistic Estimate(Best-case Scenario)
PERT SD (Standard (Pessimistic - Optimistic) / 6 M= Most likely Estimate(Realistic)
Deviation
Variance (SD)^2 P= Pessimistic Estimate(Worst-case Scenario)
PERT Activity ((Pessimistic - Optimistic) / 6)^2
Variance
PERT Variance all sum((Pessimistic - Optimistic) / 6)^2
activities
No. of n(n-1)/2 Control Limits = 3 sigma from mean
communication N is number of members in the team and
channels should include the project manager
Point of Total (Ceiling Price- Target Price)/Buyer's share Control Chart USL & LSL (Upper and Lower Specification limit) =
Assumption ratio+Target cost Defined by customer; looser than the control limits
(PTA)
Target Price Target cost+ Fee Order of Magnitude estimate = -25% to +75%(Early stage when
the scope and requirements are not defined)
Preliminary estimate = -15% to + 50% ( Made in early stage of
Project)
Sigma values Budget estimate = -10% to +25% (Made during Planning phase)
1 sigma = 68.26% Definitive estimate = -5% to +10% (Most accurate and time
consuming)
2 sigma = 95.46% Final estimate = 0% (Final estimate is always zero)
3 sigma = 99.73% Float on the critical path = 0 days
6 sigma = 99.99% Time a PM spends communicating = 90%
Crashing a project = Crash least expensive tasks on critical Path
JIT inventory = 0% (or very close to 0%.)
