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PMP Exam Prep Equations

Paul Naybour Paul Naybour

Published: 8th February 2013

Below is a collection of the formula useful for PMP prepraration

Time Management

Pert

1. PERT

(P + 4M + O )/ 6 Pessimistic, Most Likely, Optimistic

2. Standard Deviation

(P – O) / 6

One standard deviation = 66%

Two standard deviations = 95%

Three Standard deviations = 99%

3. Variance

[(P – O)/6 ]squared

 

Scheduling

1. Float or Slack

LS-ES and LF-EF

 

Cost management

1. Cost Variance

EV – AC

2. Schedule Variance

EV – PV

3. Cost Perf. Index

EV / AC

4. Sched. Perf. Index

EV / PV

5. 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

6. Est. To Complete

Percentage complete

EAC – AC

EV/ BAC

7. Var. At Completion

BAC – EAC

8. To Complete Performance IndexTCPI

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)^n

15. 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 Cost

17. Payback Period

Less is better

Net Investment / Avg. Annual cash flow.

18. BCWS

PV

19. BCWP

EV

20. ACWP

AC

 

Estimating Cost

1. Order of Magnitude Estimate

-25% – +75% (-50 to +100% PMBOK)

2. Budget Estimate

-10% – +25%

3. Definitive Estimate

-5% – +10%

 

Communications Planning

1. Comm. Channels

N(N -1)/2

 

Risk Management

1. Expected Monetary Value

Probability * Impact

 

Procurement and Accounting

. Point of Total Assumption (PTA)

((Ceiling Price – Target Price)/buyer’s Share Ratio) + Target Cost

Return on Sales ( ROS ) 
 

Net Income Before Taxes (NEBT) / Total Sales OR

Net Income After Taxes ( NEAT ) / Total Sales

Return on Assets( ROA ) 
 

NEBT / Total Assets OR

NEAT / Total Assets

Return on Investment ( ROI )

NEBT / Total Investment OR

NEAT / Total Investment

Working 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