PMP Math Formulas

1. PMP Math Formulas
Acronym Meaning Description Formula
AC Actual Cost The Actual amount of money the project has spent to date.
The sum of all the budget values established for the work to be
performed on a project or a work breakdown structure component
BAC Budget At Completion
or a schedule activity. The total planned value for the project.
Refers to the medium used to convey information from a sender N (N - 1) / 2 (Where N = Number of people in your team)
CC Communication Channels
(or transmitter) to a receiver.
Measures the project based on its financial performance. CPI = EV / AC
Measurement of spending efficiency.
CPI Cost Performance Index < 1 means cost overrun
> 1 means under budget
= 1 means performance matches plan
The difference between the earned value amount and the CV = EV - AC
cumulative actual costs of the project. Measurement of cost
CV Cost Variance performance.
(-) indicates over budget
(+) indicates under budget
CV of zero indicates right on budget
These forecasting formulas predict the likely completed costs of EAC = BAC / CPI
EAC Estimate At Completion
the project based on current scenarios within the project.
The earned value management formula that predicts how much ETC = EAC - AC
funding the project will require to be completed. There are three
ETC Estimate To Complete
variations of this formula, all based on conditions the project
maybe experiencing.
It is the physical work completed to date and the authorized EV = BAC * % Comp
budget for that work. It is the percentage of the budget at
EV Earned Value
completion (BAC) that represents the actual work completed in the
project.
EVA is a financial performance method to calculate the true EVA = Net Operating Profit After Tax - Cost of Capital
EVA Economic Value Add economic profit of a corporation. EVA = (Revenue - Operating Expenses - Taxes) - (Investment Capital x % Cost of Capital)
A benefit comparison model that determines a future value of FV = PV (1 + i)n (PV - Present Value ; i - Interest Rate ; n - Number of time periods)
FV Future Value
money.
Program Evaluation and Review Technique (P + 4M + O) / 6 (i.e. P - Pessimistic ; M - Most Likely or Realistic ; O - Optimistic)
PERT PERT Estimate
(Three-Point Estimate).
The cost point beyond which the seller incurs all incremental costs, PTA = Target Cost + ((Ceiling Price - Target Price) / Buyer's Share)
PTA Point of Total Assumption
assuming 100% of the risk of cost increases. Price = Cost + Profit
A benefit comparison model that determines a present value of a PV = FV / (1 + i)n (FV - Future Value ; i - Interest Rate ; n - Number of time periods)
PV Present Value
future amount of money.
Is a financial measure that quantifies how well a company ROIC = Net Income After Tax / Total Capital Invested
generates cash flow relative to the capital it has invested in its
ROIC Return on Invested Capital business. When the return on capital is greater than the cost of
capital (usually measured as the weighted average cost of capital),
the company is creating value; when it is less than the cost of
capital, value is destroyed.
A measurement of the project based on its schedule performance. SPI = EV / PV
Measurement of work efficiency.
SPI Schedule Performance Index < 1 means behind plan
> 1 means ahead plan
= 1 means performance matches plan
STD Deviation Standard Deviation Standard Deviation of PERT Estimate. (P - O) / 6 (i.e. P - Pessimistic ; O - Optimistic)
The difference between the Earned Value (EV) and the Planned SV = EV - PV
Value (PV). Indicates schedule performance.
SV Schedule Variance (-) indicates behind
(+) indicates ahead
SV or zero indicates right on schedule
To Complete Performance Index (BAC - EV) / (EAC - AC)
TCPI To Complete Performance Index < 1 is good - you can under-perform
> 1 is bad - you must perform better
A forecasting formula that predicts how much of a variance the VAC = BAC – EAC
VAC Variance At Completion project will likely have based on current conditions within the
project.
A Variance is the difference between what was expected and what VAR = BAC - AC
VAR Variance
was experienced.
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2. Math Formula Memory Technique
Math Formula Memory Technique
1 2 3 4 5 6 7 8 EAC at Budgeted Rate = BAC + AC - EV
E V BAC * Actual % Complete EAC at Present CPI = BAC / CPI
P V BAC * Planned % Complete EAC using SPI & CPI = [(BAC - EV) / SPI X CPI] + AC
F V PV FV = PV(1 + i)n Where i - Interest, n - # of time periods
C V EV AC PV = BAC * Planned % Complete
S V EV PV
C PI EV AC
S PI EV PV Normal Distribution
E AC AC *% Comp 1 SD = 1 Sigma
E AC BAC / CPI 1 Sigma = 68.26%
E TC AC EAC 2 Sigma = 95.46%
V AC BAC EAC 3 Sigma = 99.73%
V AR BAC AC 6 Sigma = 99.99%
T CPI BAC EV / (BAC - AC)
Standard Deviation (SD) = (P - O) / 6
EPF CSCS EEE VVT
(i.e. P - Pessimistic ; O - Optimistic)
EV = BAC * Actual Deliverables % Complete PERT = (P + 4M + O) / 6 (Weighted)
PV = BAC * Planned Schedule % Complete (P - Pessimistic (High));
FV = PV(1 + i)n (M - Most Likely or Realistic (Middle)) ;
CV = EV - AC (> 0 Good) (O - Optimistic (Low))
SV = EV - PV (> 0 Good) Three Point Estimate = (P + M + O) / 3 (Non-Weighted)
CPI = EV / AC (> 1 Good) Where P = Pessimistic ; M =Most Likely ; O = Optimistic
SPI = EV / PV (> 1 Good) Communication Channels (CC) = N (N - 1) / 2
EAC = AC / % Complete (Where N = Number of people in your team)
EAC = BAC / CPI ROIC = Net Income After Tax / Total Capital Invested
ETC = EAC - AC ROIC - Return On Invested Capital
VAC = BAC - EAC Benefit Measurement - Bigger is better
VAR = BAC - AC EVA = Net Operating Profit After Tax - Cost of Capital
TCPI = (BAC - EV) / (BAC - AC) (< 1 - Good; > 1 - Bad) (Revenue - Op. Exp - Taxes) - (Investment Capital X
% Cost of Capital)
Note: EVA - Economic Value Add
Deliverables - Example: Rooms Benefit Measurement - Bigger is better
Schedule - Example: Days, Weeks Source Selection = (Weightage X Price)
+
(Weightage X Quality)
Note: Critical Path
To memorize the formulas, Forward Pass: (Add 1 day to Early Start)
follow the number pattern for EF = (ES + Duration - 1)
filling the blanks. Backward Pass: (Minus 1 day to Late Finish)
LS = (LF - Duration + 1)
ES = Early Start; EF = Early Finish;
LS = Late Start; LF = Late Finish
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