PMP FORMULAE

EV = Earned Value: What is the estimated value of the work actually accomplished PV = Planned Value: What is the estimated value of the work planned to be done AC = Actual Cost: What is the actual cost incurred for the work accomplished BAC = Budget at Completion (the budget): How much did we BUDGET for the TOTAL roject effort EAC = Estimate at Completion: What do we currently expect the TOTAL project to cost? (a forecast) ETC = Estimate to Complete: From this point on, how much MORE do we expect it to cost to finish the project VAC = Variance at completion: As of today, how much over or under budget do we expect to be at the end of the project 1. Schedule Variance SV = EV - PV 2. Cost Variance CV = EV - AC 3. Schedule Performance Index SPI = EV/PV SPI > 1 means project is ahead of schedule SPI < 1 means project is behind schedule 4. Cost Performance Index CPI = EV/AC CPI > 1 means project running under budget CPI < 1 means project running over budget 5. Estimate to completion ETC = EAC AC 6. Estimate at completion EAC forecast for ETC work performed at the present CPI EAC = BAC / CPI EAC forecast for ETC work performed at the budgeted rate EAC = AC + BAC - EV EAC forecast for ETC work considering both SPI & CPI factors

EAC = AC + [(BAC - EV)/ (CPI * SPI)] 7. Budget at Completion BAC = Sum of All PVs for the complete project duration 8. Variance at completion VAC = BAC EAC

9. To-Complete Performance Index o o TCPI based on the BAC TCPI = (BAC - EV) / (BAC - AC) TCPI based on the EAC TCPI = (BAC - EV) / (EAC - AC)

10.PERT analysis calculates Expected Activity Cost (Ce) using weighted average of these three estimates Ce = (Co + 4Cm + Cp) / 6 Co = Optimistic Activity Cost Cp = Pessimistic Activity Cost Cm = Most likely Activity Cost 11.PERT analysis calculates Expected Activity Duration (EAD or Te) using weighted average of these three estimates EAD or Te = (To + 4Tm + Tp) / 6 To = Optimistic Activity Duration Tp = Pessimistic Activity Duration Tm = Most likely Activity Duration Standard Deviation SD = (Tp To)/6 2 Activity Variance = ((Tp To)/ 6) Range of the estimate = EAD +/- SD Example: For EAD = 25 SD =3, Range of Estimate will be 22 to 28 or +/-3 or 25

*To calculate Standard Deviation for a series of items, find corresponding variances and add all variances and then take square root of the total to convert back into standard deviation. *To find the Expected Activity Duration for the PROJECT to complete, calculate separately Expected Activity Duration for each activity on critical Path and add those. 12.Total number of potential communication channel = n (n-1) / 2 Where n represents no of stakeholders

13.

Critical Path Method

ES (Early Start Date): Starts with O EF (Early Finish Date): ES + t LS (Late Start Date): LF t LF (Late Finish Date): Start with CP Float or Slack or Total Float (TF) = LS ES = LF EF Where t is the time taken by an activity

14.

Estimates Monetary Value EMV EMV = Probability * Impact

Where Probability in % Example: for 70%, its 0.7 Impact in Dollar value Example: for $100,000, its 100,000 Contingency Reserve = Sum all risks EMV

15. Present value n

PV = FV / (1+r) Where FV = future value R =rate of interest i.e. 10% will be 0.1 N = number of time periods

16. Net Cash Flow = Net Cash Flow In Net Cash Flow Out

17. Procurement Management Target Price is also known as Planned Price or Estimated Price Profit is also known as Fee Cost-Plus-Fixed-Fee (CPFF) Final Price = Actual Cost + Profit Where Profit = % of Estimated Cost Cost-Plus-Percentage-Cost (CPPC) Final Price = Actual Cost + Profit Where Profit = % of Actual Cost Example: 15% of Actual Cost $100000, then Profit = 15000 Cost-Plus-Incentive-Fee (CPIF) Final Price = Actual Cost + Final Profit Final Profit = ((Target Cost- Actual Cost)* % seller share) + Target Profit Target Price = Target Cost + Target Profit * If Final Price is greater than Ceiling Price then Final Price = Ceiling Price

18. Net Present Value NPV = the project with greatest NPV is selected irrespective of year mentioned when options are given to you to choose projects for initiation.

19. Internal Rate of Return IRR = the project with greatest IRR is selected when options are available with company to choose projects for initiation.

20. Payback Period The project with least Payback Period is selected when options are given to you to choose projects for initiation.

21. Benefit Cost Ratio The project with greatest Benefit Cost Ratio is selected when options are given to you to choose projects for initiation. Example Cost benefit ratio = 1.7 means Payback is 1.7 times the costs

22. Opportunity Cost You have two projects to choose from: Project A with an NPV of $45000 or Project B with an NPV of $85000. What is the opportunity cost of selecting Project B? Ans: $45000 23. Sunk Costs Its expended costs, accounting standards say that sunk cost should not be considered when determining whether to continue with trouble project

24. Straight line depreciation Same amount of depreciation is taken every year

25. Accelerated depreciation It depreciates faster than the straight line