PMP Formulas
1. Number of Communication Channels:
n * (n -1)/2
N = Number of members in the team
Interpretation:
If the number of member in the team is 4 then the number of
communication channels is: 4 * (4 – 1)/2 = 6.
If the no. of member in the team is increased from 4 to 5 the increase in
the communication channels is: 5 * (5-1)/2 – 4 * (4-1)/2 = 4.
Planned value (PV): how much work was scheduled to date
Originally planned cost of the work that should have been done by this time also
called as Budget Cost of Work Scheduled (BCWS).
Planned Value = (Planned % Complete) X BAC
Actual cost (AC): the amount of money spent so far
Actual cost expended on the project up until this point in time also called as Actual
Cost of Work Performed (ACWP).
Earned value (EV): how much of work was completed to date
The value of work that has been completed. This is not the actual cost of the work
that has been completed but rather the original ascribed value from your approved
cost baseline for the value of the work.
Budget at completion (BAC):
The original forecast budget for the project.
2. Schedule Variance (SV):
It is the difference between the earned value (EV) and the planned value (PV).
SV = EV - PV
EV = Earned Value PV = Planned Value
Interpretation:
< 0 behind schedule
= 0 on schedule
> 0 ahead of schedule
3. Schedule Performance Index (SPI):
This is a ratio of the earned value and planned value that allows you to better
determine the magnitude of any variance.
Ex: if you have a schedule performance index of 0.95, it means that every day you
spend working on the project you are getting a 0.95 day return.
SPI = EV/PV
EV = Earned Value PV = Planned Value
Interpretation:
< 1 behind schedule
= 1 on schedule
> 1 ahead of schedule
4. Cost Variance (CV):
This is simply the difference between earned (EV) and the actual cost (AC) at this
point.
CV = EV - AC
EV = Earned Value AC = Actual Cost
Interpretation:
< 0 Over Budget
= 0 On Budget
> 0 Under Budget
5. Cost Performance Index (CPI):
The cost performance index calculation tells you the magnitude of the variance.
Ex: if you have a cost performance index of 1.1, it means that for every dollar you
spend on the project you are getting a $1.10 return.
CPI = EV/AC
EV = Earned Value AC = Actual Cost
Interpretation:
< 1 Over Budget
= 1 On Budget
> 1 Under Budget
6. Estimate At Completion (EAC): If original is flawed
EAC = AC + New ETC
AC = Actual Cost New ETC = New Estimate To Completion
Interpretation:
If original estimation is based on wrong data/assumptions or circumstances
have changed.
7. Estimate At Completion (EAC): If BAC remains the same
EAC = AC + BAC - EV
AC = Actual Cost BAC = Budget At Completion EV = Earned Value
Interpretation:
The variance is caused by one time event and is not likely to happen again.
8. Estimate At Completion (EAC): If CPI remains the same
EAC = BAC / CPI
BAC = Budget At Completion CPI = Cost Performance Index
Interpretation:
If the CPI would remain the same till the end of the project, the original
estimate is not accurate.
9. Estimate At Completion (EAC): If substandard performance continues
EAC = AC + (BAC - EV) /(CPI * SPI)
AC = Actual Cost BAC = Budget At Completion EV = Earned Value
CPI = Cost Performance Index SPI = Schedule Performance Index
Interpretation:
Use when the question gives all the values (AC, BAC, EV, CPI, and SPI)
otherwise this formula is not likely to be used.
10. To-Complete Performance Index (TCPI):
The to-complete performance index (TCPI) tells you the rate at which you have to
work to achieve either your estimate at completion (EAC) or your budget at
completion (BAC), depending on which one you are targeting. A to-complete
performance index of less than 1 is good, whereas a to-complete performance index
of more than 1 is bad.
TCPI = (BAC - EV) /(BAC - AC)
TCPI = Remaining Work/ Remaining Funds
AC = Actual Cost BAC = Budget At Completion EV = Earned Value
Interpretation:
< 1 Under Budget
= 1 On Budget
> 1 Over Budget
11.Estimate To Completion (ETC):
The estimate to complete calculation is simply your forecast of the remaining costs to
be incurred on the project. The easiest way to calculate this is simply to subtract
your actual cost (AC) spent to date from your estimate at completion (EAC).
ETC = EAC - AC
EAC = Estimate At Completion AC = Actual Cost
12.Variance At Completion (VAC):
The variance at completion calculation is simply the difference between what you
originally thought the project was going to cost (BAC) and what you now think it is
going to cost (EAC). A negative variance is bad, and a positive variance is good.
VAC = BAC - EAC
BAC = Budget At Completion EAC = Estimate At Completion
Interpretation:
< 0 Under Budget
= 0 On Budget
> 0 Over Budget
13.PERT(Program Evaluation Review Technique):
PERT = ( O + 4M + P)/6
O = Optimistic Estimate M = Most Likely Estimate P =Pessimistic Estimate
14.Standard Deviation:
Standard Deviation = ( P - O)/6
O = Optimistic Estimate P =Pessimistic Estimate
15.Float/Slack:
Float/Slack = LS - ES
Float/Slack = LF - EF
LS = Late Start ES= Early Start
LF = Late Finish EF = Early Finish
Interpretation:
= 0 On Critical Path
< 0 Behind Schedule
Type of Question on PMP Formulas:
1) Applying a Formula
2) Applying two Formulas
3) Inversing a Formula
4) Result Interpretation
5) Find the correct Formula
6) Use a formula based on Keyword
Ex: You have a project to be completed in 12 months and the total cost of the project
is 100,000 USD. Six months have passed and the schedule says that 50% of the
work should be completed.
Project duration: 12 months
Project cost (BAC): 100,000 USD
Time elapsed: 6 months
Percent complete: 50% (as per the schedule)
Planned Value = (Planned % Complete) X BAC
= 50% of 100000 = (50/100) * 100000 = 50000
