Important PMP/CAPM Formulas

Mudassir IqbalMay 22, 2023PMP ConceptsNo comments

1. Earned Value Management (EVM)

Definitions and Concept

EV = Earned Value Management
SV = Schedule Variance
PV = Planned Value
AC= ” Actual Cost
CPI = Cost Performance Index : Behind/Over Budget > 1 > Ahead/Under of Budget
SPI = Schedule Performance Index : Behind Schedule > 1 > Ahead of Schedule
ETC = Estimate to Complete
EAC = Estimate at completion (Forecasted Value based on performance)
VAC = Variance at Completion (forecasted)

Formulas

SV = EV – PV
CV = EV – AC
SPI = EV / PV
CPI = EV / AC
ETC = (BAC – EV) / CPI
EAC = AC + ETC
EAC = AC + (BAC – EV) : If future work will be completed at the planned rate
EAC = BAC / CPI : If the CPI is expected to be the same for the remainder of the project
VAC = BAC – EAC
TCPI = (BAC – EV) / (BAC – AC)

2. Network Diagrams

Activity Duration = EF-ES +1
Total Float (TF) = LS – ES
TF = LF – EF
Free Float (FF) = ES_(Successor) – ES_(Present) – Dur_(Present)

3. Project Estimation

E (PERT Analysis/BETA Distribution) = (O + P + 4*M) / 6
PERT Standrd Diviation σ = (P – O) / 6
E (3-Point Estimate) = (O + P + M) / 3
Var = σ⁽²⁾

Standard Deviation/ PERT Analysis Download

4. Project Selection Methods

Present Value PV = FV / (1 + r)ⁿ
Future Value FV = PV * (1+ r )ⁿ
NPV = ∑PV (This is sum of all PV)
ROI = Return / Investment
BCR = Benefits / Costs
Payback Period = Initial Investment / Periodic CashFlow

5. Expect Monetary Value (EMV)

EMV_(R) = P*I
EMV_(P) = ∑EMV_(R)
Net Benefit = EMV_(P) – Cost

6. Communication Channels

C = n*(n – 1)/2

7. Procurement Management (Point of Total Assumption)

Pt. of Total Assumption (PTA) = CP-TP/Buyer’s Share Ratio + TC

8. Risk Probability

Expected Monetary Value (EMV) = Probability * Impact : always <1

9. Values

1 Sigma = 68.26%

2 Sigme = 95.46%

3 Sigma = 99.73%

6 Sigma = 99.99% (3.4 defects in one million)

Control Limits = 3 Sigma from Mean

Rough Order of Magnitude (ROM) = -25% to +75%

Preliminary Estimate = -15% to 25%

Budget Estimate = -10% to +25%

Definitive Estimate = -5% to +10%

Preto Chart = 80/20

–> Download the PMP Formula File

Mudassir Iqbal

I am the founder of Know Your Project (KYP) IT Consulting and Training Company. We are based in Pakistan but work extensively with middle-market businesses directly in the European, Middle East and South Asia Regions, as well as through partnerships with multinational companies like yours. I have personally delivered several digital change projects across many sectors globally - including construction, technology, finance, manufacturing, warehousing, logistics, telecommunication. My areas of expertise are concerned with Business Process Re-engineering (BPR), IT Governance and Assurance, PMO Setup, and Business and IT Agility. I also have substantial experience strategizing ERP implementations and have been working with Oracle, SAP, Microsoft Dynamics and Odoo for the best part of my professional life. Both nationally and internationally, I’m also providing in-depth, high-caliber executive development and training in various fields, covering topics such as project planning, project management, leading teams, cultural change. I’m a passionate writer and speaker on the topics of Digital Transformation, CIO, ERP and Project Management.