Essential PMP Formulas

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Benefit Measurement Methods

Bigger is Better: Smaller is Better:
BCR Benefit/Cost Ratio Opportunity Cost
IRR Internal Rate of Return Payback Period
PV Present Value
NPV Net Present Value
EVA Economic Value Add
ROI Return On Investment
ROIC Return On Invested Capital

Return on Invested Capital (Benefit Measurement bigger is better)

ROIC= Net Income After Tax Total Capital Invested

Economic Value Add (Benefit Measurement bigger is better)

EVA = Net Operating Profit After Tax Cost of Capital
= (Revenue - Op. Expenses - Taxes) - (Investment Capital x % Cost of Capital)

PERT Estimate a.k.a. Three-Point Estimate

(P + 4R + O) / 6 P = Pessimistic; R = Realistic (or Most Likely); O = Optimistic

Standard Deviation of PERT Estimate

(P O) / 6 Pessimistic less Optimistic divided by 6

Critical Path the combination of activities that, if any are delayed, will delay
the projects finish

Float amount of time an activity may be delayed before it moves the projects
critical path

Free Float amount of time an activity may be delayed before impacting early
start of any subsequent activity

Communication Channels
N ( N 1 ) / 2 ; Where N = the number of people in your team

Copyright 2009 Velociteach. All rights reserved.

Essential PMP Formulas (contd)
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Point of Total Assumption (PTA) The cost point beyond which the Seller incurs
all incremental costs, assuming 100% of the risk of cost increases.
PTA = Target Cost + ((Ceiling Price Target Price) / Buyers Share)
Remember: Cost + Profit = Price

Earned Value:
BAC = Total Budgeted for the project
PV= Planned % Complete X BAC (BCWS)
EV= Actual % Complete X BAC (BCWP)
AC= Sum of the actual costs (ACWP)

CV= EV AC (From C to shining C)

CPI= EV / AC (For a given period of time)
CPIC= EVC / ACC (Cumulative - From beginning to a point in time)
SV= EV PV
SPI= EV / PV

Forecasting:
EAC1= BAC / CPIC (Continue present CPIC)
EAC2= AC + bottom-up ETC (Most common; disruptive)
EAC3= AC + BAC-EV (Perform at budgeted rate)
EAC4= AC + (BAC-EV) / (CPI X SPI) (Constrained schedule)
ETC= EAC ACC
VAC= BAC EAC

To Complete Performance Index:

Performance which must be achieved in remaining work to meet budget or target
TCPI meeting BAC = (BAC EV) / (BAC AC)
TCPI meeting EAC = (BAC EV) / (EAC AC)
(remaining work) / (remaining funds)

Copyright 2009 Velociteach. All rights reserved.