useful formulas for pmp

7/28/2019 Useful Formulas for PMP

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KEY CONCEPT AND FORMULAS FOR PMP EXAM TUTOR CONFLUX

Effective Learning for Sure Success Page 1

Earn Value FormulasPV (Planned Value) = BCWS (Budgeted Cost of Work Scheduled

EV (Earned Value) = BCWP (Budgeted Cost of Work Performed)

AC (Actual Cost) = ACWP (Actual Cost of Work Performed)

SV = EVPV (minus is behind schedule)

CV = EVAC (minus is over budget)

SPI = EV/PV (Less than 1 is behind schedule)

CPI = EV/AC (Less than 1 is over budget)

EAC = AC + (BAC-EV) Use when variances are atypical

EAC = AC + [(BAC-EV)/CPI] Use when variances are typical

(Note: This is the same as EAC = BAC/CPI)

VAC = BACEAC

ETC = BACEV Use when variances are atypical

ETC = (BACEV)/CPI Use when variances are typical

ETC = EACAC Use when original estimates were flawed

Network DiagramPrecedence Diagramming Method (PDM)

Also called Activity on Node (AON): Activities are in boxes

Most commonly used today

Has 4 relationships: F-S, S-S, F-F, S-F

No dummies (zero duration dependencies) allowed

Can analyze using either Three-Point Estimates or CPM

Arrow Diagramming Method (ADM)

Also called Activity on Arrow (AOA)

Only 1 relationship: F-S

Can have dummies

Can analyze using either Three-Point Estimates or CPM

Graphical Evaluation and Review Technique (GERT) - Allows loops and repetitive activitiesThree Point Estimates, or PERTPERT = PROGRAM Evaluation and Review Technique

Holds schedule and lets cost float

3 estimates for each task: Optimistic, Pessimistic, and Most Likely


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Mean Estimate = (O + 4*ML + P)/6

Standard Deviation (s) = (PO)/6

Variance = s2 , or [(PO)/6]2

Standard deviation of tasks on CP = Sum of variances

Standard Deviation Ranges:

If 95% is confidence rating. Range =(2 x ) to + (2 x )

Powers of a Project Manager1. Expert: Best, earned on your own

2. Reward: Next best. Based on PM position

3. Formal: Power, based on PM position

4. Referent: Referring to positions of others

1. 5. Penalty: Worst. Based on PM position

Sources of Conflict (Order of Priority)1. Schedules

2. Priorities

3. Manpower (Resources )

4. Technical Opinions

5. Procedures

6. Personality7. Cost

Channels of CommunicationBetween Team Members = N(N-1)/2

Project Selection Financials


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NPV (Net Present Value) = FV/(1+r)n

FV= Future Value, r= interest rate, n= no. of time periods

Higher NPV is better

IRR (Internal Rate of Return) = Solve the NPV equation for r

Also called Hurdle Rate

Higher IRR percentage is better

BCR (Benefit/Cost Ratio)

Higher BCR is better.

Beware, exam can call it CBR, where lower is better

ROI (Return on Investment) = Earnings/Investment

Higher ROI is better

Payback Period = Time to recover cost of the project

Lower payback period is better

Cash Flow = Cash InCash Out

Calculating Stack or FloatTotal Float (also called Slack, Float, or Project Float) is the total amount of time an activity can be delayed

without delaying the project finish date.

Free Float/Slack is the amount of time an activity can be delayed without delaying its successor (following

activity).

LS ES: Calculates slack with forward pass

LF EF: Calculates slack with backwards passLag Time: Inserted wait time between activities

Lead Time: Overlapping activities, also called paralleling or fast tracking. Lead In; Lag Out

Accuracy of EstimatesOrder of Magnitude:-50% to +50%

Budget Estimate:-10% to +25%

Definitive Estimate:-5% to +10%

Conflict Resolution(Best to Worst)1. Problem Solving: Also called Confronting

2. Compromising: Solutions satisfy both parties

3. Withdrawal: Postponing a decision

4. Smoothing: Emphasis on agreement

5. Forcing: One viewpoint at expense of another.


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Herzbergs Motivators1. Achievement

2. Recognition

3.

Challenge of the work itself

4. Responsibility

5. Advancement

6. Growth

ClosingProject is closed when administrative closure is complete.

Administrative closure is done at end of each Project Phase and at the end of the Project.

Contract closure: verification that deliverables were acceptable; it is done once at the end of the

contract.

Contract Closure Procedure is produced under Close Project

useful formulas for pmp

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