Essential PMP Formulas

Project Selection
Return on Invested Capital (ROIC) = Net Profit after Tax Total Capital Invested
Economic Value Add (EVA) = Net Profit after Tax Cost of Capital
Benefit Cost Ratio (BCR) = Benefit Cost (Values > 1 is desirable)
Net Present Value (NPV) = Present Value of the total benefits Costs over a period (the
bigger the value, the better)

Communication
Communication Channels = N (N 1) 2, where N = the number of people in the project
team

Earned Value
BAC = Total Budgeted for the project
PV = Planned % Complete * BAC
EV = Actual % Complete * BAC
AC = Sum of the actual costs
CV = EV AC (Negative CV shows we are over budget)
SV = EV PV (Negative SV shows we are behind schedule)
CPI = EV AC (For a given period of time)
CPIC = EVC ACC (Cumulative from the beginning to a given point in time)
SPI = EV PV
EAC = BAC CPIC
ETC = EAC AC
VAC = BAC EAC
TCPI = (BAC EV) Remaining Funds (where remaining funds is calculated as BAC AC or
EAC AC)
** SPI or CPI > 1 shows that you are ahead on schedule or under budget
** SPI or CPI = 1 shows that you are on target (performance is as planned)
** SPI or CPI < 1 shows that you are behind schedule or over budget

Estimating
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Essential PMP Formulas

PERT Estimates a.k.a. Three-Point Estimates = (P + 4R + O) 6, where P = Pessimistic, R

= Realistic or Most Likely, O = Optimistic
Standard Deviation (SD) = (P O) 6, where P = Pessimistic, O = Optimistic
Activity Variance = (SD) or [(P O 6) * (P O 6)], where P = Pessimistic, O =
Optimistic
Range of an Activity Duration = EAD +/- SD, where EAD = Expected Activity Duration or
PERT Estimate
Order of Magnitude or Ball Pack Estimate = 50% to +100%
Definitive Estimate = 15% to +20%

Scheduling
Activity Duration = EF ES + 1, where EF = Early Finish, ES = Early Start
Late Finish = LS + Activity Duration 1, where LS = Late Start
Float = LS ES or LF EF
** Early Start, Late Start or Early Finish can be derived from any of the above formulas by
substitution method when the necessary variables are known

Procurement Planning
Point of Total Assumption = Target Cost + ((Ceiling Price Target Price) Buyers %
Share)
where Ceiling Price = A Cap or the highest price the buyer will pay,
Target Cost = Expected cost of product or service (Sellers cost plus profit),
Target Price = Overall expected cost of the contract (target cost + target incentive fee),
Sharing Ratio = Describes how cost savings or overrun will be shared; X : Y = buyer % :
seller %

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