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# PMP

SUMMARY OF FORMULAS

SHEETS

Formula Path: Integration management knowledge area Initiation !ro"e## grou! \$%\$ &e'elo! Pro(e"t )harter Tool# and Te"hni*ue# Pro(e"t Sele"tion method# +ene,it mea#urement method# A% S"oring Model# or weighted #"oring model# +% +ene,it )o#t Ratio -+)R. Compares the benefits to the cost of different projects +)R/ I, benefits are greater than the cost +)R0 I, benefits and costs are same +)R1 I, costs are greater than the benefits.

)% Pa23a"k !eriod Payback period is the length of time it takes the company to get back the initial cost of producing the product or service. &% &i#"ounted "a#h ,low Present value (PV) can be found from the formula P40 F4 -\$5i.6 (PV = Present Value !V = !uture Value i = "nterest rate n = #o of years) E% 7et Pre#ent 4alue -7P4. \$he Present value of the total benefits (income or revenue) less the costs. #PV allo%s calculating the accurate value of the project. "f #PV calculation& ', then accept the project "f #PV calculation (', then reject the project. !ormula is complicated. F% Internal rate o, return -IRR. \$he rate at %hich the project inflo%s and project outflo%s are e)ual. *ost difficult method. \$rial + error method Projects %ith higher ",, value are profitable. ",, is the discount rate %hen #PV = '. ",, assumes that cash inflo%s are reinvested at the ",, value.

Formula Path: Time management knowledge area Planning !ro"e## grou! 8%9 S"hedule &e'elo!ment Tool# and Te"hni*ue# )riti"al Path Method -)PM. \$he critical path method is a schedule net%ork analysis techni)ue that is performed using the schedule model. \$he critical path method calculates the early start and finishes dates, and late start and finish dates for all schedule activities TF -F. 0LS:ES TF -F. 0LF:EF

-. = -arly .tart -! = -arly !inish /. = /ate .tart /! = /ate !inish \$! = \$otal !loat (\$otal .lack)

Formula Path: Time management knowledge area Planning !ro"e## grou! 8%9 S"hedule &e'elo!ment Tool# and Te"hni*ue# Program E'aluation Re'iew Te"hni*ue -PERT. \$hese formulas relate to activities to find the duration and standard deviation for a project. \$hese formulas can also be used for cost estimates PERT Formula# P-,\$ or -0pected 1uration -P5;M5O. < 2ctivity .tandard 1eviation P:O < 2ctivity Variance -P:O.3 -<.3

(O = Optimistic

M = Most likely

P = pessimistic)

Formula Path: )o#t management knowledge area Monitoring and )ontrolling !ro"e## grou! 8%\$; )ommuni"ation Planning Tool# and Te"hni*ue# )ommuni"ation Re*uirement Anal2#i# The Im!a"t o, the 7um3er o, Peo!le on )ommuni"ation# )hannel# #umber 4f communication Channels = n -n:\$. 8 n= number of people

Formula Path: Ri#k management knowledge area Planning !ro"e## grou! 8%\$= >uantitati'e Ri#k Anal2#i# Tool# and Te"hni*ue# >uantitati'e Ri#k Anal2#i# and Modeling Te"hni*ue# E?!e"ted Monetar2 4alue -EM4. EM4 0 Pro3a3ilit2 ? Im!a"t

Formula Path: Pro"urement management knowledge area Planning !ro"e## grou! 8%8@ Plan Pur"ha#e# and A"*ui#ition Tool# and Te"hni*ue# Make or +u2 Anal2#i# Make or +u2 Anal2#i# e?am!le 5ou are trying to decide %hether to lease or buy an item for your project. \$he daily lease cost is 678'. \$o purchase the item the investment cost is.67,''' and the daily cost is 68'. 9o% long %ill it take for the lease cost to be the same as the purchase cost: 2ns%er /et 1 e)ual the number of days %hen the purchase and lease costs are e)ual. A\$8@ & 0 A\$B@@@ 5 A8@ & A\$8@ & : A8@ & 0 A\$B@@@ A\$@@ & 0 A\$B@@@ &0 \$@. \$he lease cost %ill be the same as the purchase cost after ten days. "f you think you %ill need the item for more than ten days, you should consider purchasing it to reduce total costs.

Formula Path: )o#t management knowledge area Monitoring and )ontrolling !ro"e## grou! ;%< )o#t )ontrol Tool# and Te"hni*ue# Per,orman"e Mea#urement anal2#i# Earned 4alue Management -E4M. o \$o perform the -V* calculations, you need to first gather the Three mea#urement#; Term Planned Value -arned Value 2ctual Cost =udget at Completion -stimate at Completion -stimate to Complete Variance at Completion Inter!retation -A# o, toda2 %%% .
<hat is the estimated value of the %ork planned to be done: <hat is the estimated value of the %ork actually accomplished: <hat is the actual cost incurred for the %ork accomplished: 9o% much did %e =>1?-\$ for the \$4\$2/ project effort: <hat do %e currently e0pect the \$4\$2/ project to cost: !rom this point on, ho% much *4,- do %e e0pect it to cost to finish the 9o% much over or under budget do %e e0pect to be at the end of the project:

## A"ron2m P4 E4 A) +A) EA) ET) 4A)

7ame Cost Variance (CV) .chedule Variance (.V) Cost Performance "nde0 (CP") .chedule Performance "nde0 (.P") -stimate at Completion (-2C)

## Formula E4:A) E4:P4 E4 A) E4 P4

Inter!retation -A# o, toda2 ... ) #-?2\$"V- is over budget, P4."\$"V- is under budget. #-?2\$"V- is behind schedule, P4."\$"V- is ahead of schedule. <e are getting 6 @@ %orth of %ork out of every 67 spent. !unds are or are not being used efficiently. <e are (only) progressing at @@ percent of the rate originally planned. 2s of no%, ho% much do %e e0pect the total project to cost: 6 @@ . .ee formulas at the left.

+A) )PI A)5 ET) #4\$-; \$here are many %ays to calculate -2C, depending on the assumptions made. \$he first A) 5 -+A) : E4. formula to the right is the one most often asked on the e0am. A) 5 -+A) : E4. )PI -stimate to Complete (-\$C) Variance at Completion (V2C) EA):A) +A):EA)

>sed if no variances from the =2C have occurred or you %ill continue at the same rate of spending. 2ctual plus a ne% estimate for remaining %ork. >sed %hen original estimate %as fundamentally fla%ed. 2ctual to date plus remaining budget. >sed %hen current variances are thought to be atypical of the future. 2C plus the remaining value of %ork to perform. 2ctual to date plus remaining budget modified by performance. >sed %hen current variances are thought to be typical of the future. 9o% much more %ill the project cost: 9o% much over or under budget %ill %e be at the end of the project: