Are you studying to take the PMP® Exam? Then you know that a big part of the exam consists of project management related formulas. In this presentation Cornelius Fichtner, PMP (host of The Project Management Podcast and The Project Management PrepCast) explains five of these formulas to you.
1. Five PMP® Exam Formulas
Explained
Presented by
Cornelius Fichtner, PMP
2. 1.) Basic Earned Value Formulas
Concept
Formula
Result Interpretation
Cost Variance (CV)
Provides cost performance of the
project. Helps determine if the project is
proceeding as planned.
CV = EV - AC
Negative = over budget
Positive = under budget
Cost Performance Index (CPI)
Measure of cost efficiency on a project.
Ratio of earned value to actual cost.
CPI = EV / AC
1 is good. We are getting $1 for $1 spent.
>1 is better. We are getting >$1 for $1
spent.
<1 is bad. We are getting <$1 for $1 spent.
Schedule Variance (SV)
Provides schedule performance of the
project. Helps determine if the project
work is proceeding as planned.
SV = EV - PV
Positive = Ahead of schedule
Neutral = On schedule
Negative = Behind schedule
Schedule Performance Index (SPI)
Measure of schedule efficiency on a
project. Ratio of earned value to
planned value. Used to determine if a
project is behind, on or ahead of
schedule. Can be used to help predict
when a project will be completed.
SPI = EV / PV
1 is good. Progressing at the planned rate.
>1 is better. Progressing at a faster rate
<1 is bad. Progressing at a slower rate
3. 2.) PERT
•
•
Program Evaluation and Review Technique (PERT): Beta
and Triangular distribution
Three point estimate for the expected duration of a
schedule activity using pessimistic, optimistic and most
likely durations. A probabilistic approach, using statistical
estimates of durations.
Formula
Result Interpretation
Beta = (Pessimistic + (4 * Most Likely) +
Optimistic) / 6
The result is the estimated duration of a schedule
activity expressed as a weighted average. This is
the preferred formula for the PMP Exam
Triangular = (Pessimistic + Most Likely +
Optimistic) / 3
The result is the estimated duration of a schedule
activity expressed as a simple average
4. 3.) Early / Late Start and Finish
Concept
Formula
Interpretation
Early Finish (EF)
Determine when an activity will finish
at the earliest.
EF = (ES + duration) - 1
The earliest day on which
this activity can finish
Early Start (ES)
Determine when an activity can start
at the earliest.
ES = (EF of predecessor) + 1
The earliest day on which
this activity can start.
Late Finish (LF)
Determine when an activity should
finish at the latest.
LF = (LS of successor) - 1
The latest day on which this
activity can finish.
Late Start (LS)
Determine when an activity should
start at the latest.
LS = (LF - duration) + 1
The latest day on which this
activity can start.
5. 4.) Net Present Value
•
Method for financial evaluation of long-term projects. (Also
described as Present value of cash inflow / benefits minus
present value of cash outflow / costs.)
Formula
Result Interpretation
Formula not required for exam. You only
need to be able to interpret NPV numbers
but not calculate them.
Positive NPV is good.
Negative NPV is bad.
The project with the higher NPV is the “better” project.
6. 5.) Median and Mode
Concept
Formula
Interpretation
Median
The middle value that
separates the higher half from
the lower half of the data set.
Arrange the values from lowest value to
highest value and pick the middle one.
Example: 4 is the median in 2, 4, 6
If there is an even number of values, calculate
the mean of the two middle values. Example: 5
is the median in 2, 4, 6, 8 because 4 + 6 / 2 = 5
The result is a number
representing the
median.
Mode
The most frequent value in a
given data set.
Find the value in a data set that occurs most
often. Example: 2 is the mode of 1, 2, 2, 3
The result is a number
representing the
mode.
7. Take Action
•
There are a total of 49 formulas that you need to
know for the PMP® Exam
• There are also 18 important values and 27
acronyms you need to understand
• Stop by at www.pmformulas.com and review our
complete PMP® Exam Formula Study Guide
• Be certain that you study the right formulas.
8. Disclaimer
PMI, PMP, CAPM, PgMP, PMI-ACP, PMI-SP, PMI-RMP and
PMBOK are trademarks of the Project Management Institute, Inc.
PMI has not endorsed and did not participate in the development of
this publication. PMI does not sponsor this publication and makes
no warranty, guarantee or representation, expressed or implied as
to the accuracy or content. Every attempt has been made by OSP
International LLC to ensure that the information presented in this
publication is accurate and can serve as preparation for the PMP
certification exam. However, OSP International LLC accepts no
legal responsibility for the content herein. This document should be
used only as a reference and not as a replacement for officially
published material. Using the information from this document does
not guarantee that the reader will pass the PMP certification exam.
No such guarantees or warranties are implied or expressed by
OSP International LLC