PUSH the Limit of Thinking in PMP Formula's
The
Formulas You Need to Know for the Test
These are the first 5 formulas you will need to know:
Earned Value Management
———————–
EV = BAC * % complete
EV = PV * % complete (any point during project execution)
———————–
EV = BAC * % complete
EV = PV * % complete (any point during project execution)
EV=BCWP (budgeted cost
of work performed)
PV=BCWS (budgeted cost of work scheduled)
AC=ACWP (actual cost of work performed)
PV=BCWS (budgeted cost of work scheduled)
AC=ACWP (actual cost of work performed)
SV = EV-PV > 0
is good
SPI = EV/PV > 1 is ahead of schedule
SPI = EV/PV > 1 is ahead of schedule
CV = EV-AC > 0
is good
CPI = EV/AC > 1 is under budget
CPI = EV/AC > 1 is under budget
PV = SV/(SPI-1)
AC = CV/(CPI-1)
____________________________________________________________________
AC = CV/(CPI-1)
____________________________________________________________________
EAC = AC+bottom-up ETC :
when initial estimates are flawed
EAC = AC+(BAC-EV) : when ETC is predicted to be done at budgeted rate (ATYPICAL)
EAC = BAC/CPI : when ETC is expected at current CPI (typical)
EAC = AC+(BAC-EV)/(SPI*CPI) : at current SPI, CPI
EAC = AC+(BAC-EV) : when ETC is predicted to be done at budgeted rate (ATYPICAL)
EAC = BAC/CPI : when ETC is expected at current CPI (typical)
EAC = AC+(BAC-EV)/(SPI*CPI) : at current SPI, CPI
EAC=BAC-CV ?
EAC = AC/%Complete
______________________________________________________________________
ETC = EAC – AC :assuming
work goes as per plan
ETC = BAC – EV
ETC = BAC – EV
VAC = BAC – EAC
%VAC = VAC/BAC * 100
%VAC = VAC/BAC * 100
TCPI = (BAC-EV)/(BAC-AC)
: accepting BAC value
TCPI = work remaining/funds remaining
TCPI = (BAC-EV)/(EAC-AC) : when BAC is not sufficient and EAC is calculated
TCPI > 1 is bad
TCPI = work remaining/funds remaining
TCPI = (BAC-EV)/(EAC-AC) : when BAC is not sufficient and EAC is calculated
TCPI > 1 is bad
————-
Expected Monitory value: EMV=Impact*Probability
————-
Communication channels = N*(N-1)/2
Expected Monitory value: EMV=Impact*Probability
————-
Communication channels = N*(N-1)/2
7% of communication
message is contained in words
38% in vocal pitch
55% in body language
Albert Mehrabian’s book “Silent Message”
38% in vocal pitch
55% in body language
Albert Mehrabian’s book “Silent Message”
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TEAM stages – Tuckman (Jensen) Ladder
forming,storming,forming,performing,adjourning
TEAM stages – Tuckman (Jensen) Ladder
forming,storming,forming,performing,adjourning
Future value & Present value
—————————-
FV = PV (1+r)^N : r=rate of interest, N=number of time periods
PV = FV/(1+r)^N
NPV : higher the better
NPV > 0 investment will add value, accept the project
—————————-
FV = PV (1+r)^N : r=rate of interest, N=number of time periods
PV = FV/(1+r)^N
NPV : higher the better
NPV > 0 investment will add value, accept the project
Internal rate of return,
IRR : Bigger the better
Benefit Cost Ration, BCR : Bigger the better
Payback period: Lesser the better : This is nothing but Breakeven period
Payback period=Net investment/Avg annual cash flow
Benefit Cost Ration, BCR : Bigger the better
Payback period: Lesser the better : This is nothing but Breakeven period
Payback period=Net investment/Avg annual cash flow
————-
Probability distribution
————————
PERT: Normal: (O+M*4+P)/6
Triangular: (O+M+P)/3
SD of activity = (P-O)/6
Variance of activity = [SD]squared
————-
Float/Slack/total slack = LS-ES = LF-EF : =0 for activities on critical path
————-
Cost Of Quality, COQ = EFTW+COPQ = POC+PONC
Essential first time work
Cost of poor quality
Price of Conformance
Price of non-conformance
————-
Probability distribution
————————
PERT: Normal: (O+M*4+P)/6
Triangular: (O+M+P)/3
SD of activity = (P-O)/6
Variance of activity = [SD]squared
————-
Float/Slack/total slack = LS-ES = LF-EF : =0 for activities on critical path
————-
Cost Of Quality, COQ = EFTW+COPQ = POC+PONC
Essential first time work
Cost of poor quality
Price of Conformance
Price of non-conformance
————-
Depreciation/Straight-line
depreciation = Asset cost/Useful life
Double declining balance = 2x((Asset cost – Accumulated depreciation)/Useful life)
————-
Double declining balance = 2x((Asset cost – Accumulated depreciation)/Useful life)
————-
Rough Order of Magnitude
(ROM) -25% to +75%
Budget Estimate -10% to +25%
DefinitiveEstimates -5% to +10%
————-
Remember, RETURN = Net Income Before Tax (NIBT) *or* Net Income After Tax (NIAT); & ON means ‘/’
Budget Estimate -10% to +25%
DefinitiveEstimates -5% to +10%
————-
Remember, RETURN = Net Income Before Tax (NIBT) *or* Net Income After Tax (NIAT); & ON means ‘/’
Return on Sales, ROS =
NI*T/Total Sales
Return on Assets, ROA = NI*T/Total Assets
Retrun on Investment, ROI = NI*T/Total Investment
Return on Assets, ROA = NI*T/Total Assets
Retrun on Investment, ROI = NI*T/Total Investment
Working Capital = Current Assets – Current Liabilities
Discounted cashflow =
Cashflow * Discount factor
————-
————-
Contract related formulas
————————-
Savings = Target cost – Actual cost
Bonus = Savings*Percentage
Contract cost = Bonus+Fees
Total cost = Actual cost + Contract cost
————-
Point of total assumption
PTA = [(Ceiling Price – Target Price)/Buyer’s Share Ratio] + Target Cost
Cost to buy = Initial cost + [#months * (monthly maintenance costs)] lifecycle cost = total cost + maintenance and support cost for lifetime of product
————-
————————-
Savings = Target cost – Actual cost
Bonus = Savings*Percentage
Contract cost = Bonus+Fees
Total cost = Actual cost + Contract cost
————-
Point of total assumption
PTA = [(Ceiling Price – Target Price)/Buyer’s Share Ratio] + Target Cost
Cost to buy = Initial cost + [#months * (monthly maintenance costs)] lifecycle cost = total cost + maintenance and support cost for lifetime of product
————-
Normal Distribution
——————-
1 sigma = 68.26%
2 sigma = 95.46%
3 sigma = 99.73%
6 sigma = 99.999%
1 SD = 1 sigma
————-
What Five Strategic Considerations may result in authorization of a project? (MOCkTaiLS – MOCTLS)
Market demand
Organizational need
Customer request
Technological advances
Legal requirements
Social need
————-
EVA = Net Operating Profit After Tax – Cost of Capital (Revenue – Op. Exp – Taxes) – (Investment Capital X % Cost of Capital)
EVA: Economic Value Add Benefit Measurement – Bigger is better
Source
Selection = (Weightage X Price) + (Weightage X Quality)——————-
1 sigma = 68.26%
2 sigma = 95.46%
3 sigma = 99.73%
6 sigma = 99.999%
1 SD = 1 sigma
————-
What Five Strategic Considerations may result in authorization of a project? (MOCkTaiLS – MOCTLS)
Market demand
Organizational need
Customer request
Technological advances
Legal requirements
Social need
————-
EVA = Net Operating Profit After Tax – Cost of Capital (Revenue – Op. Exp – Taxes) – (Investment Capital X % Cost of Capital)
EVA: Economic Value Add Benefit Measurement – Bigger is better
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