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
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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)
SV = EV-PV  > 0 is good
SPI = EV/PV   > 1 is ahead of schedule
CV = EV-AC  > 0 is good
CPI = EV/AC   > 1 is under budget
PV = SV/(SPI-1)
AC = CV/(CPI-1)
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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=BAC-CV ?
EAC = AC/%Complete
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ETC = EAC – AC :assuming work goes as per plan
ETC = BAC – EV
VAC = BAC – EAC
%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
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Expected Monitory value: EMV=Impact*Probability
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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”
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TEAM stages – Tuckman (Jensen) Ladder
forming,storming,forming,performing,adjourning

Future value & Present value
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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
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Probability distribution
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PERT: Normal:  (O+M*4+P)/6
Triangular: (O+M+P)/3
SD of activity = (P-O)/6
Variance of activity = [SD]squared
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Float/Slack/total slack = LS-ES = LF-EF   : =0 for activities on critical path
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Cost Of Quality, COQ = EFTW+COPQ = POC+PONC
Essential first time work
Cost of poor quality
Price of Conformance
Price of non-conformance
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Depreciation/Straight-line depreciation = Asset cost/Useful life
Double declining balance = 2x((Asset cost – Accumulated depreciation)/Useful life)
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Rough Order of Magnitude (ROM) -25% to +75%
Budget Estimate -10% to +25%
DefinitiveEstimates -5% to +10%
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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
Working Capital = Current Assets – Current Liabilities
Discounted cashflow = Cashflow * Discount factor
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Contract related formulas
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Savings = Target cost – Actual cost
Bonus = Savings*Percentage
Contract cost = Bonus+Fees
Total cost = Actual cost + Contract cost
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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
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Normal Distribution
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1 sigma = 68.26%
2 sigma = 95.46%
3 sigma = 99.73%
6 sigma = 99.999%
1 SD = 1 sigma
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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
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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)




     


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