Acronym Name Formula

AC Actual Cost AC = actual cost of the project up

to the measurement period
BAC Budget at Completion BAC = total budgeted cost of the
project
EV Earned Value EV = Actual % complete x BAC
PV Planned Value PV = Planned % complete x BAC
CV Cost Variance CV = EV - AC
SV Schedule Variance SV = EV - PV
CPI Cost Performance Index CPI = EV / AC
CPIC Cumulative CPI CPIC = EVC / ACC
SPI Schedule Performance Index SPI = EV / PV
SPIC Cumulative SPI SPIC = EVC / PVC
EAC Estimate at Completion EAC = BAC / CPI
ETC Estimate to Complete ETC = EAC - AC
VAR Variance at Completion VAR = BAC - EAC
TCPI To-Complete Performance Index (BAC) TCPI = (BAC - EV) / (BAC - AC)
TCPI To-Complete Performance Index (EAC) TCPI = (BAC - EV) / (EAC - AC)

BCWS = Budgeted Cost for Work Scheduled = PV 

BCWP = Budgeted Cost for Work Performed = EV 
ACWP = Actual Cost for Work Performed = AC 

Important Project Management Formulas and Concepts

Standard deviation
 
(Pessimistic Estimate - Optimistic Estimate)
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Three-point estimate
 
(Pessimistic Estimate + (4 x Most Likely Estimate) + Optimistic Estimate)
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Expected monetary value

EMV=Expected value x probability percent

Example: The project team members have provided estimates of  an activity’s level of effort that have varied. The
most pessimistic estimate is 80 hours and the most optimistic estimate is 30 hours.
Example: A beneficial risk will save $1,000 in cost for the project should it occur. The risk has been determined to
have a 30% probability of taking place.
EMV=$1,000 x 30%
EMV = $300

Example: The project team members have provided different estimates of an activity’s estimated level of effort.. The
pessimistic estimate is 80 hours, the most optimistic estimate is 30 hours, and the most likely estimate is 60 hours.
Standard deviation = (80 - 30) / 6
Standard deviation = 50 / 6
Standard deviation = 8.33
Three-point estimate = (80 + (4 x 60) + 30) / 6
Three-point estimate = (80 + 240 + 30) / 6
Three-point estimate = 350 / 6
Three-point estimate = 58.33
 
Point of total assumption

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PTA = Target Cost + [(Ceiling Price - Target Price)/Buyer's Percentage
Share of Cost]

Example: A contractor has agreed to build a storage depot at a ceiling price of $100,000. The targeted price is
$90,000, and the buyer and seller agree that the target cost is $80,000, and that the seller will be responsible for 25%
of costs that run over the target. This structure will make the buyer responsible for 100% of the costs up to $80,000,
and 75% of costs between $80,000 and $100,000.
 
Target Price: $90,000
Target Cost: $80,000
Ceiling Price: $100,000
Share Ratio: Buyer = 75%; Seller = 25%
PTA = $80,000 + ($100,000 - $90,000) / 75%
PTA = $80,000 + $10,000/.75
PTA = $80,000 + $13,333.33
PTA = $93,333.33

Communication channels
n(n-1)/2 where n is the number of people.
Example: If there are 25 people on a project team, there are 300 channels of communication.
25 (25-1) / 2
(25 x 24)/2
600 / 2
300
 
 
Future value
FV = Current Value x (1 + I)^n where I is the interest rate and n is the number of periods.
Example:  The future value of $100,000 in two years at an average interest rate of 5% is $110,250.
FV = 100,000 x (1 + .05)^2
FV=100,000 x (1.05) ^2
FV=100,000 x 1.1025
FV=110,250
 
Present value
PV = Future Value / (1 + I)^n where I is the interest rate and n is the number of periods.
Example: The present value of $125,000 earned five years from now at an average interest rate of 7% is worth only
$89,123.38 today.
PV=125,000 / (1 + .07)^5
PV=125,000 / (1.07)^5
PV=125,000 / 1.40255
PV=89,123.38

ROI
ROI = (Benefit – Cost)/Cost
The ROI of a project that will cost $100,000 but result in a $250,000 benefit or increase in profits is 1.5.
ROI=(250,000-100,000)/100,000
ROI=150,000/100,000
ROI=1.5

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PMP's cheat sheet

Key formulas 

Standard deviation= P-O / 6 ; where P is Pessimistic estimate and O is Optimistic estimate 

PERT = O+P+4R/6 ; where O and P are defined above and R is Realistic estimate 
# of channel of communication = N(N-1)/2; where N is the number of project members 

Rules based on numbers 

8/80 rule is a heuristic which allows a work package to be no larger than 80 hours and no smaller than hours
duration 

80/20 rule is a reference to Pareto’s law where 80% of the problems come from 20% of the causes 

0/50/100 is a method to track completion of work packages. It allows no credit for the work until it is 50%
complete, and no additional credit until it is 100% complete 

Human Resource 

Maslow’s Hierarchy of Needs: there are five layers of needs for all human: 

1) physiological 
2) safety 
3) social needs (ex.: love and friendship) 
4) self-esteem 
5) crowning jewel (self actualization) 

Herzberg’s Theory of Motivation: there are two catalysts for workers: hygiene agents and motivating agents 

Hygiene agents: these do nothing to motivate, but their absence demotivates workers. Hygiene agents are the
expectations all workers have: job security, a paycheck, clean and safe working conditions, a sense of
belonging, civil working relationship, and other basic attributes associated with employment 

Motivating agents: these are the elements that motivate people to excel. They include responsibility,
appreciation of work, recognition, opportunity to excel, education, and other opportunities associated with
work other than just financial rewards 

McGregory’s Theory of X and Y: this theory states ‘X’ are lazy, don’t want to work, and need to be
micromanaged. ‘Y’ people are self-led, motivated, and can accomplish things on their own 

Ouchi’s Theory Z: this theory holds that the workers are motivated by a sense of commitment, opportunity,

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and advancement. Workers will work if they are challenged and motivated. Think participative management 

Expectancy Theory: people will behave based on what they expect as a result of their behavior. In other words,
people will work in relation to the expected reward of the work 

Achievement Theory: people need three things: achievement , power and affiliation 

Time Management 

Precedence diagramming method (PDM). This is a method of constructing a project network diagram that uses
boxes or rectangles (nodes) to represent the activities and connects them with arrows that show the
dependencies. This technique is also called activity-on-node (AON) and is the method used by most project
management software packages. 

Arrow Diagram Method (ADM) aka Activity-on-Arrow (AOA) allows dummy activity 
Conditional diagram method, Graphical Evaluation and Review Technique (GERT) allows loop 

Qualitative Risk Analysis versus Quantitative Risk Analysis 

Qualitative Risk Analysis: What are the chances that a risk event will occur? What would the impact be if the
event does occur? 
Outputs: Prioritized list of risks and Overall risk ranking for the project 

Quantitative Risk Analysis: this is all about assigning hard numbers to the risk 
Tool and techniques: Interviewing, Sensitivity Analysis, Decision Tree Analysis, Simulation 
Outputs: Prioritized list of quantified risks 

Residual risks are those that could not be avoided, transferred or mitigated. They may also include minor risks
that have been accepted after changing the project plan. 

Secondary risks are those that arise from taking action on a primary risk

One of the things Monte Carlo analysis would show is where schedule risk exists on the project. 

Workarounds are implemented for unanticipated risk events for which no response was planned 

BCWS PV
BCWP EV
ACWP AC
Order of Magnitude Estimate -25% - +75% (-50 to +100% PMBOK)
Budget Estimate -10% - 25%
Definitive Estimate -5% - 10%

Sigma σ 1σ = 68.27%

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 2σ = 95.45%
3σ = 99.73%
6σ = 99.99985%