Mastering the PMP Calculations

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Mastering the PMP Calculations – TestEagle.com

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Learn All of the Calculations The PMP calculations are linked to each other.com Page 4 . (The dotted arrows show a formula that is required dependent on the scenario) Mastering the PMP Calculations – TestEagle. TCPI SV BAC EV CV ETC AC CPI PV SPI EAC BETC The arrows show the formulas that are needed by the target formula. That’s why learning all of them is vital to passing the PMP.

................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 14 Schedule Variance (SV) .......... 10 Example of Calculating PV ................................................................................................................................... 9 Planned Value (PV) ..................................................................................................................................................................................................................................................................................................................................................... 15 Example of Calculating SV ............................................................................................................................................................................................................................................ 13 Example of Calculating CV........................................................ 17 Example of Calculating CPI ........... 19 Example of Calculating SPI ....................................................................................................... 13 CV Formula ..................................................................................................................... 2 How can TestEagle Help You? .............................................................. 9 BAC Formula ....................................... 12 Cost Variance (CV) .. 7 Budget At Completion (BAC) ........................................................................................................................................................................................................................ 12 Example of Calculating EV ......................................................................... 21 EAC Formula .................................................................................................................................................................................................................................... 18 Schedule Performance Index (SPI) .................................................................................... 19 SPI Formula ................................................................. 7 Example of Calculating Actual Cost ................................................ 21 Scenario 2 – CPI will stay the same for the rest of the project .........................................................................................com Page 5 .......................................Contents Is this book right for me? ................................................................................................................................................................ 7 AC Formula .. 4 Actual Cost (AC) ............ 20 Estimate At Completion (EAC) ...................................................................................................... 22 Mastering the PMP Calculations – TestEagle.............. 10 Earned Value (EV) ...................................................................................................................................... 16 Cost Performance Index (CPI) ................................................. 3 Learn All of the Calculations ....................... 17 CPI Formula ................................................................................................................................................................................................................................................ 21 Scenario 1 – Original estimate is no longer valid ................................................................... 15 SV Formula ............................................................................................................................................................................. 10 PV Formula..................................................................................................................................................... 9 Example of Calculating BAC ................................................................................................................................... 11 EV Formula ...............................................................................................................................

.................................................................... 29 Scenario 1 ...........................................................................................................................................................................................................................................BAC is no longer valid ..... 33 Communication Channels Formula ..................................................................................................................... 27 ETC Formula ......................... 30 Example of Calculating TCPI ......................................... 29 TCPI Formulas ........................................... 29 Scenario 2 ..... 33 What does the Communication Channel value mean? ........................................ 23 Examples of Calculating EAC ..................................................................................................................................................................................... 31 Example 2................................................................................................................................ 23 Example 2..................................................................................................................................................... 34 Example of Calculating Communications Channels...................................................................................... 36 Mastering the PMP Calculations – TestEagle...................................................... 28 To-Complete Performance Index (TCPI) ............................................. 22 Scenario 4 – Project has to meet a deadline ....... 23 Example 1..com Page 6 .......................................................................................................................... 30 What does TCPI mean? ..............................................................................................................................................Scenario 3 – Current CPI is abnormal ............................ 31 Example 1................................................................................................................................................................................................................................... 25 Example 4...................................................................................................................................................................................................................................................................... 27 Example of Calculating ETC ................................................................................................................................................................................................................................ 35 PMP Formula Cheat Sheet .............................................................................................. 24 Example 3......... 27 What does ETC mean? ..................................BAC is valid ............................ 26 Estimate To Complete (ETC) ....................................................................................................................................................................................................................................................................................................................................................................... 32 Communication Channels ............................

The expected value of the work (e.5 million and involves numerous contractors. So what is “Actual Cost”? Actual Cost (AC) is the actual costs incurred by the project as of a certain point in time.com Page 7 . AC is used to answer the question “How much have we spent on the project as of today?” AC Formula As we already said. Tom is working on a project to install a new Wi-Fi network on the campus of a Palo Alto Smartphone manufacturer. the Wi-Fi network) is $3. you add up all the costs incurred by the project as of the point in time you are measuring. To calculate the AC for a project. Mastering the PMP Calculations – TestEagle. But that doesn’t mean there’s no math involved.Actual Cost (AC) Actual Cost is one of the easiest calculations that you’ll need to know for the PMP. Example of Calculating Actual Cost Let’s see an example.6 million dollars. Well there’s no formula involved so that makes it pretty easy right? Tip – AC is also known as Actual Cost of Work Performed (ACWP).g. there’s no formula for AC. Usually this means adding all the costs incurred by the project as of today. The project has a budget of $2.

000 on site surveys. So the $30.1 million for installation costs.000 on team meetings and team building sessions. Which means it isn’t an actual cost today.com Page 8 . Mastering the PMP Calculations – TestEagle.2 million for Wi-Fi equipment. That was easy right? You can expect questions like this in the PMP exam.Tom has budgeted $1. What is the AC of the project? Answer: $453. $3. Today it’s an expected cost of $30. Tom will be signing a contract for an extra ten Wi-Fi antenna tomorrow for $30. employee laptop updates and training.000. The contract for the extra ten Wi-Fi antennas is being signed tomorrow.000 for miscellaneous costs.000 = $453. He has also budgeted $200. How did we calculate this? $400. $50. The project team has just begun installing the equipment needed – starting with the Wi-Fi antennas. Maybe you are wondering why the AC isn’t $483.000? Read the text again.000.000 + $3. $1.000 on Wi-Fi equipment. The project has spent $400.000.000 + $50.000 is not included in the AC calculation. You’ll also find them in the TestEagle practice PMP exams.000.

Miscellaneous costs are estimated at $15. To do that. The labor is estimated at $95. Dave is the project manager on a project to install a new privacy fence around a five-star hotel. For example. You will normally be given the BAC in the question as part of figuring out another value. BAC is estimated by calculating how much money you believe you will need to complete the project. the BAC could be included in the question text.000. However.com Page 9 . Example of Calculating BAC Let’s see an example. If you want that figure. the question may want you to calculate the To-Complete Performance Index.000.000.000. This is not a calculation that you perform at the end of the project to figure out how much you spent.000. And training is estimated at $3. BAC Formula How is BAC calculated? Usually for the PMP exam you won’t need to calculate it. if you do need to calculate the BAC here’s how to do it. (There is no formula).000. Mastering the PMP Calculations – TestEagle. Tip – BAC is an estimate and is determined at the start of the project. The materials for the fence are estimated to cost $230. Ongoing maintenance is estimated at $20. you’d calculate AC at the end of the project. What is the BAC? Answer: $343.Budget At Completion (BAC) Budget At Completion (BAC) is a measure of how much you estimate the project will cost at its completion.

The estimated total cost is $2. Jenny is the project manager on a project to build a new smart-phone browser.com Page 10 .000 + $3.000 = $343. What is the PV after 5 months? Answer: $1. Tip – The $20.000.000. PV is also used to calculate Schedule Variance (we’ll be covering that in a later chapter). PV Formula Planned Value = Planned % Complete X BAC Example of Calculating PV Let’s see an example. Mastering the PMP Calculations – TestEagle. Tip – PV is also known as Budgeted Cost of Work Scheduled – BCWS.300.000.000 of ongoing maintenance was not included as this is not part of the project to install the fence. The project is expected to last 10 months. Planned Value (PV) Planned Value (PV) is the estimated value of the work to be completed by your project within a specific time period.How did we calculate this? $230.000 + $15.000 + $95.150.

150.000 = $1. the EV would show the value that it has produced. Mastering the PMP Calculations – TestEagle.5 (or 50% in other words). Understanding EV is vital as it’s used in many of the other calculations that you will need to know to master the PMP exam. We know that BAC is the estimated total cost of the project.com Page 11 . In this case.300. So in this case. So if the project stopped today.How did we calculate this? Planned % Complete is the percentage of the project that is planned to be complete. Earned Value (EV) EV is the estimated value of the work completed by your project as of today. 5 months / 10 months = 0.000.300.5 x $2. It’s used to calculate:      Cost Variance (CV) Schedule Variance (SV) Cost Performance Index (CPI) Schedule Performance Index (SPI) To-Complete Performance Index (TCPI) Tip – EV is also known as Budgeted Cost of Work Performed (BCWP). With these figures we can calculate that PV = 0. BAC = $2.000.

the project is 27% complete.000.500. How did we calculate this? The Percent Complete = 27%.500.000. After six months of work. Mastering the PMP Calculations – TestEagle. We know that BAC is the estimated total cost of the project. What is the EV? Answer: $13.com Page 12 . India. The estimated total cost of the project is expected to be $50.000.000.000. With these figures we can calculate that the EV = 27% * $50. So in this case.000.EV Formula Earned Value = Percent Complete * Budget At Completion Example of Calculating EV Rohit is the project manager on a project to build a new cricket stadium in Mumbai. BAC = $50.000.000 = $13.

CV shows if your project is under or over budget.Cost Variance (CV) As the name suggests the CV calculation shows if there are any variations in the costs of the project. And a positive number is under budget. rupees etc). Mastering the PMP Calculations – TestEagle. And AC is also known as Actual Cost of Work Performed (ACWP). CV Formula Cost Variance = Earned Value – Actual Cost Tip – EV is also known as Budgeted Cost of Work Performed (BCWP). In other words. So you may see the formula written as: CV = BCWP – AC CV = BCWP .ACWP CV = EV – ACWP The formula produces a dollar amount (or pounds.com Page 13 . But what does this mean? A negative number is over budget.

forgot to install a piece of equipment etc. What is the CV? And what does it tell us about the project? Answer: The CV is -$260.000 (The project’s costs are “the costs incurred by the project”).300.000. And this tells us that the project is over budget.560.300. The value earned by the project is $2.com Page 14 .300. But why is being under budget bad? It could be a sign that the team has missed a requirement.000.000 (“value earned by the project” is another way of saying Earned Value).000. Example of Calculating CV Chris is the project manager on a project to build a new photo sharing app for the iPhone and Android smart phones. How did we calculate this? The EV is $2.000. This because a CV of $0 is neither over budget or under budget. Most people understand instinctively why being over budget is bad. Anytime the CV isn’t $0 – you need to investigate.560.An important point to remember is that on a perfect project. The costs incurred by the project are $2.000 = -$260.560.000 – $2. The AC is $2. the CV is $0. Knowing this we can calculate that the CV = $2. Mastering the PMP Calculations – TestEagle.

And PV is also known as Budgeted Cost of Work Scheduled (BCWS).Schedule Variance (SV) Just like with CV. Simply put. A value of zero means the project is exactly on schedule but this is very rare. Schedule Variance is your project is behind or ahead of schedule. it shows if there is a variance in the scheduling of the project. So you may seen the formula written as: SV = BCWP . In this case. SV Formula Schedule Variance = Earned Value – Planned Value Tip – EV is also known as Budgeted Cost of Work Performed (BCWP). Schedule Variance shows if there is a variance on the project. And a value greater than zero means the project is ahead of schedule. Mastering the PMP Calculations – TestEagle.com Page 15 .BCWS A value of less than zero means the project is behind schedule.

The Planned Value is $825.000 – $825. EG “value earned by the project” is another way of saying Earned Value.000.000. Which is a waste of resources (and the company’s money!).Tip – Most people understand that being behind schedule is bad. How did we calculate this? Well we know that Schedule Variance = Earned Value – Planned. This tells us that the project is behind schedule. But did you know that being ahead of schedule can be bad as well? For example.000 = -$10. This is to test your knowledge and make sure you understand what you are calculating. The Earned Value is $815.000. The value earned by the project is $815. Doug has estimated that the project should have a planned value of $825. Tip – The PMP exam may use slightly different descriptions to describe the input to a formula. Basically if a project has a Schedule Variance that isn’t zero – you need to investigate why and mitigate the risks.000. Knowing this we can calculate that the SV = $815.000 at this point. if a team works overtime and gets a task finished early this may mean that they sit around idle waiting for the next task to start. The project has been underway for six months. He is working on a project to build a new inventory management system.000 Mastering the PMP Calculations – TestEagle. Example of Calculating SV Doug is the project manager for a software company based in San Francisco. What is the Schedule Variance? And what does this tell us about Doug’s project? Answer: The Schedule Variance is -10.com Page 16 .

75 of value. And AC is also known as Actual Cost of Work Performed (ACWP). CPI Formula Cost Performance Index = Earned Value / Actual Cost Tip – EV is also known as Budgeted Cost of Work Performed (BCWP). $1 $0. You spent $1 on the project and got $1 of value in return. So you may see the formula written as – CPI = BCWP / ACWP The result of the Cost Performance Index formula is a number. this means that for every $1 spent on the project you are getting $0.75. So what does this number mean? A value of less than one means that money is being spent inefficiently on the project. In other words. the Cost Performance Index shows how much value you are getting for each dollar spent on the project (or pounds.5 Investment Return A CPI of one means that your project is exactly on track. Mastering the PMP Calculations – TestEagle. rupees or riyals – you get the point).com Page 17 . So if your CPI is 0.Cost Performance Index (CPI) Cost Performance Index is used to show the efficiency of the money being spent by the project.

000 = 1. this means that for every $1 spent on the project you are getting $1. He is working on a project to implement a new inventory management system.000. Knowing this we can calculate that the CPI = $405. EG “value earned by the project” is another way of saying EV.000 / $325.And a value of greater than one means that money is being spent efficiently on the project.25 of value is being produced.000. Tip – The PMP exam may use slightly different descriptions to describe the input to a formula.com Page 18 .25.000. What is the Cost Performance Index? And what does this tell us about Brian’s project? Answer: The Cost Performance Index is 1.000. How did we calculate this? Well we know that Cost Performance Index = Earned Value / Actual Cost.25 Mastering the PMP Calculations – TestEagle. This means that for every $1 spent on the project $1. The estimated value of the work completed by the project so far is $405. So if your CPI is 1. This is to test your knowledge and make sure you understand what you are calculating.40 of value. So far the project has cost $325. The total cost of the project is expected to be $650. but what is the return?” Example of Calculating CPI Brian is the project manager for a food manufacturing company based in Dallas. Cost Performance Index answers the question “We’re investing in this project. Texas.000.4. The EV is $405. The AC is $325.

on time or early. the Schedule Performance Index shows whether your project will deliver late. the project will be completed sooner than the plan predicts. In other words. the project will not finish on time. So if your SPI is 0.com Page 19 . And a value of greater than one means that the project will be completed early. So if your SPI is 1. An SPI of one means that your project will be finish exactly when the plan predicts.8. SPI Formula Schedule Performance Index = Earned Value / Planned Value Tip – EV is also known as Budgeted Cost of Work Performed (BCWP). PV is also known as Budgeted Cost of Work Scheduled (BCWS). Schedule Performance Index answers the question “When will the project be completed?”.2. Mastering the PMP Calculations – TestEagle.Schedule Performance Index (SPI) Schedule Performance Index is used to show whether a project is behind or ahead of schedule. So you may see the formula written as .SPI = BCWP / BCWS A value of less than one means that the project is potentially behind schedule.

The estimated value of the work completed by the project so far is $116.000 / $125.000.93 Mastering the PMP Calculations – TestEagle.000. Knowing this we can calculate: Schedule Performance Index= $116.000.000 = 0. EG “value earned by the project” is another way of saying Earned Value. What is the Schedule Performance Index? And what does this tell us about Frank’s project? Answer: The Schedule Performance Index is 0.com Page 20 . The Earned Value is $116.93. This means that Frank’s project is behind schedule.Example of Calculating SPI Frank is the project manager for a software development company based in London.000. The Planned Value is $125. This is to test your knowledge and make sure you understand what you are calculating. The planned value of the project is $125. He is managing a project to create a new mobile photo sharing app. Tip – The PMP exam may use slightly different descriptions to describe the input to a formula. How did we calculate this? We know that Schedule Performance Index = Earned Value / Planned Value.

Mastering the PMP Calculations – TestEagle. Each formula tackles a different scenario that you may face on your project. According to the PMBOK® there is no formula. Why is this different to BAC? EAC is used once the project has started and uses actual results from the project not just estimates. Or circumstances may have changed so much that the estimates you have are no longer valid. This is because there are actually four formulas. Instead this is a prediction by the team of how much work is left to complete the project. Scenario 1 – Original estimate is no longer valid You might discover that the original estimates for your project were fundamentally floored. In other words. the EAC predicts the total cost of your project. EAC Formula The Estimate At Completion formula is more complicated than most.com Page 21 . In this case you would use the following formula: Estimate At Completion = Actual Cost + Bottom-up Estimate To Complete You might be wondering how you calculate the Bottom-up Estimate To Complete. If you have been working on a project for six months and the PMO ask for an estimate of what the project will cost – you would give them the EAC not the BAC.Estimate At Completion (EAC) Estimate At Completion (EAC) is used to predict the cost of the project at its completion.

com Page 22 . It’s also appropriate that the current CPI (which reflects the accidental damage) does not reflect how the project will progress.000 to install a new generator. In this case you would use the following formula: Estimate At Completion = Budget At Completion / Cost Performance Index Scenario 3 – Current CPI is abnormal In this case you need to calculate the Estimate At Completion but discover that your current CPI is abnormal. During the installation the generator is accidentally damaged and $5.Tip – you may see the formula written as: EAC = AC + Bottom-up ETC Scenario 2 – CPI will stay the same for the rest of the project This scenario assumes that the Cost Performance Index (CPI) experienced by the project will stay the same until the project is completed. In this case it is appropriate to believe that your original estimates for installing the generators are still good.000 has is spent on repairs. The formula is: Estimate At Completion = Actual Cost + (Budget At Completion – Earned Value) Mastering the PMP Calculations – TestEagle. In this case you should use a formula that ignores the CPI. Why could the current CPI be abnormal? An example might be that you have estimated $50. You have three more generators to install but you are confident that the accident won’t happen again as you have a risk mitigation plan (and you yelled at the people who caused the damage!).

000. he determined that the remaining costs are development – $50.Scenario 4 – Project has to meet a deadline We’ve all worked on projects where the boss or a customer demands that a project be delivered by a certain date.000 and documentation – $10. The formula is: Actual Cost + [(Budget At Completion . After talking with the teams on the project.000 and has a CPI of 1.com Page 23 . What is the Estimate At Completion? Answer: The Estimate At Completion is $300. quality assurance – $30.Earned Value) / (Cost Performance Index X Schedule Performance Index)] Examples of Calculating EAC Example 1 Frank is the project manager for a software development company based in London. Mastering the PMP Calculations – TestEagle. To calculate the Estimate At Completion for such a project you need to take into account the Schedule Performance Index and Cost Performance Index. The project recently hit problems when the development team discovered that the software architecture they were going to use is not valid. He is managing a project to create a new recipe sharing social network. The project has already spent $210. The PMO has asked for a new estimate of the total cost of the project.000. After discussions the team has decided on a new approach.1.000.

138.000 Example 2 Tim is the project manager for an undersea cable company based in Cyprus.000 + $4. a formula using CPI can be used.500.300. Therefore. The PMO has asked for an updated estimate of the total cost of the project. What is the Estimate At Completion? Answer: The Estimate At Completion is $25. He is managing a project to lay an optical fiber cable from Naples to Palermo.138.com Page 24 .How did we calculate this? In this example.000) = $300.000 + $2.750. The Cost Performance Index of the project is currently 1.000 for optical fiber costs.000 for testing of the cable.000 + $10.000 + ($50. Therefore.600.600.08. the costs of the project were estimated as $1. we will calculate Estimate At Completion using the formula from scenario one: Estimate At Completion = Actual Cost + Bottom-up Estimate To Complete Knowing this we can calculate: $210. the original estimates are bad because they are based on a flawed architecture approach.300.89 Mastering the PMP Calculations – TestEagle.888.000 + $30.000 for installation and $2.08 = $25. So we will calculate Estimate At Completion using the formula from scenario two: Estimate At Completion = Budget At Completion / Cost Performance Index Knowing this we can calculate: ($1.000 + $18.888. At the start of the project.000) / 1. $18.500.000 for design and permitting. the CPI is not considered abnormal. $4.89 How did we calculate this? In this example.750.

000 + ($700.000 Mastering the PMP Calculations – TestEagle. the costs of the project were estimated as $200. $300. The value of the work completed is $500.000 How did we calculate this? In this example.000 for development. the CPI is considered abnormal. At the start of the project.000 so far. the team realized that mistakes were made while collecting requirements.com Page 25 . What is the Estimate At Completion? Answer: The Estimate At Completion is $600. She is managing a project to create a new accounting software package. During a review of the project. $200.000 – $500.000 for design. So we will calculate Estimate At Completion using the formula from scenario three: Estimate At Completion = Actual Cost + (Budget At Completion – Earned Value) Knowing this we can calculate: $400.000. During construction. The mistake has now been fixed and a risk mitigation plan put in place. the PMO has asked for an updated estimate of the total cost of the project. The project has spent $400.000) = $600.Example 3 Gill is the project manager for a software company based in New York.000 for quality assurance.

23 How did we calculate this? In this example.Example 4 Rajesh is working on a project to create a new inventory management system for a food manufacturer in Sheffield.000 / 0.Earned Value) / (Cost Performance Index X Schedule Performance Index)] Knowing this we can calculate: = $450. $700.000 for development. The project has spent $450.000 . So we will calculate Estimate At Completion using the formula from scenario three: Estimate At Completion = Actual Cost + [(Budget At Completion .000 for design.000 + $972.9 X 0.8. England. The CPI for the project is 0.222.9 and the SPI is 0.000 + [($1. $225.422.000 + [$700. The CEO has told the shareholders that the new system will be in place in six months.8)] = $450. without discussing this first with the PMO.72] = $450. the project has to meet a deadline.23 = $1.075.422.222.000 for quality assurance.000 so far.222. The value of the work completed is $375.000.com Page 26 . the costs of the project were estimated as $150. What is the Estimate At Completion? Answer: The Estimate At Completion is $1.23 Mastering the PMP Calculations – TestEagle. At the start of the project.000) / (0.$375.

ACWP What does ETC mean? The result of the ETC formula is a dollar amount (or rupees. Actual Costs ETC 6 Months Ago Now Project End ETC Formula Estimate To Complete = Estimate At Completion . This information is crucial when trying to determine the future of a project.you get the point). For example.Estimate To Complete (ETC) Estimate To Complete is a prediction of how much more money the project will cost to complete.com Page 27 . So you may see the formula written as .ETC = EAC . pounds etc . The prediction is from now to the end of the project. imagine that the company you are working for is rationalizing its budget by cutting Mastering the PMP Calculations – TestEagle. how much cash you need to finish the project. So what does this amount represent? Estimate To Complete tells you and the PMO (which may be more important).Actual Cost Tip – AC is also known as Actual Cost of Work Performed (ACWP).

it’s bound to save us money”.000.4 million.000 to finish the project.000. This is to test your knowledge and make sure you understand what you are calculating. Tip – The PMP exam may use slightly different descriptions to describe the input to a formula.000 = $220.000.$430.3 million. The PMO could say “This project has cost us $2. The AC is $430.projects. So far the project has spent $430. The EAC is $650.000.Actual Cost. But then you run the numbers and calculate that the Estimate To Complete is $20.000. He is managing a project to create a new sports news app. So cutting the project makes no sense. And the Earned Value of the project is $3. Let’s cut the project .” Example of Calculating ETC Joe is the project manager for a software development company based in Vancouver.3 million and isn't even finished yet. What is the Estimate To Complete? Answer: The Estimate To Complete is $220. Knowing this we can calculate Schedule Performance Index = $650. So you respond by saying “Hey but we only need $20.000 Mastering the PMP Calculations – TestEagle.com Page 28 . How did we calculate this? Well we know that Estimate To Complete = Estimate At Completion . You are working on a large project whose Actual Cost is $2.000 .000. EG “predicted total cost of the project is” is another way of saying Estimate At Completion. (“the project has spent” is another way of saying Actual Cost). The predicted total cost of the project is $650.

You are due in Boston by 4:00pm. the other is based on EAC. Your TCPI is the speed you need to squeeze out of 5506 to arrive in Boston by 4:00pm. use this formula: To-Complete Performance Index = (Budget At Completion . One formula is based on the BAC. Scenario 1 .com Page 29 . Imagine you are the driver of a freight train 5506.To-Complete Performance Index (TCPI) To-Complete Performance Index (TCPI) is an estimate of the performance needed to achieve a goal. there is more than one formula for TCPI. It is now 2:40pm and you have 80 miles to go.Earned Value) (Budget At Completion . TCPI Formulas As with EAC.BAC is valid We know that BAC is an estimate of the project cost that you created at the start of the project.Actual Cost) Mastering the PMP Calculations – TestEagle. If this estimate is still valid.

This will give you an idea of how likely you are to achieve what is being asked. For example..BAC is no longer valid If the BAC is invalid. you will have an index value that you can compare to the current CPI.) So in this case the BAC is no longer valid and this formula should not be used. Scenario 2 . don’t use this formula. then you will probably need more people or to work longer hours. (EG I need 200 people working 6 hours per day to finish this project in four months). Mastering the PMP Calculations – TestEagle..com Page 30 .Actual Cost) What does TCPI mean? After calculating the TCPI. If any of those assumptions aren’t valid anymore. (Actually it will most likely be both.Earned Value) (Estimate At Completion .How do you know if the BAC is still valid? Remember that the BAC is estimated at the start of the project based on certain assumptions. For example. if the current CPI is 0.97 and the TCPI is 1. one of those assumptions for the tablet project was probably that you need x people working x hours a day to finish the project on time. If the project now has to be complete in two months. use this formula: To-Complete Performance Index = (Budget At Completion .45 then the cost performance needs to improve by 49%. That’s a big increase and will be difficult to achieve.

So we will calculate the TCPI using the formula from Scenario 1: To-Complete Performance Index = (Budget At Completion .000 and the AC is $80.000.875 How did we calculate this? In this example. The hotel is currently closed and the light fixtures are being replaced as part of a refurbishment. Why? The BAC was estimated to be $120. The project is due to be completed in two months.Actual Cost) Mastering the PMP Calculations – TestEagle. John estimated that the project would cost $120. he was informed that the hotel will be opening ahead of schedule and that the project needs to be completed in one month. The BAC can be considered valid. What is the To-Complete Performance Index? Answer: The TCPI is 0.000 to complete.com Page 31 .000. the BAC is $120. At a recent meeting with the stakeholder.000.000. The costs incurred by the project so far are $80. The project is estimated to last for six months. The AC is $80.000 which is exactly what you would expect two thirds of the way through the project.Example of Calculating TCPI Example 1 Let’s see an example. John is the project manager on a project to install new light fixtures in a hotel in Houston. The project is two thirds complete (four months work has been completed on a six month project).000. The EV is $85. John has also estimated that the value of the work completed so far is $85. At the start of the project.Earned Value) (Budget At Completion .

Greg is the project manager on a project to create a new mobile sharing app. The EV is $1.100. So you would expect the AC to be $1.400. The project is due to go live in twelve months.100.000.600. John has also estimated that the value of the work completed so far is $1.700. At a recent meeting with the stakeholder. The costs incurred by the project so far are $2.200. Mastering the PMP Calculations – TestEagle.000 .400.200.000.$80. What is the To-Complete Performance Index? Answer: The TCPI is 2 How did we calculate this? In this example. The BAC cannot be considered valid.000.000. the BAC is $2.000.a discrepancy of $500. Why? The BAC was estimated to be $2. However the AC is $2.$85.000) To-Complete Performance Index = $35.000 and the Actual Costs are $2.000.100. The project is due to be completed in four months.com Page 32 . At the start of the project.000 $40.000 .000.000 To-Complete Performance Index = 0. After the meeting John estimated that the total project will cost $2. Greg estimated that the project would cost $2.000) ($120.875 Example 2 Let’s see an example. he was informed that the project must now go live in two months.000.000 .To-Complete Performance Index = ($120.000 to complete. The project is three quarters complete (eight months work has been completed on a twelve month project).400.

Actual Cost) ($2.000 .000) ($2. Secondly.000) $1.000 .700. First of all it gives you an idea of how complex the communication will be on the project.200. Mastering the PMP Calculations – TestEagle.100.$1.com Page 33 .400.000 $600. it’s likely that there will be a question about communication channels on the exam! Communication Channels Formula The formula for calculating communication channels is: Communication Channels = [N(N-1)] / 2 N = the number of people & stakeholders on the project. More communication channels mean more complexity.000 To-Complete Performance Index = To-Complete Performance Index = To-Complete Performance Index = 2 Communication Channels Calculating the number of communication channels on a project is important for two reasons.$2.Earned Value) (Estimate At Completion .200.So we will calculate the TCPI using the formula from Scenario 2: To-Complete Performance Index = (Budget At Completion .

instant message .basically any way of sending and receiving the communication. meetings. Emails are created.What does the Communication Channel value mean? The Communication Channel value shows you the number of communication channels on a project. These channels could be email. These communications then need to reach their recipients. 1 Customer Project Manager 5 6 2 4 3 Analyst Mastering the PMP Calculations – TestEagle. reports are written and change requests are documented. Communication is a vital part of any project. So communication flows back and forth between team members and stakeholders via communication channels. status reports. In the example below there are four people involved in the project. This creates six communication channels.com Developer Page 34 .

Tim is a project manager on a project to build a new hospital in northern California.556 / 2 Communication Channels = 4. His team consists of 86 laborers.278 Mastering the PMP Calculations – TestEagle. Communication Channels = [N(N-1)] / 2 Communication Channels = [93(93-1)] / 2 Communication Channels = [93(92)] / 2 Communication Channels = [93(92)] / 2 Communication Channels = 8.278 communication channels on this project.Example of Calculating Communications Channels Let’s see an example. 2 foreman.com Page 35 . How many communication channels are there? Answer: There are 4. 1 head foreman and 2 assistant project managers. How did we calculate this? First we calculate N = 86 + 2 + 1 + 2 + 2 = 93 Now we can calculate the number of communication channels. The hospital board of trustees has assigned 2 people to monitor progress on the project.

Earned Value) / (Cost Performance Index X Schedule Performance Index)] Estimate At Completion .Actual Cost) Communication Channels Budget At Completion Planned Value Earned Value Cost Variance Schedule Variance Cost Performance Index Schedule Performance Index Estimate At Completion BAC PV EV CV SV CPI SPI EAC Estimate To Complete To-Complete Performance Index ETC TCPI [N(N-1)] / 2 Mastering the PMP Calculations – TestEagle. Planned % Complete X BAC Percent Complete * Budget At Completion Earned Value – Actual Cost Earned Value – Planned Value Earned Value / Actual Cost Earned Value / Planned Value Scenario 1 – Original estimate is no longer valid Actual Cost + Bottom-up Estimate To Complete Scenario 2 – CPI will stay the same for the rest of the project Budget At Completion / Cost Performance Index Scenario 3 – Current CPI is abnormal Actual Cost + (Budget At Completion – Earned Value) Scenario 4 – Project has to meet a deadline Actual Cost + [(Budget At Completion .Earned Value) (Budget At Completion .calculate all the costs incurred by the project as of the point in time you are measuring.Earned Value) (Estimate At Completion .BAC is no longer valid (Budget At Completion .PMP Formula Cheat Sheet Name Actual Cost Acronym AC Formula None .Actual Cost) Scenario 2 . None .BAC is valid (Budget At Completion .calculate how much money you believe you will need to complete the project.com Page 36 .Actual Cost Scenario 1 .

"PgMP". Mastering the PMP Calculations – TestEagle."PMI". "CAPM". Inc. "PMP". and "PMBOK Guide" are trademarks of Project Management Institute.com Page 37 .

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