PMP / PgMP MATHEMATICAL FORMULAES

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PMP / PgMP MATHEMATICAL FORMULAES
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PMP / PgMP MATHEMATICAL FORMULAES
 ABOUT THE DOCUMENT

Version   v01  
Jitesh  Goswami    
Author  
PgMP,  MSP,  PMP,  PRINCE2  
Date   6th  June,  2014  

Loca1on   h?ps://www.pmcerty.com/index.php?pid=cms&slug=freeresource  

This  document  can  help  PMP  and  PgMP  aspirants  &  professionals  to  learn  and  study  required  mathemaPcal  formulae  
Purpose  
that  can  help  answering  those  relevant  exam  quesPons  &  their  applicaPon  to  real  life  project  /  program  scenarios  

Understand  the  input  variables  of  each  formulae  and  in  what  project  /  program  situaPons  what  input  values  may  
Usage   emerge.  Apply  different  values  of  input  variables  and  see  the  effect  on  formulae  output.  Also  understand  the  meaning  of  
different  formulae  output  values  and  its  consequence  to  the  Project  /  Program  management  pracPse.  
Spending  few  minutes  understanding  the  formulae  in  detail  will  help  answer  those  quesPons  in  exam  accurately.  These  
Benefit  
formulae  can  also  help  beyond  the  PMP  /  PgMP  ExaminaPon  and  to  the  real  life  project  /  program  situaPons.  

PMP / PgMP MATHEMATICAL FORMULAES

EARNED VALUE MANAGEMNET – BASIC TERMS

EV  =  Earned  Value  
PV  =  Planned  Value  
AC  =  Actual  Cost  
CV  =  Cost  Variance  
CPI  =  Cost  Performance  Index  
SV  =  Schedule  Variance  
SPI  =  Schedule  Performance  Index  
ETC  =  Es1mate  to  Complete  
EAC  =  Es1mate  at  Comple1on  
VAC  =  Variance  at  Comple1on  
BAC  =  Budget  at  Comple1on  
TCPI  =  To  Complete  Performance  Index  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – BASIC TERMS

Earned  Value  on  a  reporPng  date  is  budgeted  cost  of  work  performed.  To  find  out  Earned  
value  manually,  you  find  out  from  your  program  acPviPes  that  what  components  and  
EV  =  Earned  Value  
program  acPviPes  have  been  completed  already.  Then  you  sum  up  all  the  budgeted  costs  
for  those  acPviPes  and  that  is  your  earned  value.  

Planned  Value  on  a  reporPng  date  is  the  budgeted  cost  of  the  work  scheduled.  To  find  out  
planned  value  manually,  you  can  open  your  program  schedule  and  look  at  relevant  
PV  =  Planned  Value  
reporPng  date.  This  will  give  you  list  of  acPviPes  you  should  have  completed  by  that  date.  
Sum  up  all  the  costs  budgeted  for  all  those  acPviPes  and  that  is  your  planned  value.  

Actual  Cost  on  a  reporPng  date  is  the  Actual  costs  incurred  by  the  program  Pll  that  date.  
AC  =  Actual  Cost  
Doesn’t  ma?er  what  acPviPes  are  performed.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – COST

PosiPve  value  of  Cost  variance  indicates  that  project/program  is  

Cost  Variance:  CV  =  EV  -­‐  AC   under  budget.  And  negaPve  value  of  cost  variance  indicates  that  
project/program  is  over  budget.  

Cost  performance  index  indicates  how  efficiently  program  

resources  are  being  used.  Let’s  say  value  is  1.1.  That  means  that  
project/program  is  ge]ng  $1.1  of  work  performed  from  every  $1  
Cost  Performance  Index:  CPI  =  EV  /  AC   spent.  Cost  performance  index  value  above  one  indicates  that  
project/program’s  efficiency  in  using  resources  is  good.  And  value  
under  one  indicates  that  program’s  efficiency  in  using  resources  is  
not  so  good.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT - SCHEDULE

PosiPve  value  of  Schedule  variance  indicates  that  project/

program  is  ahead  of  schedule.  And  NegaPve  value  of  Schedule  
Schedule  Variance:  SV  =  EV  -­‐  PV  
variance  indicates  that  project/program  is  behind  the  
schedule.  

Schedule  performance  index  indicates  the  efficiency  of  the  

Pme  used.  Let’s  say  value  is  0.9.  That  means  project/program  
is  progressing  90%  of  the  rate  originally  planned.  Schedule  
Schedule  Performance  Index:  SPI  =  EV  /  PV   Performance  index  value  above  one  indicates  that  project/
program  is  very  efficient  in  using  Pme.  And  value  under  one  
indicates  that  program  is  less  efficient  in  using  Pme.  Hence,  an  
SPI  of  >1  is  good,  <1  is  bad.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS - ETC

EsPmate  To  Complete  is  that  monetary  value  which  is  expected  
to  be  spent  on  the  underlying  project  /  program  to  complete  
remaining  work.  When  project  /  program  is  running  as  planned  
ETC  =  Es1mate  To  Complete  =  EAC  -­‐  AC  
with  valid  earned  value  performance  and  no  current  or  expected  
deviaPons  exist,  then  EsPmate  To  Complete  is  calculated  with  
this  formulae  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS - ETC

EsPmate  to  Complete  is  that  monetary  value  which  is  expected  to  
be  spent  on  the  underlying  project  /  program  to  complete  
remaining  work.  Use  this  formulae  when  current  earned  value  
measurements  are  not  representaPve  of  the  future  values.  For  
ETC  =  Es1mate  To  Complete  =  BAC  -­‐  EV  
example,  some  issues  were  encountered  which  reflected  in  poor  
current  performance,  but  have  been  fixed  and  overall  project  /  
program  budget  at  complePon  is  thought  to  be  valid  with  current  
Earned  Value  (EV).  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS - ETC

EsPmate  to  Complete  is  that  monetary  value  which  is  

expected  to  be  spent  on  the  underlying  project  /  program  
to  complete  remaining  work.  Use  this  formulae  when  
current  earned  value  measurements  have  deviated  from  
the  planned  performance  and  it  is  thought  to  conPnue  in  
ETC  =  Es1mate  To  Complete  =  (BAC  -­‐  EV)  /  CPI  
future.  For  example,  some  issues  were  encountered  
which  reflected  in  poor  (or  be?er)  current  performance,  
and  overall  current  forecasted  project  /  program  budget  
at  complePon  may  change  based  on  new  cost  
performance  index.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS – EAC

EsPmate  At  ComplePon  is  the  latest  esPmate  of  

monetary  value  which  is  expected  to  have  been  spent  
at  the  complePon  of  the  project  /  program.  Use  this  
EAC  =  Es1mate  At  Comple1on  =  BAC  /  CPI  
formulae  when  current  CPI  is  within  expected  limits  
without  unwanted  deviaPons  and  is  expected  to  
conPnue  in  future.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS – EAC

EsPmate  At  ComplePon  is  the  latest  esPmate  of  

monetary  value  which  is  expected  to  have  been  spent  
at  complePon  of  the  project  /  program.  Use  this  
formulae  when  original  EAC  can  no  longer  hold  true  
due  to  changed  condiPons  on  the  way  Pll  now.  Hence,  
EAC  =  Es1mate  At  Comple1on  =  AC  +  ETC  
Actual  Cost  incurred  so  far  and  latest  EsPmate  To  
Complete  are  considered  to  forecast  latest  EsPmate  At  
ComplePon.  (Original  ETC  can  only  be  relied  upon  if  
previously  forecasted  TCPI  sPll  holds  true.  Else,  a  new  
ETC  must  be  considered  to  forecast  latest  EAC.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS – EAC

EsPmate  At  ComplePon  is  the  latest  esPmate  of  

monetary  value  which  is  expected  to  have  been  spent  
at  complePon  of  the  project  /  program.  Use  this  
EAC  =  Es1mate  At  Comple1on  =  AC  +  (BAC  -­‐  EV)   formulae  when  current  performance  is  not  going  to  
conPnue  in  future.  Hence,  ETC  (i.e.  BAC  -­‐  EV)  is  
calculated  again  and  added  to  AC  in  order  to  get  new  
EAC  forecast.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS – EAC

EsPmate  At  ComplePon  is  the  latest  esPmate  

of  monetary  value  which  is  expected  to  have  
been  spent  at  complePon  of  the  project  /  
program.  Use  this  formulae  when  project  /  
program  is  found  over  budget  and  schedule  
EAC  =  Es1mate  At  Comple1on  =  AC  +  ((BAC-­‐EV)/(CPI*SPI))  
baseline  should  be  sPll  achieved.  Basically  
what  we  are  doing  is  recalculaPng  ETC  with  
help  of  current  CPI  &  SPI,  BAC  and  EV.  This  ETC  
is  simply  added  to  AC  to  come  up  with  latest  
EAC  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS – VAC

Variance  At  ComplePon  is  the  monetary  value  

reflecPng  whether  project  /  program  is  forecasted  to  
VAC  =  Variance  At  Comple1on  =  BAC  -­‐  EAC   be  over  budget  or  under  budget  at  its  complePon.  In  
order  to  know  this,  simply  EAC  is  subtracted  from  
BAC.  

PMP / PgMP MATHEMATICAL FORMULAES

 EARNED VALUE MANAGEMENT – FORECASTS – TCPI

To  Complete  Performance  Index  is  the  forecasted  cost  

TCPI  =  To  Complete  Performance  Index                               performance  index  in  order  to  complete  the  project  /  
=    (BAC  -­‐  EV)  /  (BAC  -­‐  AC)   program  sPll  within  the  budget.  (Use  this  formulae  if  
program  is  expected  to  be  completed  within  budget.)  

To  Complete  Performance  Index  is  the  forecasted  cost  

performance  index  in  order  to  complete  the  project  /  
TCPI  =  To  Complete  Performance  Index   program  sPll  within  the  latest  forecasted  esPmate  at  
                 =  (BAC  -­‐  EV)  /  (EAC  -­‐  AC)   complePon.  (Use  this  formulae  if  project  /  program  is  
expected  to  be  completed  within  latest  forecasted  
EsPmated  At  ComplePon.)  

PMP / PgMP MATHEMATICAL FORMULAES

 QUALITY – SIX SIGMA – VARIANCE & STANDARD DEVIATION

Variance  represents  the  variability  of  the  

Variane  of  n  numbers  =  (X1)^2  +  (X2)^2  +  (X3)^2…  +(Xn)^2  
numbers  around  the  mean  in  Squared  units.  

Standard  DeviaPon,  shows  the  variability  of  

Standard  Devia1on  =  Square  Root  of  Variance   numbers  around  its  mean  in  same  units  as  the  
numbers  

PMP / PgMP MATHEMATICAL FORMULAES

 QUALITY – SIX SIGMA

+/- 6σ = 99.99%
+/- 3σ = 99.73%
+/- 2σ = 95.46%
+/- 1σ = 68.26%

PMP / PgMP MATHEMATICAL FORMULAES

 NETWORK DIAGRAM – ACTIVITY ON NODE

This  formulae  gives  the  duraPon  of  the  acPvity  (in  same  units  
Ac1vity  Dura1on  =  EF  -­‐  ES    +  1  =  LF  -­‐  LS  +  1   as  of  EF,  ES,  LF  and  LS.  E.g.  days  or  weeks  or  months.).  EF  =  
Early  Finish,  ES  =  Early  Start,  LF  =  Late  Finish  &  LS  =  Late  Start.  
Total  float  represents  the  Pme  that  an  acPvity  can  be  get  
Total  Float  =  LS  -­‐  ES  =  LF  -­‐  EF   delayed  by,  without  affecPng  project  /  program's  schedule  
baseline  
EF  =  ES  +  Dura1on  -­‐  1   Where  EF  is  Early  Finish  of  an  acPvity  and  ES  is  Early  Start.  
Where  ES  is  an  Early  Start  of  an  acPvity  and  EF  is  an  Early  
ES  =  EF  of  predecessor  +  1  
Finish  
LF  =  LS  of  successor  -­‐  1   Where  LF  is  Late  Finish  of  an  acPvity  and  LS  is  Late  Start  
LS  =  LF  -­‐  Dura1on  +  1   Where  LS  is  Late  Start  of  an  acPvity  and  LF  is  Late  Finish  

PMP / PgMP MATHEMATICAL FORMULAES

PROJECT / PROGRAM EVALUATION & REVIEW TECHNIQUE - ESTIMATIONS

When  it  comes  to  esPmaPng  a  closest  value  of  a  variable  (e.g.  acPvity  
PERT  =  (P  +  4M  +  O)/6   duraPon  etc..),  this  PERT  formulae  is  widely  used.  It  is  also  known  as  3  
point  PERT  formulae.  

PERT  σ  =  (P  -­‐  O)/6   Variability  of  the  esPmated  value  can  be  calculated  with  this  formulae.  

PMP / PgMP MATHEMATICAL FORMULAES

 INVESTMENT SELECTION METHODS

Where  PV  is  Present  Value,  FV  is  Future  Value,  'r'  is  discount  rate  
Present  Value  (PV)  =  FV  /  (1+r)^n  
and  'n'  is  number  of  the  periods  
Where  PV  is  Present  Value,  FV  is  Future  Value,  'r'  is  discount  rate  
Future  Value  (FV)  =  PV  *  (1+r)^n  
and  'n'  is  number  of  the  periods  
NPV  >  0  is  be?er.  Between  mulPple  projects  /  programs(or  an  
iniPaPve)  the  one  with  highest  NPV  is  be?er.  NPV  is  calculated  
Net  Present  Value  (NPV)  
by  calculaPng  present  value  of  each  cash-­‐flow  item  and  then  
subtracPng  cash  ouqlows  from  cash  inflows.  
IRR  is  the  discount  rate  when  NPV  =  0.  Hence,  higher  the  IRR  the  
Internal  Rate  of  Return  (IRR)  
be?er.  
Payback  period  is  the  period  at  which  project  /  program(or  an  
Payback  Period  
iniPaPve)  will  reach  breakeven  point  (i.e.  no  profit  no  loss)  
Rate  Of  Return  (ROI)  =  Net  Benefits/  Costs     Higher  the  ROI  the  be?er  since  higher  value  reflects  more  
=  (Gain  -­‐  Costs)  /  Costs   benefits  and  be?er  returns  
SomePmes,  Cost  to  Benefits  RaPo  (CBR)  =  Costs  /  Benefits  is  also  
Benefits  to  Cost  Ra1o  (BCR)  =  Benefits  /  Costs   used.  BCR  >  1  and  CBR  <  1  are  be?er.  BCR  <  1  and  CBR  >  1  are  
not  so  good.  

PMP / PgMP MATHEMATICAL FORMULAES

 ESTIMATE RANGES

Rough  Order  of  Magnitude  Es1mate   -­‐50  to  +50%  range  

Preliminary  Es1mate   -­‐15  to  +50%  range  
Budget  Es1mate   -­‐10  to  +25%  range  
Defini1ve  Es1mate   -­‐5  to  +10%  range  

PMP / PgMP MATHEMATICAL FORMULAES

 CENTRAL VALUE – AVERAGE, MEDIAN, MODE

If  there  are  'n'  numbers  then  average  of  these  numbers  can  be  calculated  by  
Average  =  (X1  +  X2  +  X3  …  +  Xn)  /  n  
adding  all  the  numbers  and  dividing  them  by  'n'.    
If  there  are  'n'  (odd)  numbers,  then  Median  of  these  numbers  can  be  calculated  
by  arranging  all  numbers  in  ascending  order  and  reaching  next  number  to  X(n/
Median  =  X(next  number  to  n/2)    
2)th  number.  E.g.  if  there  are  seven  numbers  1,3,5,7,9,11,13    then  median  is  
=  X1,  X2,  X3…  Xn  (n  is  Odd  number)  
next  number  to  (7/2  =  3.5  =  3rd).  Which  is  4th  number  from  either  side.  In  this  
example  Median  is  number  '7'.  
If  there  are  'n'  (even)  numbers,  then  Median  of  these  numbers  can  be  
calculated  by  arranging  all  numbers  in  ascending  order  and  reaching  the                  
Median  =  X(next  number  to  n/2)    
X(n/2)th  number.  E.g.  if  there  are  eight  numbers  1,3,5,7,9,11,13,15    then  
=  X1,  X2,  X3…  Xn  (n  is  Even  number)  
median  is  average  of  (8/2  =  4)  4th  number  and  5th  number.  Which  is  (7+9)/2  =  
8.  In  this  example  Median  is  number  '8'.  
If  thre  are  'n'  numbers,  then  Mode  of  those  group  of  numbers  is  idenPfied  by  
Mode  =  X(number  that  occurs  most  frequently)     knowing  frequency  of  each  number  in  that  group.  E.g.  if  there  are  nine  numbers  
=  X1,  X2,  X3…  Xn   1,  3,  5,  7,  9,  11,  3,  13,  3,  then  Mode  of  these  numbers  is  '3'  since  number  3  
comes  3  Pmes  in  group,  which  is  highest  

PMP / PgMP MATHEMATICAL FORMULAES

 EMV & NUMBER OF COMMUNICATION CHANNELS

Expected  Monetory  Value  (EMV)  =  Probability  *  Impact  in  Currency    

If  your  project  /  program  has  total  N  number  of  

stakeholders,  then  total  number  of  
communicaPon  channels  between  these  N  
number  of  stakeholders  can  be  mathemaPcally  
Number  of  Communica1on  Channels  =  N  *  (N-­‐1)/2  
calculated  by  this  formulae.  By  the  way,  a  
communicaPon  channel  between  two  
stakeholders  is  the  communicaPon  medium  
established  between  those  two  stakeholders.  

PMP / PgMP MATHEMATICAL FORMULAES

 "It Is Not Certain That
Everything Is Uncertain.”
- by Blaise Pascal

PMP / PgMP MATHEMATICAL FORMULAES