Acronym AC BAC EV PV CV CV% SV SV% CPI CPIC SPI SPIC EAC

ETC

VAR TCPI TCPI

Formula AC = actual cost of the project up to the measurement period Budget at Completion BAC = total budgeted cost of the project Earned Value EV = Actual % complete x BAC Planned Value PV = Planned % complete x BAC Cost Variance CV = EV - AC CV /EV Schedule Variance SV = EV - PV SV % = SV / PV Cost Performance Index CPI = EV / AC Cumulative CPI CPIC = EVC / ACC Schedule Performance Index SPI = EV / PV Cumulative SPI SPIC = EVC / PVC no variation or expected to continue EAC = BAC/CPI at same rate Original estimate fundamentally EAC=AC+ETC flawed Current variances are atypical EAC=AC+BAC-EV Current variances are typical EAC=AC+((BAC-EV)/CPI)) Estimate to Complete ETC = EAC - AC Current variances are atypical ETC=BAC-EV Current variances are typical ETC=(BAC-EV)/CPI Variance at Completion VAR = BAC - EAC To-Complete Performance Index (BAC) TCPI = (BAC - EV) / (BAC - AC) To-Complete Performance Index (EAC) TCPI = (BAC - EV) / (EAC - AC) Name Actual Cost

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 - Optimistic) 6

Activity Variance = ((Pessimistic - Optimistic) / 6)^2 Variance all activities = Sum((Pessimistic - Optimistic) / 6)^2 SD of the network path= Sum (Variance 1+2+3)

Three-point estimate (Pessimistic Estimate + (4 x Most Likely Estimate) + Optimistic Estimate) 6 Expected monetary value

EMV=Expected value x probability percent Example: The project team members have provided estimates of an activitys 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 activitys 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 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

-1

+1

Free Float = ES of Following Activity - ES of Present Activity - Duration of Present Activity 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 Paretos 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 Maslows 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) Herzbergs 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 McGregorys Theory of X and Y: this theory states X are lazy, dont want to work, and need to be micromanaged. Y people are self-led, motivated, and can accomplish things on their own Ouchis Theory Z: this theory holds that the workers are motivated by a sense of commitment, opportunity, 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

Order of Magnitude Estimate Budget Estimate Definitive Estimate Preliminary Estimate Sigma

-25% - +75% (-50 to +100% PMBOK) -10% +25% -5% +10% -15 +50% 1 2 3 6 = 68.27% = 95.45% = 99.73% = 99.99985%