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


250.000 + $13.000 x (1. and the buyer and seller agree that the target cost is $80.000 + $10.000) / 75% PTA = $80.75 PTA = $80. the most optimistic estimate is 30 hours. The risk has been determined to have a 30% probability of taking place.000 Target Cost: $80. Standard deviation = (80 . 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.333.30) / 6 Standard deviation = 50 / 6 Standard deviation = 8.000.000 x (1 + . Target Price: $90. The pessimistic estimate is 80 hours.000 in two years at an average interest rate of 5% is $110. EMV=$1.05)^2 FV=100.000 .EMV=Expected value x probability percent Example: The project team members have provided estimates of an activity¶s level of effort that have varied.000 + ($100.000. and 75% of costs between $80. This structure will make the buyer responsible for 100% of the costs up to $80.333.33 PTA = $93. and the most likely estimate is 60 hours.000 Ceiling Price: $100.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 x 1.000. there are 300 channels of communication. Seller = 25% PTA = $80.000.33 Communication channels n(n-1)/2 where n is the number of people.000 and $100. Example: If there are 25 people on a project team. FV = 100.000/.$90.000.33 Point of total assumption PTA = Target Cost + [(Ceiling Price . Example: A beneficial risk will save $1.1025 FV=110. and that the seller will be responsible for 25% of costs that run over the target..05) ^2 FV=100.000 Share Ratio: Buyer = 75%.000 x 30% EMV = $300 Example: The project team members have provided different estimates of an activity¶s estimated level of effort.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. The targeted price is $90. Example: The future value of $100.000 in cost for the project should it occur. The most pessimistic estimate is 80 hours and the most optimistic estimate is 30 hours.250 2 .

000 ROI=1.07)^5 PV=125.000 ROI=150.Present value PV = Future Value / (1 + I)^n where I is the interest rate and n is the number of periods.000 but result in a $250. PV=125.000/100.000-100.000 / (1.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 Pareto¶s law where 80% of the problems come from 20% of the causes 3 .000 / 1.000 earned five years from now at an average interest rate of 7% is worth only $89.38 ROI ROI = (Benefit ± Cost)/Cost The ROI of a project that will cost $100.000 benefit or increase in profits is 1.000 / (1 + .38 today.123.40255 PV=89.5.07)^5 PV=125. ROI=(250. Example: The present value of $125.5 -1 +1 Free Float = ES of Following Activity .123.000)/100.ES of Present Activity .

education. 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 to excel. and other opportunities associated with work other than just financial rewards McGregory¶s Theory of X and Y: this theory states µX¶ are lazy. In other words. It allows no credit for the work until it is 50% complete.0/50/100 is a method to track completion of work packages. clean and safe working conditions. civil working relationship. a sense of belonging. This technique is also called activity-on-node (AON) and is the method used by most project management software packages. and need to be micromanaged. They include responsibility. motivated. don¶t want to work. power and affiliation Time Management Precedence diagramming method (PDM). Workers will work if they are challenged and motivated. and other basic attributes associated with employment Motivating agents: these are the elements that motivate people to excel. Arrow Diagram Method (ADM) aka Activity-on-Arrow (AOA) allows dummy activity Conditional diagram method. Think participative management Expectancy Theory: people will behave based on what they expect as a result of their behavior. Hygiene agents are the expectations all workers have: job security. 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. people will work in relation to the expected reward of the work Achievement Theory: people need three things: achievement . µY¶ people are self-led. appreciation of work. Graphical Evaluation and Review Technique (GERT) allows loop 4 . but their absence demotivates workers. and advancement. a paycheck. opportunity. recognition. 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.: 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.

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. Decision Tree Analysis. transferred or mitigated. 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% .45% = 99.27% = 95.+75% (-50 to +100% PMBOK) -10% +25% -5% +10% -15 +50% 1 2 3 6 = 68.73% = 99. They may also include minor risks that have been accepted after changing the project plan. Sensitivity Analysis. Simulation Outputs: Prioritized list of quantified risks Residual risks are those that could not be avoided.99985% 5 . 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.

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