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Learning pmp formulas the easy way
 

Learning pmp formulas the easy way

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An easy step by step process towards learning the formulas to pass the PMP Project Manager examination

An easy step by step process towards learning the formulas to pass the PMP Project Manager examination

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  • @vikashksingh988

    Hi, du you have a place where I can get caluculations questions for PMP?
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  • Nice topic.

    If anyone is looking for free 5000+ PMP practice questions here it is http://www.singhvikash.in/2013/12/bank-of-pmp-questions.html
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  • Hi, I am a PMP for 5 years now. As I can still remeber the hardest part of learning for the exam was to memorize the inputs, tools & techniques and outputs (called ITTO’s) from PMBOK. From August 1st 2013 PMP examination is based on PMBOK 5th edition, which brings some more processes and ITTO’s. My trick at learning was to use this free tool: PMP Itto quiz (http://www.monkibo.com/pmp-exam-itto-trainer/index.html) It is now available online and free for all. Good luck with the exam!
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    Learning pmp formulas the easy way Learning pmp formulas the easy way Presentation Transcript

    • Learning PMP Formulas the Easy WayA step by step process to learn the formulas needed to pass the PMP® examination Presented by Mark Troncone, MBA, PMP® , CSM®
    • About Me – Mark Troncone PMP® Certified – Project Management Institute CRM Certified SCRUM Master® – SCRUM Alliance Certified IT Business Analyst – State of Connecticut Active career transition mentor MBA, Management BS, Marketing AS, Accounting Work experience::  Starwood Hotels  Affinion Group  Hewitt Associates  Wachovia Bank  Bayer Pharmaceuticals  Reader’s Digest  James River Corporation
    • Agenda The purpose of this presentation The PMP® examination and formulas The formulas you need to know for the test The formulas explained How to learn the formulas the “easy” way Test yourself – time to prepare What to do - pre-exam Your ready!
    • The Purpose of this PresentationThis presentation has 3 goals:1. To explain the formulas that you will need to know for the PMP® examination2. To give you an easy-to-learn method to remember these formulas3. To ensure that you can quickly reproduce these formulas on paper before you start the PMP® exam
    • The PMP® examination and formulasSome things to know before the test: Do not get intimidated by the formulas The formulas are not hard to learn If you follow my step by step plan it’s easy With a little practice you should be able to write them down in 5 minutes! Let’s get started!!!!!!!!!!!!
    • The Formulas You Need to Know for the TestThese are the first 5 formulas you will need to know: Present Standard Activity PERT Communication Value Deviation Variance (3 Point Est.) Channels FV C P -O P -O 2 P + (4M) + O N (N – 1) (R + 1) n 6 6 2 6Where: Where: Where: Where: Where:FV = Future Value P = Pessimistic Time P = Pessimistic Time P = Pessimistic Time N = Number of PeopleR = Interest Rate O = Optimistic Time O = Optimistic Time M = Most Likely Timen = # of time periods O = Optimistic Time
    • The Formulas Explained - First 51. Present Value FV C (R + 1) Present value means - the value today of future cash flows nFV = Future Value R = Interest Rate n = Number of periods
    • The Formulas Explained - First 52. Activity Standard Deviation P - O 6 This can be used for both Time and Cost estimates The + or – an activities/cost rangeP = Most Pessimistic Time or Cost estimate for an activityO = Most Optimistic Time or Cost estimate for an activity
    • The Formulas Explained - First 5 23. Activity Variance P -O 6 This can be used for both Time and Cost estimates Represents variances of critical path activitiesP = most Pessimistic Time or Cost estimate for an activityO = most Optimistic Time or Cost estimate for an activityNote: Remember to Square the result which is a fancy way of multiplying the result times itself
    • The Formulas Explained - First 54. Three Point Estimate P + (4M) + O (PERT) 6 This can be used for both Time and Cost estimates Also Known as Expected Activity Duration EAD + or – SD gives you a range for an individual activity estimate ex) an activity can take 25 days + or – 3 daysP = Most Pessimistic Time or Cost estimate for an activityM = Most Likely Time or Cost estimate for an activity
    • The Formulas Explained - First 55. Communication Channels N (N – 1) 2 This formula is used to calculate the number of communication channels required for the number of stakeholders. It will give an indication of how complex a project’s communications will be.N = Number of Stakeholders (People)
    • The Formulas You Need to Know for the TestThese are the next 4 formulas you will need to know: 4 key terms you need to know before we start: PV = Planned Value – As of today what is the amount of work that should be completed? EV = Earned Value – As of today what is the amount of work that is actually accomplished? AC = Actual Cost – As of today what is the actual cost incurred for the work accomplished BAC = Budget at Completion – How much did we budget for the total project??
    • The Formulas You Need to Know for the TestThese are the next 4 formulas you will need to know: CV SV CPI SPI Cost Schedule Cost Schedule Variance Variance Performance Performance Index Index EV - AC C EV - PV C EV / AC EV / PV Where: Where: Where: Where: EV = Earned Value EV = Earned Value EV = Earned Value EV = Earned Value AC = Actual Cost PV = Planned Value AC = Actual Cost PV = Planned Value
    • The Formulas Explained - Next 46. CV - Cost Variance EV – AC The difference between Earned Value and Actual Cost Negative value = Cost Overrun or over budget Positive value = on or under cost or under budget Are we under or over budget  1.0 or greater is goodEV = Earned ValueAC = Actual Costs
    • The Formulas Explained - Next 47. SV - Schedule Variance EV – PV The difference between Earned Value and Planned Value Negative value = behind schedule Positive value = on or ahead of schedule Are we ahead or behind schedule  1.0 or greater is goodEV = Earned ValuePV = Planned Value
    • The Formulas Explained - Next 48. CPI - Cost Performance Index EV / AC The ratio of Earned Value to Actual Cost Value < 1 = Cost over budget Value > 1 = Cost below budget How efficiently are we using our resources Ex) We are only getting about 89 cents out of every dollar we put into the project – THIS IS BADEV = Earned ValueAC = Actual Costs
    • The Formulas Explained - Next 49. SPI - Schedule Variance EV / PV The ratio of Earned Value to Planned Value Value < 1 = behind schedule Value > 1 = on or ahead of schedule How efficiently are we using time Ex) We are only progressing at about 83 percent of the rate planned – THIS IS BADEV = Earned ValuePV = Planned Value
    • The Formulas You Need to Know for the TestThese are the next 4 formulas you will need to know: EAC ETC TCPI VACEstimate at Estimate to To Complete Variance atCompletion Complete Performance Completion Index BAC / CPI EAC - AC C BAC - EV BAC - EAC C BAC - AC CWhere: Where: Where:BAC = Budget at BAC = Budget atCompletion Where: EAC = Estimate at Completion Completion BAC = Budget atCPI = Cost Performance EAC = Estimate atIndex Completion AC = Actual Cost EV = Earned Value Completion AC = Actual Cost
    • The Formulas Explained - Next 410. EAC - Estimate at Completion BAC / CPI The ratio of Budget at Completion to Cost Performance Index This formula is used if no variances from the BAC have occurred A forecasting formula or AC + (BAC – EV) calculates the actual to date plus remaining budget – Ac plus the remaining work to perform As of now, how much do we expect the total project to costBAC = Budget at CompletionCPI = Cost Performance Index (EV / AC)
    • The Formulas Explained - Next 411. ETC - Estimate to Complete EAC - AC The difference between the Estimate at Completion ratio and the Actual Costs to date This is a forecasting formula From this point on, how much more do we expect it to cost to finish the project cost or what will the remaining work costEAC = Estimate at CompletionAC = Actual Cost
    • The Formulas Explained - Next 412. TCPI - To Complete BAC / EV Performance Index BAC / AC The ratio of Budget at Completion to Earned Value divided by the ratio of Budget at Completion to Actual Cost This formula divides the work remaining to be done by the money remaining to do it Ex) By how much does our performance need to improve, in order come on in time and on budgetBAC = Budget at CompletionEV = Earned ValueAC = Actual Cost
    • The Formulas Explained - Next 413. VAC -Variance at Completion BAC – EAC The difference between the Budget at Completion and the Estimate at Completion ratio This is a variance formula Ex) As of today will we be under or over budget at the end of the projectEAC = Estimate at CompletionBAC = Budget at Completion
    • The Formulas You Need to Know for the TestThese are final 3 formulas you will need to know: EMV TOTAL PTA Expected FLOAT Point of TotalMonetary Value Assumption ES EF [(CP –TP) / BSR] + TC PxI C C Where: Where: P = Probability LS LF CP = Ceiling Price I = Impact LS - ES TP = Target Price BSR = Buyers Share Ratio or TC = Target Cost LF - EF
    • The Formulas Explained - Final 314. EMV - Expected Monetary Value PxI Used to determine the overall ranking of risks. A better way than evaluating just the probability or impact.P = ProbabilityI = Impact
    • The Formulas Explained - Final 315. Total Float = LS - ES ES EF C or LF - EF Amount of Float LS LF Use this formula to compute float of activities We always begin “Late” so start each formula as LS or LF Used to evaluate delay or slack on activities thus determining resource allocation Remember activities on the “Critical Path” almost always have zero floatLS = Late Start ES = Early Start Note: Either formulaLF = Late Finish EF = Early Finish will get the same answer
    • The Formulas Explained - Final 316. PTA - Point of Total Assumption [(CP –TP) / BSR] + TC Only applies to Fixed Price incentive fee contracts Refers to the amount above which the seller bears all the loss of a cost overrun Costs that go above the PTA are assumed to be due to managementCP = Ceiling Price TP = Target PriceBSR = Buys Share Ratio TC = Target Cost
    • How to Learn the Formulas the “Easy” WayOK let’s put it all together…. Get a regular piece of 8” x 11” paper Draw a vertical line 2” across from the left side of the paper Draw a horizontal line 3” down from the top of the paper
    • How to Learn the Formulas the “Easy” WayAbove the horizontal line put your first 5 formula names: PV SD SDV PERT CC Future Standard Standard Expected Communication Value Deviation Deviation Activity Channels Duration Notice we start with the “present” - PV. But these are “standard” formulas, so write SD twice and take the “V” from the first formula PV and put it at the end of your second SD to make SDV. Next remember to wash your hair with “PERT” Last, you’re tired so have a “CC” on the rocks – Communication Channels
    • How to Learn the Formulas the “Easy” Way Next write in your first 5 formulas under them: PV SD SDV PERT CC FV C P - O P - O P - O N (N – 1) 6 6 6 2 (R + 1)For the first formula just know that for the Present we must know the Future divided by it’s Rate +1.Don’t forget that the Rate + 1 result must always be taken to the n power where n = number of timeperiods. Ex) if the rate was 0.1 and the number of time periods were 3 years then the result would be: n(1 + 0.1) = 1.331 3Notice I wrote all the SD, SDV and PERT formulas the same for now because basically theyare.
    • How to Learn the Formulas the “Easy” WayNext write in your first 5 formulas under them: PV SD SDV PERT CC 2 FV C P - O P - O P + (4M) + O N (N – 1) 6 6 2 (R + 1) 6For the next three formulas just know that always start out the same P – O / 6.For SDV just square it.For PERT remember that P-E-R-T is 4 letters, so you must have 4 pieces to the formula the P n(Pessimistic) and O (Optimistic), but have to drop the M (Most Likely) x 4 in the middle.The name “Communication Channels” has 4 “N’s” in it and is the only formula with an Nin it – N standing for number of people always divided by 2.
    • How to Learn the Formulas the “Easy” WayAbove the horizontal line should look like this: FV SD SDV PERT CC 2 FV C P - O P - O P + (4M) + O N (N – 1) 6 6 2(R + 1) 6 n
    • How to Learn the Formulas the “Easy” WayNow below the horizontal line write the 4 key terms: EV AC PV BACRemember: EV = Earned Value AC = Actual Cost PV = Planned Value BAC = Budget at Completion
    • How to Learn the Formulas the “Easy” WayNext the inside vertical line write the next 8 formulas:CVSV Notice the first 4 are COST and SCHEDULE alternating starting with “C” – COST. Do the “V” Variance before you do the “PI”CPI IndexSPIEAC After you know your COST and SCHEDULES you can then “E” Estimate. Just remember “A” in EAC comes before “T” in ETCETC After you Estimate you can Complete Performance. Just rememberTCPI “T” comes after “E”. After Completing Performance, how much you will be over or underVAC budget at the end of the project. Just remember “V” comes after “T”.
    • How to Learn the Formulas the “Easy” WayNext to the first 4 formulas, write the following:CV = EV - Notice the first 4 formulas all start with EVSV = EV - Variances “V” are minusCPI = EV /SPI = EV / Indexes “I” are dividesEACETCTCPIVAC
    • How to Learn the Formulas the “Easy” WayNow complete the next parts of the formulas:CV = EV - AC Notice that the Cost formulas are the same the only difference is the minus or divide signsSV = EV - PVCPI = EV / AC Notice that the Schedule formulas are the same the only difference is the minus or divide signsSPI = EV / PVEAC For COST, “A” is closer to “C” so put in ACETC For SCHEDULE, “P” is closer to “S” so put in SVTCPIVAC
    • How to Learn the Formulas the “Easy” WayNow complete the next 2 formulas: Notice that the first part of the EAC formulaCV = EV - AC contains BAC – both have “AC” in it. EAC hasSV = EV - PV a “C” in it – the closest formula up the chain with a “C” in it is CPI so put it in your done.CPI = EV / AC Remember to divide in this formula! It is theSPI = EV / PV only one left where you have to divide.EAC = BAC / CPI Note: EAC can also be written as AC + (BAC –ETC = EAC - AC EV) just a little twist but contained in CPITCPI For ETC, notice you must have completed EAC before it, which becomes the first part of this formula. The next part “AC” is contained inVAC the first part of the formula.
    • How to Learn the Formulas the “Easy” WayNow complete the last 2 formulas: TCPI is the easiest formula of them all. StartCV = EV - AC off by drawing a divide line and write BACSV = EV - PV above and below it and write 2 minus signs - you’re 50% done already! TCPI has CPI in it.CPI = EV / AC Now look at the formula for CPI it containsSPI = EV / PV EV/AC. Just use that to complete the formula – you’re done!EAC = BAC / CPIETC = EAC - AC For VAC use the BAC in the previous formula. Notice VAC has “AC” in it. The closestTCPI = BAC - EV formula up the chain that has “AC” in it is EAC. Put it in the formula – you’re done! BAC - ACVAC = BAC - EAC Notice each formula in the chain relies on a previous formula that you constructed?
    • How to Learn the Formulas the “Easy” WayIn the middle of your page add the last 3 formulas:EMV = P x IFLOAT = LS - ES or LF - EFPOTA = [(CP - TP) / BSR] + TCNote: These you will just have to know
    • How to Learn the Formulas the “Easy” WayEMV = P x I EMV – Probability x Impact is easy to rememberFLOAT = LS - ES or LF - EF ES EF FLOAT – We always start late and subtract the value C above it in the box. Write this box down, it may FLOAT become useful if questions are asked about coming up LS LF with a critical path or forward or backwards path of an activity.
    • How to Learn the Formulas the “Easy” WayPOTA = Point of Total AssumptionPOTA = [(CP - TP) / BSR] + TC POTA - the first half of the formula both contain “P” = PRICE. Remember you have to jump to the “C” ceiling to hit (minus) a “T” target. Never forget any buyer always gets his share so you have to divide out his “BSR” Buyers Share Ratio. But costs are always around so and you always have to add back his “TC” Target Cost
    • How to Learn the Formulas the “Easy” WayThose are the formulas to know for the examJust remember to set up the sheetthe way I laid it out for you andyou will do fine.Now it’s time to test yourself –don’t get nervous, it’s easy!
    • Test Yourself – Time to Prepare Study the formulas until you feel confident in being able to recite them. Practice writing them down using my “T” bar on a sheet of paper. Everyday practice writing them down 5 times. If you make mistakes, understand why and correct it. Talk yourself through writing them down using my formula memory method. Do this for two weeks at different times of the day.
    • What to do - Pre-ExamWhen you feel confident with knowing the formulas: Get an egg timer or have someone time you. Write down the formulas as fast as you can – start off with 15 minutes maximum. Initially, see how long it took you for this first attempt. Use this initial time as your starting point. Do this 5 times a day, if you make any mistakes, review the reason(s) why. Every few days try to take off 1 to 2 minutes your time A week before the exam you should be able to write them down in 5 minutes
    • Your ready! On the day of the exam you will be given 3 sheets of blank paper to use for math problems. Before the actual exam starts on the computer you will have 15 minutes to view a computer tutorial to become familiar with the computer commands for the test. Use part of this this time to write down the formulas on one side of a blank piece of paper Use this paper as your guide throughout the exam for questions concerning formulas – it is perfectly OK to do this!!!!! Remember: if you need more paper you will have to turn in used sheets – don’t worry you’ll never need more paper. GOOD LUCK and do not worry – you will pass !!!!!!!!!!!
    • QUESTIONSTell me what you think mtroncone73@yahoo.com