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Learning PMP Formulas 
the Easy Way 
A 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:: 
 TransAct Technologies 
 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 Presentation 
This presentation has 3 goals: 
1. To explain the formulas that you 
will need to know for the PMP® 
Examination 
2. To give you an easy-to-learn method 
to remember these formulas 
3. To ensure that you can quickly 
reproduce these formulas on paper 
before you start the PMP® exam
The PMP® examination and formulas 
Some 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 Test 
These are the first 5 formulas you will need to know: 
Present Standard Activity PERT Communication 
Value Deviation Variance (3 Point Est.) Channels 
F V C 
(R + 1) 
Where: 
FV = Future Value 
R = Interest Rate 
n = # of time periods 
P - O 
6 
Where: 
P = Pessimistic Time 
O = Optimistic Time 
Where: 
P = Pessimistic Time 
O = Optimistic Time 
P + (4M) + O 
6 
Where: 
P = Pessimistic Time 
M = Most Likely Time 
O = Optimistic Time 
N (N – 1) 
2 
Where: 
N = Number of People 
P - O 
6 
2 
n
The Formulas Explained - First 5 
1. Present Value 
 Present value means - the value today of future cash flows 
FV = Future Value 
R = Interest Rate 
n = Number of periods 
FV 
(R + 1) 
n
The Formulas Explained - First 5 
2. Activity Standard Deviation 
P - O 
6 
 This can be used for both Time and Cost estimates 
 The + or – an activities/cost range 
P = Most Pessimistic Time or Cost estimate for an activity 
O = Most Optimistic Time or Cost estimate for an activity
The Formulas Explained - First 5 
3. Activity Variance 
P - O 
6 
 This can be used for both Time and Cost estimates 
 Represents variances of critical path activities 
P = most Pessimistic Time or Cost estimate for an activity 
O = most Optimistic Time or Cost estimate for an activity 
Note: Remember to Square the result which is a fancy way of 
multiplying the result times itself 
2
The Formulas Explained - First 5 
4. Three Point Estimate 
(PERT) 
P + (4M) + O 
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 
days 
P = Most Pessimistic Time or Cost estimate for an activity 
M = Most Likely Time or Cost estimate for an activity 
O = Most Optimistic Time or Cost estimate for an activity
The Formulas Explained - First 5 
5. Communication Channels 
 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) 
N (N – 1) 
2
The Formulas You Need to Know for the Test 
These 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 Test 
These 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 
Where: 
EV = Earned Value 
AC = Actual Cost 
EV – PV 
Where: 
EV = Earned Value 
PV = Planned Value 
EV / AC 
Where: 
EV = Earned Value 
AC = Actual Cost 
EV / PV 
Where: 
EV = Earned Value 
PV = Planned Value
The Formulas Explained - Next 4 
6. 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 good 
EV = Earned Value 
AC = Actual Costs
The Formulas Explained - Next 4 
7. 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 good 
EV = Earned Value 
PV = Planned Value
The Formulas Explained - Next 4 
8. 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 BAD 
EV = Earned Value 
AC = Actual Costs
The Formulas Explained - Next 4 
9. 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 BAD 
EV = Earned Value 
PV = Planned Value
The Formulas You Need to Know for the Test 
These are the next 4 formulas you will need to know: 
EAC ETC TCPI VAC 
Estimate at Estimate to To Complete Variance at 
Completion Complete Performance Completion 
Index 
BAC / CPI 
Where: 
BAC = Budget at 
Completion 
CPI = Cost Performance 
Index 
EAC – AC 
Where: 
EAC = Estimate at 
Completion 
AC = Actual Cost 
BAC - EV 
BAC - AC 
Where: 
BAC = Budget at Completion 
EV = Earned Value 
AC = Actual Cost 
BAC - EAC 
Where: 
BAC = Budget at 
Completion 
EAC = Estimate at 
Completion
The Formulas Explained - Next 4 
10. 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 cost 
BAC = Budget at Completion 
CPI = Cost Performance Index (EV / AC)
The Formulas Explained - Next 4 
11. 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 cost 
EAC = Estimate at Completion 
AC = Actual Cost
The Formulas Explained - Next 4 
12. 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 budget 
BAC = Budget at Completion 
EV = Earned Value 
AC = Actual Cost
The Formulas Explained - Next 4 
13. 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 project 
EAC = Estimate at Completion 
BAC = Budget at Completion
The Formulas You Need to Know for the Test 
These are final 3 formulas you will need to know: 
EMV TOTAL PTA 
Expected FLOAT Point of Total 
Monetary Value Assumption 
P x I 
Where: 
P = Probability 
I = Impact 
ES EF 
LS LF 
[(CP –TP) / BSR] + TC 
Where: 
CP = Ceiling Price 
TP = Target Price 
BSR = Buyers Share Ratio 
TC = Target Cost 
LS – ES 
or 
LF - EF
The Formulas Explained - Final 3 
14. EMV - Expected Monetary Value P x I 
 Used to determine the overall ranking of risks. 
 A better way than evaluating just the probability or impact. 
P = Probability 
I = Impact
The Formulas Explained - Final 3 
15. Total Float = LS - ES 
or LF - EF 
ES 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 
float 
LS = Late Start ES = Early Start Note: Either formula 
LF = Late Finish EF = Early Finish will get the same answer
The Formulas Explained - Final 3 
16. 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 
management 
CP = Ceiling Price TP = Target Price 
BSR = Buys Share Ratio TC = Target Cost
How to Learn the Formulas the “Easy” Way 
OK 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” Way 
Above 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 
(R + 1) 
n 
P - O 
6 
P - O 
6 
P - O 
6 
N (N – 1) 
2 
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 time 
periods. Ex) if the rate was 0.1 and the number of time periods were 3 years then the result would be: 
(1 + 0.1) = 1.331 
Notice I 3 
wrote all the SD, SDV and PERT formulas the same for now because basically they 
are.
How to Learn the Formulas the “Easy” Way 
Next write in your first 5 formulas under them: 
PV SD SDV PERT CC 
FV 
(R + 1) 
P - O 
6 
P - O 
6 
2 
P + (4M) + O 
6 
N (N – 1) 
2 
For the next three formulas just know that always start out the same P – O / 6. 
For SDV just square it. 
For PERT remember n 
that P-E-R-T is 4 letters, so you must have 4 pieces to the formula the P 
(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 N 
in it – N standing for number of people always divided by 2.
How to Learn the Formulas the “Easy” Way 
Above the horizontal line should look like this: 
FV SD SDV PERT CC 
FV 
(R + 1) 
n 
P - O 
6 
P - O 
6 
2 P + (4M) + O 
6 
N (N – 1) 
2
How to Learn the Formulas the “Easy” Way 
Now below the horizontal line write the 4 key terms: 
EV AC PV BAC 
Remember: 
 EV = Earned Value 
 AC = Actual Cost 
 PV = Planned Value 
 BAC = Budget at Completion
How to Learn the Formulas the “Easy” Way 
Next the inside vertical line write the next 8 formulas: 
CV 
SV 
Notice the first 4 are COST and SCHEDULE alternating starting 
CPI 
with “C” – COST. Do the “V” Variance before you do the “PI” 
Index 
SPI 
EAC 
ETC 
TCPI 
VAC 
After you know your COST and SCHEDULES you can then “E” 
Estimate. Just remember “A” in EAC comes before “T” in ETC 
After you Estimate you can Complete Performance. Just remember 
“T” comes after “E”. 
After Completing Performance, how much you will be over or under 
budget at the end of the project. Just remember “V” comes after “T”.
How to Learn the Formulas the “Easy” Way 
Next to the first 4 formulas, write the following: 
CV = EV - 
Notice the first 4 formulas all start with EV 
SV = EV - 
CPI = EV / 
Variances “V” are minus 
SPI = EV / 
Indexes “I” are divides 
EAC 
ETC 
TCPI 
VAC
How to Learn the Formulas the “Easy” Way 
Now complete the next parts of the formulas: 
CV = EV - AC 
Notice that the Cost formulas are the same the only 
SV = EV - PV 
difference is the minus or divide signs 
CPI = EV / AC 
Notice that the Schedule formulas are the same the 
SPI = EV / PV 
only difference is the minus or divide signs 
EAC 
For COST, “A” is closer to “C” so put in AC 
ETC 
TCPI 
For SCHEDULE, “P” is closer to “S” so put in SV 
VAC
How to Learn the Formulas the “Easy” Way 
Now complete the next 2 formulas: 
CV = EV - AC 
Notice that the first part of the EAC formula 
contains BAC – both have “AC” in it. EAC has 
SV = EV - PV 
a “C” in it – the closest formula up the chain 
CPI = EV / AC 
with a “C” in it is CPI so put it in your done. 
SPI = EV / PV 
Remember to divide in this formula! It is the 
only one left where you have to divide. 
EAC = BAC / CPI 
ETC = EAC - AC 
Note: EAC can also be written as AC + (BAC – 
EV) just a little twist but contained in CPI 
TCPI 
For ETC, notice you must have completed 
EAC before it, which becomes the first part of 
VAC 
this formula. The next part “AC” is contained in 
the first part of the formula.
How to Learn the Formulas the “Easy” Way 
Now complete the last 2 formulas: 
CV = EV - AC 
SV = EV - PV 
CPI = EV / AC 
SPI = EV / PV 
EAC = BAC / CPI 
ETC = EAC - AC 
TCPI = BAC - EV 
BAC - AC 
VAC = BAC - EAC 
TCPI is the easiest formula of them all. Start 
off by drawing a divide line and write BAC 
above and below it and write 2 minus signs - 
you’re 50% done already! TCPI has CPI in it. 
Now look at the formula for CPI it contains 
EV/AC. Just use that to complete the formula – 
you’re done! 
For VAC use the BAC in the previous formula. 
Notice VAC has “AC” in it. The closest 
formula up the chain that has “AC” in it is 
EAC. Put it in the formula – you’re done! 
Notice each formula in the chain relies on a 
previous formula that you constructed?
How to Learn the Formulas the “Easy” Way 
In the middle of your page add the last 3 formulas: 
EMV = P x I 
FLOAT = LS - ES or LF - EF 
POTA = [(CP - TP) / BSR] + TC 
Note: These you will just have to know
How to Learn the Formulas the “Easy” Way 
EMV = P x I 
EMV – Probability x Impact is easy to remember 
FLOAT = LS - ES or LF - EF 
ES EF 
FLOAT 
LS LF 
FLOAT – We always start late and subtract the value 
above it in the box. Write this box down, it may 
become useful if questions are asked about coming up 
with a critical path or forward or backwards path of an 
activity.
How to Learn the Formulas the “Easy” Way 
POTA = Point of Total Assumption 
POTA = [(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” Way 
Those are the formulas to know for the exam 
Just remember to set up the sheet 
the way I laid it out for you and 
you 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-Exam 
When 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 !!!!!!!!!!!
QUESTIONS 
Tell me what you think 
mtroncone73@yahoo.com

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Learning pmp formulas the easy way

  • 1. Learning PMP Formulas the Easy Way A step by step process to learn the formulas needed to pass the PMP® examination Presented by Mark Troncone, MBA, PMP®, CSM®
  • 2. 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::  TransAct Technologies  Starwood Hotels  Affinion Group  Hewitt Associates  Wachovia Bank  Bayer Pharmaceuticals  Reader’s Digest  James River Corporation
  • 3. 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!
  • 4. The Purpose of this Presentation This presentation has 3 goals: 1. To explain the formulas that you will need to know for the PMP® Examination 2. To give you an easy-to-learn method to remember these formulas 3. To ensure that you can quickly reproduce these formulas on paper before you start the PMP® exam
  • 5. The PMP® examination and formulas Some 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!!!!!!!!!!!!
  • 6. The Formulas You Need to Know for the Test These are the first 5 formulas you will need to know: Present Standard Activity PERT Communication Value Deviation Variance (3 Point Est.) Channels F V C (R + 1) Where: FV = Future Value R = Interest Rate n = # of time periods P - O 6 Where: P = Pessimistic Time O = Optimistic Time Where: P = Pessimistic Time O = Optimistic Time P + (4M) + O 6 Where: P = Pessimistic Time M = Most Likely Time O = Optimistic Time N (N – 1) 2 Where: N = Number of People P - O 6 2 n
  • 7. The Formulas Explained - First 5 1. Present Value  Present value means - the value today of future cash flows FV = Future Value R = Interest Rate n = Number of periods FV (R + 1) n
  • 8. The Formulas Explained - First 5 2. Activity Standard Deviation P - O 6  This can be used for both Time and Cost estimates  The + or – an activities/cost range P = Most Pessimistic Time or Cost estimate for an activity O = Most Optimistic Time or Cost estimate for an activity
  • 9. The Formulas Explained - First 5 3. Activity Variance P - O 6  This can be used for both Time and Cost estimates  Represents variances of critical path activities P = most Pessimistic Time or Cost estimate for an activity O = most Optimistic Time or Cost estimate for an activity Note: Remember to Square the result which is a fancy way of multiplying the result times itself 2
  • 10. The Formulas Explained - First 5 4. Three Point Estimate (PERT) P + (4M) + O 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 days P = Most Pessimistic Time or Cost estimate for an activity M = Most Likely Time or Cost estimate for an activity O = Most Optimistic Time or Cost estimate for an activity
  • 11. The Formulas Explained - First 5 5. Communication Channels  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) N (N – 1) 2
  • 12. The Formulas You Need to Know for the Test These 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??
  • 13. The Formulas You Need to Know for the Test These 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 Where: EV = Earned Value AC = Actual Cost EV – PV Where: EV = Earned Value PV = Planned Value EV / AC Where: EV = Earned Value AC = Actual Cost EV / PV Where: EV = Earned Value PV = Planned Value
  • 14. The Formulas Explained - Next 4 6. 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 good EV = Earned Value AC = Actual Costs
  • 15. The Formulas Explained - Next 4 7. 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 good EV = Earned Value PV = Planned Value
  • 16. The Formulas Explained - Next 4 8. 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 BAD EV = Earned Value AC = Actual Costs
  • 17. The Formulas Explained - Next 4 9. 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 BAD EV = Earned Value PV = Planned Value
  • 18. The Formulas You Need to Know for the Test These are the next 4 formulas you will need to know: EAC ETC TCPI VAC Estimate at Estimate to To Complete Variance at Completion Complete Performance Completion Index BAC / CPI Where: BAC = Budget at Completion CPI = Cost Performance Index EAC – AC Where: EAC = Estimate at Completion AC = Actual Cost BAC - EV BAC - AC Where: BAC = Budget at Completion EV = Earned Value AC = Actual Cost BAC - EAC Where: BAC = Budget at Completion EAC = Estimate at Completion
  • 19. The Formulas Explained - Next 4 10. 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 cost BAC = Budget at Completion CPI = Cost Performance Index (EV / AC)
  • 20. The Formulas Explained - Next 4 11. 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 cost EAC = Estimate at Completion AC = Actual Cost
  • 21. The Formulas Explained - Next 4 12. 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 budget BAC = Budget at Completion EV = Earned Value AC = Actual Cost
  • 22. The Formulas Explained - Next 4 13. 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 project EAC = Estimate at Completion BAC = Budget at Completion
  • 23. The Formulas You Need to Know for the Test These are final 3 formulas you will need to know: EMV TOTAL PTA Expected FLOAT Point of Total Monetary Value Assumption P x I Where: P = Probability I = Impact ES EF LS LF [(CP –TP) / BSR] + TC Where: CP = Ceiling Price TP = Target Price BSR = Buyers Share Ratio TC = Target Cost LS – ES or LF - EF
  • 24. The Formulas Explained - Final 3 14. EMV - Expected Monetary Value P x I  Used to determine the overall ranking of risks.  A better way than evaluating just the probability or impact. P = Probability I = Impact
  • 25. The Formulas Explained - Final 3 15. Total Float = LS - ES or LF - EF ES 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 float LS = Late Start ES = Early Start Note: Either formula LF = Late Finish EF = Early Finish will get the same answer
  • 26. The Formulas Explained - Final 3 16. 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 management CP = Ceiling Price TP = Target Price BSR = Buys Share Ratio TC = Target Cost
  • 27. How to Learn the Formulas the “Easy” Way OK 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
  • 28. How to Learn the Formulas the “Easy” Way Above 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
  • 29. How to Learn the Formulas the “Easy” Way Next write in your first 5 formulas under them: PV SD SDV PERT CC FV (R + 1) n P - O 6 P - O 6 P - O 6 N (N – 1) 2 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 time periods. Ex) if the rate was 0.1 and the number of time periods were 3 years then the result would be: (1 + 0.1) = 1.331 Notice I 3 wrote all the SD, SDV and PERT formulas the same for now because basically they are.
  • 30. How to Learn the Formulas the “Easy” Way Next write in your first 5 formulas under them: PV SD SDV PERT CC FV (R + 1) P - O 6 P - O 6 2 P + (4M) + O 6 N (N – 1) 2 For the next three formulas just know that always start out the same P – O / 6. For SDV just square it. For PERT remember n that P-E-R-T is 4 letters, so you must have 4 pieces to the formula the P (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 N in it – N standing for number of people always divided by 2.
  • 31. How to Learn the Formulas the “Easy” Way Above the horizontal line should look like this: FV SD SDV PERT CC FV (R + 1) n P - O 6 P - O 6 2 P + (4M) + O 6 N (N – 1) 2
  • 32. How to Learn the Formulas the “Easy” Way Now below the horizontal line write the 4 key terms: EV AC PV BAC Remember:  EV = Earned Value  AC = Actual Cost  PV = Planned Value  BAC = Budget at Completion
  • 33. How to Learn the Formulas the “Easy” Way Next the inside vertical line write the next 8 formulas: CV SV Notice the first 4 are COST and SCHEDULE alternating starting CPI with “C” – COST. Do the “V” Variance before you do the “PI” Index SPI EAC ETC TCPI VAC After you know your COST and SCHEDULES you can then “E” Estimate. Just remember “A” in EAC comes before “T” in ETC After you Estimate you can Complete Performance. Just remember “T” comes after “E”. After Completing Performance, how much you will be over or under budget at the end of the project. Just remember “V” comes after “T”.
  • 34. How to Learn the Formulas the “Easy” Way Next to the first 4 formulas, write the following: CV = EV - Notice the first 4 formulas all start with EV SV = EV - CPI = EV / Variances “V” are minus SPI = EV / Indexes “I” are divides EAC ETC TCPI VAC
  • 35. How to Learn the Formulas the “Easy” Way Now complete the next parts of the formulas: CV = EV - AC Notice that the Cost formulas are the same the only SV = EV - PV difference is the minus or divide signs CPI = EV / AC Notice that the Schedule formulas are the same the SPI = EV / PV only difference is the minus or divide signs EAC For COST, “A” is closer to “C” so put in AC ETC TCPI For SCHEDULE, “P” is closer to “S” so put in SV VAC
  • 36. How to Learn the Formulas the “Easy” Way Now complete the next 2 formulas: CV = EV - AC Notice that the first part of the EAC formula contains BAC – both have “AC” in it. EAC has SV = EV - PV a “C” in it – the closest formula up the chain CPI = EV / AC with a “C” in it is CPI so put it in your done. SPI = EV / PV Remember to divide in this formula! It is the only one left where you have to divide. EAC = BAC / CPI ETC = EAC - AC Note: EAC can also be written as AC + (BAC – EV) just a little twist but contained in CPI TCPI For ETC, notice you must have completed EAC before it, which becomes the first part of VAC this formula. The next part “AC” is contained in the first part of the formula.
  • 37. How to Learn the Formulas the “Easy” Way Now complete the last 2 formulas: CV = EV - AC SV = EV - PV CPI = EV / AC SPI = EV / PV EAC = BAC / CPI ETC = EAC - AC TCPI = BAC - EV BAC - AC VAC = BAC - EAC TCPI is the easiest formula of them all. Start off by drawing a divide line and write BAC above and below it and write 2 minus signs - you’re 50% done already! TCPI has CPI in it. Now look at the formula for CPI it contains EV/AC. Just use that to complete the formula – you’re done! For VAC use the BAC in the previous formula. Notice VAC has “AC” in it. The closest formula up the chain that has “AC” in it is EAC. Put it in the formula – you’re done! Notice each formula in the chain relies on a previous formula that you constructed?
  • 38. How to Learn the Formulas the “Easy” Way In the middle of your page add the last 3 formulas: EMV = P x I FLOAT = LS - ES or LF - EF POTA = [(CP - TP) / BSR] + TC Note: These you will just have to know
  • 39. How to Learn the Formulas the “Easy” Way EMV = P x I EMV – Probability x Impact is easy to remember FLOAT = LS - ES or LF - EF ES EF FLOAT LS LF FLOAT – We always start late and subtract the value above it in the box. Write this box down, it may become useful if questions are asked about coming up with a critical path or forward or backwards path of an activity.
  • 40. How to Learn the Formulas the “Easy” Way POTA = Point of Total Assumption POTA = [(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
  • 41. How to Learn the Formulas the “Easy” Way Those are the formulas to know for the exam Just remember to set up the sheet the way I laid it out for you and you will do fine. Now it’s time to test yourself – don’t get nervous, it’s easy!
  • 42. 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.
  • 43. What to do - Pre-Exam When 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
  • 44. 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 !!!!!!!!!!!
  • 45. QUESTIONS Tell me what you think mtroncone73@yahoo.com