Saturday, May 10, 2008

My Notes on PMP (Formulas)

Following are the Formulas I consolidated for PMP preparation

Earned Value Analysis
PV (Planned Value) = BCWS (Budgeted Cost of Work Schedule)
EV (Earned Value) = BCWP (Budgeted Cost of Work Performed)
AC (Actual Cost) = ACWP (Actual Cost of Work Performed)

CV = EV – AC
SV = EV – PV
CPI = EV / AC
SPI = EV / PV

ETC = BAC – EV [Future Variances are Atypical or Not Consistent or Di similar]
ETC = (BAC – EV) / CPI [Future Variances are Typical or Consistent or similar]

EAC = BAC / CPI [simplest formula: typical or no variances]
EAC = AC + ETC [Initial Estimates are flawed]
EAC = AC + BAC – EV [Future variances are Atypical or Not Consistent or Di similar]
EAC = AC + BAC – EV / CPI [Future Variances are Typical or Consistent or similar]

VAC = BAC – EAC

% COMPLETE = EV / BAC x 100
% SPENT = AC / BAC x 100

CV% = CV / EV x 100
SV% = SV / PV x 100

Float or Slack
LS - ES and LF – EF

MEAN -> Average
MODE -> The “most found” number
RANGE -> Largest - Smallest Measure.
MEDIUM -> No in the middle or avg. of 2 middle Nos

PERT = O + 4ML + P / 6
STD. DEV. OF TASK = P – O / 6
TASK VAR. = [(P - O)/6 ] squared = Std. Dev ^ 2
CP STD. DEV. = √ σ² + σ² + σ²

SIGMA
1 = 68.26

2 = 95.46
3 = 99.73
6 = 99.99

Channels of Communication (N x (N – 1)) / 2

Project Selection
PV = F V / (1+r)ⁿ (or) FV = PV x (1+r)ⁿ

Cash Flow = Cash Inflow – Cash Outflow
Discounted Cash Flow = CF x Discount Factor
ARR = S Cash Flow / No. of Years
ROI = (ARR / Investment) * 100 % Bigger is better
BCR = Benefits / Cost

Benefit Cost Ratio (BCR) Bigger is better
((BCR or Benefit / Cost)
Revenue or Payback VS. cost) Or PV or Revenue / PV of Cost

Net Present Value (NPV) = Net Present Value Bigger is better

Internal Rate of Return (IRR) Bigger is better

Payback Period Less is better Net Investment / Avg. Annual cash flow

Exp. Value = Probability % x Consequence $

Class of Estimates
Definitive +5%
Capital Cost +10-15%
Appropriation +15-25%
Feasibility +25-35%
Order of Magnitude > +35% (-50 - 75%)

Contract Incentives
Savings = Target Cost – Actual Cost
Bonus = Savings x Percentage
Contract Cost = Bonus + Fees
Total Cost = Actual Cost + Contract Cost

Expected Monetary Value Probability * Impact

Point of Total Assumption (PTA) ((Ceiling Price - Target Price) / buyer's Share Ratio)
+
Target Cost


To Complete Performance Index [TCPI]
Values for the TCPI index of less then 1.0 is good because it indicates the efficiency to complete is less than planned. How efficient must the project team be to complete the remaining work with the remaining money?
( BAC - EV ) / ( BAC - AC )

Cost of Quality (CoQ) =
( ( Review Efforts + Test Efforts + Training Efforts + Rework Efforts + Efforts of Prevention) / Total efforts) x 100 %

61 comments:

  1. Thanks for all the PMP feedback, your blog is really useful... my exam is in a week... i hope i pass! :)

    ReplyDelete
  2. Mais
    I am glad that you found my notes on PMP useful. I wish you all the best for your exam and am sure you will pass through flying colors. Do let me know if you would want any help from my end and I would be happy to help.

    -Sridhar

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  3. Hi Sridhar,
    I am currently preparing for my PMP exam.
    Thanks a lot for your notes.

    Rupa

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  4. Rupa

    All the best for your PMP exam. Let me know if you need any inputs from my end

    -Sridhar

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  5. Thanks for the information. Your profile mentions P&G, perhaps in NC where you worked with Jennings Brooks?

    What does the ARR mean in the ROI formula?

    Neelima

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  6. Neelima

    You are most welcome.
    To answer your second question first, ARR in ROI stands for "Accounting rate of return" (Refer http://moneyterms.co.uk/arr/ or http://www.investopedia.com/terms/a/arr.asp)

    And first question's answer is that I worked with P&G client operating out of India while working with Corbus (Noida based company)

    All the best for your exam and do let me know if you have further questions.

    -Sridhar

    ReplyDelete
  7. sridhar - thanks for inputs , been helpful really , intend to give exams by sep17th , can i have ur mailing address please.

    Regards
    Bhasker Ravivarma V
    Delta - Nigeria

    ReplyDelete
  8. Sridhar - do we have to pay any fees for cancellation or rescheduling the PMP exam and is there a limit on the number of rescheduling / cancellations. Let me know pls since i am unable to freeze a date due to my nature of job.

    ReplyDelete
  9. Bhasker

    I hope you already have PMP Handbook with you. If not then you can get one from http://www.pmi.org/pdf/pdc_pmphandbook.pdf
    This should have all the information that you are looking for in Page 17 under section "Examination Cancellations, Rescheduling, No Shows ". Summary of which is
    1. If you need to cancel or reschedule a CBT examination, you must do so no later than 48 hours before
    2. You are allowed a maximum of one year from the date your application is approved,
    to apply for reexamination

    You can always contact me through the blog and I will happy to help.

    All the very best for your PMP

    -Sridhar
    your scheduled examination appointment.

    ReplyDelete
  10. Please can u suggest me any good PM software which you are aware of , basically for personal use to manage telecom projects.

    ReplyDelete
  11. Bhasker
    I work on Agile (Scrum) based Projects and do not use an extensive PM Tool. We use Jira for user stories, bugs and test management tool TestLink and Confluence for content/knowledge management.
    You can try http://www.jxproject.com/ and see if it fits your bill.
    All the best
    -Sridhar

    ReplyDelete
  12. Sridhar - I finally passed the PMP exams on October - 14th , am extremely grateful for your two posts on notes and formula list. I used the formula list as a dump and it worked for me well during the exams , i scored a 'Profecient in Monitoring and Controlling ( basically due the maths that i was able to score well). I thank you very much and indebted to you too.

    ReplyDelete
  13. Bhasker
    Congratulations for becoming PMP certified. I appreciate your kind words and am happy that my notes were helpful. Wishing you all the best for all your future endeavors. We can stay in touch if you like and join my professional networking in LinkedIn. My profile is http://www.linkedin.com/in/sridharpeddisetty
    -Sridhar

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  14. sridhar - as you are based in the US , please can you suggest me a good online training program for CAPM ( i can google and find also) , based on feedback which you received from colleagues/ friends/ etc perhaps you can recommend to me their names so that i can short list 2/3 and ultimately freeze the decision. Thanks.

    ReplyDelete
  15. Pls suggest me any good online training institute for capm contact hours, this is basically for my wife, since ur based in the US , i thought may be u are aware of the leading players so that i can short list and freeze on the best institute , based on value for money. Thanks.bhasker

    ReplyDelete
  16. Bhasker

    I do not have much insight on CAPM but you can try http://www.pmcampus.com/PMI_Certification_Training_Catalog/CAPM_Course_Packages/

    This is where I had taken my PMP Contact hours and I found it to be worth the cent

    -Sridhar

    ReplyDelete
  17. Sir,
    I am working as a senior software engineer in dotnet and sharepoint in india.

    i wish to move from programming to Project Management role.

    I couldnt do it in my current company,as i couldnt get promotion due to my technical inability.

    i am thinking of moving to Project management,as i feel,i am ok with communications, documentation,etc..

    can you please guide me.

    ReplyDelete
  18. Sure Venkat. I will be happy to help you in any way. You can always add me to your LinkedIn profile http://www.linkedin.com/in/sridharpeddisetty and we can correspond

    ReplyDelete
  19. Hey Sridhar, this is good list of formualae you have compiled. Great job man.

    ~ Hrishi

    ReplyDelete
  20. Hi Sridhar,
    Really appreciate your kind effort by bringing in the formula's for all PMP aspirants.
    I infact bookmark your page & will visit daily.
    One Question: How many formula's are total in PMBOK4 and the one you mentioned are enough for the exam.

    Kind regards,
    Amir

    ReplyDelete
  21. Hi Sridhar,
    Your work is something extraordinary and I cannot leave without saying Thanks to you.

    One Question:How many formula's are there in total in PMBOK4 and from where we can get the whole list.

    Regards,
    Amir

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  22. Amir

    I am not sure how many formulae are there in total in PMBOK4. Best source would be PMBOK itself but you can try sites like PMHUB and PMZilla

    ReplyDelete
  23. Sridhar,

    I am starting to work on the PMP exam can you give me some pointers which book to refer.

    Thanks for your help

    Rian

    ReplyDelete
  24. Aaron

    I have shared books referred and my experience @ http://sridharpeddisetty.blogspot.com/2008/05/lessons-learned-journey-to-project_03.html

    Please note that 4th editions might have newer recommended list and I would suggest that you join pmhub forums and ask this question there

    ReplyDelete
  25. Hi! Sridhar,

    My PMP exam is in a month and i have taken intructor led classes. I am studying PMbok and Rita's book. Is it necessary to buy Rita's simulation software for $299to pass the exam. Please advise.

    Regards
    NS

    ReplyDelete
  26. Hi! Sridhar,

    My PMP exam is in a month and i have taken intructor led classes. I am studying PMbok and Rita's book. Is it necessary to buy Rita's simulation software for $299to pass the exam. Please advise.

    Regards
    NS

    ReplyDelete
  27. Very Nice Notes ,, Many Thanks.

    Please wish me luck , I'll sit for my PMP Exam soon

    Masoud Daleel

    ReplyDelete
  28. Very Nice Notes ,, Many Thanks.

    Please wish me luck , I'll sit for my PMP Exam soon

    Masoud Daleel

    ReplyDelete
  29. Thank you Masoud. I wish you all the very best for your PMP exam and future endevours

    ReplyDelete
  30. NS

    Apologize for a late response. I personally did not take Rita's simulator but I understand it to be useful for aspirants. I would like to say that choice is yours. If you are getting more than 85% in all practise exams than you are good for the real one IMHO. I wish you all the very best

    ReplyDelete
  31. Thanks for the notes! I think they'll be very useful for my upcoming PMP exam!

    ReplyDelete
  32. Hi Sridhar,

    I am planning to give PMP exam, but don't have notes to prepare for the exam. Will you pls help me with the notes.

    Pls mail me on arif.q.shaikh@gmail.com

    Regards,
    Arif Shaikh

    ReplyDelete
  33. Arif,

    I am little surprised by your question. I have shared all notes what I had used while preparing for my PMP, here in this blog. Are you looking for something more?

    ReplyDelete
  34. If a project Manager calls for a meeting with the project team to review the knowledge gained from previous projects, in what manner is the team involved?
    Identification of Scope
    Risk Identification
    Project status team meeting
    Scope Identification
    Through which channel, a perfect communication can take place between the project team member and the Project Manager?
    By written and oral communication
    Through daily status report
    Via formal chain of command
    By updating daily status reports
    If a Project Manager Places a purchase order for an equipment, which of the following will represent it?
    Investment on capital
    Cash-out flow
    Commitment
    Expenses
    I could not get the answers from source can you kindly post the correct answer.My guess is 1)b2)a3)a

    ReplyDelete
  35. Setty,

    I concur with your answers 1)b 2)a 3)a

    ReplyDelete
  36. Dear Sridhar,
    I am beginner. I am plannig to get PMP certified by April 2011. Please guide and give some pointers to get started and eventually get certified by April.
    Thanks,
    Rakesh.

    ReplyDelete
  37. Rakesh,

    Do you have any specific question? I have shared everything about PMP in my various posts.

    ReplyDelete
  38. This post is great!

    This information is really helpful. And these notes will surely guide me in my continuing study with project management.

    Thanks a lot for sharing!

    ReplyDelete
  39. Hai Sridhar

    The post given about Formulas used in PMP preparation and examination are useful.I have a plan to give PMP exam in next couple of weeks and would request your guidance on the same.Much appreciate if you could tell me the methodology followed by you to score "proficient" .
    Many thanks in anticipation

    Regards
    Monica Yekula

    ReplyDelete
  40. Monica,

    I have shared my lessons learned under http://sridharpeddisetty.blogspot.com/2008/05/lessons-learned-journey-to-project_03.html

    Also there is a post for http://sridharpeddisetty.blogspot.com/2008/05/for-pmp-some-more-useful-links-having.html

    Let me know if you have specific questions

    ReplyDelete
  41. Hi could you please let me know wich formulas i would need know by heard in order to present the PMP exam?

    ReplyDelete
  42. Hi Sridhar,

    Wonderful information at your end. Secondly i noticed that maximum queries are replied at your end. Much appreciated

    Keep Glowin

    ReplyDelete
  43. Thank you Muhammad. I appreciate the kind words

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  44. There is an error in the first formula. PV is Planned Value. Not Present Value.

    ReplyDelete
  45. Hi,
    Thanks for providing feedback on PMP Exam formulas. My exam is scheduled in the next few days. I am sure, this will help me in preparing for formula questions

    -- Bhupinder Singh

    ReplyDelete
  46. Hi
    you have indicated that bonus = savings * % .
    what % is it seller's or buyers.
    Also how to determine the final price of the contract.I have seen some questions like how much will the seller make for the contract.
    Do you have any examples on how to solve such type of quetsions.Your help will be very much appreciated.

    Thanks,
    Lalitha

    ReplyDelete
  47. Sridhar: could you please clarify what are the right % range for different estimates:

    As per PMBOK
    Order of Magnitude would be -50 to +50%
    and other estimates are not given in PMBOK but PMP exam does ask about other estimates. As per one of the sources I have got below:

    Order of Magnitude estimate -25% to +75%
    • Preliminary estimate -15% to + 50%
    • Budget estimate -10% to +25%
    • Definitive estimate -5% to +10%
    • Final estimate 0%

    Is it correct ?

    ReplyDelete
  48. I would say its correct.

    I have shared the same under

    http://sridharpeddisetty.blogspot.com/2008/05/my-notes-on-pmp.html

    Refer points # 33 & also refer my comment to one of the queries. For your perusal the response was

    ------------
    agree that ROM estimate is mentioned differently at PMBOK and other places. ROM estimates are between -50% to +100% of actual; later estimates are between -10% and +15%. These are PMBOK definitions; other sources use the following definitions: order of magnitude (-25% to +75%), preliminary estimate (-15% to +50%), budget estimate (-10% to +25%), definitive estimate (-5% to +10%).

    I am sure that from an exam point of view you need not have to make a difficult choice on this. Your options would either have a range -50% to +100% or -25% to +75%. During my experience of solving various sample questions & actual exam I did not get any choice where *both* were given. So safer way is to keep both options in mind and practically keep in mind that ROM estimate is done on a very broader level and usually used when you are in a blind spot or to put it plainly, you do not have much historical data or specific inputs to estimate and you cannot give a ballpark estimate.
    Hope this helps

    -Sridhar
    -------------------

    ReplyDelete
  49. Thanks for sharing..I have exam tomorrow, and your list of formula is great for last minute quick look.

    / Shakeel

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  50. You are welcome Shakeel and all the very best for your exam.

    ReplyDelete
  51. Hi Sridhar, a friend of mine told me about your website..Are the formulas mentioned here holds good for the new PMP format too or has something changed in the new format..I have just started my preparation for my PMP and plan to take it in 8 to 10 weeks..Any help you can provide on this is appreciated..

    Vidya

    ReplyDelete
    Replies
    1. Vidya,
      Formulas still hold good as this is how various EVM's are calculated and would remain the same no matter which version of PMBOK comes. All the very best for your PMP

      Delete
  52. For better clarification I would put the following formula as below:

    PERT = (O + 4ML + P) / 6
    STD. DEV. OF TASK = (P – O) / 6

    ReplyDelete
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  58. "Hi there,

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