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PMP - Study Notes > Formulas > Flashcards

Formulas Flashcards

1
Q

Schedule Variance (SV)

A

SV = EV - PV

Schedule Variance = Earned Value - Planned Value
EV = % complete * BAC
 > 0 positive = ahead of schedule
 < 0 negative = behind schedule
 = 0 on schedule of project is complete
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2
Q

Schedule Performance Index (SPI)

A

SPI= EV / PV

Schedule Performance Index = Earned Value / Planned Value
EV = % complete * BAC
SPI < 1 : behind schedule
SPI = 1 : on schedule
SPI > 1: Ahead of schedule
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3
Q

Present value (PV)

A

The value today of future cash flows.

PV= FV / (1+r)n

FV = future value
r= interest rate
N = number of times period
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4
Q

Net present value (NPV)

A

Present value of the total benefits (income or revenue) minus the cost over many times period

If positive project is a good choice unless and even better investment opportunity exists. Project with greater NPV is selected. Bigger is better (NPV)

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5
Q

Internal rate of return (IRR)

A

The higher the IRR number the better

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6
Q

Payback period

A

Refers to the length of time it takes for the organization to recover its investment in the project before it starts accumulating profit

Less is better. Net Investment / avg. annual cash flow

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7
Q

Cost benefit analysis

A

Consorts the expected cost of the project to the potential benefits

Benefits ratio > 1 = benefits are greater than the cost
Benefits ratio < 1= cost is greater than the benefit

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8
Q

Economic value added

A

Connect with whether the project returns to the company more value than the initiative costs.

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9
Q

Opportunity cost

A

Opportunity given up by selecting one pertinent over another

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10
Q

Sunk costs

A

Sink costs are expended costs. Accounting standards say that wink costs should not be considered when deciding whether to continue with a troubled project

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11
Q

Law of diminishing return

A

After a certain point adding more input (resources) will not produce a proportional increase in productivity

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12
Q

Working capital

A

Current assets minus current liabilities for an organization. It is the amount of money the company has available to invest including investment in projects

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13
Q

Depreciation

A

Straight line - same amount of depreciation every year

Accelerated depreciation - 2 forms

  • double declining balance
  • sum of the years digit
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14
Q

PM Communication (Comm.)

A

90%

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15
Q

Communication Channels

A

n(n-1) / 2

n = # of stakeholders (team members), including PM

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16
Q

Acronyms

A 
AC - Actual Cost
BAC - Budget at Completion
BCR - Benefit Cost Ratio
CBR - Cost Benefit Ratio
CPI - Cost Performance Index
CV - Cost Variance
DUR - Duration
EAC - Estimate at Completion
EF - Early Finish
EMV - Expected Monetary Value
ES - Early Start
ETC - Estimate to Complete
EV - Earned Value
FV - Future Value 
IRR - Internal Rate of Return
LF - Late Finish
LS - Late Start
NPV - Net Present Value
PERT - Program Evaluation and Review Technique
PTA - Point of Total Assumption
PV - Planned Value
PV - Present Value
ROI - Return on Investment
SPI - Schedule Performance Index
SV - Schedule Variance
VAC - Variance at Completion
0 - Sigma / Standard deviation
^ - "To the power of" (2^3 = 2*2*2 = 8)
17
Q

Cost Variance (CV)

A

CV = EV - AC

EV = % complete * BAC
AC = Actual Cost
< 0 over budget
> 0 within budget
= on budget
18
Q

Earned Value (EV)

A

EV = % complete * BAC

BAC = Budget at completion

19
Q

Cost Performance Index (CPI)

A

CPI = EV / AC

EV = % complete * BAC
AC = Actual Cost
< 1 over budget
> 1 under budget 
= 1 on budget
20
Q

Estimate at Completion (EAC)

A

The expected total cost of completing all work expressed as the sum of the AC to date and the estimate to complete

If CPI is expected to be the same for the remainder of the project, EAC can be calculated using:
EAC = BAC / CPI

If future work will be accomplished at the planned rate, use: performance was bad in the past but the budget is still intact for the remainder of the work
EAC = AC + (BAC - EV) - future variance are atypical

If the initial plan is no longer valid, use:
EAC = AC + New ETC (bottom-up ETC)

If both the CPI and SPI influence the remaining work use:
EAC = AC [(BAC - EV) / (CPI x SPI)]

21
Q

Estimate to Complete (ETC)

A

The expected cost to finish all the remaining project work

assuming work is proceeding on plan, the cost of completing the remaining authorized work can be calculated using:

ETC = EAC - AC

Re-estimate the remaining work from the bottom up

ETC = re-estimate

22
Q

To Complete Performance Index (TCPI)

A

A measure of the cost performance that must be achieve with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available

the efficiency that must be maintained in order to complete on plan
TCPI = (BAC - EV) / (BAC - AC)

the efficiency that must be maintained in order to complete the current EAC
TCPI = (BAC - EV) / (EAC - AC)

> 1 = harder to complete
< 1 = easier to complete
= 1 = same to complete

23
Q

Estimated Time (Three-Point est PERT)

A

(P + 4M + O) / 6
Pessimistic
Most likely
Optimistic

24
Q

Standard Deviation

A

(P - 0) /6

pessimistic
optimistic

25
Q

Variance

A

[(P - 0) /6] squared

26
Q

Float or Slack

A

LS - ES and LF - EF

27
Q

Benefit-Cost Ratio

A

Bigger is better (BCR or Benefit / Cost) revenue or payback vs . cost

28
Q

Planned value (PV)

A

The auth. budget assigned to schedule work. The value of the work planned to be completed to a point in time, usually the data date, or project completion

29
Q

Budget at Completion (BAC)

A

the sum of all budgets established for the work to be performed

the value of total planned work, the project cost baseline

30
Q

Variance at Completion (VAC)

A

VAC = BAC - EAC

the estimated difference in cost at the completion of the project
+ = under planned cost
- = over planned cost
= on planned cost

31
Q

PTA (Point of Assumption, break point)

A

PTA ( Point of assumption, break point)
You are managing a project for a customer based on a cost-reimbursable target cost contract with the following terms:

Target costs: $1,000,000
Fixed fee:$100,000
Benefit/cost sharing:80% / 20%
Price ceiling:$1,200,000

PTA = (Ceiling Price - Target Price)/Buyers Ratio + Target Cost
PTA =( $1.2M - 1.1M)/ .20 + $1M
PTA = $100k/.20 +$1M
PTA  = $500K+ $1M
PTA = $1,500M

PMP - Study Notes (24 decks)

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