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PMP Study Materials > PMP formulas > Flashcards

PMP formulas Flashcards

Learn formulas for the PMP exam

1
Q

BAC formula in earned value management

A

No Formula.

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2
Q

PV formula in earned value management

A

No Formula. It is sometimes expressed as a %age of BAC.

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3
Q

EV formula in earned value management

A

No Formula. It is sometimes expressed as a %age of BAC or PV

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4
Q

AC formula in earned value management

A

No Formula.

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5
Q

SV formula in earned value management

A

SV = EV – PV

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6
Q

CV formula in earned value management

A

CV = EV – AC

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7
Q

SPI formula in earned value management

A

SPI = EV / PV

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8
Q

SPI cumulative formula in earned value management

A

SPIc = ΣEV / ΣPV

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9
Q

CPI formula in earned value management

A

CPI = EV / AC

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10
Q

CPI cumulative formula in earned value management

A

CPIc = ΣEV / ΣAC

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11
Q

Budget % Spent formula in earned schedule management

A

ΣAC / BAC x 100

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12
Q

TV (time variance) formula in earned schedule management

A

ES - AT

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13
Q

TPI formula in earned schedule management (time performance index)

A

ES / AT

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14
Q

Total Float formula in Network Diagram

A

TF = LS – ES | TF = LF - EF (late start mformula inus early start) (or late fformula inish mformula inus early fformula inish) (Top mformula inus bottom)

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15
Q

Free Float formula in Network Diagram

A

FF = ESsuccessor - ESpresent - DURpresent (if prev activity starts early and our activity starts early, mformula inus the duration) (need to defformula ine this better)

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16
Q

Present value or discounted cash flow equation formula in project selection methods

A

PV = FV * DF || PV = FV / (1+r)^n (future value * discount factor)(n is years, r is discount rate)(note that discount factor is the reverse of compounding interest to account for inflation over time)

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17
Q

NPV formula in project selection methods

A

ΣPV (higher is better all other things being equal)

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18
Q

ROI formula in project selection methods

A

Return / Formula investment (higher is better)

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19
Q

BCR formula in project selection methods

A

Benefits / Costs (higher is better)

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20
Q

CBR formula in project selection methods

A

Costs / Benefits (lower is better)

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21
Q

IRR formula in project selection methods

A

No formula, it’s estimated. (Higher is better)

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22
Q

PP formula in project selection methods

A

Price Point. (Market price, sale price, contract price) Lesser the better.

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23
Q

Opp Cost formula in project selection methods

A

No formula, it’s estimated. (Higher is better)

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24
Q

EMV for risk formula in expected monetary value

A

P * I (probability times Impact in dollars)

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25
Q

EMV for project formula in expected monetary value

A

ΣEVM (in risk)

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26
Q

Net Benefit formula in expected monetary value

A

EMV(project) - Cost

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27
Q

Project % Complete formula in earned value management

A

ΣEV/BAC x 100

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28
Q

ETC formula in earned value management(break into separate situations)

A

ETC = (BAC - EV) / CPI || ETC = (BAC - EV) || ETC = (BAC - EV) / CPIp

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29
Q

EAC formula in earned value management(break into separate situations)

A

EAC = AC + ETC || EAC = AC + (BAC - EV) || EAC = AC + (BAC - EV) / CPI || EAC = BAC / CPI || EAC = AC + [(BAC - EV) / (CPI * SPI)]

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30
Q

VAC (variance at completion) formula in earned value management

A

VAC = BAC - EAC || where EAC = AC + (BAC – EV)

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31
Q

TCPI formula in earned value management (break into separate situations)

A

TCPI = (BAC – EV) / (EAC – AC) || TCPI = (BAC – EV) / (BAC – AC)

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32
Q

Triangular formula in Estimation (optimistic, pessimistic, most likely)

A

E = (O + P + M) / 3 || σ = sqrt{[(P-O)^2 + (M - P)(M - O)]/(18)}

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33
Q

PERT formula in estimation (optimistic, pessimistic, most likely)

A

E = (O + P + 4*M) / 6 || σ = (P - O) / 6

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34
Q

Range formula in estimation

A

R = E ± (n * σ)

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35
Q

Sigma Values formula in estimation

A

1σ = 68.27% || 2σ = 95.45% || 3σ = 99.73% || 4σ - 99.994%

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36
Q

Path variance formula in estimation

A

VARpath = ΣVAR

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37
Q

variance

A

VAR = σ^2

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38
Q

Communication Channels formula in Communication

A

C = n*(n-1)/2

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39
Q

Percent of Total Assumption formula in procurement

A

PTA = (CP-TP)/(Buyers share ratio) + TC (this is in risk I think??)

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40
Q

SVt meaning formula in earned schedule management

A

Schedule Variance (Time)

41
Q

SPIt meaning formula in earned schedule management

A

Schedule Performance Formula index (Time)

42
Q

ES meaning formula in earned schedule management

A

Earned Schedule

43
Q

AT meaning formula in earned schedule management

A

Actual Time

44
Q

E meaning formula in estimation

A

Expected Value

45
Q

O meaning formula in estimation

A

Optimistic Value

46
Q

P meaning formula in estimation

A

Pessimistic Value

47
Q

M meaning formula in estimation

A

Most likely Value

48
Q

SD or σ meaning formula in estimation

A

Standard Deviation or Sigma

49
Q

VAR meaning formula in estimation

A

Variance of an Acitivity

50
Q

VARpath meaning formula in estimation

A

Variance of a Network Path

51
Q

n meaning formula in estimation

A

Sigma multiplication Factor

52
Q

EMVr meaning formula in expected monetary value

A

Expected Monetary Value for Risk

53
Q

P meaning formula in expected monetary value

A

Probability

54
Q

I meaning formula in expected monetary value

A

Impact (Monetary Value)

55
Q

EMVp meaning formula in expected monetary value

A

Expected Monetary Value for Project

56
Q

PTA meaning formula in procurement

A

Poformula int of Total Assumption

57
Q

CP meaning formula in procurement

A

Ceilformula ing Price

58
Q

TP meaning formula in Procurement

A

Target Price

59
Q

TC meaning formula in Procurement

A

Target Cost

60
Q

C meaning formula in C = n*(n-1)/2

A

number of communication channels

61
Q

n meaning formula in C = n*(n-1)/2

A

number of stakeholders

62
Q

r meaning formula in this formula PV = FV * DF || PV = FV / (1+r)^n

A

discount rate

63
Q

n meaning formula in this formula PV = FV * DF || PV = FV / (1+r)^n

A

number of years

64
Q

What is the difference between Net present value and discounted cash flow?

A

The difference between discounted cash flow and net present value is that net present value (NPV) subtracts the formula initial cash formula investment, but DCF doesn’t. Discounted cash flow models may produce formula incorrect valuation results if forecast cash flows or the risk rate are formula inaccurate.

65
Q

What is the accuracy range of a Rough Order of Magnitude Estimate?

A

-25% to +75%

66
Q

What is the accuracy range of a Preliminary estimate?

A

-15% to +50%

67
Q

What is the accuracy range of a Budget estimate?

A

-10% to +25%

68
Q

What is the accuracy range of a Definitive estimate?

A

-5% to +10%

69
Q

What is the accuracy range of a Final estimate?

A

0% (we know the exact value at end of project)

70
Q

What are the 4 different types of estimates?

A

Preliminary estimate, Budget estimate, Definitive estimate, Final estimate

71
Q

Given Project A with a CPI of 1.2 and an SPI of 0.8, should we release team members early or approve overtime?

A

Approve Overtime. This situation has a project that is in a budget surplus and behind schedule so in order to speed up, we should spend more money.

72
Q

Given Project B with a CPI of 0.8 and an SPI of 1.2, should we release team members early or approve overtime?

A

Release Team members early. This situation has a project that is in a budget deficit and ahead of schedule so to meet budget goals, we should release tools early.

73
Q

Given Project C with a CPI of 1.0 and an SPI of 1.0, should we release team members early or approve overtime?

A

Neither. This situation has a project that is meeting budget and schedule goals so we should continue to monitor and not take unnecessary actions.

74
Q

What does EAC contain?

A

Expected cost of the project once the project is finished.

75
Q

Explain what is happening to a project when TCPI is greater than 1.

A

TCPI is a cost performance measurement. A value of greater than 1 means we are under-performing with respect to budget and in order to meet our goals, we need to “over-perform” for the rest of the project.

76
Q

Explain what is happening to a project when TCPI is less than 1.

A

TCPI is a cost performance measurement. A value of less than 1 means we are over-performing with respect to budget and in order to meet our goals, we need to “under-performing” for the rest of the project.

77
Q

What do control limits represent? (in standard deviations)

A

3 standard deviations above, and 3 standard deviations below the mean.

78
Q

Explain the meaning of a positive VAC or variance at completion. How would a stakeholder read this result?

A

Project is under budget. We may need to increase spending to stay on track.

79
Q

Explain the meaning of a negative VAC or variance at completion. How would a stakeholder read this result?

A

Project is over budget. We may need to decrease spending to stay on track.

80
Q

Which project should be approved? Project A: higher discounted cash flow.(DCF) OR Project B: lower discounted cash flow.(DCF)

A

Project A. Discounted Cash Flow(DCF) is a valuation method that uses future free cash flow projections and discounts them using a simple or weighted average cost of capital. Learn more about this.

81
Q

What metrics can we understand from a burn-down chart? (NOTE: metrics are different is baselined from start of project vs end of project as SCOPE changes in agile projects)

A

SPI = EV/PV, SV = EV-PV. Note that the calculation changes depending on start or end of project.

82
Q

Project A has an IRR of 15% and an NPV of $26,000 for a 2-year duration.
Project B has an IRR of 14% and an NPV of $28,000 for a 4-year duration.
What is the opportunity cost, if you select project A instead of project B?

A
  1. Opp cost is the value of the non selected option.
83
Q

What is defined as
a panel of people who try to shoot down a new project idea.

A

project murder board.

84
Q
A
85
Q

Your company’s accountant informs you that she will be using a 40%
depreciation rate one of your project assets. You know that the asset costs
$24,650, has been used on the project for less than three months and that it
has an expected life of five years.

A

Double declining balance method. Depreciation Rate = 100% / Useful Life = 100% / 5 years = 20%. Since its 40%, we are using the double declining balance method.

86
Q

What is straight line depreciation?

A

Depreciation Rate = 100% / Useful Life = 100% / 5 years = 20%. Would be 20% per year.

87
Q

What is Double declining balance depriciation?

A

Depreciation Rate = 100% / Useful Life = 100% / 5 years = 20%. Would be 40% per year because its double declining.

88
Q

Should we do triangular estimation before or after a calculation?

A

Remember error propagation. We must do the estimation on the variable when it is calculated. do not shortcut.

89
Q

A project will be carried out using one-week sprints. The steering committee
wants an estimate of how long the project will take. The project backlog has
been estimated at 500 story points. The team estimates the velocity per sprint
in the worst-case scenario as 10 story points, the best-case scenario with 25
story points, and the most likely scenario as 20 points.
Using a triangular distribution, how long will the project take?

A

32 weeks. Correct. The worst-case duration can be calculated as 500 / 10 which is
50 sprints. The most likely case can be calculated as 500 / 20 which is
25 sprints. The best case can be calculated as 500 / 25 which is 20
sprints. Taking the average number of sprints would be (50 + 25 + 20) / 3
which is 31.67. Thus, the estimate would be 32. Since each sprint is one
week in length, the duration estimate would be 32 weeks.

90
Q

Your company is holding their annual employee get together. This year 123
employees have attended. Let’s assume that each employee had a brief
conversation with each of the other employees.
How many conversations took place?

A

Explanation:
The formula to calculate communication channels (or in this case
“conversations”) is n * (n – 1) / 2. Therefore, you calculate 123 * (123 – 1) / 2
= 7,503

91
Q

A Kanban board is used to manage the workflow of a software development
project. The project team has established a cycle time of five business days
per user story. The lead time is 10 business days per story. There are 20 user
stories remaining in the backlog.
What should the team report as an estimate to complete the backlog?

A

100 days. take the backlog and multiply by the cycle time.

92
Q

Assuming a 3% interest rate, which of the following projects would you
select?
A) Project Gold with a total of 213,000 profit at the end of Year 4

A

The “profit at the end of year x” represents a future value (FV). To determine
which of these projects to select you must calculate the present value (PV)
for each of the 4 projects and select the project with the highest PV. PV is
calculated by using the formula PV = FV / (1 + r)^n. Here are the results shown
as a table:
Project FV 1 + r n PV
Gold 213,000 1.03 4 189,248
Silver 97,000 1.03 1 94,175
Bronze 128,000 1.03 2 120,652
Leather 168,000 1.03 3 153,744

93
Q
A
94
Q

SPI agile formula

A

story points completed / story points planned

95
Q

CPI agile formula

A

Story point earned cost completed / cost of actual sprint

96
Q

When referencing dollar value, which is the preferred performance calculation for agile? - CPI or SPI

A

CPI because dollars is mentioned. Even if the question states. “according to planed.”

97
Q

What is mean by a classification of “downward” in a directions of influence chart for stakeholder mapping?

A

The classification is from the viewpoint of the project. “Downward” means they are below or under the project umbrella.

98
Q

What are the three types of change requests?

A

-Corrective action -> change to fix something.
-Preventative action -> change to fix an issue before it becomes bigger,
-Defect repair -> change to replace something that was not made correctly the first time. No design chainge.

99
Q
A

PMP Study Materials (2 decks)

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