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PMP Formulas

The document discusses 8 formulas used in project management to calculate things like cost variance, schedule variance, cost performance index, schedule performance index, and estimate at completion (EAC). It explains that earned value plays a key role in many of the formulas and how each formula is used depending on the specific situation, such as whether the original estimate was flawed or if the project is on budget and on schedule.

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Ananth Sheeba
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19 views

PMP Formulas

The document discusses 8 formulas used in project management to calculate things like cost variance, schedule variance, cost performance index, schedule performance index, and estimate at completion (EAC). It explains that earned value plays a key role in many of the formulas and how each formula is used depending on the specific situation, such as whether the original estimate was flawed or if the project is on budget and on schedule.

Uploaded by

Ananth Sheeba
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1 Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)

2 Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)


3 Cost Performance Index (CPI) = EV / AC
4 Schedule Performance Index (SPI) = EV / PV
5 EAC = AC + Bottom-up ETC
6 EAC = BAC / Cumulative CPI
7 EAC = AC + (BAC – EV)
8 EAC = AC + [BAC – EV / (Cumulative CPI ´ Cumulative SPI)]

Formulas 1 – 4
Take a look at the first four PMP formulas above and try to find out the commonalities in them.
Not getting it yet? Yes, the easiest part is Earned Value (EV). It appears above in all the
formulas, which means you have to derive the values of cost variance, schedule variance, cost
performance index, and schedule performance index, keeping Earned Value in mind at first.

Earned Value comes before any other value. Most importantly, if you are working cost-related
questions; think about the actual cost with Earned Value. If the question is about a schedule,
think about planned value along with the earned value. If it is a matter of variance, you need to
subtract actual cost and planned value from earned value—depending on the situation.

Similarly, if it is a question of getting index values, actual cost and planned value will be divided
from earned value. If it is a matter of cost performance index; actual cost will be divided from
earned value and if it is scheduled performance index; the planned value will be divided from
Earned Value. So, in all these circumstances, Earned Value plays a huge role, which is why it’s
at the top of the list.

Formula 5
5 EAC = AC + Bottom-up ETC

Since you will derive the estimate at completion, you need to focus on the actual costs incurred;
only then can you obtain the future value you need for processing the project. See the above
formula; it is used when the original estimate is fundamentally flawed. You use this formula to
calculate an actual plus new estimate for the remaining work.
Formula 6
6 EAC = BAC / Cumulative CPI

If you were asked during the examination whether you are a good project manager, working on
the project as planned—i.e., are you able to maintain positive values in both CPI and SPI—in
this case, you would use the above-mentioned formula from other PMP formulas. This formula is
used when the original estimation is met without any deviation.

Formula 7
7 EAC = AC + (BAC – EV)

If you find yourself in bad shape during the project execution and have incurred more money on
the project than expected or planned, use this formula to calculate the estimate at completion
value. Again, your actual cost will be used first. one of the best from all PMP formulas.

Formula 8
8 EAC = AC + [BAC – EV / (Cumulative CPI ´ Cumulative SPI)]

This pmp formula is used to calculate actual to date plus the remaining budget changed based on
performance—used when we believe the current ratio is typical as planned. In order to meet the
schedule as decided earlier, we calculate the EAC accordingly to meet that schedule.

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