CORNELIUS FICHTNER

The PM PrepCast™
PMP ® Exam
Formula Study Guide
Know the formulas, pass your exam.
Includes 160 formula sample questions
Learn the new 2022
"Interpretational Formula
Questions" style
For the 2022 PMP Exam
Get in touch:
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Orange, CA 92869 USA
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A book by Cornelius Fichtner

Published by: OSP International LLC

Printed book ISBN: 978-0-9964060-8-6

Copyright © 2022 OSP International LLC. All rights reserved.

Every attempt has been made by OSP International LLC to ensure that the information presented
in this publication is accurate and can serve as basic information in preparation for the Project
Management Professional (PMP)® certification exam from Project Management Institute (PMI)®
using A Guide to The Project Management Body of Knowledge (PMBOK® Guide).

However, OSP International LLC accepts no legal responsibility for the content herein. This
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 CON T ENTS
INTRODUCTION 5

PART ONE: The Formula Guide 7

Important to Know 8
The Formula Table Explained 8
Exponentiation 9
The Question Types Covered in this Guide 9
Essential PMP Exam Formulas 11
Values You May Need to Know 20
Formula Acronyms 21

PART TWO: Interpretational Questions 23

Interpretational Questions 24
Answers to Interpretational Questions 57

PART THREE: Computational Questions 143

Computational Questions 144

PART FOUR: Formula Pocket Guide & Reference Articles 243

Two Approaches for Calculating ES, EF, LS and LF 243
The Formula Pocket Guide 244
PMP® Formulas and Calculations – The Complete Guide 245
What Formula Question Types are on the PMP Exam? 245
The Earned Value Formulas 246
The Earned Value Calculation 247
Is There a Formula for Planned Value? 248
How to Calculate Schedule Variance 248
The Cost Variance (CV) Formula 250
How to Calculate the Cost Performance Index (CPI) 251
Using Estimate at Completion (EAC) 252
The Schedule Performance Index (SPI) Formula 252
How to Use the Variance at Completion (VAC) Formula 253

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 The Estimate to Complete Formula (ETC) 254
Understanding the To Complete Performance Index (TCPI) 254
The Formula for Standard Deviation 255
The Advantage of PERT Formula 256
How to Use the Communication Channels Formula 256
Recommendation: Practice. Practice. Practice! 257
Seven Tips for Preparing to Answer Formula-Based Questions 258
1. Study the correct PMP exam formulas 258
2. Develop a learning plan 258
3. Create a formula sheet 258
4. Make a cheat sheet 258
5. Put together your own flashcards 258
6. Know how to apply them 259
7. Practice using them at work 259
Got Questions? 260

ABOUT THE AUTHOR 261

REFERENCES 263
FURTHER RESOURCES 264
The PM Exam Simulator 264
The Project Management PrepCast: PMP Training 264

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 IN T R O D UCT IO N
Three major shifts have occurred on the PMP exam in recent years.

First, lessons learned from our students who passed their PMP exam have
shown that the main focus of formula-based questions has shifted from
calculation to interpretation. This means that you are now less likely to be
required to calculate the planned value (PV) on the exam. Instead, exam
candidates now have to understand how PV is used and what actions they
would take if, for example, the PV is negative. “What do you do now?”
PMI will ask.

Second, PMI added four more question types to the exam. In addition to
the familiar multiple-choice questions, the new question types of multiple
response, drag-and-drop, hotspot, and fill-in-the-blank have been added.

And finally, about 50% of the questions on the exam cover predictive project
management approaches, while the other 50% center around agile and hybrid
approaches. Yet, when it comes to formula-based questions, the predictive
project management approach still dominates.

With the above in mind, we have developed The PMP® Exam Formula Study
Guide that you hold in your hands and organized it into four parts for optimal
exam relevance. Here is what each of the four parts contains and how you
should divide your study time for the formulas:

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 What each part contains How much time
to spend on it

Part One introduces you to all the formulas that are

35%
traditionally needed on the PMP exam. Even with the shift
from calculation to interpretation, you need to first and
foremost understand the concepts behind the formulas and
how they are used.

Part Two contains interpretational questions. After learning

the formulas in Part One you can now apply your knowledge
to questions that are very similar to what you get on the
actual exam. About half of them cover the agile and hybrid
project management approaches and a good number use the
35%
new question types introduced by PMI.

Part Three is all about applying the formulas and calculating.

15%
Being able to correctly answer these questions means you
have gained a deep conceptual understanding of each
formula, which is the first step in being able to interpret the
result.

Part Four closes the guide with the Formula Pocket Guide as
well as a number of reference articles. 15%
Lastly, formulas are not affected by the PMBOK® Guide. For example, the
communications channels formula was developed decades ago and has not
changed once. Therefore, no matter which version of the PMBOK® Guide you
use, the formulas in this guide apply.

Good luck on your exam!

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 PA RT ON E

The Formula Guide

L
et’s begin by laying the foundation and introducing you to all the formulas
you may need for the exam, with a particular emphasis on how to
interpret the results.

Answering formula-based questions correctly is not just about finding

an average, solving for the median, or calculating earned value. Instead,
understanding each element of a formula provides you with critical decision-
making criteria. When you know what each element represents, you
understand which figures or information mentioned in the question scenario
should be used in the calculation. Also, a good grasp of the formulas will
speed up your time to answer the questions, as you can quickly eliminate any
answer choices that are clearly incorrect. And understanding the elements of
each formula makes it easier to interpret the result and what it means for your
project.

But there is really only one way to fully internalize the formulas and prepare
yourself for the math on the exam: you have to study and practice using them.

Here’s what that study and practice looks like: you must first review around
50 formulas, 20 important values, and close to 30 formula-related acronyms.
Armed with that knowledge you can then move on to apply the formulas to a
project scenario, or given the result of a formula, you must be able to interpret
what that figure means for your project.

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The PMP® Exam Formula Study Guide

Here is a tip: If you struggle with a formula concept, then take a look at the
“Complete Guide” in Part Four, where we explain in more detail many of the
concepts that students traditionally struggle with.

Important to Know
The Formula Table Explained
The next section contains a table with the essential formulas that you need
to know and apply in order to pass the PMP Exam. The formulas are listed in
a table with three columns. For each entry, we explain the concept, list the
formula(s), and – most importantly – explain how to interpret the result of the
calculation.

For example:

Concept Formula Result Interpretation

The first column contains the We list the actual formula The formula won’t do you
“concept” behind the formula. in the second column. For much good if you cannot
Instead of just giving you the some concepts, multiple explain what the result is
formula “CV = EV – AC” we formulas are needed so we or means. That is why we
want to make sure that you list them all. When helpful, include an interpretation
understand what the formula we also add examples for in the third column. Many
is trying to achieve. The best better understanding. PMP questions require
way to do that is by explaining interpretation.
its concept.
Example: Example: Example:
Cost Variance (CV) CV = EV – AC Negative = over budget
Provides cost performance of = over planned cost
the project. Helps determine Zero = on budget
if the project is proceeding as = on planned cost
planned.
Positive = under budget
= under planned cost

Result Interpretation is the most important column

for you to focus on!
While it is important to understand the formula as well as
the concept behind the formula, the PMP exam more and
more tests your ability to interpret results. Expect questions
like “What action will you take, if you calculated TCPI = 1.1?”.
Studying and understanding this column is a must.

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 PART ONE: The Formula Guide

Exponentiation
While it is unlikely that you will need to calculate exponentiation on your PMP
exam, we need to help you understand this concept (just in case, since you
never know what PMI will throw at you).

The exponent is usually shown as a superscript to the right of the base. For
instance: 34. This exponentiation can be read as 3 raised to the 4th power or
as 3 raised to the power of 4. And 34 would be calculated as 3 * 3 * 3 * 3 = 81.
The superscript notation 34 is convenient in handwriting but can lead to
errors when you are in a hurry like on the PMP exam. For instance, it is very
easy to forget to “raise” the exponent in a formula when you are hurriedly
typing or writing it out during the exam. So, it could easily happen that the
formula PV = FV / (1 + r)n gets written down as PV = FV / (1 + r)n. The difference
may seem trivial, but the result is disastrous. Therefore, we chose to use
an accepted, alternative way of expressing the exponentiation by using the
^ character.

When using this character, 34 is now expressed as 3^4 and PV = FV / ( 1+ r)n is

expressed as PV = FV / (1 + r)^n. This removes any margin for visual errors.

The Question Types Covered in this Guide

Part Two and Part Three of this guide include the following question types that
you may encounter on your PMP exam:

yy Applying a formula. These are straightforward questions where you

are given values and are expected to calculate a result by applying the
correct formula.
yy Applying two formulas. In these questions, you will be given a set of
values and asked to calculate a result. At first, these will look as if you
can simply apply one formula; however, as you apply this formula, you
realize that one value is missing. This missing value must then first be
calculated via a second formula.
yy Inverting a formula. These questions test your ability to take a basic
formula and invert it. For instance, instead of asking “4 + 6 = ?” the
question would be “4 + ? = 10” and it is your job to invert the formula
and calculate “10 – 4 = 6”.
yy Find the correct formula. In these questions, you are given a scenario
and then offered various formulas. Your task is to read and understand
the scenario and define which of the given formulas are correct based
on the circumstances described.
yy Use a formula based on keywords. There is more than one way to
calculate the EAC and the ETC. Which formula to use depends on the
project’s progression (or health) as described in the question. These are

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The PMP® Exam Formula Study Guide

scenario-based questions that will contain certain keywords. You must

recognize these keywords and apply the correct formula.
yy Result interpretation. In these questions, you are given a result of a
calculation that has already been made for you (based on a formula
provided in the scenario or implied by it) or you are given a project
status and asked, “What does this mean for the project?”
yy Selecting the best course of action. You are given a scenario describing
a project status (either explicitly or implicitly) and are requested to
suggest a course of action. If the question is a standard multiple-choice,
you would need to select one answer choice. If the question requires
multiple responses, you must select more than one.
yy Matching items. These questions require you to drag-and-drop the
answers. They cover a wide variety of skills and knowledge, such as
matching a formula with an assumption, selecting the best course(s) of
action based on the scenario described, aligning various metrics with
project selection methods, etc.
yy Visual interpretation. You are given a chart, such as a burndown or a
burnup chart, and are requested to interpret the status of the project or
suggest the best course(s) of action to move ahead with the project, to
meet its original goal, to meet the new goal described in the scenario,
etc.

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 PART ONE: The Formula Guide

Essential PMP Exam Formulas

Concept Formula Result Interpretation

Cost Variance (CV) CV = EV – AC Negative = over budget = over planned

Provides cost performance of the cost
project. Helps determine the amount Zero = on budget = on planned cost
of budget deficit or surplus at a given
Positive = under budget = under
point in time.
planned cost

Cost Performance Index (CPI) CPI = EV / AC <1 = over budget = over planned cost.
The measure of cost efficiency on a The project is getting <$1 for every $1
project. The ratio of earned value to spent.
actual cost. 1 = on budget = on planned cost.
The project is getting $1 for every $1
spent.
>1 = under budget = under planned
cost. The project is getting >$1 for
every $1 spent.

Schedule Variance (SV) SV = EV – PV Negative = behind schedule

Provides schedule performance Zero = on schedule
of the project. Helps determine if
Positive = ahead of schedule
the project work is proceeding as
planned.

Schedule Performance Index (SPI) SPI = EV / PV <1 = behind schedule. The project
The measure of schedule efficiency is progressing at a slower rate than
on a project. The ratio of earned value originally planned.
to planned value. Used to determine 1 = on schedule. The project is
if a project is behind, on or ahead of progressing at the originally planned
schedule. Can be used to help predict rate.
when a project will be completed.
>1 = ahead of schedule. The project
is progressing at a faster rate than
originally planned.

Schedule Variance (SV), an SV = ES – AT Negative = behind schedule.

alternative method The project earned less than planned
Provides schedule performance of the Zero = on schedule. The project earned
project in terms of Earned Schedule as planned.
(ES) and Actual Time (AT).
Positive = ahead of schedule. The
project earned more than planned.

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The PMP® Exam Formula Study Guide

Concept Formula Result Interpretation

Schedule Performance Index (SPI) SPI = ES / AT <1 = behind schedule. The project
(Alternative Method) is progressing at a slower rate than
Measure of schedule efficiency on a originally planned.
project in terms of Earned Schedule 1 = on schedule. The project is
(ES) and Actual Time (AT). progressing at the originally planned
rate.
>1 = ahead of schedule. The project
is progressing at a faster rate than
originally planned.

Estimate at Completion (EAC) EAC = BAC / CPI Original budget modified by the cost
Expected final and total cost of a Assumption: use this formula if the performance. The result is a monetary
project based on project performance. current cost performance is expected value.
Helps determine an estimate of the to remain the same for the remainder
total costs of a project based on actual of the project.
costs to date. There are several ways
to calculate EAC depending on the EAC = AC + Bottom-up ETC Actual cost plus a new bottom-up
current project situation and how the Assumption: use this formula if the estimate for the remaining work. The
actual work is progressing as compared original estimate was fundamentally result is a monetary value.
to the budget. Look for keywords in flawed or conditions have changed
the exam questions to determine what and invalidated original estimating
assumptions were made. assumptions.

EAC = AC + (BAC – EV) Actual cost to date (AC) plus unearned

Assumption: use this formula if the budget (BAC – EV). The result is a
current cost variance is not expected monetary value.
to occur again for the remainder of
the project, which means the original
budget is still reliable.

EAC = AC + [(BAC – EV) / (CPI * SPI)] Actual cost to date (AC) plus unearned
Assumption: use this formula if budget (BAC – EV) modified by both
both the CPI and SPI influence the cost performance and schedule
remaining project work. performance. The result is a monetary
value.

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Pages 13 to 20 are not available in the
free version of the Formula Guide.

To purchase the full version, please visit

www.pm-formulas.com

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 PART ONE: The Formula Guide

There is no agreement on estimate ranges.

We often receive questions from students about the fact that they see
different numbers for the estimate ranges when they compare various training
materials. That is true because there is, unfortunately, no final authority that
defines these ranges.
There is a disagreement both on the names as well as on the actual ranges.
Some books set the ROM at -25% to +75% and others do so at -50% to +100%.
In the real world, estimate ranges are both application area and industry
dependent. Everyone does it slightly differently in their industry and on their
projects. Therefore, it really isn’t surprising that you will see different numbers
in different books.
The numbers that we provide in the table above have been successfully used
by our students on the exam, so we believe applying them on the exam leads
to success.

Formula Acronyms
Acronym Term Description

AC Actual Cost Total cost expended and reported during the accomplishment of a project
task or project. This can be labor hours alone; direct costs alone; or all costs,
including indirect costs.

AT Actual Time The time in calendar units between the actual start date of the project till the
project status date.

BAC Budget at Completion The sum of all budgets allocated to a project.

BCR Benefit-Cost Ratio A ratio that compares benefits to cost.

CBR Cost-Benefit Ratio A ratio that compares cost to benefit (inversion of BCR).

CPI Cost Performance Index Cost efficiency rating on a project, expressed as a ratio of EV to AC.

CV Cost Variance A measure of cost performance on the project, expressed as the difference
between earned value and actual cost.

EAC Estimate at Completion The expected total cost for a scheduled activity, a group of activities, or the
project when the work will be completed.

EF Early Finish Early finish of an activity.

EMV Expected Monetary Value This is a statistical technique that calculates the probable financial results
of events.

ES Early Start Early start of an activity.

ES Earned Schedule A method of deriving time-based performance measure.

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The PMP® Exam Formula Study Guide

Acronym Term Description

ETC Estimate to Complete ETC is the expected cost needed to complete all the remaining work for a
scheduled activity, a group of activities, or the project. ETC helps project
managers predict what the final cost of the project will be upon completion.

EV Earned Value EV is the value of completed work expressed in terms of the approved budget
assigned to that work for a scheduled activity or a work breakdown structure
component.

FV Future Value Value of money on a given date in the future.

IRR Internal Rate of Return A capital budgeting metric used to decide whether an investment should be
made. It is an indicator of the efficiency of an investment.

JIT Just-in-Time An inventory strategy that strives to improve a business’s return on investment
by reducing in-process inventory and associated carrying costs.

LF Late Finish Late finish of an activity.

LS Late Start Late start of an activity.

NPV Net Present Value A standard method for the financial appraisal of long-term projects. Measures
the excess or shortfall of cash flows, in present value (PV) terms, once financing
charges are met.

PERT Program Evaluation and A method that allows the estimation of the weighted average duration of tasks.
Review Technique

PV Planned Value The authorized budget assigned to the scheduled work to be accomplished for
a scheduled activity or a work breakdown structure component.

PV Present Value Value of money received today instead of in the future.

ROI Return on Investment A ratio of money gained or lost on an investment relative to the amount of
money invested.

SPI Schedule Performance A ratio of work accomplished versus work planned, for a specified time period.
Index The SPI is an efficiency rating for work accomplishment, comparing work
accomplished to what should have been accomplished. It is a ratio of earned
value and planned value. Alternatively, it is also expressed as a ratio of earned
schedule to actual time.

SV Schedule Variance A measure of schedule performance on the project, expressed as the difference
between earned value and planned value. Alternatively, it is also expressed as
the difference between earned schedule and actual time.

TCPI To-Complete The calculated project cost performance that must be achieved on the
Performance Index remaining work to meet a specific project goal (e.g., BAC or EAC). It is the work
remaining divided by the funds remaining.

VAC Variance at Completion VAC forecasts the difference between the Budget-at-Completion and the expected
total costs to be accrued over the life of the project based on current trends.

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 PA RT TWO

Interpretational
Questions

T
he PMP exam has changed with regards to formula-based questions: You
are now more likely to be asked to interpret numbers and figures in an
exam question scenario and to identify the proper action to take.

That is why here, in Part Two, we focus almost exclusively on interpretational

questions. Go through these first and test yourself on interpreting the
situations. And if you select the wrong answer, we strongly recommend that
you invest the time to understand why you got it wrong.

To help you with this review, the answers for many (but not all) of our
interpretational questions include the following:

yy General explanation: This is a high-level overview of the question

background.
yy Per-choice explanation (PCE): For each answer option we tell you
why it is either correct or incorrect. Many of our PMP Exam Simulator
students, tell us that PCEs were one of the most essential features of
the simulator that contributed to their success in passing the exam with
Above Target in all domains.
yy References: Knowing where the explanation came from and how the
correct answer is supported can be very helpful, especially if you want
to look up additional information while preparing for the exam.

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The PMP® Exam Formula Study Guide

Interpretational Questions

iQ1 Question 1
You are leading a hybrid project, and you have just updated the daily
burndown chart for the current sprint. A key stakeholder has expressed
concern that the project team may not meet their objectives for the iteration.

Based on the burndown chart, what is your best course of action to keep the
project on track?

Sprint Burndown
70

60

50 Points Remaining
Story Points

40

30

20

10

0
1 2 3 4 5 6 7 8 9 10
Day

A) Crash the schedule

B) Fast track some of the user stories
C) Allow the team to continue working as planned
D) Hold a retrospective before the end of the day

iQ2 Question 2
A project manager meets with company executives to apprise them of
value gain progress on the project. To make it easier for the executives to
understand the various earned value metrics without complex formulas and
calculations, the project manager draws a chart, as shown below. The date of
the meeting is indicated by “Today” on the X-axis.

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 PART TWO: Interpretational Questions

What is the schedule variance (SV) of the project?

(On the real PMP exam you may be asked to provide your answer by clicking
the correct area in the image. But here in the book, we are asking you to select
the answer below.)

Actual Costs (AC)

Planned Value (PV)
Earned Value (EV)
Cost

C
A D
B
Today
Time

A) A
B) B
C) C
D) D

Question 3
Your project has a CV of -200.
iQ3
This means:

A) Your project is under budget

B) Your SPI is also negative
C) Your project is above budget
D) CV cannot be negative and there must be an error in the calculation

Question 4
An agile team uses Scrumban as the development approach and, after
iQ4
completing four out of eight planned sprints, has established a stable velocity

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The PMP® Exam Formula Study Guide

of 30 story points per sprint. The team is confident in maintaining this velocity
for the remainder of the project. The current schedule performance index (SPI)
is 0.91, and the project has a fixed deadline.

Which of the following actions would be most appropriate for the project
leader to take? (Choose three.)

A) Ask the project sponsor if an additional developer can be added to the

team
B) Ask the product owner if they would be willing to cut scope to complete
the project on time
C) Release one of the developers early to reduce cost since the project is
ahead of schedule
D) Review the Kanban board and look for opportunities to reduce work in
progress (WIP)
E) Ask the product owner for additional features to take advantage of the
excess capacity

iQ5 Question 5
You are the project manager of the Sterling project. The goal is to explore two
possible new products for your company. Over €150,000 has been spent on
this exploratory project. Market studies with focus groups show that there
is a need for both products. Your sponsor is worried that only 60% of the
project work has been completed so far. The current ETC tells you that another
€175,000 is required to complete the project.

What should you do?

A) Stop the project because you are over budget

B) Ignore the sunk cost in the decision-making process
C) The SPI is positive; therefore, the project can continue
D) Defer the decision to the project control board

iQ6 Question 6
A project team has completed four out of eight planned sprints. The initial
project backlog consisted of 22 user stories of the same size and complexity,
of which the team has completed 10. Each user story has a budgeted value of
$1,000. $11,000 has been spent on the project thus far. A bottom-up estimate
to complete the remaining work yields $15,000 for an estimated $26,000
at completion. The agile coach has been asked to provide an estimate at
completion (EAC).

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 PART TWO: Interpretational Questions

What options might the agile coach consider in deriving the estimate at
completion (EAC)? (In your exam, on a question like this, you would be asked to
drag and drop the items to create matching pairs. In this book, please arrange
the answers in the correct order.)

Answer choices Answers

Future work will be accomplished at

the planned rate

The original plan is no longer valid

Both SPI and CPI influence the

remaining work

The current CPI is expected to remain

the same

yy EAC = AC + BAC – EV
yy EAC = AC + bottom-up ETC
yy EAC = AC + [(BAC – EV) / (CPI * SPI)]
yy EAC = BAC / CPI

Question 7
Using the payback period as a means of project selection, which of the
iQ7
following projects would you select?

Project Name Project Team Investment Yearly Income Overall Risk

Gold 10 Resources 1,500,000 450,000 1.0

Silver 8 Resources 1,700,000 400,000 0.9

Platinum 15 Resources 2,000,000 640,000 1.3

Diamond 26 Resources 3,500,000 850,000 1.2

A) Gold
B) Silver
C) Platinum
D) Diamond

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iQ8 Question 8
A project team has established a stable velocity of 30 story points per sprint
and has completed 15 of 30 planned sprints. The team is confident they
can maintain this velocity for the remainder of the project. The project
has an SPI of 0.8 and a CPI of 1.2. The sponsor asks the scrum master for
recommendations to get the project back on track.

Which of the following actions would be most appropriate for the scrum
master to take? (Choose two.)

A) Seek approval to add another developer to the project team

B) Fast track some project activities that are off the critical path
C) Outsource some of the project deliverables to a vendor
D) Release one of the project team members to reduce costs
E) No action is needed since SPI and CPI even out one another

iQ9 Question 9
An agile coach is leading a project using Scrumban and has updated the
Kanban board below. He is currently exploring options for reporting metrics
that can be provided to key stakeholders.

How would the agile coach derive each of the metrics? (In your exam,
on a question like this, you would be asked to drag and drop the items to
create matching pairs. In this book, please arrange the answers in the
correct order.)

Ready Development Unit Testing Integration Final Approval Done

(WIP Limit = 8) (WIP Limit = 4) (WIP Limit = 2) Testing (WIP Limit = 3)
(WIP Limit = 3)

User story 21 User story 19 User story 17 User story 14 User story 11 User story 1
User story 22 User story 20 User story 18 User story 15 User story 12 User story 2
User story 23 User story 16 User story 13 User story 3
User story 24 User story 4
User story 25 User story 5
User story 26 User story 6
User story 27 User story 7
User story 28 User story 8
User story 29 User story 9
User story 30 User story 10

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 PART TWO: Interpretational Questions

Answer choices Answers

Track the number of days a user story spends

in the “Ready” column

Track the time from when a user story is

placed in the “Ready” column until it has
been delivered to the customer

Measure the number of days from when a

user story is pulled into the “Development”
column until it arrives in the “Done” column

Calculate the average number of user stories

completed per iteration

Divide the number of story points completed

by the number of story points planned

yy Response time
yy Lead time
yy Cycle time
yy Velocity
yy Schedule performance index (SPI)

Question 10
Using the internal rate of return as a means of project selection, which of the
iQ10
following projects would you select?

Project Project IRR Investment Bank loan Overall

Name Team needed? Risk

Gold 10 Members 6.0% 4,500,000 Yes 1.0

Silver 8 Members 5.8% 1,700,000 No 0.9

Platinum 15 Members 5.9% 2,000,000 No 1.3

Diamond 26 Members 3.0% 3,500,000 Yes 1.2

A) Gold
B) Silver
C) Platinum
D) Diamond

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 PART TWO: Interpretational Questions

Answers to Interpretational Questions

Question 1: Answer
You are leading a hybrid project, and you have just updated the daily
iA1
burndown chart for the current sprint. A key stakeholder has expressed
concern that the project team may not meet their objectives for the iteration.

Based on the burndown chart, what is your best course of action to keep the
project on track?

Sprint Burndown
70

60

50 Points Remaining
Story Points

40

30

20

10

0
1 2 3 4 5 6 7 8 9 10
Day

A) Crash the schedule

Incorrect. Hybrid projects, like the one described by the scenario, can
include elements of both predictive and agile methodologies. Crashing
is a schedule compression technique typically used in predictive projects
where resources are added to expedite delivery at greater expense.
However, the burndown chart indicates that the project team is on
track to meet the sprint goal. Therefore, crashing the schedule is not
warranted.

B) Fast track some of the user stories

Incorrect. Fast tracking is a schedule compression technique in which
tasks that were originally scheduled to run sequentially are performed
concurrently, thus expediting delivery. However, the sprint burndown

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chart suggests that the team is on track to meet the sprint goal.
Therefore, there is no compelling reason to fast track user stories.

C) Allow the team to continue working as planned

Correct. The scenario indicates that a stakeholder is concerned about
the team completing the work on time; however, the sprint burndown
chart indicates that the team is trending to complete the sprint goal
successfully. Since there is no compelling reason to believe the sprint
goal is in jeopardy, the team should be allowed to continue working
as planned.

D) Hold a retrospective before the end of the day

Incorrect. A retrospective is an agile ceremony in which the project team
takes time to review their performance and look for opportunities for
improvement. Retrospectives are typically held at the end of each sprint
but can be held at any time it would be beneficial to do so. In this case,
the burndown chart indicates that the team is making good progress,
and there is no reason to believe the sprint goal is at risk. Pulling the
team away from their development work for a retrospective would not
likely be beneficial at this point.

Explanation:
A burndown chart is a graphical representation of the work remaining versus
the time left in a timebox. When the curve representing completed work (story
points) is trending below the curve representing the planned work, the project
earns more than planned and/or is ahead of schedule. The burndown chart
in the scenario described indicates that the project team is slightly ahead of
the plan. Thus, there is no reason to believe that the sprint goal is in jeopardy.
The key stakeholder has expressed concern regarding the team achieving
the sprint goal, but there is no information presented in this scenario to
support the view that the goal is at risk. While stakeholders’ concerns should
not be ignored, the project leader might just need to explain the information
provided by the burndown chart. Regardless, the question is asking what
should be done to keep the team on track rather than how to address the
stakeholder’s concern. Given that the team is projected to achieve the sprint
goal and that no information has been provided to suggest that the goal is at
risk, the best course of action is to allow the project team to continue their
work as planned.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 226
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 62

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 PART TWO: Interpretational Questions

Question 2: Answer
A project manager meets with company executives to apprise them of
iA2
value gain progress on the project. To make it easier for the executives to
understand the various earned value metrics without complex formulas and
calculations, the project manager draws a chart, as shown below. The date of
the meeting is indicated by “Today” on the X-axis.

What is the schedule variance (SV) of the project?

(On the real PMP exam you may be asked to provide your answer by clicking
the correct area in the image. But here in the book, we are asking you to select
the answer below.)

Actual Costs (AC)

Planned Value (PV)
Earned Value (EV)
Cost

C
A D
B
Today
Time

A) A
Correct. Area A represents the difference between the earned value (EV)
and the planned value (PV). The schedule variance (SV) of the project is a
measure of schedule performance expressed as the difference between
the earned value (EV) and the planned value (PV), making this choice the
best answer to the question asked.
B) B
Incorrect. Area B represents the earned value (EV) as of “Today”, the
date of the meeting. The question is asking to determine the schedule
variance (SV) of the project. The SV is the difference between the earned
value (EV) and the planned value (PV), rather than just the earned value.
Therefore, this choice is an incorrect answer.

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C) C
Incorrect. Area C represents the difference between the earned value
(EV) and the actual costs (AC). The difference between the earned value
(EV) and the actual costs (AC) is the cost variance (CV), not the schedule
variance (SV), as asked by the question. Hence, this choice represents an
incorrect answer.

D) D
Incorrect. Area D represents the actual costs (AC) as of “Today”, the
date of the meeting. The question is asking to determine the schedule
variance (SV) of the project. The SV is the difference between the earned
value (EV) and the planned value (PV), rather than just the actual costs,
making this choice an incorrect answer.

Explanation:
Earned value analysis (EVA) is an example of data analysis tools and techniques
that can be used on a project to analyze its performance in terms of budget
and schedule. The EVA compares the performance measurement baseline to
the actual cost and schedule performance. Earned value analysis is typically
associated with a more general term, earned value management (EVM), which
is a methodology that combines scope, schedule, and resource measurements
to assess project performance and progress.

To calculate its metrics, the EVA often uses various formulas. However,
operating with the formulas and values that result from them may sometimes
be difficult for project stakeholders (such as the executives in the scenario
described) who are less familiar with the formulas. Therefore, to make it easier
for such stakeholders, a visual representation of the value gain progress may
be useful.

The question is asking to find the schedule variance (SV) of the project. SV is a
measure of schedule performance expressed as the difference between the
earned value (EV) and the planned value (PV):

SV = EV – PV

On the chart, the SV can be determined by the height of the section on the
vertical dotted line (indicated by “Today”) between the curves representing
the planned value and the earned value. It can be seen that the EV is lower
than the PV, making SV a negative number. A negative SV means the project is
behind schedule.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 262

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 PART TWO: Interpretational Questions

Question 3: Answer
Your project has a CV of -200.
iA3
This means:

A) Your project is under budget

B) Your SPI is also negative
C) Your project is above budget
D) CV cannot be negative and there must be an error in the calculation

Explanation:
Cost variance (CV) is calculated CV = EV – AC. Therefore, a negative cost
variance means that you have spent more Actual Cost than you have Earned
Value. Thus, you are spending more than is coming in and you are over budget.

Question 4: Answer
An agile team uses Scrumban as the development approach and, after
iA4
completing four out of eight planned sprints, has established a stable velocity
of 30 story points per sprint. The team is confident in maintaining this velocity
for the remainder of the project. The current schedule performance index (SPI)
is 0.91, and the project has a fixed deadline.

Which of the following actions would be most appropriate for the project
leader to take? (Choose three.)

A) Ask the project sponsor if an additional developer can be added to

the team
Correct. An SPI of 0.91 indicates that the project is running behind
schedule. Adding resources is an example of crashing. Crashing is
a schedule compression technique that can shorten the schedule
duration by adding resources. Note: adding resources might put the
project over budget; however, the scenario is not concerned with this
constraint.

B) Ask the product owner if they would be willing to cut scope to

complete the project on time
Correct. With an SPI less than 1.0, the project is behind schedule and
will not likely complete the remaining work at the current velocity. One
option to complete the project sooner is to reduce the project backlog.
Given that the deadline is fixed, the product owner might be willing to
sacrifice some functionality to meet the deadline.

C) Release one of the developers early to reduce cost since the project is
ahead of schedule

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Incorrect. The question provides an SPI of 0.91, which means the project
is running behind schedule, and the current velocity is insufficient to
complete the project on time. Releasing one of the developers early
would likely decrease the team’s velocity and further exacerbate the
schedule issue, making this choice an incorrect answer.

D) Review the Kanban board and look for opportunities to reduce

work in progress (WIP)
Correct. The question states that the project management framework
is Scrumban. Scrumban combines scrum and Kanban practices within
a single project. One of the goals of Kanban is to minimize WIP to
increase throughput. Incomplete work represents no value for the
customer, and the greater the WIP, the greater the risk of rework and
multitasking, which can slow velocity. Thus, looking for opportunities
to reduce WIP would be a viable action when attempting to increase
velocity.

E) Ask the product owner for additional features to take advantage of the
excess capacity
Incorrect. With an SPI of 0.91, the project is behind schedule, implying
there is no excess capacity. This means that the current velocity of 30
story points is insufficient to complete the project on time, let alone
adding more features. Adding scope to the project would likely cause
the project to run even further behind schedule.

Explanation:
The pertinent information provided in this scenario is that the schedule
performance index (SPI) is 0.91, and the project deadline is fixed. An SPI of 0.91
means that the project team only works at 91% of the planned rate. Since the
project is running behind schedule and the deadline is fixed, there are really
only two options to complete the project on time: to increase the velocity or
cut the project scope. Both of the incorrect answer choices represent actions
that would likely delay the project further. One might have selected one or
both incorrect answer choices if the SPI was incorrectly interpreted as the
project running ahead instead of behind schedule. All three correct answer
choices represent actions that might increase velocity or reduce scope, which
should help bring the project to completion sooner.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 263, 267
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 69,
108

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 PART TWO: Interpretational Questions

Question 5: Answer
You are the project manager of the Sterling project. The goal is to explore two
iA5
possible new products for your company. Over €150,000 have been spent on
this exploratory project. Market studies with focus groups show that there
is a need for both products. Your sponsor is worried that only 60% of the
project work has been completed so far. The current ETC tells you that another
€175,000 is required to complete the project.

What should you do?

A) Stop the project because you are over budget

B) Ignore the sunk cost in the decision-making process
C) The SPI is positive; therefore, the project can continue
D) Defer the decision to the project control board

Explanation:
A decision on whether to continue with a project should be based on forward-
looking criteria. The sunk cost (= money that has been spent) should not be
a factor in the decision-making process. Take your car as an analogy: If you
learn that you need to have the flux capacitor replaced (at a cost of €750) then
you should not be thinking “Gee… I just replaced the intake valve for €250 last
month!” Instead you should look at the value of your car and whether this
investment/repair is worth the future usage of the vehicle. It is the same with
projects. Make forward-looking decisions and ignore sunk cost.

Question 6: Answer
A project team has completed four out of eight planned sprints. The initial
iA6
project backlog consisted of 22 user stories of the same size and complexity,
of which the team has completed 10. Each user story has a budgeted value of
$1,000. $11,000 has been spent on the project thus far. A bottom-up estimate
to complete the remaining work yields $15,000 for an estimated $26,000
at completion. The agile coach has been asked to provide an estimate at
completion (EAC).

What options might the agile coach consider in deriving the estimate at
completion (EAC)? (In your exam, on a question like this, you would be asked to
drag and drop the items to create matching pairs. In this book, please arrange
the answers in the correct order.)

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Correct Answers:
Answer choices Answers

Future work will be accomplished at EAC = AC + BAC – EV

the planned rate

The original plan is no longer valid EAC = AC + bottom-up ETC

Both SPI and CPI influence the EAC = AC + [(BAC – EV) / (CPI * SPI)]
remaining work

The current CPI is expected to remain EAC = BAC / CPI

the same

Explanation:
The estimate at completion (EAC) is the expected total cost of completing
all work expressed as the sum of the actual cost to date and the estimate
to complete. There are various methods to determine the EAC for a project.
The appropriate formula to use will depend upon the assumptions that
one is willing to make regarding the project’s future performance. Changing
the assumptions may lead to a different value for EAC. In this scenario, the
necessary metrics are provided to calculate EAC with various methods.

Answering this question correctly does not require performing any

calculations. The numbers provided in the scenario are superfluous. Those
who wish to practice the application of various EAC formulas may review the
explanation provided below.
yy When future work will be accomplished at the planned rate, an estimate
at completion (EAC) can be calculated using the following formula:
EAC = AC + BAC – EV. Based on the scenario, AC = $11,000 (provided
in the scenario), BAC = $22,000 (22 user stories of the same size and
complexity multiplied by their budgeted value of $1,000 per user story),
EV = $10,000 (10 completed user stories multiplied by their budgeted
value of $1,000 per user story). Therefore, EAC = $11,000 + $22,000 –
$10,000 = $23,000.
yy When the current plan is no longer valid, a new ETC can be determined
by performing a bottom-up estimate. To derive EAC, one must include
the actual expenditures to date. Thus, using the formula AC + bottom-up
ETC would be the appropriate method to determine the EAC when the
original plan is no longer valid: EAC = $11,000 + $15,000 = $26,000.
Note: this value has already been provided in the scenario and,
therefore, does not require a calculation (which is not required for this
question anyway).

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 PART TWO: Interpretational Questions

yy In some cases, the current cost and schedule performance will continue
to affect the project going forward. To adjust the EAC to account for
cost and schedule performance, the cost performance index (CPI) and
schedule performance index (SPI) can be incorporated into the formula:
EAC = AC + [(BAC – EV) / (CPI * SPI)]. The CPI can be calculated as EV / AC.
The EV was calculated above as $10,000, and the AC was stated in the
question as $11,000. Thus, CPI = $10,000 / $11,000 = 0.91. The formula
for SPI is EV / PV. Earned value was previously calculated at $10,000.
Having completed four of eight planned sprints, the project is 50%
complete. Thus, the PV at this point in the project would be half of the
BAC or $11,000. Applying the formula for SPI would result in $10,000
/ $11,000 = 0.91. Thus, EAC = $11,000 + [($22,000 – $10,000) / (0.91 *
0.91)] = $25,520.
yy When the current cost performance is expected to remain the same
for the remainder of the project, the current CPI must be included in
the EAC calculation. Under this circumstance, the appropriate formula
would be EAC = BAC / CPI. We have previously determined BAC at
$22,000 and CPI at 0.91. Applying the formula yields $22,000 / 0.91
= $24,176.
Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 263-265, 267
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 61, 69

Question 7: Answer
Using the Payback Period as a means of project selection, which of the
iA7
following projects would you select?

Project Name Project Team Investment Yearly Income Overall Risk

Gold 10 Resources 1,500,000 450,000 1.0

Silver 8 Resources 1,700,000 400,000 0.9

Platinum 15 Resources 2,000,000 640,000 1.3

Diamond 26 Resources 3,500,000 850,000 1.2

A) Gold
B) Silver
C) Platinum
D) Diamond

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Explanation:
To calculate the payback period, you divide the investment by the yearly
income. In this question, project Platinum has the shortest payback period of
3.125 years, calculated as follows: 2,000,000 / 640,000 = 3.125. The values in
the other columns (project team size and overall risk) are irrelevant. You have
to be able to spot the important information in the question and “tune out”
the rest.

iA8 Question 8: Answer

A project team has established a stable velocity of 30 story points per sprint
and has completed 15 of 30 planned sprints. The team is confident they
can maintain this velocity for the remainder of the project. The project
has an SPI of 0.8 and a CPI of 1.2. The sponsor asks the scrum master for
recommendations to get the project back on track.

Which of the following actions would be most appropriate for the scrum
master to take? (Choose two.)

A) Seek approval to add another developer to the project team

Correct. A schedule performance index (SPI) of 0.8 indicates that the
project is behind schedule. Adding resources to a project to expedite
delivery is known as crashing. Crashing will increase costs, but with a
CPI of 1.2, the project is running under budget and, as such, might be
able to absorb the cost of an additional developer and still complete on
budget.

B) Fast track some project activities that are off the critical path
Incorrect. The strategy of running tasks in parallel that were originally
planned to be performed sequentially is known as fast tracking.
Fast tracking is a viable option for shortening the schedule duration.
However, fast tracking will only be effective for activities that are on,
rather than off, the critical path.

C) Outsource some of the project deliverables to a vendor

Correct. Outsourcing work to a vendor is another example of crashing.
Resources that are added will likely increase cost but should also
enhance velocity. Since the project is trending to finish well under
budget with a CPI of 1.2, funds may be available to contract with a
vendor for additional support without endangering the budget.

D) Release one of the project team members to reduce costs

Incorrect. With the earned value metrics provided in the scenario
(SPI = 0.8, CPI = 1.2), the project is considered behind schedule and

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 PART TWO: Interpretational Questions

under budget. Therefore, the goal is to bring the project back on

schedule rather than reduce costs. Releasing a team member would
only worsen the project schedule performance, making this choice an
incorrect answer.

E) No action is needed since SPI and CPI even out one another
Incorrect. One would select this answer if one mistakenly thought that
0.2 “missing” from the SPI of 1.0 could be compensated by the “extra”
0.2 of the CPI. However, SPI and CPI are independent earn value metrics.
Based on the scenario, the project is behind schedule and under
budget. While no action is required to modify project cost performance,
action should be taken to bring the project back on schedule.

Explanation:
With the schedule performance index (SPI) of 0.8 and a cost performance
index (CPI) of 1.2 provided in the scenario, the project is considered behind
schedule and under budget. Thus, the problem that needs to be addressed
is how to increase velocity to complete the deliverables on time. Both of the
correct answer choices are examples of crashing where resources are added to
shorten the schedule duration. Crashing increases costs, but with the project
running under budget, there is an opportunity to deploy some of the excess
funds to shorten the schedule without endangering the budget.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 267
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 61,
69

Question 9: Answer
An agile coach is leading a project using Scrumban and has updated the
iA9
Kanban board below. He is currently exploring options for reporting metrics
that can be provided to key stakeholders.

How would the agile coach derive each of the metrics? (In your exam, on
a question like this, you would be asked to drag and drop the items to
create matching pairs. In this book, please arrange the answers in the
correct order.)

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Ready Development Unit Testing Integration Final Approval Done

(WIP Limit = 8) (WIP Limit = 4) (WIP Limit = 2) Testing (WIP Limit = 3)
(WIP Limit = 3)

User story 21 User story 19 User story 17 User story 14 User story 11 User story 1
User story 22 User story 20 User story 18 User story 15 User story 12 User story 2
User story 23 User story 16 User story 13 User story 3
User story 24 User story 4
User story 25 User story 5
User story 26 User story 6
User story 27 User story 7
User story 28 User story 8
User story 29 User story 9
User story 30 User story 10

Correct Answers:
Answer choices Answers

Track the number of days a user story spends Response time

in the “Ready” column

Track the time from when a user story is Lead time

placed in the “Ready” column until it has been
delivered to the customer

Measure the number of days from when a Cycle time

user story is pulled into the “Development”
column until it arrives in the “Done” column

Calculate the average number of user stories Velocity

completed per iteration

Divide the number of story points completed Schedule performance index (SPI)
by the number of story points planned

Explanation:
The question indicates that Scrumban is being used as a project management
framework. As such, the project will be executed iteratively, and the work will
be tracked with a Kanban board. Many metrics can be used to track project
performance on an agile project. In this case, response time, lead time, cycle
time, velocity, and the schedule performance index (SPI) have been specifically
listed. To answer the question correctly, one must match the metric to a brief
description of how the metric might be derived.

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 PART TWO: Interpretational Questions

Note that in some cases, there might be more than one method to derive the
metric, but only one example has been provided.

yy Response time is the time a work item waits until work begins on
that item. In this case, the “Ready” column lists user stories that are
ready for work to begin. Once work begins on a user story, it will be
pulled into the “Development” column. Thus, the response time can
be represented as the number of days the user story spends in the
“Ready” column.
yy Lead time represents the total time it takes to deliver a work item. In
other words, lead time can be measured from the moment a work
item is placed on the board until the work item is delivered to the
customer for deployment. In this case, lead time can be measured
from the moment a user story is placed in the “Ready” column until
the deliverable related to that user story is delivered to the customer.
Note: the “Done” column does not necessarily indicate the deployment
to the customer. It only suggests the work has been completed.
Delivery to the customer is typically outside the Kanban board
boundaries. Each team/project may implement the Kanban board
differently.
yy Cycle time can be measured from the moment work begins on a work
item until the work is completed. In this example, cycle time can be
derived from the time a user story is pulled into the “Development”
column until it arrives in the “Done” column.
yy Velocity can be defined as the sum of story points completed during
an iteration or the average number of story points completed per
iteration. Since the project management framework used in this
example is Scrumban (a combination of Scrum and Kanban), it is
reasonable to assume that the relative size of each user story will
be measured using story points, and the work will be completed
iteratively. Thus, velocity would be a viable metric to use.
yy Traditional earned value metrics can also be applied to agile projects.
The schedule performance index (SPI) can be calculated as the earned
value (EV) divided by the planned value (PV). When incorporating
scrum practices, the sprint goal will represent a certain number
of story points or planned value, and the number of story points
completed by the team would be the earned value. Dividing the
number of story points completed by the number of story points
planned would be one method of calculating the SPI on an agile
project.

The contents of the Kanban board are irrelevant for matching the items
correctly. The various user stories are provided for illustration purposes only.

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Reference:
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 61-
69
https://www.projectmanagement.com/blog-post/7502/Kanban-is-the-new-Scrum

iA10 Question 10: Answer

Using the internal rate of return as a means of project selection, which of the
following projects would you select?

Project Project IRR Investment Bank loan Overall

Name Team needed? Risk

Gold 10 Members 6.0% 4,500,000 Yes 1.0

Silver 8 Members 5.8% 1,700,000 No 0.9

Platinum 15 Members 5.9% 2,000,000 No 1.3

Diamond 26 Members 3.0% 3,500,000 Yes 1.2

A) Gold
B) Silver
C) Platinum
D) Diamond

Explanation:
Project Gold has the highest internal rate of return (IRR), which is the project
selection criteria requested to be used by the scenario provided. Therefore,
other values can be ignored.

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To purchase the full version, please visit

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 PA RT T H RE E

Computational
Questions

R
ecent lessons learned from those who have taken the exam indicate that
there are fewer formula-based questions. Exam takers report it being
more common to get the type of computational question where they had
to perform a simple calculation, sometimes not even requiring a calculator.

However, PMI regularly updates the exam. New questions are added several
times per year, and no one can predict precisely what you will see on your test.

That is why here, in Part Three, we give you a good number of easy, medium,
hard and very hard computational questions to put your teeth into. Being
able to identify the right formula and calculate the correct answer is a good
indicator that you have mastered the theory. And that is the first step to
passing your exam.

Once you review the answers, you will notice that the explanations for the
computational questions are shorter than those for the interpretational
questions in Part Two. This is because computational questions usually only
have one correct answer. Once you know your formulas and understand
how to apply them in a given situation, there is only one correct answer.
And because 1 + 1 = 2, that means the explanations need to be less elaborate.

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Computational Questions

cQ1 Question 1
A scrum master is leading a project with a total budget of $335,000. Up until
now, out of 335 story points planned for the entire project, the team has
completed 12 user stories worth 74 story points. The team has begun to work
on a user story, which is worth six story points.

What is the current earned value for the project?

A) $12,000
B) $74,000
C) $80,000
D) $335,000

cQ2 Question 2
Your sponsor would like to know how long it takes to build the prototype on
your project. The sponsor tells you that a similar project last year produced a
prototype in 28 days. Your engineer tells you that the design of the prototype
will take anywhere from 25 to 45 days and based on the design changes, the
engineer thinks it will probably be close to about 32 days.

What is the three-point estimate (beta distribution) of the activity duration?

A) 31 days
B) 32 days
C) 33 days
D) 34 days

cQ3 Question 3
The activity “Ship Container” in your network diagram has an early start of
Day 17, a late start of Day 22 and a late finish of Day 37.

What is the activity duration?

A) 15 days
B) 16 days
C) 59 days
D) 14 days

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Question 4
After the last project meeting your sponsor has asked you to give her a
cQ4
new estimate of the cost at the end of the project. This is because during
the meeting it was found that so much has gone wrong until now, that the
numbers are probably off. It is expected that from now on things will progress
normally. You gather all the necessary numbers from your PMIS.

Which formula will you use to create the expected total cost of the project?

A) EAC = BAC / CPI

B) EAC = AC + ETC
C) EAC = AC + BAC – EV
D) ETC = EAC – AC

Question 5
You are managing a project using Kanban as the development framework. The
cQ5
project has consumed $9,000 of the $30,000 budgeted for the planned work.

Based on the Kanban board below and assuming that each user story is of the
same size and value, what can be said of the project’s current status?

To Do Development Unit Testing Integration Final Approval Deployed to

(WIP Limit = 8) (WIP Limit = 4) (WIP Limit = 2) Testing (WIP Limit = 3) Production
(WIP Limit = 3)

User story 21 User story 19 User story 17 User story 14 User story 11 User story 1
User story 22 User story 20 User story 18 User story 15 User story 12 User story 2
User story 23 User story 16 User story 13 User story 3
User story 24 User story 4
User story 25 User story 5
User story 26 User story 6
User story 27 User story 7
User story 28 User story 8
User story 29 User story 9
User story 30 User story 10

A) The project is running under budget

B) The CPI is less than 1.0
C) The project needs to be re-baselined
D) The CV is a negative value

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cQ6 Question 6
Your project is budgeted at £500,000 with a schedule duration of eight months.
You are currently at the end of Month 4 and you know that you are £20,000
ahead of schedule. Your estimated earned value is £350,000.

How much of the project budget is complete?

A) 70%
B) 42%
C) 5%
D) 50%

cQ7 Question 7
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, EAC = 390.

How much is the VAC?

A) VAC = 205
B) VAC = 10
C) VAC = 3
D) VAC = -10

cQ8 Question 8
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, ETC = 300.

How much is the EAC if the variances from the BAC are expected to continue at
the same rate?

A) 388
B) 402
C) 397
D) 400

cQ9 Question 9
Your development team just completed the first sprint. Based on the
burndown chart below, what can be said about the project’s schedule
performance?

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Sprint Burndown
70

60

50 Points Remaining
Story Points

40

30

20

10

0
1 2 3 4 5 6 7 8 9 10
Day

A) The SPI is 0.83 and the team failed to meet the sprint goal
B) The SPI is 1.0 and the team members met their commitment for the
sprint
C) The SPI is 1.17 and the team is ahead of schedule
D) The SPI is 0.83 and the team completed the sprint backlog before the
end of the sprint

Question 10
You are planning a networking event. The idea is to bring 50 top executives
cQ10
from local companies who don’t know each other together into one room and
give them three minutes to talk with each other and then move on to the next
person in the room. At the end of the event each attendee will have spoken to
each of the other attendees. The event begins at 5pm.

When will the event end?

A) About 61 hours later

B) At 7:27pm
C) At 7:30pm
D) About 40 hours later

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cQ11 Question 11
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) 25 weeks
B) 32 weeks
C) 50 weeks
D) 64 weeks

cQ12 Question 12
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3.

What is the Estimate to Complete (ETC) if work will continue at the planned
rate?

A) 298
B) 300
C) 305
D) 295

cQ13 Question 13
The plan for the first iteration was to complete 100 story points. However,
the team was only able to complete 80. Each story point earns $1,000 for
the project. The actual cost of the iteration was $90,000. As the iteration
retrospective approaches, the scrum master requests that the team prepares
all the data required to calculate the various earned value metrics.

At the retrospective, the team determines that the project is __________________

budget.

(On the real PMP exam you may be asked to provide your answer by filling in
the blank with the letter representing the correct answer. But here in the book,
we are asking you to select the answer below.)

A) On
B) Under
C) Over
D) Cannot be determined

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A) 437,000
B) 432,000
C) 494,117
D) 493,470

cQ90 Question 90
Your sponsor would like to know how long it takes to build the prototype on
your project. He tells you that a similar project last year produced a prototype
in 28 days. Your engineer tells you that the design of the prototype will take
anywhere from 25 to 45 days and based on the design changes he thinks it will
probably be close to about 32 days.

What is the simple average of the numbers that you have received?

A) 31 days
B) 32 days
C) 33 days
D) 34 days

Answers to the Computational Questions

cA1 Question 1: Answer

A scrum master is leading a project with a total budget of $335,000. Up until
now, out of 335 story points planned for the entire project, the team has
completed 12 user stories worth 74 story points. The team has begun to work
on a user story, which is worth six story points.

What is the current earned value for the project?

A) $12,000
Incorrect. $12,000 could have resulted from multiplying the number of
the completed user stories (which is 12 according to the scenario) by
$1,000. However, the earned value should be based on the story points
that have been completed rather than the number of user stories that
have been completed.

B) $74,000
Correct. The team has completed 74 story points. The value of each
story point can be obtained from the project budget, which is $335,000,
and the total number of story points, which is 335. Therefore, the value
of each story point is $1,000. Hence, the current earned value of the
project is $74,000.

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C) $80,000
Incorrect. This answer could have been a result of 74 completed
story points and 6 story points of the user story that is currently in
development. In agile projects, partially completed work does not
provide value to the customer. Therefore, no credit is given for partially
completed work. Thus, the 6 story points currently in development
would not be used to determine the earned value.

D) $335,000
Incorrect. $335,000 represents that total project budget. The team will
only realize this amount as the earned value once all user stories have
been developed, completed, and accepted. The question asks about the
‘current’ earned value rather than the total earned value at the end of
the project.

Explanation:
This scenario requires the calculation of earned value in an agile environment.
Earned value is the value of the work completed based on the budgeted value
for that work. In this case, the project budget is $335,000 and the total number
of story points is 335. Thus, the value for each story point can be calculated
as $335,000 / 335 which is $1,000 per story point. The project team has
successfully completed 74 story points. Therefore, the budgeted value of the
completed work is $74,000, which represents the earned value for the project.

Note: with projects carried out using the agile project management approach,
as in the scenario provided, partially completed work does not represent any
value for the customer and, therefore, is not counted towards the calculation
of the earned value. Therefore, the six story points of the user story that is
currently in development should not be taken into account.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 261
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 69

Question 2: Answer
Your sponsor would like to know how long it takes to build the prototype on
cA2
your project. He tells you that a similar project last year produced a prototype
in 28 days. Your engineer tells you that the design of the prototype will take
anywhere from 25 to 45 days and based on the design changes he thinks it will
probably be close to about 32 days.

What is the three-point estimate (Beta distribution) of the activity duration?

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A) 31 days
B) 32 days
C) 33 days
D) 34 days

Explanation:
The formula for the PERT beta three-point estimate or weighted average is
[Pessimistic + (4 * Most Likely) + Optimistic] / 6. The numbers to use are
only those from your engineer. The sponsor’s value of 28 days is irrelevant.
Therefore, you calculate [45 + (4 * 32) + 25] / 6 = 33 days

cA3 Question 3: Answer

The activity “Ship Container” in your network diagram has an early start of Day
17, a late start of day 22 and a late finish of day 37.

What is the activity duration?

A) 15 days
B) 16 days
C) 59 days
D) 14 days

Explanation:
The formula to calculate activity duration is Late Finish – Late Start + 1
Therefore, you calculate 37 – 22 + 1 = 16

cA4 Question 4: Answer

After the last project meeting your sponsor has asked you to give her a
new estimate of the cost at the end of the project. This is because during
the meeting it was found that so much has gone wrong until now, that the
numbers are probably off. It is expected that from now on things will progress
normally. You gather all the necessary numbers from your PMIS.

Which formula will you use to create the expected total cost of the project?

A) EAC = BAC / CPI

B) EAC = AC + ETC
C) EAC = AC + BAC – EV
D) ETC = EAC – AC

Explanation:
The sponsor has asked you to calculate the estimate at completion (EAC).
Based on the information in the scenario we learn that the past variances

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are not typical because things should be normal going forward from here.
Hence, we will use the EAC formula, which is used when it is assumed that past
variances will not happen again. We will calculate the actual cost to date plus
original budget for the remaining work. (BAC – EV) is the original budget for the
remaining work.

Question 5: Answer
You are managing a project using Kanban as the development framework. The
cA5
project has consumed $9,000 of the $30,000 budgeted for the planned work.
Based on the Kanban board below and assuming that each user story is of the
same size and value, what can be said of the project’s current status?

To Do Development Unit Testing Integration Final Approval Deployed to

(WIP Limit = 8) (WIP Limit = 4) (WIP Limit = 2) Testing (WIP Limit = 3) Production
(WIP Limit = 3)

User story 21 User story 19 User story 17 User story 14 User story 11 User story 1
User story 22 User story 20 User story 18 User story 15 User story 12 User story 2
User story 23 User story 16 User story 13 User story 3
User story 24 User story 4
User story 25 User story 5
User story 26 User story 6
User story 27 User story 7
User story 28 User story 8
User story 29 User story 9
User story 30 User story 10

A) The project is running under budget

Correct. To determine project performance related to budget, a cost
performance index (CPI) should be calculated. The CPI is the earned
value (EV) divided by actual cost (AC). The earned value is represented
by the 10 completed user stories with a total value of $10,000. The
actual cost is stated as $9,000. Therefore, the CPI = $10,000 / $9,000
= 1.1. A CPI greater than 1.0 means the project is running under budget.

B) The CPI is less than 1.0

Incorrect. The cost performance index (CPI) can be calculated as earned
value (EV) divided by actual cost (AC). The earned value is represented
by the 10 completed user stories with a total value of $10,000. The
actual cost is stated as $9,000. Therefore, the CPI = $10,000 / $9,000
= 1.1, which is greater, no less than 1.0.

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C) The project needs to be re-baselined

Incorrect. Re-baselining a project is an option that can be considered
when the project budget or schedule is no longer viable. However, there
is not enough information in the scenario to suggest that there is an
issue with the project baselines. Therefore, re-baselining the project is
unwarranted and premature.

D) The CV is a negative value

Incorrect. The cost variance (CV) can be calculated as the earned
value (EV) minus the actual cost (AC). In this case, the earned value
is represented by the 10 completed user stories with a total value of
$10,000, and the actual cost is provided in the scenario as $9,000.
Therefore, the CV = $10,000 – $9,000 = $1,000, which is a positive
value.

Explanation:
In order to answer this question correctly, one must calculate either the cost
performance index (CPI) or the cost variance (CV). The formulas for each are
CPI = EV / AC and CV = EV – AC, where EV is the earned value and AC is the
actual cost. The actual cost of the project to date is stated in the question
as $9,000. Earned value is the value of the work completed based on the
budgeted value for that work. With 30 total user stories and a budget of
$30,000, each user story can be calculated as $30,000 / 30 which is $1,000
per user story (note that the question stipulates that each user story is of the
same size and value). The earned value is represented by the 10 user stories
that have been deployed to production as seen in the far-right column of the
Kanban board. With 10 stories completed at a value of $1,000 each, the earned
value is $10,000. Applying the formulas, the CPI = $10,000 / $9,000, which is
1.1, and the CV = $10,000 – $9,000, which is $1,000. Therefore, the project is
running under budget.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 261-263, 267
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 65-
66, 69

cA6 Question 6: Answer

Your project is budgeted at £500,000 with schedule duration of eight months.
You are currently at the end of Month 4 and you know that you are £20,000
ahead of schedule. Your estimated earned value is £350,000.

How much of the project budget is complete?

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A) 70%
B) 42%
C) 5%
D) 50%

Explanation:
The formula for calculating percent complete of a project budget is
(EV / BAC) * 100%. Therefore, you calculate (350,000 / 500,000) * 100% = 70%.
Note that the 20,000 schedule variance is irrelevant to this calculation.

Question 7: Answer
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, EAC = 390.
cA7
How much is the VAC?

A) VAC = 205
B) VAC = 10
C) VAC = 3
D) VAC = -10

Explanation:
The formula for calculating the variance at completion (VAC) is
VAC = BAC – EAC. Therefore, you calculate 400 – 390 = 10.

Question 8: Answer
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, ETC = 300.
cA8
How much is the EAC if the variances from the BAC are expected to continue at
the same rate?

A) 388
B) 402
C) 397
D) 400

Explanation:
When variances are expected to continue at the current rate, the formula for
calculating the estimate at completion (EAC) is: EAC=BAC / CPI. However, the
question does not provide the CPI.

So, you first have to calculate the CPI:

CPI = EV / AC = 105 / 102 = 1.0294
Now you can calculate the EAC:
EAC = BAC / CPI = 400 / 1.0294 = 388.57

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cA9 Question 9: Answer

Your development team just completed the first sprint. Based on the
burndown chart below, what can be said about the project’s schedule
performance?

Sprint Burndown
70

60

50 Points Remaining
Story Points

40

30

20

10

0
1 2 3 4 5 6 7 8 9 10
Day

A) The SPI is 0.83 and the team failed to meet the sprint goal
Correct. The formula for calculating the schedule performance index
(SPI) is the earned value (EV) divided by the planned value (PV). The team
completed 50 story points (earned value), while the sprint goal was 60
story points (planned value). Thus, the SPI = 50 / 60 = 0.83. According to
the burndown chart, the sprint ended with 10 story points remaining,
which means the team failed to meet the sprint goal.

B) The SPI is 1.0 and the team members met their commitment for the
sprint
Incorrect. The burndown chart indicates that the team completed 50
story points of 60 planned for the sprint. Therefore, the team failed to
meet the sprint goal, making this choice an incorrect answer without the
need to calculate the SPI.

C) The SPI is 1.17 and the team is ahead of schedule

Incorrect. This answer choice results from the incorrect use of the SPI
formula where the earned value (EV) and the planned value (PV) are
transposed. The correct formula for the SPI is EV / PV. The sprint goal

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(PV) was 60 story points, while the team only completed 50 story points
(EV). Thus, the SPI = 50 / 60 = 0.83. Using the incorrect formula would
result in an incorrect SPI of 1.17.

D) The SPI is 0.83 and the team completed the sprint backlog before the
end of the sprint
Incorrect. While the value of the SPI has been correctly calculated in
this answer choice (50 / 60 = 0.83), the burndown chart indicates that
the team still had 10 story points remaining at the end of the sprint.
Therefore, the team failed to complete the planned 60 story points by
the end of the sprint, making this choice an incorrect answer.

Explanation:
Traditional earned value metrics, like the schedule performance index (SPI),
can be applied to agile projects. In this case, the sprint goal was 60 story points
(the first data point on the burndown chart). The sprint ended with 10 story
points remained (the last data point on the burndown chart). Thus, the team
completed 50 of the 60 planned story points and failed to achieve the sprint
goal. The SPI can be calculated as earned value (EV) divided by the planned
value (PV). In the burndown chart provided in the scenario, the earned value is
50 story points, and the planned value is 60 story points. Therefore, the SPI can
be calculated as follows:
SPI = EV / PV = 50 / 60 = 0.83
An SPI value less than 1.0 means the project is behind schedule or, in other
words, the team failed to meet the sprint goal.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 263, 267
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 62, 69

Question 10: Answer

You are planning a networking event. The idea is to bring 50 top executives
cA10
from local companies who don’t know each other together into one room and
give them three minutes to talk with each other and then move on to the next
person in the room. At the end of the event each attendee will have spoken to
each of the other attendees. The event begins at 5pm.
When will the event end?
A) About 61 hours later
B) At 7:27pm
C) At 7:30pm
D) About 40 hours later

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Explanation:
This is an interesting variation of the communications channels formula
designed to test your logical thinking. In fact, the goal of the question is not to
use the communication channels formula at all. If you use the formula you will
get the wrong answer. Why? Because the question isn’t asking you to calculate
the communication channels. Instead the question asks the following:

We have 50 executives. Each of them will speak to the 49 others for 3 minutes.
How long will it take?

The mistake you could make is to calculate the communication channels

(50 * 49 / 2 = 1,225) multiply that by 3 minutes (= 3,675 minutes) making
end-time 61.25 hours later. No executive would stay this long. Yes, you have
correctly calculated the communications channels, but you have to remember
that during the event you always have 25 simultaneous conversations going on
in the room. I speak to you and the other 48 executives speak to each other as
well.

The actual calculation you have to do is much simpler: If I am one of the

50 executives, then I have to speak to 49 others. If you are one of these
executives, then you also have to speak to 49 others. In fact, each of the
attending 50 executives has to speak to 49 others. Therefore, you calculate
49 * 3 minutes = 147 minutes = 2 hours 27 minutes. This gives you an end
time of 7:27pm.

cA11 Question 11: Answer

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) 25 weeks
Incorrect. 25 weeks is the estimate calculated using the velocity
provided by the team for the most likely scenario. However, the
question is asking to find an estimate using a triangular distribution.
Triangular distribution takes the average of the three estimates rather
than just the estimate of the most likely scenario.

B) 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

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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.

C) 50 weeks
Incorrect. 50 weeks is the estimate calculated using the velocity
provided by the team for the worst-case scenario. However, the
question is asking to find an estimate using a triangular distribution.
Triangular distribution takes the average of the three estimates rather
than just the estimate of the worst-case scenario

D) 64 weeks
Incorrect. Although two-week sprints are typical, the question stipulates
that the sprint length will be one week for the project. If two-week
sprints are used in the calculation, then one might have arrived at 64
weeks instead of 32 weeks.

Explanation:
In this scenario, we are asked to provide a duration estimate for the project
using a triangular distribution. The formula for expected duration using a
triangular distribution would be (pessimistic + most likely + Optimistic) / 3.
The pessimistic 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 optimistic
duration 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 or, rounding up
to the next integer number, 32 sprints. Since each sprint is one week in length,
the duration estimate would be 32 weeks.

Reference:
A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition,
Project Management Institute Inc., 2017, Page(s) 201, 244-245
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 61

Question 12: Answer

PV = 100, EV = 105, BAC = 400, AC = 102 and CV = 3?
cA12
What is the Estimate to Complete (ETC) if work will continue at the planned
rate?

A) 298
B) 300
C) 305
D) 295

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Explanation:
The formula for calculating the ETC is: ETC = EAC – AC

First, since estimate at completion does not exist, you must calculate it using
the formula: EAC = AC + (BAC – EV) = 102 + (400 – 105) = 397

Once you have the EAC, you plug the values into the formula: ETC = EAC – AC
giving you ETC = 397 – 102 = 295

cA13 Question 13: Answer

The plan for the first iteration was to complete 100 story points. However,
the team was only able to complete 80. Each story point earns $1,000 for
the project. The actual cost of the iteration was $90,000. As the iteration
retrospective approaches, the scrum master requests that the team prepares
all the data required to calculate the various earned value metrics.

At the retrospective, the team determines that the project is __________________

budget.

(On the real PMP exam you may be asked to provide your answer by filling in
the blank with the letter representing the correct answer. But here in the book,
we are asking you to select the answer below.)

A) On
Incorrect. To understand project performance related to budget, the
CPI should be calculated first, and then its result interpreted. With the
details provided in the scenario: CPI = $80,000 / $90,000 = 0.89. A CPI of
less than 1.0 means that the project is over budget. The project would
have been on budget if its CPI was equal to 1.0.

B) Under
Incorrect. To determine how well the project is doing in terms of budget,
the CPI should be calculated first, and then its result interpreted. The
scenario provides 80 completed story points and the actual cost of
$90,000. This means that: CPI = $80,000 / $90,000 = 0.89. Since the CPI is
less than 1.0, the project is considered over, not under budget.

C) Over
Correct. To answer whether the project is on, under, or over budget,
the CPI should be calculated and its value interpreted. Based on the
information provided in the scenario, the CPI = $80,000 / $90,000 = 0.89,
which is less than 1.0, meaning that the project is over budget, making
this choice the best answer to the question asked.

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D) Cannot be determined
Incorrect. There is sufficient information in the scenario to determine
whether the project is on, under, or over budget. This determination
can be made by calculating the CPI and interpreting its value. With the
details provided in the scenario: CPI = $80,000 / $90,000 = 0.89,
meaning the project is over budget, making this choice an incorrect
answer.

Explanation:
Earned value management (EVM) is typically associated with the predictive
(traditional) project management approaches. However, applying EVM
metrics to projects carried out using agile methods can be done similarly and
serve as an effective tool to measure team performance. For example, the
schedule performance index (SPI) is the number of story points (features)
completed divided by the number of the story points (features) planned. The
cost performance index (CPI) is the earned value (EV, which is the value of the
completed story points or features) divided by the actual costs incurred during
the period under measurement.

The interpretation of the SPI and CPI values in agile projects are made similarly
to the interpretation of those values in traditional projects. For example, an SPI
less than 1.0 means the project (or iteration) is behind schedule, or, in other
words, the team is working at a rate lower than planned. An SPI greater than
1.0 means the project (iteration) is ahead of schedule, i.e., the team is working
at a rate higher than planned. A CPI less than 1.0 means the project (iteration)
is over budget, or, in other words, the team earns less than a dollar compared
to each dollar spent. A CPI greater than 1.0 indicates the project (iteration) is
under budget, i.e., the team earns more than a dollar compared to each dollar
spent.

The question asks to determine how well the project is doing regarding its
adherence to the planned budget. To make this determination, one should
calculate the CPI and interpret its value. Based on the explanation above,
the CPI = $80,000 / $90,000 = 0.89. In other words, the team produced only
89 cents on the dollar compared to the plan (assuming the prediction is still
correct), which means the project is over budget.

Note: the scenario is talking about an iteration while the question is asking
about the project. However, according to the scenario, this was the first
iteration. Therefore, the determination of whether the project is on, under, or
over budget is essentially the same as for the iteration.

Reference:
Agile Practice Guide – First Edition, Project Management Institute Inc., 2017, Page(s) 69

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Two Approaches for Calculating ES, EF, LS and LF

There are two approaches for calculating ES, E, LS and LF:

yy First approach: calculate the network diagram starting on day 0

yy Second approach: calculate the network diagram starting on day 1

In the PMP® Exam Formula Study Guide, we use the second approach, because
when your sponsor tells you that your project starts on the first day of
September, then that is September 1, not September 0. This is also the way
that all modern scheduling tools seem to work. You schedule your project
based on a calendar start date and not “on day 0”.

That is why there is a slight difference between the calculations: you have to
add/subtract 1 from the results in the second approach.

Of course, this often leads to confusion among PMP students who want to
know which formula they should use on the exam.

We have discussed this with several of our PMP trainer colleagues, and they
agree that the Project Management Institute (PMI)® does not “support” a
specific method of calculating a network diagram. (Remember that next to the
two options shown above you could also calculate a network path starting on
a specific calendar date in hours instead of days, making the calculations even
more complex).

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 PART FOUR: Formula Pocket Guide & Reference Articles

Both of these calculations will lead to the correct answer. However, in the
exam, the big difference is that the first approach (starting on day 0) involves
fewer calculations because you don’t have to “+1 or -1” each time. So, in order
to reduce your “risk” of doing a calculation wrong and saving time during the
exam, you might want to initiate the network diagram with day 0. However, in
“real life” starting with day 1 is more appropriate.

Since PMI is aware of these varying methods, you should not see a question
on the exam where only the application of one or the other leads to the correct
answer.

Visit the following link to watch a 45 minute video

on how to perform a forward pass and backward pass:
https://www.project-management-prepcast.com/
network-diagram.

PMP® Formulas and Calculations – The Complete

Guide
When I speak to Project Management Professional (PMP)® students, there’s
often one thing on their mind: How are they going to learn all the PMP
formulas? In particular the ones where you need to calculate a result?

There’s no getting away from it. There are a lot of these formulas and
calculations that you may need to know on the exam.

In this (almost) complete guide we’ll go through the PMP formulas with
examples. Stick with me and by the end you’ll see that learning the PMI
formulas isn’t going to be that bad. Read on and you’ll learn a lot about how
to crack formula-based PMP questions to help pass your PMP exam.

What Formula Question Types are on the PMP Exam?

For the PMP exam, you must know how to correctly answer questions with
formulas about earned value, communications, procurement, probability,
network diagrams, project selection, depreciation, and some mathematical
basics. You also have to know a lot of acronyms.

As we saw earlier in the guide, these are the types of questions you have to
expect:

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yy Apply a formula: These are straightforward questions where you are

given values and are expected to apply the correct formula.
yy Apply two formulas: In these questions you get a set of values and are
asked to calculate a result. At first these look as if you can simply apply
one formula. But as you are applying this first formula you suddenly
realize that one value is missing. This missing value must then first be
calculated via a second formula.
yy Invert a formula: These questions test your ability to take a basic
formula and invert it. For instance instead of asking “4 + 6 = ?” the
question would be “4 + ? = 10” and it is your job to invert the formula
and calculate “10 – 4 = 6”.
yy Result interpretation: In these types of questions you are given a
result and asked, “What does this result mean for the project?”
yy Find the correct formula: For these types of questions you are given
a scenario and various formulas as options. Your task is to select the
formula which best applies to the given scenario.
yy Use a formula based on keywords: There is more than one way
to calculate earned value results. Which formula to use depends on
the progression (or health) of your project. These are scenario-based
questions that contain certain keywords. You must recognize these
keywords and apply the correct formula.

So you can easily see that being “mathematically ready” for your PMP exam
means more than simply knowing your earned value (EV) formulas. Yes, you’ll
definitely see at least one EV question on your exam but there’s a lot more to
the test than simply that.

The Earned Value Formulas

Many PMP aspirants find the concepts behind earned value management
(EVM) hard to understand and the formula even harder, so that’s where we are
going to start.

First, let’s define the term:

Earned Value (EV). The measure of work completed expressed in terms

of the budget authorized for that work. [1]

The thing that complicates it for many people is the question: “What on earth
is value?” For the earned value calculations you just have to remember that
value equals money. The total value of a project (in EVM terms) is equal to the
budget of the project. As you work through the project, you spend the budget
in order to achieve the project’s objectives, which in turn deliver business
value. You can assess how much value you have ‘earned’ (read: ‘achieved’) by
knowing how far through the project you are and how much you have spent.

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The PMP® Exam Formula Study Guide

Seven Tips for Preparing to Answer Formula-Based

Questions
1. Study the correct PMP exam formulas
Over the years, PMI has updated the formulas required for the exam. Make
sure the resources you are using reflect the most recent version of the PMBOK®
Guide and the Agile Practice Guide, so you are studying the correct information.

2. Develop a learning plan

It might feel like you’ll never get to a point where you know and understand
every formula, as well as the variations, concepts, terminology, use, and
value. But with a learning plan, you can take just one small step every day and
practice, practice, practice. You’ll soon find that the calculations start to come
naturally. The best way to get confident with the math is to review the formulas
regularly. Do sample calculations or questions every other day for two weeks.
Take a week off as a break and then repeat for the following fortnight. As you
get closer to your exam date, be sure to answer at least one formula-based
question every day.

3. Create a formula sheet

One part of your learning plan should be to make a formula sheet. This is
simply a list of all the relevant result interpretations as well as formulas. Write
down the interpretations and calculations using pen and paper. Use this page
as part of your regular studies. The important difference between this sheet
and anything you can download from the internet is the fact that you created it
yourself. You learn and retain more that way.

4. Make a cheat sheet

The next study resource you can create is a cheat sheet. This is more than
simply a list of the formulas. A cheat sheet includes details about what the
formula is for and what the outcomes represent (the interpretation). It’s a
more detailed set of notes about the calculations. You can use it for jogging
your memory if you can’t remember what formula to use in a scenario or how
to interpret the results.

5. Put together your own flashcards

The third study resource we recommend is creating flashcards. You can buy
them, but many students prefer to make their own as the process of making
flashcards helps you to remember and recall the information on them. Use
small notecards or cut some cardboard into a convenient size.
yy To study interpretational concepts: Write a result on the front
(i.e., CPI = 0.9) and write the interpretation of the result on the back.

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The PMP® Exam Formula Study Guide

Got Questions?
If you are not sure about how exactly to use a formula then we have a forum
where you can post your question:

https://www.project-management-prepcast.com/forum

Over a dozen community moderators, and hundreds of students just like you
use this forum regularly to discuss PMP related topics. It’s the friendliest and
most helpful PMP community out there.

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 AB O U T T HE AUT HO R

Cornelius Fichtner
PMP, CSM, PMI-OC Fellow
Founder and President

Cornelius is involved in all aspects of the company. As President and Founder,

he defines the strategic direction and works with trainers and coaches to
design and develop new products. You probably know him best from his
podcasts: he records and narrates lessons for our students.

For Cornelius, no day is like the previous one. He answers student questions
in our forums and on email, develops sample exam questions and even edits
webpages if needed. During the development of our new products, websites
and services he always demands and expects that what we create is beyond
reproach. It simply has to be 100% correct but at the same time provide an
‘edutainment’ factor so that students and customers enjoy learning and using
our products.

Cornelius came to project management by accident. He started out as a

software developer but quickly realized that he preferred talking to people to
writing code. He moved into what was then called “organizational planning”
and even became certified in the field. It took him about 3-4 years to make the
switch and completely leave software development all the while leading more
and more complex and important projects.

Cornelius has been working as a Project Manager in his native Switzerland,

in Germany and in the USA since 1990 and received his Project Management
Professional (PMP)® credential in April 2004. He has led projects for a
management consulting company, a national retailer, an internet startup
company, and for one of the oldest financial service providers in the USA.

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The PMP® Exam Formula Study Guide

Cornelius says: “I think the main way I help customers pass their exams is by
letting my enthusiasm for project management shine through in our training
lessons. Students often comment how I’m able to make a dry subject like PM
theory come alive. I’m able to motivate, excite and inspire them on this ‘dry’
subject, and so they keep going on the road to passing their exam. I’m able
to put myself into the shoes of our students and see our products from their
perspective. This enables me to create training material that has the customer
at heart and will help them to not only prepare for and pass their exams but
also helps them become better project managers. I’m the voice and face of
pretty much all our training lessons. However, I definitely have a face for
radio!”

Cornelius holds PMP and CSM credentials and lives in Tucson, Arizona, USA
with his wife, their two cats, and four computers. He is a member of the
American Wine Society Tucson Chapter. He enjoys juggling and says that he is
excellent with three balls, OK with four, but can only keep five balls in the air
for a couple of seconds.

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 R E F E R ENCES
[1] Project Management Institute Inc., 2017, A Guide to the Project Management
Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Glossary

[2] Ibid

[3] Ibid

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 F U RT HER RES O URCES
These additional resources will help you prepare for the exam.

The PM Exam Simulator

Test yourself and access a realistic, online, computer-based exam environment
to answer PMP exam sample questions before heading out for the exam room.
Face the latest exam format with confidence and pass comfortably based on
2,100 sample questions in practice tests and quizzes. This simulator is also
known as ‘PrepCast Simulator’ or simply ‘PrepCast’.
Find out more: https://www.pm-exam-simulator.com/
Try it for free: https://free.pm-exam-simulator.com/

The Project Management PrepCast: PMP Training

The PM PrepCast offers project management training to help you meet
your education requirement and pass your PMI exam. Learn with certified
instructors who bring their on-the-job experience to help you understand the
concepts and prepare for the test. With a range of resources from on-demand
learning to instructor-led training, we can help you achieve your certification
and take the next step in your career.
Find out more: https://www.project-management-prepcast.com/

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 "The PM PrepCast™ Formula Study Guide was more
than just formulas. The Formula Study Guide includes
explanations on how to use the formulas and what
they mean. You still have to memorize the formulas,
but it is easier, once you understand their purpose."
Darcy Swope
PMP

Cornelius Fichtner
Author, course creator and podcast host.
Cornelius Fichtner, PMP is an author,
speaker, course creator and podcast
host. He is probably best known for his
PM Exam Simulator that provides PMP
practice exams to help students
effortlessly pass their PMP Exam. He
says that the main way he helps candidates pass their
exams is by letting his enthusiasm for project
management shine through during training. Students
often comment how he's able to make a dry subject like
PM theory come alive to motivate, excite and inspire
them on this 'dry' subject. He is a past President of the
PMI-OC Chapter and a PMI-OC Fellow and lives in
Tucson, Arizona, USA with his wife, their two cats, and
four computers.