TOP 20 PMP PM

CERTIFICATION
FORMULAS:
SSO Consultants
Content:
Cost Performance Schedule Estimate at
Cost Variance Schedule Variance
Index Performance Index Completion

Estimate to Variance at To-Complete Return on

Payback Period
Complete Completion Performance Index Investment

Estimate at
Internal Rate of Completion (EAC)
Return on Assets Net Present Value Planned Value
Return with Bottom-Up
Estimation

Estimate at
Schedule Estimate to Variance at
Cost Performance Completion (EAC)
Performance Index Complete (ETC) Completion (VAC)
Index (CPI) Forecast with To-Complete
(SPI) Forecast Forecast Forecast
Performance Index

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1. Cost Performance Index:
• Formula: CPI = EV / AC
• Explanation: CPI measures the cost efficiency of
work completed.
• Example: If the Earned Value (EV) is ₹50,000 and the
Actual Cost (AC) is ₹60,000, then CPI = 50,000 /
60,000 = 0.83.
• It helps us assess whether we are under or over
budget and provides insights into the financial
performance of our project.

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2. Schedule Performance Index (SPI):

• Formula: SPI = EV / PV
• Explanation: SPI measures the schedule
efficiency of work completed.
• Example: If the Earned Value (EV) is ₹50,000
and the Planned Value (PV) is ₹60,000, then
SPI = 50,000 / 60,000 = 0.83.
• It helps us evaluate whether we are ahead or
behind schedule and provides insights into
our project's time performance.
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3. Cost Variance (CV):
• Formula: CV = EV - AC
• Explanation: CV measures the variance
between the earned value and the actual
cost.
• Example: If the Earned Value (EV) is ₹50,000
and the Actual Cost (AC) is ₹60,000, then CV
= 50,000 - 60,000 = -₹10,000.
• It helps us assess whether we are under or
over budget and provides insights into the
financial performance of our project.
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4. Schedule Variance (SV):
• Formula: SV = EV - PV
• Explanation: SV measures the variance
between the earned value and the planned
value.
• Example: If the Earned Value (EV) is ₹50,000
and the Planned Value (PV) is ₹60,000, then
SV = 50,000 - 60,000 = -₹10,000.

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5. Estimate at Completion (EAC):
• Formula: EAC = BAC / CPI or EAC = AC + (BAC -
EV) Explanation: EAC predicts the total
project cost based on performance.
• Example: If the Budget at Completion (BAC) is
₹1,00,000 and the Cost Performance Index
(CPI) is 0.83, then EAC = 1,00,000 / 0.83 =
₹1,20,482.
• It gives us insights into the expected final cost
and helps us make informed decisions about
budgeting and resource allocation.
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6. Estimate to Complete (ETC):
• Formula: ETC = EAC - AC
• Explanation: ETC estimates the cost required
to complete the remaining work.
• Example: If the Estimate at Completion (EAC)
is ₹1,20,482 and the Actual Cost (AC) is
₹90,000, then ETC = 1,20,482 - 90,000 =
₹30,482.
• It provides insights into the financial forecast
and helps us make informed decisions about
resource allocation and budget management. 8
7. Variance at Completion (VAC):
• Formula: VAC = BAC - EAC
• Explanation: VAC indicates the variance
between the budgeted cost and the
estimated cost.
• Example: If the Budget at Completion (BAC) is
₹1,00,000 and the Estimate at Completion
(EAC) is ₹1,20,482, then VAC = 1,00,000 -
1,20,482 = -₹20,482.
• It helps us assess the financial performance
and forecast of the project. 9
8. To-Complete Performance Index (TCPI):

• Formula: TCPI = (BAC - EV) / (BAC - AC)

Explanation: TCPI represents the performance
required to achieve the desired project cost.
• Example: If the Budget at Completion (BAC) is
$150,000, the Earned Value (EV) is $100,000, and
the Actual Cost (AC) is $80,000, then the TCPI
would be:
• TCPI = ($150,000 - $100,000) / ($150,000 -
$80,000) = 0.7143
• It helps us assess the efficiency needed for the
remaining work to meet budget expectations. 10
9. Return on Investment (ROI):
• Formula: ROI = (Net Profit / Total
Investment) * 100
• Explanation: ROI measures the profitability of
an investment.
• Example: If the Net Profit is ₹50,000 and the
Total Investment is ₹2,00,000, then ROI =
(50,000 / 2,00,000) * 100 = 25%.
• It helps us assess the financial performance
and efficiency of our project or initiative.
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10. Payback Period:
• Formula: Payback Period = Initial Investment /
Annual Cash Inflows
• Explanation: Payback Period determines the
time required to recover the initial investment.
• Example: If the Initial Investment is ₹1,00,000
and the Annual Cash Inflows are ₹25,000, then
the Payback Period = 1,00,000 / 25,000 = 4
years.
• It provides insights into the financial recovery
and risk associated with the investment. 12
11. Return on Assets (ROA):
• Formula: ROA = Net Income / Total Assets
• Explanation: ROA measures the efficiency of
utilizing assets to generate income.
• Example: If the Net Income is ₹50,000 and
the Total Assets are ₹5,00,000, then ROA =
50,000 / 5,00,000 = 0.1 or 10%.

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12. Net Present Value (NPV):
• Formula: NPV = Sum of (Cash Flows / (1 +
Discount Rate)^n)
• Explanation: NPV calculates the present value
of future cash flows.
• Example: If the Cash Flows are -₹10,000,
₹3,000, ₹4,000, ₹5,000, and the Discount Rate
is 10%, then NPV = (-10,000 / (1 + 0.1)^0) +
(3,000 / (1 + 0.1)^1) + (4,000 / (1 + 0.1)^2) +
(5,000 / (1 + 0.1)^3).
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13. Internal Rate of Return (IRR):
• Formula: Calculate the discount rate that
makes the NPV zero.
• Explanation: IRR determines the discount rate
that equates the present value of cash
inflows with the present value of cash
outflows.
• Example: Solve for the discount rate that
makes the NPV zero using the NPV formula.

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14. Planned Value (PV):

• Formula: PV = BAC * Planned % Complete

• Explanation: PV represents the estimated
value of the work planned to be completed.
• Example: If the Budget at Completion (BAC) is
₹1,00,000 and the Planned % Complete is
40%, then PV = 1,00,000 * 0.4 = ₹40,000.

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15. Estimate at Completion (EAC) with Bottom-Up Estimation:

• Formula: EAC = AC + Bottom-Up Estimate

• Explanation: EAC incorporates a new
estimate for the remaining work based on
detailed bottom-up estimation.
• Example: If the Actual Cost (AC) is ₹90,000
and the Bottom-Up Estimate is ₹30,000, then
EAC = 90,000 + 30,000 = ₹1,20,000.

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16. Cost Performance Index (CPI) Forecast:

• Formula: CPI Forecast = EV / EAC

• Explanation: CPI Forecast predicts the future
cost efficiency of work.
• Example: If the Earned Value (EV) is ₹50,000
and the Estimate at Completion (EAC) is
₹1,20,482, then CPI Forecast = 50,000 /
1,20,482 = 0.4155.

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17. Schedule Performance Index (SPI) Forecast:

• Formula: SPI Forecast = EV / EAC

• Explanation: SPI Forecast predicts the future
schedule efficiency of work.
• Example: If the Earned Value (EV) is ₹50,000
and the Estimate at Completion (EAC) is
₹1,20,482, then SPI Forecast = 50,000 /
1,20,482 = 0.4147.

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18. Estimate to Complete (ETC) Forecast:

• Formula: ETC Forecast = EAC - AC

• Explanation: ETC Forecast estimates the cost
required to complete the remaining work
based on the current performance.
• Example: If the Estimate at Completion (EAC)
is ₹1,20,482 and the Actual Cost (AC) is
₹90,000, then ETC Forecast = 1,20,482 -
90,000 = ₹30,482.

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19. Variance at Completion (VAC) Forecast:

• Formula: VAC Forecast = BAC - EAC

• Explanation: VAC Forecast indicates the
projected variance between the budgeted cost
and the estimated cost based on current
performance.
• Example: If the Budget at Completion (BAC) is
₹1,00,000 and the Estimate at Completion
(EAC) is ₹1,20,482, then VAC Forecast =
1,00,000 - 1,20,482 = -₹20,482.
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20. Estimate at Completion (EAC) with To-Complete Performance
Index (TCPI):

• Formula: EAC = AC + (BAC - EV) / TCPI

• Explanation: EAC considers the required
performance to achieve the desired project cost
based on TCPI.
• Example: If the Actual Cost (AC) is ₹90,000, the
Budget at Completion (BAC) is ₹1,00,000, the
Earned Value (EV) is ₹10,000, and the To-Complete
Performance Index (TCPI) is 0.88, then EAC =
90,000 + (1,00,000 - 10,000) / 0.88 = ₹1,93,182.
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