[Compiled by Anil Kumar Tanguturi] 1 | P a g e

PMP Formulae & Tips Cheat Sheet

Integration Management Develop Project Charter process Project Selection Methods (>> Benefit Measurement Methods >> Economic Models 1-7)
S# What? Formula Additional Notes
1 Present Value (PV)
( )
n
R 1
FV
PV
+
=

The result amount of money to invest today (PV) for n
years at r % interest in order to end up with the target sum
(FV Future Value). bigger the better.
2 Payback Period Net Investment / Average Annual cash flow
Length of time it takes the company to get back the initial
cost of producing a product/service. shorter the better
3 Net Present Value (NPV) The PV of the total benefits (income or revenue) less the costs.
NPV is a much more precise capital budgeting method than
payback period. bigger the better
4 Internal Rate of Return (IRR)
The interest rate at which the present value of the cash flows
equals the initial investment. Tip: Interest from Bank A/c
IRR is a more precise (and more conservative) capital
budgeting method than NPV. bigger the better
5 Benefit Cost Ratio BCR = (Revenue / Cost) Cost Benefit Analysis. bigger the better
6 Return on Invested Capital Net Income (after tax) from proj / Total Capital invested in the proj bigger the better
7
Economic Value Add Benefit
Measurement
EVA = Net Operating Profit After Tax Cost of Capital
(Investment Capital X % Cost of Capital)
bigger is better
Cost of Capital = (Revenue - Op. Exp - Taxes)
8 Opportunity Cost value of the project not selected smaller the better
9 Working Capital Current Assets Current Liabilities
10 Return on Sales (ROS) NIBT / Total Sales (OR) NIAT / Total Sales NIBT - Net Income Before Taxes
NIAT - Net Income After Taxes 11 Return on Assets (ROA) NIBT / Total Assets (OR) NIAT / Total Assets
12 Return on Investment (ROI) NIBT / Total Investment (OR) NIAT / Total Investment bigger the better
13 Discounted Cash Flow Cash Flow X Discount Factor

Time Management
Precedence Diagramming
Method (PDM / AON)

Sequence Activities
Process
Finish-to-Start(FS): An activity must finish before the successor can start. (dig hole; plant tree)(most common)
Start-to-Start (SS): An activity must start before the successor can start.
Finish-to-Finish (FF): An activity must finish before the successor can finish.
Start-to-Finish (SF): An activity must start before the successor can finish. (rarely used)

Lead: A lead can be added to start an activity before completion of the predecessor (Ex: Start writing Training Material before completion
of Testing)
Lag: is inserted waiting time b/w activities (Ex: needing to wait 3 days after pouring concrete before constructing the frame of the house)

S# What? Formula Additional Notes
1 Triangular Distribution / 3P Estimate (P + M + O) / 3 Estimate Activity Durations Process
Duration/Cost : * P Pessimistic; M - Most Likely (Realistic); O Optimistic
* PERT is probabilistic, using statistical estimates of durations (left)
* Estimate range for an activity = PERT duration +/- standard deviation
* Std deviation tells the amt of uncertainty/risk involved in the estimate for the activity
* There is 68% probability that the work will finish within +/- one std deviation (1 )
* There is 95% probability that the work will finish within +/- two std deviations (2 )
* There is 99% probability that the work will finish within +/- three std deviations (3 )
2
Weighted 3P Estimate / PERT (Program
Evaluation & Review Technique) / Expected
Value (modified BETA distribution)
6
O M 4 P + +

3
4
Standard Deviation ()
Variance (v)
=
6
O P
v =
2
6
O P
(

5
Total Float / Slack (There is a start formula
& a finish formula; & both begin with Late)
(LS ES) or (LF - EF)
Develop Schedule Process Critical Path Method
(CPM is deterministic , using specific durations)

ES Early Start; EF Early Finish;
LS Late Start; LF Late Finish;
TF Total Float

6 Activity Duration (EF ES) or (LF LS)
7 Forward Pass: (Add 1 day to Early Start) EF = (ES + Duration - 1)
8 Backward Pass: (Minus 1 day to Late Finish) LS = (LF - Duration + 1)

Procurement Management
S# What? Formula Additional Notes
1
Contract Types
Risk Levels

CPPC CPFF CPAF CPIF T&M FPEPA FPAF FPIF FFP

Cost Reimbursable (CR) (Cost Plus Award Fee/CPAF, Cost Plus Incentive
Fee/CPIF, Cost Plus Fixed Fee/CPFF)
Time & Material (T&M)
Fixed Price (FP) (Fixed Price Economic Price Adjustment/FP-EPA, Fixed
Price Incentive Fee/FPIF, Firm Fixed Price/FFP)
2 Sharing Ratio Y% / Z% (eg. 80%/20%)
How cost savings or overrun will be shared.
Y% buyers share ratio & Z% sellers share ratio
3 Target Price (TP) TP = TC + TF
TC Target Cost
TF Target Fee
AC Actual Cost
AF Actual Fee (Profit)
4 Final Price (FP) FP = AC + AF
5 Actual Fee (AF) Actual Fee (AF) = TF + Z% * (TC-AC)
6
Contract related
formulas
Savings = TC AC
Bonus = Savings x Percentage (Sellers Share Ratio)
Contract Cost = Bonus + Fees
Total Cost = AC + Contract Cost = AC + Fees + Bonus
7
Point of Total
Assumption (PTA)
TC
% Y
TP CP
TPA +
|
|
.
|

\
|
=

PTA only relates to FPIF contracts.
((Ceiling Price - Target Price)/buyer's Share Ratio) + Target Cost
8 Source Selection (Weightage X Price) + (Weightage X Quality) Conduct Procurements Selection of Vendor using 'Weighing System

[Compiled by Anil Kumar Tanguturi] 2 | P a g e

Cost Management Earned Value Measurement (EVM) Control Costs Process
Term Expansion Interpretation
PV
(BCWS)
Planned Value (Budgeted
Cost of Work Scheduled)
As of today, What is the estimated value of the work planned to be done?
How much work (value) was expected to be finished at this point of time?
EV
(BCWP)
Earned Value (Budgeted
Cost of Work Performed)
As of today, What is the estimated value of the work actually accomplished?
How much work (value) has actually been completed at this point of time?
AC
(ACWP)
Actual Cost (Actual Cost of
Work Performed)
As of today, What is the actual cost incurred for the work accomplished?
BAC Budget At Completion How much did we BUDGET for the TOTAL project effort?
CV Cost Variance How much more/less has the completed work cost compared to what was planned?
SV Schedule Variance How much more/less work has been accomplished compared to what was planned?
CPI Cost Performance Index How much is the work being completed costing compared to what was planned? Know whether over or under budget?
SPI Schedule Performance Index How does the work being completed compare to what was planned in the schedule? Know if ahead or behind schedule?
EAC Estimate At Completion What do we currently expect the TOTAL project (at completion) to cost (a forecast)?
ETC Estimate To Complete From now on, how much MORE money will it take to finish the project (a forecast)?
VAC Variance At Completion As of today, How much over or under budget (will the total project cost be?) do we expect to be at the end of the project?
TCPI
To Complete Performance
Index (Based on BAC & EAC)
What level of performance must future project work meet in order to meet the budget (BAC)? What level of performance
must future project meet in order to meet the projects cost based on past performance (EAC)?


Alphabetical Order (A,E,P) (C,S) ----->
Data AC op EV op PV
Variances CV = <<---(-)---- ----(-)--->> =SV
Indices CPI= <<---(/)---- ----(/)--->> =SPI

Tips: Most formulas start with EV -ve is bad; +ve is good
If Variance: EV Something If Cost related use AC
If Index: EV / Something If Schedule related use PV

Notes: CV & SV are known as progress formulae.
CPI & SPI are known as efficiency indicators.

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FRs occur in incremental amounts
(steps) that are not continuous

S# What? Formula Additional Notes
1 PV (P%C) * BAC P%C Planned % Complete. PV is also called BCWS.
2 EV (A%C) * BAC A%C A ctual % Complete. EV is also called BCWP.
3 CV EV AC NEGATIVE is over budget, POSITIVE is under budget. @ End of project, CV = BAC AC
4 SV EV PV NEGATIVE is behind schedule, POSITIVE is ahead of schedule
5 CPI EV / AC
Efficiency in usage of Funds. We are getting $ __ worth of work out of every $1 spent.
CPI > 1, Efficiency in utilizing the resources allocated to the project is good
< 1, Efficiency in utilizing the resources allocated to the project is bad
6 SPI EV / PV
We are (only) progressing at __ % of the rate originally planned.
SPI > 1 Mean more work was completed than was planned; < 1 Mean less work was completed than was planned
7 EAC
(BAC / CPI) Used if no variances from BAC (or) proj will continue at the same rate of spending. = same as AC + ((BAC EV) / CPI)
AC + Bottom-up ETC Used when original estimate was fundamentally flawed. AC + a new estimate for remaining work
AC + (BAC EV) Used when current variances are thought to be atypical of future. AC + (remaining value of work @ budgeted rate)
SPI * CPI
EV) (BAC
AC

+

Used when current variances are thought to be typical of future. AC + remaining budget modified by performance
8 ETC EAC AC A more accurate way is to re-estimate cost of the remaining work from the bottom-up.
9 VAC BAC EAC How much over or under budget will we be at the end of the project?
10
TCPIBAC (BAC EV) / (BAC AC) Values for the TCPI index of less than 1.0 is good because it indicates the efficiency to complete is less than planned.
How efficient must the project team be to complete the remaining work with the remaining money? TCPIEAC (BAC EV) / (EAC AC)
11
Estimate
Ranges
Estimate Costs Process
(Oh Boy Dave
Its Pepperoni Pizza)
Order of Magnitude (Oh) Initiating (Its): -25% to +75% or (ROM: -/+ 50%; PMBOK 7.1 P168)
Budget(ary) (Boy) Planning (Pepperoni): -10% to +25%
Definitive (Dave) Planning (Pizza): -5% to +10% (-10% to +15% PMBOK)
12
Cost
Aggregation
Determine Budget
Process
Contingency Reserves: to address cost impacts of remaining risks after risk response planning (known risks).
Project Estimates + Contingency Reserves = Cost Baseline
Management Reserves: extra funds set aside to cover unforeseen risks (unknown risks).
Cost Baseline + Management Reserves = Cost Budget / Project Funding Requirement
13
Rules Based on
Numbers
80 Hour Rule Max size of work packages
80/20 Rule Paretos Law 80% of problems are due to 20% of causes
0/50/100 Work Package completion. No credit until 50% complete. No additional credit until 100% complete

Quality Management
S# What? Formula
1 Standard Deviation / Sigma 1 = 68.27%; 2 = 95.45%; 3 = 99.73%; ---------- 6 = 99.99985%

Communication Management
S# What? Formula
1
Number of Communication Channels (N - # of project
members including Project Manager)
( ) | |
2
1 N N

Risk Management
S# What? Formula
1
Expected Monetary Value / EMV (or)
Contingency Reserve (

P*I of known Risks)

Probability * Impact


[Compiled by Anil Kumar Tanguturi] 3 | P a g e

Process Groups & Knowledge Areas Mapping
PGs >>
KAs
Initiating Planning Executing Monitoring & Controlling Closing
Integration Management (6)
Develop Project
Charter
Develop Project Management Plan Direct & Manage Project Execution
Monitor & Control Project Work
Perform Integrated Change Control
Close Project
or Phase
(5) Scope Management
Collect Requirements
Define Scope
Create WBS

Verify Scope
Control Scope

Ti (6) me Management
Define Activities
Sequence Activities
Estimate Activity Resources
Estimate Activity Durations
Develop Schedule
Control Schedule
(3) Cost Management
Estimate Costs
Determine Budget
Control Costs
(3) Quality Management Plan Quality Perform Quality Assurance Perform Quality Control
(4) Human Resource
Management

Develop Human Resource Plan
Acquire team
Develop Team
Manage Team

Communication Management
(5)
Identify
Stakeholders
Plan Communications
Distribute Information
Manage Stakeholder Expectations
Report Performance
Ri (6) sk Management
Plan Risk Management
Identify Risks
Perform Qualitative Risk Analysis
Perform Quantitative Risk Analysis
Plan Risk Responses
Monitor & Control Risks
(4) Procurement Management Plan Procurements Conduct Procurements Administer Procurements
Close
Procurements

Processes without major outputs:
Perform Quality Assurance, Manage Project Team, Distribute Information, Manage Stakeholder Expectations
Reserve Analysis is a T&T for (where there is a Risk component):
Estimate Activity Durations, Estimate Costs, Determine Budget, Monitor & Control Risks
Audits are a T&T for:
Perform Quality Assurance, Monitor & Control Risks, Administer Procurements, Close Procurements
Issue Log is
I/p & O/p for Manage Stakeholder Expectations; and T&T for Manage Project Team

Monitor & Control PG ( primary IO interactions) & Deliverables Flow


WPI includes status of deliverables,
schedule progress, costs incurred,
achieved value of performance
measures, implementation status of
change requests, status of risks, etc.
WPI is gathered as project is being
executed. WPI is an input to most of
M&C processes.

WPI is used to generate WPMs such
as SV, CV, SPI, CPI and budget
forecasts such as ETC, EAC.

Together WPI, WPMs and budget
forecasts are used to generate
Performance Reports.

As you can see, WPI includes nitty-
gritty details (raw data) of the project.
Stakeholders like customer, sponsor,
top management does not need this
information at this detail. They need
big picture at various levels.
Performance Reports give
stakeholders the information on how
project is progressing in the form of
well-organized and summarized
reports and at the level they require.
The focus of Performance Reports is
Communication.


[Compiled by Anil Kumar Tanguturi] 4 | P a g e

Summary Definitions of Processes in each of 9 KAs
.
INTEGRATION (6)
Develop Project Charter: The process of developing a document that formally
authorizes a project or phase and documenting initial requirements that satisfy
the stakeholder's needs and expectations.
Develop Project Management Plan: The process of documenting the actions
necessary to define, prepare, integrate and coordinate all subsidiary plans.
The PM plan becomes the primary source of information for how the project
will be planned, executed, monitored & controlled, and closed.
Direct and Manage Project Execution: The process of performing the work
defined in the project management plan to achieve the project's objectives.
Monitor and Control Project Work: The process of tracking, reviewing, and
regulating the progress to meet the performance objectives defined in the
project management plan. Monitoring includes status reporting, progress
measurement, & forecasting. Performance reports provide information on the
projs performance with regard to scope, schedule, cost, resources, quality &
risk, which can be used as inputs to other processes.
Perform Integrated Change Control: The process of reviewing all change
requests, approving changes, and managing changes to 1. the deliverables, 2.
organizational process assets, 3. project documents, & 4. the project
management plan.
Close Project or Phase: The process of finalizing all activities across all of the
project mgmt PGs to formally complete the project or phase (by getting the
final acceptance / sign-off from the customer).
.
(5) SCOPE
Collect Requirements: The process of defining and documenting stakeholders'
needs to meet the project objectives.
Define Scope: The process of developing a detailed description of the Project
& Product. It turns all requirements into a more detailed project scope stmt.
Create WBS: The process of subdividing project deliverables and project work
into smaller, more manageable components.
Verify Scope: The process of formalizing acceptance (by customer) of
completed project deliverables.
Control Scope: The process of monitoring the status of the project and product
scope and managing changes to the scope baseline.
.
TI (6) ME
Define Activities: The process of identifying the specific actions to be
performed to produce the project deliverables. WPs >> Activities (work
necessary to complete WPs).
Sequence Activities: The process of identifying and documenting relationships
among the project activities.
Estimating Activity Resource: The process of estimating the type & quantities
of material, people, equipment, or supplies required to perform each activity.
Estimating Activity Duration: Process of approximating the number of work
periods needed to complete individual activities with estimated resources.
Develop Schedule: The process of analyzing activity sequences, durations,
resource requirements & schedule constraints to create project schedule. It
determines the planned start & finish dates for project activities & milestones.
Control Schedule: The process of monitoring the status of the project to
update project progress and managing changes to the schedule baseline.
.
(3) COST
Estimate Costs: The process of developing an approximation of the monetary
resources needed to complete project activities.
Determine Budget (Cost Performance Baseline): The process of aggregating
the estimated costs of individual activities or work packages to establish an
authorized cost baseline.
Control Costs: The process of monitoring the status of the project to update
the project budget and managing changes to the cost baseline.
.
(3) QUALITY
Plan Quality: The process of identifying quality requirements and/or standards
for the project and product, and documenting how the project will
demonstrate compliance.
Perform Quality Assurance: The process of auditing the quality requirements
& the results from quality control measurements to ensure appropriate quality
standards and operational definitions are used.
Perform Quality Control: The process of monitoring and recording results of
executing the quality activities to assess performance and recommend
necessary changes.
.
.
(4) HUMAN RESOURCE
Develop Human Resource Plan: The process of identifying and documenting
Project Roles, Responsibilities & Required Skills; Reporting Relationships; and
creating a Staff Management Plan.
Acquire Project Team: The process of confirming human resource availability
and obtaining the team necessary to complete project assignments.
Develop Project Team: The process of improving the competencies, team
interaction, and overall team environment to enhance project performance.
"Project Management Skills, Leadership Styles, Power, Team Building and
Motivation of people are all concepts that fall into this process."
Manage Project Team: The process of tracking team member performance,
providing feedback, resolving issues, and managing changes to optimize the
project performance.
.
COMMUNICATIONS (5)
Identify Stakeholders: The process of identifying all people or organizations
impacted by the project and document their interests, involvement and impact
on project success.
Plan Communications: The process of determining the project stakeholder
information needs & defining a communication approach.
Distribute Information: It is the process of making relevant information
available to project stakeholders as planned. Execution of Communication
Management Plan, as well as responding to unexpected requests for
information. Bulk of Project Communication takes place here.
Manage Stakeholder Expectations: It is the process of communicating and
working with stakeholders to meet their needs and addressing issues as they
occur.
Report Performance: It is the process of reporting to the stakeholders, how
the project is progressing against the plan. It involves collecting and
disseminating Project Information, Communicating Progress, Utilization of
Resources and Forecasting Future Progress and Status.
.
RI (6) SK
Plan Risk Management: The process of DEFINING HOW to conduct risk
management activities for a project. In Plan Risk Management, the remaining
FIVE risk management processes are PLANNED (creating a road map for them)
and HOW they will be conducted is documented.
Identify Risks: The process of determining WHICH risks may affect the project
and documenting their characteristics.
Perform Qualitative Risk Analysis: The process of PRIORITIZING risks for
further analysis or action by assessing and combining their probability of
occurance and impact. It is a SUBJECTIVE ANALYSIS.
Perform Quantitative Risk Analysis: The process of NUMERICALLY ANALYZING
the effect of identified risks on overall project objectives. Overall project risk
exposure; and initial COST & SCHEDULE reserves are determined.
Plan Risk Responses: Process of DEVELOPING OPTIONS & ACTIONS to enhance
opportunities & to reduce threats to proj objectives.
Monitor and Control Risks: The process of IMPLEMENTING risk response
plans, TRACKING identified risks, MONITORING residual risks, IDENTIFYING
new risks, and EVALUATING risk process effectiveness throughout the project.
.
(4) PROCUREMENT
Plan Procurements: The process of documenting project purchasing (make-or-
buy) decisions, specifying the approach, and identifying potential sellers.
(How, What, How Much and When).
Conduct Procurements: The process of distributing procurement docs,
obtaining seller responses, evaluating bids & selecting seller/s, and awarding
a contract to the selected seller/s.
Administer Procurements: The process of managing procurement
relationships, monitoring contract performance, and making changes and
corrections as needed.
Close Procurements: The process of completing each project procurement.
.

[Compiled by Anil Kumar Tanguturi] 5 | P a g e

Acknowledgements
1. PMBOK Guide 4
th
Edition from PMI
2. PMP Exam Prep by Rita Mulcahy
3. PMP Exam Study Guide by Kim Heldman
4. PMP Exam In Depth by Paul Sanghera
5. Head First PMP
6. http://www.deepfriedbrainproject.com