If you talk to Project Management Professional (PMP)® aspirants, there is one thing that usually disturbs their minds: How to learn each and every PMP® formulae required for the Project Management Institute (PMI)®-PMP examination?
Well, obviously, no one can get away from this. There exist a multitude of such formulas as well as calculations that every examinee must learn in order to prepare for the examination.
Comprehensive Guide to Top PMP® Exam Formulas
Through this comprehensive guide, we are going to understand all the important PMP formulas using examples. Read carefully until the end and you will understand that studying the PMI® formulas is actually not so difficult. Through this blog, you are going to learn several points regarding successfully cracking formula-based questions in the PMP exam that will help you pass with flying colors.
Everyone who is preparing for the PMP® examination must already have learned that one needs to memorize certain frequently required formulas of project management, as well as their practical applications, ways to use, methods of computing the formula, and of course, derivation of the values. As a matter of fact, it is commonly understood that learning all the important PMP formulas is the hardest part of this exam.
Along with these essential formulas, a top PMP online course also acts as a total solution to crack the PMP® certification exam.
Let us look at these individually.
- Schedule Performace Index (SPI) is equivalent to EV/PV
- Cost Performance Index (CPI) = EV / AC
- Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)
- Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)
By taking a look at these four PMP® formulas given above, it is not very difficult to figure out major commonalities among them. The easiest portion is Earned Value (EV). This is extensively used in all of the formulas listed above, meaning you need to draw every other value included in the list above by understanding Earned Value and keeping it in mind at all times.
Earned Value must be known before the other values. Primarily, in case you need to compute cost-related problems, you might think of the actual cost in relation to the Earned Value. In case the problem is regarding a schedule, chalk out the planned value in comparison to the earned value. For matters related to variance, you will be subtracting actual cost along with planned value from the earned value on the basis of the situation.
In the same breath, for questions asking for index values, the actual cost added to the planned value must be divided by the earned value. For a problem of cost performance index, the actual cost has to be divided by the earned value while for a scheduled performance index, you will divide the planned value by Earned Value. Clearly, in all of these situations, Earned Value takes up a pivotal role, and that’s the reason it is the most important.
- EAC = AC + Bottom-up ETC
Because you have to derive the estimate in the end, you will have to concentrate only on the costs incurred, so that you can obtain the value required for processing the problem. Carefully look at the formula given above. This has to be used in case the actual estimate is totally flawed. This formula is used to compute an actual and new estimate with respect to the remaining work.
- EAC = BAC / Cumulative CPI
The examination may ask you questions such as are you a responsible project manager who can work on the given project according to plans, meaning whether you are maintaining positive values for CPI as well as SPI. In such cases, you will use this formula mentioned above. This has to be used only if the actual estimation meets without deviation.
- EAC = AC + (BAC – EV)
During the execution of the project, in case you have invested more money on it than originally expected or planned, you should use this formula for calculating the estimated completion value. Once more, the actual cost must be used, to begin with.
- EAC = AC + [BAC – EV / (Cumulative CPI ´ Cumulative SPI)]
This formula has to be used for calculating actual to-date expenses with the rest of the budget changed on the basis of performance when the given ratio is as planned. You accordingly calculate the EAC to meet the predefined schedule.
Tips For the Exam
To properly decide the PMP formula you need to use at a particular place, you have to make sure that you read the problem carefully and understand the given situation of the project manager when encountering such kinds of problems.
Along with these cost management formulae, stay updated with the Project Management Institute website. You can avail training for the PMP examination that offers hands-on projects for scope, time, and cost management, as well as risk assessment, to guarantee adequate preparation for your PMP® exam.
The ability to master all formulas takes significant time as well as practice. It is not wise to expect overnight miracles. These are a few steps to the ideal approach:
- Study the correct formulas. It is not unusual to find certain websites which include wrong or obsolete PMP exam formulas!
- Thoroughly revise the EVM formulas listed in your PMBOK® Guide at regular intervals according to your study schedule and timetable. Repetition will help you with cluster understanding.
- You have to know every single earned value formula through and through.
- Solve a minimum of one formula-based problem every day until the day of the exam. Given that most aspirants take around 3 months to prepare well, you can easily answer almost 90 questions involving formulas.
Learning and understanding every formula along with its concepts, keywords, variations, values, and acronyms might appear to be overwhelming in the beginning. Taking only one small step towards your goal each day with dedicated and extensive practice will give you the ability to naturally calculate your solutions to all questions.