Formula Sheet
I stuck the formula sheet here, in case you want to start memorizing it right now. Most of the formulas are in the PMBOK Guide, but some are not.
If you understand these equations now, great. If not, don’t worry. We’ll return to these equations later in the book.
| Present Value | Where, PV = Present Value FV = Future Value i = Interest Rate t = Time The Present Value tells us how much a future sum of money is worth today (adjusted for inflation). If your project will earn $100 ten years from now, how much is that $100 worth today? |
| PERT | Where, PERT = Program Evaluation & Review Technique P = Pessimistic Scenario ML = Most Likely Scenario O = Optimistic Scenario PERT is an estimate of how long it will take to accomplish something. |
| One Standard Deviation | Where, SD = Standard Deviation P = Pessimistic Estimate O = Optimistic Estimate That is, the pessimistic and optimistic predictions are separated by 3 Standard Deviations |
| Variance | |
| Cost Variance (CV) | Where, CV = Cost Variance EV = Earned Value (how much something is worth) AC = Actual Cost (how much it actually cost to produce) Cost Variance tells us if we are overbudget or underbudget, in a dollar amount. If we spent $1000 (Actual Cost) to make a product worth $100 (Earned Value), we are overbudget. |
| Cost Performance Index (CPI) | Where CPI = Cost Performance Index CPI tells us if we are overbudget or underbudget, as a percentage. |
| Schedule Variance (SV) | Where SV = Schedule Variance EV = Earned Value (Amount of planned value completed at a specific time) PV = Planned Value (Amount of value that should have been completed) Schedule Variance uses dollar amounts to tell us if we are ahead of schedule or behind schedule. It tells us how many dollars we are behind schedule (not how much time). If we completed $1000 worth of work (Earned Value), but we were expected to complete $2000 worth of work (Planned Value), then we are $1000 behind schedule. |
| Schedule Performance Index (SPI) | Where SPI = Schedule Performance Index SPI tells us, in percentage terms, how far ahead or behind schedule we are. |
| Estimate at Completion (EAC) | Where EAC = Estimate at Completion (how much the project will cost at the end, assuming CPI stays the same) BAC = Budget at Completion CPI = Cost Performance Index EAC tells us what the project will cost when it is complete (based on the current project performance data). |
| Variance at Completion (VAC) | Where VAC = Variance at Completion (estimate of the change in budget) VAC tells us how much more or less the project will cost when completed. |
| TCPI with BAC | TCPI takes existing project performance data, and tells us tells us how much better (or worse) the project must perform, so that it will be completed within our budget/schedule goals. TCPI uses BAC (assumes that the budget won’t change). |
| TCPI with EAC | TCPI takes existing project performance data, and tells us tells us how much better (or worse) the project must perform, so that it will be completed within our budget/schedule goals. TCPI can also use EAC (assumes that we will be overbudget or underbudget). |
| Number of Communication Channels | Where n = number of people How many communication channels we will need is based on the number of people we need to communicate with. |
| Point of Total Assumptions (PTA) | The PTA tells us the point in a Fixed Price Plus Incentive contract where the seller is responsible for the cost overrun. |
| EAC where project continues at original planned rate | If our project is over/under budget, we can calculate what the final cost of the project will be. This equation assumes that the remaining portion of the project will be on budget. EAC can be calculated at any point in the project. At the start of the project, EAC = BAC. At the end of the project, EAC = AC. |
| EAC where CPI and SPI affect remainder of project | If our project is over/under budget, we can calculate what the final cost of the project will be. This equation assumes that the remaining portion of the project will not be on budget or on schedule. Instead, we use CPI and SPI to calculate the rate at which the project will be completed. EAC can be calculated at any point in the project. At the start of the project, EAC = BAC. At the end of the project, EAC = AC. |