Project Management isn’t about doing complex mathematics — it’s about interpreting project performance and making decisions using simple, powerful formulas. These 25 formulas are the core of the PMP® exam numericals and real-world project calculations.

This guide covers:
✔ Formula
✔ Meaning
✔ Why it is used (Purpose)
✔ Real project relevance

🔵 1. Earned Value Management (EVM) Formulas

EVM helps you understand cost, schedule, and performance in one unified system.

1. Planned Value (PV)

Formula: PV = Planned % Complete × BAC
Use: To know how much work should have been completed.
Why: Helps compare planned progress vs. actual progress.

2. Earned Value (EV)

Formula: EV = Actual % Complete × BAC
Use: Shows the value of work actually completed.
Why: Helps measure real project achievement.

3. Actual Cost (AC)

Formula: Total cost spent so far
Use: Tracks actual money spent.
Why: Essential to compare cost performance.

4. Cost Variance (CV)

Formula: CV = EV – AC
Use: Measures cost performance.
Why:

• Positive CV = under budget

• Negative CV = over budget

5. Schedule Variance (SV)

Formula: SV = EV – PV
Use: Measures schedule performance.
Why:

• Positive = ahead of schedule

• Negative = behind schedule

6. Cost Performance Index (CPI)

Formula: CPI = EV ÷ AC
Use: Shows cost efficiency.
Why: CPI < 1 means cost overrun.

7. Schedule Performance Index (SPI)

Formula: SPI = EV ÷ PV
Use: Shows schedule efficiency.
Why: SPI < 1 means delays.

8. Budget at Completion (BAC)

Use: Total budget for the project.
Why: Baseline for forecasting & performance tracking.

9. Estimate at Completion (EAC)

Formula 1: EAC = BAC ÷ CPI
Use: Forecast future cost.
Why: Predicts total project cost considering performance issues.

Additional EAC variations:

• EAC = AC + (BAC – EV) (When past variances won’t repeat)

• EAC = AC + (Remaining Work ÷ (CPI × SPI)) (When schedule & cost both impact outcomes)

• EAC = AC + Bottom-up ETC (When re-estimating accurately)

10. Estimate to Complete (ETC)

Formula: ETC = EAC – AC
Use: Remaining budget required.
Why: Helps plan future spending.

11. Variance at Completion (VAC)

Formula: VAC = BAC – EAC
Use: Predicts cost difference at project end.
Why: Positive VAC = under budget forecast.

12. To-Complete Performance Index (TCPI)

Formula: (For BAC)
TCPI = (BAC – EV) ÷ (BAC – AC)
Use: Efficiency needed to meet BAC.
Why: Tells whether the project can “recover.”

🔵 2. Project Selection / Financial Formulas

Used in business cases, feasibility studies, and project approvals.

13. Benefit-Cost Ratio (BCR)

Formula: BCR = Benefits ÷ Costs
Use: Compare cost vs benefits.
Why: Choose projects with highest benefit.

14. Net Present Value (NPV)

Use: Sum of discounted cash flows.
Why: Higher NPV = better long-term value.

15. Internal Rate of Return (IRR)

Use: Rate at which NPV = 0.
Why: Higher IRR = better return on investment.

16. Payback Period

Use: Time required to recover investment.
Why: Helps compare short-term vs long-term benefits.

🔵 3. Communication & Stakeholder Formulas

17. Communication Channels

Formula: Channels = n (n – 1) ÷ 2
Use: Shows number of possible communication paths.
Why: More people = more complexity = need better communication planning.

🔵 4. Risk Management Formulas

18. Expected Monetary Value (EMV)

Formula: EMV = Probability × Impact
Use: Quantify risk in dollars.
Why: Helps in decision trees & contingency reserves.

19. Risk Score (Qualitative)

Formula: Risk Score = Probability × Severity
Use: Prioritize risks.
Why: High score = needs proactive management.

🔵 5. Critical Path & Estimation Formulas

20. PERT Estimate

Formula: (O + 4M + P) ÷ 6
Use: Weighted estimate based on uncertainty.
Why: Gives a more realistic time duration.

21. Standard Deviation (SD)

Formula: (P – O) ÷ 6
Use: Measures uncertainty in activity duration.
Why: Helps calculate confidence levels.

22. Activity Variance

Formula: SD²
Use: Helps determine project schedule risk.
Why: High variance = higher risk.

🔵 6. Resource & Productivity Metrics

23. Resource Utilization

Formula: Actual Hours Worked ÷ Available Hours
Use: Tracks staff efficiency.
Why: Prevents overloading or under-utilizing teams.

24. Productivity

Formula: Output ÷ Input
Use: Measures efficiency of work.
Why: Helps improve performance & reduce waste.

🔵 7. Cost of Quality (COQ)

25. Cost of Quality

Formula: Prevention + Appraisal + Failure Costs
Use: Understand the cost of delivering quality.
Why: Shows why investing in quality early saves money later.

📚 Why PMP® Formulas Are Important

Understanding formulas helps you:
✔ Make accurate cost & schedule decisions
✔ Identify variances early
✔ Improve forecasting accuracy
✔ Communicate performance with data
✔ Prioritize risks mathematically
✔ Pass PMP exam numerical questions quickly

Formulas simplify complex project realities into clear, actionable insights.

📌 Final Thoughts

These 25 formulas represent over 90% of the mathematical concepts used in the PMP exam and real-world project performance analysis. By mastering them, you enhance your ability to manage cost, schedule, risk, communication, and overall project success.

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