Top PMP Formulas to Pass the PMP Certification Exam

PMP certification is a globally recognized certification offered by a US-based, non-profit professional organization called the Project Management Institute (PMI). The accreditation is indispensable for any project management professional that wants to advance their career.

The Project Management Body of Knowledge (PMBOK) compiles and publishes ‘A Guide to the Project Management Body of Knowledge’ that is overseen by the PMI. PMBOK sets the standard terminology and guidelines for project management and the guide compiled by them contains all the content that the exam is based on.

The PMP exam is a 4-hour, closed-book exam (no reference material is allowed) comprised of 200 multiple-choice questions that cover five performance domains that are weighted as follows:

• Initiating (13%)
• Planning (24%)
• Executing (31%)
• Monitoring and controlling (25%)
• Closing (7%)

The PMP exam usually includes between ten to twenty, formula-based questions which should be quite easy to pass if you fully comprehend PMP math-based concepts.

In this post, we shall touch on the top twenty formulas that aspirants should be fully conversant with. Before we can get to them, here is a quick summary of the reasons why it is crucial to passing your PMP certification.

Importance of PMP Certification

The PMP exam costs $405 for PMI members and $555 for non-PMI members. You could avoid further costs by downloading a free copy of PMBOK and studying on your own.

If you do not pass the exam and want to re-sit it, there is an additional fee of $275 (members) or $375 (non-members). That said, you are probably better off taking a PMP course because it will thoroughly prepare you to pass the exam.

Although preparing for the PMP exam is time-consuming and can be expensive, it is well worth the cost for the following reasons:

• Increased career opportunities because PMP is globally recognized and respected.
• Increased earning potential since you stand to make more than non-PMP-certified professionals.
• Stand out from the competition. Passing the PMP exam shows employers that you are not only a dedicated management professional but that you are ready to work harder than your counterparts. Such dedication and work ethic inspire confidence in employers and other stakeholders, which means that their assignments are likely to be successful.
• Skill enhancement. Passing the exam requires understanding and application of project management principles. Additionally, the certification needs to be maintained by earning professional development units (PDUs), which demonstrates that the candidate is up to date with project management developments.
• Gain a network of project management peers. Becoming a member of PMI affords you lots of opportunities to network with other project managers and tap lots of resources provided by the PMI.

Top 20 Formulas Needed for PMP Exam

Whether you decide to take a project management course, or follow your self-study program, ensure that you are fully knowledgeable about these top twenty formulas needed for the PMP exam. The formulas fall under two criteria, which include:

• Critical Path Method (CPM) formulas
• Earned Value Management (EVM) formulas

CPM-related PMP formulas:

1. PERT Triangular Distribution/ Estimated Activity Duration (EAD)

• Used to calculate duration, cost, and resource estimates.
• To calculate EAD you must first determine estimates of the activity Pessimistic (P), Optimistic (O), and Most Likely (M)
• PERT Triangular Distribution (EAD) = (?+?+?)/3

2. PERT Beta Distribution

• Like EAD you must first determine (P), (O), and (M)
• The PERT Beta Distribution is then used to estimate activity duration
• PERT Beta Distribution=(?+4?+?)/6

3. Standard Deviation

• The SD of an Activity measures the variation from the average
• A low (SD) indicates a data point that is close to the average while a large (SD) indicates data points that are spread out over a large range.
• (SD)=(?−?)/6

4. Variance

• The variance of activity is used to calculate risk level which then prompts the next best course of action
• It is calculated by squaring the standard deviation
• Variance=(SD)^2

5. Range of Activity Duration

• The Range of Activity Duration is the final step in applying SD and activity variance calculations
• The start of a range is calculated by subtracting Standard Deviation from Estimated Activity
• The end of a range is calculated by adding Standard Deviation to Estimated Activity
• Range of Activity Duration=EAD±??

6. Float or Slack

• Float or slack are used to calculate the time an activity can be delayed without causing problems to subsequent tasks (free float) or the project end date (total float).
• Total Float = Late Start (LS) – Early Start (ES) or
• Total Float = Late Finish (LF) – Early Finish (EF)

EVM PMP Formulas:

7. Budget at Completion (BAC)

• BAC defines the total amount of money that will be used during a project and includes contingency reserves.
• BAC=Total Budget = Total activity cost estimates + Total contingency cost reserves

8. Earned Value

• Used to monitor whether the project plan, actual work and completed work are working well (or not) and by how much
• Used to calculate what is actually completed
• Earned Value = % complete * Budget at Completion (BAC)

9. Planned Value (PV)/ Budgeted Cost of Work Scheduled (BCWS)

• Used to monitor the planned state of completion on a project
• Used to calculate what you expect to complete
• PV = (Planned % Complete) * (BAC)

10. Cost Variance (CV)

• Cost Variance is the budget surplus/deficit at a given point in time
• CV= Earned Value (EV)− Actual Cost (AC)

11. Schedule Variance (SV)

• Schedule Variance is a measure of progress or performance at a given point in time
• (SV)= Earned Value (EV)− Planned Value (PV)

12. Cost Performance Index (CPI)

• CPI measures the cost efficiency of budgeted resources as a ratio of Earned Value (EV) to Actual Cost (AC)
• CPI=??/??

13. Schedule Performance Index (SPI)

• SPI is used to measure how efficiently the project team is completing tasks and is also used to control schedules
• Its calculation is a ratio of Earned Value (EV) and Planned Value (PV)
• SPI=??/??

14. Estimate to Complete (ETC)

• ETC defines the expected cost to complete the rest of the project
• It is calculated by re-estimating the remaining work to complete the project
• ETC=Re-estimation of Remaining Works or
• ETC=Estimate at Completion (EAC)− Actual cost (AC)

15. Estimate at Completion (EAC)

• EAC defines the total cost of completing all work.
• Three different approaches are used to calculate it:
  1. EAC=AC+(BAC−EV). Assumption: All future Estimate to Complete (ETC) will be completed at the budgeted rate
  2. EAC=BAC/CPI. Assumption: Achieved cost to-date will be the same in the future
  3. EAC=AC+[(BAC−EV)/ (CPI x SPI)]. Assumption: ETC work will be performed at an efficiency rate that considers schedule and cost performance indices

16. Variance at Completion (VAC)

• VAC is a prediction of the amount of budget surplus/deficit defined by the difference between Budget at Completion (BAC) and Estimate at Completion (EAC)
• VAC=BAC−EAC

17. To-Complete Performance Index (TCPI)

• TCPI is a measure of cost performance required to achieve a specified management goal using remaining/available resources.
• TCPI is a ratio of the cost to finish the outstanding work and available budget
• It can be calculated in two ways:
  1. TCPI=(???−EV)/(EAC−AC)
  2. TCPI=(???−EV)/(BAC−AC)

18. Number of Communication Channels Formula

• Used to calculate the complexity of project communications or the total number of communication channels between stakeholders (N) in an environment
• Number of Communication Channels=N*(N−1)/2

19. Expected Monetary Value

• Used in Quantitative Risk Analysis to measure Expected Monetary Value (EMV) of a threat or opportunity
• EMV=Probability * Impact

20. Point of Total Assumption (PTA)

• PTA is exclusively used in the Fixed Price Incentive Fee (FPIF) Contracts to determine mismanagement.
• Costs that are above a given PTA level indicate the level of mismanagement
• PTA= [(Ceiling Price − Target Price)/ Buyer’s Sharing Ratio)] + Target cost

Conclusion

Depending on your time and budget, there are several ways to study for the PMP exam. However, the preferred method for most PMP candidates is project management training. Through PMP training, you get a well-structured course taught by accredited professionals that understand the ins and outs of what you can expect in the exam. Additionally, you also get access to interactive training and the best study materials that will help you pass the exam in the least possible time.

Originally published on August 5, 2019. Last updated on June 15, 2023.