Project Management Formulas

Purpose

Formula

Net Present Value

PV = FV/(1+r)n

Internal Rate of Return

Discount rate at which net present value = 0

Expected Monetary Value (EMV)

Σ products of probabilities & corresponding values

Incentive fee

The target fee adjusted by the seller’s share ration as a percentage of the cost variance from the target cost.

PERT

Use Beta distribution formulas

Triangular Distribution

Mean = (a+m+b) / 3

Variance

v = (a2+m2+b2-am-ab-mb) / 18

Standard Deviation

σ = √variance

Beta Distribution

Mean = (a+4m+b) / 6

Variance

v = [(b-a)/6]2

Standard Deviation

σ = (b-a)/6 = √variance

Total Triangular & Beta

Mean

Variance

Standard Diviation

 

Σ [Individual means]

v = Σ [Individual variance]

σ = √Total variance

Communication paths

n(n-1)/2

Earned value

CV = EV – AC

 

SV = EV - PV

 

CPI = EV / AC

 

SPI = EV / PV

 

ETC = EAC – AC

 

VAC = BAC – EAC

 

TCPI = (BAC - EV) / (BAC - AC)

EAC Do not extrapolate variances

BAC + AC – EV

EAC Ignore existing budget

AC + ETC

EAC Variances will continue

BAC / CPI

EAC Worst case

BAC/(CPI * SPI)

EAC PMBOK formula

AC + (BAC - EV) /CPI

Point of total assumption