Formula based questions in PMP are an easy area to score because the concepts are easily understood, and once you understand them the math is quite simple, and gives you a great scoring opportunity that you shouldn’t miss. I’m listing down the different concepts that you should know in order to get all the numbers related problems correct.

Scheduling

Three Point Weighted Average Estimate: This is used for scheduling, and is calculated as:

(O +4M + L)/6

Standard Deviation: This is very simple in the context of PMP and can be calculated with the following formula:

(P – O)/6 where P is the Pessimistic Estimate, and O is the Optimistic Estimate.

Duration of an Activity: Late Finish – Late Start or Early Finish – Early Start

Rough order of Magnitude: +/- 50%

Budget Estimate: -10% to +25%

Definitive Estimates: -5% to 10%

Opportunity Cost

If there are two projects A & B, and the NPV of A is $85,000 and B is $50,000 then the opportunity cost of selecting project A is $50,000.

Communication Channel

Communication Channels: This is another very simple one to calculate, and can be calculated as n*(n-1)/2. The questions trick you by asking how many new channels were added, sometimes you forget to include yourself to see what n is but other than that it is pretty simple.

NPV: These type of questions are common, and they give you a certain cash flow, discount rate, number of years, and ask you which project to select. For instances where there is just one cash inflow, you can use the simple formula:

PV = FV / [(1+i)^n]

If there is more than one year then unfortunately you have to calculate this for every year and then sum the number but that itself shouldn’t take a lot of time.

Earned Value Measurement

There are several questions on EV (Earned Value), and I found that the best way to get a handle on this was to walk through an example in my head.

Say, there is a project that is 5 weekdays long, and you expect $10 worth of work to be done every day. This project will be $50 when it is finally completed, and that is the BAC (Budgeted At Cost).

So, on Tuesday, you would expect $20 worth of work to be done which is the (PV) Planned Value on Tuesday.

On Tuesday you find that only Monday’s work has been done, so now your EV (Earned Value) is just $10. To your great dismay, you find that the work that was done actually cost you $15 so that is your AC (Actual Cost)

Your Cost Variance is what you got done minus what it cost you so EV – AC viz. -5$ in this case. The Cost Performance Index is how well you are doing on cost, and that is measured as EV/AC so 10/15 or 0.67 in this case.

For Variance, remember that negative is bad, and for indices, remember that a number less than 1 is bad, and a number greater than one is good.

To see how you are doing with time, you know that you had to accomplish $20 worth of work but did only $10 worth of work so in terms of schedule you are $10 behind.

Schedule Variance can be calculated as Earned Value – Planned Value, so -10$ in this case.
SPI (Schedule Performance Index) is EV/PV so 0.50 in this case.

EAC is Estimate At Actuals, and means how much do we expect the project to cost when it is complete. There can be three situations.

When the current variation is one off, in which case:
EAC = (BAC-EV) + AC

When the current variance in cost or schedule is expected to continue:

BAC/CPI or BAC/SPI

When the current variance in cost and schedule is expected to continue:

(BAC – EV) / (CPI x SPI)

The To Complete Performance Index can be calculated as BAC – EV / BAC – AC

Finally, the VAC (Variance at Complete) can be calculated as BAC – EAC.

Understanding these numbers is great because they don’t take a lot of time, and once done gives you guaranteed points on the exam!

I read an excellent post about the difference between Work Performance Data and Work Performance Information in the context of PMP, and you can summarize it easily in terms of thinking of data as the raw facts that come out of Direct and Manage Project Work process when you execute the project, and then it becomes inputs to the all the Control processes.

Work Performance Information on the other hand are outputs of all the Control Processes, and become an input to the Monitor and Control Project Work.

If you think about this for a minute, it will make perfect sense. Read the post as well, it is very well written.

The PMP certification is easily the hardest certification I’m attempting since I started working. Getting to the exam stage is hard enough, but the exam itself is the toughest part of the certification.

There are simply no shortcuts for this exam, and you need a solid four to six months of effort before you can clear it. I am still preparing for the exam so this post is by no means from an expert, and that is something to keep in mind when you read it.

That said, I discovered a few things that improved my score on the practice tests, and I think they will benefit you as well.

Review the PMBOK for every wrong answer

Almost everyone prepares by taking practice tests, and reviewing their wrong answers. I review by having an electronic copy of the PMBOK at hand, and then spending 5 – 10 minutes on the PMBOK on the concept that I got wrong. So, if I got a question on Quality Assurance versus Quality Control wrong then I do a CTRL F on these two words on the PMBOK and read about them, and let information settle in. Very quickly I realize what I misunderstood in either the concept or the question, and from there on I see that I’m able to answer similar questions with ease.

Always Use Elimination

While taking tests, eliminate answers rather than trying to find the best fit one. This is relatively easier to do, and is perhaps more in line with how the questions are framed, and how the brain processes information.

For example, you get the following question:

You are managing a project that will implement a new Insurance software package. Two project team members have difficulty working together. They come to you, for help resolving the issues. You immediately set up a meeting that includes the functional manager. After the meeting you and the functional manager discuss the issues and agree on a solution. What type of organizational structure you are working in?

A) Functional

B) Balanced Matrix

C) Projectized 

D) Strong Matrix

The way I think about this is to say to myself, right, this is definitely not Projectized because there is a Functional Manager, it can’t be a Strong Matrix or you wouldn’t need to involve the functional manager. At this point you know that it can be either the Functional or Balanced, and then you can further eliminate Functional because had it been functional, you would have relied on the functional manager to solve this problem. That leaves us with Balanced Matrix which is the right answer, and if you look at it in the context of the question, not just elimination, you will see that it looks quite accurate.

These two tips have helped me a fair bit, and other than that I really recommend going through this PM Zilla page on 10 PMP question types, and how to prepare for them?