PMP® Formulas in Project Management
The Project Management Institute (PMI)® publishes A Guide to the Project Management Body of Knowledge (PMBOK® Guide) in which professional standards are documented. The PMI also oversees the Project Management Professional (PMP)® certification testing assessing candidates’ knowledge of standards, formulas, and tools within the practice of project management. PMP® formulas are an integral part of Project Management. You can expect to see questions on the PMP® exam that reference formulas. These questions will require you to calculate a value, questions for using provided data and formulas to calculate an estimation, and questions that require math to use a formula for estimating value.
There is no way to “cheat” the system as questions are administered via secure systems. To earn a passing score, PMP® test prep experts give an estimation of at least 35 hours of practice questions and study, including time to practice the basic math skills needed to calculate PMP® formulas. PMP® exam prep for formulas includes work to memorize formulas but also time to develop an understanding of the math behind a formula, the purpose of a formula, and the role of a formula in project management.
Use the resources provided here to create your own “PMP formulas cheat sheet” for your PMP® exam study efforts. Your PMP exam practice should be based on PMBOK® Guide concepts and include PMP® formula based questions. On your study sheet, include not only each PMP® formula but notes on how the formula is explained in the context of project management.
PMP® Exam Formula Cheat Sheet
Learn how to successfully use project management formulas after reading this cheat sheet.
Formulas within Project Management
Within the PMP® exam, formula questions fall into three general types: (1) PURPOSE, what the purpose of each PMP® formula is, (2) CALCULATION, what are values used to calculate PMP® formulas, and (3) APPLICATION, how a PMP formula applied. Within this study guide, note that PMP® formula names have been listed with a “PMP” label as it is how most are known informally. On the PMP® exam itself, there will not be specific references for “PMP formulas” but there will be questions showing formula diagrams with the intent to measure your ability to correctly perform an estimation and to accurately calculate value based on key formulas.
PMP® Formula Categories
PMP® formulas are broadly organized into six categories: Critical Path Method, Earned Value Management, Estimating Monetary Value, Estimating Techniques, General Project Management, and Project Selection Method.
Each category is based on the project management standards put forth in the PMBOK® Guide. To ace the PMP® certification exam, memorize “PMP formulas” for all of the categories. A calculation may be required in some PMP® questions, and time can be saved if you memorize the formula before taking the PMP exam.
PMP® Practice Questions
It is essential that any PMP® exam practice questions or tests you complete are based in verified PMP® exam prep training sources. Make sure you are able to jot down all PMP exam formulas quickly as part of study and exam prep.
Create a sheet of formulas for easy reference during your PMP® exam study work and for use on the job. Remember that the value of PMP® formulas goes beyond passing the PMP® certification exam and enables you to practice project management at a professional level.
Critical Path Method Formulas
Critical Path Method
A method used to estimate the minimum project duration and determine the amount of scheduling flexibility on the logical network paths within the schedule model.Source: The PMI’s online lexicon
In the context of the PMP® exam, there may be questions that show a critical path diagram for which the PMP® test taker is asked, for example, to calculate the Free Float or to complete an estimation for how long work will take. Example images may be shown like this diagram from the PMI.org conference paper “Understanding the basics of CPM calculations” in which rather than complicated math to calculate, the PMP® candidate does a simple calculation for estimating duration.
For Critical Path method, the PMP® formulas and tools include:
Earned Value Management Formulas
Earned Value Management
“A methodology that combines scope, schedule, and resource measurements to assess project performance and progress.“Source: The PMI’s online lexicon
The PMP® certification exam includes questions about, or driven by, the earned value (EV) performance. The Earned Value concept is around data-driven insight into the project progress and projections as measured against the original plans of timeline and costs. The earned value calculations are simple calculations that are only as accurate as the data used in the formula.
An organization must have certain measures in place to fully realize the benefit of earned value. The formulas within earned value have their own purpose within project management and collectively work together within an earned value management system. For Earned Value formulas, some have to be calculated first in order to get the numerical value needed to calculate other formulas.
Studying for the PMP® Exam?
Successful companies do not put budgets or resources behind every project no matter what. There will be a consistent project selection method to balance risk, investment, and potential return. Within a project selection process, project managers will leverage specific formulas. The PMP® exam could have questions with project comparisons as part of assessing the student’s knowledge of formulas, how they are calculated, and how to apply data from those formulas. Many project selection formulas depend on data or information from other formulas. For example, to determine the Return on Investment (ROI) one must have the COI (Cost of Investment) and the Net Profit. PMP® exam questions may query if a project should be financially supported to proceed or if a project that is completed was a good investment. Project Managers use project scheduling formulas to manage risks and achieve desired business results.
General Project Management
The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.Source: The PMI’s online lexicon
Your PMP® formulas cheat sheet may not need to include the actual PMI definition of project management. Rather, include on your study sheet those formulas which apply to project management in general.
Project Managers working towards earning the PMP® certification should have a basic understanding of contracts and project formulas connected to different types of contracts. For example, the point of total assumption calculation can be used with fixed-price incentive fee contracts. The Project Point of Total Assumption is a very specific figure determined by calculations driven by a specific formula.
Project Selection Method
Project Managers should not only memorize formulas to prepare for the PMP® certification exam. Additionally, students should know the exam has project example questions in which the PMP® candidate must know when to use which PMP® formula, how to interpret calculations, and how estimated values can be applied to the management of the project. There are almost 12 formulas for project estimating covering budget, task duration, and project duration. Some estimating formulas require data from other project formulas to be calculated. There is no cheat sheet for accurate estimating; it is a science based on proven processes and formulas to calculate reliable data.