Questions and Answers
What does BAC stand for?
What is Earned Value (EV)?
% complete x BAC
What is the formula for Cost Variance (CV)?
EV - AC
What is the formula for Schedule Variance (SV)?
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What does CPI stand for?
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What is the formula for Schedule Performance Index (SPI)?
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What is Estimate at Completion (EAC)?
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What does ETC stand for?
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What is the formula for Variance at Completion (VAC)?
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What does TCPI stand for?
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What is the formula for Expected Monetary Value (EMV)?
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How do you calculate the number of communication channels?
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Match the following Normal Distribution values with the corresponding probabilities:
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What is the formula for Program Evaluation and Review Technique (PERT)?
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How do you calculate the standard deviation (SD) of activity?
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What is the formula for Variance of Activity?
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What is the formula for Float?
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Study Notes
Budgeting and Earned Value Management
- Budget at Completion (BAC) represents the total planned budget at the end of a project, calculated as the sum of all present values (Σ(PV)).
- Earned Value (EV) quantifies project performance by multiplying the percentage of completed work by the BAC.
Cost and Schedule Variance
- Cost Variance (CV) measures financial performance and is determined by subtracting Actual Cost (AC) from Earned Value (EV). A CV greater than zero indicates under-budget performance.
- Schedule Variance (SV) assesses time performance by calculating the difference between Earned Value (EV) and Planned Value (PV). A positive SV signifies ahead of schedule.
Performance Indices
- Cost Performance Index (CPI) indicates cost efficiency by dividing Earned Value (EV) by Actual Cost (AC). A CPI greater than one denotes effective cost management.
- Schedule Performance Index (SPI) measures schedule efficiency by dividing Earned Value (EV) by Planned Value (PV). An SPI exceeding one suggests efficient time management.
Estimates and Variance Analysis
- Estimate at Completion (EAC) forecasts the total cost at project completion, calculated by dividing Actual Cost (AC) by the percentage complete.
- Estimate to Completion (ETC) is the remaining budget needed to finish the project, derived from subtracting Actual Cost (AC) from Estimate at Completion (EAC).
- Variance at Completion (VAC) provides insight into projected financial performance by calculating the difference between Budget at Completion (BAC) and Estimate at Completion (EAC).
Completing Performance Index and Risk Management
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To Complete Performance Index (TCPI) evaluates the efficiency required to complete the remaining work. It can be calculated using different formulas:
- Remaining work over remaining budget
- (BAC - EV) / (BAC - AC)
- (BAC - EV) / (EAC - AC).
- Expected Monetary Value (EMV) is used in risk management, calculated by multiplying the impact by the probability of risks.
Communication and Distribution
- Communication Channels in a project context are calculated using the formula N(N-1) / 2, where N is the number of stakeholders involved.
- Normal Distribution is a statistical concept where 1 standard deviation (σ) represents approximately 68.26% of data, 2σ denotes 95.46%, 3σ accounts for 99.73%, and 4σ covers 99.999%.
Project Scheduling Techniques
- Program Evaluation and Review Technique (PERT) estimates project duration using a weighted average formula: (Optimistic + 4*Most Likely + Pessimistic) / 6.
- Standard Deviation of Activity (σ) reflects variability in project duration, calculated as (Pessimistic - Optimistic) / 6.
- Variance of Activity is expressed as the square of the standard deviation (σ^2).
- Float refers to the permissible delay in project scheduling, calculated via the formula LS - ES or LF - EF, representing Late Start, Early Start, Late Finish, and Early Finish.
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Description
Test your knowledge of key formulas used in the Capital Asset Pricing Model (CAPM) with these flashcards. Each card covers essential terms and their definitions, such as Budget at Completion (BAC), Earned Value (EV), and Cost Performance Index (CPI). Perfect for students and professionals looking to strengthen their understanding of project management concepts.