The Top 8 Formulas to Memorize Before Your PMP® Exam

If you’re studying for the PMP® exam, you have probably already learned that you need to know some frequently used project management formulas—along with where to use them, how to use them, how to compute them, and most importantly, how to derive the values. In fact, many say that the most difficult part of the exam is learning all the PMP formulas. 

Are you a professional who is aspiring to be a project manager? Try answering this PMP Practice Preparation Questions and assess yourself.

We’ve put together a list of cost management formulas that you’ll need to know, along with a breakdown of how and when to use them. 

Watch a video on PMP Certification Training

Cost Management Knowledge Area PMP Formulas

Although there are more than 25 project management formulas that you might need to tackle during the exam, there are a few cost management formulas that are very important, and which you’re likely to encounter more than once during the exam. Further, many of the calculation-based questions are based on these top 8 cost management formulas.


Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)


Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)


Cost Performance Index (CPI) = EV / AC


Schedule Performance Index (SPI) = EV / PV


EAC = AC + Bottom-up ETC


EAC = BAC / Cumulative CPI


EAC = AC + (BAC – EV)


EAC = AC + [BAC – EV / (Cumulative CPI ´ Cumulative SPI)]

Formulas 1 – 4

Take a look at the first four PMP formulas above and try to find out the commonalities in them. Not getting it yet? Yes, the easiest part is Earned Value (EV). It appears above in all the formulas, which means you have to derive the values of cost variance, schedule variance, cost performance index, and schedule performance index, keeping Earned Value in mind at first.

Earned Value comes before any other value. Most importantly, if you are working cost-related questions; think about the actual cost with Earned Value. If the question is about a schedule, think about planned value along with the earned value. If it is a matter of variance, you need to subtract actual cost and planned value from earned value—depending on the situation.

Similarly, if it is a question of getting index values, actual cost and planned value will be divided from earned value. If it is a matter of cost performance index; actual cost will be divided from earned value and if it is scheduled performance index; the planned value will be divided from Earned Value. So, in all these circumstances, Earned Value plays a huge role, which is why it’s at the top of the list.

Formula 5


EAC = AC + Bottom-up ETC

Since you will derive the estimate at completion, you need to focus on the actual costs incurred; only then can you obtain the future value you need for processing the project. See the above formula; it is used when the original estimate is fundamentally flawed. You use this formula to calculate an actual plus new estimate for the remaining work.

Formula 6


EAC = BAC / Cumulative CPI

If you were asked during the examination whether you are a good project manager, working on the project as planned—i.e., are you able to maintain positive values in both CPI and SPI—in this case, you would use the above-mentioned formula from other PMP formulas. This formula is used when the original estimation is met without any deviation.

PMP Certification

Formula 7


EAC = AC + (BAC – EV)

If you find yourself in bad shape during the project execution and have incurred more money on the project than expected or planned, use this formula to calculate the estimate at completion value. Again, your actual cost will be used first. one of the best from all PMP formulas.

Formula 8


EAC = AC + [BAC – EV / (Cumulative CPI ´ Cumulative SPI)]

This pmp formula is used to calculate actual to date plus the remaining budget changed based on performance—used when we believe the current ratio is typical as planned. In order to meet the schedule as decided earlier, we calculate the EAC accordingly to meet that schedule.

Looking forward to enhancing your project management skills? Take our project management certification course today and take your project management career to new heights.

Find Our PMP Training in Top Cities

India United States Other Countries
PMP Certification in Bangalore PMP Certification in Charlotte PMP Certification in Dubai
PMP Certification in Delhi PMP Certification in Los Angeles PMP Certification in Cairo
PMP Certification in Pune PMP Certification in San Francisco PMP Certification in Manila


In order to best decide which PMP formulas to use and where to make sure you’re reading the question carefully and consider the hypothetical situation, a project manager would be in when faced with this sort of problem.

In addition to these important cost management formulas, you’ll want to stay current with any updates on the Project Management Institute website. Simplilearn offers online training for the PMP certification that delivers hands-on projects in scope management, time and cost management, and risk assessment, designed to prepare you as much as possible for the PMP® exam.

PMP is a registered mark of the Project Management Institute, Inc.

Are you looking forward to making a mark in the Project Management field? If yes, enroll in the Project Management Fundamental Program now and get a step closer to your career goal!

About the Author


Simplilearn is one of the world’s leading providers of online training for Digital Marketing, Cloud Computing, Project Management, Data Science, IT, Software Development, and many other emerging technologies.

View More
  • Disclaimer
  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.