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PMP Formula of the Week: Earned Value Fixed Formula Measurement Rule

By Guest Authors
July 27, 2015

PMPFormulaOTW475166460You are developing a schedule management plan that sets an earned value fixed formula measurement rule. Which of the following formulas could be an example of such a rule?

A. CP + 4CM + CO ÷ 6
B. 20/80
C. Six Sigma
D. TCPI

Reveal Answer

The correct answer is B.

CP + 4CM + CO ÷ 6, answer A, is the Program Evaluation and Review Technique (PERT) formula for the mean, which is incorrect for this situation. Six Sigma, answer C, is a quality standard. TCPI, answer D, is the “to-complete cost performance index” forecasting formula, but it is not a rule.

20/80, answer B, is the only applicable solution that could serve as an example of an earned value fixed formula measurement rule.

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2 comments

  1. drpdg 3 years ago Reply

    80/20 is Pareto’s Law

    Sorry but the ONLY plausible answer is TCPI as it is the only formula even remotely related to earned value.

    Instead of using PMI’s PMBOK Guide, why not check out the original source?

    BR,
    Dr. PDG, Jakarta

    1. GKBlog Editor 3 years ago Reply

      The question was:
      You are developing a schedule management plan that sets an earned value fixed formula measurement rule. Which of the following formulas could be an example of such a rule?
      A. CP + 4CM + CO ÷ 6
      B. 20/80
      C. Six Sigma
      D. TCPI

      Fixed formula measurement rules are established by organizations when they wish to have a predictable manner with which to account for earned value of tasks or work packages. In this instance, 20/80 is indicating that the organization will take credit for 20% of task completion at the beginning of the task and 80% at the completion of the task (to account for the full 100%). This can be done as a 50/50 fixed formula, a 25/75 fixed formula, or any combination that adds to 100%. The TCPI, or To Complete Performance Index, is the level of efficiency that a project must perform to in order to bring the project in on budget when using the formula: TCPI=(BAC-EV) / (BAC-AC). This has nothing to do with a fixed formula rule. Furthermore, the TCPI does not indicate schedule performance, but rather cost performance. The question indicated “schedule management plan.”

      The 80/20 rule, or Pareto Principle, which states that 80% of defects are from 20% of sources, is applicable to Project Quality Management and has nothing to do with Earned Value Management. The ratio stated in answer B was 20/80 was purely coincidental and not in reference to the Pareto Principle.

      Thanks for your response and I hope that clears things up!


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