*Blogs*

- Project Management Terms
- Agile - The Definition of Continuous Change
- Servant Leadership - A Key Leadership Style in Agile
- 6 Steps to making reasonable decisions
- What is the BOSCARD method
- PEST Analysis: How Political, Economic, Social, and Technological Factors Impact Your Business
- 49 Processes in Project Management
- What is Aggregate Planning in Project Management?
- 25 PMP Formulas you must remember to pass the PMP exam
- Example with formulas Earned Value, Cost Variance and Schedule Variance
- Example with formular Cost Performance Index (CPI), Schedule Performance Index (SPI) and Estimate at Completion (EAC)
- Example with formulas Beta Value in PERT, Expected Monetary Value (EMV) and Risk Priority Number
- Example with formular Variance at Completion, Estimate to Complete (ETC) and To Complete Performance Index (TCPI)
- Example with formular Standard Deviation, Communication Channels and Cost plus Percentage of Cost
- Example with formular Cost plus Fixed Fee, Cost plus Award Fee and Cost plus Incentive Fee
- Example with formular Return on Investment (ROI), Payback Period and Cost Benefit Ratio
- Example with formular Present Value (PV), Future Value (FV), Target Price and Point of Total Assumption

- Kanban Board - Agile Project Chart
- Gantt Chart - Roadmap Project Chart
- What is a Timeline View in Project Management?
- PERT Chart - The Most Popular Project Management Diagram
- Work-Breakdown Structure (WBS) Chart
- Flowchart in Project Management
- Cause-Effect Project Charts - Fishbone Diagram
- Burn-up and Burn-down Project Charts
- Bar Chart in Project Management
- What is Pareto Chart
- What is Pie Chart
- What is Control Chart
- What is Matrix Diagram
- What is Critical Path Diagram
- What is Cumulative Flow Project Chart
- What is Enterprise Environmental Factors
- What is Arrow Diagramming Method (ADM)
- What is Cost Baseline
- What is Cost-Benefit Analysis
- What is Cost Engineering?
- What is Cost Management Plan
- What is Cost of Quality?
- What is Cost Overrun?
- What is Cost Performance Index?
- What is Cost Plus Fixed Fee Contract?
- What is Cost Plus Incentive Fee Contract?
- What is Cost Plus Percentage Of Cost Contract
- What is Cost Reimbursable Contract?

# Example with formulas Beta Value in PERT, Expected Monetary Value (EMV) and Risk Priority Number

**1. Beta Value in PERT**

Formula: Beta = (Pessimistic + 4 Most Likely + Optimistic) / 6

Beta value in PERT (Program Evaluation and Review Technique) is a weighted average taken from three values. Optimistic Value, Most Likely Value, and Pessimistic Value. Suppose a task takes 5 days to finish on average, but when things do not go according to plan it could take up to 10 days. When prioritized and everything goes according to plan it can be completed in 3 days.

3 becomes the Optimistic Value, 5 is the Most Likely Value, and 10 is the pessimistic value.

So, Beta value will be (3 + (4x5) + 10)/6

= 5.5 days.

This is also sometimes calculated without giving weightage to the most likely value

In that case the calculation will be (3+5+10)/3

= 6 days

**2. Expected Monetary Value (EMV)**

Formula: EMV = P x I

EMV or Expected Monetary Value is a concept in risk management. It is calculated by multiplying the probability of an event and the impact of it.

Let’s say that we have estimated the probability of an event to be 1/3rd or 0.33. If that event occurs it would cost, you $6000. In this instance EMV would be calculated as

6000 * 1/3 = $2000

This value will help you assess and compare the magnitude of risks and prepare for them.

**3. Risk Priority Number**

Formula: RPN = Severity x Probability x Detection

Risk Priority Number or RPN is a value that will help you rank the risks of tasks. This is calculated by multiplying three values.

Severity – denoting the severity of the risk.

Probability – denotes how likely the severity would be.

Detection - represents the ease with which it can be detected.

The rankings are done in a reverse order. For example, if there are 50 risks the one with the highest risk will be ranked 50. The one with the highest likelihood of happening will get the highest numerical value and under detection the highest number would go to the risk that is hardest to detect. The value is usually represented on a scale of 0 to 1. With a risk that has a high severity, high probability, and low chance of getting detected will have values close to 0.9 and the lower risk tasks will have values closer to 0.1.

By multiplying the three values you get the RPN. The RPN can be used to decide which task requires more focus and control from the perspective of project success or risk mitigation. The higher the value of RPN the more attention it should be given.