In PERT, the pessimistic cost estimate is $11,000, and the optimistic cost estimate is $________.
Understand the Problem
The question is asking for the optimistic cost estimate in a PERT (Program Evaluation and Review Technique) analysis, given the pessimistic cost estimate.
Answer
$O = 6E - 4M - P$
Answer for screen readers
The optimistic cost estimate can be found using the formula $O = 6E - 4M - P$ where $P$ is the pessimistic cost estimate and $E$ and $M$ must be known to calculate $O$.
Steps to Solve
- Identify the given values
In PERT analysis, we typically have the following estimates:
- Optimistic cost estimate ($O$)
- Pessimistic cost estimate ($P$)
- Most likely cost estimate ($M$)
Since we are provided with the pessimistic cost estimate ($P$), we will need the optimistic cost estimate ($O$) and most likely cost estimate ($M$) in order to calculate the overall expected cost.
- Use PERT formula
The PERT expected cost formula is:
$$ E = \frac{O + 4M + P}{6} $$
Where:
- $E$ is the expected cost
- $O$ is the optimistic cost estimate
- $M$ is the most likely cost estimate
- $P$ is the pessimistic cost estimate
- Rearrange to find optimistic estimate
If we only have the pessimistic cost estimate ($P$) and need to find the optimistic estimate ($O$), we rearrange the equation. Assuming we know the most likely estimate ($M$), we can express $O$ as:
$$ O = 6E - 4M - P $$
Here, we need values for $E$ (expected cost) and $M$ (most likely cost) to calculate $O$.
The optimistic cost estimate can be found using the formula $O = 6E - 4M - P$ where $P$ is the pessimistic cost estimate and $E$ and $M$ must be known to calculate $O$.
More Information
In a PERT analysis, the cost estimates provide a range that helps project managers understand the potential variability in project costs. The optimistic estimate allows planners to consider best-case scenarios.
Tips
- Assuming that only the pessimistic cost estimate is sufficient to calculate the optimistic estimate without knowing the most likely or expected cost.
- Misunderstanding the PERT formula and its rearrangement.
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