PMBOK Section: Estimate Costs
Process Group: Planning Process Group
Question Type: Calculation
Knowledge Area: Cost Management
Difficulty Level: Hard
Question: You are managing an amusement park development project. You have received the following estimates for site excavation and area development activity that is critical to the success of your project. The most likely estimate is $100,000, the optimistic estimate is $90,000, and the pessimistic estimate is $120,000. What is the variance of this data?
Hint: Calculate the standard deviation using the PERT method and then calculate variance from it.
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Explanation: Standard deviation can be calculated as (Pessimistic - Optimistic) / 6. Variance can be calculated by squaring the standard deviation. For the given data, the variance is $25,000,000 and the standard deviation is $5,000. Hence choice A is the correct answer. Reference: PMP Study Guide 5ed - Sybex - pg:170