Question: You are managing a construction project. One of the milestone is due to be achieved in the next few days. You have heard that prices of row materials are likely to increase. If this happens, that can cause interruption to the supply of raw materials and which can delay your project. There is 20% chance that this change will happen and it can cause you an impact of $50,000 due to the delay. If change does not happen, you can achieve the milestone and the customer will award you $10,000 as a bonus. What is the EMV of this risk?
Hint: Take the opportunity as a positive value and the threat as a negative value for the EMV calculation
All our questions are updated to the latest PMBOK® Guide standard. Stop by at http://free.pm-exam-simulator.com and try it for 3 days. We are a PMI Registered Education Provider.
The Correct Answer is A.
Explanation: EMV is calculated by multiplying the value of each possible outcome by its probability of occurrence and adding the products together. Further opportunities are taken as positive values while threats are taken as negative values. There is 20% chance that you will lose money and 80% chance that you will save money. Using the EMV formula (20% * -50,000) + (80% * 10,000) = -2,000. Choice A is the correct answer to this question