Estimation questions

Submitted by Siva_chandru on Tue, 03/18/2014 - 12:52

The question is :

You are working for FALCON highway construction agency as a project cost estimator. The agency started a highway construction project which is in it's planning phase. The rough order of magnitude (ROM) cost estimate for the project is expected to be between 3 and 5 million dollars in the planning phase with a ROM of -25% to +25%. What will be the ROM estimate in the execution phase if it changes to -10% to +10%?

  1. Between 3.1 and 4.1 million dollars

  2. Between 3.6 and 4.4 million dollars

  3. Between 3.9 and 4.1 million dollars

  4. Between 3.4 and 4.4 million dollars

 

Answer :  B

I couldn't able to make out.Can you please explain how the calculation ?

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sammithnaik

Wed, 03/19/2014 - 08:56

considering the ROM of -25% to 25% which gives the estimate range of 3 to 5 million dollars. First calcutae the budgetary value. so lets consider the unknown budgetary value as x. therefore (-25% of x)  + (+25% of x) = 50% of the range. ie 4 million dollars. Hence apply the next ROM of -10% to +10% to this value which is 3.6 to 4.4 million dollars.

Regards,

Sammith, PMP

 

Siva_chandru

Wed, 03/19/2014 - 19:35

Thank you so much for the explanation.