Opportunity Cost

Submitted by debohaldar on Sat, 05/16/2009 - 08:27

Hi, I encountered the following comment on PMSTUDY :

"Opportunity Cost is not a project selection criteria ! "

Is this accurate ? I was reading Andy Crowe's book and it lists opportunity cost as a project

selection criteria. In fact, he states the smaller the opportunity cost, the more attractive the project.

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Mon, 05/18/2009 - 05:23

Very good question. Indeed opportunity cost will be one of the deciding factors in selecting a project. So for the purpose of the exam, you will have to see what the options are. PMBOK does not mentions opporuntiy cost as selection criteria, however they do mention at high level about "economic models" and scoring models. So opportunity cost may be part of the economic models.

Paul sanghera also says the same as you mentioned about Andy crowe's book. Smaller the opportunity cost the better. So to answer this question you will really have to look at the options.

I believe you can find you answer in this book if you can get your hands on it "PgMP: Program Management Professional Exam Study Guide By Paul Sanghera"

He does list a bit more about project selection criteria.

debohaldar

Mon, 05/18/2009 - 06:02

Thanks for the clarification ! I was browsing through some notes from an engineering economic analysis course I took in college and it lists Opportunity cost as a project selection criteria as well - but then again, as you said, I'll look carefully at the options :)

 -Deb.