ITPEC FE Subject A October 2025 Question 42
Based on the requirements gathered, the cost of a software project under normal conditions is estimated at $70,000. In case of smooth project implementation, some activities are not required and the estimated cost is reduced to $50,000; however, in the worst-case scenario, additional tasks are required and the cost increases to $120,000. What is the expected cost of the project (in dollars) that is calculated by using the three-point estimate in the beta distribution, also known as PERT?
Explanation
$75,000 — PERT weights the most likely estimate four times against the optimistic and pessimistic ones.
- •Optimistic O = 50,000, most likely M = 70,000, pessimistic P = 120,000
- •Expected value: E = (O + 4M + P) ÷ 6
- •E = (50,000 + 4 × 70,000 + 120,000) ÷ 6 = 450,000 ÷ 6 = 75,000
Answer (b)
Why not others:
- •(a) 70,000 — the most likely estimate alone, without the optimistic and pessimistic cases
- •(c) 80,000 — the plain average (50,000 + 70,000 + 120,000) ÷ 3, which gives the most likely value the same weight as the extremes
- •(d) 85,000 — the midpoint of the optimistic and pessimistic costs, (50,000 + 120,000) ÷ 2, which ignores the most likely estimate
Key rule: A PERT three-point estimate is (O + 4M + P) ÷ 6, and its standard deviation is (P − O) ÷ 6.
Project Management · AI-written, may contain errors
This question comes from an official ITPEC past paper. ITPEC Practice is an independent study tool and is not affiliated with ITPEC. See the official FE past-paper collection or Report an issue.