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PMP Formula of the Week: Confidence Level

Date:
Nov. 02, 2015
Author:
Guest Authors

PMPFormulaOTW475166460

You are estimating the total project cost using three points for cost estimates with a 95 percent confidence level. What is the cost estimate range if the estimated project cost is $120,000 and the standard deviation is $2,500?

A. $115,000 to $120,000
B. $117,500 to $122,500
C. $112,500 to $127,500
D. $115,000 to $125,000

[showhide type="post" more_text="Reveal Answer" less_text="Hide Answer"]

The correct answer is D.

A 95 percent confidence level requires +/–2. Therefore, project cost range = $120,000 +/–2 or $120,000 +/–2($2,500), which is $120,000 +/–$5,000 or $115,000 to $125,000.

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