PMI-RMP · Question #366
The risk manager evaluates two contractors, contractor A and contractor B, for a project with a finish date of 15 December. The contractors' bids are the same, including the cost. After performing a M
The correct answer is B. Contractor B, based on the probability and confidence levels, as there is a higher cumulative. Contractor B is the superior choice on both key dimensions: cost and confidence. Contractor B costs US$150,000 less than Contractor A ($600K vs. $750K) and additionally provides a 10% increase in the confidence level of meeting the finish date. Contractor A costs more and offers
Question
The risk manager evaluates two contractors, contractor A and contractor B, for a project with a finish date of 15 December. The contractors' bids are the same, including the cost. After performing a Monte Carlo assessment on the contractors' schedules, the risk manager returns the following information:
In order for contractor A to meet the finish date of 15 December, it will cost an additional US$750,000, and will not change the confidence level. In order for contractor B to meet the finish date of 15 December, it will cost an additional US$600,000, and will increase the confidence level by 10%. Which contractor should the risk manager select?
Exhibit
Options
- AContractor A, based on the probability and confidence levels, as there is a higher cumulative
- BContractor B, based on the probability and confidence levels, as there is a higher cumulative
- CContractor B, based on costing US$150,000 less than contractor A.
- DContractor A, based on the confidence level.
How the community answered
(54 responses)- A19% (10)
- B70% (38)
- C4% (2)
- D7% (4)
Explanation
Contractor B is the superior choice on both key dimensions: cost and confidence. Contractor B costs US$150,000 less than Contractor A ($600K vs. $750K) and additionally provides a 10% increase in the confidence level of meeting the finish date. Contractor A costs more and offers no improvement in confidence. In Monte Carlo analysis, a higher confidence level means a higher probability of achieving the target date. Selecting Contractor B delivers better schedule assurance at lower cost - a dominant strategy that wins on both criteria simultaneously.
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