PMP Formula of the Week: Confidence Level

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

Reveal 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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Related Courses
IT Project Management
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PMP Formula of the Week Series

• PMP Formula of the Week: Forecasting a Necessary CPI
• PMP Formula of the Week: Forecasting a Necessary CPI Based on an ETC
• PMP Formula of the Week: Ahead or Behind Schedule
• PMP Formula of the Week: Point of Total Assumption
• PMP Formula of the Week: Rent, Lease or Buy?
• PMP Formula of the Week: Risky Task
• PMP Formula of the Week: Earned Value Management Methodology
• PMP Formula of the Week: Schedule Performance Index of 1
• PMP Formula of the Week: TCPI
• PMP Formula of the Week: Fixed-Price Incentive Fee Contract
• PMP Formula of the Week: S-Curve
• PMP Formula of the Week: Current Project Status
• PMP Formula of the Week: Project Schedule Information
• PMP Formula of the Week: Random Defective Article
• PMP Formula of the Week: Confidence Level

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