Question: Need to Solve this problem using the concept of expected monetary value (EMV). The approved budget (cost) for a project is $250,000. The team has
Need to Solve this problem using the concept of expected monetary value (EMV).
The approved budget (cost) for a project is $250,000.
The team has identified the following five risks for the project:
Risk ID | Risk Type | Risk Probability | Impact (Cost) | Impact (Benefit) |
1 | Threat | 50% | $50,000 | |
2 | Threat | 25% | $75,000 | |
3 | Opportunity | 75% | $40,000 | |
4 | Threat | 50% | $100,000 | |
5 | Threat | 25% | $150,000 |
Provide the answer to the following questions, with calculations and reasoning:
1. What are the top three risks for the project? Why?
2. What is the expected total cost for the project?
3. What is the best-case total cost for this project?
4. What is the worst-case total cost for this project? 5. Based on the combined EMV of all the risks, how much contingency reserve would you suggestfor the project?
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