ABC Co. is considering to build, buy, or outsource a project based on the following probabilities and
costs:
1. Buy
A. no modifications: p=.6, $400,000
B. slight modifications: p=.4, $450,000.
2. Build:
A. Complex, p=.4, $550,000
B. Simple, p =.6,
a. with

Efforts of a 4 person project is originally estimated at 20 person-months. However, after 2
months only 30% completed.
1. Compute the remaining efforts in person-months.
Let T = total revised efforts
Efforts consumed: 4 p x 2 m = 8 pm
8 pm = .30 x T
T = 2

A project with an initial cost of $40,000 (Year 0) with a life of 5 years is under
consideration. The annual benefits and costs at end of Year 1 to end Year 5 are expected
at $30,000 and $10,000 respectively. The discount rates at 6% for end of year 1 to

Execise 1Given the following information for a one-year project, answer the following questions. Recall
that PV is the planned value, EV is the earned value, AC is the actual cost, and BAC is the
budget at completion.
PV =
$23,000
EV =
$20,000
AC =
$25,00