You have just been assigned as Project Manager (PM) to the Kuraiz-Reconda Fiber Optic Cable (KRFOC) project. You are preparing your cost estimate for the project and your Project Engineer (PE) tells you it will take 300 hours to complete the design effort. Your Finance Manager (FM) tells you that engineering labor is $100 an hour. Fortunately for you, unfortunately for them, you are a graduate, specializing in project management in general and advanced project management techniques.
Upon questioning, your PE admits that the 300 hours is just a guess, that under the best circumstances, meaning you quit bugging him with inane questions, it may take only 250 hours. However, it could take as long as 500 hours (if you do not leave him alone to do his job). He stands by his estimate that it will normally take 300 hours. Hint: this is a triangular distribution.
Thinking back to your school days, you wonder if all engineers cost $100 per hour. Upon questioning, your FM admits that this is an average cost, that some are higher, some are lower. You direct him to give you the distribution of all engineer labor rates. With a lot of help (your FM does not have the benefit of your education), he replies that the labor rate is normally distributed with a mean of $100 and a standard deviation (he is still not sure what that is) of $25.
Please answer the following two questions:
- Using this information and a wonderful tool you mastered, Crystal Ball (CB), what is the mean cost of your engineering effort?
- You are about to present your cost estimate to your sponsor when you remember that he was once a Professor. You recall, too, that he wore both a belt and suspenders and you suspect that this meant he might be a bit conservative. You therefore decide to provide an engineering cost estimate such that you are confident that 90% of the time your actual costs would be less than that value and that no more than 10% of the time would you exceed that value. What is your new estimate of engineering costs?
Be sure to provide the results of your CB simulation.