PMI Risk Management Professional Practice Exam

A subject matter expert estimates the cost of direct labor on a project using a triangular distribution. What is the peak of the distribution?

1. US$800,000

2. US$808,333

3. US$816,667

4. US$1,000,000

The correct answer is: US$816,667

In a triangular distribution, the peak of the distribution is defined as the most likely value, which is represented by the mode. This value is where the maximum probability density occurs and indicates the estimate that has the highest likelihood of being accurate based on the expert's judgment and available data. The triangular distribution also has a minimum and a maximum value, which respectively signify the lower and upper bounds of the data range. When estimating costs, the most likely value (the peak) is typically assessed based on expert insights, historical data, and reasonable assumptions about the factors that can influence costs. In this case, if the cost of direct labor has been assessed through a triangular distribution with the most likely value being US$816,667, it implies that this is the cost estimate that the subject matter expert believes is the most realistic compared to the minimum and maximum estimates provided. Therefore, selecting US$816,667 as the peak reflects an informed estimate that has taken into account various factors and uncertainties in the cost estimation process.