Question

The project budget baseline for XYZ is $3,500,000 with the following risks assessment: Risk Event Probability Impact Expected Value Parts delayed in Customs 40% $100,000 Strong labor training equates to quick assembly 60% ($50,000) Heat sink assembly requires rework 85% $150,000 (source: Paul Martinsen, PMP)\

3. Calculate the adjusted project budget baseline for XYZ project.

Answer 1

Please see the table below. Please be guided by the second row to understand the mathematics. Figures in parenthesis, if any, mean negative values. All financials are in $.

Risk Event	Probability	Impact	Expected Value
	Pi	Vi	Pi x Vi
Parts delayed in Customs	40%	100,000	40,000
Strong labor training equates to quick assembly	60%	(50,000)	(30,000)
Heat sink assembly requires rework	85%	150,000	127,500
Total			137,500

Hence,  the adjusted project budget baseline for XYZ project = Baseline budget + Adjustment required due to risk events = 3,500,000 + 137,500 = $  3,637,500