PMBOK chose higher EMV while Rita chooses lower EMV

Submitted by aliweb on Thu, 06/28/2012 - 01:26

If you go to page 299 of PMBOK 4th edition you will see a decision tree diagram which uses EMV (Expected Monetary Value). In that diagram they chose higher EMV as correct answer over lower EMV.

Now if you open Rita 7th edition and go to page 388 you will see decision tree diagram example. And here Rita is choosing lower EMV as correct answer over high EMV. There is another diagram on same page and Rita again choses lower EMV and not higher EMV.

So what is the correct way??? Shall we go with higher EMV or lower? Is there a problem with PMBOK's or Rita's approach or I haven't understood them corrctly?

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aliweb

Thu, 06/28/2012 - 09:53

 Anyone?

SueB

Thu, 07/05/2012 - 08:00

You need to look at what you are calculating.  The PMBOK example is calculating opportunity cost (ie what return is there on the investment).  In this example the correct answer is the $46m return for the $50m investment.

 

In Rita's first example on page 388 you are calculating the risk of failure associated with prototyping (ie the potential cost) in this instance the correct answer is $242 because the EMV (cost ) is lower to prototype.

 

In the second example on the same page you are also calculating the cost  not the potential income or opportunity.

aliweb

Thu, 07/05/2012 - 10:30

Sorry I didn't understand your point about PMBOK using opportunity costs.

I just checked and both books are calculating EMV using decision tree. In both cases there is some cost involved plus risk percentage and impact. And they both are using EMV to decide which option to use. Rita uses lower and PMBOK uses higher.

I will take another look at both the examples to develop understanding about what you said.

saket_pmp

Thu, 06/28/2012 - 14:04

In real PMP exam the questions are well discussed and though by expert panel and you will not get such direct questions much. They keep psychometric analysis techniques while making the questions and its choices.


However, if you get any direct questions, the source of truth should be PMBOK and ONLY PMBOK. PMI would never refer any other books while framing questions.


Saket, PMP

sspawar

Thu, 07/05/2012 - 14:37

  دوست. یہ بہت سادہ ہے.
پمبوك میں، منافع جا رہا ہے تجزیہ کیا، اس وجہ سے زیادہ منافع کے امکانات کا انتخاب کیا جائے گا.
ریتا میں، سرمایہ کاری کی جا رہی ہے اس وجہ سے تجزیہ کیا ایک ہی چیز کے لئے میں کم سرمایہ کاری کا انتخاب کیا جائے گا.

.

 

saket_pmp

Thu, 07/05/2012 - 17:15

Pawar Ji,


I and many people in this forum know that you are not a pie, still, for the sake of this forum and professional PMP atmosphere, please use English as communication medium so that everyone understands.


Another humanity suggestion, please do not criticize things rather comment what you found good. For each hour you remain sad, you loose 60 minutes of happiness.


I am sure, you will take my comments positively.


Cheers!
Saket, PMP

diba_perfect

Thu, 07/05/2012 - 17:56

;-)

googler's picture

googler

Thu, 07/05/2012 - 18:51

arabic?

aliweb

Fri, 07/06/2012 - 01:36

Nice :)

I do not have access to books at the moment but later I will look at the problems from point of view you have described.

sspawar

Fri, 07/06/2012 - 01:50

Thanks Mr. M D (Diba_perfect)

Who could not be happy to see our mother/ Mother tongue.

Dear Mr, Allen,(Googler)

You are right, contents script is Arabic.

In contents Its a "URDU", National language of Pakistan.

Where as in heading - Its HINDI National Language of INDIA

Actually originator ( questioner ) is Mr. Ali, is from KARACHI Pakistan.

To make the things interesting and very convinient (communication skill) , I applied this out of the box trick.

For those who are feeling inconvinient like Mr. Saket,

It is very simple-  go to "google translate" - paste this content , it will detect the language and will translate in required one. Ethically its a respect to others culture and country at global level, and comunicating in better way.

Best Regards and Cheers

SSP

krantikumar50

Fri, 07/06/2012 - 02:52

All and SS,


 


Lets cut  short  of these noices and concentarte on our main motive PMP only. Such things are deterents.


 


Bottom line is our communication language should be restricted to English only.


 


Warmly, KK....


 


 


 


 

googler's picture

googler

Fri, 07/06/2012 - 10:23

I have a friend in University, hails from Turkey , saw similar scripts!! You caught me right !!


I respect all cultures, thanks for the info. dude!!