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Risk management - 2 pathways

2 pathways

2 pathways2 pathways

Diagram 1

2 pathways2 pathways

Diagram 2

If you remember the earlier diagram above (diagram 1) [see Uncertain events part 3], this represents 2 uncertain events and shows how we dealt with them. The main task was the purchase of 10 pumps with the potential uncertain event being the purchase of a possible additional 5 pumps.

It shows 2 pathways:

Pathway 1= 70% likelihood of occurring
  
MINIMUM= £10,000
MAXIMUM= £15,000
LIKELY= £12,500

And

Pathway 2= 30% likelihood of occurring
  
MINIMUM= £15,000
MAXIMUM= £22,500
LIKELY= £18,750

This suggests that the total cost could lie between £10,000 to £22,500.

The total cost (with the uncertain event) could be represented by a 3 point estimate similar to the lower diagram above (diagram 2).

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