Example with formular Standard Deviation, Communication Channels and Cost plus Percentage of Cost

13. Standard Deviation

Formula: Standard Deviation (σ) = (Pessimistic – Optimistic) / 6 

Standard Deviation expressed by the character ‘σ’ represents the degree to which the values can change within a project. Let's imagine a task that takes 4 days to complete in the best case and 16 days to complete in the worst case. You would calculate standard deviation as 

 (Pessimistic – Optimistic) / 6  


Standard deviation would be 2 in this case. 

14. Communication Channels

Formula: Communication Channels = n(n-1) / 2 

In a project, communication is key. This formula is used to measure the number of communication channels needed in a project. Here ‘n’ represents the number of stakeholders. If there are 12 stakeholders in the project, there will be communication channels between each stakeholder. If you are a stakeholder then you will be part of 11 communication channels. Similarly, every other stakeholder will be a part of 11 channels. This is the n-1 calculation. This number needs to be divided in two to remove the duplicate channels because your channel with a particular stakeholder and their channel with you should not be counted twice. In this scenario of 12 stakeholders the calculation will be as follows:  

= n(n-1) / 2 

12 (12-1)/2 = 66 

We have 66 Communication channels in this case. 

15. Cost plus Percentage of Cost

Formula: Cost plus Percentage of Cost = Cost + n% 

This is a type of contract that is in the sellers' favor where the buyer agrees to pay all the costs incurred by the seller and adds a percentage of the total cost as payment. ‘n’ represents the agreed percentage that will be paid on top of the cost incurred. If n is 10% and the cost is 50. In this case the cost-plus percentage of cost will be calculated as: 

 Cost + n% 

50 + (50 x 10/100)  


In this the cost the buyer pays more when there is an increase in the cost incurred. If the cost increases to 60 the buyer will need to pay 66.

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