The median is the value that is half the distance between
the absolute value of the most pessimistic value and the most optimistic
value.
Median = 1/2 * | (optimistic value - pessimistic
value)
[13]Balsley, Howard, Introduction
to Statistical Method, Littlefield, Adams & Co., Totowa, NJ,
1964, pp. 3–4.
[14]Schyuler, John R., Decision
Analysis in Projects, Project Management Institute, Newtown Square,
PA, 1996, chap. 1, p. 11.
[15]"Best" may not be sufficiently
conservative for some organizations, depending on risk attitude. Many project
managers forecast with a more pessimistic estimate than the expected
value.
Strictly speaking, arithmetic operations on the expected
value depend on whether or not only linear equations of probability were
involved, like summations of cost or schedule durations. For example, nonlinear
effects arise in schedules due to parallel and merging paths. In such cases,
arithmetic operations are only approximate, and statistical simulations are
best.
[17]You may also hear the term
"moment" or "method of moments." Expected value is a "moment of X"; in fact, it is the "first moment of X." E(Xn) is called the "nth moment of X." An in-depth
treatment of moments requires more calculus than is within the scope of this
book.
[18]"σ" is the lower case "s" in the Greek alphabet. It is
pronounced "sigma."
[19]An exception to the idea
that variance has no physical meaning comes from engineering. The variance of
voltage is measured in power: VAR(voltage) = watts.
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