Consider a five-mile-long railroad tunnel. Tunnel experts and advocates estimate the total cost to be $200 million. What is the reference class for this project? But reference class projects in this area have been over-budget by 30%. So, what should the actual revised budget number be for this proposed five-mile tunnel project?
A) Past bridge projects, $230 million
B) Past tunnel projects, $260 million
C) Past highway projects, $200 million
D) Past building projects, $230 million
E) Past construction projects, $230 million

Question

Quizplus · Accepted Answer

The reference class should be similar projects, in this case, past tunnel projects. Given the 30% over-budget average, the revised budget should be $200 million * 1.30 = $260 million.

Consider a Five-Mile-Long Railroad Tunnel