Last year the company paid an external subcontractor US$60,000 for an ongoing project. The project manager is evaluating whether using internal staff this year would be more cost-effective. They estimated optimistic = 4 months, pessimistic = 6 months, most likely = 5 months and used PERT. The in-house resources would be: two engineers at US$700/month each, one project manager at US$1,600/month, and additional monthly expenses of US$2,000. Using PERT, how much would the project manager estimate the company can save?

First, calculate the PERT estimate for the duration: (Optimistic + 4 Most Likely + Pessimistic) / 6 = (4 + 45 + 6) / 6 = (4 + 20 + 6) / 6 = 30 / 6 = 5 months. Next, calculate the monthly cost of internal staff: 2 Engineers US$700/month = US$1,400/month 1 Project Manager US$1,600/month = US$1,600/month Additional monthly expenses = US$2,000/month Total monthly internal cost = US$1,400 + US$1,600 + US$2,000 = US$5,000/month. Total internal cost for 5 months = US$5,000/month 5 months = US$25,000. Finally, calculate the savings: Subcontractor cost - Internal cost = US$60,000 - US$25,000 = US$35,000. US$20,000, US$40,000, and US$30,000 are incorrect as they result from miscalculations in the PERT estimate, monthly internal costs, or total internal costs.