~~~~~ O of 5 Concepts completed (D ffi 0

Your Answer (0 coe<ect)

What is required in order for risk response control to succeed?

0 Mitigation of risk likelihood

Reason: This strategy deals with reducing the probability, not the impact.

0 Work Breakdown Structure dictionary

Reason: Provides detailed information on individual WBS elements and work packages.

® Documentation of responsibility

Reason: If there are not clear lines of responsibility for action. the chances of success are reduced.

Correct Answer

Documentation of responsibility

0 0
W ith PERT, each activity duration can range from an optimistic time to a pessimistic time.
Bla nk 1 Blank 2

Correct Answer

Blank 1: optimistic
Blank 2: pessimistic

0 Need help? Review these concept resources.

(J3 Read About the Concept

For a proj ect task, the optimistic activity time is 3 hours, the pessimistic time is 10 hours, and the most likely time is 7 hours. Calculate the weighted
average activity time.

0 7 hours

Reason: The most likely activity time Is not the same as the weighted average activity time.

0 6.7 hours

Reason: This is a simple average of (3 + 7 + 10V3 = 6.7.

® 6.8 hours

Reason: This Is (3 + (4x7) + 10)/6 = 6.8, the weighted average using the PERT formula.

Correct Answe r

6.8 hours
Your Answer (0 correct )

The average project duration is _ _ .

0 the activity times and project durations are not incorporated

Reason: The average p roj ect duration is the sum of all the average activities times along the critical path

0 the probabilities that are available to management.

Reason: The average project duration is the sum of all the average activities times along the critical path

® the sum of all the average activities times along the critical path

0 the sum of times on the normal path becomes the project duration

Reason: The average p roj ect duration is the sum of all the average activities times along the critical path

Correct Answer

the sum of all the average activities times along the critical path

What functions are Included In risk response control?

Developing management reserves.

Reason: These are funds developed as part of the risk response plan.

Initiating contingency plans.

Reason: Strategies are developed in Step 3 of the risk management planning cycle and need to be controlled when executed.

Executing the response strategies.

Reason: Strategies are d eveloped in Step 3 of the risk management planning cycle and need to be controlled when executed.

Watching for new risks.

Reason: This is p art of ongoing status m eetings after the start of the proje ct.

Monitoring "triggering" events.

Re ason: Strategies are developed in Step 2 of the risk management planning cycle and need to be controlled when executed.

When assigning responsibility for responding to risk on a work package, which stakeholders should be Involved In the decision-making?

Person responsible for work package

Reason: The person who is doing the work on the task should know who is responsible for responding should a risk occur.

D Person responsible for risk response

Reason: The person who will own responsibility for responding when risk occurs must agree to the responsibility.

Project team members on critical path

Reason: Unless those team members are working on the task for which risk response is being assigned, they may be notified, but they're
not part of the decision-making.

l!lil Project manager

Reason: The project manager must know who Is going to respond should a risk occur.

D Project sponsor

Reason: The sponsor Is typically involved in more strategic-level decisions than risk response at a work-package level.
Correct Answer

Person responsible for work package

Person responsible for risk response

Project manager

0
PERT developers chose an approximation of the beta distribution to represent activ ity d urations.
B l an k 1

Correct Answer

Blank 1: beta

Which of the follow ing is the formula fo r the standard deviation of an activ ity when using PERT?

Reason: This is the variance

0 a+4m
6

Reason: Ttiis is the weighted average activity time.

Correct Answer

0
The average project duration follows a normal distribution.
Blank 1

Correct Answer

Blank 1: normal
What term is used to d escribe t he docu ments needed to d evelop an adequate risk response control plan7

Project Scope.

Reason: While needed to execute a proj ect, it is not part of the risk register.

Work Breakdown Structure Dictionary.

Reason: Provide s detailed informat ion on individual WBS elements and w ork packages.

Risk Register. -
Reason: Summarizes the first t hree steps in risk management planning: identify, assess, response planning.

Work Breakdown Structure.

Reason: While used as part of risk identification, it is not part of the risk register.

Correct Answer

Risk Register.

Which response explains why monitoring risk during p roj ect execut ion is imp ortant?

I!'.! New risks may emerge as proj ect activities complete. -

Reason: Hence the use of foreseen and unforeseen in describing risk.

I!'.! People may h ide p roblems until they become difficu lt to manage.

Reason: T11is is corporate culture and the proj ect manager's attitude.

D Not required because the risk management plan is only executed at the start o f the proj ect.

Reason: Should be reviewed at each status meeting for c hange, but degree of effort is guided by proj ect complexity and team member
input.

Correct Answer

New risks may emerge as project acti'vities complete.

People may hide pro blems until they b ecome difficult to manage.

0 0
Risks can have b ot h positive and negative consequences
Blank 1 Blank 2

Correct Answer

Blank 1: positive
Blank 2 : negative
 0
A giant Popsicle melting faster than expected is an example of negative risk.
Blank 1

Correct Answer

Blank 1: negative

Over the life of a project, how does the chance of risk events behave?

0 Starts low and rises, ending high

Reason: The chance of a risk event occurring declines over the life of the proj ect. See Figure 7.1 for more detail.

I® Starts high and declines, ending low

0 Remains constant

Reason: The chance of a risk event occurring declines over the life o f the proj ect. See Figure 7.1 for more detail.

0 Behaves differently for different types of proj ects

Reason: The chance of a risk event occurring d eclines over the life of the project. See Figure 7.1 for more detail.

Correct Answer

Starts high and declines, ending low

@ 1g11re . presents a graphic model of the risk management challenge. he cha nces o a risk evenr occurri ng e.g., an error in t1111e
estimates, cost estimates. or design technology) are greatest during the ea rly stages of a project. T his is when uncertainty is highest and
many questions remain unanswered. As the project progresses toward completion. risk declines as the answers to critical issues (Will
t he technology work? Is the timeline feasible?) are resolved. The cost impact of a risk event, however. increases over the life of the
project. For example, the risk event of a design flaw occurring after a prototype has been made has a g reater cost or time 11npact than 1f
t he flaw were d iscovered during the plannrng phase of the project]

FIGURE 7.1 Risk Ewni Graph

R,sk Cos,

H,gh High
Cost to fh<
risk event

Ch~nces of rl!i>ks
occurring

Oefinmg Planning
Pr
A ___ is the contingency budget set aside to deal with risk events.

0 preventive reserve

Reason: Risks often cannot be prevented, b ut the probability of a risk happening can be reduced through mitigation.

0 risk mitigation

Reason: Mitigation is the action taken to minimize or reduce t he chance of a risk happening.

® management reserve -
Reason: The term for a contingency b udget to deal with risks is management reserve.

Correct Answer

management reserve

List the steps of risk management in their proper sequence.

Risk Identification.

Risk Assessment.

Risk Response Development.

Risk Response Control.

Correct Answer

1. Risk Identification.

2. Risk Assessment.

3. Risk Response Dev elopment.

4. Risk Response Control.

Which of the following pertain to "risk" in the context of project management? (Check all that apply.)

L'!lil A risk may have a positive impact on project objectives.

Reason: By definition, ris k goes both ways, although most risk management plans just address the negatives.

l'!".il A risk is an uncertain event or condition. -

Reason: Correct. And if the event occurs, it can have either a positive or negative effect on proj ect objectives.

D Proper p lanning can overcome risk.

Reason: Risk is the inability to control chance events, so while we can plan to manage risk, we cannot "overcome" it completely.

~ A risk may have a negative impact on project objectives.

Reason: This is the primary focus of risk management.

-
Correct Answer

A risk may have a positive impact on project objectives.

A risk is an uncertain event or condition.

A risk may have a negative impact on project objectives.

What is a risk event?

0 What can be done when a risk happens

Reason: Determining how to respond after a risk happens comes after identifying risk ev ents.

® What can go wrong during the project -

Reason: Risk management identifies as many risk events, that is, what can go w ro ng, before the project begins.

0 What can be done to minimize risk before the project begins

Reason: Determining what can be done to minimize risk before t he p roject begins comes after identifying risk events.

Correct Answer

What can go wrong during the project

In a generic project life cycle, which phase would incur th e highest cost if a negative risk event occurs?

0 Scope development

Reason: No "real" work is done, so cost to correct is minimal.

0 Defining

Reason: No "real" work is done, so cost to correct is minimal.

0 Planning

Reason: No "real" work is done, so cost to correct is minimal.

® Delivering -
Reason: This would infer that the proj ect is complete, but if something is w rong it would most likely generate the highest cost to correct the
mistake.

Correct Answer

Delivering

Events t hat are within the project manager's control are called "risks" but to differentiate events t hat are outside of a project team's cont rol, the term
_ _ _ _ _ _ is often used.

® threat

Reason: Usually a "management reserve" is established to deal with these.

0 contingency

Reason: This is a risk response plan.

0 chance

Reason: Same as probability.

0 probability

Reason: Defines the likelihood.

Correct Answer

threat

Risk Assessment is the first step in the risk management process.

0 True

I@ False

Correct Answer

False
What is the b enefit of a risk management plan f or a proj ect?

0 Minimizing the impact of risks o ccurrin g.

Reason: Through develop ing plans, re sponsibilities and resources as r equired.

0 Providing flexibility for project scope d ev e lopment.

Reason: The sco pe is fixed until and unles s it is modified by a scope ch ange control, which may be init iated by a risk occurring .

0 Creating multiple work breakd ow n structures.

Reason: The re w ill o nly be one WBS, altho ug h it can be alt ered as a response to a risk occurring .

® Preve nting all p roj ect risk.

Reason: No amount of p lanning can foresee all risk.

Correct Answer

Minimizing the impact of risks occurrin g.

In a generic proj ect life cycle, which phase(s) has/ have the highest probability of risk occurring?

0 Defining and Planning

Reason: This is w here scope and WBS uncerta inty is t he greatest, and many planning q uestio ns are yet to be answered.

0 Planning and Executing

Reason: It's high during p lanning, but sho uld fall off during the execution of the project.

@ Executing and Delivering

Reason: A s the w ork completes, the chance of a negative risk event w ill d iminish.

0 Delivering

Reason: If t his were true, there would have been a co mplete lack of project control.

Correct Answer

Defining and Planning

 Over the life of a project, how does the cost to fix risk events behave?

0 Starts low and rises, ending high

@ Starts high and declines, ending low

Reason: The cost to fix a risk event rises over the left of the project. See Figure 7.1 for more detail.

0 Rema ins constant

Reason: The cost to fix a risk event rises over the left of the project. See Fig ure 7.1 for more detail.

0 Behaves d ifferently for different types of proj ects

Reason: The cost to fix a risk event rises over the left of the project. See Fig ure 7.1 for more detail.

Correct Answer

Starts low and rises, end ing hig h

Decision Making Tool

Whe n complex problems require input from multiple specialists, _ _ d ecision making should be used.

0 top-down

Reason: It would not be appropriate for management to make a decision that requires specialist input.

® group

Reason: Group decision making should be used w he n it wil l improve the quality of important decisions. This is ofte n the case w ith complex
problems that req uire tl1e input of a variety of d iffe re nt specialists.

0 unanimous

Reason: It is not necessary that everyone support the decision 100%, but they must at least agree it is the best decision under the
c ircumstances.

Correct Answer

g roup
Place the steps to group decision making in the correct sequence.

Identifying problems

Gene rating alternatives

Reaching a decision

Following up

Correct Answer

1. Ide ntifying problems

2. Generating alternatives

3. Rea ching a decision

4. Fo llow ing up

In w hat step of g roup decision making does t he p roject manager identify the underlying issues?

0 Generating altern at ives

Reason: In this step, b rainsto rming is used to develop mu lt iple possible solutio ns.

® Prob lem identification -

Reason: In this first step, the team agrees on the det ails o f the prob lem to be solved.

0 Fo llow -up

Reason: In this final ste p, th e decisio n has been mad e an d implemented, and its effectiveness should be evaluated.

0 Reaching a decision

Reaso n: In this step, alternative so lutions are evaluated and o ne solution is chosen.

Correct Answer

Problem identificatio n

0
During brainstorm ing , th e team generates a list of possible solutions on a flipchart or b lackboard.
Blank 1

Correct Answer

Blank 1: brainsto rming

 0
During the course of the discussion to re ach a decision, the project manager attempts to build consensus among the group.
Blank 1

Correct Answer

Blank 1: consensus or agreement

When strong commitment to a decision is needed. _ _ _ _ _ _ should be used.

@ conflict management -
Reason: Conflict may be avoided if a way can be found to encourage strong commitment to a decision.

problem identification

Reason: Problem identification is one of the major steps in the group decision-making process.

group decision making

Reason: Group decision making should be used when strong commitment to the decision is needed and there is a low probability of
acceptance if only one person makes the decision.

management by walking around

Reason: Although a manager may use MBWA to improve relationships in a team, its primary purpose is not strong commitment to a decision.

Correct Answer

group decision making

What title best describes the role of the project manager in t he group decision making process?

0 Ultimate authority

Reason: In group decision making, the project manager has ceded the authority to the group for that decision.

0 Tie-b reaker

Reason: If the p roj ect manager is able to guide the process, the team will agree on the best possible solut ion.

@ Facilitator

Reason: A project manager should facilitate the discussion within th e group so t he team reaches consensus.

Correct Answer

Facilitator
In w hat step of group decision making does the team eva luate the effectiveness of the decision?

0 Generating alternatives

Reason: In this step, b rainstorming is used to deve lop multiple possibl e so lutions.

0 Reaching a decision

Reason: In this step, altern ative solutions are evaluated and o ne so lution is chose n.

® Foll ow-up

Reason: In th is final ste p, the decisio n has been mad e and implemented, an d its effectiveness should be eva luated .

0 Prob lem identificati on

Reaso n: In this first step, the tea m ag rees on the det ails o f the pro blem to be solved.

Correct Answer

Fo llow-up

0
If d efe nsive posturing is detected during the problem-ide ntification d iscussion, then it may b e w ise to state the problem-solv ing
Blank 1
ste p if possible.

Correct Answer

Blank 1: postpone, delay, or resched ule

In w hat step of group decision making does the team brainsto rm possible solutio ns?

0 Reaching a decision

Reason: In this step, alternative so lutions are evaluated and o ne solution is chosen.

0 Follow-up

Reason: In this final step, the d ecision has been made and implem ented , and its effectiveness should be evaluated .

0 Problem identificatio n

Reason: In this first ste p, the team ag rees on th e d etails of the proble m to be solved.

® Generating alternatives

Reason: In this step, b rainsto rming is used to develop multiple possible solutio ns.

Correct Answer

Generating alternatives
 In w hat step of group decision making d o es t he team assess the merits of alternative solutions?

0 Generating alternatives

Reason: In this step, b rainstorming is used to develop mult iple possible solutions.

® Reaching a decision

Reason: In this step, alternative so lutio ns are evaluated and one solut ion is chosen.

0 Problem identificat ion

Reason: In this first step, the team agrees o n the details o f the problem to be solved.

0 Follow-up

Reason: In this final step, the decision has been mad e and implemented, and its effective ness sho uld be evaluated.

Correct Answer

Reaching a d ecision

Onc e the decision has been made and implemented, it is important fo r the team to f ind the time to evaluate the effectiveness of t he
Blank 1
d ecision.

Correct Answer

Blank 1: effective ness or perfo rmance

Risk Identification

The risk management process b egins by trying to generate a list of all the possible risk that could affect the proj ect.
Blank i

Correct Answer

Blank 1: risks

Only by focusi ng on actual events can potential solutions be found.

Blank 1

Correct Answer

Blank 1: events
True or false: A risk breakdown structure sho uld focus on task-level risks during the initial risk identification stage.

0 True

Reason: The RBS should be used to focus on proj ect-level risks at the beginning.

@ False -
Reason: T he RBS sho uld be used to focus on project-level risks at the beginning.

Correct Answer

False

Risk profiles are generated and maintained usually by who7

0 Project sponsor

Reason: They are not generally involved at this micro level.

0 Top management

Reason: They are not generally involved at this micro level.

0 Project office

0 Project vendor

Reason: They are not generally involved at this micro level.

@ Project manager

Reason: While they might be involved, it is not th eir p rimary responsibility.

Correct Answer

I Project office
In addition to the core project team, who should/may participate in identifying risk?

l!lil Customers

Reason: Customers are always a valuable resource in identifying risks.

l!lil Sponsors

Reason: Sponsors will generally have the benefit of experience.

Finance analysts

Reason: A finance analyst may not participate in identifying risk.

l!lil Outside vendors/contractors -

Reason: Inputs from outside vendors/contractors on identifying risks should be so.licited.

Correct Answer

- Customers

Sponsors

r Outside vendors/contractors

Why should groups be used in the risk identification stage, rather than individuals?

0 To increase proj ect buy-in.

Reason: This may be an important side-effect of involving core team members and other relevant stakeholders in risk identification, but it is
not the primary reason groups sl1ould be used.

0 To spread the responsibility equally in case risks occur.

Reason: Risks will occur, whet her a group or an individual identifies the risks. The purpose of using a group is not to lay blame when a risk
occurs.

® To make more accurate j udgments about risks.

Reason: Research has shown t hat groups make more accurate j udgments about risk than do individuals.

Correct Answer

To make more accurate judgments about risks.

When identifying risk, a team should initially focus on what aspect of risk?

® Actual events that increase the risk -

Reason: The goal is to focus on events or conditions that will happen, and then identify causes to help manage risk.

0 Outcomes of a chance event

Reason: This is described as a typical mistake. Focusing on outcomes w ill not help identify causes, and t herefore not help manage risk.

0 Consequences of a chance event

Reason: This is described as a typical mistake. Focusing on outcomes w ill not help ident ify causes, and th erefore not help manage risk.

0 The impact of a chance event

Reason: This is the next step (after identification) in the process.

Correct Answ er

Actual events that increase the risk

What identifies and documents an initial set of risks?

Work Breakdown Structure (WBS).

Reason: Both the RBS and Risk Profile with subsequently use the WBS to help provid e detail, but the WBS purpose is not risk management.

D Organizational Breakdown Structure (OBS).

Reason: Both the RBS and Risk Profile may subsequently use the OBS to help provide detail, but the OBS purpose is not risk management.

L"A Risk Profile. -

Reason: A list of questions generated over time from past proj ect history. Essentially, the collective wisdom of prior project managers.

L'!:il Risk Breakdown Structure (RBS). --

Reason: Breaks the whole project into environmental cross sections to look at the WBS by a different perspective t han deliverables or
organization.

Correct Answer

Risk Profile.

Risk Breakdown Structure (RBS).

0
Risk pro files are updated and refined during the post-proj ect audit
Blank 1

Correct Answer

Blank 1: audit
 0
One of th e keys to success in risk identification is attitude . {Enter o nly o ne word per blank.)
Blank 1

Correct Answer

Blank 1: attitude or outl ook

A _ _ is a list of questions that address traditional areas of uncertainty on a project, drawn from previous, similar projects.

0 work breakdown structure

Reason: A work breakdown struct ure contains the tasks and d eliverables required to complete a p roject. It is not a list of questions.

® risk profile -
Reason: A risk profile is a list of questio ns used to help identify risks to the current p roj ect, based on similar, past p roj ects.

0 risk breakdown structure

Reason: A risk breakdown stru cture is sim ilar to a w ork breakdown structu re in fo rmat. It is no t a list o f q uestio ns.

Correct Answer

risk profile

Risk Assessment
Assessing identified risk is done with respect to what aspect of the project? {Check all that apply.)

Risk profiles

Reason: Risk profile is used as a tool in risk identification p rocess.

L!,i Project timing

Reason: While assessing a risk, th e project's ti m ing is also taken into consideration.

L!,i Project cost -

Reason: While assessing a risk, the project's cost is also taken into consideration.

L!,i Project priorities --

Reason: Ultimately, t he priorities of the project will drive the next step in developing the response p lan. This includes cost, time, scope, and
quality.

Correct Answer

Project t iming

Project cost

Project priorities
In scenario analysis, the significance o f _ _ is assessed.

® each risk event -

Reason: All risk events are assessed to determine the likelihood of occurre nce and the impact or consequences sho uld it occur.

0 high-probability risks

Reason: Scenario analysis is used to determ ine the probability o f a risk occurring, and the impact or consequence, should it occur.

0 risks on the critical path

Reason: A ll risk events are assessed to determi ne t he like lihood of occurrence and the impact or consequences should it occur.

Correct An swer

each risk event

Which statement best describes the scales used to measure/predict probability, impact, and detection?

0 Numerical rankings will always work.

Rea son: Nume rical rankings may not alw ays deliver true results, so common sense needs to be applied as well.

0 Simplest is always best.

Reason: Will range from simple to complex, but sl1o uld be defi ned prior to beginning the process.

® They may vary depending on project. -

Reason: Will range from simple to complex, but should be defined prior to beginning the process.

Correct An swer

They may vary depending on project.

Whi ch of the following are used by a ri sk assessment matrix to prioriti ze identified risk?

L'!ll Impact

Reason: The matrix is likelihood v. impact and separated into zones for priority.

Cost

Reason: The matrix is likelihood v. impact and separated into zones for priority.

L'!ll Likelihood

Reason: The matrix is likelihood v. impact and separated into zones for priority.

D Detectability

Reason: The matrix is likelihood v. impact and separated into zones for priority.

Correct Answer

Impact

Likelihood

Why is the second ste p of risk management to assess the risks ident ified in the first step?

0 To avert the risk

Reason: A risk can only be mit igated after it is identified.

0 To determine what's missing

Reason: While more may be identified, this is not the purpose o f assessment.

® To establish priorities for attention

Reason: Risk identification will likely produce more potent ial risks than there are resources, so the goal is to separate the important ones to
develop a response plan.

Correct Answer

To establish p rio rities fo r attenti on

In scenario analysis, which of the following is used to assess risk?

Stage of project life cycle

Reason: Although more costly toward the end, it is not a part of the assessment.

~ Impact of an event

Reason: Scenario analysis is the easiest and most commonly used technique for analyzing risks. Team members assess the significance of
each risk event in terms of probability of the event and impact of the event.

Risk management

Reason: Risk management can occur only after a risk is identified.

l'!"J Probability of an event

Reason: Scenario analysis is the easiest and most commonly used technique for analyzing risks. Team members assess the significance of
each risk event in terms of probability of the event and impact of the event.

Correct Answer

Impact of an event

Probability of an event

0
Impact scales can be a bit more problematic, since adverse risks affect proj ect object ives differently.
Blank 1

Correct Answer

Blank 1: Impact

0
Green zone risks are typically considered inconsequential and ignored unless t heir status changes.
Blank 1

Correct Answer

Blank 1: Green

0
Red zone risks receive fi rst priority.
Blank 1

Correct Answer

Blank 1: Red
 0 0
Impact x Probability x Detection = Risk Value
Blank 1 Blank 2

Correct Answer

Blank 1: Risk
Blank 2: Value

0
PERT and related techniques take a more macro perspective by looking at overall cost and schedule risks.
Blank 1

Correct Answer

r···Blank 1: PERT

Often organizations find it useful to categorize t he severity of different risks into some form of risk assessment matrix. The matrix is typically structured
around the impact and likelihood of the risk event. Match the zones shown below with their meanings.

Red
f[_
1
_____ Major risks. ol _

Yellow
{l~--Mod
erate-
r ks.
is- - ~•j
Green
f
1 [ ~ - - - ~ol
~ Minor risks. _

Correct Answer

Red Major risks.

Yellow Moderate risks.

Green Minor risks.

The g oal of the failure mode and effe cts analysis (FMEA) is to prioritize risk by _ _.

0 assig ning numerical FMEA rankings

Reason: The FMEA is designed to calculate and ra nk by the p roduct of impact, p robability, and detect io n.

0 assessing a risk only by its detection rate and severity

Reason: The FMEA is designed to calculate and ra nk by the p roduct of impact, p robability, and detect io n.

® identifying a risk o nly by its impact and detection -

Reason: The FMEA is designed to ca lculate and rank by t he product of impact , probability, and detect ion.

0 subjective classifications

Reason: This is more like the risk severity matrix using like lihood v. impact and separated into zones for priority.

Correct Answer

assigning numerical FMEA rankings

What time frames does the statisti cal methodolo gy in Prog ram Evaluation and Review Techniq ue (PERT) simulation ut ilize?

0 Average of all activity durations.

Reason: Activity optimistic and pessimist ic times are used to create a c riticality index, i.e., a re lative probability of a task becoming critica l.

0 Project start and e nd dates.

Reason: Activity optimistic and pessimist ic times are used to create a c riticality index, i.e., a re lative probability of a task becoming critica l.

® Activity optimistic and pessimistic times. -

Reason: Creates a c riticality index, i.e., a relative p robability of a task becoming c ritical.

Correct Answer

Activity optimistic and pessimistic times.

What is the outcome of the statistical methodology used in the Program Evaluation and Review Technique (PERT)?

0 An optimistic completion time

Reason: PERT uses a weighted average including optimistic, most likely, and pessimist ic times, but this is not the outcome.

® Focusing on individual events -

Reason: The focus of PERT is not on individual events b ut on the likelihood the p roject will be completed on l ime and within budget.

0 The likelihood of various project durations

Reason: PERT takes a macro approach of total p roj ect timing using individual activity

0 A pessimistic completion time

Reason: PERT uses a weighted average including optimistic, most likely, and pessimist ic times, but this is not the outcome.

Correct Answer

The likelihood of various proj ect durations

Risk Response
Risk responses are developed based upon __.

0 project cost and timing.

Reason: These are considered during the assessment steps. Response development needs to consider appropriate act ions after
assessment is conducted.

0 project cost.

Reason: This is considered during the assessment step.

0 project timing.

Reason: This is considered during the assessment step.

® risk assessment classifications. -

Reason: From the risk severity matrix or numerical rankings with an FMEA type approach.

Correct Answer

risk assessment classifications.

In general terms, risk mit igation will approach an identified risk by planning to reduce its __.

~ impact

Reason: Minimize the negative consequences when the risk event occurs.

D timing

Reason: While always a consideration, the two strategies are not specifically related to this.

D cost

Reason: While always a consideration, the two strategies are not specifically related to this.

~ likelihood -
Reason: Lessen the chance of the risk event from occurring.

Correct Answer

impact

likelihood

Which best describes what is meant by "risk avoidance" in a risk management plan?

0 Ignore the risk and manage it when it occurs.

Reason: This is retaining risk.

® Changing the p roject plan to eliminate a risk condition.

Reason: Impossible to do this for everyth ing, but at t imes specific risks can be eliminate before starting a project by taking different
approaches in th e WBS.

0 Change the plan to lessen consequences.

Reason: This is mitigating the impact.

0 Buy insurance to manage consequences.

Reason: This is transferring risk.

Correct Answer

Changing the p roj ect plan to eliminate a risk condition.

Which statement is correct with respect to transferri ng risk?

0 Transfer of risk increases total cost of the risk event occurring.

Reason: Transfer will involve a p remium, but the concept is that doing so will result in a break even or lower total cost of the risk.

0 Transferring risk infers postponement or delay of a risk occurrence.

Reason: It does not involve timing.

® Transfer of risk does not change the likelihood or impact.

Reason: The risk is still there, but the cost is passed to another.

Correct Answer

Transfer of risk does not change the likelihood or impact.

What are the drawbacks in using insurance to transfer risk?

L'!lil It may be difficult to explain the risk and its consequences to an insurance broker.

Reason: The insurance broker is not familiar with the proj ect, and may not understand the circumstances in which risks may occur, or their
consequences.

It is difficult to insure low-probability and high-consequence risk events.

Reason: The opposite is t rue; it is often easy to define and insure this type of risk event.

L'!lil Insurance is often costly

Reason: The co st o f insurance for risk events can be quite high.

Correct Answer

It may be difficult to explain the risk and its consequences to an insurance broker.

Insurance is often costly

Identify the responses to a risk event when the risk has been identified and assessed.

Retain
-
Reason: When a risk event is identified and assessed, a decision must be made concerning which response is appropriate for the event.
Responses to risk can be classified as mitigating, avoiding, transferring, sharing, or retention.

Postpone

Reason: Risk happens on its own schedule and is usually more expensive if it happens later in the project life cycle.

L!.I Avoid
-
Reason: When a risk event is identified and assessed, a decision must be made concerning which response is appropriate for the event.
Responses to ris k can be classified as mitigating, avoiding, transferring, sharing, or retention.

L!.I Transfer

Reason: When a risk event is identified and assessed, a decision must be made concerning which response is appropriate for the event.
Responses to risk can be classified as mitigating, avoiding, transferring, shari ng, or retention.

L!.I Mitigate

Reason: When a risk event is identified and assessed, a decision must be made concerning which response is appropriate for the event.
Respon ses to risk can be classified as mitigating, avoiding, transferring, sharing, or retention.

Correct Answer

Retain

Avoid

Transfer

Mitigate

0
As a risk mit igation strategy, It is common to use a ratio between old and new projects to adj ust time or cost.
Blank 1

Correct Answer

Blank 1: ratio
When t he p roject encounters a threat that is outside the scope of the project or the authority of the project manager, what should they do?

0 Monitor the risk

Reason: Escalated risks are not monitored further by the project team.

0 Make a note of it in the risk plan

Reason: If it is outside the scope of the project, noting it in the risk plan is not appropriate.

0 Ignore the risk since it is outside the scope of the project

Reason: One should not ignore significant risks.

® Notify the appropriate people w ithin the organization

Correct Answer

Notify the appropriate people within the organization

0
Avoiding risk is changing the project plan to eliminate the risk or condition .
Blank 1

Correct Answer

Blank 1: Avoiding

0
Retaining risk occurs when a conscious decision is made to accept the risk o f an event occurring.
Blank 1

Correct Answer

Blank 1: Retaining

What is key to developing a risk transfer approach to risk management?

0 Finding ways to reduce the p robability o f the risk event occurring.

Reason: Transfer does not change risk; t his is a mitigation strategy.

® Identify and document responsibility for absorbing the impact of the risk occurrence.

Reason: This prevents lit igation if the risk event occurs.

0 Determine at what point in the project the risk transference should occur.

Reason: Since when a risk may occur is generally unknown, this would seem impractical.

Correct Answer

Identify and document responsibility for absorbing the impact of the risk occurrence.
Which methods may be used to transfer risk in a project?

L'!lil Insurance -
Reason: This is the most obvious. but not always the easiest.

Time and material contracts

Reason: A fixed price contract transfers risk from owner to contractor; time and material avoids risk to the contractor.

Warrant ies and/ or guarantees

Reason: Financial tools are typical methods.

~ Fixed price contracts -

Reason: A fixed price contract transfers risk from owner to contractor; time and material avoids risk to the contractor.

Correct Answer

Insurance

Warranti es and/ or guarantees

Fixed price contracts

Escalating risk occurs when the project encoun te rs a threat that is outside the scope o f the p roj ect or the authority of the p roject
Bl ank 1
manager.

Correct Answer

Blank 1: Escalating .

~ --------------------------------------------------------·················j

What characteristic s of a risk event may make "accepting the risk" an appropriate strategy?

L'!lil Low cost impact. -

Reason: If b udget constraints aren't a concern , the risk occurren ce cost wou ld not be considerat io n.

D The risk is unknown.

Reason: By definition, a risk management plan develops respon se for only identified, i.e., k nown, risks.

L'!lil Ext remely low probability of occurrence.

Reason: Combined with a high impact cost would make tl1is a viable option.

Correct Answer

Low cost impact.

Extremely low p robability of occurrence.

 There are three key reasons risk may be accepted. Match the reason a risk is "accepted," with how that type of risk is handled.

Too large to be transferred.

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T-h_
e_b_u_d_g_e_t_ re_s_e_rv_e_a_b_s_o_rb_s_th_e_ri_s_
k_s_if_t_h_e_y_m_a_
te_r_ia_l_iz_e_.- - - ~

Costs are too small to mitigate.

{ ~ - - - -A
-c_o_s_t_o_v_
e_rr_u_n_i_s_a_c_c_
e_p_te
_d_s_h_o_u_ld-th_e_ri_s_ ~
k_e_v_e_n_t_o_c_c_u_r__ _ _ _

So unlikely it is ignored. J The project owne r assumes the risk of an event occurri ng

l~--~
Correct Answer

The project owner assumes the risk of an eve nt

Too large to be transferred.
occurring

The budg et reserve absorbs the risks if t hey

Costs are too small to mitig ate.
materialize.

A cost overrun is acce pted should the risk eve nt

So unlikely it is ignored.
occur.

Contingency Planning
Which are ROtential impacts g iven a project with risk responses but no contingency plan?

~ Delayed corrective action. -

Reason: Many times, initial understanding of a problem is incomplete/incorrect and leads to poor decision making. Delays can be one of
them in which time is spent gathering ideas to imple ment.

L'!lil Panic.

Reason: The entire reason for p lanning is to have ideas of what to do, and avoid panic that may e nsue from risk events.

~ Incorrect actions taken.

Reason: Many times, initial understanding of a problem is incomplete/incorrect and leads to poor decision making.

Reduced costs through saved time.

Reason: The savings is realized w hen needed, and cost under situation of d uress and panic are often more expensive.

Correct Answer

Delayed corrective action.

Panic.

Incorrect actions taken.

Place the following components of the risk response matrix in the correct sequence.

Risk event
-
Response
.-.
Contingency plan

Trigger

Who is responsible

Correct Answer

1. Risk event

2. Response

3. Contingency plan

4. Trigger

5. Who is responsible

Which are appropriate methods for handling technical (project technology related issues) risk?

l!lil Testing and assessment methods.

Reason: Early testing of concepts is an appropriate contingency for managing technical risks.

r., Back-up or alternate plans.

Reason: This is an appropriate contingency for managing technical risks.

D Reducing project duration.

Reason: Duration and project timing are defined as schedule risks, rather than a technical risks.

D Purchase price protections.

Reason: Pricing problems are defined as cost risks, rather than a technical risks.

Correct Answer

Testing and assessment methods.

Back-up or alternate p lans.

What type of contingency is typically required to manage a "schedule risk", i.e., finishing a project late?

® Budget reserves, i.e. cash

Reason: The funds are expended on methods to shorten activities, such as overtime, subcontracting, etc.

0 Back-up strategies

Reason: This is for technical risks.

0 Mitigation of risk likelihood

Reason: This strategy deals with reducing the probability, not the impact.

0 Inflati on factor adjustments

Reason: This is for cost risks.

Correct Answer

Budget reserves. i.e. cash

0
Proj ects of long duration need some contingency for cost changes- which are usually upward.
Bla nk1

Correct Answer

Blank 1: price or cost

0
A contingency p lan is an alternative plan t hat will be used if a possible foreseen risk event becomes a reality.
Blank 1

Correct Answer

Blank 1: contingency
What are key components of a contingency plan?

Developing a work breakdown structure for the contingency plan.

Reason: It is doubtful th at t he contingency p lan w ould require a WBS, but something like a responsibility matrix would be appropriate.

~ Naming a person responsible to execute the plan.

Reason: If nobody is named as responsible, t hen odds of success are greatly diminished.

~ Cost estimates in the planning, not execution, phase.

Reason: Cost. and source of funding, are required.

~ Defining the event that will initiate/trigger the plan into action.

Reason: Defines when to implement the contingency.

Correct Answer

Naming a person responsible to execute the plan.

Cost estimates in the planning, not execution, phase.

Defining the event that will initiate/trigger the plan into action.

0
Technical risks are problemati c; they can often be the kind that cause the project to be shut down.
Bla nk 1

Correct Answer

Blank 1: Technical

0
Crashing is reducing the time it takes to complete a project.
Blank 1

Correct Answer

Blank 1: Crashing or Crunching

0
Freeway proj ects can fall sl1ort o f the original intentions but st ill add value for each mile completed. This is called • Chunkability ". (Enter
8 Iank1
only one word per blank.)

Correct Answer

Blank 1: chunkable or chunkability

 Which are appropriate methods fo r handling cost risk?

0 Reducing project d uration

Reason: Duration and project t iming are defined as schedule risks, rathe r than a technical risks.

0 Lump sum approach

Reason: Avoid a lump-sum approach to developing contingency funds; too often, it w ill not address where price protection is needed.

0 Back-up or alternate p lans

Reason: This is an appropriate contingency for managing technical risks.

® Item-by-item p rice risk analysis

Reason: Purchases and cont racts that change should be ident ified and estimates should be made of the magnitude of t he change.

Correct Answer

Item -by-item price risk analysis

What are the potential actions o f project fund ing cut s such as the reduct ion or elimination of the source of project cash inflow 7

Reduce project scope -

Reason: Which would reduce resource requirements.

L'!':111 Cancel remainder of the project

Reason: If the cost to cancel is less than the cost to contin ue, this is a viable option.

Crashing the project

Reason: Crashing means reducing the durat ion of a project by shortening one or more activities and not ending t he p roject.

Correct Answer

Reduce proj ect scope

Cancel remainder of the proj ect

Contingency Reserves
0
Contingency funds are established to cover project risks.
Bla nk 1

Correct Answer

Blank 1: Contingency
Match the type of contingency wit h the correct definition.

Management
l ~-------
s_e_t_u_
p_t_o_c_o_v_e_r_u_n_k_n_o_w_n
_r_u_n_id_e_n_t-if-ie_ d_ri_
s_k_
s ._ _ _ _ _ __

Time

l ~
Set up to cove r id entified and/o r unknown risks.
- - ~

Correct Answer

Management Set up to cov er unknown/unidentified risks.

Time Set up to cov er identified and/or unknow n risks.

0
Contingency reserves are identified for specific work packag es o r segme nts of a project fou nd in the baseline budget o r w o rk
Blank 1
breakd ow n structure.

Correct Answer

Blank 1: Contingency

Which statements about management reserves are correct?

0 Allocated funds are deducted after specific work package/deliverable is completed.

Reaso n: Cover major unforeseen risk and are t herefore part of the whole project.

0 Management reserves are dependent on budget reserves.

Reaso n: Manag ement reserves are independent of budget reserves.

0 Management reserves are tagged to specific work packages or deliverables.

Reason: Management reserves cover major unforeseen risk and are therefore part of the w ho le project.

0 Management reserves are established after the budget reserves are identified.

Reason: Manag ement reserves are established after the budg et rese rves are ident ified and funds established.

_.
® The funds for management reserves are included in the total baseline project cost.

Reason: These are separate, and are red uced as the proje ct progresses.

Correct Answer

Management reserves are established after the budget reserves are identified .
Which of t he following types of act ivities might need time buffers?

[ L!.I Act ivities with seve re risks

Act ivities with high costs to make sure the high cost does not negatively imp act t he budg et

Reason: Having a hig h cost does not nece ssarily ind icate the need for a time buffer.

Noncritical activities to reduce the likelihood that they w ill create another critical path

I L!.I Merge activitie s •7

L!.I Burst activities -
Reason: There is no particular reason a burst activity (an activity w ith m ult iple fo llowing activitie s) wou ld need a time buffer.

L!.I Act ivities that req uire scarce re sources

Correct Answer

Activities w ith severe risks

Noncrit ical activit ies to reduce the likelihood that they w ill create another critical path

Merge activities

Activities that require scarce resources

What best d escribes a contingency f und for a p roject?

0 A res erve to manage known and unknown negative p roject risk.

Reaso n: As explained in t he chapte r, most risk is negative but the re should be funds available to exploit opportunities if t hey occur.

0 A reserve to manage known and unknown i,ositive project risks.

Reaso n: As explained in t he chapte r, most risk is negative but the re should be funds available to exploit opportunities if t hey occur.

® A reserve to manage all known and unknown project risks.

Rea so n: Continge ncy funds are not part of baseline cost and are su pp orted throug h a risk management plan.

0 This is a form of padding used in est imates.

Reason: Conting ency funds are not part o f baseline cost, so they ar e not ro lled up with individ ual WBS est imat es.

Correct Answer

A rese rve to manag e all kno w n and unknown proj ect risks.

0
Management reserves are set up to cover un ide ntified risks and are allocated to risks associated w ith the total proj ect.
Blank 1

Correct Answer

Bla nk 1: Management
 0
Contingency reserves reduces as the proj ect prog resses.
Blank 1

Correct Answer

Bla nk 1: decrease or d ecline

0
Management reserves are established after cont ing ency reserves are identified and funds established.
Bla nk 1

Correct Answer

Blank 1: after

Where are time buffers typically applied in a project plan?

l.!J Activities with severe risk

Reason: Buffers are added to activities with sever risks, merge activities that are prone to delays due to one or more preceding activities
being late, activ'ities that require scare resource.

l!"A Activities that merged when they are prone to delays

Reason: Buffers are added to activities with sever risks, merge activities that are prone to delays due to one or more preceding activities
being late, activities that require scare resource.

All activities along the critical path

Reason: This leads to too many buffers and is more like padding.

l:"J Activities requiring scarce resources

Reason: Buffers are added to activities with sever risks, merge activities that are prone to delays due to one or m ore preceding activities
being late, activities that require scare resource.

Correct Answer

Activities with severe risk

Activities that merged when they are prone to delays

Activities requiring scarce resources

0
Contingency reserves are identified for specific work packages or segments of a proj ect found in the baseline budget or work
Bla nk 1
breakdown structure.

Correct Answer

Blank 1: Contingency
 0
Contingency and manageme nt reserves sho uld b e kept separate
Blank 1

Correct Answer

Blank 1: separate

Which statements are correct w ith respect to time buffers7

® Buffers are a fo rm of estimate padding added by t he p roject manager rather than by the w ork package estimator. -
Reason: Estimates should be done using normal time and before ri sk management p lanning.

0 Buffers should b e added to proj ects with high uncertainties.

Reason: Unc ertainty is defined and d ocumented in the risk management p lan.

0 Buffers should be added to most , if not all, individual activitie s.

Reason: This would imply pad ding, whereas buffers should be used at critical merge activities or project phases.

Correct Answer

Buffers sho uld be adde d to proj ects with high uncertainties.

0
In the face of overall schedule unc ertainty, b uffers are sometimes added to the end of the proj ect.
Blank 1

Correct Answer

Blank 1: end, finish, or completion