Project Management- Chapter 7

Which of the following is the formula for the standard deviation of an activity when using PERT?

(b−a)/(6)

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

-A risk may have a negative impact on project objectives. -A risk is an uncertain event or condition. -A risk may have a positive impact on project objectives.

Where are time buffers typically applied in a project plan?

-Activities requiring scarce resources -Activities with severe risk -Activities that merged when they are prone to delays

What are the potential actions of project funding cuts such as the reduction or elimination of the source of project cash inflow?

-Cancel remainder of the project -Reduce project scope

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

-Defining and Planning

What are key components of a contingency plan?

-Defining the event that will initiate/trigger the plan into action. -Cost estimates in the planning, not execution, phase. -Naming a person responsible to execute the plan.

List the steps of risk management in their proper sequence

1- risk identification 2- risk assessment 3-risk response development 4-risk response control

Which statement best defines the methodology for exploiting project opportunities?

Eliminate the uncertainty associated with an opportunity to ensure that it definitely happens.

____ risk occurs when the project encounters a threat that is outside the scope of the project or the authority of the project manager.

Escalating

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

False

True or false: A risk breakdown structure should focus on task-level risks during the initial risk identification stage.

False

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

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

____ scales can be a bit more problematic, since adverse risks affect project objectives differently.

Impact

Which are appropriate methods for handling cost risk?

Item-by-item price risk analysis

____ reserves are set up to cover unidentified risks and are allocated to risks associated with the total project.

Management

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

They may vary depending on project.

Why is the second step of risk management to assess the risks identified in the first step?

To establish priorities for attention

Which statement is correct with respect to transferring risk?

Transfer of risk does not change the likelihood or impact.

True or false: PERT is similar to the critical path method.

True

Which of the following best describes a risk event?

What can go wrong during the project

Which statement best defines the methodology for accepting project opportunities?

When the event occurs, implement increased application of resources, but don't expend any pursuing it.

A _____ is the contingency budget set aside to deal with risk events.

management reserve

An ____ is an event that can have a positive impact on project objectives.

opportunity

Projects of long duration need some contingency for ____ changes—which are usually upward.

price

Often organizations find it useful to categorize the 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 ---> Yellow---> Green--->

red --->Major risks Yellow--->Moderate risks Green--->Minor risks

Risk responses are developed based upon ___.

risk assessment classifications.

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

risk profile

The risk management process begins by trying to generate a list of all the possible ____ that could affect the project.

risks

Contingency and management reserves should be kept ____ .

separate

In the context of PERT, match the variables in the formula to compute the weighted average activity time with their descriptions. te---> a---> b---> m--->

te---> Weighted average activity time a--->Optimistic activity time b--->Pessimistic activity time m--->Most likely activity time

PERT uses ____ for each activity.

three time estimates

The risk breakdown structure is used in conjunction with the ___ to help identify risks.

work breakdown structure

What aspects of project change control are documented within a communication plan at the start of a project?

-How stakeholders will be notified of changes. -The evaluation/decision making process.

Which of the following are used by a risk assessment matrix to prioritize identified risk?

-Impact -Likelihood

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

-Impact of an event -Probability of an event

Which aspects of project management require a system/process to track and control change?

-Implementation of contingency plans. -Improvements suggested by team members. -Project scope.

What functions are included in a risk response strategy?

-Initiating contingency plans -Monitoring "triggering" events -Watching for new risks

What are the drawbacks in using insurance to transfer risk?

-Insurance is often costly -It may be difficult to explain the risk and its consequences to an insurance broker.

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

-Low cost impact. -Extremely low probability of occurrence.

Which of the following types of activities might need time buffers?

-Merge activities -Noncritical activities to reduce the likelihood that they will create another critical path -Activities that require scarce resources -Activities with severe risks

What is the benefit of a risk management plan for a project?

-Minimizing the impact of risks occurring.

Most change management systems are designed to accomplish which of the following?

-Negotiate and resolve conflicts of change, conditions, and cost. -Communicate changes to the parties affected. -Assign responsibility for implementing change.

Which response explains why monitoring risk during project execution is important?

-New risks may emerge as project activities complete. -People may hide problems until they become difficult to manage.

Which are potential impacts given a project with risk responses but no contingency plan?

-Panic. -Delayed corrective action. -Incorrect actions taken.

Where in the project life cycle should a project manager begin the risk identification process?

-Planning

Assessing identified risk is done with respect to which of the following aspects of the project?

-Project cost -Project priorities -Project timing

In the context of change control management, identify the sources of changes in a project.

-Risk events -Project managers -Project customers

In addition to the core project team, who should/may participate in identifying risks?

-Sponsors -Customers -Outside vendors/contractors

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

-Testing and assessment methods. -Back-up or alternate plans.

Which methods may be used to transfer risk in a project?

-Warranties and/or guarantees -Fixed-price contracts -Insurance

One of the keys to success in risk identification is ____ . (Enter only one word per blank.)

-attitude

The ____ ____ ____ (TE) is the sum of all the average activity times along the critical path.

-average -project -duration

In general terms, risk mitigation will approach an identified risk by planning to reduce its:

-impact. -likelihood.

The average project duration follows a ____ distribution.

-normal

Basically PERT simulation assumes a statistical distribution, range between ____ and ____ , for each activity duration.

-optimistic -pessimistic

With PERT, each activity duration can range from an ____ time to a ____ time.

-optimistic -pessimistic

Risks can have both ____ or ____ consequences.

-positive -negative

An effective tool for identifying specific risks is the ____ ____ ____ . (Enter only one word per blank.)

-risk -breakdown -structure

A ____ ____ details all identified risks, including descriptions, category, probability of occurring, impact, responses, contingency plans, owners, and current status.

-risk -register

Impact × Probability × Detection =____ ____

-risk -value

In practice, external risk events are often referred to as "______" to differentiate them from those that are not within a project manager's or team's responsibility area.

-threats

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

1- Risk event 2- Response 3- Contingency plan 4- Trigger 5- Who is responsible

List the steps of risk management in their proper sequence.

1- Risk identification 2-Risk Assessment 3-Risk Response Development 4-Risk Response Control

For a project task, the optimistic activity time is 4 hours, the pessimistic time is 8 hours, and the most likely time is 5 hours. Calculate the weighted average activity time.

5.33 hours

For a project 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.

6.8 hours

What best describes a contingency fund for a project?

A reserve to manage all known and unknown project risks.

____ risk is changing the project plan to eliminate the risk or condition.

Avoiding

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

Actual events that increase the risk

Which statement best defines the methodology for sharing project opportunities?

Allocate some or all ownership to another party best able to capture the opportunity for the benefit of the project.

Which statements are correct with respect to time buffers?

Buffers should be added to projects with high uncertainties.

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

Documentation of responsibility

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

Changing the project plan to eliminate a risk condition.

____ funds are established to cover project risks.

Contingency

____ reserves are identified for specific work packages or segments of a project found in the baseline budget or work breakdown structure.

Contingency

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

Contingency funds, i.e. cash

____ , or reducing project duration, is accomplished by shortening one or more activities on the critical path.

Crashing

Match the types of contingency funds with their descriptions. Management---> Contingency--->

Management---> These are set up to cover unknown/unidentified risks. Contingency---> These are set up to cover identified risks.

When the project encounters a threat that is outside the scope of the project or the authority of the project manager, what should they do?

Notify the appropriate people within the organization

____ and related techniques take a more macro perspective by looking at overall cost and schedule risks.

PERT

Who usually generates and maintains risk profiles?

Project office

____zone risks receive first priority.

Red

Which mitigation strategy is normally first pursued to minimize the cost impact of a risk event occurring?

Reduce likelihood.

____ risk occurs when a conscious decision is made to accept the risk of an event occurring.

Retaining

The sequence of steps in managing opportunities is the same as negative risk, but which step utilizes a different approach?

Risk Response Development.

Risk response approaches are

Specific to each risk event.

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

Starts low and rises, ending high

____ risks are problematic; they can often be the kind that cause the project to be shut down.

Technical

Which statement best defines the methodology for enhancing project opportunities?

The opposite of mitigation, i.e. take actions to increase the probability and/or impact of a positive occurrence.

Management reserves are established ____ contingency reserves are identified and funds established.

after

The goal of the failure mode and effects analysis (FMEA) is to prioritize risk by _____.

assigning numerical FMEA rankings

PERT developers chose an approximation of the ____ distribution to represent activity durations.

beta

Freeway projects can fall short of the original intentions but still add value for each mile completed. This is called "____ ." (Enter only one word per blank.)

chunkability

A ____ plan is an alternative plan that will be used if a possible foreseen risk event becomes a reality.

contingency

Contingency reserves ____ as the project progresses.

decrease

In scenario analysis, the significance of ____ is assessed.

each risk event

Only by focusing on actual ____ can potential solutions be found.

events