Project Management Chapter 7 Questions

All of the following are included in the risk identification process except A. Customers B. Subcontractors C. Competitors D. Vendors E. None of these are included

C. Competitors

Which of the following is not one of the potential responses to a specific risk event? A. Mitigating B. Retaining C. Ignoring D. Transferring E. Sharing

C. Ignoring

Adopting proven technology instead of experimental technology is an example of mitigating a risk. T/F

FALSE

The "Snapshot from Practice" case where Ellipsus Systems developed parallel prototype systems (WAP and JAVA) is an example of _________ a risk.

avoiding

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

contingency plan

The ________ impact of a risk event in a project is less if the event occurs earlier rather than later.

cost

The first step in the Risk Management process is ________.

risk identification

The easiest and most commonly used technique for analyzing risks is ________.

scenario analysis

Identify and briefly describe the five ways to respond to identified risks.

1. Mitigate the risk; duplicate systems, backup systems, alternate technology development, 2. Avoid the risk; changing the project plan to eliminate the risk, 3. Transfer the risk; fixed-price contract, insurance, 4. Sharing the risk; find others to share the costs of the risk, and 5. Retain the risk; take preventative measures to reduce the risk such as training.

Identify and briefly describe the four steps in risk management.

1. Risk Identification; all possible risks are identified, 2. Risk Assessment; risks are assessed in terms of importance and need for attention, 3. Risk Response Development; plans are developed to respond if the risk actually occurs, and 4. Risk Response Control; the actual response to the risk and controlling changes associated with the risks.

Identify at least six items that may be included on a Risk Profile.

1. technical requirements, 2. Design, 3. Testing, 4. Development, 5. Schedule, 6. Budget, 7. Quality, 8. Management, 9. Work Environment, 10. Staffing, 11. Customer, and 12. Contractors.

One of the keys to success in risk identification is A. Critical thinking B. Optimism C. Pessimism D. A "can do" attitude E. All of these are correct While a "can do" attitude is

A. Critical thinking

In the beginning the focus of risk management should be on risks that A. Impact the whole project B. Impact the critical path C. Are known D. Have the greatest cost impact E. Have the greatest schedule impact

A. Impact the whole project

The demolition of the Seattle Kingdome (Snapshot from Practice) is an example of which of the following? A. Mitigating B. Retaining C. Ignoring D. Transferring E. Sharing

A. Mitigating

A list of questions that address traditional areas of uncertainty on a project is termed a A. Risk profile B. Questionnaire C. Research D. Query E. Checklist

A. Risk profile

The cost impact of a risk event occurring as a project proceeds through its life cycle tends to A. Slowly rise B. Drop sharply and then level out C. Rise sharply and then level out D. Remain about the same E. Slowly drop

A. Slowly rise

What is the difference between budget reserves and management reserves?

Budget reserves are controlled by team participants and have been identified for known risks that have a low chance of occurring and are directly associated with specific work packages. Management reserves are controlled by the project manager and cover items which were unforeseen usually at the total project level.

Compare and contrast budget reserves and management reserves.

Budget reserves are for known risks associated with specific work packages and controlled by the project managers. Management reserves are for unforeseen risks associated with the overall project and are controlled by upper management.

The initial step in the risk management process is to A. Determine the level of acceptable risk B. Assess the risk potential C. Identify the risks D. Set aside budget funds for managing the risks E. Appoint a risk manager

C. Identify the risks

Which of the following is used to review activity and project risk? A. NPV B. S-curves C. PERT D. Decision trees E. All of these can be used

C. PERT

An uncertain event or condition that, if it occurs, has a positive or negative effect on a project objectives is termed. A. Random chance B. A disaster C. Risk D. Hazard E. Bad luck

C. Risk

The risk assessment form contains all of the following except A. Likelihood of the risk event occurring B. Potential impact of the risk event C. Who will detect the occurrence of the risk event. D. Difficulty of detecting the occurrence of the risk event E. When the risk event may occur

C. Who will detect the occurrence of the risk event.

Technical risks are: A. Can often be the kind that cause the project to be shut down. B. Problematic C. Imposed duration dates D. Both A and B are correct E. A, B, and C are all correct

D. Both A and B are correct

Which of the following is typically included in risk profiles? A. Management aspects B. Market aspects C. Technical aspects D. Both A and C are included E. A, B, and C are all included

D. Both A and C are included

One common mistake made early in the risk identification process is to A. Not all possibilities are considered B. Participants are over-optimistic C. Participants are over-pessimistic D. Focus on objectives and not on the events that could produce consequences. E. Too much attention is given to past events

D. Focus on objectives and not on the events that could produce consequences.

A risk profile is a list of questions that address traditional areas of uncertainty on a project that answers developed from: A. When the event might occur in the project B. Chances of the event occurring C. Interaction with other parts of the project or with other projects D. From previous, similar projects E. Magnitude or severity of the event's impact

D. From previous, similar projects

The 1999 NASA Mars Climate Orbiter is an example of A. Disaster avoidance through proactive risk management B. Murphy's Law C. Proper use of critical thinking D. Mismanaged risk control E. Using historical records to assess risk

D. Mismanaged risk control

Detailing all identified risks, including descriptions, category, and probability of occurring, impact, responses, contingency plans, owners and current status is called: A. Management reserves B. Change control C. Contingency reserves D. Risk register E. Risk profiles

D. Risk register

Which of the following is not one of the steps in the risk management process? A. Risk response development B. Risk assessment C. Risk identification D. Risk tracking E. Risk response control

D. Risk tracking

Due to the impact over a long period of time, risk events that occur in the early stages of a project will have a greater cost impact than those that occur in later stages. T/F

FALSE

During risk identification the smaller risks should be identified first because they will naturally lead to identifying the larger risks. T/F

FALSE

Performance bonds, warranties, and guarantees are financial instruments used to share risk. T/F

FALSE

Scheduling outdoor work in the summer, investing in up front safety training, and choosing high quality materials are examples of retaining a risk. T/F

FALSE

The Risk Severity Matrix rates risk events based upon schedule and cost. T/F

FALSE

The first step in the risk management process is Risk Assessment. T/F

FALSE

The risk identification process should be limited to just the core project team. T/F

FALSE

In __________ the Risk Severity Matrix is extended by including the ease of detecting a risk event occurring.

Failure Mote and Effects Analysis (FMEA)

________ reserves are controlled by the project manager and used to cover major unforeseen risks to the entire project.

Management

How should a risk assessment be conducted?

Not all identified risks deserve attention, some are trivial and others are serious threats. The Scenario analysis is the easiest and most commonly used technique for analyzing risks. Each risk is assessed in terms of 1. what the risk are, 2. the outcomes of the event's occurrence, 3. the severity of the event's impact, 4. the probability of the event occurring, 5. when the event may occur, and 6. the interaction with other parts of the project or other projects.

What is a Risk Severity Matrix and what does it do?

Risks are placed on a matrix that has Likelihood as the vertical axis and Impact as the horizontal axis. Risks in the upper right corner are considered major, those further left are considered moderate, while the rest are considered minor. The matrix is usually color-coded with the major risks in red, moderate risks in yellow and minor risks in green. It is an easily read graphical representation of a project's risks.

A risk profile is a list of questions that have been developed and refined from previous, similar projects. T/F

TRUE

Budget reserves are setup to cover identified risks associated with specific segments of a project while management reserves are set up to cover unidentified risks associated with the total project. T/F

TRUE

Change management systems involve reporting, controlling, and recording changes to the project baseline. T/F

TRUE

Fixed price contracts are an example of transferring risk from an owner to a contractor. T/F

TRUE

In a Risk Severity Matrix a green zone risk is considered inconsequential and ignored unless their status changes. T/F

TRUE

One common mistake that is made early on in the risk identification process is to focus on consequences and not on the events that could produce consequences. T/F

TRUE

Project managers need to establish an environment in which participants feel comfortable raising concerns and admitting mistakes. T/F

TRUE

Risks such as inflation and monetary exchange rates are not usually included in a project's risk assessment. T/F

TRUE

Since the goal is to find problems before they happen, the project manager should encourage critical thinking when it comes to risk identification. T/F

TRUE

The FMEA method calculates a risk value by assigning ease of detection ratings to the key risk elements. T/F

TRUE

The probability that a risk event will occur is higher during the initial stages of a project. T/F

TRUE

The quality and credibility of the risk analysis process requires that different levels of risk probabilities and impacts be defined. T/F

TRUE

Identify and briefly describe the parts of a Risk Response Matrix and explain how one would be used.

The parts are: the risk event, the response, contingency plan, trigger, and who is responsible. It is used for summarizing how the project team plans to manage risks that have been identified.

Describe the process for identifying project risks.

The project manager pulls together a risk management team consisting of core team members and other relevant stakeholders and uses brainstorming and other techniques to identify project risks. Focus should be on the WBS and the risks associated with the deliverables.

The horizontal scale on the Risk Severity Matrix measures the _________ of a potential risk event.

impact

The vertical scale on the Risk Severity Matrix measures the _________ of a potential risk event.

likelihood

Testing a new project on a smaller isolated area prior to installing it for the entire organization is an example of ________ a risk.

mitigating

In a ________, three different estimates of activity times are used to statistically predict the time an activity will take to complete.

probability analysis

If a risk event is very unlikely to occur the project owner would probably ________ the risk.

retain

The ________ form identifies each risk event, the likelihood of it occurring, the potential impact, when it may occur, and the degree of difficulty in detecting it.

risk assessment

A ________ is a list of questions that address traditional areas of uncertainty on a project.

risk profile

A ________ identifies what to do if a potential risk event actually occurs.

risk response matrix

The ________ matrix is divided into red, yellow, and green zones representing major, moderate, and minor risks.

risk severity

When the entertainment industry formed a consortium to define a common operating format for DVD it was ________ the risk.

sharing

Performance bonds, warranties, and insurance are examples of ________ a risk.

transferring

Which of the following is not one of the probability analysis tools? A. Ratio/range analysis B. Decision tree C. PERT simulation D. PERT E. All of these are probability analysis tools

A. Ratio/range analysis

Describe the relationship between the likelihood of a risk event occurring and the cost of fixing the risk event as a project proceeds through its life cycle.

In the early stages of the project life cycle the probability of a risk event occurring is greater than at any other time and the cost to fix it is lower than at any other point. As time passes the probability of occurrence drops lower and lower while the cost rises.

What is Change Control Management and what function does it perform?

Change Control Management is the formal process for making and tracking changes once a project has started. Any changes must be detailed and accepted by the project team. Risks associated with making changes are thus assessed and documented.

A ____________ is useful for summarizing how the project team plans to manage risks that have been identified.

Risk Response Matrix

Contingency funding is made up of budget reserves and management reserves. T/F

TRUE

Risk events such as inflation, market acceptance, and government regulations are referred to as ________.

threats

What is a risk profile and what benefits does it provide to risk management?

A risk profile is a list of questions that address traditional areas of uncertainty on a project. The questions have been developed and refined from previous, similar projects. These profiles are generated and maintained by the project office and are updated and refined during the life of the project. This historical file assists in identifying risks for future projects.

Funds that are for identified risks that have a low probability of occurring and that decrease as the project progresses are called ______ reserves. A. Management B. Budget C. Contingency D. Padded E. Just in case

B. Budget

This risk assessment tool is a variation of the risk severity matrix that includes the ease of detection for each of the identified risks. A. PERT simulation B. FMEA analysis C. Ratio/range analysis D. Probability analysis E. Semi-quantitative analysis

B. FMEA analysis

Which of the following is identified to cover major unforeseen risks and, hence, are applied to the total project? A. Budget reserves B. Management reserves C. Time buffers D. Both B and C are correct E. A, B, and C are all correct

B. Management reserves

Which of the following would not be considered a threat? A. Inflation B. Meeting the project schedule C. International disruptions D. Economic conditions E. Competition

B. Meeting the project schedule

The risk associated with one of the key members being stuck by lightning would most likely be handled by which of the following? A. Mitigating B. Retaining C. Ignoring D. Transferring E. Sharing

B. Retaining

The attempt to recognize and manage potential and unforeseen trouble spots that may occur when a project is implemented is known as A. Risk forecasting B. Risk management C. Contingency planning D. Scenario analysis E. Disaster protection

B. Risk management

The easiest and most commonly used technique for analyzing risks is _____ analysis. A. Probability B. Scenario C. Payback D. Risk/reward E. Impact

B. Scenario

________ reserves are identified for specific work packages and cover risks that have a low probability of occurring.

Budget

Change management systems are designed to accomplish all of the following except: A. Track all changes that are to be implemented B. Review, evaluates, and approve/disapprove proposed changes formally C. Identify expected effects of proposed changes on schedule and budget D. Reflect scope changes in baseline and performance measures E. All of the above are correct

E. All of the above are correct

Which of the following is not included in a Failure Mode and Effects Analysis? A. Impact B. Probability C. Detection D. Risk value E. All of these are included

E. All of these are included

A Risk Response Matrix contains all of the following except A. Contingency plan B. Trigger C. Who is responsible? D. Response E. All of these are included in the matrix

E. All of these are included in the matrix

The two scales of a risk severity matrix measure A. Time, cost B. Cost, schedule C. Impact, cost D. Time, impact E. Likelihood, impact

E. Likelihood, impact

The risk management tool that is divided into three color-coded zones representing major, moderate, and minor risks is the risk A. Assessment form B. Responsibility matrix C. Scenario assessment D. Impact assessment E. Risk severity matrix

E. Risk severity matrix

The chances of a risk event occurring as a project proceeds through its life cycle tends to A. Slowly rise B. Drop sharply and then level out C. Rise sharply and then level out D. Remain about the same E. Slowly drop

E. Slowly drop

The likelihood of a risk event occurring ________ as a project goes through its life cycle.

decreases