PMP - 2020 - Quiz - PpK - Knowledge Area - Risk Management
A project manager has decided to use a decision tree to do a build or upgrade analysis. The build requires an investment of $200M. On the build decision branch, there is a 60 percent probability of strong demand (yielding a revenue of $400M) and a 40 percent probability of weak demand (yielding a revenue of $150M). What is the expected monetary value (EMV) of the build? $100M $300M $140M $200M
$100M The payoff for the strong demand scenario is $400M - $200M = $200M (since the initial investment is $200M). The payoff for the weak demand scenario is $150M - $200M = - $50M. Therefore, the EMV is computed as: (0.6 * 200) + (0.4 * -50), where 0.6 represents the 60% probability of the strong demand scenario and 0.4 represents the 40% probability of the weak demand scenario. 120 - 20 = 100. Therefore, the expected monetary value is $100M. [PMBOK 6th edition, Page 435]
If a project has a 60 percent chance of a $100,000 profit and a 40 percent chance of a $100,000 loss, the expected monetary value of the project is: $20,000 profit $40,000 loss $100,000 profit $60,000 loss
$20,000 profit EMV = Probability * Impact. 0.6 * $100,000 = $60,000. 0.4 * ($100,000) = ($40,000). $60,000 - $40,000 = $20,000 profit. [PMBOK 6th edition, Page 435]
ou are the project manager of a project and are about to conduct a risk identification exercise in a few days' time. You want to remind the participants in the exercise beforehand of the various sources from which risk may arise in the project. What could you use to help you do this? A Risk Breakdown Structure (RBS) A Risk Simulation Structure (RSS) A Risk Register An Impact Matrix
A Risk Breakdown Structure (RBS) The Risk Breakdown Structure (RBS) is a hierarchically organized depiction of identified project risks arranged by risk category and subcategory. This may be based on a previously prepared categorization framework. The RBS serves to remind participants in the risk identification exercise of the different sources from which project risk may arise. [PMBOK 6th edition, Page 405]
A project manager is using a Risk Diagramming technique that is a graphical representation of situations showing causal influences, time ordering of events, and other relationships among variables and outcomes. This would be: An Influence Diagram A system flow chart A Pareto chart Histogram
An Influence Diagram A Risk Diagramming technique that is a graphical representation of situations showing causal influences, time-ordering of events and other relationships among variables and outcomes is known as an Influence Diagram. The Cause-and-Effect diagram also identifies the causes of risk but does not have the time-ordering of events. [PMBOK 6th edition, Page 436]
You are optimizing a highly automated assembly process for an agricultural aircrafts manufacturing facility. You priority considerations are parts orientation, techniques for segmentation of different part types, and spacing between units on the line. You have decided to utilize the DfX technique on this project. The X in the DfX can be: Different aspects of product development Competing project constraints Design assumptions Discretionary dependencies
Different aspects of product development The X in DfX can be different aspects of product development, such as reliability, deployment, assembly, manufacturing, cost, service, usability, safety, and quality. [PMBOK 6th edition, Page 295]
Identification of new risks, reassessment of old risks, and closing of outdated risks are part of the Monitor Risks process. How often should project risk reassessment be scheduled? It depends on how the project progresses relative to its objectives. Reassessment is necessary at the 50 percent and 75 percent stages of project completion. Reassessment is necessary at the 25 percent, 50 percent, and 75 percent stages of project completion. Reassessment is necessary at the 20 percent, 40 percent, 60 percent and 80 percent stages of project completion. (Your Answer)
It depends on how the project progresses relative to its objectives. The Monitor Risks process is performed throughout the project. The number of project risk reassessments scheduled depends on the progress of the project relative to its objectives. [PMBOK 6th edition, Page 453]
Work Performance Information is not an output of which of the following processes? Manage Communications Validate Scope Monitor Risks Control Scope
Manage Communications Work Performance information is not an output of the Manage Communications Process. [PMBOK 6th edition, Page 379]
As part of a strategy to handle negative risk, a project manager decided to adopt less complex processes, conduct more tests, and choose a more stable supplier. What strategy would this be classified as? Mitigation Acceptance Transference Avoidance
Mitigation Actions such as adopting less complex processes, more testing, or choosing a more stable supplier would be considered mitigation. These actions reduce the probability and impact of risks. [PMBOK 6th edition, Page 443]
Joanne wants to identify all possible duration outcomes for her project along with the probability of occurrence of each expected duration. Ideally the output should be a probability distribution representing the probability of achieving different project durations. Which of the following techniques could she use? Monte Carlo simulation Quantification tabling Delphi technique Control Room method
Monte Carlo simulation Typical outputs of a Monte Carlo analysis is a cumulative probability distribution representing the probability of achieving any particular outcome or less. [PMBOK 6th Edition, Page 433]
You are running a project risk identification workshop with your project team and key stakeholders. A number of project risks have been identified that have a potential to increase the project cost and duration estimates. Once the risks were identified, you used an affinity diagram to sort and group these together into risk categories. You then called off the meeting and promised the stakeholders to share the risk responses once these risks are qualitatively analyzed. What did you miss? Opportunities Threats Impacts Risk probabilities
Opportunities You forgot to consider opportunities and only collected negative risks. Risk probabilities and impacts are incorrect choices as, according to the scenario, the risks will be analyzed later. [PMBOK 6th edition, page 397]
Which of the following is NOT a valid WBS creation approach: Parametric approach Top-down approach Use of organizational guidelines Use of WBS templates
Parametric approach A WBS structure may be created through various approaches. Some of the popular methods include the top-down approach, the use of organization-specific guidelines, and the use of WBS templates. Parametric approach is an estimation technique and not a valid WBS creation technique. [PMBOK 6th edition, Page 159]
You have been managing a research project to create genetically modified fruits using genetic engineering techniques. Since many legal issues are involved in this process, you created contingency allowances by using various quantitative analysis methods to account for cost uncertainty. You have just concluded a brainstorming session with your team in the execution phase to monitor risks that have developed in the project over the past few weeks and to establish new risk response plans. What should you do if you want to allocate more contingency reserves to account for new risks? Perform the reserve analysis to compare the amount of contingency reserves remaining to the amount of risk remaining Perform Monte Carlo analysis to compare the amount of contingency reserves remaining to the amount of risk Perform the variance and trend analysis to compare planned results to the actual results Perform the quantitative risk analysis to determine the outstanding risks
Perform the reserve analysis to compare the amount of contingency reserves remaining to the amount of risk remaining Many risks may develop over the course of any project. Project managers must monitor those risks and plan risk responses. The reserve analysis is used as a tool in the Monitor Risks process. This technique is used to compare the amount of contingency reserves remaining to the amount of risk remaining throughout the execution of the project. Hence, you must conduct a reserve analysis first to decide on the contingency allowances. [PMBOK 6th edition, Page 456]
Velvet is working for a chemical industry, and her management proposed two different projects to manufacture benzene for commercial use. After doing financial analysis, the financial advisor provided her with the following statistics about the projects: Project 1: 60 percent probability of success with a profit of $500,000 and 20 percent probability of failure with a loss of $200,000. Project 2: 30 percent probability of success with a profit of $300,000 and 30 percent probability of failure with a loss of $400,000. Based on the information above, Velvet should choose: Project 1 Either project 1 or project 2 Neither project 1 nor project 2 Project 2
Project 1 Profit or loss from a project = (Expected profit * probability of profit) - (Expected loss * probability of loss). For Project 1, the profit or loss = (500000*0.6 - 200000*0.2) = 300000 - 40000 = $260,000 profit. For Project 2, the profit or loss = (300000*0.3 - 400000*0.3) = 90000 - 120000 = ($30,000) = $30,000 loss. Hence, Velvet should select Project 1, which can yield a profit. [PMBOK 6th edition, Page 435]
You are managing a building refurbishment project that involves a number of uncertainties and risks. This has required you to pay special attention to the risk management processes. As part of the risk analysis, most of the risks can be analyzed at a high level, while some of the critical risks need to be analyzed in a greater detail. Which type of risk analysis ranks risks for future action or analysis by evaluating their probability of occurrence and impact? Qualitative analysis RBS Assumptions analysis Quantitative analysis
Qualitative analysis Qualitative analysis examines risks from the risk register and analyzes each risk's probability of occurrence and the effect it would have on the project deliverables if it did occur. It ranks risks for future action or analysis by evaluating their probability of occurrence and impact. [PMBOK 6th edition, Page 419]
Which of these is not a data analysis technique used during quantitative risk analysis? RACI chart Tornado diagram Decision tree Influence diagrams
RACI chart RACI chart is not a data analysis technique used during quantitative risk analysis. Rest of the choices are valid techniques for data analysis. [PMBOK 6th edition, Pages 434, 435, 436]
A number of identified risks occurred early in a project. As a result, most of the project objectives ended up in jeopardy. The project manager decided to present a case to management that the project be closed down. This is an example of: Risk Avoidance Risk Acceptance Risk Mitigation Risk Transfer
Risk Avoidance Risk avoidance involves changing the project management plan to eliminate the risk. Although an extreme situation, shutting down a project constitutes a radical but legitimate avoidance strategy. [PMBOK 6th edition, Page 443]
You are the project manager for a project and have just entered the third year of a scheduled four-year project. You need to evaluate new risks that have arisen since the project began. What agenda item do you need to add to your next team meeting? Risk re-assessment Variance and trend analysis Process Improvement Plan Risk audit
Risk re-assessment A risk reassessment is a technique that involves reevaluating project risks and identifying new risks that arise as the project moves forward. These risks are evaluated and placed in the risk register. The PMBOK recommends conducting risk reassessments during team meetings as a part of the Monitor Risks process.[PMBOK 6th edition, Page 457
Early in the project, you are meeting with your team and would like to address all the strengths, weaknesses, opportunities, and threats the project is facing. What tool should be used? SWOT Analysis Interviewing Delphi Technique Brainstorming
SWOT Analysis A SWOT Analysis chart would be the best choice. SWOT is an acronym for strengths, weakness, opportunities and threats. [PMBOK 6th edition, Page 415]
Melissa, a junior project manager in your firm, is currently managing a hardware deployment project. She has recently created a risk management plan for this project and has requested a review and feedback from you. You found out that some sections of the plan are irrelevant. Which of the following would not be included in this plan? Templates Roles and responsibilities Budgeting Methodology
Templates Templates is not a valid response. The other choices are typical components of a Risk Management Plan. [PMBOK 6th edition, Page 405]
The project manager in charge of a new credit card software project has asked the product manager to create a checklist to assist with identifying risks. A project manager can create a risk checklist from which of the following sources? The lowest level of the Risk Breakdown Structure Agreement templates Earned value measurements Project Management Information System
The lowest level of the Risk Breakdown Structure The lowest level of the RBS can be used as a risk checklist. [PMBOK 6th edition, Page 416]
Prompt lists are usually developed based on historical information and knowledge accumulated from previous similar projects. Which of the following statements about risk prompt lists is wrong? The lowest level of the Risk Breakdown Structure (RBS) cannot be used as a risk prompt list. The prompt list can be used as a framework Prompt lists can be used for idea generation Prompt list is a predetermined list of risk categories
The lowest level of the Risk Breakdown Structure (RBS) cannot be used as a risk prompt lis The lowest level in the RBS can be used as a basic risk prompt list. The other statements are all true. [PMBOK 6th edition, Page 416]
Jen works as a project manager for the National Weather Agency. She is managing a project designed to assess the effect of climate change on northern mountains. The initial study established a two months' delay for the testing equipment to reach mountains due to road construction. However, a recent assessment has indicated a significantly shorter delay because of rapid progress in construction. To deal with the shorter delay, which of the following steps should Jen take next? Update the risk register Distribute the information Conduct a stakeholder meeting Create a new project plan
Update the risk register The delays are considered risks to the project. In this scenario, the reassessment indicated a decline in the risk (delay time) compared to the initial risk identification. The risk reassessment is performed in the Monitor Risks process, and the outcome of the risk reassessment updates the risk register. Therefore, Jen must take steps to update the risk register. Other steps can be taken after updating the risk register. [PMBOK 6th edition, Page 458]
You have recently joined a team that is obsessed with the use of decision trees to analyze most project situations. You are a bit concerned with this behavior and are now putting together a presentation on proper usage of decision trees. You need to give examples where you should or shouldn't apply a decision tree to analyze a project situation. Under which of the following scenarios would you not use a decision tree? When the future scenarios are known When some future scenarios are unknown When you need to look at the implications of not choosing certain alternatives When the outcomes of some of the actions are uncertain
When the future scenarios are known You would use a decision tree when uncertainty and unknowns exist regarding future scenarios and their outcomes, not when future scenarios are known. [PMBOK 6th edition, Page 435]
You are managing a software development project for your organization and currently tailoring risk management processes to be applied on this project. You are using PMBOK Guide as a base framework for your processes. Which of these is an input to the Monitor Risks process? Work Performance Reports Risk audits Change requests Work performance information
Work Performance Reports Work Performance Reports are inputs to the Monitor Risks process. [PMBOK 6th edition, Page 453]
ou found out that a project team is not applying the project risks management processes in the right sequence. As a result, the team is not getting the results they should be getting. You tell them the correct sequence of processes in the risk management area is: Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, and Plan Risk Responses Plan Risk Responses, Perform Qualitative Risk Analysis, and Perform Quantitative Risk Analysis Perform Quantitative Risk Analysis, Perform Qualitative Risk Analysis, and Plan Risk Responses Plan Risk Responses, Perform Quantitative Risk Analysis, and Perform Qualitative Risk Analysis
perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, and Plan Risk Responses The correct sequence is: Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, Plan Risk Responses. Perform Qualitative Risk Analysis includes methods for identifying risks for further actions such as Perform Quantitative Risk Analysis and Plan Risk Responses. [PMBOK 6th Edition, Page 395]
