PM Chapter 7 LearnSmart

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

Avoiding

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 addition to the core project team, ALL should/may participate in identifying risk, except for: -Outside vendors/contractors -customers -sponsors -finance analysts

finance analysts

What best describes a contingency fund for a project? -A reserve to manage known and unknown negative project risk. -A reserve to manage known and unknown positive project risks. -A reserve to manage all known and unknown project risks. -This is a form of padding used in estimates.

A reserve to manage all known and unknown project risks.

Which of the following types of activities might need time buffers? -Activities with severe risks -Burst activities -Noncritical activities to reduce the likelihood that they will create another critical path -Merge activities -Activities with high costs to make sure the high cost does not negatively impact the budget -Activities that require scarce resources

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

What time frames does the statistical methodology in Program Evaluation and Review Technique (PERT) simulation utilize? -Activity optimistic and pessimistic times. -Average of all activity durations. -Project start and end dates.

Activity optimistic and pessimistic times.

When identifying risk, a team should initially focus on what aspect of risk? -Actual events that increase the risk -Outcomes of a chance event -Consequences of a chance event -The impact of a chance event

Actual events that increase the risk

What type of contingency is typically required to manage a "schedule risk", i.e., finishing a project late? -Back-up strategies -Budget reserves, i.e. cash -Mitigation of risk likelihood -Inflation factor adjustments

Budget reserves, i.e. cash

Which best describes what is meant by "risk avoidance" in a risk management plan? -Changing the project plan to eliminate a risk condition. -Buy insurance to manage consequences. -Ignore the risk and manage it when it occurs. -Change the plan to lessen consequences.

Changing the project plan to eliminate a risk condition.

______________ reserves are set up to cover identified risks; these reserves are allocated to specific segments or deliverables of the project.

Contingency

What two statements are correct and explain the distinction between a risk response plan and a contingency plan? (Choose 2) -Contingency plans go into effect before a risk occurrence happens. -Contingency plans go into effect after a risk occurrence happens. -Risk response plans are initiated before the risk occurs. -Risk response plans are initiated after the risk occurs.

Contingency plans go into effect after a risk occurrence happens. Risk response plans are initiated before the risk occurs.

Change management systems utilize what process steps? (Choose 3) -Recording -Reporting -Controlling -Progressive elaboration

Controlling Reporting Recording

All are the potential actions of project funding cuts such as the reduction or elimination of the source of project cash inflow, except for: -Cancel remainder of the project -Crashing the project -Reduce project scope

Crashing the project

In a generic project life cycle, which phase(s) has/have the highest probability of risk occurring? -Defining and Planning -Planning and Executing -Executing and Delivering -Delivering

Defining and Planning

All are key components of a contingency plan, except for: -Naming a person responsible to execute the plan -Cost estimates in the planning, not execution, phase. -Developing a work breakdown structure for the contingency plan. -Defining the event that will initiate/trigger the plan into action.

Developing a work breakdown structure for the contingency plan.

What is required in order for risk response control to succeed? -Work Breakdown Structure dictionary -Mitigation of risk likelihood -Documentation of responsibility

Documentation of responsibility

Which statement best defines the methodology for exploiting project opportunities? -Eliminate the uncertainty associated with an opportunity to ensure that it definitely happens. -Allocate some or all ownership to another party who is best able to capture the opportunity for the benefit of the project. -The opposite of mitigation, i.e. take actions to increase the probability and/or impact of a positive occurrence. -When the event occurs, implement increased application of resources, but don't expend any pursuing it.

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

What is key to developing a risk transfer approach to risk management? -Determine at what point in the project the risk transference should occur. -Finding ways to reduce the probability of the risk event occurring. -Identify and document responsibility for absorbing the impact of the risk occurrence.

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 of the following are used by a risk assessment matrix to prioritize identified risk? (Choose 2) -Impact -Cost -Likelihood -Detectability

Impact & Likelihood

All are the drawbacks in using insurance to transfer risk, except for: -It is difficult to insure low-probability and high-consequence risk events. -Insurance is often costly -It may be difficult to explain the risk and its consequences to an insurance broker.

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

Which are appropriate methods for handling cost risk? -Item-by-item price risk analysis -Lump sum approach -Reducing project duration -Back-up or alternate plans

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 statements about management reserves are correct? -Allocated funds are deducted after specific work package/deliverable is completed. -Management reserves are established after the budget reserves are identified. -The funds for management reserves are included in the total baseline project cost. -Management reserves are dependent on budget reserves. -Management reserves are tagged to specific work packages or deliverables.

Management reserves are established after the budget reserves are identified.

What is the benefit of a risk management plan for a project? -Preventing all project risk. -Minimizing the impact of risks occurring. -Providing flexibility for project scope development. -Creating multiple work breakdown structures.

Minimizing the impact of risks occurring.

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 -Ignore the risk since it is outside the scope of the project -Make a note of it in the risk plan -Monitor the risk

Notify the appropriate people within the organization

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

PERT

In scenario analysis, which of the following is used to assess risk? (Choose 2) -Stage of project life cycle -Probability of an event -Impact of an event -Risk management

Probability of an event Impact of an event

Which source(s) of project information must be reviewed and, if necessary, updated/changed upon approval of a change request proposal? (Choose 2) -Project baseline. -Risk management plan. -Work Breakdown Structure. -Budget or management reserves.

Project baseline. Work Breakdown Structure.

Which aspects of project management require a system/process to track and control change? (Choose 3)Improvements suggested by team members. -Project scope. -Implementation of contingency plans. -The project network plan. -Improvements suggested by team members. -Communication plan.

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

Assessing identified risk is done with respect to what aspects of the project? (Choose 3) -Project timing -Risk profiles -Project cost -Project priorities

Project timing Project cost Project priorities

All of the following pertain to "risk" in the context of project management, except for: -A risk is an uncertain event or condition. -Proper planning can overcome risk. -A risk may have a positive impact on project objectives. -A risk may have a negative impact on project objectives.

Proper planning can overcome risk.

All are potential impacts given a project with risk responses but no contingency plan, except for: -Delayed corrective action -Reduced costs through saved time -Incorrect actions taken -Panic

Reduced costs through saved time

What identifies and documents an initial set of risks? (Choose 2) -Work Breakdown Structure (WBS). -Organizational Breakdown Structure (OBS). -Risk Breakdown Structure (RBS). -Risk Profile.

Risk Breakdown Structure (RBS). Risk Profile.

What term is used to describe the documents needed to develop an adequate risk response control plan? -Work Breakdown Structure Dictionary. -Risk Register. -Work Breakdown Structure. -Project Scope.

Risk Register.

The sequence of steps in managing opportunities is the same as negative risk, but which step utilizes a different approach? -Risk Identification. -Risk Assessment. -Risk Response Development.

Risk Response Development.

Impact × Probability × Detection = __________ ________

Risk Value

Risk response approaches are -Determined when the risk occurs. -Specific to each risk event. -Common for classification types: high, med, low. -Common for all risk events.

Specific to each risk event.

Over the life of a project, how does the cost to fix risk events behave? -Starts low and rises, ending high -Starts high and declines, ending low -Remains constant -Behaves differently for different types of projects

Starts low and rises, ending high

Which are appropriate methods for handling technical (project technology related issues) risk? (Choose 2) -Purchase price protections. -Reducing project duration. -Testing and assessment methods. -Back-up or alternate plans.

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

All characteristics of a risk event may make "accepting the risk" an appropriate strategy, except for: -Extremely low probability of occurrence. -The risk is unknown. -Low cost impact.

The risk is unknown.

Which statement best describes the scales used to measure/predict probability, impact, and detection? -They may vary depending on project. -Simplest is always best. -Numerical rankings will always work.

They may vary depending on project.

All are methods that may be used to transfer risk in a project, except for: -Fixed price contracts -Time and material contracts -Insurance -Warranties and/or guarantees

Time and material contracts

Why is the second step of risk management to assess the risks identified in the first step? -To avert the risk -To establish priorities for attention -To determine what's missing

To establish priorities for attention

Why should groups be used in the risk identification stage, rather than individuals? -To spread the responsibility equally in case risks occur. -To make more accurate judgments about risks. -To increase project buy-in.

To make more accurate judgments about risks.

What is the purpose of a contingency fund in executing a response to an opportunity (positive risk) occurring? -To take advantage of opportunities -To eliminate project risks -None, it is not built into the original plan

To take advantage of opportunities

Which statement is correct with respect to transferring risk? -Transfer of risk increases total cost of the risk event occurring. -Transfer of risk does not change the likelihood or impact. -Transferring risk infers postponement or delay of a risk occurrence.

Transfer of risk does not change the likelihood or impact.

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

True

What is a risk event? -What can go wrong during the project -What can be done when a risk happens -What can be done to minimize risk before the project begins

What can go wrong during the project

Which statement best defines the methodology for accepting project opportunities? -Attempt to ensure that an opportunity is realized/happens through applied resources or other strategies. -Allocate some or all ownership to another party best able to insure the event happens -The opposite of mitigation, i.e., take actions to increase the probability and/or impact of a positive occurrence. -When the event occurs, implement increased application of resources, but don't expend any pursuing it.

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

The goal of the failure mode and effects analysis (FMEA) is to prioritize risk by _____. -identifying a risk only by its impact and detection -subjective classifications -assessing a risk only by its detection rate and severity -assigning numerical FMEA rankings

assigning numerical FMEA rankings

One of the keys to success in risk identification is ________

attitude

Risk profiles are updated and refined during the post-project ___________

audit

Freeway projects can fall short of the original intentions but still add value for each mile completed. This is called being "________________".

chunk ability

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

contingency

___________ funds are established to cover project risks.

contingency

____________ funds are established to cover project risks.

contingency

_____________ is reducing the time it takes to complete a project.

crashing

In scenario analysis, the significance of ____ is assessed. -each risk event -risks on the critical path -high-probability risks

each risk event

Only by focusing on actual __________ can potential solutions be found

events

True or False: 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

A _____ is the contingency budget set aside to deal with risk events. -preventive reserve -management reserve -risk mitigation

management reserve

A giant Popsicle melting faster than expected is an example of ___________ risk.

negative

The average project duration follows a __________ distribution.

normal

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

price

As a risk mitigation strategy, It is common to use a _______________ between old and new projects to adjust time or cost

ratio

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

reduce likelihood

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

retaining

No amount of planning can overcome ____________, or the inability to control chance events.

risk

Risk responses are developed based upon ___. -project cost and timing. -project cost. -risk assessment classifications. -project timing.

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 -work breakdown structure -risk breakdown structure

risk profile

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

risk register

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 ___________

separated

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

technical

Events that are within the project manager's control are called "risks" but to differentiate events that are outside of a project team's control, the term ____________ is often used. -chance -probability -threat -contingency

threat

The risk breakdown structure is used in conjunction with the ___ to help identify risks. -contingency budget -scope -work breakdown structure

work breakdown structure