PM: Module 4 Chapter 7

b) risk profile

A ____ is a list of questions that address traditional areas of uncertainty on a project, drawn from previous, similar projects. a) risk breakdown structure b) risk profile c) work breakdown structure

b) management reserve

A _____ is the contingency budget set aside to deal with risk events. a) preventive reserve b) management reserve c) risk mitigation

b) Project cost c) Project timing d) Project priorities

Assessing identified risk is done with respect to what aspect of the project? (multiple answers) a) Risk profiles b) Project cost c) Project timing d) Project priorities

end

In the face of overall schedule uncertainty, buffers are sometimes added to the _____ of the project.

after

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

events

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

b) Starts high and declines, ending low

Over the life of a project, how does the chance of risk events behave? a) Starts low and rises, ending high b) Starts high and declines, ending low c) Remains constant d) Behaves differently for different types of projects

price

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

b) Specific to each risk event.

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

b) The budget reserve absorbs the risks if they materialize.

Risk: Costs are too small to mitigate. a) A cost overrun is accepted should the risk event occur. b) The budget reserve absorbs the risks if they materialize. c) The project owner assumes the risk of an event occuring.

a) A cost overrun is accepted should the risk event occur.

Risk: So unlikely it is ignored. a) A cost overrun is accepted should the risk event occur. b) The budget reserve absorbs the risks if they materialize. c) The project owner assumes the risk of an event occuring.

c) The project owner assumes the risk of an event occuring.

Risk: Too large to be transferred. a) A cost overrun is accepted should the risk event occur. b) The budget reserve absorbs the risks if they materialize. c) The project owner assumes the risk of an event occuring.

b) work breakdown structure

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

risks

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

b) False

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

a) Cancel remainder of the project b) Reduce project scope

What are the potential actions of project funding cuts such as the reduction or elimination of the source of project cash inflow? (multiple answers) a) Cancel remainder of the project b) Reduce project scope c) Crashing the project

b) Risk Profile. c) Risk Breakdown Structure (RBS).

What identifies and documents an initial set of risks? (multiple answers) a) Work Breakdown Structure (WBS). b) Risk Profile. c) Risk Breakdown Structure (RBS). d) Organizational Breakdown Structure (OBS).

a) Activity optimistic and pessimistic times.

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

c) Budget reserves, i.e. cash

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

b) Activities with severe risk c) Activities that merged when they are prone to delays d) Activities requiring scarce resources

Where are time buffers typically applied in a project plan? (multiple answers) a) All activities along the critical path b) Activities with severe risk c) Activities that merged when they are prone to delays d) Activities requiring scarce resources

c) Planning.

Where in the project life cycle should a project manager begin the risk identification process? a) Scope development. b) Defining. c) Planning. d) Executing. e) Delivering.

b) Panic. c) Incorrect actions taken. d) Delayed corrective action.

Which are potential impacts given a project with risk responses but no contingency plan? (multiple answers) a) Reduced costs through saved time. b) Panic. c) Incorrect actions taken. d) Delayed corrective action.

b) Changing the project plan to eliminate a risk condition.

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

b) Reduce likelihood.

Which mitigation strategy is normally first pursued to minimize the cost impact of a risk event occurring? a) Reduce impact. b) Reduce likelihood. c) Avoidance.

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

Which of the following pertain to "risk" in the context of project management? (multiple answers) a) A risk may have a negative impact on project objectives. b) Proper planning can overcome risk. c) A risk may have a positive impact on project objectives. d) A risk is an uncertain event or condition.

b) They may vary depending on project.

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

b) Transfer of risk does not change the likelihood or impact.

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

e) Management reserves are established after the budget reserves are identified.

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

a) Buffers should be added to projects with high uncertainties.

Which statements are correct with respect to time buffers? a) Buffers should be added to projects with high uncertainties. b) Buffers should be added to most, if not all, individual activities. c) Buffers are a form of estimate padding added by the project manager rather than by the work package estimator.

a) To establish priorities for attention

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

a) To make more accurate judgments about risks.

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

Crashing

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

Management

_____ reserve funds are needed to cover major unforeseen risks and, hence, are applied to the total project.

Escalating

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

Technical

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

Green

_____ zone risks are typically considered inconsequential and ignored unless their status changes.

risk breakdown structure

a hierarchical tool to identify various areas and causes of potential project risks, arranged by risk category

mitigating risk

actions taken to reduce the likelihood or impact of risk

time buffer

contingency amount of time for an activity to cover uncertainty

retaining risk

decision to accept the risk of an event occuring

risk register

details of all identified risks, includes descriptions, category, profitability, impact, responses, contingency plans, owner & status

avoiding risk

eliminating risk by project design before project begins

opportunity

event that may have a positive impact on project objectives

contingency reserves

financial reserves to cover identified risks that may occur and influence plan's time or costs

management reserves

funds, as a percentage of project budget, reserved for unforeseen contingencies, new problems

risk profile

list of questions addressing traditional areas of uncertainty

escalating risk

notifying the appropriate people about a risk outside the project scope or that exceeds the authority of the project manager

contingency plan

plan that covers identified risks that may materialize over the project's life

change management system

process for authorizing and documenting changes to project scope

transferring risk

shifting responsibility for a risk to another party

scenario analysis

technique for analyzing risks where team members assess the significance of each risk in terms of profitability and impact

risk

the chance of an undesirable event occurring, with its consequences and possible outcomes

risk severity matrix

tool to help assess the impact of risks on a project

a) each risk event

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

b) 5.33 hours

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. a) 5 hours b) 5.33 hours c) 5.67 hours