SPM Chapter 11

What is the first step in a Monte Carlo analysis? a. Determine the probability distribution of each variable. b. For each variable, such as the time estimate for a task, select a random value based on the probability distribution for the occurrence of the variable. c. Assess the range for the variables being considered. d. Run a deterministic analysis or one pass through the model using the combination of values selected for each one of the variables.

Assess the range for the variables being considered.

____________________ is a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment.

Brainstorming

____________________ based on risks that have been encountered in previous projects provide a meaningful template for understanding risks in a current project.

Checklists

____ are predefined actions that the project team will take if an identified risk event occurs. a. Fallback plans c. Contingency plans b. Contingency reserves d. Contingency allowances

Contingency plans

_________________________ are provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level.

Contingency reserves - Contingency allowances

A simple approach to using probability/impact information is to calculate risk factors.

False

Few organizations develop their own risk questionnaires.

False

Good project risk management never goes unnoticed.

False

It is uncommon for people to identify problems or opportunities without really understanding them.

False

Negative and positive risks should always be included in the same probability/impact matrix or chart.

False

Negative risk management is like investing in opportunities.

False

Potential risks can only be identified early in a project.

False

"If the information technology project is to produce a new product or service, will it be useful to the organization or marketable to others?" applies to which risk category? a. Financial risk c. Structure/process risk b. Technology risk d. Market risk

Market risk

____ analysis simulates a model's outcome many times to provide a statistical distribution of the calculated results. a. Decision tree c. Monte Carlo b. EMV d. Watch list

Monte Carlo

"Is there a project champion?" applies to which risk category? a. Financial risk c. Structure/process risk b. Technology risk d. People risk

People risk

____ involves numerically estimating the effects of risks on project objectives. a. Performing qualitative risk analysis c. Planning risk management b. Planning risk responses d. Performing quantitative risk analysis

Performing quantitative risk analysis

____ involves deciding how to approach and plan the risk management activities for the project. a. Identifying risks c. Performing qualitative risk analysis b. Planning risk management d. Performing quantitative risk analysis

Planning risk management

____________________ risks are risks that remain after all of the response strategies have been implemented.

Residual

____ applies to positive risks when the project team cannot or chooses not to take any actions toward a risk. a. Risk enhancement c. Risk sharing b. Risk acceptance d. Risk exploitation

Risk acceptance

____ involves eliminating a specific threat, usually by eliminating its causes. a. Risk avoidance c. Risk transference b. Risk acceptance d. Risk mitigation

Risk avoidance

____ involves reducing the impact of a risk event by reducing the probability of its occurrence. a. Risk avoidance c. Risk transference b. Risk acceptance d. Risk mitigation

Risk mitigation

____ are/is a qualitative risk analysis tool, and in addition to identifying risks, it maintains an awareness of risks throughout the life of a project. a. Risk factor analysis c. Risk registering b. Probability/impact matrices or charts d. Top Ten Risk Item Tracking

Top Ten Risk Item Tracking

____________________ are indicators or symptoms of actual risk events.

Triggers

A potential response to the risk event of a defective server might be the inclusion of a clause in a contract with the supplier to replace a defective server within a certain time period at a negotiated cost.

True

A probability/impact matrix or chart lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other.

True

Before you can improve project risk management, you must understand what risk is.

True

The Monte Carlo analysis can predict the probability of finishing by a certain date or the probability that the cost will be equal to or less than a certain value.

True

The cost for risk management should not exceed the potential benefits.

True

You can break down the technology risk category into hardware, software, and network technology.

True

System or process ____________________ are diagrams that show how different parts of a system interrelate.

flowcharts

Risk management can have a(n) ____________________ impact on selecting projects, determining the scope of projects, and developing realistic schedules and cost estimates.

positive

A project manager can chart the probability and impact of risks on a ____. a. risk ranking chart c. probability/impact matrix b. risk probability table d. risk assessment matrix

probability/impact matrix

A project ____________________ is an uncertainty that can have a negative or positive effect on meeting project objectives.

risk

A(n) _________________________ is a hierarchy of potential risk categories for a project.

risk breakdown structure

A(n) ____________________ documents the procedures for managing risk throughout the project.

risk management plan

The ____________________ is the person who will own or take responsibility for the risk.

risk owner

A(n) ____________________ is a document that contains results of various risk management processes.

risk register

Utility rises at a decreasing rate for a ____ person. a. risk-seeking c. risk-neutral b. risk-averse d. risk-indifferent

risk-averse

Those who are ____ have a higher tolerance for risk, and their satisfaction increases when more payoff is at stake. a. risk-seeking c. risk-neutral b. risk-averse d. risk-indifferent

risk-seeking

Many professionals use ____________________ to help make several common business decisions, such as determining break-even points based on different assumptions.

sensitivity analysis

There are ____ major processes involved in risk management. a. three c. five b. four d. six

six

The idea of striving to balance risks and opportunities suggests that different organizations and people have different ____________________ for risk.

tolerances - tolerance

KLCI Research Group's 2001 survey revealed that ____ percent of the organizations surveyed had a Project Management Office. a. 64 c. 85 b. 75 d. 94

64

KLCI Research Group's 2001 survey revealed that ____ percent identified anticipating and avoiding problems as the primary benefit of risk management. a. 60 c. 89 b. 80 d. 99

80

KLCI Research Group's 2001 survey revealed that ____ percent of the participants said they had procedures in place to identify and assess risk. a. 75 c. 97 b. 87 d. 99

97

The basic concept of the ____________________ is to derive a consensus among a panel of experts who make predictions about future developments.

Delphi technique

A ____ person achieves a balance between risk and payoff. a. risk-seeking c. risk-fearing b. risk-averse d. risk-neutral

Drisk-neutral

______________________________ is the product of a risk event probability and the risk event's monetary value.

EMV - Expected monetary value - Expected monetary value (EMV)

Quantitative risk analysis and qualitative risk analysis must be done together.

False

"Will the project meet NPV, ROI, and payback estimates?" applies to which risk category? a. Financial risk c. Structure/process risk b. Technology risk d. Market risk

Financial risk

Poor conflict management, poor project organization and definition of responsibilities, and absence of leadership are risk conditions associated with the ____ project management knowledge area. a. Integration c. Time b. Quality d. Human Resources

Human Resources

____ involves determining which risks are likely to affect a project and documenting the characteristics of each. a. Identifying risks c. Performing qualitative risk analysis b. Planning risk management d. Performing quantitative risk analysis

Identifying risks

____ involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project. a. Performing quantitative risk analysis c. Monitoring and controlling risk b. Planning risk responses d. Performing qualitative risk analysis

Monitoring and controlling risk

Unenforceable conditions or contract clauses, and adversarial relations are risk conditions associated with the ____ project management knowledge area. a. Integration c. Procurement b. Quality d. Human Resources

Procurement

____ involves changing the size of the opportunity by identifying and maximizing key drivers of the positive risk. a. Risk exploitation c. Risk enhancement b. Risk sharing d. Risk acceptance

Risk enhancement

____ involves doing whatever you can to make sure the positive risk happens. a. Risk exploitation c. Risk enhancement b. Risk sharing d. Risk acceptance

Risk exploitation

____________________ are numbers that represent the overall risk of specific events, based on their probability of occurring and the consequences to the project if they do occur.

Risk factors

____ involves allocating ownership of the risk to another party. a. Risk exploitation c. Risk enhancement b. Risk sharing d. Risk acceptance

Risk sharing

____ involves shifting the consequence of a risk and responsibility for its management to a third party. a. Risk avoidance c. Risk transference b. Risk acceptance d. Risk mitigation

Risk transference

____________________ is the amount of satisfaction or pleasure received from a potential payoff.

Risk utility - Risk tolerance

____ risks are a direct result of implementing a risk response. a. Tertiary c. Residual b. Primary d. Secondary

Secondary COMPLETION

By reviewing the project scope statement, cost, schedule, and communications management plans, enterprise environmental factors, and organizational process assets, project teams can discuss and analyze risk management activities for their particular projects.

True

The Delphi technique is a systematic, interactive forecasting procedure based on independent and anonymous input regarding future events.

True

The Microsoft Solution Framework (MSF) includes a risk management model that includes developing and monitoring a top-ten master list of risks.

True

Risk ____________________ involves accepting the consequences should a risk occur.

acceptance

KLCI Research Group's 2001 survey revealed that the most frequently cited benefit from software risk management practices is to ____. a. prevent surprises c. meet customer commitments b. improve ability to negotiate d. anticipate/avoid problems

anticipate/avoid problems

In a risk breakdown structure, competitors, suppliers, and cash flow are categories that fall under ____ risk. a. business c. organizational b. technical d. project management

business

A(n) ____ is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain. a. decision tree c. Monte Carlo analysis b. EMV d. watch list

decision tree

The main output of the ____________________ process is the start of a risk register.

identifying risks

A(n) ____ represents decision problems by displaying essential elements, including decisions, uncertainties, causality, and objectives, and how they influence each other. a. risk breakdown structure c. process flow chart b. influence diagram d. system flow chart

influence diagram

William Ibbs and Young H. Kwak's study revealed that the ____ industry had the lowest level of project management maturity in the area of quality management. a. engineering/construction c. information systems b. telecommunications d. high-tech manufacturing

information systems

William Ibbs and Young H. Kwak's study revealed that the ____ industry had the lowest level of project management maturity in the area of risk management. a. engineering/construction c. information systems b. telecommunications d. high-tech manufacturing

information systems

Given that all projects involve _____________________ that can have negative or positive outcomes, the question is how to decide which projects to pursue and how to identify and manage project risk throughout a project's life cycle.

uncertainties - uncertainty

According to the Standish Group's success potential scoring sheet, ____ has the highest relative importance. a. executive management support c. proper planning b. clear statement of requirements d. user involvement

user involvement

A(n) ____________________ is a list of risks that are low priority, but are still identified as potential risks.

watch list

Project teams sometimes use ____________________—unplanned responses to risk events—when they do not have contingency plans in place.

workarounds

____ are developed for risks that have a high impact on meeting project objectives, and are put into effect if attempts to reduce the risk are not effective. a. Fallback plans c. Contingency plans b. Contingency reserves d. Contingency allowances

Fallback plans

A risk management review accomplishes one objective, it keeps management and the customer aware of the major influences that could prevent or enhance the project's success.

False

Risk events refer to specific, certain events that may occur to the detriment or enhancement of the project.

False

The last step in project risk management is deciding how to address this knowledge area for a particular project by performing risk management planning.

False

The level of detail included in the risk management plan rarely varies across projects.

False

The lower the EMV, the better.

False

The main output of qualitative risk analysis is a decision tree.

False

The psychology literature shows that individuals, working alone, produce fewer ideas than the same individuals produce through brainstorming in small, face-to-face groups.

False

____ is a fact-finding technique for collecting information in face-to-face, phone, e-mail, or instant-messaging discussions. a. Brainstorming c. The Delphi technique b. SWOT analysis d. Interviewing

Interviewing

____ involves prioritizing risks based on their probability and impact of occurrence. a. Performing qualitative risk analysis c. Planning risk responses b. Planning risk management d. Performing quantitative risk analysis

Performing qualitative risk analysis

____ involves taking steps to enhance opportunities and reduce threats to meeting project objectives. a. Performing quantitative risk analysis c. Monitoring and controlling risk b. Planning risk responses d. Performing qualitative risk analysis

Planning risk responses

Increasing the project manager's authority is a strategy for mitigating technical and cost risks.

True

Project risk management does not stop with the initial risk analysis.

True

Risk management is a frequently overlooked aspect of project management.

True

SWOT analysis can be used during risk identification by having project teams focus on the broad perspectives of potential risks for particular projects.

True

Selecting the most experienced project manager is recommended for reducing schedule risks.

True

Several PC-based software packages are available that perform Monte Carlo simulations.

True

Inadequate planning, poor resource allocation, poor integration management, and lack of post-project review are risk conditions associated with the ____________________ project management knowledge area.

integration

Examples of risk ____________________ include using proven technology, having competent project personnel, using various analysis and validation techniques, and buying maintenance or service agreements from subcontractors.

mitigation