PM Test Center

Your client requests that you to use a Monte Carlo technique for the project. What are you being asked to do?

A. Create a histogram that ranks risks.
B. Estimate cost and time results by executing the project many times through a simulator.
C. Ignore minor risks and take our chances.
D. Monitor cost variances and use contingency funds when necessary.

Answer: B. Estimate cost and time results by executing the project many times through a simulator.
The Monte Carlo, a Quantitative Risk Analysis Technique, runs simulations to estimate cost and time. It uses many iterations to produce a probability distribution.

Expected monetary value (EMV) for an entire project is calculated by:

A. Creating a probability and impact matrix
B. Performing a sensitivity analysis
C. Adding the EMV for each risks
D. EMV can only be determined for each risk, not for an entire project

Answer: C. Adding the EMV for each risks
The EMV for an entire project is just the sum of the EMVs of all the risks.

For a particular risk, if the probability is 10% and the impact is -$20,000, then the expected monetary value (EMV) is:

A. -$2,000
B. $2,000
C. $20,000
D. Not enough information to determine

Answer: A. -$2,000
The expected monetary value (EMV) for a risk is simply the probability times the impact.

You are performing quantitative risk analysis on your $100,000 project for the first risk, the probability is 25% and the impact is $8,000. What is the expected monetary value of that risk?

A. $2,000
B. $32,000
C. $68,000
D. $98,000

Answer: A. $2,000
To calculate the expected monetary value, a technique of the Perform Quantitative Risk Analysis process, you simply multiple probability and impact. In this case, 25% times $8,000 equals $2,000.

During risk identification, you decide that there are some risks that you do not want to do anything to change their probability or impact. To ensure that you have enough funds in case the risk events are triggered, you request a contingency reserve. How would you best describe this risk response strategy?

A. Passive acceptance
B. Reserve analysis
C. Active acceptance
D. Fund exploitation

Answer: C. Active acceptance
The accept strategy means that you decide to deal with the risk as it occurs. Active acceptance indicates that you will have a contingency reserve while passive acceptance means that you will determine how to handle it after the risk event has occurred.

An output that is created from the Identify Risk process and updated throughout all subsequent risk processes is:

A. Risk register
B. Probability and impact matrix
C. SWOT analysis
D. Risk audits

Answer: A. Risk register
A risk register, or risk log, is a list of identified risks and responses. It is the only output of the Identify Risk process. The risk register also serves as an input for future risk processes and its updates are an output of the very same processes.

As a project manager for a pharmaceutical company, you have managed many projects for developing products. A new product is planned as a joint venture and you are paired with another project manager in another company. This is due to leveraging core competencies between the two companies in order to maximize revenue potential on the product. This type of risk strategy is referred to as:

A. Share
B. Transfer
C. Mitigate
D. Enhance

Answer: A. Share
A joint venture is an excellent example of sharing a risk in the Plan Risk Response process. By sharing a positive risk, also known as an opportunity, accountability (and ownership) is distributed based on the strengths of each organization involved.

One of your peers is a managing a large software implementation project. Which process is she in if she is figuring out the probability of each risk and then assessing their impact to the project?

A. Plan Risk Response
B. Perform Qualitative Risk Analysis
C. Perform Quantitative Risk Analysis
D. Identify Risks

Answer: B. Perform Qualitative Risk Analysis
The Perform Qualitative Risk Analysis process involves the determination of probability and impact in order to prioritize risks.

While monitoring and controlling risks on a project, one of the tools a project manager could use compares the amount of the contingency reserves remaining to the amount of risk remaining to determine if the remaining reserve is adequate. This is called:

A. Reserve analysis
B. Performance report
C. Risk audit
D. Variance and trend analysis

Answer: A. Reserve analysis
A reserve analysis is used in parallel to project execution since risks may have positive or negative impacts to the contingency reserve. This ensures that the reserve is neither too high nor too low throughout the project.

You are working on a project to build a small bridge near the town entrance and decide to gather risks using the Delphi technique. You know that once you have identified all the risks at this stage, you will have your initial:

A. Monte Carlo Simulation
B. Risk register
C. Performance report
D. Risk management plan

Answer: B. Risk register
The risk register is the primary output from the Identify Risks process; the Delphi technique is one of the tools and techniques that may be used. Subsequent risk processes include the risk register as their inputs as well as providing risk register updates as their outputs.