PM Test Center

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.

While planning a project that involves building a unique product for a client, you decide to build a prototype in order to reduce the risk of not meeting expectations. This is an example of what type of risk response strategy?

A. Avoid
B. Transfer
C. Mitigate
D. Accept

Answer: C. Mitigate
Mitigating requires you to decrease the probability and/or impact of a particular risk. In this scenario, creating a prototype could reduce the chance that the risk triggers but even if it does, it could decrease the delta (gap).

After deciding to outsource a part of the project, your sponsor tells you that he wants a contract with the least amount of risk. What type of contract will you be seeking?

A. Fixed price
B. Time and materials
C. Cost plus fixed fee
D. Cost plus percentage of cost

Answer: A. Fixed price
Of the contract types listed, fixed price (aka firm fixed price or lump sum) is the safest bet for the buyer. In a fixed price contract for $100,000, the buyer knows exactly what she is getting (assuming the scope is clearly defined) and how much she is paying. If the work actually takes more than $100,000 to deliver, then it rests on the supplier.

The purpose of a risk management plan is:

A. Indicate the probability and impact of each risk
B. Monitor risks on the project
C. Describe how risk will be managed on the project
D. Identify risks on the project

Answer: C. Describe how risk will be managed on the project
As with any management plan, the key is to describe how something will be managed. The key word being HOW. You do not actually do anything with the risks at this point; rather simply documenting the process of managing risk. The other choices on the list refer to other risk processes.

Joe is conducting a SWOT analysis. Which process is he most likely working in?

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

Answer: A. Identify Risks
A SWOT analysis is a tool and technique typically used in the Identify Risks process.

An anonymous way to reach a consensus of experts when identifying risks is:

A. Interviewing
B. Delphi technique
C. Root cause analysis
D. Brainstorming

Answer: B. Delphi technique
When using the Delphi technique, a facilitator gathers risks through an anonymous survey. When feedback is received, the process is repeated until a consensus is reached.

You and your sponsor agree to actively accept the quality risk of using a non-certified engineer on the project. What will you be doing?

A. Nothing. You will only react if the risk event occurs.
B. Find a way to decrease the probability or impact of the risk.
C. Create a contingency plan in the event the risk event occurs.
D. Insure the risk so your company can be compensated if the risk event occurs.

Answer: C. Create a contingency plan in the event the risk event occurs.
Active acceptance means that you create a contingency plan but do not implement it unless the risk event occurs. Typically this strategy is for risks that have a low probability and/or low impact. Decreasing probability or impact is a mitigation response while insurance is a transfer response.

One way to enhance a positive risk is:

A. Hiring another contractor to accelerate a project
B. Replacing a new employee with a more experienced one to ensure better quality
C. Buying insurance against weather impacting a construction schedule
D. Starting a task a few days later on the critical path

Answer: A. Hiring another contractor to accelerate a project
Enhance strategy is used when attempting to increase the probability or impact of a risk. A common method is to crash, essentially adding more resources to a particular task to accelerate the timeline.

While managing a project for a new playground, one of your team members uncovers an opportunity to exploit a risk. Most likely, he found a way to:

A. Increase the probability or impact of a risk
B. Ensure that a positive risk is realized
C. Decrease the probability of impact of a risk
D. Eliminate the threat entirely

Answer: B. Ensure that a positive risk is realized
The term exploit is used to define a strategy that ensures that a positive risk, or opportunity, is realized. Increasing a probability or impact is a enhance response, decreasing a probability or impact is a mitigation response, and eliminating is an avoid response.