PM Test Center

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).

While planning your budget, you decide to categorize your types of costs. Labor, the biggest cost on the project, is best categorized as a(n):

A. Fixed cost
B. Variable cost
C. Direct cost
D. Indirect cost

Answer: C. Direct cost
Direct costs are those that attribute directly to a particular project. Conversely, indirect costs typically benefit multiple projects, such as overhead costs. One way to look at fixed costs vs. variable costs is that the former do not change as production changes.

Part of your project includes building one hundred widgets. You know that it will take longer and be more costly to do the first widget as opposed to the one-hundredth widget because of improved efficiency. This is known as:

A. Historical information
B. Bottom up estimating
C. Learning curve
D. PERT estimating

Answer: C. Learning curve
A learning curve will lead to improved efficiency since your team will be more experienced as they build the widgets. This is a form a parametric estimating.

While working on a WBS, breaking down work into manageable parts is known as:

A. Decomposition
B. WBS dictionary
C. Work package
D. Scope management

Answer: A. Decomposition
Work packages are the lowest level of a WBS. The process of getting to that point is called decomposition.

Although you got your project schedule approved prior to starting it, your client just moved the target finish date up two days. In order to finish the project two days earlier, which of the following can you apply?

A. Add two days of lag to the critical path
B. Add two days of lag to a non-critical path
C. Add two days of lead to the critical path
D. Add two days of lead to a non-critical path

Answer: C. Add two days of lead to the critical path
Lag is a forced waiting period and therefore, would push the project out. Adding lead, also known as negative lag, would do the opposite — overlap related tasks, which is what you will need to do in this example to finish sooner. However, only adding lead to the critical path would affect the end date. Although you can add lead anywhere, putting it on a non-critical path would not allow you to finish any sooner.

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.

If 1 sigma is equal to 68.26% and 6 sigma is equal to 99.9997%, what does 2 sigma equal?

A. 74.52%
B. 81.24%
C. 88.79%
D. 95.46%

Answer: D. 95.46%
2 sigma is 95.46% while 3 sigma is 99.73%.

The PERT formula is typically calculated as:

A. (O+M+P)/6
B. (O+4M+P)/6
C. (O+M+P)/3
D. (O+4M+P)/3

Answer: B. (O+4M+P)/6
PERT is a weighted average, typically with emphasis on the most likely (M). PERT is a weighted average, typically with emphasis on the most likely (M). So if you are going to calculate 1x optimistic plus 4x most likely plus 1x pessimistic, then there are six variables. Therefore, you would divide by six to get a weighted estimate.

After making a small change to your project schedule, you realize now that you have two critical paths. Therefore, the project:

A. Will cost less
B. Must be modified to allow only one critical path
C. Has increased risk
D. Cannot be accomplished

Answer: C. Has increased risk
A critical path is the longest path (and the shortest amount of time possible) it takes to complete the project. If you have two critical paths, that means you have less flexibility in your schedule. As a result, you have increased risk. You can actually have as many critical paths as necessary but of course, the more you have the riskier the project becomes.

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.