PMP Exam Pretest - Risk

A project manager has decided to use a decision tree to do a build or upgrade analysis. The build requires an investment of $200M. On the build decision branch, there is a 60 percent probability of strong demand (yielding a revenue of $400M) and a 40 percent probability of weak demand (yielding a revenue of $150M). What is the expected monetary value (EMV) of the build?

• A. $300M

• B.$140M

• C. $100M

• D. $200M

Your company has bagged a number of government contracts dealing with setting up infrastructure. This includes setting up roads and bridges. This is a very big and prestigious project so your company would like to ensure everything is planned well in advance. You are the project manager of this project. Considering its importance - you and your team come up with a list of risks. One of the subject matter experts indicates that during the months of July and August the construction work of the bridge across the river would need to stop on account of past history of flooding of the river. You agree with the expert and plan the schedule accordingly. What strategy did you just apply?

• A. Avoid

• B. Exploit

• C. Mitigate

• D.Transfer

The Risk Management plan will usually contain the definitions of risk probability and impact. Which of the following has the highest probability (negative) on a project?

• A rating of 1.1 on the probability scale

• A rating of 0 on the probability scale

• A rating of 0.1 on the probability scale

• A rating of 0.8 on the probability scale

A Probability and Impact Matrix contains risks prioritized according to their potential implications for meeting the project's objectives. The typical approach is:

• A. To use a look-up table or Probability and Impact Matrix with specific combinations of probability and impact that lead to a risk being rated as “high,” “moderate,” or “low” importance. The project manager usually sets the importance for planning responses to the risk

• B. To create a Risk Breakdown Structure with the probabilities and impacts listed on the individual boxes. The higher the risk, the closer it is to the Start Node

• C. To create a matrix with the Cost, Time, Scope, and Quality on one axis and probability of occurrence on the other

• D. To use a look-up table or Probability and Impact Matrix with specific combinations of probability and impact that lead to a risk being rated as “high,” “moderate,” or “low” importance. The organization usually sets importance for planning responses to the risk.

You are the project manager of a project and are about to conduct a risk identification exercise in a few days’ time. You want to remind the participants in the exercise beforehand of the various sources from which risk may arise in the project. What could you use to help you do this?

• A. An Impact Matrix

• B. A Risk Register

• C. A Risk Simulation Structure (RSS)

• D. A Risk Breakdown Structure (RBS)

Which of the following is not a valid instance of risk transference?

• A. Use of a Cost Reimbursable contract

• B. Warranties

• C. Fixed Price contracts

• D. Performance bonds

Rizal has recently been assigned as the project manager for a new shopping mall construction project. Since the project will span well over five years, Yudhi is a bit hesitant to use the current market rates for estimating construction materials cost. The prices have been steadily increasing and the current market rates might not remain valid in the future. Which of the following techniques can Yudhi apply to determine her project budget?

• Conduct a trend analysis on the cost of materials and use that to extrapolate the cost of materials in the future

• Determine the cost of the project using current market rates and increase the total budget by some factor

• Compute the Net Present Value of the cost of materials and use that to determine the project budget

• Use Rolling Wave Planning to determine the budget as the project progresses

Under which of the following scenarios would you not use a decision tree?

• A.When some future scenarios are unknown

• B. When you need to look at the implications of not choosing certain alternatives

• C. When the future scenarios are known

• D. When the outcomes of some of the actions are uncertain

You have been managing a research project to create genetically modified fruits using genetic engineering techniques. Since many legal issues are involved in this process, you created contingency allowances by using various quantitative analysis methods to account for cost uncertainty. You have just concluded a brainstorming session with your team in the execution phase to monitor risks that have developed in the project over the past few weeks and to establish new risk response plans. What should you do if you want to allocate more contingency reserves to account for new risks?

• A.Perform the reserve analysis to compare the amount of contingency reserves remaining to the amount of risk remaining

• B.Perform Monte Carlo analysis to compare the amount of contingency reserves remaining to the amount of risk remaining

• C.Perform the variance and trend analysis to compare planned results to the actual results

• D. Perform the quantitative risk analysis to determine the outstanding risks

As part of the Risk Response planning for your project, you are trying to come up with a strategy to deal with negative risks or threats. In order to eliminate the impact of a particular risk, you relax the objective that is in jeopardy by extending the project schedule. This is an example of:

• A. Transference

• B. Mitigation

• C. Avoidance

• D. Postponement