PMP MCQ SERIES-Risk

1. If a project has a 60 % chance of a $100,000 profit and a 40 % chance of a $100,000 loss, the EMV for the Project will be;

• A. $100,000 profit
• B. $60,000 loss
• C. $20,000 profit
• D. $40,000 loss

Answer explanation

Explanation: Expected monetary value (EMV) is calculated by multiplying the probability by the impact. We need to calculate both positive and negative values and then add them: * 0.6 x $100,000 = $60,000 * 0.4 x ($100,000) = ($40,000) * Expected monetary value = $60,000 - $40,000 = $20,000 profit

2. Assuming the ends of a range of estimates are +/-3 sigma from the mean, which of the following range estimates involves the Least RISK?

• A. 30 days, plus or minus 5 days
• B. 22 to 30 days
• C. Optimistic- 26 days, most likely 30 days, pessimistic-33 days
• D. Mean of 28 days

Answer explanation

Explanation: The question asks which range estimate involves the least risk, given that the ends of the range are from the mean. Here’s the explanation of why the correct answer is C: Optimistic - 26 days, most likely 30 days, pessimistic - 33 days:

1. Understanding range and risk:

Risk is associated with the width of the range. A narrower range indicates less uncertainty and, therefore, less risk.

The width of the range is calculated as the difference between the pessimistic and optimistic estimates.

2. Analyzing each option:

Option A: 30 days ± 5 days

Range = .

Total range = 10 days.

Option B: 22 to 30 days

Range = .

Total range = 8 days.

Option C: Optimistic - 26 days, most likely - 30 days, pessimistic - 33 days

Range = .

Total range = 7 days.

This is the narrowest range, indicating the least risk.

Option D: Mean of 28 days

This is not a valid range estimate as it provides no variability or boundaries for the estimate.

3. Conclusion:

Option C has the narrowest range (7 days), representing the least uncertainty and therefore the least risk.

3. Your new project is tasked with designing a robotic device. A successful outcome for this high-profile project would

create a technological breakthrough and a significant market opportunity, but there is a lot of uncertainty about the

technology and requirements. The CFO has asked you to determine as quickly as possible whether the project is

viable. What would be the best approach for doing this?

• A. Ask the team to perform thorough proof of concept tests before starting development.
• B. Do a risk-based spike to determine if the Kansas testing facility is tornado-proof.
• C. Have the team begin planning and development, and see if they reach an impasse.
• D. Do an exploratory spike to research potential quality control issues and ways to mitigate them.

Answer explanation

Explanation: This scenario deals with the agile concept of fast failure, where we want to determine if a project is viable as quickly as possible. To determine project viability, agile teams typically use architectural spikes to do proof-of-concept testing. Performing proof-of-concept tests before starting development is the correct answer.

4. If a risk has a 20 % chance of happening in a given month, and the Project is expected to last 5 months,

What is the probability that this Risk event will occur during the 4-month of the project?

• A. Less than 1 percent
• B. 20 percent
• C. 60 percent
• D. 80 percent

Answer explanation

Explanation: No calculation is needed. If there is a 20 percent chance in any one month, the chance in the fourth month is 20 percent.

5. If a risk event has a 90 % chance of occurring, and the consequences will be $10,000, what does $9,000 represent?

• A. Risk value
• B. Present value
• C. Expected monetary value
• D. Contingency budget

Answer explanation

Explanation: Expected monetary value is calculated by multiplying the probability times the impact. In this case, EMV = 0.9 x $10,000 = $9,000.

6. Most of the project risks will be identified during which risk management processes?

• A. Perform Quantitative Risk Analysis and Identify Risks
• B. Identify Risks and Monitor Risks
• C. Perform Qualitative Risk Analysis and Monitor Risks
• D. Identify Risks and Perform Qualitative Risk Analysis

Answer explanation

Explanation: Although risks can be identified at any time throughout the project, most risks are identified during the Identify Risks process. Newly emerging risks are identified in the Monitor Risks process.

7. What kind of change-driven project would gain the most benefit from conducting a project pre-mortem exercise?

• A. A high-value project with dear specifications for technology and requirements
• B. An urgent, risky project with a hard deadline
• C. A project that will require process tailoring
• D. A long-term, high-visibility project

Answer explanation

Explanation: This question asks when a dedicated workshop for identifying potential risks would be most worthwhile. A long-term, high-visibility project is the correct answer.

8. You are iterating the project management plan and will be meeting with the sponsors to get approval. There have been some problems on recent projects because the projects were started quickly, & it was assumed that there would be few challenges. You know the sponsors will want assurances that this project will not have similar issues. You have evaluated the approach and have planned the project, including how you will manage risk, in order to deliver a better outcome. You have a few minor risks on the Watch List. What, if anything should be done with those risks?

• A. Document them for historical use on other projects.
• B. Document them and revisit them during project monitoring and controlling.
• C. Document them and set them aside because they are already covered in your contingency plans.
• D. Document them and give them to the customer.

Answer explanation

Explanation: Risks change throughout the project. You need to review risks at intervals during the project to ensure non-critical risks on the watch list have not become critical.

9. You are embarking on a new technology upgrade project that is considered key to future growth of the business. Because of the critical nature of the project, you recognize the importance of performing thorough risk management, and you want to make sure you have considered all relevant project information before beginning. All the following are always inputs to the risk management process except:

• A. Historical information
• B. Lessons learned
• C. Work breakdown structure
• D. Project status reports

Answer explanation

Explanation: Project status reports can be an input to risk management. However, when completing risk management for the first time, you would not have project status reports. Therefore, project status reports are not always an input to risk management.

10. Risk thresholds are determined to help:

• A. The team rank the project risks
• B. The project manager estimate the project
• C. The team schedule the project
• D. Management know how other managers will act on the project

Answer explanation

Explanation: If you know the risk thresholds of the stakeholders, you can determine how they might react to different situations and risk events. You use this information to help assign levels of risk to each work package or activity based on their probability and impact.