part 2
125. The 200 million dollar nuclear power plant you have just built cannot be activated because a pair of rare spotted owls have just built their nest in your steam tower. You explain this to the CEO of the utility as
A. the importance of concern for endangered species
B. an unknown - unknown
C. a known - unknown
D. an occurrence that should be handled via contingency allowances
E. c and d
Answer: E
126. A manager who says "I'll pay for it, but I want it as soon as possible" is considered to be
A. authoritarian
B. risk accepting
C. risk averse
D. in need of a solution
E. intolerant of basic project management principles
Answer: B
127. If the mean is 3, the mode is 4, the median is 2, the PERT is 6 and one standard deviation is 3, a 95% confidence level is between
A. 0 and 12
B. 3 and 9
C. -3 and 9
D. 1 and 7
E. 0 and 6
Answer: A
128. Final risk quantification and modeling normally considers the impacts of all risks except possibly those due to
A. producibility
B. reliability
C. affordability
D. acceptability
E. operability
Answer: D
129. Risk management is defined as the art and science of ________ risk factors throughout the life cycle of a project.
A. researching, reviewing, and acting on
B. identifying, analyzing, and responding to
C. reviewing, monitoring, and managing
D. identifying, reviewing, and avoiding
E. analyzing, changing, and suppressing
Answer: B
130. Project risk is defined as the cumulative effect of the chances of ________ that will adversely affect project objectives.
A. likely events
B. complex activities
C. complex schedules
D. uncertain occurrences
E. new work
Answer: D
131. The three factors that characterize project risk are ________.
A. severity of impact, duration of impact, and cost of impact
B. identification, type of risk category, and probability of impact
C. risk event, risk probability, and the amount at stake
D. occurrence, frequency, and cost
E. cost, schedule, and quality
Answer: C
132. Risk event is the precise description of what might happen to the ________ of the project.
A. manager
B. detriment
C. schedule
D. budget
E. length
Answer: B
133. In the risk management context, mitigation and deflection are both means of ________ the risk to the ________ objectives.
A. improving; client's
B. increasing; project's
C. decreasing; sponsor's
D. decreasing; project's
E. decreasing; corporation's
Answer: D
134. Contingency planning is a means to ________ risks to the project through a formal process and provide the resources to meet the risk events.
A. address
B. classify
C. assign
D. resolve
E. eliminate
Answer: A
135. Suppose a project manager is negotiating with a subcontractor to provide the installation and integration of a computer system with data links. The data links must access three different computer protocols and provide a common data communication. This integration of the data protocols has never been accomplished before. Since both are attempting to avoid any risk, the project manager would like to award a ________ contract, while the subcontractor would like to sign only a ________ contract.
A. letter; formal
B. fixed price; cost-plus
C. cost-plus; fixed price
D. no-fault; no-obligation
E. variable; lump-sum
Answer: B
136. Suppose a project manager of a research and development contract is charged with building a new radar antenna for an aircraft. The weight is limited to 12 pounds in the specification. This represents a major weight reduction over current systems, which weigh in excess of 26 pounds. Before starting the project, the project manager should ________.
A. attempt to cancel the cost-plus contract because the antenna just can't be built to the specification
B. ignore the situation because no one has said the antenna can't be built to the specification
C. assess the probability of failing to meet the specification
D. start work immediately to get most of the hardware fabricated so it can be weighed to determine the actual weight of the completed antenna.
E. delay and perform a risk assessment until the project is better defined through building experience
Answer: C
137. Suppose the project manager is evaluating the bids of two vendors. Each vendor offers to sell similar electronic components, which are integrated at the vendors site. To avoid the most risk, the project manager views items such as the vendor's ________.
A. price, sales volume, and profit margin
B. price, promised delivery, and inspection schedule
C. personnel policies, personnel training program, and price
D. price, experience, and delivery means
E. experience, personnel skills, and material control procedures
Answer: E
138. Suppose the project manager must submit a summary risk assessment to the director of project managers. The assessment is to be made for each component of a new electronics system. The project manager submits the following
Component A - Low Risk Component B - Medium Risk Component C - Moderate Risk Component D - High Risk Component E - Median Risk The problem with the project manager's risk assessment is that ________.
A. the project risk has a full range of risk values
B. the project risk is normally distributed
C. the project risk has one high risk assessment that could cause problems
D. the project risk assessment does not have a uniform evaluation criteria for the middle risk category
E. there is no identifiable problem
Answer: D
139. Suppose the project budget is set at $2,300,000 for the total project. Some work that must be accomplished has not been identified in the initial planning. The most appropriate source of funds to cover this work is the ________.
A. management reserve
B. contingency reserve
C. slush fund reserve
D. sinking fund
E. corporate profit
Answer: B
140. Suppose the project manager is planning courses of action to develop the strategy for the project. Courses "A" and "B" are both feasible options and can be implemented. Senior management has directed that risk be considered, but there is a need to maximize the profit on this project. A decision tree is used as a valid means for selecting the most profitable option. Course A has a potential profit of $27,500 with a probability of 0.75 success. Course B has a potential profit of $20,800 with a probability of 0.90 success. The course of action that should be selected is ________.
A. Course A because it has a higher profit potential
B. Course B because it has a higher probability of success
C. Course A because it has an expected value of $36,667 when the probability is factored into the decision
D. Course A because it has an expected value of $1,905 more than Course B
E. Either course because there is no difference in expected value
Answer: D
141. Suppose the project has many hazards that could easily injure one or more persons and there is no method of avoiding the potential for damages. The project manager should consider ________ as a means of deflecting the risk.
A. abandoning the project
B. buying insurance for personal bodily injury
C. establishing a contingency fund
D. establishing a management reserve
E. not acknowledging the potential for injury
Answer: B
142. The primary characteristic that distinguishes external and internal risk areas is the ________.
A. magnitude of the impact on the project
B. project manager's perception of risk
C. technical nature of the project
D. use of more or fewer subcontractors
E. project manager's ability to influence the risk
Answer: E
143. There are two general categories of risk areas, internal and external. Examples of external risk areas are ________.
A. schedule delays, cost overruns, and changes in technology
B. regulatory, project completion, and taxation
C. natural disasters, regulatory, and design
D. currency rates, design, and social impact
E. inflation rates, performance, and schedule delays
Answer: B
144. In the area of legal risks, there are two reasons for licensing of projects. One reason is for revenue generation by the community, while the other is for ________.
A. harassment of the project manager
B. bureaucratic interest in the project
C. public safety of the product
D. monitoring of the project schedule
E. identification of the project manager
Answer: C
145. Intellectual property rights assigned to an individual by means of a patent or copyright have value to the owner. Any infringement on those rights during the implementation of a project can ________.
A. cause a law suit to be initiated for damages
B. cause the project to be halted pending a legal determination of property rights
C. cause damages to be awarded to the holder of a patent
D. diminish the reputation of the project's parent corporation
E. all of the above
Answer: E
146. During the conduct of impact analysis for any risk, the individual performs screening. Screening is for the purpose of determining whether the risk is ________ the project.
A. within or outside the scope of
B. a contingency item for
C. significant enough to adversely affect
D. realistic and treatable during implementation of
E. all of the above
Answer: A
147. Suppose a project of $1.5 million has an adverse event that has the probability of 0.07 of occurrence and a potential loss of $15,000. This represents an expected negative value of ________.
A. $10,500
B. $1,050
C. $105
D. $15,000
E. cannot be determined from the available data
Answer: B
148. The assigned values of risk for a project is best accomplished through a structured methodology that ensures all project elements are evaluated. The project tool that is best suited for the structured analysis of the project risk is the ________.
A. contract
B. specification
C. statement of work
D. work breakdown structure
E. linear programming diagram
Answer: D