CEP Risk Analysis & Value Engineering 2 — Questions and Answers
Question 1: Which Monte Carlo simulation output metric represents the probability that a project will be completed at or below a specific cost?
- Cumulative distribution function (CDF) (Correct answer)
- Probability density function (PDF)
- Coefficient of variation
- Standard deviation
Correct answer: Cumulative distribution function (CDF)
The CDF from Monte Carlo simulation shows the cumulative probability of achieving a cost at or below each value on the x-axis.
Question 2: In value engineering, the 'worth' of a function is best defined as:
- The lowest cost to reliably perform the function (Correct answer)
- The market price of the component performing the function
- The replacement cost of the component
- The owner's perceived value of the component
Correct answer: The lowest cost to reliably perform the function
In VE methodology, worth is defined as the least cost to reliably accomplish a required function.
Question 3: A risk register entry shows a risk with probability 0.30 and impact of $80,000. What is the expected monetary value (EMV)?
- $24,000 (Correct answer)
- $80,000
- $110,000
- $26,667
Correct answer: $24,000
EMV = Probability × Impact = 0.30 × $80,000 = $24,000.
Question 4: Which value engineering job plan phase involves generating creative alternatives without criticism?
- Creative phase (Correct answer)
- Information phase
- Evaluation phase
- Development phase
Correct answer: Creative phase
The creative phase uses brainstorming to generate many alternatives without judging their merit.
Question 5: Sensitivity analysis in cost estimating is primarily used to:
- Identify which input variables most affect the estimate outcome (Correct answer)
- Calculate the probability of cost overrun
- Determine the optimal contingency reserve
- Establish the project baseline budget
Correct answer: Identify which input variables most affect the estimate outcome
Sensitivity analysis reveals which uncertain variables have the greatest influence on the total cost estimate.
Question 6: When applying FMEA in the context of cost estimating risk, 'detectability' refers to:
- The likelihood that a failure or error will be caught before it impacts cost (Correct answer)
- The probability that a failure will occur during construction
- The severity of impact on project cost if a failure occurs
- The frequency with which a risk event is expected to recur
Correct answer: The likelihood that a failure or error will be caught before it impacts cost
In FMEA, detectability measures how likely it is that existing controls will identify a failure before it causes harm.
Question 7: In a risk breakdown structure (RBS), risks are organized by:
- Category or source of risk (Correct answer)
- Probability of occurrence
- Impact on project cost
- Responsibility of the project team
Correct answer: Category or source of risk
An RBS hierarchically categorizes risks by their sources or types, similar to how a WBS organizes work.
CEP Risk Analysis & Value Engineering 2
Which Monte Carlo simulation output metric represents the probability that a project will be completed at or below a specific cost?