CEP Risk Analysis & Value Engineering 4 — Questions and Answers
Question 1: In value engineering function analysis, a 'basic function' is defined as:
- The primary purpose that makes the item worth having (Correct answer)
- Any function that supports the primary purpose
- A function identified through brainstorming
- The most expensive function of an item
Correct answer: The primary purpose that makes the item worth having
The basic function is the essential purpose of the item—removing it would make the item worthless or defeat its design intent.
Question 2: Which correlation coefficient value indicates that two risk variables are perfectly positively correlated in a Monte Carlo model?
- +1.0 (Correct answer)
- 0.0
- -1.0
- +0.5
Correct answer: +1.0
A correlation coefficient of +1.0 means the two variables move perfectly in the same direction, maximizing combined variance.
Question 3: A contingency reserve addresses which type of risk?
- Known unknowns (identified risks) (Correct answer)
- Unknown unknowns (unidentified risks)
- Force majeure events
- Scope changes initiated by the owner
Correct answer: Known unknowns (identified risks)
Contingency reserve covers identified but uncertain risk events (known unknowns), while management reserve covers unknown unknowns.
Question 4: The FAST diagram in value engineering is used to:
- Map the logical relationships between functions (Correct answer)
- Schedule value engineering workshops
- Calculate the cost of each function
- Identify the project's critical path
Correct answer: Map the logical relationships between functions
A Function Analysis System Technique (FAST) diagram shows how and why functions relate to each other in a hierarchical logic map.
Question 5: When a risk analysis uses a triangular distribution with values of $100K (optimistic), $200K (most likely), and $500K (pessimistic), the mean is approximately:
- $267K (Correct answer)
- $200K
- $300K
- $100K
Correct answer: $267K
For a triangular distribution, mean = (optimistic + most likely + pessimistic) / 3 = ($100K + $200K + $500K) / 3 ≈ $267K.
Question 6: Which of the following best describes a 'risk attitude' of risk-averse in project cost estimating?
- Preferring a certain outcome over a gamble with higher expected value (Correct answer)
- Accepting any risk as long as expected value is positive
- Ignoring risks below a defined threshold
- Treating all risks with equal weight regardless of impact
Correct answer: Preferring a certain outcome over a gamble with higher expected value
A risk-averse decision-maker prefers certainty and will sacrifice some expected value to avoid variability.
Question 7: In value engineering, the 'evaluation phase' of the job plan involves:
- Ranking and screening creative alternatives based on feasibility and cost (Correct answer)
- Generating as many function alternatives as possible
- Presenting findings and recommendations to management
- Verifying that the selected alternative meets requirements
Correct answer: Ranking and screening creative alternatives based on feasibility and cost
The evaluation phase applies criteria to narrow the creative alternatives down to the most promising candidates for further development.
CEP Risk Analysis & Value Engineering 4
In value engineering function analysis, a 'basic function' is defined as: