CEP Risk Analysis & Value Engineering 5 — Questions and Answers
Question 1: A P80 confidence level on a cost estimate means:
- There is an 80% probability the actual cost will not exceed this value (Correct answer)
- 80% of the estimate items have been priced
- The estimate has an 80% confidence in accuracy
- 80% of identified risks are mitigated
Correct answer: There is an 80% probability the actual cost will not exceed this value
P80 (the 80th percentile) means 80% of simulated outcomes fall at or below that cost, leaving a 20% chance of exceeding it.
Question 2: Which risk identification technique uses anonymous rounds of expert questioning to reach group consensus on risk likelihood?
- Delphi technique (Correct answer)
- Brainstorming
- Root cause analysis
- SWOT analysis
Correct answer: Delphi technique
The Delphi technique iteratively collects and refines expert opinions anonymously to reduce bias and reach convergence.
Question 3: In value engineering, the function 'support weight' for a structural beam is written in what format?
- Verb + noun (active verb + measurable noun) (Correct answer)
- Noun + adjective
- Subject + predicate + object
- Noun + verb phrase
Correct answer: Verb + noun (active verb + measurable noun)
VE function descriptions always use an active verb combined with a measurable noun to define what the item does.
Question 4: What is the primary purpose of a pre-mortem analysis in project risk management?
- Proactively identify reasons why the project might fail before it starts (Correct answer)
- Document lessons learned after a project failure
- Assign blame for cost overruns to team members
- Calculate the probability of schedule delay
Correct answer: Proactively identify reasons why the project might fail before it starts
A pre-mortem imagines the project has already failed and works backward to identify potential causes, surfacing risks early.
Question 5: Which quantitative risk analysis output helps identify the percentage of total risk attributed to each individual risk source?
- Risk contribution analysis (Correct answer)
- Expected monetary value
- Sensitivity index
- Risk probability matrix
Correct answer: Risk contribution analysis
Risk contribution analysis decomposes total project risk variance to show each risk's proportional contribution to overall uncertainty.
Question 6: A value engineering change proposal (VECP) submitted by a contractor typically results in:
- Shared cost savings between the contractor and owner (Correct answer)
- Full savings retained by the owner
- Full savings retained by the contractor
- No change to the contract price
Correct answer: Shared cost savings between the contractor and owner
VECPs in government contracting typically split net savings between the contractor and the government as an incentive for innovation.
Question 7: In risk-adjusted cost estimating, the expected cost including contingency is best expressed as:
- Base estimate + EMV of all identified risks (Correct answer)
- Base estimate × risk multiplier
- Base estimate + pessimistic cost
- Base estimate + 10% markup
Correct answer: Base estimate + EMV of all identified risks
Adding the sum of expected monetary values (probability × impact) for each identified risk to the base estimate yields a risk-adjusted cost.
CEP Risk Analysis & Value Engineering 5
A P80 confidence level on a cost estimate means: