Risk Management and Contingency Planning Flashcards
7 cards from real CPE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Management and Contingency Planning flashcards as text
What is 'risk appetite' in the context of project estimating and planning?
Answer: The level of risk an organization is willing to accept in pursuit of its objectives
Risk appetite defines how much uncertainty an organization will tolerate, shaping decisions about contingency levels and risk responses.
A force majeure clause in a construction contract is primarily designed to:
Answer: Excuse a party from performance obligations due to extraordinary unforeseeable events
Force majeure clauses protect parties from liability when performance is prevented by extraordinary events outside their control.
In a SWOT analysis applied to project risk, which quadrant identifies internal weaknesses that could become project risks?
Answer: Weaknesses
The Weaknesses quadrant of a SWOT analysis reveals internal limitations or gaps that may create risk exposure on the project.
Risk burndown tracking during project execution measures:
Answer: The reduction in overall risk exposure as risks are resolved or retired over time
A risk burndown chart shows the declining total risk exposure as individual risks close out or are resolved through the project lifecycle.
When estimating contingency for a project with significant geotechnical uncertainty, the most defensible approach is to:
Answer: Commission a geotechnical investigation and model the cost variability probabilistically
Commissioning a geotechnical study and performing probabilistic cost modeling provides the most defensible and accurate contingency for subsurface uncertainty.
Which metric is used to evaluate whether a risk response is cost-effective before implementing it?
Answer: Cost of the response relative to the expected monetary value of the risk
A response is cost-effective only if its implementation cost is less than the expected monetary value (EMV) of the risk it addresses.
A CPE reviewing a completed estimate notices that contingency was consumed on items that were actually within the original scope. This indicates:
Answer: Scope creep or poor scope definition, not true risk events, consumed the contingency
Using contingency for in-scope work indicates scope was poorly defined or scope creep occurred, which are scope management failures rather than true risk materializations.