CPM CPM Risk Management & Procurement 1 — Questions and Answers
Question 1: During risk identification for a CPM project, which technique involves structured brainstorming using a hierarchical decomposition of risk categories?
- Risk Breakdown Structure (RBS) (Correct answer)
- Work Breakdown Structure (WBS)
- Probability-Impact Matrix
- Monte Carlo Simulation
Correct answer: Risk Breakdown Structure (RBS)
A Risk Breakdown Structure (RBS) organizes identified risks into categories and subcategories using a hierarchical decomposition similar to a WBS.
Question 2: A CPM project manager performs a qualitative risk analysis. Which output is the PRIMARY result of this process?
- Risk register updates with prioritized risk list (Correct answer)
- Expected monetary value for each risk
- Updated project budget reserves
- Contract negotiation outcomes
Correct answer: Risk register updates with prioritized risk list
Qualitative risk analysis outputs prioritized risks in the risk register based on probability and impact assessments.
Question 3: In CPM procurement planning, a 'Time and Materials' contract is MOST appropriate when:
- The scope of work cannot be precisely defined upfront (Correct answer)
- The buyer wants to transfer maximum risk to the seller
- A fixed price has been negotiated for all deliverables
- The contract duration is less than 30 days
Correct answer: The scope of work cannot be precisely defined upfront
Time and Materials contracts are used when scope is uncertain, compensating the seller for actual time and materials consumed.
Question 4: Which risk response strategy involves shifting the negative impact of a risk to a third party, such as through insurance?
- Transfer (Correct answer)
- Mitigate
- Accept
- Avoid
Correct answer: Transfer
Risk transfer moves the financial or operational consequence of a risk to another party, such as purchasing insurance or outsourcing.
Question 5: A CPM project manager calculates the Expected Monetary Value (EMV) of a risk with a 30% probability of occurring and an impact of -$50,000. What is the EMV?
- -$15,000 (Correct answer)
- -$50,000
- -$35,000
- $15,000
Correct answer: -$15,000
EMV = Probability × Impact = 0.30 × (-$50,000) = -$15,000, representing the weighted average outcome of the risk.
Question 6: During contract closeout in CPM procurement, which activity ensures the seller has met all contractual obligations?
- Formal acceptance and procurement audit (Correct answer)
- Scope validation of internal deliverables
- Lessons learned documentation only
- Risk reassessment by the project team
Correct answer: Formal acceptance and procurement audit
Formal acceptance and a procurement audit confirm the seller fulfilled all contract terms before officially closing the procurement.
CPM CPM Risk Management & Procurement 1
During risk identification for a CPM project, which technique involves structured brainstorming using a hierarchical decomposition of risk categories?