PMI-RMP Quantitative Risk Analysis 3 — Questions and Answers
Question 1: Contingency reserve for cost is best determined by which quantitative output?
- The difference between a target confidence level (e.g., P80) and the base estimate (Correct answer)
- The sum of all worst-case impacts
- A fixed 10% of the total budget
- The largest single risk impact
Correct answer: The difference between a target confidence level (e.g., P80) and the base estimate
Contingency reserve is the gap between the chosen confidence percentile and the deterministic base estimate.
Question 2: A correlation coefficient of +0.9 between two cost inputs in a simulation means what?
- The two inputs tend to move strongly in the same direction together (Correct answer)
- The inputs are independent
- One input is always 90% of the other
- There is no statistical relationship
Correct answer: The two inputs tend to move strongly in the same direction together
A high positive correlation means the variables tend to rise and fall together, widening total variance.
Question 3: Which input quality issue most undermines the credibility of a Monte Carlo result?
- Poorly estimated distributions and ignored correlations (garbage in, garbage out) (Correct answer)
- Running too many iterations
- Using a fixed random seed
- Reporting results as percentiles
Correct answer: Poorly estimated distributions and ignored correlations (garbage in, garbage out)
Simulation outputs are only as good as the distribution and correlation assumptions fed into them.
Question 4: Expected value of a contingency decision is calculated by combining what two factors across outcomes?
- Probability and monetary impact of each outcome (Correct answer)
- Duration and headcount of each task
- Float and lag of each activity
- Vendor count and contract length
Correct answer: Probability and monetary impact of each outcome
EMV across outcomes multiplies each outcome's probability by its impact and sums the results.
Question 5: In sensitivity analysis, a variable shown with a very short bar on a tornado diagram indicates what?
- It has relatively little influence on the outcome (Correct answer)
- It is the highest-priority risk
- It has the largest impact
- It must be eliminated first
Correct answer: It has relatively little influence on the outcome
Short bars represent low sensitivity, meaning the variable barely moves the result.
Question 6: A criticality index of 95% for an activity in schedule simulation means what?
- The activity was on the critical path in 95% of the iterations (Correct answer)
- The activity has 95% float
- The activity will finish 95% on time
- The activity costs 95% of the budget
Correct answer: The activity was on the critical path in 95% of the iterations
Criticality index reflects how often an activity landed on the critical path across simulation runs.
Question 7: Why might a project manager apply correlation between activity durations in a schedule simulation?
- Because related activities often share root causes and don't vary independently (Correct answer)
- To make the simulation run faster
- To reduce the number of iterations needed
- To force a single deterministic result
Correct answer: Because related activities often share root causes and don't vary independently
Correlating durations reflects shared drivers, producing a more realistic and typically wider spread.
PMI-RMP Quantitative Risk Analysis 3
Contingency reserve for cost is best determined by which quantitative output?