PMI-SP Risk Analysis & Contingency Planning 3 — Questions and Answers
Question 1: In schedule risk analysis, what is the primary advantage of using three-point estimates (optimistic, most likely, pessimistic) over single-point estimates?
- They eliminate all uncertainty from the schedule
- They capture the range of possible durations and support probabilistic analysis (Correct answer)
- They reduce the number of activities needed in the schedule
- They allow the scheduler to bypass stakeholder approval
Correct answer: They capture the range of possible durations and support probabilistic analysis
Three-point estimates capture duration uncertainty by defining a range, enabling PERT calculations and Monte Carlo simulations that reflect realistic schedule variability.
Question 2: A scheduler is analyzing schedule risks and notices that two risks are correlated—when Risk A occurs, Risk B is more likely to occur. How should this correlation BEST be handled in Monte Carlo simulation?
- Treat the risks as independent events to simplify the model
- Model the correlation explicitly using correlation coefficients between the risks (Correct answer)
- Remove one of the risks from the risk register
- Add the two risks' individual EMVs together and treat them as one risk
Correct answer: Model the correlation explicitly using correlation coefficients between the risks
Correlated risks in Monte Carlo simulation must be modeled with explicit correlation coefficients to avoid underestimating combined schedule impact.
Question 3: Which schedule contingency reserve approach is MOST appropriate when historical data is available and reliable?
- Adding a flat 10% buffer to all activity durations
- Using Monte Carlo simulation based on historical duration distributions (Correct answer)
- Estimating reserves based on intuition and experience alone
- Setting reserves equal to the longest activity on the critical path
Correct answer: Using Monte Carlo simulation based on historical duration distributions
When historical data is available, Monte Carlo simulation using empirically derived distributions provides the most statistically valid basis for contingency reserves.
Question 4: A project team has identified a risk that, if it occurs, would require rework of a completed deliverable. This type of risk trigger is BEST addressed by:
- Accepting the risk and documenting it in the risk register
- Building a contingency plan that includes rework time in the schedule (Correct answer)
- Removing the deliverable from the project scope
- Ignoring the risk because rework rarely occurs
Correct answer: Building a contingency plan that includes rework time in the schedule
A contingency plan that pre-allocates schedule buffer for potential rework ensures the project can respond without missing the overall project deadline.
Question 5: What is the key difference between a contingency reserve and a management reserve in project scheduling?
- Contingency reserves are for known risks; management reserves are for unknown risks (Correct answer)
- Management reserves are for known risks; contingency reserves are for unknown risks
- Contingency reserves require sponsor approval to use; management reserves do not
- There is no practical difference between the two types of reserves
Correct answer: Contingency reserves are for known risks; management reserves are for unknown risks
Contingency reserves address identified (known) risks included in the risk register, while management reserves cover unforeseeable unknown-unknown risks.
Question 6: During project execution, a risk response action creates a new risk that was not previously identified. This new risk is called a:
- Residual risk
- Secondary risk (Correct answer)
- Transferred risk
- Threshold risk
Correct answer: Secondary risk
Secondary risks are unintended new risks that arise directly as a result of implementing a risk response strategy.
Question 7: A PMI-SP practitioner uses sensitivity analysis to identify which schedule activities contribute most to overall project risk. The PRIMARY output of sensitivity analysis is BEST represented by:
- A probability-impact matrix
- A tornado diagram showing activities ranked by impact on schedule variance (Correct answer)
- A Gantt chart with risk events added as milestones
- A risk breakdown structure (RBS)
Correct answer: A tornado diagram showing activities ranked by impact on schedule variance
Tornado diagrams are the standard output of sensitivity analysis, ranking uncertain inputs by their influence on schedule duration from highest to lowest impact.
PMI-SP Risk Analysis & Contingency Planning 3
In schedule risk analysis, what is the primary advantage of using three-point estimates (optimistic, most likely, pessimistic) over single-point estimates?