Finals Deck Flashcards
1
Q
What is the first step in the Risk Management Process?
A
Risk Identification
This step involves generating a list of all possible risks that could affect the project.
2
Q
What is the definition of risk in the context of projects?
A
An uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives.
3
Q
What is the primary focus of risk management in projects?
A
Recognizing and managing potential and unforeseen trouble spots.
4
Q
What are the four steps in the Risk Management Process?
A
- Risk Identification
- Risk Assessment
- Risk Response Development
- Risk Response Control
5
Q
What does Risk Response Development involve?
A
Creating contingency plans and strategies to reduce possible damage.
6
Q
True or False: All risks identified in the risk management process deserve equal attention.
A
False.
7
Q
What is a common mistake made during the risk identification process?
A
Focusing on objectives instead of the events that could produce consequences.
8
Q
What is a Risk Breakdown Structure (RBS)?
A
A tool used to help management teams identify and analyze risks.
9
Q
What is a risk profile?
A
A list of questions addressing traditional areas of uncertainty on a project.
10
Q
What does the risk assessment process involve?
A
Evaluating risks based on their probability of occurrence and impact.
11
Q
Fill in the blank: The cost impact of a risk event is less if the event occurs _______.
A
[earlier in the project].
12
Q
What can be a source of external project risks?
A
- Inflation
- Market acceptance
- Exchange rates
- Government regulations
13
Q
What should be the attitude during the risk identification process?
A
Encouragement of critical thinking.
14
Q
What is scenario analysis used for in risk assessment?
A
To assess the significance of each risk event.
15
Q
What is the significance of the risk management process being proactive?
A
It ensures that surprises are reduced and negative consequences are minimized.
16
Q
True or False: Historical records can complement the risk identification process.
A
True.
17
Q
What does the term ‘contingency planning’ refer to?
A
Preparing responses for events that may occur.
18
Q
What is the impact of a design flaw occurring later in the project?
A
Greater cost or time impact.
19
Q
What is the purpose of involving stakeholders in the risk management process?
A
To gain valuable perspectives and increase commitment to project success.
20
Q
What is a key factor in successfully identifying risks?
A
The attitude of the project manager and team members.
21
Q
What happens to the project cost if risks are mismanaged early on?
A
The cost is magnified.
22
Q
What is the importance of defining different levels of risk probabilities?
A
To tailor the analysis to the specific nature and needs of the project.
23
Q
Fill in the blank: The _______ is a preventive process designed to ensure that surprises are reduced.
A
[risk management process].
24
Q
What should the risk management team establish regarding impact scales?
A
What distinguishes different levels of impact.
25
What event exemplified poor risk management by NASA?
The 1999 Mars Climate Orbiter incident.
26
What is the impact of project priorities on risk assessment?
Impact is assessed based on project priorities, where time-critical projects may have minor impacts compared to cost-critical projects, which may have severe impacts.
## Footnote
Impact should be evaluated in light of the project's specific objectives.
27
What are the types of impact scales used in risk assessment?
Types of impact scales include:
* Rank-order descriptors (e.g., low, moderate, high, very high)
* Numeric weights (e.g., 1–10)
* Focus on general project or specific project objectives
28
Define the impact scale for cost in risk assessment.
The impact scale for cost includes:
* 1: Insignificant cost increase
* 2: < 10% cost increase
* 3: 10–20% cost increase
* 4: 20–40% cost increase
* 5: > 40% cost increase
29
Define the impact scale for time in risk assessment.
The impact scale for time includes:
* 1: Insignificant time increase
* 2: < 5% time increase
* 3: 5–10% time increase
* 4: 10–20% time increase
* 5: > 20% time increase
30
Define the impact scale for scope in risk assessment.
The impact scale for scope includes:
* 1: Scope decrease barely noticeable
* 2: Minor areas of scope affected
* 3: Major areas of scope affected
* 4: Scope reduction unacceptable to sponsor
* 5: Project end item is effectively useless
31
Define the impact scale for quality in risk assessment.
The impact scale for quality includes:
* 1: Quality degradation barely noticeable
* 2: Only very demanding applications are affected
* 3: Quality reduction requires sponsor approval
* 4: Quality reduction unacceptable to sponsor
* 5: Project end item is effectively useless
32
What is detection difficulty in risk assessment?
Detection difficulty measures how easy it is to detect that a risk event is going to occur in time to take mitigating action.
## Footnote
It ranges from 1 (lots of time to react) to 5 (no warning).
33
What is a risk assessment matrix?
A risk assessment matrix categorizes risks based on their likelihood and impact, often divided into red (major risk), yellow (moderate risk), and green (minor risk) zones.
34
What does the red zone in a risk severity matrix indicate?
The red zone indicates major risks, characterized by high impact and high likelihood.
35
What does the yellow zone in a risk severity matrix indicate?
The yellow zone indicates moderate risks.
36
What does the green zone in a risk severity matrix indicate?
The green zone indicates minor risks.
37
What is Failure Mode and Effects Analysis (FMEA)?
FMEA is a risk assessment technique that includes ease of detection in its evaluation, calculated as Impact x Probability x Detection = Risk Value.
38
What is the formula for calculating Risk Value in FMEA?
Risk Value = Impact x Probability x Detection.
39
What is a common weakness of the FMEA approach?
A weakness is that different risk events can receive the same weighted score despite differing severity, probability, and detection ratings.
40
What statistical techniques can assist in assessing project risk?
Techniques include:
* Decision trees
* Statistical variations of net present value (NPV)
* Correlations between past projects' cash flow and S-curves
* PERT and PERT simulation
41
What is the purpose of PERT simulation?
PERT simulation assesses overall cost and schedule risks by simulating activity durations and identifying critical paths.
42
What strategies can be used for mitigating risk?
Strategies include:
* Reducing the likelihood of the event occurring
* Reducing the impact of the adverse event on the project
43
What is an example of risk mitigation in project management?
Testing and prototyping to identify and solve problems before full implementation.
44
What is risk avoidance?
Risk avoidance involves changing the project plan to eliminate specific risks or conditions.
45
What is risk transfer?
Risk transfer involves passing risk to another party, often resulting in a premium charge for this exemption.
46
What is an example of risk transfer in a project?
Fixed-price contracts, where the contractor assumes responsibility for risk events.
47
What is Ellipsus Systems, AB?
A software design company located in Vaxjo, Sweden, that links corporate computer systems to mobile phones.
48
What are the two major emerging technical standards mentioned?
* WAP (Wireless Application Protocol)
* Java
49
What was the initial perception of WAP?
It generated huge excitement but faced negative perceptions due to slow response time.
50
What approach did Rikard Kjellberg take regarding technology standards?
He decided to develop projects based on both WAP and Java standards.
51
What financial instruments are used to transfer risk?
* Insurance
* Performance bonds
* Warranties
* Guarantees
52
What does BOOT stand for in project management?
Build-Own-Operate-Transfer
53
What is risk retention?
A conscious decision to accept the risk of an event occurring.
54
What is a contingency plan?
An alternative plan to be used if a possible foreseen risk event becomes a reality.
55
What distinguishes a risk response from a contingency plan?
A risk response is part of the actual implementation plan, while a contingency plan goes into effect after the risk is recognized.
56
What is a major risk management technique in high-tech industries?
Developing contingency plans for suppliers to mitigate delays.
57
What is a risk response matrix?
A tool summarizing how the project team plans to manage identified risks.
58
What is the greatest danger in climbing Mount Everest?
Not reaching the summit but making it back to the base camp.
59
What is the importance of establishing a predetermined turnaround time in mountain climbing?
To ensure a safe return regardless of proximity to the summit.
60
What can cause schedule risks in project management?
Deferring the threat of a project coming in late.
61
What is 'crashing' in project management?
Reducing project duration by compressing one or more activities on the critical path.
62
What should be avoided when addressing price risks in long-duration projects?
Using a lump sum to cover price risks.
63
What is a common consequence of funding cuts in project management?
The potential cancellation of the project before completion.
64
What was the RAH-66 Comanche helicopter project an example of?
A project that faced cancellation due to funding cuts and strategic changes.
65
What is a key consideration in funding risk assessment?
Evaluating the funding supply for the project.
66
What was the recommendation made by the Defense Department in February 2004 regarding the new age combat helicopter?
The project should be canceled due to a need to cut costs and a shift toward unmanned aircraft for surveillance and attack missions.
67
What can lead to the cancellation of projects in business firms?
Changes in priorities and top management, as well as tight resources.
68
What is the impact of severe budget cuts on a project?
It often requires scaling back the scope of the project.
69
What are 'all-or-nothing projects'?
Projects that are vulnerable to budget cuts, such as the Comanche helicopter project.
70
What is 'chunk-ability' in project management?
The ability to still add value to a project even if it falls short of original intentions.
71
What is an opportunity in project management?
An event that can have a positive impact on project objectives.
72
How can unusually favorable weather affect a construction project?
It can accelerate construction work.
73
What are the four types of responses to an opportunity in project management?
* Exploit
* Share
* Enhance
* Accept
74
What does the 'Exploit' response aim to achieve?
To eliminate uncertainty associated with an opportunity.
75
What does the 'Share' strategy involve?
Allocating ownership of an opportunity to another party best able to capture it.
76
What is the purpose of contingency funds in project management?
To cover project risks—both identified and unknown.
77
Why might project owners be reluctant to establish contingency funds?
They may perceive it as implying that the project plan is poor.
78
What influences the size of contingency reserves?
The uncertainty inherent in the project.
79
What is the typical range for contingency percentages in projects similar to past projects?
1 to 10 percent.
80
What are budget reserves used for?
To cover identified risks allocated to specific segments or deliverables of the project.
81
What are management reserves used for?
To cover major unforeseen risks and are applied to the total project.
82
What is a major challenge for project managers regarding changes?
Coping with and controlling project changes.
83
What are the three categories of changes in projects?
* Scope changes
* Implementation of contingency plans
* Improvement changes suggested by team members
84
What is the purpose of a change management system?
To report, control, and record changes to the project baseline.
85
What does a risk register contain?
Identified risks, descriptions, category, probability, impact, responses, contingency plans, owners, and current status.
86
True or False: Budget reserves are included in the baseline for each work package.
False.
87
Fill in the blank: The process of managing risks involves executing the risk response strategy and monitoring _______.
[triggering events]
88
What is the significance of establishing an environment where participants feel comfortable raising concerns?
It encourages the identification of problems and new risks.
89
What is the purpose of documenting responsibility in risk management?
To ensure that each identified risk is assigned to someone who will manage it.
90
What is the risk control process primarily concerned with?
Monitoring risks and implementing changes as necessary.
91
What should be done when new risks emerge during a project?
Analyze and incorporate them into the risk management process.
92
What is a change request form used for?
To track proposed changes in a project.
93
What is the role of design engineers in project management?
They assess the implications of changes to projects, such as in the exhaust system for hybrid automobiles.
## Footnote
Design engineers evaluate how changes impact weight parameters and other project aspects.
94
What responsibility do architecture firms have on construction projects?
They assess the implications of changes and ensure appropriate expertise is applied to project alterations.
95
What is the purpose of change request forms?
To track proposed changes in a project, including their description, impacts, and review paths.
## Footnote
Change request forms typically detail the change, its impact on scope, schedule, cost, and include signature paths for approval.
96
What key information is included in a change request log?
It summarizes the status of outstanding change requests, including source, date, document codes, cost estimates, and current status.
97
What is the plan of record in project management?
The current official plan for the project regarding scope, budget, and schedule, serving as a change management benchmark.
98
Why is integration of the change control system with the WBS and baseline crucial?
To prevent project plans and control from self-destructing.
99
What are the benefits derived from change control systems?
* Inconsequential changes are discouraged.*
* Costs of changes are logged.*
* Integrity of the WBS is maintained.*
* Allocation of budget funds is tracked.*
* Responsibility for implementation is clarified.*
* Effect of changes is visible to all parties.*
* Implementation of change is monitored.*
* Scope changes reflected in baseline measures.
100
What is the essence of project management according to the summary?
Risk management.
101
What is the purpose of project selection systems?
To reduce the likelihood that projects will not contribute to the firm's mission.
102
What do risk breakdown structures aim to prevent?
The omission of vital parts of the project and unrealistic budget estimates.
103
What is the nature of risk management in project management?
Proactive, reducing surprises and improving understanding of likely outcomes.
104
What is a contingency plan?
A plan designed to increase the chance that a project can be completed on time and within budget.
105
True or False: Responsibility for risks should be clearly identified and documented.
True
106
What should project managers do with budget reserves?
Keep them linked to the WBS and communicate them to the project team.
107
What does effective change control facilitate?
Measuring performance against schedule and cost.
108
What culture is required for successful risk management?
A culture where threats are embraced and problems are identified.
109
Fill in the blank: A __________ is a formal, structured process to handle project risks.
risk management process
110
What is a risk severity matrix used for?
To assess the severity of identified risks.
111
What are the key terms associated with risk management? List at least three.
* Avoiding risk.*
* Budget reserve.*
* Change management system.*
* Contingency plan.*
* Management reserve.*
* Mitigating risk.*
* Opportunity.*
* Retaining risk.*
* Risk.*
* Risk breakdown structure (RBS).*
