PM3110 Chapter 7

Question 1

Analysis of probability and consequences

Answer 1

.the potential impact of these risk factors, determined by how likely they are to occur and the effect they would have on the project if they did occur.

Question 2

Change management

Answer 2

as part of risk mitigation strategies also requires a useful documentation system that all partners in the project can access. Any strategy aimed at minimizing project risk factor, along with the member of the project team responsible for any action, must be clearly identified.

Question 3

Commercial risk

Answer 3

.an uncertainty that companies may willingly accept, given that it is virtually impossible to accurately predict customer acceptance of a new product or service venture.

Question 4

Contingency reserves

Answer 4

.the specific provision for unforeseen elements of cost within the defined project scope. Contingency reserves are viewed differently, however, depending upon the type of project undertaken and the organization that initiates it.

Question 5

Contractual or legal risk

Answer 5

.is often consistent with projects in which strict terms and conditions are drawn up in advance.

Question 6

Control and documentation

Answer 6

.creating a knowledge base for future projects based on lessons learned.

Question 7

Cross-training

Answer 7

.project team personnel so that they are capable of filling in for each other in the case of unforeseen circumstances. Cross-training requires that members of the project team learn not only their own duties but also the roles that other team members are expected to perform.

Question 8

Execution risk

Answer 8

.is a broad category that seeks to assess any uniquecircumstances or uncertainties that could have a negative impact on execution of the plan.

Question 9

Financial risk

Answer 9

.refers to the financial exposure a firm opens itself to when developing a project.

Question 10

Insurance

Answer 10

.Contractors acquire this as a means to offset the risks from the project that are often covered under contractual terms.

Question 11

Liquidated damages

Answer 11

.project penalty clauses that kick in at mutually agreed-on points in the project’s development and implementation.

Question 12

Managerial contingency

Answer 12

..is budget safety measures that address higher-level risks.

Question 13

Mentoring

Answer 13

junior or inexperienced project personnel are paired with senior managers in order to help them learn best practices.

Question 14

Project risk

Answer 14

.“an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives such as scope, schedule, cost, or quality. A risk may have one or more causes and if it occurs, may have one or more impacts.”

Question 15

(PRAM) Project Risk Analysis and Management

Answer 15

.a generic methodology that can be applied to multiple project environments and encompasses the key components of project risk management.

Question 16

Risk Breakdown Structure

Answer 16

.Generally fall into these classification clusters: 1) Financial 2) Technical 3) Commercial 4) Execution 5) Contractual or legal

Question 17

Risk Identification

Answer 17

“a source-oriented grouping of project risks that organizes and defines the total risk exposure of the project.”.

Question 18

Risk management

Answer 18

.recognizes the capacity of any project to run into trouble, is defined as the art and science of identifying, analyzing, and responding to risk factors throughout the life of a project and in the best interests of its objectives.

Question 19

Risk mitigation strategies

Answer 19

steps taken to minimize the potential impact of those risk factors deemed sufficiently threatening to the project..

Question 20

Task contingency

Answer 20

.is used to offset budget cutbacks, schedule overruns, or other unforeseen circumstances accruing to individual tasks or project work packages. These budget reserves can be a valuable form of risk management because they provide the project team with a buttress in the face of task completion difficulties.

Question 21

Technical risk

Answer 21

When new projects contain unique technical elements or unproven technology, they are being developed under significant technical risk. Naturally, there are degrees of such risk; in some cases, the technical risk is minimal (modifications to an already-­developed product), whereas in other situations the technical risk may be substantial.