Module 7- Quantitative Risk Analysis

Question 1

1. Which of the following is not an input to the perform quantitative risk analysis process?

A. Risk management plan
B. Cost management plan
C. Quality management plan
D. Schedule management plan

Answer 1

1.	C
PMBOK Guide - The inputs to the perform quantitative risk analysis process include:
-	Risk management plan
-	Cost management plan
-	Schedule management plan
-	Risk register
-	Enterprise environmental factors
-	Organizational process assets

Question 2

2. Which of the following is not an input to the perform quantitative risk analysis process?

A. Scope baseline
B. Enterprise environmental factors
C. Schedule management plan
D. Risk register

Answer 2

2.	A
PMBOK - The inputs to the perform quantitative risk analysis process include:
-	Risk management plan
-	Cost management plan
-	Schedule management plan
-	Risk register
-	Enterprise environmental factors
-	Organizational process assets

Question 3

3. Which of the following is an input to the perform quantitative risk analysis process?

A. Human resource management plan
B. Scope management plan
C. Quality management plan
D. Organizational process assets

Answer 3

3.	D
PMBOK Guide - The inputs to the perform quantitative risk analysis process include:
-	Risk management plan
-	Cost management plan
-	Schedule management plan
-	Risk register
-	Enterprise environmental factors
-	Organizational process assets

Question 4

4. Which of the following is not a tool or technique used in the perform quantitative risk analysis process?

A. SWOT analysis
B. Data gathering and representation techniques
C. Quantitative risk analysis and modeling techniques
D. Expert judgment

Answer 4

4. A
   PMBOK Guide - The tools and techniques used in the perform quantitative risk analysis process include:
   - Data gathering and representation techniques
   - Quantitative risk analysis and modeling techniques
   - Expert judgment

Question 5

5. Which of the following is a tool or technique used in the perform quantitative risk analysis process?

A. Data gathering and representation techniques
B. Empirical data analysis
C. Qualitative risk analysis and modeling techniques
D. All of the above are tools and techniques used in the perform quantitative risk analysis

Answer 5

5. A
   PMBOK Guide - The tools and techniques used in the perform quantitative risk analysis process include:
   - Data gathering and representation techniques
   - Quantitative risk analysis and modeling techniques
   - Expert judgment

Question 6

6. Which of the following is an output to the perform quantitative risk analysis process?

A. Project document updates
B. Risk register updates
C. Project management plan updates
D. Risk management plan updates

Answer 6

6. A

PMBOK Guide - The output to the perform quantitative risk analysis process is project document updates

Question 7

7. You are in the process of quantifying risks on a project you are leading. Several of your key resources are non-collocated, but have needed input. How can this be done?

A. Make use of the Delphi Technique
B. Make use of Monte Carlo Analysis
C. Make use collaboration software
D. Apply Critical Chain Modeling

Answer 7

7. A
   The Delphi Technique is specifically designed to survey your experts, aggregate their responses, and then feed the aggregated result back to them for confirmation. This is the best option in a situation where the resources are not all together

Question 8

8. You are the project manager on a large IT project. You have assembled your team, identified the major risks on the project, determined what would trigger those risks, rated the risks on a rating matrix, tested the major risk assumptions, and assessed the quality of the data used. The team is continuing to move through the risk management process. What have you forgotten to do?

A. Involve other stakeholders
B. Use a Monte Carlo simulation
C. Mitigate the risks
D. The overall risk ranking for the project

Answer 8

8. A
   There is nothing wrong with this process. It simply needs to be continued. The best answer in this case is to involve other stakeholders.

Question 9

9. Monte Carlo analysis is used to:

A. Get an indication of the risk involved in a project
B. Simulate the order in which activities occur
C. Estimate an activity’s length
D. Measure project risk level

Answer 9

9. A
   Several of these answers are partially correct. Monte Carlo analysis could help you know that an activity needs to change, but not what the estimate should be. Monte Carlo analysis is a simulation tool, but it typically is used to simulate time or cost and not ordering of the activities. It can also be used to measure the probabilities of risk or the likelihood of being on the critical path. However, the best answer is getting an overall analysis of the project risk.

Question 10

10. You have been asked to establish an estimated project cost using Expected Monetary Value (EMV). If the project has a best case estimate of U.S. $1,000 with a probability of 30%, a most likely case estimate of U.S. $1,180 with a probability of 50%, and a worst case estimate of U.S. $1,369 with a probability of 20%, what is the EMV for the project?

A. U.S. $1,164
B. U.S. $1,179
C. U.S. $1,191
D. U.S. $1,199

Answer 10

10. A
    To get the correct answer you must first realize you are dealing with three mutually exclusive options. You cannot simultaneously have the best and worst case scenarios. Therefore, your probabilities must sum to 100%. Use the calculation probability * result for each case and then add the results together to get the EMV.

Question 11

11. You have been asked to establish an estimated project cost using Expected Monetary Value (EMV). If the project has a best case estimate of U.S. $6,500 with a probability of 32%, a most likely case estimate of U.S. $7,865 with a probability of 48%, and a worst case estimate of U.S. $9,202 with a probability of 20%, what is the EMV for the project?

A. U.S. $7,584
B. U.S. $7,610
C. U.S. $7,696
D. U.S. $7,713

Answer 11

11. C
    To get the correct answer you must first realize you are dealing with three mutually exclusive options. You cannot simultaneously have the best and worst case scenarios. Therefore, your probabilities must sum to 100%. Use the calculation probability * result for each case and then add the results together to get the EMV.

Question 12

12. You have been asked to establish an estimated project cost using Expected Monetary Value (EMV). If the project has a best case estimate of U.S. $4,800 with a probability of 35%, a most likely case estimate of U.S. $6,000 with a probability of 45%, and a worst case estimate of U.S. $7,200 with a probability of 20%, what is the EMV for the project?

A. U.S. $5,776
B. U.S. $5,820
C. U.S. $5,901
D. U.S. $6,030

Answer 12

12. B
    To get the correct answer you must first realize you are dealing with three mutually exclusive options. You cannot simultaneously have the best and worst case scenarios. Therefore, your probabilities must sum to 100%. Use the calculation probability * result for each case and then add the results together to get the EMV.

Question 13

13. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). A will cost U.S. $650,000 and B will cost U.S. $467,000. There is a 56% chance that project A will be successful, which will result in a gain of U.S. $1,800,000. If project A fails there will be a loss of U.S. $900,000. There is a 67% chance project B will be successful, and that will result in a U.S. $950,000 gain. If Project B fails there will be a loss of U.S. $670,000. Based on this information, what is the value of the best alternative?

A. U.S. $-38,000
B. U.S. $38,000
C. U.S. $-51,600
D. U.S. $51,600

Answer 13

13. A
    To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

Question 14

14. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). A will cost U.S. $54,000 and B will cost U.S. $90,000. There is a 54% chance that project A will be successful, which will result in a gain of U.S. $206,540. If project A fails there will be a loss of U.S. $90,500. There is a 61% chance project B will be successful, and that will result in a U.S. $269,000 gain. If Project B fails there will be a loss of U.S. $118,000. Based on this information, which project do you choose?

A. A
B. B
C. The projects offer the same valuation
D. There is not enough information to determine

Answer 14

14. B
    To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

Question 15

15. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). A will cost U.S. $300,000 and B will cost U.S. $255,000. There is a 67% chance that project A will be successful, which will result in a gain of U.S. $650,000. If project A fails there will be a loss of U.S. $310,000. There is a 58% chance project B will be successful, and that will result in a U.S. $650,000 gain. If Project B fails there will be a loss of U.S. $225,000. Based on this information, what is the value of the best alternative?

A. U.S. $60,700
B. U.S. $27,500
C. U.S. $33,200
D. U.S. $51,600

Answer 15

15. C
    To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

Question 16

16. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). A will cost U.S. $345,000 and B will cost U.S. $300,000. There is a 67% chance that project A will be successful, which will result in a gain of U.S. $789,000. If project A fails there will be a loss of U.S. $310,000. There is a 58% chance project B will be successful, and that will result in a U.S. $980,000 gain. If Project B fails there will be a loss of U.S. $289,000. Based on this information, which project do you choose?

A. Project A
B. Project B
C. Both Project A & B offer the same valuation
D. There is not enough information to determine

Answer 16

16. B
    To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

Question 17

17. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). A will cost U.S. $288,000 and B will cost U.S. $225,500. There is a 61% chance that project A will be successful, which will result in a gain of U.S. $650,000. If project A fails there will be a loss of U.S. $287,000. There is a 57% chance project B will be successful, and that will result in a U.S. $560,000 gain. If Project B fails there will be a loss of U.S. $225,000. Based on this information, what is the value of the best alternative?

A. U.S. $6,480
B. U.S. -$3,050
C. U.S. $3,200
D. U.S. -$3,430

Answer 17

17. B
    To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

Question 18

18. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). A will cost U.S. $750,000 and B will cost U.S. $594,000. There is a 68% chance that project A will be successful, which will result in a gain of U.S. $1,600,000. If project A fails there will be a loss of U.S. $978,000. There is a 63% chance project B will be successful, and that will result in a U.S. $1,400,000 gain. If Project B fails there will be a loss of U.S. $725,000. Based on this information, which project do you choose?

A. Project A
B. Project B
C. Both Project A & B offer the same valuation
D. There is not enough information to determine

Answer 18

18. A
    To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

Question 19

19. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). A will cost U.S. $663,500 and B will cost U.S. $589,000. There is a 66% chance that project A will be successful, which will result in a gain of U.S. $1,399,000. If project A fails there will be a loss of U.S. $663,500. There is a 69% chance project B will be successful, and that will result in a U.S. $1,005,000 gain. If Project B fails there will be a loss of U.S. $225,000. Based on this information, what is the value of the best alternative?

A. U.S. $34,250
B. U.S. $34,700
C. U.S. $68,950
D. U.S. $68,525

Answer 19

19. B
    To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.