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PMI PMI-RMP Practice Test - Questions Answers, Page 6
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Question 51
A project has a S0S4 chance of a US$100 000 profit and a 40% chance of a US$100,000 loss. What is the expected monetary value for this project?
US$20.000 loss
US$20,000 profit
US$40,000 loss
US$100,000 profit
The expected monetary value (EMV) for this project can be calculated as follows: (0.6 x US$100,000) - (0.4 x US$100,000) = US$60,000 - US$40,000 = US$20,000 profit.
The EMV of a project is the weighted average of the possible outcomes, which are a US$100,000 profit or a US$100,000 loss in this case. To calculate the EMV, we multiply the probability of each outcome by its monetary value, and then add them together. The formula is:
EMV = (Probability of profit x Value of profit) + (Probability of loss x Value of loss)
In this case, the probability of profit is 60%, and the value of profit is US$100,000. The probability of loss is 40%, and the value of loss is -US$100,000 (negative because it is a loss). Therefore, the EMV is:
EMV = (0.6 x 100,000) + (0.4 x -100,000) EMV = 60,000 - 40,000 EMV = US$20,000
This means that the project has an expected monetary value of US$20,000 profit, which is the answer option B. The other options are incorrect because they do not match the EMV calculation.
The EMV is a useful tool for comparing different projects or alternatives based on their expected values. However, it does not account for the variability or uncertainty of the outcomes, which may also affect the project decision making. For example, a project with a higher EMV but a higher risk may not be preferable to a project with a lower EMV but a lower risk. Therefore, the EMV should be used with caution and in conjunction with other risk analysis techniques.
For more information on the EMV and other risk analysis methods, you can refer to the PMI Risk Management Professional (PMI-RMP) Examination Content Outline and Specifications, the A Guide to the Project Management Body of Knowledge (PMBOK Guide) -- Sixth Edition, and the Expected Monetary Value (EMV): A Guide With Examples. I hope this helps you understand the concept of EMV and how to apply it to project risk management
Question 52
A budget change request was initiated by a functional manager in an organization due to a shortage in the functional manager's department budget. The functional manager asks the CEO to approve utilization of a contingency budget reserved for one of the projects in its closing phase.
What should the risk manager of the related project have done to prevent this situation from happening?
Reformed the risk monitoring and closing process properly.
Created the project work plan and budget more accurately.
Educated the project team on budget change requests.
Communicated better with the organization's CEO.
According to the PMI Risk Management Professional (PMI-RMP) Handbook1, one of the domains of the PMI-RMP exam isRisk Monitoring and Reporting, which involves tracking identified risks, monitoring residual risks, identifying new risks, executing risk response plans, and evaluating risk process effectiveness throughout the project1. The risk manager of the related project should have reformed the risk monitoring and closing process properly to ensure that the contingency budget is only used for the intended risks and not for other purposes.The risk manager should have also communicated the status and outcomes of the risk activities to the relevant stakeholders, such as the functional manager and the CEO, to avoid any confusion or conflict over the budget allocation1.Reference:1: PMI Risk Management Professional (PMI-RMP) Handbook, page 6.
The risk manager should have ensured a more accurate project work plan and budget to prevent the functional manager from requesting to use the project's contingency budget. A well-planned budget would have avoided the shortage in the functional manager's department budget.
Question 53
The project risk manager is in the process of identifying risks. The project sponsor has communicated that there is an influential stakeholder who has a senior management position. The other stakeholders do not feel comfortable speaking in front of this stakeholder.
What should the project risk manager do next to identify risks?
Review the risk breakdown structure to ensure project scope is covered.
Use the brainstorming technique to remove personal bias.
Use expert judgment to remove ego or emotional conflict.
Consider the Delphi technique to gather all stakeholder opinions.
The Delphi technique allows the project risk manager to gather opinions from all stakeholders anonymously. This method would enable stakeholders to express their concerns without feeling uncomfortable in front of the influential stakeholder.
The Delphi technique is a tool used to make quick decisions with consensus. This technique consists of sending several sets of anonymous questions to each expert. This is followed by a group discussion after every round. The Delphi technique can help the project risk manager to identify risks by soliciting the opinions of all stakeholders without revealing their identities. This way, the stakeholders can express their views freely and honestly, without being influenced or intimidated by the influential stakeholder. The Delphi technique can also reduce personal bias, ego, or emotional conflict among the participants. The project risk manager can use the results of the Delphi technique to create a list of potential risks and their causes, effects, and probabilities.Reference:3,2,5
Question 54
A certain risk is identified for a major project, and the risk response is planned. However, the analysis reveals a high probability for a secondary risk which will be tolerated based on the organization's risk thresholds. The secondary risk is subsequently registered. During project execution, the primary risk occurs, the planned action is taken, and the secondary risk emerges
What two actions should the risk owner take? (Choose two.)
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Question 55
Multiple new risks have come up on a project that were not included on the risk register. The project manager met with the team to explain that risk management is critical for the success of the project, and risk identification is key.
What should the project manager do next?
Question 56
Towards the end of definitive design, project costs have increased to the point where it will be classified as a capital asset project. The customer has expressed they want one final total project completion date and will afford no extensions after it is established.
How should the risk manager proceed?
Question 57
The project manager is reviewing the lessons learned from a previous similar project. The previous project was delayed due to the delay in delivery of a gas turbine generator (GTG). Construction of the previous project had to be shut down unexpectedly to wait for the late delivery of the GTG.
What should the project manager do first?
Question 58
The project manager and the risk manager of a new project to develop an application to support autonomous driving are meeting with the sponsor and key stakeholders to discuss the project. During the meeting, it is identified that the transport authority is discussing new traffic regulations for the industry that could be in place before the project ends.
How should the project manager and the risk manager handle this situation?
Question 59
The project manager has completed four projects all with similar scope. The project manager has recently been assigned to start on a new project and believes some risks may occur again on this project.
What should the project manager do?
Question 60
During project planning, a risk is identified for which the risk manager has defined a mitigation strategy. Later during project execution, this risk still leaves substantial residual risk.
What should the risk manager do to handle this situation?
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