Chapter 9

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Questions and Answers

In the context of overall project risk analysis, what is the most critical reason for project sponsors and organizational stakeholders to seek relatively representative cost and schedule risk assessments?

To provide project managers with a comprehensive understanding of resource allocation, thereby maximizing project efficiency.
To create a baseline for subsequent risk assessments, ensuring consistency in risk management practices across various projects.
To comply with mandatory auditing requirements as dictated by international accounting standards.
To inform decisions regarding project approval, termination, or the implementation of high-level remedial actions such as adjusting project objectives or risk tolerances. (correct)

Why are direct aggregations of individual (qualitative) project risks typically deemed imprudent when deriving overall project risks, particularly in large, complex projects?

Because this approach leads to an overestimation of overall project risks.
Because regulatory compliance standards mandate a separate quantitative risk assessment, rendering the aggregation of qualitative risks redundant.
Because such aggregations often fail to account for interdependencies and synergistic effects among risks, leading to potentially inaccurate or misleading overall risk assessments. (correct)
Because qualitative risks are inherently subjective and cannot be quantified for meaningful aggregation.

How do overall (quantitative) project risk assessments fundamentally leverage individual (qualitative) risk identification and analysis to enhance project management effectiveness?

By validating the accuracy of individual risk assessments through a top-down quantitative approach.
By statistically correlating qualitative risk scores with quantitative project performance metrics.
By converting qualitative risk assessments into quantitative data through econometric modeling, enabling a more precise calculation of overall project risk exposure.
By using the insights from qualitative risk analysis to inform and prioritize individual risks, thereby guiding resource allocation and risk response strategies. (correct)

In the context of project risk management, when employing expert judgment for determining overall (quantitative) project risks, what critical measure should be adopted to mitigate potential biases arising from overbearing or overly opinionated subject matter experts (SMEs)?

Utilizing the Delphi method to ensure anonymous input from each SME, fostering a more objective and balanced assessment. (B) Signup and view all the answers

When estimating overall project cost and schedule risk by decomposing the project plan into mutually exclusive segments (i.e., major WBS elements or project phases), what is the most critical prerequisite for ensuring the accuracy and reliability of this approach?

Developing a meticulously designed Work Breakdown Structure (WBS) with clearly defined, high-level interdependencies. (D) Signup and view all the answers

What key factor most significantly influences the acceptability of overall project cost and schedule estimates derived independently by assessing Work Breakdown Structure (WBS) elements with expert judgment?

The perceived credibility of the experts interviewed and the underlying data used to rationalize their estimates. (B) Signup and view all the answers

How does the use of modeling and simulation tools align with augmenting project team capabilities in integrated project master scheduling, and what organizational support infrastructure is essential to leverage these tools effectively?

Modeling and simulation demand a capable project planning team proficient in integrated project master scheduling, alongside organizational commitment to cover training and implementation costs. (B) Signup and view all the answers

What inherent challenges are recognized to potentially impede the effective utilization of modeling and simulation tools for overall project risk assessment?

Difficulties in acquiring knowledgeable resources and securing organizational support, alongside the potential for inaccurate or biased input data. (B) Signup and view all the answers

In project risk assessment models built from the project's integrated master schedule (IMS), what role do task interdependencies play, and how are they incorporated to analyze cost or schedule risk?

Task interdependencies, such as predecessor and successor relationships, are critical for modeling the flow of work and analyzing cost or schedule risks based on activity durations and dependencies. (C) Signup and view all the answers

How are Monte Carlo simulations employed within the context of project risk assessment, and what fundamental output do they generate to aid in decision-making?

By constructing a set of notional schedule runs derived from randomized task cost and/or durations based on probability distributions, generating histograms and cumulative probability curves for specific key end milestones. (A) Signup and view all the answers

Within the application of project modeling and simulation, how can probability paths be strategically inserted into the project schedule to enhance the granularity of risk assessment?

By enabling probability paths for activities that can significantly impact risk assessment results, such as sequential redesign/build/test 'spins' with decreasing probabilities of occurrence. (D) Signup and view all the answers

When is it most appropriate to develop a customized probability distribution based on actual past data points in project modeling and simulation?

When the data is representative of past efforts similar to those being estimated, lending greater credibility to the simulation results. (A) Signup and view all the answers

What foundational element dictates the effectiveness of modeling and simulation in analyzing overall project risks, particularly concerning complexity, fidelity, and precision of results?

The project's Integrated Master Schedule (IMS) aligned with a Work Breakdown Structure (WBS) that appropriately segregates work activities. (A) Signup and view all the answers

What practical guidelines should be adhered to when implementing modeling and simulation to analyze overall project risks in a pragmatic and effective manner?

Focusing on higher-level aggregate activities to reduce model complexity, committing to a worst-case schedule, and soliciting three-point estimates that bound extremes reasonably. (D) Signup and view all the answers

When soliciting three-point estimates for task durations to refine project schedules, which strategy effectively mitigates unrealistic expectations and promotes buy-in from project team members?

Requesting 10% confidence and 90% confidence durations for best-case and worst-case, respectively, to establish achievable targets. (B) Signup and view all the answers

What potential risk is inherent in inputs where the best-case or worst-case estimate is identical to the nominal estimate, and how can this be addressed?

It suggests a mistaken input, necessitating thorough normalization of the inputs received to filter out overly aggressive or conservative estimates. (A) Signup and view all the answers

What critical form of evaluation does modeling and simulation enable, allowing project teams to identify influential factors affecting project cost and schedule performance using a 'Tornado Diagram'?

Sensitivity analysis. (B) Signup and view all the answers

Why might a project's original Gantt chart completion date exhibit a lower probability of achievement than initially projected, particularly in complex and highly uncertain projects?

Because the average value of three-point distributions tends to be skewed to the right, and there can be multiple critical paths at the same time (merge bias). (A) Signup and view all the answers

How does 'merge bias' manifest in project scheduling, and what implications does it have for project execution and overall risk assessment?

Merge bias occurs when more than one critical path exists simultaneously, reducing the likelihood of meeting the project's schedule objectives; being aware of this effect in the planning and executing processes can literally save your project from a pending disaster. (B) Signup and view all the answers

When a project team leverages modeling and simulation tools prior to establishing the Plan of Record (POR), what significant benefits are gained, and how does this proactive approach augment project planning?

It serves as a robust project planning tool, likely revealing surprising cost and schedule risks, and iterating the integrated master schedule (IMS) a few times with simulation enables refinement before finalizing the baseline budget and schedule. (A) Signup and view all the answers

In the context of overall project cost risk assessment, how does the application of modeling and simulation impact the range of probable results and the assessment of the 'nominal' (most likely) cost estimate derived from an interview process?

Modeling and simulation result in a narrower range of probable outcomes and assign a specific probability to the nominal estimate. (C) Signup and view all the answers

What consideration should guide the selection of a target probability level for overall project cost, especially when stakeholders exhibit a conservative, risk-averse stance?

The 75% probability cost estimate, providing a buffer to account for potential risks. (B) Signup and view all the answers

What common biases can affect schedule estimates? How can the likelihood that one's Gantt chart deterministic schedule will need more buffer be addressed and what steps should a project team take?

Merge bias and three-point estimation bias; the project team should analyze overall project cost and/or schedule risk during the planning process and iterate the project plan, if necessary, before signing up for project cost and/or schedule commitments. (E) Signup and view all the answers

In the framework of project risk management, how are 'What-if' analyses and design of experiments (DOE) employed to evaluate and refine project plans, and what strategic benefits do they offer?

'What-if' analyses determine individual project risks that most impact project performance, and DOE evaluates different project plan changes to proactively address identified risks and determine cost-effective risk responses. (B) Signup and view all the answers

How should project teams use project data collected over time and what is the relevance of this process to assessing future project risks?

Estimating the future can greatly benefit from past project performance data, and if project information is consistently collected it can be assimilated to formulate credible distributions from which to make three-point estimates or custom distributions. (C) Signup and view all the answers

What role do Figures of Merit or metrics play when monitoring and controlling projects using the modeling and simulation tool? How should they be tracked?

Good figures of merit (or metrics) to track are the probabilities of achieving one or more important delivery milestones over time (e.g., on a monthly cadence), which basically equates to a measure of project risk over time, and can be a good indicator of project health. (A) Signup and view all the answers

How can an organization bolster its ability to forecast upcoming risks for projects that feature a consistent output? What should be established to support the forecasting?

For projects that are inherently complex and higher risks, the past analogous data (if they exist) will likely have broader distributions, but at least a credible risk assessment can be performed if the data exist; the key to collecting this type of project data is the establishment of consistent project WBSs, which likely need to be established as organizational project governance guidelines. (C) Signup and view all the answers

Which methodologies are typically used to assess overall project risk and include key points such as project cost and schedule, knowledgeable individuals, and an integrated project master schedule?

Interviewing and expert judgment and modeling and simulation tools and techniques . (A) Signup and view all the answers

Within the realm of project management, what role does past project schedule performance data fill for predicting the future and what chapter should be consulted for further insight, according to the provided documentation?

Past project data are potentially invaluable, and Chapter 12 should be consulted. (E) Signup and view all the answers

What should project sponsors and organizational stakeholders do if their organization's tolerances shift over the course of a project?

Review the risk assessment and take higher-level remedial actions (i.e., change project objectives). (C) Signup and view all the answers

What is overall project risk usually influenced or affected by?

Individual risks. (D) Signup and view all the answers

What is the most common methodology that is used due to its complexity and relative low cost?

Interviewing and eliciting expert judgement. (C) Signup and view all the answers

When using expert judgement as a tool or technique for quantitative analysis, where does the process start?

By providing the experts with final (or near-final) project plans. (B) Signup and view all the answers

Why is it important to determine the credibility of experts when estimating overall project costs and schedule?

The acceptability of the resulting estimates will be largely influenced by the credibility of the experts interviewed. (A) Signup and view all the answers

What are some of the side benefits of implementing modeling and simulation tools into a project?

Evaluating and determining individual project risk responses via "what ifs" and trade-off analyses. (C) Signup and view all the answers

Why would a team look at cumulative probability curves in modeling and simulation work?

Probabilities relative to achieving a particular cost target and/or schedule date, as well as the plotting of cumulative probability curves. (B) Signup and view all the answers

What is the primary input to the model when using modeling and simulation for analyzing overall project risks?

The project's IMS. (D) Signup and view all the answers

Flashcards

Overall Project Risk Analysis

Cost and schedule risk assessments that help project sponsors and stakeholders decide whether to approve, shut down, or remediate a project.

Scope of Overall Project Risk Assessment

Focuses primarily on project cost and schedule objectives while also considering scope and quality risks.

Methods for Assessing Overall Project Risks

Using techniques such as interviewing, expert judgment, modeling, and simulations to assess overall risks.