Risk Management Principles

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Questions and Answers

What is the name of the organization that developed the standard for risk management in portfolios, programs, and projects?

Project Management Institute

What are the three main objectives of risk management?

  • To develop a strategy, to create a culture that embraces risk management, and to ensure that the organization is prepared to deal with change (correct)
  • To identify and assess risks, to develop a plan for dealing with risks, and to implement that plan (correct)
  • To improve decision making, to generate broad awareness of uncertainty, and to increase the chances to realize opportunities for the benefit of the business (correct)
  • To identify and evaluate risks, to assess their potential impact, and to develop strategies for mitigating and responding to risks (correct)

The practice of risk management includes planning the approach, identifying and analyzing risks, response planning and implementation, and ongoing monitoring of risks.

True (A)

What is the purpose of the Standard for Risk Management in Portfolios, Programs, and Projects?

<p>To provide a standard for risk management in portfolios, programs, and projects that outlines the essential considerations for risk management practitioners and expands on the knowledge contained on risk management in the relevant sections of the PMI foundational standards.</p> Signup and view all the answers

What are the four key elements of risk management presented in the document?

<p><code>Purpose and Benefits</code>, <code>Principles and Concepts</code>, <code>Integration of Risk Management</code>, and <code>Risk Management Life Cycle</code> (C)</p> Signup and view all the answers

The Pulse of the Profession report found that for organizations that apply a formal risk management approach, 73% of projects meet their objectives, 61% finish on time, and 64% are completed within the approved budget.

<p>True (A)</p> Signup and view all the answers

What are the seven core principles of risk management elaborated in the Standard for Risk Management in Portfolios, Programs, and Projects?

<ol> <li>Strive to achieve excellence in the practice of risk management 2. Align risk management with organizational strategy and governance practices 3. Focus on the most impactful risks 4. Balance realization of value against overall risks 5. Foster a culture that embraces risk management 6. Navigate complexity using risk management to enable successful outcomes 7. Continuously improve risk management competencies</li> </ol> Signup and view all the answers

What is the difference between a threat and an opportunity in risk management?

<p>A threat is a risk that could have a negative effect on objectives, while an opportunity is a risk that could have a positive effect. (A)</p> Signup and view all the answers

Risk management aims to ensure that the management of risk is an inherent part of all management domains, but doesn’t seek to impose uniformity of processes across portfolios, programs, and projects

<p>True (A)</p> Signup and view all the answers

What are the three levels of risk identified in the document?

<p>Portfolio, Program, and Project (C)</p> Signup and view all the answers

What are the key success factors for successful risk management?

<p>The key success factors for successful risk management include 1. Recognizing the value of risk management 2. Individual commitment/responsibility 3. Open and honest communication 4. Organizational commitment 5. Tailoring risk effort 6. Integration with organizational project management</p> Signup and view all the answers

Risk management is a strategic tool that can be used to help organizations achieve their strategic objectives and maximize their value creation.

<p>True (A)</p> Signup and view all the answers

What are the three levels of risk management that are described in detail in the document?

<ol> <li>Portfolio risk management 2. Program risk management 3. Project risk management</li> </ol> Signup and view all the answers

Portfolio risk management is concerned with the potential interdependencies between components and, therefore, is more than just the sum of individual component risks.

<p>True (A)</p> Signup and view all the answers

What is the primary purpose of program risk management?

<p>Program risk management ensures effective management of any risk that can cause misalignment between the program roadmap and its supported objectives to organizational strategy. This involves defining program risk thresholds, performing the initial program risk assessment, and developing a program risk response strategy.</p> Signup and view all the answers

A Guide to the Project Management Body of Knowledge (PMBOK® Guide) describes Project Risk Management as the processes of conducting risk management planning, identification, analysis, response planning, response implementation, and monitoring risk on a project.

<p>True (A)</p> Signup and view all the answers

What are the primary objectives of Project Risk Management?

<p>The primary objectives of Project Risk Management are to increase the probability and/or impact of opportunities and to decrease the probability and/or impact of threats in order to optimize the chances of project success.</p> Signup and view all the answers

Risk management is an integrated framework that spans organizational levels.

<p>True (A)</p> Signup and view all the answers

What are the key areas of focus for plan risk management?

<p>People: Attitudes, roles, responsibilities, authority, communication Tools: Toolbox, Parameters, Definitions Business: Constraints, Amount of detail and effort.</p> Signup and view all the answers

The Delphi Technique uses a facilitated anonymous polling of subject matter experts to identify risks in their area of expertise.

<p>True (A)</p> Signup and view all the answers

What is a Cause and Effect diagram and what is its purpose?

<p>A <code>Cause and Effect</code> diagram, also known as a fishbone diagram, is a visual tool that helps to identify the root causes of a risk. It allows for a deeper understanding of the source and likelihood of potential problems and can be used to identify quality-related problems.</p> Signup and view all the answers

A risk breakdown structure (RBS) is a hierarchical framework of potential sources of risk.

<p>True (A)</p> Signup and view all the answers

What are the three steps involved in Assumptions and Constraints Analysis?

<ol> <li>List the assumption or constraint 2. Test the assumptions or constraint by asking two questions: Could the assumption/constraint be false? If it were false, would one or more objectives be affected? 3. Generate a risk, for example, in the form: &lt;Assumption/constraint&gt; may prove false, leading to &lt;effect on objective(s)&gt;</li> </ol> Signup and view all the answers

To categorize and prioritize individual risks for further attention, to provide a mechanism for evaluating the level of overall portfolio, program, or project risk.

<p>To assess the probability and impact of each risk. (A)</p> Signup and view all the answers

Quantitative risk analysis uses techniques that are typically based on probability and impact, but may also include additional variables for prioritization.

<p>True (A)</p> Signup and view all the answers

What is a Contingency Reserve and what is its purpose?

<p>A <code>Contingency Reserve</code> is an amount of time or money that is set aside to allow for unexpected events or risks. It is typically made up of two components: amounts to cover specific, approved conditional responses (e.g., contingency plans) and amounts to address unspecified or passively accepted risks.</p> Signup and view all the answers

The Decision Tree Analysis is used to determine partial and global probabilities of occurrence.

<p>True (A)</p> Signup and view all the answers

The Failure Mode and Effects Analysis is often used in engineering contexts to identify potential failures or risks in a system, but it can also be adapted for use in other contexts, such as business risk management.

<p>True (A)</p> Signup and view all the answers

Monte Carlo Simulation is a statistical analysis technique that can be applied in situations in which there are uncertain estimates, with the aim of using this to reduce the level of uncertainty through a series of simulations.

<p>True (A)</p> Signup and view all the answers

The purpose of the Plan Risk Responses process is to determine a set of actions that provides the highest chance of success while complying with applicable constraints.

<p>True (A)</p> Signup and view all the answers

What are the three categories of techniques used in the Plan Risk Responses process?

<p>Creativity techniques to identify potential responses, Decision-support techniques for determining the optimal potential response, and Implementation techniques designed to turn a risk response into action.</p> Signup and view all the answers

The Monitor Risks process provides the assurance that risk responses are being applied, verifies whether they are effective, and, as necessary, initiates corrective actions.

<p>True (A)</p> Signup and view all the answers

The Risk Breakdown Structure (RBS) is a hierarchical framework of potential sources of risk and is a valuable tool for identifying and organizing risks. It can also be used as a framework for other risk identification techniques.

<p>True (A)</p> Signup and view all the answers

The primary objective of Enterprise Risk Management (ERM) is to ensure that the organization is aligned with its strategic objectives and that it is able to create and sustain value.

<p>True (A)</p> Signup and view all the answers

Risks from portfolios, programs, and projects should be reflected as ERM risks.

<p>True (A)</p> Signup and view all the answers

The purpose of the Standard for Risk Management in Portfolios, Programs, and Projects is to provide a standard for project management practitioners and other project stakeholders that defines the aspects of project risk management recognized as good practice on most projects most of the time, and also to provide a standard that is globally applicable and consistently applied.

<p>True (A)</p> Signup and view all the answers

What is the total area of the trapezoid ADBOA?

<p>41.58 m² (C)</p> Signup and view all the answers

What is the calculated horizontal distance traveled by the water jet from the orifice?

<p>13.2 m (D)</p> Signup and view all the answers

Using Terzaghi's formula, what is the ultimate bearing capacity ( extit{q_{ult}}) calculated for the footing?

<p>119.452 kN (C)</p> Signup and view all the answers

What is the coefficient of velocity used in the calculation of the vertical jet velocity?

<p>1.0 (D)</p> Signup and view all the answers

What is the vertical height the jet rises above the level of the orifice?

<p>2.5 m (D)</p> Signup and view all the answers

What factor of safety is used against bearing capacity failure for the footing?

<p>3.0 (D)</p> Signup and view all the answers

What is the value of $h$ calculated in the area ABD problem?

<p>6.93 (D)</p> Signup and view all the answers

What is the vertical distance from the bottom of the tank to the location of the orifice?

<p>3.0 m (A)</p> Signup and view all the answers

What is the value of $N$ when the point is 6 m below the load and 3 m horizontally from its line of application using the given formula?

<p>0.544 (C)</p> Signup and view all the answers

What is the calculated vertical stress $p$ at a point 6 m below the ground when using the formula $p = \frac{0.318QN}{z^2}$ with $Q = 2500 kN$?

<p>12 kPa (B)</p> Signup and view all the answers

What is the effective pressure at the mid-height of the clay layer before the water table is lowered?

<p>207.29 kPa (B)</p> Signup and view all the answers

What value does $a = \frac{y}{tan θ}$ equal if $θ$ is calculated based on the height and acceleration?

<p>4.0 m/s² (B)</p> Signup and view all the answers

What is the saturated unit weight of sand after the water table is lowered by 10 m?

<p>18.79 kN/m³ (D)</p> Signup and view all the answers

What is the effective soil pressure at the mid-height of the clay after the water table is lowered by 10 m?

<p>281.29 kPa (C)</p> Signup and view all the answers

In the context of the water content of soil, which of the following statements is accurate?

<p>It could never be greater than 100% (C)</p> Signup and view all the answers

How thick is the sand layer overlaying the clay layer?

<p>15.2 m (D)</p> Signup and view all the answers

What is the total force acting on the rear end of a closed cylindrical tank when it is filled with water and accelerating forward at 4 m/s²?

<p>48.37 kN (D)</p> Signup and view all the answers

What is the dry unit weight of the sand?

<p>18.2 kN/m³ (B)</p> Signup and view all the answers

For an open cylindrical vessel filled with water, how much water spills out when it rotates at 87 rpm?

<p>259 liters (A)</p> Signup and view all the answers

What is the radian equivalent of 87 rpm when calculating angular speed?

<p>9.11 rad/sec (C)</p> Signup and view all the answers

What value of the specific gravity of soil grains is used in the calculations?

<p>2.67 (B)</p> Signup and view all the answers

What is the degree of saturation of the sand above the water table after it is lowered?

<p>20% (A)</p> Signup and view all the answers

Which of the following correctly illustrates the relationship of $r$ and $z$ in the context of the equations presented?

<p>$r$ is the horizontal distance while $z$ is vertical depth (D)</p> Signup and view all the answers

What is the formula used to calculate the wet unit weight of the sand with a degree of saturation of 20%?

<p>$Y_{wet} = \frac{(Gs+Se)Yw}{1+e}$ (C)</p> Signup and view all the answers

What is the calculated horizontal force required to open the vertical rectangular gate if the water level on one side stands at the top of the gate and on the other side is 2 m below it?

<p>21.26 kN (A)</p> Signup and view all the answers

If the area of a rectangular irrigation canal is calculated as $A = 1.2(5.4)$, what is the resulting area in square meters?

<p>6.48 m² (D)</p> Signup and view all the answers

What is the hydraulic radius $R$ for the given dimensions of the rectangular irrigation canal?

<p>0.83 m (D)</p> Signup and view all the answers

How much vertical force does the cylindrical surface gate exert if the height from the water surface is found to be 6.93 m?

<p>2355.6 kN (C)</p> Signup and view all the answers

In the irrigation canal problem, which roughness coefficient value is used for the calculations?

<p>0.013 (B)</p> Signup and view all the answers

What is the moisture content in percent for the soil if the dry unit weight is 1600 kg/m³ and the wet unit weight is 1000 kg/m³?

<p>60% (C)</p> Signup and view all the answers

What is the void ratio (e) if the specific gravity (G) is 2.67 and the moisture content (ω) is 60%?

<p>1.60 (D)</p> Signup and view all the answers

What is the discharge $Q$ in cubic meters per second for the calculated area and velocity in the irrigation canal?

<p>13.92 m³/sec (D)</p> Signup and view all the answers

If the vertical force acting on a sector gate is $F_x = 9.81 imes (6.93)(6.93)(10)$, what does this formula represent in engineering terms?

<p>Hydrostatic force on the gate (B)</p> Signup and view all the answers

What is the calculated porosity (n) if the void ratio (e) is 1.60?

<p>61.5% (C)</p> Signup and view all the answers

Which step is essential when evaluating the appropriate depth of the canal while maintaining the same discharge and slope?

<p>Use the equation $b = 2d$ (A)</p> Signup and view all the answers

What is the angle of friction (φ) for the soil sample if the deviator stress at failure is 450 kPa and the chamber confining pressure is 240 kPa?

<p>28.9° (D)</p> Signup and view all the answers

What is the normal stress (σ_n) on the plane of maximum shear if the applied stresses result in σ_n = 465 kPa?

<p>465 kPa (A)</p> Signup and view all the answers

What is the total force acting on a circular plate of radius 300 mm submerged 2 m below the water surface?

<p>6.38 kN (D)</p> Signup and view all the answers

What is the distance from the center of gravity of the plate to the location of the total force if it is calculated as 0.00978 m?

<p>0.00978 m (B)</p> Signup and view all the answers

What is the vertical stress (p) at a point 3 m directly below a point load of 2500 kN?

<p>132.5 kPa (A)</p> Signup and view all the answers

What is the pressure exerted by the footing on soil 2.7 m below the footing?

<p>20.6 kPa (C)</p> Signup and view all the answers

Using Manning's Formula, what is the primary variable needed to estimate the number of hectares served by the irrigation canal?

<p>Coefficient of roughness (C)</p> Signup and view all the answers

After unloading 2 MN of its cargo, what was the new draft of the ship?

<p>6.4 m (B)</p> Signup and view all the answers

Determine the final height of the mountain using the barometer readings.

<p>3.11 km (B)</p> Signup and view all the answers

In the improvised barometer, what was the weight ratio of the liquid used to mercury?

<p>0.80 (A)</p> Signup and view all the answers

What is the draft of the ship when it enters fresh water after unloading cargo?

<p>6.56 m (B)</p> Signup and view all the answers

What was the cross-section of the piece of wood being measured in the curing tank?

<p>50 mm x 100 mm (C)</p> Signup and view all the answers

What is the depth of water recorded in the curing tank?

<p>1.80 m (D)</p> Signup and view all the answers

Flashcards

Risk

An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more objectives.

Opportunities

Risks with a positive effect on objectives.

Threats

Risks with a negative effect on objectives.

Risk Attitude

A disposition toward uncertainty, adopted explicitly or implicitly by individuals and groups, driven by perception, and evidenced by observable behavior.

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Risk Appetite

The degree of uncertainty an organization or individual is willing to accept in anticipation of a reward.

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Risk Threshold

The measure of acceptable variation around an objective that reflects the risk appetite of the organization and its stakeholders.

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Enterprise Risk Management (ERM)

The entire organizational strategy for countering business threats and exploiting business opportunities.

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Structural Risks (Portfolio Level)

Risks associated with the composition of a group of projects and the potential interdependencies among components.

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Component Risks (Portfolio Level)

Risks that the component manager escalates to the portfolio level for information or action.

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Overall Risk (Portfolio Level)

Considers the interdependencies between components and is, therefore, more than just the sum of individual component risks.

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Program Risk Management

Ensures effective management of any risk that can cause misalignment between the program roadmap and its supported objectives to organizational strategy.

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Project Risks

Risks that could affect the achievement of project objectives.

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Portfolio Risk Management Life Cycle

A set of processes for identifying, analyzing, planning, implementing, and monitoring risks throughout the life of a portfolio.

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Program Risk Management Life Cycle

A set of processes for identifying, analyzing, planning, implementing, and monitoring risks throughout the life of a program.

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Project Risk Management Life Cycle

A set of processes for identifying, analyzing, planning, implementing, and monitoring risks throughout the life of a project.

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Organizational Process Maturity

The ability of an organization to apply a certain set of processes in a consistent manner.

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Linking ERM and Portfolio/Program/Project Risk Management

The process of establishing the connections between the various governance levels through the bottom-up escalation of identified risks and the top-down definition of risk management strategies.

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Risk Appetite (Organizational Level)

The level of risk the organization is willing to take in pursuit of its portfolio, program, and project objectives.

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Project Risk Management Life Cycle

The process of identifying, analyzing, planning, implementing, and monitoring risks throughout the life of a project.

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Program Risk Management Life Cycle

The process of identifying, analyzing, planning, implementing, and monitoring risks throughout the life of a program.

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Portfolio Risk Management Life Cycle

The process of identifying, analyzing, planning, implementing, and monitoring risks throughout the life of a portfolio.

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Risk Mitigation

A proactive approach to risk management where actions are taken to prevent risks from occurring or minimize their impact.

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Risk Response

A reactive approach to risk management where actions are taken after a risk event has occurred.

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Project Risk Management

A structured method for identifying, analyzing, and managing risks in a project.

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Program Risk Management

A structured method for identifying, analyzing, and managing risks in a program.

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Portfolio Risk Management

A structured method for identifying, analyzing, and managing risks in a portfolio.

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Influence Diagram

A visual representation of the relationship between various factors that contribute to risk.

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Expected Monetary Value (EMV)

A way to estimate the financial impact of a risk event.

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Failure Mode and Effects Analysis (FMEA)

A technique for analyzing potential failure points in a system.

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Scenario Analysis

A method for creating a range of possible future scenarios based on different assumptions and uncertainties.

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Decision Tree Analysis

A technique for identifying and analyzing risks by considering the positive and negative aspects of a decision.

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Saturated weight of soil

The weight of the soil when completely saturated with water.

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Dry weight of soil

The weight of the soil after all the water in it has been evaporated.

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Void ratio (e)

The ratio of the volume of voids to the volume of solids in a soil sample.

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Water content (w)

The ratio of the weight of water to the weight of solids in a soil sample.

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Porosity (n)

The ratio of the total volume of soil to the volume of solids in a soil sample.

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Total weight of soil

The total weight of the soil, including the weight of the water in it.

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Bulk density of soil

The ratio of the weight of the soil to the volume of the soil.

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Specific gravity of soil solids (Gs)

The ratio of the mass of the soil solids to the mass of water at the same temperature.

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What is void ratio?

The ratio of the volume of voids to the total volume of soil.

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What is porosity?

The ratio of the volume of voids to the volume of solids.

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What is the angle of friction?

The angle at which a soil sample fails under shear stress during a triaxial test.

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What is shear stress on the failure plane?

The stress acting parallel to the failure plane during a triaxial test.

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What is normal stress on the plane of max.shear?

The stress acting perpendicular to the failure plane during a triaxial test.

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What is the total force acting on a submerged surface?

The total force acting on a submerged surface.

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What is the location of force from the center of gravity of the plate?

The distance between the center of gravity of a submerged surface and the point where the buoyant force acts.

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What is the location of force from the liquid surface?

The distance between the liquid surface and the point where the buoyant force acts.

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Westergaard's Vertical Stress Equation

The vertical pressure exerted by a point load on the surface of a semi-infinite soil mass, according to Westergaard's theory.

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Vertical Stress Calculation

The vertical stress at a point below the ground due to a point load Q, calculated using Westergaard's formula.

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Influence Factor (N) in Westergaard's Equation

A factor in Westergaard's formula that adjusts the vertical stress based on the horizontal distance from the load, denoted by 'r'.

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Vertical Stress at a Point Below a Point Load

The vertical stress at a given point below the ground surface due to a point load Q applied on the surface.

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Water Spilling in a Rotating Cylinder

The phenomenon of water spilling out of a rotating cylindrical container due to the centrifugal force generated by the rotation.

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Force on a Horizontal Tank During Acceleration

The force exerted on the rear end of a closed cylindrical tank filled with water when the tank is accelerating horizontally.

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Water Content of Soil

The amount of water present in a soil sample, expressed as a percentage of the total mass of the soil.

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Moisture Content of Soil

The relative amount of water in soil, expressed as a percentage of the weight of the dry soil.

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Pressure Exerted by Footing

Pressure exerted by the footing on the soil is calculated by dividing the load by the area of the footing. The load is the weight of the footing and the cargo it supports. Area is the base area of the footing.

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Duty of Water

Duty of water is the amount of water needed per unit area of land to meet crop requirements. It is measured in liters per second per hectare (L/s/ha)

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Manning's Formula

Manning's formula is a widely used empirical equation for estimating the average flow velocity in open channels. It involves the channel's hydraulic radius, roughness coefficient, and slope.

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Ship Draft

Draft refers to the vertical depth of a ship submerged below the waterline. It's essential for navigating and safely handling a vessel.

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Specific Gravity (s.g.)

The specific gravity of a substance is the ratio of its density to the density of water. A substance with a specific gravity less than 1 will float in water, while a substance with a specific gravity greater than 1 will sink.

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Buoyancy Force

The buoyancy force is the upward force exerted by a fluid on an object submerged in it. It is equal to the weight of the fluid displaced by the object.

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Barometer

A barometer is a device used for measuring atmospheric pressure. It works by balancing the pressure of the atmosphere against the weight of a column of liquid, usually mercury.

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Mountain Height Determination

The height of a mountain can be determined by measuring the difference in atmospheric pressure between the top and the base of the mountain. This is because air pressure decreases with altitude.

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Force to Open Gate

The force acting horizontally at the top of a vertical rectangular gate, hinged at the bottom, to open it when water levels are different on either side.

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Water Pressure Force

The water pressure force acting on a specific area of a submerged surface, calculated by multiplying the water density, depth, and area.

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Appropriate Canal Depth

The depth of water above a specific point in a canal, calculated using the Manning equation and considering the hydraulic slope and roughness coefficient.

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Uniform Flow in a Canal

A specific type of flow in a canal where the depth of flow is maintained, ensuring efficient water transport without excessive energy loss.

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Vertical Force on Curved Surface

The total vertical force exerted on a curved surface submerged in water, such as a sector gate, calculated using the hydrostatic pressure formula.

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Sector Gate

A type of gate that acts as a barrier to water flow, often used for controlling the flow of water in canals or irrigation systems.

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Manning Equation

The equation that relates the flow velocity in an open channel, including canals, to hydraulic radius, slope, and the roughness coefficient of the channel.

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Total Submerged Area

The sum of the areas of all the surfaces of a submerged body, typically used in calculating the buoyant force or hydrostatic forces acting on it.

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Vertical Height of Water Jet

The vertical distance a jet rises above the orifice is calculated using the equation: V² = V₁² - 2gh, where: V is the velocity of the jet, V₁ is the vertical component of the velocity, g is the acceleration due to gravity, and h is the vertical height.

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Horizontal Distance of Water Jet

The horizontal distance traveled by the jet is calculated using the equation: x = Vt, where x is the distance, V is the horizontal component of the jet's velocity, and t is the time it takes for the jet to travel the distance.

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Angle of Internal Friction (φ)

The angle of internal friction (φ) of the soil represents the angle at which the soil begins to fail under shear stress.

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Footing Load Calculation

The load that the footing can safely support is calculated by considering the ultimate bearing capacity (q_{ult}) and the safety factor (SF). It uses Terzaghi's formula for general shear failure: q_{ult} = 1.3 c N_c + q N_a + 0.40 γ B N_y, where c is the cohesion, q is the surcharge, γ is the unit weight of the soil, B is the width of the footing, and N_c, N_q, and N_y are bearing capacity factors.

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Soil Flow Rate

The estimated flow rate in the vertical direction per square meter of soil is calculated by considering the hydraulic gradient (i) and the hydraulic conductivity (K). It uses the equation: q = Ki, where q is the flow rate, K is the hydraulic conductivity, and i is the hydraulic gradient.

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Ultimate Bearing Capacity (q_{ult})

The ultimate bearing capacity (q_{ult}) is the maximum pressure that the soil can withstand before failure occurs.

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Allowable Bearing Capacity (q_{all})

The allowable bearing capacity (q_{all}) is the ultimate bearing capacity divided by a safety factor (SF). It represents the safe load that the soil can withstand.

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Hydrostatic Head (H)

The hydrostatic head (H) is the vertical distance from the free surface of the water to the point where the hydrostatic pressure is being measured.

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Study Notes

Introduction

  • Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more objectives.
  • Positive risks are opportunities, while negative risks are threats.
  • Risk management includes planning the approach, identifying and analyzing risks, response planning, and implementation, and ongoing monitoring of risks.
  • Risk management is essential for all organizational activities, from portfolios through programs, projects, and operations.
  • The degree of risk management in an organization affects its success.
  • Risk management can be beneficial for generating value.

Principles of Risk Management

  • Strive to achieve excellence in the practice of risk management. This involves reaching the appropriate level of organizational process maturity and optimal performance levels.
  • Align risk management with organizational strategy and governance.
  • Focus on the most impactful risks to optimize resource use.
  • Balance value creation with overall risks.
  • Foster a culture of risk management.
  • Manage complexity effectively to enable success.
  • Continuously improve risk management competencies.
  • Consider both threats and opportunities.
  • Recognize the value of risk management in decision-making.

Risk Management Life Cycle

  • Plan Risk Management: Develops overall risk management strategy, how processes will be executed, and integration, including risk appetite and tolerance.
  • Identify Risks: Identifies risks to the extent practicable, recognizing some are inherently unknowable. Includes identifying both threats and opportunities.
  • Perform Qualitative Risk Analysis: Prioritizes risks according to criteria like likelihood of occurrence and impact; considers urgency, proximity, detectability, dormancy, manageability, controllability, connectivity, strategic impact, and stakeholder impact.
  • Perform Quantitative Risk Analysis: Determines numerical estimate of risk impact on objectives; incorporates techniques like contingency reserve estimation, decision tree analysis, Monte Carlo simulation, and PERT.
  • Plan Risk Responses: Determines effective responses for priority risks accommodating stakeholders' attitudes and constraints; considers escalation, avoidance, mitigation, acceptance, sharing, enhancement, and exploitation.
  • Implement Risk Responses: Executes the approved response actions.
  • Monitor Risks: Reevaluates existing risks, identifies any emergent or secondary risks, and monitors the effectiveness of risk responses.

Risk Management in Portfolios, Programs, and Projects

  • Key concepts and definitions, domains of risk management (enterprise, portfolio, program, project), and key success factors for each. Risk management in this domain addresses the complexity of the various levels and components within organizations.
  • The relationship between risk and organizational strategic goals at each level is important.

Project Management Controls for Each Step

  • Specific controls outlined for each process (integration, scope, schedule, cost, quality, resources, communications, risk, procurement, and stakeholder management) for projects; considers life-cycle approaches and dependencies.

Appendix

  • Contains additional details and tables of contributors, reviewers, and the development and purpose of the standard, portfolio risk management, program risk management, project risk management controls and techniques, including tables and an index of factors. There are also tables of contents and lists of figures and tables.

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