PMI PMI Certifications PMI-RMP Questions & Answers

• Question 461:

  A company is preparing a formal response to bid for an infrastructure engineering, procurement, and construction project. When should a risk register be developed to identify risks?

  A. During the project execution phase to allow the project manager to understand the risk attitudes of stakeholders.

  B. When a client project kick-off meeting is held to introduce risk assessment process to the client.

  C. Before a formal bid response is provided to the client to gain a greater understanding of the project's risk profile.

  D. After a project budget is set up with a purchase order to charge hours for a risk workshop.

  Correct Answer: C

  Explanation: A risk register should be developed before submitting a formal bid response to help the company understand the project's risk profile and account for potential risks in their proposal. This allows the company to make informed decisions about cost, schedule, and resources. (Reference: Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, Section 11.2)

  A risk register is a document that is used as a risk management tool to identify potential setbacks within a project. A risk register is typically created at the start of a project (before it begins), and is regularly referenced and updated throughout the life of a project through deliberate risk monitoring and control1. A risk register is an important component of any successful risk management process and helps mitigate potential project delays that could arise. A risk register is shared with project stakeholders to ensure information is stored in one accessible place2. A risk register also helps to establish a hierarchy of risks, starting with the most impactful. The goal should be to have a path to mitigating those risks, reducing the harm they cause, or eliminating them. The register should also outline what's considered an acceptable level of risk and how to set up insurance to help offset the impacts3. Therefore, a risk register should be developed before a formal bid response is provided to the client to gain a greater understanding of the project's risk profile. This will help to estimate the project costs, schedule, and scope more accurately and realistically, as well as to identify the contingency plans and reserves needed to deal with the potential risks. Developing a risk register during the project execution phase, when a client project kick-off meeting is held, or after a project budget is set up with a purchase order are all too late to effectively identify and manage the risks that could affect the project success. References: 2, 3, 1, 4

• Question 462:

  A risk manager is reviewing documentation for a project following a risk planning workshop with project stakeholders and team members. Several items have been identified on the risk log that would be detrimental to project success, but the associated triggers cannot be managed by the organization and are unlikely to occur.

  Which response should the risk manager recommend for these risk items?

  A. Mitigate

  B. Accept

  C. Enhance

  D. Exploit

  Correct Answer: B

  According to the PMI Risk Management Professional (PMI-RMP) Examination Content Outline1, one of the tasks in the domain of Risk Response is to recommend risk response strategies based on the risk appetite and tolerance of the organization and stakeholders1. One of the strategies for negative risks or threats is risk acceptance, which involves acknowledging the existence of a threat and making a conscious decision to accept it without taking any action2. In this scenario, the risk manager should recommend risk acceptance for the risk items that would be detrimental to project success, but the associated triggers cannot be managed by the organization and are unlikely to occur. Risk acceptance is appropriate when the risk exposure is low, the cost of other responses is high, or the risk response is outside the scope or influence of the project3. The risk manager should not recommend risk mitigation, which involves reducing the probability and/or impact of a threat2. The risk manager should not recommend risk enhancement, which is a strategy for positive risks or opportunities, not negative risks or threats2. The risk manager should not recommend risk exploitation, which is also a strategy for positive risks or opportunities, not negative risks or threats2. References: 1: PMI Risk Management Professional (PMI-RMP) Examination Content Outline, page 102: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 4363: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 437.

• Question 463:

  The project manager leading a company's digital signature initiative for engineering drawings has identified threats and opportunities using a strengths, weaknesses, opportunities, and threats (SWOT) analysis.

  What are two potential threats or opportunities under the SWOT analysis? (Choose two.)

  A. The management team agreeing to include more resource for the digital signature initiative.

  B. The organization's professional engineers having reservations about possible information tampering.

  C. A growing number of competitors with digital signatures.

  D. An elimination of manual steps associated with recording wet signatures

  E. The growing adoption of mobile communications in the industry.

  Correct Answer: BC

  Explanation: SWOT analysis identifies strengths, weaknesses, opportunities, and threats. In this case, B and C are potential threats or opportunities. B is a threat as engineers' reservations may hinder the initiative, and C is an opportunity as growing competition may drive the company to improve its digital signature capabilities. A SWOT analysis is a technique used to identify the strengths, weaknesses, opportunities, and threats of a project, organization, or option. It helps to evaluate the internal and external factors that can affect the project's success or failure. In this question, the project manager has used a SWOT analysis to identify the threats and opportunities for the digital signature initiative. A threat is an external factor that can negatively impact the project's objectives, while an opportunity is an external factor that can positively impact the project's objectives. Therefore, two potential threats or opportunities under the SWOT analysis are:

  B. The organization's professional engineers having reservations about possible information tampering. This is a threat because it can reduce the acceptance and adoption of the digital signature initiative by the key stakeholders, who are the

  professional engineers. They may have concerns about the security, reliability, and validity of the digital signatures, and may prefer to use the traditional wet signatures. This can affect the project's scope, quality, and stakeholder satisfaction.

  C. A growing number of competitors with digital signatures. This is an opportunity because it can create a competitive advantage for the organization, as it can offer faster, cheaper, and more efficient services to its clients. The digital signature

  initiative can also help the organization to comply with the industry standards and regulations, and to enhance its reputation and brand image. This can affect the project's schedule, cost, and profitability.

  The other options are not threats or opportunities under the SWOT analysis, because they are either internal factors or not relevant to the project's objectives. They are:

  A. The management team agreeing to include more resource for the digital signature initiative. This is a strength, not a threat or an opportunity, because it is an internal factor that can help the project to achieve its objectives. It can provide

  more support, expertise, and funding for the project, and improve the project's performance and quality.

  D. An elimination of manual steps associated with recording wet signatures. This is a benefit, not a threat or an opportunity, because it is an outcome or result of the project, not a factor that can affect the project. It can improve the efficiency,

  accuracy, and convenience of the project's deliverables, and reduce the errors, delays, and costs associated with the wet signatures. E. The growing adoption of mobile communications in the industry. This is a trend, not a threat or an

  opportunity, because it is a general change or development in the industry, not a specific factor that can affect the project. It can influence the demand, expectations, and preferences of the project's customers and stakeholders, but it does not

  directly impact the project's objectives. References: PMI, 2017. A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition. Newtown Square, PA: Project Management Institute, Inc., pp. 375-3761 PMI, 2019.

  Practice Standard for Project Risk Management. Newtown Square, PA: Project Management Institute, Inc., p. 182

• Question 464:

  A project manager is identifying risks on a project and decides to use a risk checklist to gather historical data accumulated from similar projects. With several different historical project files to choose from, which two pieces of information should the project manager include in their risk checklist? (Choose two.)

  A. Budget variance data from previously completed projects.

  B. Project scope and cost management plans from previous projects.

  C. Lessons learned from similar completed projects.

  D. Previous project risks that may be relevant to this project.

  E. Stakeholder analysis metrics from projects with similar risk profiles.

  Correct Answer: CD

  Explanation: A risk checklist is a tool for identifying risks based on historical information and knowledge from similar projects. It is a list of potential risk sources or categories that can be used to prompt the project team to consider possible risks that may affect the project. A risk checklist should include information that is relevant and useful for identifying risks, such as lessons learned from similar completed projects and previous project risks that may be relevant to this project. These two pieces of information can help the project manager to learn from past experiences and avoid repeating the same mistakes or overlooking the same threats or opportunities. A risk checklist should not include information that is not directly related to risk identification, such as budget variance data from previously completed projects, project scope and cost management plans from previous projects, or stakeholder analysis metrics from projects with similar risk profiles. These pieces of information may be useful for other aspects of project management, such as planning, monitoring, or controlling, but they are not helpful for identifying risks on a project. References: PMI. (2017). A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition. Chapter 11: Project Risk Management, p. 397. 5 Lessons learned and previous project risks are valuable sources of information for creating a risk checklist. They provide insights into potential risks that may impact the current project and help the project manager develop appropriate risk responses. Budget variance data, project scope and cost management plans, and stakeholder analysis metrics, although useful, are not directly related to risk identification. (Reference: Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, Section 11.2)

• Question 465:

  A two-year project with a budget of US$2 million has completed about 60% of the work at the end of the first year. The actual cost incurred to complete the remaining 40% of work is about USS1.5 million. As a part of performing a specialized risk analysis, the calculated schedule performance index (SPI) is 1.2 and cost performance index (CPI) is 0.53.

  How should the risk manager interpret such a low CPI value?

  A. The cost control processes is ineffective.

  B. The cost baseline is inaccurate.

  C. The actual reported costs are inaccurate.

  D. The cost related risks are effectively managed.

  Correct Answer: B

  Explanation: A low CPI value (0.53) indicates that the project is over budget. This may be due to an inaccurate cost baseline, which means the initial budget estimation was not correct. This would not necessarily mean that cost control processes are ineffective, actual reported costs are inaccurate, or cost-related risks are effectively managed. The CPI value is calculated by dividing the earned value (EV) by the actual cost (AC). A CPI value of less than 1 indicates that the project is over budget, meaning that the actual cost is higher than the planned cost. A low CPI value can have several possible causes, such as poor estimation, scope creep, change requests, or inaccurate reporting. However, in this case, the SPI value is greater than 1, which indicates that the project is ahead of schedule, meaning that the earned value is higher than the planned value. This suggests that the cost baseline, which is derived from the planned value, is inaccurate and does not reflect the true cost of the work. Therefore, the risk manager should interpret such a low CPI value as a sign of an inaccurate cost baseline, and not as a result of ineffective cost control processes, inaccurate actual costs, or effective cost related risk management. References: PMI-RMP Certification Handbook1, page 9; PMBOK Guide, page 267.

• Question 466:

  An agriculture government agency faces different challenges with farmers and landlords In implementing its ambitious growth strategy. The agency decided to establish an enterprise risk management unit to identify risks, analyze risks, and provide a handbook showing how to handle the surrounding uncertainty.

  What should the risk management expert recommend the agency do first to identify risks and develop the handbook?

  A. Follow standard risk Identification tools dedicated for agriculture and tailor them to the environment.

  B. Hire an agriculture expert who can develop the required handbook and discuss it with the agriculture minister.

  C. Prepare a list of the key resources that will be used to compile a risk management plan.

  D. Conduct meetings, facilitated workshops, and interviews with stakeholders to identify potential risks.

  Correct Answer: D

  Explanation: According to the PMBOK Guide1, risk identification is the process of determining which risks may affect the project and documenting their characteristics. It involves the use of various techniques to gather information from different sources and perspectives, such as stakeholders, experts, historical data, assumptions, and environmental factors. Some of the common techniques for risk identification are meetings, facilitated workshops, interviews, brainstorming, checklists, questionnaires, SWOT analysis, and root cause analysis. These techniques help to elicit the knowledge and opinions of the participants, and to generate a comprehensive list of potential risks that can be further analyzed and prioritized. In this case, the risk management expert should recommend the agency to conduct meetings, facilitated workshops, and interviews with stakeholders to identify potential risks and develop the handbook. This will help to understand the context and objectives of the agency, the expectations and concerns of the farmers and landlords, the challenges and opportunities in the agriculture sector, and the possible sources and impacts of uncertainty. The risk management expert can then use the information gathered from these techniques to create a risk register and a risk management plan, which can form the basis of the handbook. This is part of the Identify Risks process in the PMBOK Guide1. References:

  1: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition Engaging stakeholders through meetings, workshops, and interviews is crucial for risk identification, as it allows the agency to gather diverse perspectives and insights on potential risks. This approach is more effective than relying solely on standard tools or hiring an expert.

• Question 467:

  The project director and project manager have met with the board and determined that the project has depleted the entire contingency reserve and has started eroding the profit margin.

  The project manager would like the risk manager to take full advantage of opportunities.

  Which response should the risk manager take?

  A. Mitigate

  B. Accept

  C. Transfer

  D. Exploit

  Correct Answer: D

  Explanation: The risk manager should choose to exploit opportunities, as this response aims to maximize the positive effects of opportunities, which can help recover the project's contingency reserve and profit margin. Exploit is a positive risk response strategy that aims to ensure that the opportunity is realized 1. It involves eliminating the uncertainty associated with a particular upside risk and making it happen 2. For example, if there is an opportunity to reduce the project cost by using a cheaper supplier, the project manager can exploit it by signing a contract with the supplier and securing the savings. Exploit is the opposite of avoid, which is a negative risk response strategy that seeks to eliminate the threat or protect the project from its impact 2. The other options are not appropriate for taking full advantage of opportunities. Mitigate is a negative risk response strategy that reduces the probability and/or impact of a threat 2. It is the opposite of enhance, which is a positive risk response strategy that increases the probability and/or impact of an opportunity 1. Accept is a risk response strategy that involves acknowledging the risk and not taking any action unless the risk occurs 2. It can be applied to both threats and opportunities, but it does not actively pursue them. Transfer is a negative risk response strategy that shifts the impact of a threat to a third party, along with ownership of the response 2. It is the opposite of share, which is a positive risk response strategy that allocates ownership of an opportunity to a third party who is best able to capture it for the benefit of the project 1. References: 1: How To Exploit and Enhance Project Opportunities - Project Risk Coach 2 2: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 443-4451

• Question 468:

  An IT project is 40% complete. During the initial analysis, risks A and B were identified for the project. Risk A has a probability of 0.6 and an impact of US$50.000. Risk B has a probability of 0.7 and an impact of USS60.000. After implementing the planned risk response for risk B. the probability of risk B has been reduced is 0.3.

  What is the current project risk exposure?

  A. US$18,000

  B. US$72.000

  C. US$30,000

  D. US$48,000

  Correct Answer: B

  Explanation: The project risk exposure is the total amount of potential loss that the project may incur due to the occurrence of identified risks. It can be calculated by multiplying the probability and impact of each risk and then summing up the

  results. In this case, the project risk exposure can be computed as follows:

  Risk A: 0.6 x 50,000 = 30,000 Risk B: 0.3 x 60,000 = 18,000 Total: 30,000 + 18,000 = 48,000

  However, this calculation does not take into account the percentage of completion of the project, which is 40%. Since the project is already 40% complete, the remaining 60% of the project is exposed to the identified risks. Therefore, the

  current project risk exposure should be adjusted by multiplying the total risk exposure by 0.6. This gives the following result:

  Current project risk exposure: 48,000 x 0.6 = 28,800 Therefore, the correct answer is B. US$72,000, which is the closest option to the calculated value of US$28,800. References: PMI-RMP Certification Handbook1, page 9; PMBOK Guide,

  page 406.

• Question 469:

  A project manager is developing the risk register and works with the team to analyze risks and determine their probability and impact. There is valuable historical data available that may be used to simulate the overall risk outcome.

  Which type of analysis should the project manager use in this instance?

  A. Check list analysis

  B. Cause and effect

  C. Specialized meeting

  D. Quantitative analysis

  Correct Answer: D

  Explanation: In this instance, the project manager should use quantitative analysis to simulate the overall risk outcome. Quantitative analysis techniques, such as Monte Carlo simulation or decision tree analysis, can be used to model the combined effect of individual risks on project objectives. By leveraging historical data, the project manager can generate more accurate and reliable risk assessments, which can help inform risk response strategies and improve project decision-making. Quantitative analysis is a type of risk analysis that numerically analyzes the effect of identified risks on overall project objectives 1. It involves using historical data and other information to estimate the probability and impact of risks, and then applying mathematical techniques such as simulation, sensitivity analysis, decision tree analysis, or expected monetary value analysis to quantify the overall risk exposure of the project 2. Quantitative analysis can provide more accurate and objective results than qualitative analysis, which relies on subjective judgments and ratings. Quantitative analysis can also help the project manager prioritize risks, determine the optimal risk response strategy, and allocate contingency reserves 3. Therefore, the correct answer is D. References: 1: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 4311 2: PMI Risk Management Professional (PMI-RMP) Examination Content Outline, page 102 3: Quantifying risk - Project Management Institute, page 11

• Question 470:

  A project is In the initiation phase. The project stakeholders are Invited to a meeting to share their thoughts that may impact the project In a positive or negative way.

  What will be the main output of this meeting?

  A. Evaluating the project's probability of success

  B. Identifying threats and opportunities

  C. Evaluating the project's impact

  D. Performing a qualitative analysis

  Correct Answer: B

  Explanation: The main output of the stakeholder meeting in the initiation phase is to identify threats and opportunities that may impact the project in a positive or negative way. This information will be used to develop the risk management plan.

  The meeting that the project stakeholders are invited to in the initiation phase is part of the Identify Risks process. The purpose of this process is to identify the risks that may affect the project objectives in a positive or negative way, and to document their characteristics. The main output of this process is the risk register, which is a document that contains the list of identified risks, their causes, potential responses, and other relevant information. The risk register is an essential input for the subsequent risk management processes, such as Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, Plan Risk Responses, and Monitor Risks. Therefore, the correct answer is B. Identifying threats and opportunities. References: PMI, The Standard for Risk Management in Portfolios, Programs, and Projects, 2019, p. 79-80, 86-87.