Questionnaire 05 – Response to Risks

A construction project is budgeted at $10,000,000 and scheduled to be completed within one year. The client wants to bring the completion date forward and offers a $500,000 bonus if the project is completed two months ahead of schedule. The team assesses the impact and determines that the requirement can be met by adding resources to the critical path activities, at a cost of $100,000. What risk response is being used in this situation?

A company is in the middle of a project to install a new ERP system. On the weekend during which data was being migrated from the old system a novice operator on duty made a mistake and all historical data for the project was lost. What should the project manager have done to mitigate this risk?

A company’s client has purchased an old building and plans to convert it into a movie theater. It turns out that the local historical committee has become involved and their engagement may lead to a delay in obtaining building permits. The client asked the project manager for advice. This suggested that a contingency reserve be added to the schedule. What kind of risk response is this?

There is a probability of 0.10 that a given risk event will occur on a project. If it occurs, it will result in a loss of $10,000. The insurance cost for this event is $1,200. Should the project manager buy this insurance?

During the planning of a company’s office modernization project, the team identifies a fire risk at the facility. After analyzing the risk, the project manager recommends installing an automatic fire suppression system and training employees in safe evacuation. Which statement correctly describes the project manager’s response?

The manager of a large project has identified a risk that the customer may reject a deliverable because the team member working on that deliverable has previously delivered poor quality deliverables. The team decided to replace the team member with another one. The new team member strictly follows the quality standards, however, there is a fear that the new team member may resign and join another company. How should the team member’s risk of termination be ranked?

A project team uses an adaptive lifecycle to decrease project risk. Management believes the project is still too risky and has a good relationship with a salesperson with experience in areas the company lacks. Management wants activities with a risk greater than $50,000 to be transferred to the seller. They believe this will eliminate the impact of these risks. Why is this not true?

The urban fiber optic installation project is planned to last one year. The city hall provided workers, since the project involves paving the road and they know the details of how this is done. During the project, however, the election of a new mayor will take place. The best-rated candidate in the polls to take over the mayoralty is a critic of the project and threatens, if elected, to withdraw the transferred workers, which could lead to a delay in his project. What is the best alternative in this situation?

A development project for a new system is underway. The collective agreement with the union expires this month and it is possible that it will not be renewed. If this happens, the project manager and senior management have decided that the project will be cancelled, as the work of unionized team members is a critical part of the project’s success and any delay will result in the loss of a business opportunity. This is an example of what type of risk response?

The design of a new motorcycle is underway. Although the team is working hard, the project is behind schedule. There is a rumor that staff members are threatening to strike for better pay. Senior management met and decided to increase the team’s salary to the desired amount, as the losses due to the delay in launching the motorcycle on the market would be greater than the amount involved in the salary increase. This is an example of what type of risk response?