CM 4221 FINAL STUDY GUIDE
Risk - Answer -A potential event that results in an outcome that is different from what is
planned. An uncertain event that could have a positive or negative effect on your
project. A measure of probability and magnitude of achieving or not achieving a defined
project goal
Threat - Answer -A negative effect of a risk
Opportunity - Answer -A positive effect of a risk
Risk Analysis - Answer -Predicting the effects of risky events on an outcome of interest.
"How much will this project actually cost?"
Decision Analysis - Answer -Deciding upon a course of action in the face of risk.
"Should we bid a project that has high levels of uncertainty in the site conditions?"
Uncertainty - Answer -the set of all potential outcomes, both favorable and unfavorable,
within each known risk. Involves variability: Frequency of occurrence, Severity of the
occurrence, outcomes that can occur within a range.
Expected Value - Answer -Probability of event times the Impact of the event. Impact (or
outcome) is typically referred to as 'Severity'.
PxS
Unit Risk - Answer -What if probabilities cannot be defined but we know the frequency
(e.g., injuries, defects)?
(Frequency) x (severity)
Project Risk Management - Answer -Actively managing risks on your project. Project
team's job should be to proactively prevent problems rather than reactively dealing with
problems. Project manager leads this effort. Risks are best assumed by the party with
the greatest ability to control the risk.
Tools for managing risk - Answer -Risk management, Insurance, Bonding, Transfer
(contract), Safety program/culture - Quality management, Contingency.
Risk Management - Answer -Is a very proactive task, Allows the project manager to be
in control, Has been shown by studies to decrease up to 90% of project problems and
provide 5% project cost savings, Formal/structured risk management helps to better
understand possible project outcomes and control project outcomes, is CONTINUOUS.
, Risk Identification - Answer -Step 1 of Risk Management Process. Analyze the project
to identify sources of risk. Identify, categorize, and document all risks (and
opportunities) that could affect project. Start "Risk Register" - comprehensive and non‐
overlapping list of risks. Ultimately, adequately describe each issue.
Risk Assessment - Answer -Step 2 of Risk Management Process. Assess risk in terms
of: Chance of occurring, severity, Controllability. Process of adequately describing and
assessing the severity of the risks in terms of their probability of occurrence and
magnitude of impact.
Risk Response Development (Planning) - Answer -Step 3 of Risk Management
Process. Develop a strategy to reduce the possible impact and develop contingency
plans. Eliminate threats before they happen. Make sure opportunities happen. Decrease
the probability and/or impact of threats. Increase the probability and/or impact of
opportunities. For Residual Threats: Contingency Plans & Fallback Plans.
Risk Response Control - Answer -Step 4 of Risk Management Process. Implement risk
strategy, Monitor and adjust plan for new risks, Change management. The process of
implementing risk response plans, tracking identified risks, monitoring residual risks,
identifying new risks & evaluating risk process effectiveness throughout the project.
Business Risk - Answer -Chance for profit or loss
Insurable (Pure) Risk - Answer -Chance for loss only (e.g., fire, theft, personal injury)
Internal Risk - Answer -Risk that may affect the project and is in control of the project
manager
External Risk - Answer -Risk that may affect the project but is outside the control of the
project manager.
Technical - Answer -Changes in technology, design issues, O&M issues
Legal - Answer -Licenses, patent rights, lawsuits, contractual failure, default
Construction Performance Risk Categories - Answer -Cost, Time, Functionality, Quality
& Safety
Risk Statements - Answer -Represent one risk event, Consist of a defined event and its
impact, Enhance the next step of analyzing likelihood and impact. "If <RISK EVENT>
happens, then <CONSEQUENCE>, which will <IMPACT> the <PROJECT
OBJECTIVE>."
Risk Identification Tools - Answer -Documentation review, Brainstorming, Nominal
group technique - Assumption analysis, Crawford slip, Checklist analysis, Root cause
analysis & Influence diagrams
Risk - Answer -A potential event that results in an outcome that is different from what is
planned. An uncertain event that could have a positive or negative effect on your
project. A measure of probability and magnitude of achieving or not achieving a defined
project goal
Threat - Answer -A negative effect of a risk
Opportunity - Answer -A positive effect of a risk
Risk Analysis - Answer -Predicting the effects of risky events on an outcome of interest.
"How much will this project actually cost?"
Decision Analysis - Answer -Deciding upon a course of action in the face of risk.
"Should we bid a project that has high levels of uncertainty in the site conditions?"
Uncertainty - Answer -the set of all potential outcomes, both favorable and unfavorable,
within each known risk. Involves variability: Frequency of occurrence, Severity of the
occurrence, outcomes that can occur within a range.
Expected Value - Answer -Probability of event times the Impact of the event. Impact (or
outcome) is typically referred to as 'Severity'.
PxS
Unit Risk - Answer -What if probabilities cannot be defined but we know the frequency
(e.g., injuries, defects)?
(Frequency) x (severity)
Project Risk Management - Answer -Actively managing risks on your project. Project
team's job should be to proactively prevent problems rather than reactively dealing with
problems. Project manager leads this effort. Risks are best assumed by the party with
the greatest ability to control the risk.
Tools for managing risk - Answer -Risk management, Insurance, Bonding, Transfer
(contract), Safety program/culture - Quality management, Contingency.
Risk Management - Answer -Is a very proactive task, Allows the project manager to be
in control, Has been shown by studies to decrease up to 90% of project problems and
provide 5% project cost savings, Formal/structured risk management helps to better
understand possible project outcomes and control project outcomes, is CONTINUOUS.
, Risk Identification - Answer -Step 1 of Risk Management Process. Analyze the project
to identify sources of risk. Identify, categorize, and document all risks (and
opportunities) that could affect project. Start "Risk Register" - comprehensive and non‐
overlapping list of risks. Ultimately, adequately describe each issue.
Risk Assessment - Answer -Step 2 of Risk Management Process. Assess risk in terms
of: Chance of occurring, severity, Controllability. Process of adequately describing and
assessing the severity of the risks in terms of their probability of occurrence and
magnitude of impact.
Risk Response Development (Planning) - Answer -Step 3 of Risk Management
Process. Develop a strategy to reduce the possible impact and develop contingency
plans. Eliminate threats before they happen. Make sure opportunities happen. Decrease
the probability and/or impact of threats. Increase the probability and/or impact of
opportunities. For Residual Threats: Contingency Plans & Fallback Plans.
Risk Response Control - Answer -Step 4 of Risk Management Process. Implement risk
strategy, Monitor and adjust plan for new risks, Change management. The process of
implementing risk response plans, tracking identified risks, monitoring residual risks,
identifying new risks & evaluating risk process effectiveness throughout the project.
Business Risk - Answer -Chance for profit or loss
Insurable (Pure) Risk - Answer -Chance for loss only (e.g., fire, theft, personal injury)
Internal Risk - Answer -Risk that may affect the project and is in control of the project
manager
External Risk - Answer -Risk that may affect the project but is outside the control of the
project manager.
Technical - Answer -Changes in technology, design issues, O&M issues
Legal - Answer -Licenses, patent rights, lawsuits, contractual failure, default
Construction Performance Risk Categories - Answer -Cost, Time, Functionality, Quality
& Safety
Risk Statements - Answer -Represent one risk event, Consist of a defined event and its
impact, Enhance the next step of analyzing likelihood and impact. "If <RISK EVENT>
happens, then <CONSEQUENCE>, which will <IMPACT> the <PROJECT
OBJECTIVE>."
Risk Identification Tools - Answer -Documentation review, Brainstorming, Nominal
group technique - Assumption analysis, Crawford slip, Checklist analysis, Root cause
analysis & Influence diagrams
