Project Management 2nd Edition by Pinto chapter 07

Project Management, 2e (Pinto)
Chapter 7 Risk Management

7.1 True/False

1) The risk is highest in the earliest phase of the project life cycle.
Answer: TRUE
Diff: 1
Section: 7.0 Introduction
Skill: Factual
AACSB Tag: Reflective

2) As risk decreases in the project life cycle, opportunity increases.
Answer: FALSE
Diff: 1
Section: 7.0 Introduction
Skill: Factual
AACSB Tag: Reflective

3) Risks can be quantified by multiplying the likelihood a failure will occur by the severity of the
failure.
Answer: TRUE
Diff: 2
Section: 7.0 Introduction
Skill: Analytical
AACSB Tag: Analytic Skills

4) Technical risk is the probability that the project will not perform to the required standards or
produce substandard products or have excessive operating cost consumption.
Answer: TRUE
Diff: 2
Section: 7.1 Risk Management: A Four-Stage Process
Skill: Factual
AACSB Tag: Reflective

5) The probability that the investments made to fund the front-end activities will be lost due to
project abandonment is financing risk.
Answer: FALSE
Diff: 2
Section: 7.1 Risk Management: A Four-Stage Process
Skill: Definition
AACSB Tag: Reflective




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, 6) One approach to risk mitigation is simply to accept it.
Answer: TRUE
Diff: 2
Section: 7.1 Risk Management: A Four-Stage Process
Skill: Factual
AACSB Tag: Reflective

7) Risk cannot be transferred because ultimately your own project will suffer the consequences if
the event occurs.
Answer: FALSE
Diff: 2
Section: 7.1 Risk Management: A Four-Stage Process
Skill: Factual
AACSB Tag: Reflective

8) Contingency reserves require a construction company to hold back some funds in an account
just in case something happens that increases the overall project cost.
Answer: TRUE
Diff: 2
Section: 7.1 Risk Management: A Four-Stage Process
Skill: Factual
AACSB Tag: Reflective

9) The highest dollar value of reserves is typically task contingency.
Answer: FALSE
Diff: 2
Section: 7.1 Risk Management: A Four-Stage Process
Skill: Factual
AACSB Tag: Reflective

10) The PRAM model for risk management proposes that risk management follow a life cycle
much as projects follow a life cycle.
Answer: FALSE
Diff: 2
Section: 7.2 Project Risk Management: An Integrated Approach
Skill: Factual
AACSB Tag: Reflective

7.2 Fill in the Blank

1) __________ is defined as the art and science of identifying, analyzing, and responding to risk
factors throughout the life of a project and in the best interests of its objectives.
Answer: Risk management
Diff: 1
Section: 7.0 Introduction
Skill: Factual
AACSB Tag: Reflective

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Copyright © 2010 Pearson Education, Inc.