Project Management Professional PMP · Free Practice Question Medium
Question 25
You are the project manager of the Bern Update project for your organization. You are currently working with your project in quantitative analysis to create a contingency reserve. One project risk has a thirty percent probability of happening and will cost the project $45,000 if it occurs. For this one risk, what is the amount of funds that should go into the contingency reserve?
- A $15,000
- B $45,000
- C $13,500
- D No funds are allotted until the risk occurs.
Reveal correct answer
Correct answer: C
Explanation
In quantitative analysis, you take the probability of thirty percent times the impact of $45,000, which is $13,500 added to the contingency reserve. $45,000 is the total effect the risk will have on the project, so this choice is incorrect. $15,000 is one-third of the risk exposure, not thirty percent of the risk exposure, so this choice is incorrect. Funds are added to the contingency reserve before the risk event occurs, so this choice is incorrect.Discussion
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