This Document Contains Chapters 11 to 13 Chapter 11: Project Risk Management True/False 1. Risks can have both negative and positive effects on meeting project objectives. Answer: True Rationale: Project risk management involves understanding potential problems that might occur on the project and how they might impede project success. However, there are also positive risks or opportunities, which can result in good outcomes for a project. 2. A risk-seeking person prefers outcomes that are more uncertain and is often willing to pay a penalty to take risks. Answer: True Rationale: A risk-seeking person prefers outcomes that are more uncertain and is often willing to pay a penalty to take risks. 3. The last step in project risk management is deciding how to address this knowledge area for a particular project by performing risk management planning. Answer: False Rationale: The first step in project risk management is deciding how to address this knowledge area for a particular project by performing risk management planning. 4. Unknown risks can be managed proactively. Answer: False Rationale: Known risks can be managed proactively. However, unknown risks, or risks that have not been identified and analyzed, cannot be managed. 5. Contingency plans are predefined actions that the project team will take if an identified risk event occurs. Answer: True Rationale: Contingency plans are predefined actions that the project team will take if an identified risk event occurs. 6. Brainstorming is a systematic, interactive forecasting procedure based on independent and anonymous input regarding future events. Answer: False Rationale: Brainstorming is a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment. The Delphi technique is a systematic, interactive forecasting procedure based on independent and anonymous input regarding future events. 7. The psychology literature shows that individuals, working alone, produce fewer ideas than the same individuals produce through brainstorming in small, face-to-face groups. Answer: False Rationale: Although businesses use brainstorming widely to generate new ideas, the psychology literature shows that individual people working alone produce a greater number of ideas than they produce through brainstorming in small, face-to-face groups. 8. The Delphi technique is a systematic, interactive forecasting procedure based on independent and anonymous input regarding future events. Answer: True Rationale: The Delphi technique is an approach to gathering information that helps prevent some of the negative group effects found in brainstorming. The basic concept of the Delphi technique is to derive a consensus among a panel of experts who make predictions about future developments. 9. Risk events refer to specific, certain events that may occur to the detriment or enhancement of the project. Answer: False Rationale: Risk events refer to specific, uncertain events that may occur to the detriment or enhancement of the project. 10. A probability/impact matrix or chart lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other. Answer: True Rationale: A project manager can chart the probability and impact of risks on a probability/impact matrix or chart, which lists the relative probability of a risk occurring and the relative impact of the risk occurring. 11. Top Ten Risk Item Tracking is a quantitative risk analysis tool. Answer: False Rationale: Top Ten Risk Item Tracking is a qualitative risk analysis tool. 12. The Microsoft Solution Framework (MSF) includes a risk management model that includes developing and monitoring a top-ten master list of risks. Answer: True Rationale: The Microsoft Solution Framework (MSF) includes a risk management model that includes developing and monitoring a top ten master list of risks. MSF is the methodology Microsoft uses for managing projects. 13. Quantitative risk analysis need not be done for projects that are large and complex. Answer: True Rationale: Quantitative risk analysis often follows qualitative risk analysis, yet both processes can be done together or separately. On some projects, the team may only perform qualitative risk analysis. The nature of the project and availability of time and money affect which risk analysis techniques are used. Large, complex projects involving leading-edge technologies often require extensive quantitative risk analysis. 14. The lower the earned monetary value calculation for a project, the chances of project success is higher. Answer: False Rationale: Expected monetary value (EMV) is the product of a risk event probability and the risk event’s monetary value. Because the EMV provides an estimate for the total dollar value of a decision, you want to have a positive number; the higher the EMV, the better. 15. The Monte Carlo analysis can predict the probability of finishing by a certain date or the probability that the cost will be equal to or less than a certain value. Answer: True Rationale: Monte Carlo analysis simulates a model’s outcome many times to provide a statistical distribution of the calculated results. This analysis can predict the probability of finishing by a certain date or the probability that the cost will be equal to or less than a certain value. 16. Identified risks may not materialize, or their probabilities of occurrence or loss may diminish. Answer: True Rationale: Identified risks may not materialize, or their probabilities of occurrence or loss may diminish. Previously identified risks may be determined to have a greater probability of occurrence or a higher estimated loss value. Similarly, new risks will be identified as the project progresses. 17. The risk register can be created with a simple Microsoft Word or Excel file. Answer: True Rationale: The risk register is often a simple Microsoft Word or Excel file, but it can also be part of a more sophisticated database. Multiple Choice 1. Risk utility rises at a decreasing rate for a _____ person. A. risk-seeking B. risk-averse C. risk-neutral D. risk-indifferent Answer: B Rationale: Utility rises at a decreasing rate for a risk-averse person. In other words, when more payoff or money is at stake, a person or organization that is risk-averse gains less satisfaction from the risk, or has lower tolerance for the risk. 2. Those who are _____ have a higher tolerance for risk, and their satisfaction increases when more payoff is at stake. A. risk-seeking B. risk-averse C. risk-neutral D. risk-indifferent Answer: A Rationale: Those who are risk-seeking have a higher tolerance for risk, and their satisfaction increases when more payoff is at stake. A risk-seeking person prefers outcomes that are more uncertain and is often willing to pay a penalty to take risks. 3. A _____ person achieves a balance between risk and payoff. A. risk-seeking B. risk-averse C. risk-fearing D. risk-neutral Answer: D Rationale: A risk-neutral person achieves a balance between risk and payoff. This person would evaluate decisions using a number of factors—risk is just one of them. 4. _____ involves deciding how to approach and plan the risk management activities for the project. A. Identifying risks B. Planning risk management C. Performing qualitative risk analysis D. Performing quantitative risk analysis Answer: B Rationale: Planning risk management involves deciding how to approach and plan risk management activities for the project. 5. _____ involves determining which risks are likely to affect a project and documenting the characteristics of each. A. Identifying risks B. Planning risk management C. Performing qualitative risk analysis D. Performing quantitative risk analysis Answer: A Rationale: Identifying risks involves determining which risks are likely to affect a project and documenting the characteristics of each. The main output of this process is the start of a risk register. 6. _____ involves prioritizing risks based on their probability and impact of occurrence. A. Performing qualitative risk analysis B. Identifying risks C. Planning risk responses D. Performing quantitative risk analysis Answer: A Rationale: Performing qualitative risk analysis involves prioritizing risks based on their probability and impact of occurrence. After identifying risks, project teams can use various tools and techniques to rank risks and update information in the risk register. 7. _____ involves numerically estimating the effects of risks on project objectives. A. Performing qualitative risk analysis B. Planning risk responses C. Identifying risks D. Performing quantitative risk analysis Answer: D Rationale: Performing quantitative risk analysis involves numerically estimating the effects of risks on project objectives. 8. _____ involves taking steps to enhance opportunities and reduce threats to meeting project objectives. A. Performing quantitative risk analysis B. Planning risk responses C. Controlling risk D. Performing qualitative risk analysis Answer: B Rationale: Planning risk responses involves taking steps to enhance opportunities and reduce threats to meeting project objectives. 9. _____ involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project. A. Performing quantitative risk analysis B. Planning risk responses C. Controlling risk D. Performing qualitative risk analysis Answer: C Rationale: Controlling risk involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project. 10. Identifying risks is a subprocess of the _____ process of project risk management. A. planning B. executing C. monitoring and controlling D. closing Answer: A Rationale: Identifying risks is a subprocess of the planning process of project risk management. 11. Performing qualitative and quantitative risk analyses are subprocesses of the _____ process of project risk management. A. planning B. executing C. monitoring and controlling D. closing Answer: A Rationale: Performing qualitative and quantitative risk analyses are subprocesses of the planning process of project risk management. 12. _____ are predefined actions that the project team will take if an identified risk event occurs. A. Secondary risks B. Workarounds C. Contingency plans D. Management reserves Answer: C Rationale: Contingency plans are predefined actions that the project team will take if an identified risk event occurs. 13. Unenforceable conditions or contract clauses and adversarial relations are risk conditions associated with the project _____ management knowledge area. A. integration B. quality C. procurement D. human resources Answer: C Rationale: Unenforceable conditions or contract clauses, and adversarial relations are risk conditions associated with the project procurement management knowledge area. 14. _____ is a fact-finding technique that can be used for collecting information in face-to-face, phone, e-mail, or instant-messaging discussions. A. Brainstorming B. Monte Carlo analysis C. The Delphi technique D. Interviewing Answer: D Rationale: Interviewing is a fact-finding technique for collecting information in face-to-face, phone, e-mail, or instant-messaging discussions. Interviewing people with similar project experience is an important tool for identifying potential risks. 15. A(n) _____ represents decision problems by displaying essential elements, including decisions, uncertainties, causality, and objectives, and how they influence each other. A. risk breakdown structure B. influence diagram C. process flow chart D. work breakdown structure Answer: B Rationale: An influence diagram represents decision problems by displaying essential elements, including decisions, uncertainties, causality, and objectives, and how they influence each other. 16. The _____ lists the relative probability of a risk occurring and the relative impact of the risk occurring. A. Top Ten Risk Item Tracking chart B. requirements traceability matrix C. probability/impact matrix D. expectations management matrix Answer: C Rationale: A project manager can chart the probability and impact of risks on a probability/impact matrix or chart, which lists the relative probability of a risk occurring and the relative impact of the risk occurring. 17. _____ are/is a qualitative risk analysis tool that maintains an awareness of risks throughout the life of a project in addition to identifying risks. A. SharePoint portal B. Probability/impact matrices or charts C. Expectations management matrix D. Top Ten Risk Item Tracking Answer: D Rationale: Top Ten Risk Item Tracking is a qualitative risk analysis tool. In addition to identifying risks, it maintains an awareness of risks throughout the life of a project by helping to monitor risks. 18. A(n) _____ is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain. A. decision tree B. activity-on-arrow C. workaround D. backward pass Answer: A Rationale: A decision tree is a diagramming analysis technique used to help select the best course of action when future outcomes are uncertain. A common application of decision tree analysis involves calculating expected monetary value. 19. _____ analysis simulates a model’s outcome many times to provide a statistical distribution of the calculated results. A. Sensitivity B. Systems C. Monte Carlo D. NPV Answer: C Rationale: Monte Carlo analysis simulates a model’s outcome many times to provide a statistical distribution of the calculated results. 20. What is the first step in a Monte Carlo analysis? A. Determine the probability distribution of each variable. B. For each variable, such as the time estimate for a task, select a random value based on the probability distribution for the occurrence of the variable. C. Assess the range for the variables being considered. D. Run a deterministic analysis or one pass through the model using the combination of values selected for each one of the variables. Answer: C Rationale: Assess the range for the variables being considered. In other words, collect the most likely, optimistic, and pessimistic estimates for the variables in the model. 21. A _____ is a technique used to show the effects of changing one or more variables on an outcome. A. sensitivity analysis B. decision tree C. Monte Carlo analysis D. systems analysis Answer: A Rationale: A sensitivity analysis is a technique used to show the effects of changing one or more variables on an outcome. 22. _____ involves eliminating a specific threat, usually by eliminating its causes. A. Risk avoidance B. Risk acceptance C. Risk transference D. Risk mitigation Answer: A Rationale: Risk avoidance involves eliminating a specific threat, usually by eliminating its causes. 23. _____ involves shifting the consequence of a risk and responsibility for its management to a third party. A. Risk avoidance B. Risk acceptance C. Risk transference D. Risk mitigation Answer: C Rationale: Risk transference involves shifting the consequence of a risk and responsibility for its management to a third party. 24. _____ involves reducing the impact of a risk event by reducing the probability of its occurrence. A. Risk avoidance B. Risk acceptance C. Risk transference D. Risk mitigation Answer: D Rationale: Risk mitigation involves reducing the impact of a risk event by reducing the probability of its occurrence. 25. _____ involves doing whatever you can to make sure the positive risk happens. A. Risk exploitation B. Risk sharing C. Risk enhancement D. Risk acceptance Answer: A Rationale: Risk exploitation involves doing whatever you can to make sure the positive risk happens. 26. _____ involves allocating ownership of the risk to another party. A. Risk exploitation B. Risk sharing C. Risk enhancement D. Risk acceptance Answer: B Rationale: Risk sharing involves allocating ownership of the risk to another party. 27. _____ involves changing the size of the opportunity by identifying and maximizing key drivers of the positive risk. A. Risk exploitation B. Risk sharing C. Risk enhancement D. Risk acceptance Answer: C Rationale: Risk enhancement involves changing the size of the opportunity by identifying and maximizing key drivers of the positive risk. 28. _____ applies to positive risks when the project team cannot or chooses not to take any actions toward a risk. A. Risk enhancement B. Risk acceptance C. Risk sharing D. Risk exploitation Answer: B Rationale: Risk acceptance applies to positive risks when the project team cannot or chooses not to take any actions toward a risk. 29. _____ risks refer to those that are direct results of implementing risk responses. A. Architectural B. Primary C. Residual D. Secondary Answer: D Rationale: Secondary risks are a direct result of implementing a risk response. 30. _____ are unplanned responses to risk events used when project teams do not have contingency plans in place. A. Workarounds B. Fallback plans C. Contingency plans D. Triggers Answer: A Rationale: Workarounds are unplanned responses to risk events used when project teams do not have contingency plans in place. Completion 1. Potential problems that might occur on the project and how they might impede project success are _____ risks. Answer: negative 2. A project _____ is an uncertainty that can have a negative or positive effect on meeting project objectives. Answer: risk 3. _____ is the amount of satisfaction or pleasure received from a potential payoff. Answer: Risk utility 4. Risk utility rises at a decreasing rate for a(n) _____ person. Answer: risk-averse 5. The term _____ is used to describe risks that the project team has identified and analyzed. Answer: known risks 6. The main output of the _____ process is the start of a risk register. Answer: identifying risks 7. A(n) _____ documents the procedures for managing risk throughout the project. Answer: risk management plan 8. _____ are provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level. Answer: Contingency reserves Contingency allowances 9. A(n) _____ is a hierarchy of potential risk categories for a project. Answer: risk breakdown structure 10. _____ is a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment. Answer: Brainstorming 11. The basic concept of the _____ technique is to derive a consensus among a panel of experts who make predictions about future developments. Answer: Delphi 12. System or process _____ are diagrams that show how different parts of a system interrelate. Answer: flowcharts 13. A(n) _____ is a document that contains results of various risk management processes. Answer: risk register 14. _____ are indicators or symptoms of actual risk events. Answer: Triggers 15. The _____ is the person who will own or take responsibility for the risk. Answer: risk owner 16. _____ are numbers that represent the overall risk of specific events, based on their probability of occurring and the consequences to the project if they do occur. Answer: Risk factors 17. A(n) _____ is a list of risks that are low priority, but are still identified as potential risks. Answer: watch list 18. _____ is the product of a risk event probability and the risk event’s monetary value. Answer: EMV Expected monetary value Expected monetary value (EMV) EMV (Expected monetary value) 19. _____ helps professionals to see the effects of changing one or more variables on an outcome. Answer: Sensitivity analysis 20. _____ involves accepting the consequences should a risk occur. Answer: Risk acceptance 21. Risk _____ refers to reducing the impact of a risk event by reducing the probability of its occurrence. Answer: mitigation 22. _____ risks are risks that remain after all of the response strategies have been implemented. Answer: Residual 23. Project teams sometimes use _____, which are unplanned responses to risk events, when they do not have contingency plans in place. Answer: workarounds Essay 1. List and briefly describe the six major processes involved in risk management. Answer: Planning risk management involves deciding how to approach and plan the risk management activities for the project. By reviewing the project management plan, project charter, stakeholder register, enterprise environmental factors, and organizational process assets, project teams can discuss and analyze risk management activities for their particular projects. The main output of this process is a risk management plan. Identifying risks involves determining which risks are likely to affect a project and documenting the characteristics of each. The main output of this process is the start of a risk register. Performing qualitative risk analysis involves prioritizing risks based on their probability and impact of occurrence. After identifying risks, project teams can use various tools and techniques to rank risks and update information in the risk register. The main outputs are project documents updates. Performing quantitative risk analysis involves numerically estimating the effects of risks on project objectives. The main outputs of this process are project documents updates. Planning risk responses involves taking steps to enhance opportunities and reduce threats to meeting project objectives. Using outputs from the preceding risk management processes, project teams can develop risk response strategies that often result in updates to project management plan and other project documents. Controlling risk involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project. The main outputs of this process include work performance information, change requests, and updates to the project management plan, other project documents, and organizational process assets. 2. List and briefly describe four methods for identifying risks. Answer: Brainstorming is a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment. This approach can help the group create a comprehensive list of risks to address later in the qualitative and quantitative risk analysis processes. An experienced facilitator should run the brainstorming session and introduce new categories of potential risks to keep the ideas flowing. After the ideas are collected, the facilitator can group and categorize the ideas to make them more manageable. Delphi technique: An approach to gathering information that helps prevent some of the negative group affects found in brainstorming is the Delphi Technique. The basic concept of the Delphi Technique is to derive a consensus among a panel of experts who make predictions about future developments. The Delphi Technique uses repeated rounds of questioning and written responses, including feedback to earlier-round responses, to take advantage of group input, while avoiding the biasing effects possible in oral panel deliberations. To use the Delphi Technique, you must select a panel of experts for the particular area in question. Interviewing: Interviewing is a fact-finding technique for collecting information in face-to-face, phone, e-mail, or instant-messaging discussions. Interviewing people with similar project experience is an important tool for identifying potential risks. Root cause analysis: It is not uncommon for people to identify problems or opportunities without really understanding them. Before suggesting courses of action, it is important to identify the root cause of a problem or opportunity. Root cause analysis often results in identifying even more potential risks for a project. SWOT analysis: Another technique is a SWOT analysis of strengths, weaknesses, opportunities, and threats, which is often used in strategic planning. SWOT analysis can also be used during risk identification by having project teams focus on the broad perspectives of potential risks for particular projects. Applying SWOT to specific potential projects can help identify the broad risks and opportunities that apply in that scenario. Three other techniques for risk identification include the use of checklists, analysis of assumptions, and creation of diagrams. 3. Explain decision trees and expected monetary value. Answer: A decision tree is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain. A common application of decision tree analysis involves calculating expected monetary value. Expected monetary value (EMV) is the product of a risk event probability and the risk event’s monetary value. To create a decision tree, and to calculate expected monetary value specifically, you must estimate the probabilities, or chances, of certain events occurring. Probabilities are normally determined based on expert judgment. To calculate the expected monetary value (EMV) for each project, multiply the probability by the outcome value for each potential outcome for each project and sum the results. Because the EMV provides an estimate for the total dollar value of a decision, you want to have a positive number; the higher the EMV, the better. Using EMV helps account for all possible outcomes and their probabilities of occurrence, thereby reducing the tendency to pursue overly aggressive or conservative risk strategies. 4. Explain the basic steps involved in performing a Monte Carlo analysis. Answer: 1. Assess the range for the variables being considered. In other words, collect the most likely, optimistic, and pessimistic estimates for the variables in the model. For example, if you are trying to determine the likelihood of meeting project schedule goals, the project network diagram would be your model. You would collect the most likely, optimistic, and pessimistic time estimates for each task. This step is similar to collecting data for performing PERT estimates. However, instead of applying the same PERT weighted average formula, you go on to the following steps when performing a Monte Carlo simulation. 2. Determine the probability distribution of each variable. What is the likelihood of that variable falling between the optimistic and most likely estimates? For example, if an expert assigned to do a particular task provides a most likely estimate of ten weeks, an optimistic estimate of eight weeks, and a pessimistic estimate of fifteen weeks, you then ask what the probability is of completing that task between eight and ten weeks. The expert might respond that there is a 20 percent probability. 3. For each variable, such as the time estimate for a task, select a random value based on the probability distribution for the occurrence of the variable. For example, using the above scenario, you would randomly pick a value between eight weeks and ten weeks 20 percent of the time and a value between ten weeks and fifteen weeks 80 percent of the time. 4. Run a deterministic analysis or one pass through the model using the combination of values selected for each one of the variables. For example, the one task described above might have a value of 12 on the first run. All of the other tasks would have one random value assigned to them on that first run, also, based on their estimates and probability distributions. 5. Repeat Steps 3 and 4 many times to obtain the probability distribution of the model’s results. The number of iterations depends on the number of variables and the degree of confidence required in the results, but it typically lies between 100 and 1,000. Using the project schedule as an example, the final simulation results will show you the probability of completing the entire project within a certain time period. 5. What are the four basic response strategies for negative risks? Describe each strategy. Answer: 1. Risk avoidance or eliminating a specific threat, usually by eliminating its causes. Of course, not all risks can be eliminated, but specific risk events can be. For example, a project team may decide to continue using a specific piece of hardware or software on a project because they know it works. Other products that could be used on the project may be available, but if the project team is unfamiliar with them, they could cause significant risk. Using familiar hardware or software eliminates this risk. 2. Risk acceptance or accepting the consequences should a risk occur. For example, a project team planning a big project review meeting could take an active approach to risk by having a contingency or backup plan and contingency reserves if they cannot get approval for a specific site for the meeting. On the other hand, they could take a passive approach and accept whatever facility their organization provides. 3. Risk transference or shifting the consequence of a risk and responsibility for its management to a third party. For example, risk transference is often used in dealing with financial risk exposure. A project team may purchase special insurance or warranty protection for specific hardware needed for a project. If the hardware fails, the insurer must replace it within an agreed-upon period of time. 4. Risk mitigation or reducing the impact of a risk event by reducing the probability of its occurrence. Suggestions for reducing common sources of risk on information technology projects were provided at the beginning of this chapter. Other examples of risk mitigation include using proven technology, having competent project personnel, using various analysis and validation techniques, and buying maintenance or service agreements from subcontractors. Chapter 12: Project Procurement Management True/False 1. Suppliers are those organizations or individuals who provide procurement services. Answer: True Rationale: Organizations or individuals who provide procurement services are referred to as suppliers. Suppliers are also known as vendors, contractors, subcontractors, or sellers. 2. While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of suppliers. Answer: True Rationale: While outsourcing, organizations should be careful to protect strategic information that could become vulnerable in the hands of suppliers. 3. Project procurement management consists primarily of two processes: assessing procurements and controlling procurements. Answer: False Rationale: There are four main processes in project procurement management. These consist of planning procurement management, conducting procurements, controlling procurements, and closing procurements. 4. If an organization has no need to buy any products or services from outside the organization, then it has no need to perform any of the procurement management processes. Answer: True Rationale: Planning procurements involves identifying which project needs can best be met by using products or services outside the organization. If there is no need to buy products or services from outside the organization, then further procurement management is not needed. 5. Risk registers and stakeholder registers are outputs of the planning procurement process. Answer: False Rationale: The risk register and the stakeholder register are inputs for the planning procurement process. Other inputs needed for planning procurements include the project management plan, requirements documentation, activity resource requirements, the project schedule, and activity cost estimates, among others. 6. A single contract can include all three categories of contracts. Answer: True Rationale: Three broad categories of contracts are fixed price or lump sum, cost reimbursable, and time and material. A single contract can include all three of these categories if it makes sense for a particular procurement. 7. Indirect costs are those costs can be traced back to a project in a cost-effective way. Answer: False Rationale: Indirect costs are not directly related to the products or services of the project, but they are indirectly related to performing the project. Normally, these costs cannot be traced back to the project in a cost-effective way. 8. Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts. Answer: False Rationale: Cost-reimbursable contracts often include fees, such as a profit percentage or incentives for meeting or exceeding selected project objectives. Buyer absorb more of the risk with cost-reimbursable contracts than they do with fixed-price contracts. 9. The fee in a CPFF contract constantly varies even when the scope of a contract remains the same. Answer: False Rationale: With a cost plus fixed fee (CPFF) contract, the buyer pays the supplier for allowable performance costs plus a fixed fee payment that is usually based on a percentage of estimated costs. This fee does not vary, however, unless the scope of the contract changes. 10. In unit pricing, the total value of the contract is a function of the quantities needed to complete the work. Answer: True Rationale: Unit pricing can be used in various types of contracts to require the buyer to pay the supplier a predetermined amount per unit of product or service. The total value of the contract is a function of the quantities needed to complete the work. 11. All contracts should include specific clauses that take into account issues unique to the project. Answer: True Rationale: Any type of contract should include specific clauses that take into account issues unique to the project. 12. In an FPI contract, all of the risk is borne by the buyer. Answer: False Rationale: A firm-fixed-price (FFP) contract has the least amount of risk for the buyer, followed by a fixed-price incentive fee (FPIF) contract. 13. An FP-EPA contract carries the least risk for a supplier. Answer: False Rationale: For a seller, an FFP carries the most risk. An FP-EPA contract carries a higher degree of risk for a seller than a CPPC, CPFF, CPIF, CPAF, or an FPI. 14. Make-or-buy analysis involves comparing the internal costs of providing a product with the cost of outsourcing. Answer: True Rationale: Make-or-buy analysis involves estimating the internal costs of providing a product or service and comparing the estimate to the cost of outsourcing. 15. Contents of the procurement management plan vary with project needs. Answer: True Rationale: The procurement management plan is a document that describes how the procurement processes will be managed. Like other project plans, contents of the procurement management plan will vary with project needs. 16. The main sections of an RFP can include the statement of work and schedule information. Answer: True Rationale: The main sections of an RFP usually include its statement of purpose, background information on the organization issuing the RFP, the basic requirements for the products and services being proposed, and the hardware and software environment. 17. A key factor in evaluating bids, particularly for projects involving information technology, is the past performance record of the bidder. Answer: True Rationale: A key factor in evaluating bids, particularly for projects involving IT, is the past performance record of the bidder. The RFP should require bidders to list other similar projects they have worked on and provide customer references for those projects. 18. Reviewing performance records reduces the risk of selecting a supplier with a poor track record. Answer: True Rationale: A key factor in evaluating bids, particularly for projects involving IT, is the past performance record of the bidder. Reviewing performance records and references reduces the risk of selecting a supplier with a poor track record. 19. In project procurement management, a main output of the controlling process is a source selection criteria. Answer: False Rationale: In project procurement management, two of the main outputs of this process are a selected seller and procurement contract award. 20. The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws. Answer: True Rationale: Controlling procurements ensures that the seller’s performance meets contractual requirements. The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws. 21. The closing procurements process involves updating records to reflect final results and archiving information for future use. Answer: True Rationale: The final process in project procurement management is closing procurements. This process involves determining if all work required in each contract was completed correctly and satisfactorily. The team should also update records to reflect final results and archive information for future use. 22. Procurement audits are often done during contract closure to identify lessons learned in the entire procurement process. Answer: True Rationale: Procurement audits are often done during contract closure to identify lessons learned in the entire procurement process. Organizations should strive to improve all of their business processes, including procurement management. Multiple Choice 1. “A shortage of qualified personnel is one of the main reason that companies outsource. A project may require experts in a particular field for several months and planning for this procurement ensures that the needed services will be available for the project.” Which of the following benefits does this characteristic of outsourcing provide an organization? A. Reduces focus on its core business B. Increases control over all aspects of projects that suppliers carry out C. Provides access to specific skills D. Reduces dependency on suppliers Answer: C Rationale: Organizations can gain access to specific skills and technologies by using outside resources. 2. Outsourcing suppliers can often provide economies of scale, especially for hardware and software, that may not be available to the client alone. Which of the following benefits does this offer an organization? A. Reduction in fixed and recurrent costs B. Increased flexibility C. Increased accountability D. Access to specific skills Answer: A Rationale: Companies can use outsourcing to reduce labor costs on projects by avoiding the costs of hiring, firing, and reassigning people to projects or paying their salaries when they are between projects. Outsourcing suppliers often can provide economies of scale that may not be available to the client alone, especially for hardware and software. 3. “Most organizations are not in business to provide information technology services, yet many have spent valuable time and resources on information technology functions when they should have instead worked on important competencies such as marketing, customer service, and new product design. Outsourcing helps tackle this problem.” Which of the following benefits does outsourcing primarily provide in such a scenario? A. Reduces fixed and recurrent costs B. Protects strategic information from being accessible to external suppliers C. Increases accountability even without a written contract D. Helps focus on an organization’s core business Answer: D Rationale: By outsourcing many IT functions, employees can focus on jobs that are critical to the success of the organization. 4. “Outsourcing to provide extra workers during periods of peak workloads can be much more economical than trying to fill entire projects with internal resources.” Which of the following advantages does this characteristic of outsourcing provide organizations? A. Offers control over all aspects of projects that suppliers carry out B. Provides a company flexibility in staffing C. Shifts accountability from external suppliers to internal staff D. Helps avoid any form of dependency on suppliers Answer: B Rationale: Outsourcing to provide extra staff during periods of peak workloads can be much more economical than trying to staff entire projects with internal resources. Many companies cite better flexibility in staffing as a key reason for outsourcing. 5. A drawback of outsourcing is that: A. it does not provide access to specific skills or technologies. B. it invariably results in an increase in both fixed and recurrent costs. C. it can make an organization become overly dependent on particular suppliers. D. it cannot increase accountability of suppliers through a written contract. Answer: C Rationale: An organization can become too dependent on particular suppliers. If those suppliers went out of business or lost key personnel, it could cause great damage to a project. 6. The first step in project procurement management is: A. closing procurement management. B. controlling procurements. C. conducting procurements. D. planning procurement management. Answer: D Rationale: There are four main processes in project procurement management. The process of planning procurement management involves determining what to procure and when and how to do it. This is the first step of project procurement management. 7. In project procurement management, the process of _____ involves determining what to procure, when, and how. A. closing procurements B. controlling procurements C. conducting procurements D. planning procurement management Answer: D Rationale: There are four main processes in project procurement management. The process of planning procurement management involves determining what to procure and when and how to do it. 8. In project procurement management, the process of _____ involves obtaining seller responses, selecting sellers, and awarding contracts. A. conducting procurements B. closing procurements C. settling contracts D. planning procurement management Answer: A Rationale: There are four main processes in project procurement management. The process of conducting procurements involves obtaining seller responses, selecting sellers, and awarding contracts. 9. Outputs of the _____ process consist of selected sellers and resource calendars. A. closing procurements B. conducting procurements C. planning procurement management D. controlling procurements Answer: B Rationale: Conducting procurements involves obtaining seller responses, selecting sellers, and awarding contracts. Outputs include selected sellers, agreements, resource calendars, change requests, and updates to the project management plan and other project documents. 10. Which of the following processes of project procurement management involves managing relationships with sellers, monitoring contract performance, and making changes as needed? A. Closing procurements B. Settling contracts C. Deciding on the services to procure D. Controlling procurements Answer: D Rationale: There are four main processes in project procurement management. The process of controlling procurements involves managing relationships with sellers, monitoring contract performance, and making changes as needed. 11. In project procurement management, which of the following processes involve completion and settlement of each contract, including resolution of any open items? A. Planning procurement management B. Controlling procurements C. Closing procurements D. Conducting procurements Answer: C Rationale: There are four main processes in project procurement management. The process of closing procurements involves completion and settlement of each contract or agreement, including resolution of any open items. 12. The procurement statements of work are an output of the _____ process of project procurement management. A. planning B. executing C. monitoring and controlling D. closing Answer: A Rationale: The procurement statements of work are an output of the planning process of project procurement management. Other outputs of the process include the procurement management plan, procurement documents and source selection criteria. 13. In project procurement management, the process of conducting procurements is part of the _____ process. A. planning B. executing C. monitoring and controlling D. closing Answer: B Rationale: Conducting procurements is part of the executing process of project procurement management. It involves obtaining seller responses, selecting sellers, and awarding contracts. 14. In project procurement management, which of the following is an output of the executing process? A. Make-or-buy decisions B. Statements of work C. Source selection criteria D. Resource calendars Answer: D Rationale: In project procurement management, outputs of the executing process include selected sellers, agreements, resource calendars, change requests, project management plan updates, project documents updates. 15. In project procurement management, an output of the _____ monitoring and controlling process. A. Change requests B. Selected sellers C. Resource calendars D. Make-or-buy decisions Answer: A Rationale: In project procurement management, outputs of the monitoring and controlling process include work performance information, change requests, project management plan updates, project documents updates, organizational process assets updates. 16. Which of the following is true of lump-sum contracts? A. They incur a high degree of risk for the buyer. B. They involve a fixed total price for a well-defined product or service. C. They consist of a fee based on the satisfaction of subjective performance criteria. D. They are also known as cost-reimbursable contracts. Answer: B Rationale: Fixed-price or lump-sum contracts involve a fixed total price for a well-defined product or service. The buyer incurs little risk in this situation because the price is predetermined. 17. _____ contracts involve payment to the supplier for direct and indirect actual costs and often include fees. A. Firm-fixed-price B. Lump sum C. Cost-reimbursable contracts D. Fixed-price incentive fee Answer: C Rationale: Cost-reimbursable contracts involve payment to the supplier for direct and indirect actual costs. Such contracts often include fees, such as a profit percentage or incentives for meeting or exceeding selected project objectives. 18. In a(n) _____ contract, the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus. A. FFP B. CPIF C. CPPC D. FPIF Answer: B Rationale: In a cost plus incentive fee (CPIF) contract, the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus. 19. With a(n) _____ contract, the buyer pays the supplier for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs. A. CPFF B. FPIF C. CPAF D. CPIF Answer: A Rationale: With a cost plus fixed fee (CPFF) contract, the buyer pays the supplier for allowable performance costs plus a fixed fee payment that is usually based on a percentage of estimated costs. This fee does not vary unless the scope of the contract changes. 20. In which of the following contracts does the buyer pay the supplier for allowable performance costs along with a predetermined percentage based on total costs? A. FPIF B. CPIF C. CPPC D. CPAF Answer: C Rationale: With a cost plus percentage of costs (CPPC) contract, the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on total costs. 21. From the buyer’s perspective, the _____ is the least desirable among all contracts because the supplier has no incentive to decrease costs. A. CPIF B. CPFF C. CPAF D. CPPC Answer: D Rationale: With a cost plus percentage of costs (CPPC) contract, the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on total costs. From the buyer’s perspective, this is the least desirable type of contract because the supplier has no incentive to decrease costs. 22. A(n) _____ contract carries the least risk for suppliers. A. CPPC B. FFP C. CPAF D. FP-EPA Answer: A Rationale: With a cost plus percentage of costs (CPPC) contract, the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on total costs. From the supplier’s perspective, a CPPC contract carries the least risk. 23. The _____ is a description of the work required for a procurement. A. RFQ B. RFP C. WBS D. SOW Answer: D Rationale: The statement of work (SOW) is a description of the work required for a procurement. Some organizations use the term statement of work for a document that describes internal work as well. 24. A(n) _____ is a document used to solicit proposals from prospective suppliers. A. RFQ B. WBS C. RFP D. SOW Answer: C Rationale: A Request for Proposal (RFP) is a document used to solicit proposals from prospective suppliers. 25. A document used to solicit quotes or bids from prospective suppliers is known as a(n) _____. A. RFQ B. RFP C. WBS D. SOW Answer: A Rationale: A Request for Quote (RFQ) is a document used to solicit quotes or bids from prospective suppliers. 26. After planning for procurement management, which of the following does the next process involve? A. Determining the evaluation criteria for the contract award B. Developing procurement statements of work C. Using expert judgement in planning purchases and acquisitions D. Sending appropriate documentation to potential sellers Answer: D Rationale: After planning for procurement management, the next process involves deciding whom to ask to do the work, sending appropriate documentation to potential sellers, obtaining proposals or bids, selecting a seller, and awarding a contract. 27. In project procurement management, which of the following is one of the main outputs of the conducting procurement process? A. A selected seller B. A procurement management plan C. A procurement statement of work D. A closed procurement Answer: A Rationale: Two of the main outputs of the conducting procurement process are selected sellers and a procurement contract award. 28. The process of choosing suppliers or sellers is known as _____. A. source selection B. a bid C. WBS D. a change order Answer: A Rationale: Selecting suppliers or sellers is called source selection. The process involves evaluating proposals or bids from sellers, choosing the best one, negotiating the contract, and awarding the contract. 29. Which of the following is an output of the contract closure process? A. Procurement statements of work B. Updates to organizational process assets C. Resource calendars D. Work performance information Answer: B Rationale: Closed procurements and organizational process assets updates are outputs of the contract closure process. Completion 1. _____ refers to the process of acquiring goods and/or services from an outside source. Answer: Procurement 2. A(n) _____ is a mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them. Answer: contract 3. _____ management includes the processes required to acquire goods and services for a project from outside the performing organization. Answer: Project procurement 4. Procurement statements of work are an output of the _____ process. Answer: planning procurement management 5. A(n) _____ decision is one in which an organization decides if it is in its best interests to make certain products or perform certain services inside the organization, or if it is better to buy them from an outside organization. Answer: make-or-buy 6. A(n) _____ contract has the least amount of risk for the buyer. Answer: firm-fixed-price (FFP) 7. A(n) _____ contract includes a special provision for predefined final adjustments to the contract price due to changes in conditions such as inflation. Answer: fixed-price with economic price adjustment (FP-EPA) 8. The cost at which the contractor assumes total responsibility for each additional dollar of contract cost is known as a(n) _____. Answer: point of total assumption (PTA) 9. Three types of cost-reimbursable contracts include cost plus incentive fee, cost plus fixed fee, and _____. Answer: cost plus percentage of costs 10. _____ contracts are a hybrid of fixed-price and cost-reimbursable contracts. Answer: Time and material (T&M) 11. A(n) _____ is a contract clause that allows the buyer or supplier to end the contract. Answer: termination clause 12. If an SOW is used as part of a contract to describe only the work required for that particular contract, it is called a(n) _____. Answer: contract statement of work 13. A contract statement of work is a type of _____ statement that describes the work in sufficient detail to allow prospective suppliers to determine if they can provide the required goods and services and to determine an appropriate price. Answer: scope 14. A(n) _____ is a document prepared by a seller when there are different approaches for meeting buyer needs. Answer: proposal 15. A(n) _____ is also known as a tender or quote, short for quotation. Answer: bid 16. All procurement documents should be in _____ form in order to facilitate accurate and complete responses from prospective sellers. Answer: written 17. A(n)_____ conference helps ensure that everyone has a clear, common understanding of the buyer’s desired products or services. Answer: bidders’ 18. The process of source selection involves evaluating proposals from sellers, choosing the best one, negotiating, and awarding the _____. Answer: contract 19. _____ are oral or written acts or omissions by someone with actual or apparent authority that can be construed to have the same effect as a written change order. Answer: Constructive change orders 20. In procurement management, evaluation of any change should include a(n) _____ analysis. Answer: impact 21. The final process in project procurement management is _____. Answer: closing procurements 22. Tools used in contract closure include procurement audits, _____, and a records management system. Answer: negotiated settlements 23. A(n) _____ system provides the ability to easily organize, find, and archive procurement-related documents. Answer: records management 24. A(n) _____ type of e-procurement that sends requests for information and prices to suppliers and receives the response of suppliers using Internet technology. Answer: e-tendering 25. A(n) _____ type of e-procurement that Identifies new suppliers for a specific category of purchasing requirements using Internet technology. Answer: e-sourcing Essay 1. What are some of the advantages that outsourcing offers which is encouraging many companies to adopt it? Answer: Outsourcing provides several advantages. These include: (1) Access to skills and technologies: Organizations can gain access to specific skills and technologies by using outside resources. A project may require experts in a particular field for several months, or it might require specific technologies from an outside source. Planning for this procurement ensures that the needed skills and technologies will be available for the project. (2) Reduces both fixed and recurrent costs: Outsourcing suppliers often can use economies of scale that may not be available to the client alone, especially for hardware and software. It can also be less expensive to outsource some labor costs to other organizations in the same country or offshore. (3) Allows the client organization to focus on its core business: By outsourcing many IT functions, employees can focus on jobs that are critical to the success of the organization. 481 (4) Provides flexibility: Outsourcing to provide extra staff during periods of peak workloads can be much more economical than trying to staff entire projects with internal resources. Many companies cite better flexibility in staffing as a key reason for outsourcing. (5) Increases accountability: A well-written contract can clarify responsibilities and sharpen focus on key deliverables of a project. Contracts are legally binding and thus there is more accountability for delivering the work as stated in the contract. 2. List and briefly describe the four main processes of project procurement management. Answer: he four main processes of project procurement management are as follows: (1) Planning procurement management involves determining what to procure, when, and how. In procurement planning, one must decide what to outsource, determine the type of contract, and describe the work for potential sellers. (2) Conducting procurements involves obtaining seller responses, selecting sellers, and awarding contracts. (3) Controlling procurements involves managing relationships with sellers, monitoring contract performance, and making changes as needed. (4) Closing procurements involves completion and settlement of each contract or agreement, including resolution of any open items. 3. What are the four types of cost-reimbursable contracts? Briefly describe each type. Answer: The four types of cost-reimbursable contracts are as follows: (1) A cost plus incentive fee (CPIF) contract is one in which the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus. If the final cost is less than the expected cost, both the buyer and the supplier benefit from the cost savings, according to a negotiated share formula. (2) A cost plus fixed fee (CPFF) contract is one in which the buyer pays the supplier for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs. This fee does not vary, however, unless the scope of the contract changes. (3) With a cost plus award fee (CPAF) contract, the buyer pays the supplier for allowable performance costs plus an award fee based on the satisfaction of subjective performance criteria. This type of contract is not usually subject to appeals. (4) With a cost plus percentage of costs (CPPC) contract, the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on total costs. From the buyer’s perspective, this is the least desirable type of contract because the supplier has no incentive to decrease costs. 4. How is a statement of work (SOW) different from a contract statement of work? What are some of the requirements for creating a contract SOW? Answer: The statement of work (SOW) is a description of the work required for the procurement. If a SOW is used as part of a contract to describe only the work required for that particular contract, it is called a contract statement of work. The contract SOW is a type of scope statement that describes the work in sufficient detail to allow prospective suppliers to determine if they are capable of providing the goods and services required and to determine an appropriate price. A contract SOW should be clear, concise, and as complete as possible. It should describe all services required and include performance reporting. It is important to use appropriate words in a contract SOW such as must instead of may. It should specify the products and services required for the project, use industry terms, and refer to industry standards. It should specify the location of the work, the expected period of performance, specific deliverables and when they are due, applicable standards, acceptance criteria, and special requirements. A good contract SOW gives bidders a better understanding of the buyer’s expectations. A contract SOW should become part of the official contract to ensure that the buyer gets what the supplier bid on. 5. How are RFPs different from RFQs? What are some of the requirements of writing an RFP? Answer: A Request for Proposal (RFP) is a document used to solicit proposals from prospective suppliers. On the other hand, A Request for Quote (RFQ) is a document used to solicit quotes or bids from prospective suppliers. Developing an RFP is often a time-consuming process. Organizations must plan properly to ensure that they adequately describe what they want to procure, what sellers to include in their proposals, and how they will evaluate proposals. To generate a good RFP, expertise is invaluable. It is thus important to consult with experts who know the contract planning process for particular organizations. Legal requirements are often involved in issuing RFPs and reviewing proposals, especially for government projects. To make sure that an RFP has enough information to provide the basis for a good proposal, the buying organization should try to put itself in the suppliers’ shoes. Chapter 13: Project Stakeholder Management True/False 1. Project stakeholder management has only recently been identified as an entire knowledge area by the Project Management Institute. Answer: True Rationale: Because stakeholder management is so important to project success, the Project Management Institute decided to create an entire knowledge area devoted to it as part of the Fifth Edition of the PMBOK Guide in 2012. 2. Project stakeholder management has resonances with project cost management and project time management. Answer: False Rationale: Many of the concepts related to communications and human resource management also apply to stakeholder management, but unique activities are required to perform good stakeholder management. 3. Projects often do not cause any changes in an organization. Answer: False Rationale: Projects often cause changes in organizations, and some people may lose their jobs when a project is completed. For example, a project might create a new system that makes some jobs obsolete, or a project might result in outsourcing work to an external group to make the organization more efficient. 4. The main output of the identifying stakeholders process is the project charter. Answer: False Rationale: Identifying stakeholders involves identifying everyone involved in the project or affected by it, and determining the best ways to manage relationships with them. The main output of this process is a stakeholder register. 5. Internal stakeholders include top management, other functional managers, and other project managers. Answer: True Rationale: Internal project stakeholders generally include the project sponsor, project team, support staff, and internal customers for the project. Other internal stakeholders include top management, other functional managers, and other project managers because organizations have limited resources. 6. Groups representing consumer, environmental, or other interests can be identified as project stakeholders. Answer: True Rationale: Groups representing consumer, environmental, or other interests can be identified as project stakeholders. 7. Stakeholders might change during a project due to employee turnover, partnerships, and other events. Answer: True Rationale: Stakeholders might change during a project due to employee turnover, partnerships, and other events. 8. Sensitive information can be included in the stakeholder register as very few people in the organization have access to it. Answer: False Rationale: Because this document is available to other people in the organization, the project manager must be careful not to include sensitive information, such as how strongly the stakeholders support the project or how much power they have. 9. A leading stakeholder is one who is aware of the project and is neither supportive nor resistant to it. Answer: False Rationale: A leading stakeholder is one who is aware of the project and its potential impacts and actively engaged in helping it succeed 10. The stakeholder management plan is always a formal document. Answer: False Rationale: After identifying and analyzing stakeholders, the project manager and team should develop a stakeholder management plan to help them effectively engage stakeholders and make sure that good decisions are made throughout the life of the project. This plan may be formal or informal, based on the needs of the project. 11. The stakeholder management plan should not be accessible to all stakeholders. Answer: True Rationale: Because a stakeholder management plan often includes sensitive information, it should not be part of the official project documents, which are normally available for all stakeholders to review. 12. Communication and interpersonal skills are important for successful project stakeholder management. Answer: True Rationale: Project managers must understand and work with various stakeholders; therefore, they should specifically address how to use various communications methods and their interpersonal and management skills to engage stakeholders. 13. Issue logs can be used to address issues related to other knowledge areas like project scope management or project quality management. Answer: True Rationale: Issues should be documented in an issue log, a tool used to document, monitor, and track issues that need resolution. Though the PMI now lists issue logs as a tool for stakeholder management, even though they can address issues related to other knowledge areas. 14. Though stakeholders cannot be controlled, their level of engagement can be controlled. Answer: True Rationale: You cannot control stakeholders, but you can control their level of engagement. Engagement involves a dialogue in which people seek understanding and solutions to issues of mutual concern. 15. Key stakeholders need not be invited to participate in a kick-off meeting. Answer: False Rationale: Key stakeholders should be invited to actively participate in a kick-off meeting rather than merely attending it. The project manager should emphasize that a dialogue is expected at the meeting, including texts or whatever means of communication the stakeholders prefer. 16. Communications software like e-mail, blogs, Web sites, texts, and tweets can aid in stakeholder communications. Answer: True Rationale: Productivity software like word processors, spreadsheets, and presentation software can aid in creating various documents related to stakeholder management. Communications software like e-mail, blogs, Web sites, texts, and tweets can aid in stakeholder communications. 17. Project management software tools normally do not promote the use of Facebook as a forum to promote project activities. Answer: False Rationale: Although many organizations do not promote the use of Facebook at work, several project management software tools include functionality like Facebook’s to encourage relationship building on projects. Multiple Choice 1. _____ is the new knowledge area identified by the Project Management Institute. A. Project stakeholder management B. Project communication management C. Project risk management D. Project procurement management Answer: A Rationale: Because stakeholder management is so important to project success, the Project Management Institute decided to create an entire knowledge area devoted to it as part of the Fifth Edition of the PMBOK Guide in 2012. 2. _____ involves determining everyone involved in the project or affected by it, and determining the best ways to manage relationships with them. A. Identifying stakeholders B. Planning stakeholder management C. Managing stakeholder engagement D. Controlling stakeholder engagement Answer: A Rationale: Identifying stakeholders involves identifying everyone involved in the project or affected by it, and determining the best ways to manage relationships with them. The main output of this process is a stakeholder register. 3. The main output of the _____ process is the stakeholder register. A. Planning stakeholder management B. Identifying stakeholders C. Managing stakeholder engagement D. Controlling stakeholder engagement Answer: B Rationale: Identifying stakeholders involves identifying everyone involved in the project or affected by it, and determining the best ways to manage relationships with them. The main output of this process is a stakeholder register. 4. One of the main outputs of the _____ process are the issue logs.. A. Planning stakeholder management B. Identifying stakeholders C. Managing stakeholder engagement D. Controlling stakeholder engagement Answer: C Rationale: Identifying stakeholders involves identifying everyone involved in the project or affected by it, and determining the best ways to manage relationships with them. The main output of this process is a stakeholder register. 5. _____ involves monitoring stakeholder relationships and adjusting plans and strategies for engaging stakeholders as needed. A. Planning stakeholder management B. Identifying stakeholders C. Managing stakeholder engagement D. Controlling stakeholder engagement Answer: D Rationale: Controlling stakeholder engagement involves monitoring stakeholder relationships and adjusting plans and strategies for engaging stakeholders as needed. Outputs of this process are work performance information, change requests, project documents updates, and organizational process assets updates. 6. The stakeholder register is the output of the _____ process of project stakeholder management. A. initiating B. planning C. executing D. monitoring and controlling Answer: C Rationale: The stakeholder register is the output of the executing process of project stakeholder management. 7. Which of the following is true about identifying stakeholder ? A. The project manager’s family is not a potential stakeholder. B. It is not very difficult to identify stakeholders. C. Stakeholders with indirect ties to the project need not be engaged with. D. Stakeholders do not change during a project Answer: C Rationale: It is also necessary to focus on stakeholders with the most direct ties to the project. For example, if you listed every single supplier for goods and services used on a project, you would be wasting precious time and resources. If a supplier is just providing an off-the-shelf product, it should need little if any attention. 8. Doctors who have been co-opted to actively participate in a project related to using information technology for chronic health problems would be examples of _____ stakeholders. A. supportive B. leading C. resistant D. neutral Answer: B Rationale: Leading stakeholders are aware of the project and its potential impacts and actively engaged in helping it succeed. 9. The project team must take corrective action if stakeholders with high interest and high power are categorized as _____. A. resistant B. neutral C. supportive D. leading Answer: A Rationale: The project team should take corrective action if stakeholders with high interest and high power are also categorized as resistant or unaware. 10. The project team must take corrective action if stakeholders with _____ are categorized as resistant or unaware. A. high interest/low power B. high interest and high power C. low interest/low power D. low interest/high power Answer: B Rationale: The project team should take corrective action if stakeholders with high interest and high power are also categorized as resistant or unaware. 11. The project team must take corrective action if stakeholders with _____ are categorized as resistant or unaware. A. high interest/low power B. high interest and high power C. low interest/low power D. low interest/high power Answer: B Rationale: The project team should take corrective action if stakeholders with high interest and high power are also categorized as resistant or unaware. 12. After identifying and analyzing stakeholders, the project manager and team should develop a(n)______ to help them effectively engage stakeholders and make sure that good decisions are made throughout the life of the project. A. stakeholder management plan B. stakeholder register C. issue log D. power/interest grid Answer: A Rationale: After identifying and analyzing stakeholders, the project manager and team should develop a stakeholder management plan to help them effectively engage stakeholders and make sure that good decisions are made throughout the life of the project. 13. Scope, time and cost goals in order of importance can be ranked on a(n) _____. A. requirements traceability matrix B. expectations management matrix C. responsibility assignment matrix D. probability matrix Answer: B Rationale: Project sponsors can usually rank scope, time, and cost goals in order of importance and provide guidelines on how to balance the triple constraint. This ranking can be shown in an expectations management matrix, which can help clarify expectations. 14. A(n) _____ is a tool used to document, monitor, and track problems that need resolution. A. requirements traceability matrix B. Gantt chart C. power/interest grid D. issue log Answer: D Rationale: Issues should be documented in an issue log, a tool used to document, monitor, and track issues that need resolution. Completion 1. The purpose of _____ is to identify all people or organizations affected by a project, to analyze their expectations, and to effectively engage them in project decisions throughout the life of a project. Answer: project stakeholder management 2. _____ can be perceived as enemies or allies by stakeholders depending on the outcomes of a project. Answer: Project managers 3. The main output of the identifying stakeholders process is the _____. Answer: stakeholder register 4. _____ are individuals, groups, or organizations who may affect, be affected by, or perceive themselves to be affected by a decision, activity, or outcome of a project. Answer: Project stakeholders 5. _____ can be classified as internal to the organization or external. Answer: Project stakeholders 6. The project sponsor, project team and the support staff would be the _____ project stakeholders. Answer: internal 7. Government officials and concerned citizens would be classified as _____ project stakeholders. Answer: external 8. A simple way to document basic information on project stakeholders is by creating a(n) _____. Answer: stakeholder register 9. A(n) _____ is a technique for analyzing information to determine which stakeholders’ interests to focus on and how to increase stakeholder support throughout the project. Answer: stakeholder analysis 10. A(n) _____ is a tool used to group stakeholders based on their level of authority and their level of concern for project outcomes. Answer: power/interest grid 11. A(n) _____ stakeholder is one who is oblivious to a project and its potential impact. Answer: unaware 12. A(n) _____ stakeholder is one who is aware of the project and is neither supportive nor resistant. Answer: neutral 13. A(n) _____ stakeholder is one who is aware of the project and its potential impacts and actively engaged in helping it succeed. Answer: leading 14. The _____ is a formal or informal document that helps project teams to effectively engage stakeholders and make sure that good decisions are made through out the life of the project. Answer: stakeholder management plan 15. A(n) _____ is a tool that helps clarify expectations and lists project measures of success as well as priorities, expectations, and guidelines related to each measure. Answer: expectations management matrix 16. A(n)_____ is a tool that is used to document , monitor, and track problems that need resolution. Answer: issue log Essay 1. Identify and describe the four processes involved in project stakeholder management. Answer: The four processes in project stakeholder management include the following: Identifying stakeholders involves identifying everyone involved in the project or affected by it, and determining the best ways to manage relationships with them. The main output of this process is a stakeholder register. Planning stakeholder management involves determining strategies to effectively engage stakeholders in project decisions and activities based on their needs, interests, and potential impact. Outputs of this process are a stakeholder management plan and project documents updates. Managing stakeholder engagement involves communicating and working with project stakeholders to satisfy their needs and expectations, resolving issues, and fostering engagement in project decisions and activities. The outputs of this process are issue logs, change requests, project management plan updates, project documents updates, and organizational process assets updates. Controlling stakeholder engagement involves monitoring stakeholder relationships and adjusting plans and strategies for engaging stakeholders as needed. Outputs of this process are work performance information, change requests, project documents updates, and organizational process assets updates. 2. What is a stakeholder register and what information must be included in it? Answer: A simple way to document basic information on project stakeholders is by creating a stakeholder register. This document can take various forms and include the following information: • Identification information: The stakeholders’ names, positions, locations, roles in the project, and contact information. • Assessment information: The stakeholders? ’ major requirements and expectations, potential influences, and phases of the project in which stakeholders have the most interest. • Stakeholder classification: Is the stakeholder internal or external to the organization? Is the stakeholder a supporter of the project or resistant to it?13 3. What must be the contents of the stakeholder management plan? Answer: • Current and desired engagement levels: If these levels are not the same, the project team should develop a strategy to align engagement levels. • Interrelationships between stakeholders: There are many interrelationships between project activities and stakeholders. The project manager must be in tune with the politics of the organization. • Communication requirements: The communications management plan should specify stakeholder requirements, and the stakeholder register can expand on unique requests from specific people. • Potential management strategies for each stakeholder: This critical section can contain very sensitive information. • Methods for updating the stakeholder management plan: All plans need some process for handling changes and updates. Flexibility would be important as stakeholders change on the project. Test Bank for Information Technology Project Management Kathy Schwalbe 9781133526858, 9781133627227, 9780324786927, 9781337101356, 9780324665215
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