Ranga's 51 hot topics to remember for Risk Management Professional (RMP) exam

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Ranga's 51 hot topics to remember for Risk Management Professional (RMP) exam

Transcript of Ranga's 51 hot topics to remember for Risk Management Professional (RMP) exam

  • Prepared by Rangarajan Ramaswamy, PMP, PMI-SP, PMI-RMP Page 1 of 5 RANGAS 51 HOT TOPICS TO REMEMBER FOR RISK MANAGEMENT PROFESSIONAL (RMP) EXAM 1. A contingency plan is a planned action to be taken if a threat or an opportunity happens. A fallback plan is implemented if the contingency plan is not effective or fails. A secondary risk is associated with risks pertaining to risk response. A workaround is an immediate fix needed if an unidentified or unanticipated risk occurs during execution stage. 2. A Pre-mortem is the process of "evaluating" a project before it has actually been done, to identify potential risks on the project. 3. Assumption testing is done during Perform Qualitative Risk Assessment process. In assumption testing, the stability and consequence are rated from 1 to 10. A stability rating of 5 to 10 means the assumption is valid and a consequence rating of 5 to 10 means the assumption could have large impact on the project. 4. It is important to analyze assumptions made when determining risk to uncover the consequences if the assumptions are false. 5. Mutual exclusivity in decision tree model - Two events are called mutually exclusive if both cannot occur in a single trial. Example: Flipping a coin will always give only 1 result (Head or Tail). 6. FMEA (Failure Mode Effect Analysis) is used to identify potential causes of product failure, determine the effects, and identify actions to mitigate the failures. 7. Risk rating is something between 1 10. Risk Score is calculated as P*I. Comparing the risk scores of risks in the project results in the Risk Ranking within the project. 8. Residual risks are risks that have been passively accepted, or for which contingency plans have been created. It is important that management be informed of risks that have been passively accepted, as well as the risks for which contingency and fallback plans have been created. 9. Residual risks are those risks that remain after Plan Risk Response process. 10. Project Cost breakdown is as follows:- a. Work package estimate = Summation of activity estimate b. Control account estimate = Summation of work packages estimate c. Project estimate = Summation of Control accounts estimate d. Cost baseline = Project estimate + Contingency reserve e. Cost budget = Cost baseline + Management reserve 11. Management reserve is usually a percentage of the total project cost. The contingency reserve is the expected monetary value (EMV) of the risks.
  • RANGAS 51 HOT TOPICS TO REMEMBER FOR RISK MANAGEMENT PROFESSIONAL (RMP) EXAM Prepared by Rangarajan Ramaswamy, PMP, PMI-SP, PMI-RMP Page 2 of 5 12. Monte Carlo simulation is used to determine time and cost based on probability distribution. 13. Project Manager holds the Primary responsibility of identifying risk. 14. All the Risks for which PM and team has no control over, management should be involved. 15. The team is more confident and optimistic about the project during the Plan Risk Response process. 16. Meetings should not be required before the approved fallback or contingency plan is implemented. 17. PM should spend most of the time preparing contingency plans. 18. The highest-risk path is the path through the network diagram that has the highest risk score. The activities on this path may not immediately follow each other, as activities do on the critical path. 19. Exploiting an opportunity means increasing its probability. Enhancing an opportunity means increasing its impact. 20. The ultimate outcome of the risk ranking process is that the non-top risks are separated from the top risks, so that the top risks can be moved forward. 21. The risk reserve report keeps a running balance of the remaining reserve, and is used like a checkbook. 22. Path convergence is best described as many activities leading into a central activity. This adds risk to that central activity. 23. Perform qualitative risk analysis is subjective evaluation. 24. Perform quantitative risk analysis is objective evaluation. 25. The team needs to understand the risk tolerance areas for the project to know the acceptable level of risk and, therefore, which risks need to be addressed. 26. Stakeholder risk tolerance is identified during the Plan Risk Management process. 27. When an identified risk arises, it is not necessary to hold a meeting, and the risk response plan does not require review. Of course, since the risk has occurred, it was not avoided. 28. It is the responsibility of risk governance board to ensure the project is following the standard policies during all processes. 29. Risk management "metrics" are used to measure how the project risk management team is performing against the plan. 30. Purpose of risk audit is to determine the effectiveness of risk management team. 31. Project charter and WBS helps prevent re-work, wasted time & effort. 32. While calculating worst case scenarios simply neglect the probability and add the negative impacts. Similarly, for calculating best case scenarios neglect the probability and add the positive impacts.
  • RANGAS 51 HOT TOPICS TO REMEMBER FOR RISK MANAGEMENT PROFESSIONAL (RMP) EXAM Prepared by Rangarajan Ramaswamy, PMP, PMI-SP, PMI-RMP Page 3 of 5 33. Prompt lists are used to help ensure that all aspects are covered during risk identification. A prompt list categorizes risks into types or areas and is usually specific to a project type and an organizations function (e.g. legal, commercial, technical, design, construction, testing etc.) 34. Many workarounds on a project indicate that there was a lack of adequate project planning and the project is likely in trouble. 35. Work Performance Data is raw data such as physical progress, start finish dates. Work Performance Information is analysis of performance data such as change requests, forecasted estimates. Work Performance Report is physical or electronic representation of Work Performance Information such as status reports, memos, notes, dashboards. 36. Contingency reserves are associated with the known-unknowns, which may be estimated to account for the unknown amount of rework. 37. List of formulae to be remembered :- a. No. of communication channels N = n(n-1)/2 (where n is no of stakeholders) b. Duration or cost for triangular distribution E= (O + M + P)/3 c. Duration or cost for Beta distribution (traditional PERT) E= (O + 4M + P)/6 d. CV = EV - AC e. SV = EV - PV f. CPI = EV/AC g. SPI = EV/PV h. EAC forecast for work performed at the budgeted rate: EAC = AC + (BAC EV) i. EAC forecast for work performed at the present rate CPI : EAC = BAC / CPI j. EAC forecast for ETC work considering both SPI and CPI factors: EAC = AC + [(BAC EV) / (CPI X SPI)] k. TCPI based on the BAC: (BAC EV) / (BAC AC) l. TCPI based on the EAC: (BAC EV) / (EAC AC). m. In short TCPI = work remaining/funds remaining n. Variance at completion VAC = BAC EAC o. Activity standard deviation is (P-O)/6 p. Activity variance is square of standard deviation = [(P-O)/6]2 38. Projects with TCPI > 1 is harder to complete and TCPI < 1 is easier to complete. 39. CPI>1(Under Budget) ,CPI=1(At budget) , CPI1(Ahead of plan) , SPI=1(As planned) , SPI