fbpx

Reply: Free PMP Exam Sample Question of the Week

Name
E-mail
Your e-mail address will never be displayed on the site.
Subject
Message

Topic History of : Free PMP Exam Sample Question of the Week

Max. showing the last 6 posts - (Last post first)
9 years 1 month ago #5143

Anne B

Anne B's Avatar



Question:
You are setting aside 15% of your baseline hardware cost to counteract the risk of hardware cost increases and technological advances. What is this called?

A. Reserve Analysis
B. Residual Risk
C. Contingency Reserve
D. Budgeted Cost of Work Scheduled


Hint: You are setting aside a budget for an unplanned event.


All our questions are updated to the latest PMBOK® Guide standard. Stop by at free.pm-exam-simulator.com and try the PMP Exam Simulator free for 3 days. We also offer 110 free questions at www.free-pm-exam-questions.com . We are a PMI Registered Education Provider.

Answer and Explanation:

The Correct Answer is C.

The amount that you are setting aside to account for cost uncertainty is called a "contingency reserve". The contingency reserve may be a percentage of the estimated cost, a fixed number, or may be developed by using quantitative analysis methods.

Please note that the question was intentionally a bit vague by asking "What is this called?" and not clearly specifying what "this" is referring to. "This" could refer to the action of setting the amount aside or "this" could refer to the amount that was set aside. In order to determine the correct answer you had to analyze the available answers, and compare the definitions of the four available options against the scenario. In this way, it became clear that the action that you performed was not a "reserve analysis" and that the amount you put aside was also neither a "residual risk" nor the "budgeted cost of work scheduled".

By eliminating these other choices, it becomes clear that "this" must relate to the amount of money you are putting away because "Contingency reserve" is the only definition that works in the circumstances described.

OSP INTERNATIONAL LLC
OSP INTERNATIONAL LLC
Training for Project Management Professional (PMP)®, PMI Agile Certified Practitioner (PMI-ACP)®, and Certified Associate in Project Management (CAPM)®

Login