PGMP · Question #345
On the electric company project the government implemented a regulatory change associated with the electricity sub-station upgrade project that required the company to spend an additional $400,000…
The correct answer is B. Unknown unknowns. Unknown unknowns are risks that could not have been identified or anticipated during planning - they are entirely unforeseen events. A sudden government regulatory change that forces an unplanned $400,000 expenditure is a textbook unknown unknown because the team had no basis…
Question
On the electric company project the government implemented a regulatory change associated with the electricity sub-station upgrade project that required the company to spend an additional $400,000 US on the project. This type of cost and activity best relates to which of the following?
Options
- AKnown unknowns
- BUnknown unknowns
- CManagement reserve
- DRisk management
How the community answered
(22 responses)- A5% (1)
- B82% (18)
- C9% (2)
- D5% (1)
Explanation
Unknown unknowns are risks that could not have been identified or anticipated during planning - they are entirely unforeseen events. A sudden government regulatory change that forces an unplanned $400,000 expenditure is a textbook unknown unknown because the team had no basis to identify it as a potential risk. Known unknowns are identified risks for which contingency reserves are set aside. Management reserve is the budget allocated for unknown unknowns, but the event itself is classified as an unknown unknown. Risk management handles known unknowns, not unknown unknowns.
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