You are the project manager of the NHH project for your company. You and the project team have completed the quantitative risk analysis for your project. During this process you create a contingency reserve based on the risk probability-impact matrix as seen in the figure below. Based on the information in the figure above, what amount would you need to include in your risk contingency fund?

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D. $258,500 The contingency reserve in quantitative risk analysis is determined by summing the Expected Monetary Value (EMV) of all identified risks, calculated as probability multiplied by monetary impact for each risk. A positive result of $258,500 represents the total reserve needed to cover probable risk impacts based on the probability-impact matrix data provided. This ensures the project has adequate funds set aside to address risks if they occur.

Answer

A. -$465,000 A negative contingency reserve value of -$465,000 is not a valid reserve amount; contingency reserves must be a positive value representing funds to be set aside for risk events.

Answer

B. $171,500 $171,500 does not represent the correct EMV summation based on the probability-impact matrix values provided with the question.

Answer

C. -$258,500 A negative value of -$258,500 is mathematically incorrect for a contingency reserve; the correct reserve is the positive equivalent representing funds to be allocated.

You are the project manager of the NHH project for your company. You and the project team have completed the quantitative risk analysis for your project. During this process you create a contingency…

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