PMI-RMP · Question #373
For the last several months, a project manager for a global technology program is focused on improving the project outsourcing process and analyzing the vendor supply chain as key pieces of the cost…
The correct answer is A. Vendor supply chain disruption and final system test. A cost-risk sensitivity analysis is typically displayed as a tornado diagram, where horizontal bars represent the potential impact of each risk on the project cost baseline. The longer the bar, the greater the risk's influence on cost. Based on the described analysis, 'Vendor…
Question
For the last several months, a project manager for a global technology program is focused on improving the project outsourcing process and analyzing the vendor supply chain as key pieces of the cost containment strategy. Early in the project, these two areas were identified as key risks to the final delivery of the project. Since that initial risk identification, the risk manager works to identify additional risks, as well as analyze the potential impact to the project cost baseline. After performing a cost-risk sensitivity analysis, the risk manager produces this chart. Based on this analysis, which two risk areas should the project manager focus on to control project cost?
Exhibit
Options
- AVendor supply chain disruption and final system test
- BVendor supply chain disruption and software design changes
- COutsourcing negotiations and vendor supply chain disruption
- DLabor rate increases and management reviews
How the community answered
(28 responses)- A82% (23)
- B4% (1)
- C11% (3)
- D4% (1)
Explanation
A cost-risk sensitivity analysis is typically displayed as a tornado diagram, where horizontal bars represent the potential impact of each risk on the project cost baseline. The longer the bar, the greater the risk's influence on cost. Based on the described analysis, 'Vendor supply chain disruption' and 'final system test' would appear as the two longest bars on the tornado diagram, indicating they have the greatest sensitivity - meaning small changes in these risks produce the largest swings in project cost. The project manager should prioritize these two areas because controlling them yields the highest return on risk management effort. Although outsourcing negotiations were explicitly mentioned as an early focus area, the sensitivity analysis is the authoritative tool for re-prioritizing risk response effort, and it may reveal that final system test has a greater cost impact than originally anticipated.
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