Risk Analysis & Value Engineering Flashcards

Which technique assigns three time/cost estimates (optimistic, most likely, pessimistic) to model uncertainty in project variables?

Answer: Three-point estimating (PERT)

Three-point estimating uses optimistic, most likely, and pessimistic values to calculate a weighted average and measure uncertainty.

A value engineering study identifies a component with a cost-to-worth ratio of 3.5. This indicates:

Answer: The component costs 3.5 times more than its function is worth

A cost-to-worth ratio greater than 1 means the current cost exceeds the worth of the function, signaling a VE opportunity.

Which statistical measure best describes the dispersion of possible cost outcomes in a risk analysis?

Answer: Standard deviation

Standard deviation quantifies the spread or variability of outcomes around the mean, making it the primary measure of dispersion.

In a tornado diagram used for sensitivity analysis, the longest bar represents:

Answer: The variable with the greatest impact on cost

In a tornado diagram, bars are sorted by length so the longest bar at the top represents the most influential variable.

Value engineering is most effectively applied during which project phase?

Answer: Conceptual or early design phase

VE savings potential is highest during early design when changes are least costly and most impactful.

A project risk matrix plots risks on axes of probability and impact primarily to:

Answer: Prioritize risks for response planning

The probability-impact matrix visually prioritizes risks so teams focus resources on those with highest combined scores.

Which risk response strategy involves shifting the financial impact of a risk to a third party?

Answer: Transfer

Risk transfer moves the financial consequence of a risk to another party, typically through insurance or contracts.