Risk Analysis & Value Engineering Flashcards

Which Monte Carlo simulation output metric represents the probability that a project will be completed at or below a specific cost?

Answer: Cumulative distribution function (CDF)

The CDF from Monte Carlo simulation shows the cumulative probability of achieving a cost at or below each value on the x-axis.

In value engineering, the 'worth' of a function is best defined as:

Answer: The lowest cost to reliably perform the function

In VE methodology, worth is defined as the least cost to reliably accomplish a required function.

A risk register entry shows a risk with probability 0.30 and impact of $80,000. What is the expected monetary value (EMV)?

Answer: $24,000

EMV = Probability × Impact = 0.30 × $80,000 = $24,000.

Which value engineering job plan phase involves generating creative alternatives without criticism?

Answer: Creative phase

The creative phase uses brainstorming to generate many alternatives without judging their merit.

Sensitivity analysis in cost estimating is primarily used to:

Answer: Identify which input variables most affect the estimate outcome

Sensitivity analysis reveals which uncertain variables have the greatest influence on the total cost estimate.

When applying FMEA in the context of cost estimating risk, 'detectability' refers to:

Answer: The likelihood that a failure or error will be caught before it impacts cost

In FMEA, detectability measures how likely it is that existing controls will identify a failure before it causes harm.

In a risk breakdown structure (RBS), risks are organized by:

Answer: Category or source of risk

An RBS hierarchically categorizes risks by their sources or types, similar to how a WBS organizes work.