medium · Project Management Professional Predictive (Plan-Driven)
Whitlock Software is executing a predictive system migration. A database corruption risk (probability 0.1, impact -$200,000) and a documentation error (probability 0.5, impact -$10,000) are identified. A legacy hardware sale opportunity exists (probability 0.2, impact +$50,000).
If the project manager establishes a contingency reserve of $15,000, which statement is true?
- The reserve is excessive because the project uses a predictive approach.
- The reserve is inadequate because the largest threat impact is $200,000.
- The reserve should be increased to $25,000 to exclude the uncertain opportunity.
- The reserve is adequate as it matches the absolute value of the net EMV.
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