Quantitative Risk Analysis

Correct Answer: Sensitivity Analysis

The best technique to identify the effect on overall project cost given a certain set of variables in a construction project is Sensitivity Analysis. Sensitivity Analysis helps to estimate the uncertainty in the outcome of a decision if a particular variable is manipulated. It shows how changes in the input variables impact the cost or outcomes of the project. While the other techniques are also useful in project management, they are not as direct in evaluating the influence of individual variables on the project cost. Scenario Analysis examines the project outcomes under a variety of different conditions or scenarios, but it doesn't isolate the contribution of individual variables. Decision Tree Analysis is more focused on decision sequences under uncertainty rather than the influence of particular variables on cost. Expected Monetary Value Analysis is a quantitative risk analysis technique that uses the probabilities and impacts of potential risks to estimate potential financial outcomes but it doesn't focus specifically on variable inputs and their effects on cost.

Correct Answer: Triangular Distribution

The Triangular Distribution should be used for quantitative risk analysis in this context. This is because the triangular distribution is used when estimates are known for the minimum, most likely, and maximum values, and these estimates are not equally likely. This closely matches the situation described in the question, where there's an uncertainty in risk impact estimates ranging from $2000 to $8000, with a 'most likely cost' of $4000 Other distributions are not suitable here as they do not match the scenario given in the question. Uniform Distribution expects all the values in a range to have the same likelihood. However, in the given question, it's stated that $4000 is the 'most likely' cost, meaning some values are more probable than others The Normal Distribution is mainly applied when a large number of processes or factors contribute to the final outcome. In this case, we don't have such an implication. The Exponential Distribution outlines the probability of a certain event occurring within a specific time frame. There's no time frame mentioned in the question, thus it's not applicable here.

Correct Answer: $16,000

The expected monetary value (EMV) of a risk is calculated by multiplying the probability of the risk by the potential cost if it occurs. In this case, the probability is 0.4 and the cost is $40,000. Therefore, the EMV is (0.4 times $40,000), which is $16,000. The answer choices $40,000, $24,000, and $10,000 are incorrect because they do not align with the calculated EMV of the risk based on the given probability and potential cost.