Project Management Professional test

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PMP - Opportunities & Threats - PMBOK 7th edition - Contingency Reserve

Intermediate

1/5

A project manager is conducting a risk assessment for a software development project with an estimated budget of $400,000. The project manager identifies several potential risks that could impact the project's cost. Which of the following is the most appropriate approach for the project manager to determine the contingency reserve?

Analyze the identified risks, estimate their potential impact on the project cost, and allocate a portion of the project budget as a contingency reserve based on the risk assessment.

Wait until the risks actually occur during project execution and then request additional funds from the project sponsor to cover the costs associated with those risks.

Include a standard 10% of the project budget as a contingency reserve, regardless of the specific risks identified during the risk assessment process.

Conduct a thorough risk assessment, prioritize the risks based on their potential impact and probability, and develop a comprehensive risk response strategy, but do not allocate any portion of the budget as a contingency reserve.