Risk Response Planning

Correct Answer: Mitigation

The correct answer is 'Mitigation'.

In Risk Response Planning, mitigation is the strategy that involves taking action to reduce the probability or impact of a risk. This approach aims to proactively address potential risks by implementing measures to minimize their likelihood of occurrence or to lessen their potential negative effects on the project.

The other options are incorrect for the following reasons:

'Acceptance' is a strategy where the project team decides to acknowledge the risk and not take any action unless the risk occurs. This does not involve reducing the probability or impact of the risk.

'Avoidance' is a strategy that involves changing the project plan to eliminate the risk entirely. While this does prevent the risk from occurring, it does not specifically reduce the probability or impact of an existing risk.

'Transference' is a strategy that involves shifting the responsibility for managing the risk to a third party. This does not directly reduce the probability or impact of the risk, but rather moves the responsibility to another entity.

Correct Answer: Reduce the risk by creating agreements with multiple suppliers.

The best risk response strategy when facing a risk of cost overruns due to potential delays in receiving construction material would be to 'Reduce the risk by creating agreements with multiple suppliers'. This option ensures that if one supplier cannot deliver the materials on time, the project manager can switch to another supplier, thus minimizing the risk of delays and unnecessary cost overruns. 'Ignoring the risk as it is a common issue in construction projects' is not a valid solution because the goal of risk management is not to ignore but to anticipate and mitigate potential issues, regardless of how common they might seem. 'Transferring the risk by hiring another construction company to handle the material procurement' might seem like a good option, but it just shifts the responsibility and does not fully eliminate the risk. The hired company might also face the same issues of potential delays. 'Accepting the risk and creating a contingency reserve to cover the cost overruns' might be an acceptable strategy when no alternate options are available, however, it does not proactively tackle the root cause of the risk – which is the potential delay of material delivery.

Correct Answer: Mitigate

Mitigating the risk involves taking proactive steps to reduce the probability or impact of the risk. In this scenario, the project manager can mitigate the risk of delays due to uncertain availability of key team members by implementing measures such as cross-training other team members, adjusting project schedules, or identifying alternative resources. This reduces the likelihood or impact of the resource-related delays. Avoiding the risk might not be feasible if the project relies on those skills. Transferring the risk typically involves shifting it to a third party, which may not apply here. Accepting the risk would mean doing nothing, which does not help in preventing delays.