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Joe is working as a project manager in a highway construction project. He wants to use a fixed price contract instead of cost-plus contract. The risk response strategy he is using in this case is an example of?
A) Risk Avoidance
Risk TransferenceC) Risk Mitigation
D) Risk Acceptance
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Hint: The project manager in this example is currently performing the Conduct Procurements process but the answer is in the Plan Risk Responses process.
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ANSWER AND EXPLANATION:
The correct answer is B
Explanation: Risk Transference requires shifting some or all of the negative impact of a threat, along with the ownership of the response. A fixed price contract may transfer risk to the seller, whereas a cost-plus contract may transfer cost risk to the buyer.
Reference: PMBOK Guide 4th Edition, page 304
This post has been edited by Cornelius Fichtner: 13 June 2012 - 02:45 AM
