You are the project manager of the GHE Project. You have identified the following risks with the
characteristics as shown in the following figure: How much capital should the project set aside for
the risk contingency reserve?

A.
$142,000

B.
$232,000

C.
$41,750

D.
$23,750

Explanation:
Contingency reserves are estimated costs to be used at the discretion of the project manager to
deal with anticipated, but not certain, events. These events are “known unknowns” and are part of
the project scope and cost baselines. The contingency reserve is calculated by multiplying the
probability and the impact for the risk event value for each risk event. The sum of the risk events
equals the contingency reserve for the project. Note that Risk D is a positive risk amount.
Answer option C is incorrect. This value is the sum of the risk events if you did not include Risk D
as a positive risk value.
Answer option A is incorrect. This is a sum of the risk event.
Answer option B is incorrect. This is a sum of the risk events without including Risk D as a positive
risk event.