Mary is the project manager of the HGH Project for her company. She and her project team have agreed that if the vendor is late by more than ten days they will cancel the order and hire the NBG Company to fulfill the order. The NBG Company can guarantee orders within three days, but the costs of their products are significantly more expensive than the current vendor. What type of a response strategy is this?

A.
Contingent response strategy

B.
Expert judgment

C.
Internal risk management strategy

D.
External risk response

Explanation:

This is a contingent response strategy because it is a predefined strategy that the project will implement only if certain condition, such as the late order delivery, comes true.

The contingency risk response strategy is also known as the contingency plan. Contingency risk response strategy is involved with the improvement of different courses of actions that include changes in schedule, resources, or contract. Contingency planning comes into action when the risk events happen in the project. This means that one should prepare and plan the contingencies in advance before the threats occur. After the risks have been acknowledged and quantified, contingency plans should be planned, developed, and kept organized.
Contingency allowances or the reserves are the general contingency responses.

Answer option C is incorrect. This is not a valid risk management term.

Answer option D is incorrect. This could be seen as an external risk because the occurrence of the risk event is managed by the vendor, but it is a pre-defined risk response so a contingent response strategy is a better choice.

Answer option B is incorrect. Expert judgment is usually seen when the project hires a consultant or relies on someone with more experience than the project manager to help make the best decision.

Reference: "Project Management Body of Knowledge (PMBOK Guide), Fourth Edition"