TOPIC: Free PMP® Exam Sample Question

The project management plan specifies that a predictive development approach has been selected to produce the project deliverables.

Where in the project life cycle will the overall project risk be the lowest?

(On the actual PMP exam, you will be requested to click the correct area in the image. But here in the simulator, please select the answer below.)



A. A
B. B
C. C
D. D

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HINT: Where does the project have the least number of unknowns?

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Answer and Explanation:
The correct answer is D.

A life cycle of a typical traditionally managed project consists of initiation, planning, execution, monitoring and controlling, and closure. Overall project risk is the effect of uncertainty on the project as a whole.

Many various factors contribute to the overall project risk: technical, managerial, commercial, external, to name but a few. Deliverables are not produced up until the project enters its execution. Project objectives, such as scope, schedule, cost, quality, etc. are not being measured during project initiation and planning.

At that point, there are many unknowns, and it's even unclear if the project will meet its objectives. Therefore, the overall project risk at the beginning of the project is the greatest. As the project progresses, decisions are made, and deliverables and produced and accepted, the overall project risk decreases.

During project closure, there are typically not too many unknowns left (if at all). After the deliverables are accepted, and the project's objectives are met, the "victory" can be declared. This is where the overall project risk is considered very low or non-existent. Therefore, of the choices provided, the risk is the lowest during project closure (area D).

Details for each option:

A. Incorrect. Area A represents project initiation. On traditionally managed projects, project initiation is characterized by the biggest number of unknowns from various categories: technical, managerial, commercial, external, to name but a few. Therefore, overall project risk is greatest at the start of the project.

B. Incorrect. Area B represents project planning. On traditionally managed projects, project planning typically involves the development of the project management plan. No deliverables are produced during project planning. However, more is known about the project, and some decisions are made. Hence, the level of risk is not the greatest.

C. Incorrect. Area C represents activities associated with project execution as well as monitoring and controlling. The focus of the project during this stage of its life cycle is to produce the deliverables. As deliverables are completed and accepted, decisions are made, and uncertainty is left behind, the level of project risk decreases.

D. Correct. Area D represents project closure. At this point in the project life cycle, all deliverables are supposed to be completed and accepted, and project objectives met. By that time, the project is supposed to have little to none unknowns, and, therefore, the overall project risk should be at its lowest level.

Reference: A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) – Seventh Edition, Project Management Institute Inc., 2021, The Standard for Project Management:
3.10 OPTIMIZE RISK RESPONSES
2.3.3 DEVELOPMENT APPROACHES
2.8.5 RISK

Process Groups: A Practice Guide, Project Management Institute Inc., 2023,
1.7.1 Project and Development Life Cycles
5.18 Plan Risk Management