Showing posts with label RMP Exam Tips. Show all posts
Showing posts with label RMP Exam Tips. Show all posts

Friday, October 16, 2026

Updates to RMP Live Lessons, RMP Contact Hours and I Want To Be A PMI-RMP Book

 

I’m pleased to announce that there has been a number of updates related to ManagementYogi's Risk Management Professional (RMP) certification courses and exam prep book. I believe it’ll help all customers (subscribers) of ManagementYogi.

These updates are free-of-charge for current subscribers of ManagementYogi's RMP courses and book. 

The updates happen over the years and this post informs the consolidation of all updates so far.

All of the followings have been updated:

These updates happened due to the following reasons, but are not limited to them:
  • Availability of new Standards and/or Guides: Risk management standards and guides are not static. New editions come out and aspirants have to follow them.
  • New question styles: New style of questions come in the exam for which the candidates have to be prepared. 
  • Feedback from exam takers and certified RMPs: This is another key area, which I emphasize. Few exam takers, including certified RMPs, call-back. And I learn from them. 
  • Updates on videos: The RMP Book, RMP Contact Hours and RMP Live Lessons course have seen continuous updates depending on the exam changes, customer feedback, new areas, new tools and techniques etc.
Important Note: I receive the below two questions frequently. Hence, I’m taking it here.

Question – 1: Does the RMP Exam have content from PMBOK Guide, 7th edition?
Answer: Yes. The PMBOK Guide, 7th edition is followed as of October 2026. It’s explicitly listed in the latest RMP-ECO. You can refer to the exam in this link. (Link for ECO). Hence, if you are preparing for the exam, you’ve to know the related areas – not all.

In fact, certified RMPs have faced questions from PMBOK7. Like CIPSA and CHAMP certifications, no two experiences are the same for the RMP exam and your experience may differ.

Question – 2: Does the RMP Exam have content from PMBOK Guide, 8th edition?
Answer: No. As of October 2026, in the exam content outline (ECO), there is no information at all with respect to the PMBOK Guide, 8th edition. To reiterate, RMP exam is primarily based on the ECO. And the emphasis is not on PMBOK, but specifically on risk management. 

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With the above background, following are the updates.


1. A large number of NEW questions related to a variety of industries. 

This includes questions related to Energy, Software, Public(Govt.), Space, Education, Artificial Intelligence (AI), among others. The questions are not just skin-deep, but goes into the answers with sufficient background information the in the question.

To answer these questions you need not know all the industries. But your foundational and fundamental understanding with respect to risk management must be solid. 

2. Completely revamped question sets.
This is applicable for RMP Live Lessons (Guaranteed RMP) course. A number of question sets have been revamped considering the latest releases related to risk management.

In total, now there are 8 full-length question sets, i.e., 920 questions. With Smart Card questions and Lesson-End  practice questions, the number is over 1,200.  

This will give you sufficient practice to prepare for the exam. 

3. More emphasis on two exam domains.
The below two domains have been significantly enhanced with question bank updates:
  • Domain I: Risk Strategy and Planning
  • Domain II: Risk Identification 
This is applicable across, i.e., the I Want To Be A RMP book, the RMP 30/40 Contact hours and Guaranteed RMP course. 

4. New video sets for RMP application process.
A number of videos have been added to fill the RMP application form. These are exhaustive set of videos to guide you through.

In fact, aspiring RMPs have used these videos to fill-up and have their application approved. You have to careful while filling the form in order to avoid being rejected. 

This update is part of the RMP Live Lessons course.

5. RMP application templates and RMP sample applications.
Both RMP Application Templates and Sample Applications have been provided so that you can fill-up your forms. A number of associated videos are also added to enable you. 

This is update is part of the RMP Live Lessons course.

6. Updates for the software tools. 
For the RMP exam, you’ve to know a large of tools and techniques and have to answer them based on scenarios or situations in a short time. The software spreadsheet tools have been provided for this purpose. These tools enable faster and better learning. The tools have been updated.

This update is for RMP Live Lessons course.
 
7. Introduction of new tools and techniques.
This is not related to the PMBOK Guide, 8th edition, but related new releases from PMI related to risk management. Some new tools and techniques have been added based on the latest releases.

This update has happened across all as needed - RMP book, 30/40 contact hours and RMP Live Lessons course.

8. Addition of PowerPoint slides for easier navigability.
For easier navigability with respect to the video, the PowerPoint slides have been added. This is for each lesson. This will ensure you can revisit quickly, too.

This update is for both: RMP Contact Hours and RMP Live Lessons – Guaranteed Pass. 

9. Extensive coverage of Hybrid-Agile.
In the released risk management related standards and guides, hybrid is included across all – portfolios, programs and projects. There has been content additions and video updates related to hybrid. 

Some of the content have been taken from the CHAMP (Hybrid-Agile) to make your understanding clearer. However, the focus in the aforementioned courses and book is on risk management.

This update is applicable across all – I Want To Be A RMP book, RMP 30/40 Contact hours and Guaranteed RMP course. 

10. Content from Practical RMP.
To make risk management understandable and applicable in the field, I've updated/modified few snippets from real-world software tools such as Primavera Risk Management Analysis. Such content are taken from Practical RMP with Primavera Risk Analysis course.

This update is applicable across all – I Want To Be A RMP book, RMP 30/40 Contact hours and Guaranteed RMP course. 

Conclusion: Impact of Gen-AI – Little to None!
Artificial intelligence (AI) tools are built with freely available data/data-set from the internet. The internet/web is filled with very rudimentary questions. It no way matches the real standard of questions in the RMP Exam.

With the emergence of AI, particulary generative AI tools, questions created by those tools are again fed back to them to create another! Imagine the quality of the questions.

The RMP exam is of high standard. Like CIPSA (Scaled Agile) or CHAMP (Hybrid-Agile) certifications from ManagementYogi, the PMI-RMP credential is also a highly specialized certification. 

More importantly, it’s time you invest, which cannot be recovered. I keep saying:

Time is more important than money. Money can be recovered, but time cannot.

Though useful in certain cases and situations, AI can’t help you understand complex risk management concepts. It can’t match human explanations with figures, flow diagrams, detailed exercises, interactions, among many others. AI can’t also answer your questions face-to-face in a human way, which needs emotional engagement and commitment. 

To succeed in the RMP exam, without any doubt, you have to prepare with the right content. 

Before purchasing, if you have any questions or need clarifications please contact: managementyogi@gmail.com


Practical RMP (Unique, Hands-on):

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Friday, October 03, 2025

RMP Success Story: Mastering Risk, Not Just the Exam Using ManagementYogi’s RMP 30 Contact Hours – A Practitioner Approach to Success

By Vallabha Chebiyyam, RMP, PMP


Introduction

I’ve been certified Project Management Professional (PMP) from PMI and hence wanted to advance my knowledge, understanding and application of Risk Management in a deeper way. 

Hence, I decided to go with the Risk Management Professional (RMP), which is considered to be valuable in my field of work.



Why ManagementYogi’s RMP 30 Contact Hours

The RMP 30 contact hours program from Management Yogi gives you a practitioner-first approach and it’s an exam-true program. It blends PMI-RMP exam alignment with field-grade techniques. 

With this contact hours course, I believe I received a clean path for not only my exam, but also subsequent application. 

RMP 30 Contact Hours Course: Key Features

Management Yogi’s RMP 30 Contact Hours stands out for a practitioner-first structure with concise videos that move from concept to application to short practice. The course maintains a strong governance lens around thresholds, reserves, authority, and change control, and its exam-style scenarios reflect PMI wording and decision patterns. 

The topics that helped me most were data quality assessment before qualitative analysis, response strategy trade-offs across threats and opportunities, and clear reserve policies with drawdown rules. 

This course covers the advanced content fully:

  • Expected Monetary Value (EMV) Analysis 
  • Decision Tree Analysis (DTA)
  • Earned Value Management (EVM)
  • Sensitivity Analysis with Tornado Charts
  • Various Probability Distributions
  • Selecting appropriate distributions such as Triangular, BetaPERT, and Lognormal
  • Correlation in Risk Management
  • Monte Carlo Analysis and its interpretations with percentiles and drivers

In addition, it covers the areas of the PMBOK Guide, 7th edition and 6th edition with special emphasis on Risk Management. It covers:

  • Agile Management considering risks
  • Hybrid Management considering risks 
  • Various associated Risk Artifacts
  • Risk Attitude Spectrum 

Own Study for the RMP Exam 

For practice, the combination of chapter-end questions for retention, full-length exams for pacing, and new items aligned to current standards, PMBOK 7 and 6, and agile and hybrid references were effective. Hence, I used and practiced them all. 

While studying, I found the below ones most useful:

  • Quantitative analysis with many techniques outlined above
  • Plan and implement risk responses 
  • Practical tool snapshots that map insights into scheduling platforms like Primavera or Microsoft Project

These made my workplace adoption straightforward.

The formula sets are concise and usable for exam preparation and day-to-day work, and the revision tips throughout the course and checklists were genuinely helpful for my final reviews. 

Contact Hours Assessment

The assessment for the 30 contact hours was fair, aligned to the content, and served as a clear consolidation of learning rather than a surprise test. Post the assessment, I received the completion certificate.  


Final PMI-RMP Exam

After receiving the contact hours certificate, I went for RMP application fill-up and submitted the application. Post approval, I took the exam in Canada and successfully cleared the exam on 27th September, 2025.

Conclusion 

I want to apply my learnings in my profession and field work. 

Brief Profile: Vallabha Chebiyyam, RMP, PMP 

Assistant Project Manager: I’m working as a management and leadership professional with an engineering background and is based out of Canada. 






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Monday, January 15, 2024

20 NEW PMI-RMP Multi-Response Free Questions and Answers (Part - 2)

 

This is in continuation of the earlier series of questions for the mutlti-response or multi-answer questions for the PMI-RMP® examination. I call them multi-response, multi-choice quesitons.

I'd strongly suggest that you take both the parts together when you try to attempt the questions. That way you will get a feel of questions and how to answer them. Do note that these are not verbatim  questions from PMI-RMP exam, however, these questions covers the areas needed for the exam. These questions are taken from the following courses and book:

Again do note that the PMBOK 7th edition is a reference for the new RMP exam. It's explicitly listed in the exam content outline (RMP-ECO). 

The RMP Live Lessons course also comes with a dedicated  full-length question for this purpose (PMBOK7 and ECO).

In this part, we will have final 10 multi-answer/response questions. I hope you are able to do most of the questions on your own! If not, do send a mail as noted below.

[This series - Part - 1]

Subscribe to the site (top-right corner) for fresh updates.

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Question – 11: For a project, the risk manager has all the planning related work, implementing the risk responses and currently monitoring the risks. For certain risks, while monitoring, the plan is to trigger a response based on analysis. Which of the following can be used (choose two)?

A. Affinity diagrams.
B. Contingency planning.
C. Variance analysis.
D. Residual impact analysis.
E. Trend analysis.


Question – 12: Which of the following are not correct about reserve analysis (choose two)?

A. Informs the amount of reserves remaining to the amount of risk remaining at any time in the project.
B. Use in both Perform Quantitative Risk Analysis and Monitor Risks process.
C. Can be plotted with a cause-and-effect diagram.
D. Burndown charts can be used to represent the reserve remaining.
E. Tells if the remaining reserve is adequate.


Question – 13: For a project, a number of risk related activities, but conditions ones, are added with changes to the project schedule. These have been approved and integrated, which in result in updates to (choose two):

A. Project schedule.
B. Project schedule management plan.
C. Project management plan.
D. Project schedule baseline.
E. Project resource management.


Question – 14: A planning session is ongoing in order to build a common understanding of the risk approach between stakeholders and to gain agreement for managing risks in a project, which will be part of the portfolio. The output of this meeting can have which of the following (choose two):

A. Introduction, Portfolio description, Stakeholder risk appetites.
B. Identified risks, Risk owners, Risk Response Owners.
C. Project description, Criteria for success, Thresholds and corresponding definitions.
D. Communications management plan, Risk breakdown structure, Contingency plans.
E. Risk management organization, Roles, responsibilities, and authority, Risk management techniques and guidelines for use.


Question – 15: Risk identification is about all of the following, except (choose two):

A. Develop a comprehensive list of all known uncertainties that could project objectives.
B. Use various tools and techniques such as variance analysis and trend analysis to identify new risks.
C. Write the risk statements in a three-part statement for clarity.
D. Use matrix method-based techniques such as analytical hierarchical process (AHP) to identify risks.
E. Remove biases and an array of human behavior patterns stand in the way of identifying unknown risks.


Question – 16: An example of unknown-known can be all of the followings, but (choose two):

A. A known fact.
B. A hidden assumption.
C. A hidden fact.
D. An unknowable.
E. An ignored assumption.


Question – 17: Delphi technique is one of the core techniques used to identify various uncertainties in a project and hence, associated risks. However, one of the key stakeholders opposes and outlines a number of reasons about its drawbacks. Why can this stakeholder be right (choose two)?

A. Limited to technical risks.
B. Iterative and hence gets unnecessarily refined.
C. Removes sources of bias.
D. Dependent on actual expertise of experts.
E. Can't be used for reserve estimation.


Question – 18: A project is getting closed. The risk manager and team members have tried to manage the risks to a large extent possible, but still some of the risks remained. As the project draws to a closure, what should be done with these risks, except (choose two)?

A. Include a summary of any risks or issues encountered on the project and how they were addressed.
B. Check the risk register and close all the risk before closing the phase.
C. Move the content of the risk register into the lessons learned register.
D. Hand-over the remaining risks into the next phase of the project.
E. Check the risk report in order to see the status of high-priority risks.


Question – 19: For a multi-geographical project under a satellite program, a project manager is currently collecting the performance information. In addition to it, which of the following can be done, except (choose two)?

A. Checking the status of the risks that have already been identified.
B. Evaluating whether or not the impact can be contained within the limits of the project budget.
C. Verifying whether any known risk has not occurred or is not about to occur.
D. Monitoring the status of all actions implemented to respond to the detection or occurrence of a risk.
E. Adding additional activities or work packages to update the project’s baselines or product backlog.


Question – 20: For a project, the risk owner has been monitoring the actions to determine the effectiveness and to identify if any secondary risks have arisen. The risk action owners while informing the status of response actions say that the undertaken actions are closed. What should the risk owner do next (choose two)?

A. Check if the risk has been effectively dealt with.
B. Inform the project manager about it and close the risk.
C. Determine if any additional actions need to be planned and implemented.
D. Keep the risk in the register and manage the risk through subsequent risk management processes.
E. Immediately perform an audit of this risk to determine the effectiveness of response.


Subscribe to the site (top-right corner) for fresh updates. 

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The question set is available in the embedded document below. The answers are also part of this document. You can scroll to see the content. 

For all answers, subscribe to this site and send a mail (from your GMail id) to managementyogi@gmail.com.



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Tuesday, January 09, 2024

20 NEW PMI-RMP Multi-Response Free Questions and Answers (Part - 1)



The Risk Management Professional (RMP®) exam from PMI® has various types of questions, including the multi-response questions. Indeed, if you are appearing for the latest RMP exam in 2024 and beyond, then you will face both multi-choice and multi-response questions. There is a subtle difference between the two.

Multi-choice questions: There will be four radio-button choices. ONLY one of the choices will be correct. I call it single-response, multi-choice question. These questions are relatively not that difficult. But considering PMI, the standard will be high. 

Multi-response questions: There will be usually five choices with check-boxes on the left, where you can select the right answers. In this case, there will be more than one correct answer. I call these multi-response, multi-choice questions. These are also called mutli-answer questions. These questions, compared to multi-choice questions, will be relatively difficult. 

These questions are taken from the following courses and book:

To answer these questions, you need to have:

  • Understanding of the Standard for Risk Management in Portfolios, Programs and Project. This is the main reference for the RMP exam.
  • Understanding on the concepts of uncertainties, complexties, ambiguities and risks from both PMBOK Guide 7th edition and PMBOK 6th edition. Yes, PMBOK 7th edition is an explicit reference for the latest RMP exam!
  • Ability to apply your understanding in the real-world in a varieties of situations and scenarios.
  • Good understanding of the PMI-RMP exam content outline (ECO), the latest one released in March/April 2022.

In this part, we will have 10 such multi-answer/response (or multi-response, multi-choice) questions. 

You will be seeing such questions for the first time. As noted earlier, RMP exam takers are already facing such questions. 

I hope you enjoy doing the questions and it helps in your PMI-RMP exam.


Subscribe to the site (top-right corner) for fresh updates. 

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Question – 1: One of the principles of risk management is to foster a culture to embrace risk management. Such a culture: (choose two)

A. Identifies threats rather than ignoring them.
B. Identifies opportunities rather than ignoring them.
C. Identifies opportunities by cultivating a positive mindset within an organization.
D. Identifies both threats and opportunities by allocating the right resources.
E. Focuses on most impactful risks first.


Question – 2: Which of the following are not correct about risk attitude (choose two)?

A. Driven by perception and evidenced by observable behavior.
B. Must range from risk seeking to risk averse.
C. Individuals will have inconsistent attitudes towards risks.
D. Not always stable or homogenous.
E. It's the degree to which an individual accepts risks in anticipation of reward.


Question – 3: A risk manager and team members are identifying various sources of uncertainties at the individual project task level and also overall project level. While doing so, they are currently focusing on the quantitative assessment of various project constraints such as cost, schedule, scope, quality among others. Which of the following cannot be inputs for this purpose (choose two)?

A. Cost estimates.
B. Duration estimates.
C. Requirement estimates.
D. Resource estimates.
E. Resource requirements.


Question – 4: Risk management planning process is not only important from the process perspective, but also strategy perspectives. Which of the following are not the purposes of this process (choose two)?

A. Gain a better understanding of individual risks. 
B. Have a numerical estimate of the overall effect of risk on the objectives.
C. Develop the overall risk management strategy.
D. Decide how the risk management processes will be executed. 
E. Integrate risk management with all other activities.


Question – 5: Considering team members are new to the project and risk management is quite new, which of the following are the key success factors for risk identification (choose two)?

A. Risks linked to objectives.
B. Agreed upon definition of risk terms.
C. Complete risk statement.
D. Appropriate risk data model. 
E. Available resources, budget and schedule for responses.


Question – 6: Considering risk owner and risk action owner, which are not correct? (choose two)

A. Risk owner is responsible for monitoring the risk.
B. Risk owner is responsible for selecting and implementing an appropriate risk response strategy.
C. Risk action owner reports the risk owner about the status of the risk response actions.
D. Risk action owner is responsible for finding out the effectiveness of a response.
E. Risk action owner owns the response actions, whereas risk response owner owns the response.


Question – 7: A project has been following the project management body of knowledge (PMBOK) guide's process group model of initiating to closing to manage a project, of which risk management is an integral part. Considering the planning process group of the five process groups, which of the following are considered?

A. Understanding of high-level risks that might impact project objectives.
B. Selection of overall risk management approach for the project.
C. Risk management integration with quality management and execution of stakeholder engagement strategies.
D. Risk management being part of every process in the planning process group.
E. Handing over the remaining known risks prior to closure of the project.


Question – 8: A risk manager is evaluating the effectiveness of risk management processes as documented in the risk management plan. The purposes of the audit can be (choose two):

A. Risk management rules are being carried out as specified.
B. Residual risks response planning is properly taken. 
C. Risk management strategy is iterative and integrative.
D. Risk management related lessons are documented properly. 
E. Risk management rules are adequate for monitoring and controlling the work.


Question – 9: The risk breakdown structure (RBS) is a hierarchical framework of potential sources of risk and used in risk identification. RBS can be used for all of the following situations, except (choose two):

A. Can be used in association with brainstorming.
B. Ensures coverage of all types of risk. 
C. Lowest level of RBS is known as the risk package.
D. Tests for blind spots or emissions.
E. Used for evaluating current risks as well as identifying new risks.


Question – 10: In a meeting for risk identification, the risk manager wants to allow all participants to speak their mind and contribute to the discussion. This is to identify as many risks as possible and to stimulate creativity. Which of the following tools and/techniques will help the risk manager the most (choose two)?

A. Brainstorming.
B. Checklist.
C. Prompt list.
D. Document analysis.
E. Delphi technique.


Subscribe to the site (top-right corner) for fresh updates. 

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The question set is available in the embedded document below. The answers are also part of this document. You can scroll to see the content. 

For all answers, subscribe to this site and send a mail (from your GMail id) to managementyogi@gmail.com.






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Wednesday, April 26, 2023

Course Review: ManagementYogi’s RMP 30 Contact Hours Online – A Crisp Course to Learn Risk Management and Go for PMI-RMP Exam

 By Prasad Ramamurthy Kadambi, PMP

 

I’m a certified PMP since 2020. To continue with your earned PMP credential, one needs 60 PDUs, which I had very little of as of 2022 end. I reached out to Satya to know how best to get these PDUs and with best possible learning. 

Satya asked which one do I use the most in my profession, to which I informed: Risk Management! Satya advised me to go with RMP 30 contact hours, which I immediately followed, made the payment and subscribed to the RMP 30 Contact Hours Online course within hours.

Four months down the line, I not only achieved all the needed PDUs 114 days before my PMP renewal date, in the process I also learned a lot, which includes learning from Satya’s Management Review sessions. 

Indeed, I met all my goals with which I started.

My review of this online course is outlined below.

Why this Course – ManagementYogi’s RMP 30 Contact Hours

Risk Management is vital for a Project Manager as it will be the responsibility of a Project Manager to mitigate the risks throughout the project life cycle. 

Risk Management should be known in depth by the Project Managers, otherwise it affects the deliverables.

Following are the other top reasons I subscribed to the course:

  • This course outlines the need for better Risk Management and enables us to appear for PMI-RMP exam as it is mandatory to have 30 contact hours. 
  • I work as a Program Manager, and I see a lot of interlocks between the projects, and this would increase the risk multiple times.
  • Satya’s Management Review Sessions: It is very unique. With Satya, we get an opportunity to ask our questions and he doesn’t mind explaining the concept in detail which supports osmotic learning. For example, recently, I requested Satya to explain ‘Probability Distribution’ and he covered it exhaustively for 2 hours. This is something what we will NOT get with others.

Course – ManagementYogi’s RMP 30 Contact Hours: Key Features

In my view, below are the key features of this course. 

  • The course gives a bird’s view of PMI-RMP certification, and it is very crisp.
  • It covers areas of Advance Risk Management as well, e.g., Probability Distribution, Hybrid-Agile management etc. 
  • The lesson end questions and three full length question sets are very challenging. It’ll improve your understanding by leaps and bounds.
  • The 50-question assessment that will be finally taken is of very high quality. Post the assessment, I received the 30 RMP Contact Hours Certificate in 2 days.
  • Satya’s course content will ensure that we read Risk Management Standards (Foundational and Practice), PMBOK Guide 7th edition and PMBOK Guide 6th edition. 
  • In the Management Review Sessions, you will learn many aspects of Agile and Hybrid in detail.
  • Another unique thing about the course is that the course is constantly updated as needed, and updates are shared free of cost.
  • RMP Formula Gold Cards are very helpful as they can be downloaded for our reference.

Personally, I like the Risk Monitoring lesson the most. In addition, practical hands-on demonstrations will be shown in Management Review Sessions with various tools. I liked the course as it made me read a lot and there is a lot of learning too.

Lessons in the Course – ManagementYogi’s RMP 30 Contact Hours

First and foremost, I want to inform you that the questions in this course will be very tricky and unless the concepts are clear it will be difficult to answer. These are high quality questions. 

Next, I’ve outlined the following high-level information for the various lessons of the course.

  1. Lesson – 1: Welcome: It enumerates the Course Structure.
  2. Lesson – 2: Introduction: It explains the PMI-RMP exam in detail.
  3. Lesson – 3: Fundamentals of Risk and Risk Management: It explains Performance Domains and Life Cycles.
  4. Lesson – 4: Risk Management Framework and Life Cycle: You’ll learn in detail about Processes in Risk Management and framework. Emphasis is given on flow and interactions.
  5. Lesson – 5: Risk Management and Other Knowledge Areas: This the most important Lesson which explains the impact of Risk Management on other Knowledge Areas and vice-versa.
  6. Lesson – 6: Risk Management Planning: It explains Process and ITTOs.
  7. Lesson – 7: Risk Identification: I primarily focused on the Data gathering and Data Analysis Technique in this lesson.
  8. Lesson – 8: Qualitative Risk Analysis: This lesson goes into much more detail when compared to the content we had for PMI-PMP.
  9. Lesson – 9: Quantitative Risk Analysis: This lesson also goes in more detail when compared to the content we had for PMI-PMP. In fact, it’s far advanced.
  10. Lesson – 10: Risk Response Planning: This lesson explains Process and ITTOs with other needed information. 
  11. Lesson – 11: Risk Response Implementation: It explains the process, ITTOs and various unknown areas before. 
  12. Lesson – 12: Risk Monitoring: I like this lesson the most as I can co-relate to my regular work at the Program Level.

In essence, these lessons cover Risk Management exhaustively to apply for the 30 contact hours, get it approved and above all, learn professional risk management.

Brief Profile: Prasad Ramamurthy Kadambi, PMP
Project Manager, HP Inc.

 

More RMP 30 Contact Hours Course:





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Thursday, December 08, 2022

A Deep Dive into Probability Distribution in Risk Management


Ever tossed a fair coin? I’d bet you have! At least in your childhood days while deciding which team would bat first in a baseball or a cricket match, or who would serve first in a badminton or tennis game. Every kid agrees to it because it’s unbiased. When you toss a fair coin, the chances of getting a head is 1/2 (0.5) or 50%. This is the division between the favorable outcome, which is a head and all possible outcomes (head and tail).

A coin toss is perhaps is the simplest introduction to probability, which informs chance or likelihood of occurrence of a random variable. The random variable here is getting a head. Let’s note the random variable as X and probability as P(X). Mathematically put:

Probability (Getting head) or P (X)

= Favorable number of outcomes of the event / Total number of possible outcomes

= 1 / 2 = 0.5 = 50%

Now, what’s the chance of getting a head when you toss a pair of coins together? In this case, the total number of possible outcomes is four: tail (first coin) and tail (second coin), tail and head, head and tail, and finally head and head. The values that the random variable can take are many, as shown in the below table:

As you can see, the possible values of X range from 0 to 2 (i.e., 0 head, 1 head, or 2 heads). This leads to the concept of distribution. Looking at the above table, we can see the frequencies of this random variable’s occurrences are 1, 2, and 1. This is distribution or frequency distribution. One could say: distribution is the possible values a random variable can take and how frequently these values occur.

Now, if I add probabilities to this random variable’s values, we get a probability distribution. This is depicted in below:

As shown in the above table:

  • We have all favorable outcomes for 0, 1, or 2 heads. These are represented in the first and second columns.
  • All possible outcomes are obviously four, and that’s shown in the third column.
  • P(X) is shown in the final column, and the probabilities are 25%, 50%, and 25%, respectively for 0, 1, or 2 heads. This is probability distribution. Summed up, it equals one.

Hence, we can say that probability distribution for a random variable describes how probabilities are distributed over the values of the random variable.

Discrete and Continuous Distribution

Distribution can be discrete or continuous. Discrete means you are getting an integer number (1 head or 2 heads). You don’t say that you will get 0.33 head! Considering another example of counting the number of children in households of a locality, you will come-up with results such as 0 child, 1 child, 2 children, etc. You won’t get 0.57 child!

You may be laughing now – what’s 0.33 head or 0.57 child!? Good to see you smiling. Smiling lessens stress and helps in understanding.

All random variables; however, are not discrete. For example, let’s say you are determining the distribution of age, weight, or height of people in a locality. Considering height, it can be anything: 5 feet, 5.5 feet, 5.85 feet, 6.1 feet, and so on. In such a case, the distribution is continuous. So, this distinction is important: at a high-level, there are two types of random variables – discrete and continuous and respective probability distributions – discrete probability distribution and continuous probability distribution.

Now, combining all, i.e., probability, distribution and probability distribution, I've the following consolidated tip.

But, how does all of this fit into Risk Management? Risk Managers don’t toss coins or calculate heads/tails in an experiment. That’s kids’ games and not for grown-up men or women! Perhaps; although, child play teaches the basics neatly.

Probability Distribution and Risk Management

With the above basics, let’s consider another example to understand probability distribution from the perspective of risk management. You are going to a friend’s house. It may take you one hour to reach your destination if you encounter no obstacles. If there is heavy traffic, it’s possible that you may not get there for three hours. With less traffic, it’s more likely to take 2 hours. Hence, you can say there are three possibilities:

  • Minimum (or Optimistic) travel duration = 1 hour
  • Most likely travel duration = 2 hours
  • Maximum (or Pessimistic) travel duration = 3 hours

In this case, the random variable (X) is the “travel duration.” Can you conclusively say which one of the estimates is correct? Unlikely, because other factors such as traffic conditions are involved. Now, if I add chances to these numbers, then we get probability distributions. I’ve prepared the below video to explain in more detail [Duration: 05m:33s]. For better audio-visual experience, you may want to go full HD and plug-in your earphones.


Importance of Probability Distribution *** UPDATED ***

In project risk management, the concept of probability distribution is applied to estimation. Continuing with our previous example, when we estimate, we take the most likely outcome of two hours, which is not correct because we’ve forgotten to consider other possibilities.

We can (and should!) consider possible scenarios, not just the most likely one. In other words, instead of saying an activity in a project is going to take “X” number of days, we also can consider other days using a distribution. For each duration in the distribution, there is a probability available.

This can be done for all the activities or tasks of the project, which in turn impacts the project schedule and cost. This enables us to build a more realistic plan.

Now that we have understood the basics of probability, distribution, and probability distribution, let’s look at the various types used in risk management.

Triangular Distribution *** UPDATED ***

Triangular distribution is the most common type of distribution used.  Named triangular because of the shape of the curve, this refers to there being no pre-existing data, but only expert opinions or judgment.

Symmetrical Triangular Distribution

The below distribution is triangular and symmetrical.

                                 

By looking at the graph above, we can say: There is approximately a 30% chance of the duration being 6 days, a full chance of the duration being 8 days’, and also a 30% chance of the duration being 10 days.”

Asymmetrical Triangular Distribution

Do note that the triangle shown need not be symmetric. Asymmetrical diagrams are shown below:

From here, you can calculate the durations with respective chances or probabilities.

Let’s take another example of a project, once with a task of Product Requirement Documentation (PRD) Preparation with an estimated 5 days duration. This is the most likely estimate, but we do not have the minimum and maximum value.

By using the Primavera Risk Analysis (PRA) software tool, the triangular distribution is depicted as below:

                                

The durations can be 4, 5, or 6 days (shown in the X-axis). The respective chance for minimum, likely, and maximum values are entered when you perform a duration risk analysis. This is demonstrated in a video in the later part of this article.

While building the schedule model, this triangular distribution can be noted as Triangle (4, 5, 6) or Triangle (4; 5; 6).

Uniform Distribution

In rectangular distribution, you can use a maximum value and a minimum value, but not any most likely value. In the below example, we have a uniform (or rectangular) distribution.

Looking at it, we might say: The task has a minimum duration of 4 days, but a maximum duration of 12 days

You can use Uniform Probability Distributions when you specify the extremes of uncertainty of the activity under consideration and when the intermediate values have equal chances of occurring. It is also possible when you cannot draw any inference on the possible distribution shape.

Taking our previous example of the PRD Preparation task, which is estimated to be 5 days, using PRA, we have the following values for Uniform distribution:

Like Triangular distribution, while building the schedule model, this distribution can be noted as Uniform (4, 6).

Beta Distribution *** UPDATED ***

Beta distribution, like triangular distribution has also three possible values – worst case, most likely, and best case. Like the triangular model, it also gives more weightage to the most likely case. We have seen one example of Beta distribution in the earlier video.

Unlike the triangular distribution, the shape for beta distribution is smoother and the tails in Beta distribution taper off less quickly. A sample beta distribution curve is shown below:

Beta distribution can also be symmetric or asymmetric in shape. The notations happen like Beta (6, 8, 10). As you can see above, there can be many values close to the most likely values, and it slowly tapers off towards the minimum or maximum ends.

Using the PRA software tool, for our task, PRD Preparation, a Beta (or BetaPert) distribution will come out as below:


Do note that along with the triangular distribution, beta distribution is another frequently used probability distribution.

Normal Distribution

Normal distribution is defined by the mean of a planned (or remaining duration) activity for an activity and standard deviation (SD) of the activity.

This distribution is used if there is historical information available. Normal distribution also has a bell-shaped curve like Beta, but considers SD to calculate the worst (and best) case scenarios. 

For our example (task of PRD Preparation with a duration estimate of 5 days), we note the normal distribution as Normal (5,1), where 5 is the mean and 1 is the SD.

Discrete Distribution

In a discrete distribution model, the duration of an activity under consideration can have a number of integer values, but without any intermediate values. In other words, the distribution is discrete, rather than continuous like in a triangle, beta, or uniform.

In the above sample, the activity has discrete distribution of values 6, 10, 18, and 20. 

Considering our task of PRD Preparation, the discrete distribution will be seen as below with the PRA tool. The distributions are 2, 3, 4, and, 5 with respective weighting factors of 10, 20, 30 and, 50, respectively. This can be noted as Discrete ({2, 3, 4, 5}, {10, 20, 30, 50}).


Practical Example and Demonstration

With this understanding, let’s take a practical look using MS Project and Primavera Risk Analysis. The video [Duration: 05m:42s] demonstrates a project plan with fixed activity estimates. It’s next imported to the PRA tool and analyzed with various probability distributions for the activities of the project.


Conclusion

Probability distribution is very important when you use quantitative risk analysis, which involves a number of mathematical modeling and sampling. Managers or planners can also deploy advanced probability distributions such as lognormal distributions, cumulative distributions, general distributions, among others. The above video explains a few of these.

We have come a long way and seen a number of examples. I propose just one more exercise. I promise it won’t be difficult, provided you have read the content sincerely. Going back to our first examples of coin tosses, can you answer these:

  • What’s the probability distribution of getting a head when you toss three coins?
  • What are the values that the random variable can take?

If you are getting four values for the random variable of getting a head and when all your probability distributions are summed-up to equal one, then you have well understood the concept. 

I welcome your thoughts, feedback, and suggestions in the comment section below.


* This article is dedicated to the memory of my father, the late Harendra Nath Dash, who passed away three years ago on June 11, 2019. He first introduced me to the concept of probability and statistics. It was mesmerizing then, and I still remember it. I wish this article to be a tribute to him and his teachings.

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This article was first published by MPUG.com on 7th June, 2022. The current one is updated.




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