Free DRMP Practice Questions

Question 1

At a coastal terminal, the same port closure would delay two equipment deliveries due in the same shipping window. An analyst models independent closure events for the deliveries and adds a lump-sum site-overhead loss to each. The model also calculates site overhead from the simulated commissioning date. Which revision fixes both weaknesses?

Accepted Answer

Sample one closure per trial, apply it to both deliveries, and calculate site overhead once from the resulting project duration.

Answer

Keep the closure events independent, but remove their lump-sum overhead losses.

Answer

Use one closure event for both deliveries and retain both overhead allowances to reflect the two affected packages.

Answer

Apply the closure only to the delivery on the deterministic critical path, retaining its separate overhead allowance.

Question 2

An owner has spent $300,000 on a concept study that cannot be recovered. Proceeding now requires another $1,000,000 and would generate net receipts of $660,000 at the end of each of the next two years, relative to abandonment. Funding is available; there are no taxes, residual value, or other cash flows. At a 10% annual required return, which recommendation correctly applies incremental net present value?

Accepted Answer

Proceed: excluding the sunk study cost gives an NPV of approximately +$145,000.

Answer

Abandon: including the concept-study cost in the investment gives an NPV of approximately -$155,000.

Answer

Proceed: the incremental NPV is +$320,000.

Answer

Proceed: deducting all expenditure from both receipts gives an NPV of +$20,000.

Question 3

A calibration review covers 100 completion forecasts for comparable projects. Each forecast gave a P10-P90 date range. Actual finishes were inside the ranges in 54 cases, earlier than P10 in 23, and later than P90 in 23. Project type and measurement basis had not materially changed. This pattern most strongly supports which diagnosis and response?

Accepted Answer

Overconfidence: use the observed coverage to recalibrate the probabilities and reconsider range widths.

Answer

Planning optimism: move both ends of the completion-date ranges later.

Answer

Availability bias: exclude recently disrupted projects before reassessing the forecast record.

Answer

Anchoring: replace the forecaster's central estimates with the approved completion targets before setting new ranges.

Question 4

Finance and operations teams agree on the probability distributions for cost, completion, and throughput of two port-expansion schemes. They can reproduce each other's calculations, yet rank the schemes differently. Neither scheme violates a mandatory requirement. The facilitator's next useful task is to:

Accepted Answer

Clarify the value trade-offs and risk preferences the authorized decision-maker wants applied.

Answer

Increase the simulation sample until the alternative rankings converge.

Answer

Commission independent forecasts to replace the shared estimates before discussing the disagreement further.

Answer

Average the two departmental rankings so that neither function's preferences receive greater weight.

Question 5

A process-plant estimate uses detailed unit rates and is labeled Class 2 because most budgeted engineering hours have been spent. However, the equipment list, piping and instrumentation diagrams, and site layout remain substantially unresolved. Under AACE's process-industry classification approach, what evidence should control acceptance of the class label?

Accepted Answer

The verified maturity and status of the scope-defining planning and design deliverables.

Answer

The share of estimate line items supported by quotations rather than historical unit rates.

Answer

The funding decision the estimate will support.

Answer

The accuracy interval obtained after adding enough contingency to support the intended classification.

Question 6

One hour before a commissioning pressure test, the independent shutdown trip fails its proof test. The approved test plan requires that trip to prevent a potentially fatal overpressure event. The sponsor offers to accept the risk because the initiating event is unlikely; no alternative protection has been assessed or authorized. What is the necessary immediate restriction?

Accepted Answer

Hold the affected test until the trip is restored and verified.

Answer

Proceed at the intended pressure after documenting the sponsor's formal acceptance of the risk.

Answer

Proceed under dedicated operator supervision, treating the additional monitoring as a substitute for the failed trip.

Answer

Suspend every commissioning workstream until the entire project risk assessment has been reapproved.

Question 7

A risk-neutral owner must choose a large or compact facility. High demand has probability 0.40 and low demand 0.60. The large facility's net present values are +$20 million and -$8 million in those states; the compact facility's are +$10 million and +$4 million. A demand study costs $4.6 million in present-value terms. It would arrive before selection but would only provide information, without changing the available facilities or their payoffs. Before investigating the study's accuracy, what can already be concluded?

Accepted Answer

Reject the study: perfect information is worth $4.0 million at most.

Answer

Buy the study: the expected value achievable with perfect demand information is $10.4 million, exceeding its price.

Answer

Reject the study: the compact facility has the higher expected NPV, so new information cannot change the preferred choice.

Answer

Buy the study: the large facility's high-demand advantage is $10 million.

Question 8

A statistician reports a 95% confidence interval of $9.5-$10.5 million for the population mean cost of comparable installation jobs. The underlying jobs show substantial job-to-job variation. A director proposes $10.5 million as a P95 budget for the next job. Which correction addresses the director's error?

Accepted Answer

Use the 95th percentile of a predictive cost distribution for an individual job.

Answer

Use the upper end of a 99% confidence interval for the population mean instead.

Answer

Use the sample median as the budget.

Answer

Keep the amount but describe it as a P97.5 project budget, since the original interval was two-sided.

Question 9

A funded supplier-response plan calls for a backup order if a factory inspection milestone is missed and delegates release authority to the procurement manager for premiums up to $250,000. The milestone has now been missed. The qualified backup supplier's premium is $180,000, and all specified release conditions are met. The original supplier still forecasts on-time delivery. What should the procurement manager do now?

Accepted Answer

Release the authorized backup order now, documenting that the preapproved response trigger has been met.

Answer

Hold the order for sponsor review because a new purchase should be escalated even when it falls within delegated authority.

Answer

Wait for the delivery date to be missed.

Answer

Credit the backup's qualification as risk reduction and postpone the order.

Question 10

An owner can accept a guaranteed buyout or retain an asset with uncertain returns. After all costs and taxes, the two choices produce the same expected final wealth. The buyout produces a certain amount; retention produces genuinely variable wealth. The owner's utility of final wealth is increasing and strictly concave throughout the relevant range. Under that model, which preference is justified?

Accepted Answer

Accept the buyout; it has greater expected utility.

Answer

Retain the asset because its upside gives it a higher certainty equivalent than the buyout.

Answer

Remain indifferent because equal expected final wealth gives the alternatives identical expected utility.

Answer

Delay the choice because a concave utility function cannot rank alternatives without their exact probabilities and payoffs.

Free DRMP Practice Questions

Domain 1: Basic Cost Engineering & Statistics and Economic Analysis

Question 1

Question 2

Question 3

Domain 2: Decision & Risk Practices

Question 4

Question 5

Question 6

Domain 3: Risk Management

Question 7

Question 8

Question 9

Domain 4: Communication

Question 10

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