Quality, Risk, and Procurement Management
What this domain tests
This domain tests quality planning and control, risk identification and response, and procurement decisions that match contract type to scope certainty.
Core rules
- Quality planning sets standards; quality assurance audits the process; quality control inspects deliverables. Cost of quality includes prevention, appraisal, and failure costs; prevention is usually cheaper than rework.
- Risk management: identify, analyze (probability and impact, qualitative or quantitative), plan responses, implement, monitor. Threats can be avoided, mitigated, transferred, or accepted; opportunities exploited, enhanced, shared, or accepted.
- Expected monetary value (EMV) = probability × impact. Use it to compare responses, not to replace judgment.
- Make-or-buy analysis decides procurement. Fixed-price suits well-defined scope; cost-reimbursable suits uncertain scope; time-and-materials suits small, evolving work but carries cost risk.
Worked example
A vendor outage has a 20% chance and a $50,000 impact, so EMV = 0.20 × $50,000 = $10,000. A $6,000 mitigation reduces probability to 5%: EMV = 0.05 × $50,000 = $2,500. Expected loss falls by $7,500, so the net benefit is $1,500. The response is worth considering financially, but the PM must also check feasibility and secondary risks.
Traps
- Treating quality assurance as final inspection; assurance is process-focused.
- Listing only threats and ignoring opportunities.
- Using fixed-price contracts for poorly defined scope.
- Adding EMV values without considering response cost or risk appetite.