Free PMP Exam Sample Question

The following PMP® exam sample question is taken from the Free PMP Exam Simulator at http://free.pm-exam-simulator.com - The answer is at the very bottom:

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Joe is working as a project manager in a highway construction project. He wants to use a fixed price contract instead of cost-plus contract. The risk response strategy he is using in this case is an example of?

A) Risk Avoidance
B) Risk Transference
C) Risk Mitigation
D) Risk Acceptance

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Hint: The project manager in this example is currently performing the Conduct Procurements process but the answer is in the Plan Risk Responses process.

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ANSWER AND EXPLANATION:
The correct answer is B
Explanation: Risk Transference requires shifting some or all of the negative impact of a threat, along with the ownership of the response. A fixed price contract may transfer risk to the seller, whereas a cost-plus contract may transfer cost risk to the buyer.
Reference: PMBOK® Guide 4th Edition, page 304

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