CAPM (Certified Associate in Project Management) Practice Exam

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How does reserve analysis help in estimating?

By eliminating all project risks
Through adding specific reserves for known risks
By providing extra budget to the project
Adding a percentage to activities for uncertainties

The correct answer is: Adding a percentage to activities for uncertainties

Reserve analysis is a technique used in project management to estimate budget and account for potential risks that may occur during the project. The purpose of reserve analysis is to allocate a certain amount of money for unforeseen risks, rather than relying solely on the budget for planned work. The other options are incorrect because - A: It is impossible to eliminate all project risks, as there will always be some level of uncertainty in any project. - B: While reserve analysis does involve setting aside funds for known risks, this is not the only reason it is used. - C: Reserve analysis does not simply provide extra budget for the project, but rather accounts for potential uncertainties that may arise. By adding a percentage to activities for uncertainties, reserve analysis helps in estimating by providing a more realistic budget that considers both planned work and potential risks. Thus, option D is correct.