| Course | PJM-5300 Project Risk Management |
|---|---|
| Module | Module 4 |
| Paper type | Module 4 written assignment: project risk analysis and management |
| Length | About 549 words, 4 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | M.S. in Management in Project Management |
| Updated | October 2026 |
Free sample paper for PJM 5300 Module 4
Seventy-Six Thousand Dollars of Uncertainty: Sizing the Reserve and Deciding on a Spare Camera
Student Name
M.S. in Management in Project Management, Thomas Edison State University
PJM-5300: Project Risk Management
Mentor Name
Month Day, Year
Seventy-Six Thousand Dollars of Uncertainty: Sizing the Reserve and Deciding on a Spare Camera
Expected Monetary Value
Expected monetary value multiplies each risk's probability by its cost impact. The risk standard published by the Project Management Institute (2019) presents it as a way to estimate the average outcome of uncertain events and to support decisions and reserve setting.
The total of $76,000 is the expected cost of these risks. It is not what will happen: in practice, either a risk occurs and costs its full impact, or it does not.
| Risk | Probability | Cost impact | Expected value |
|---|---|---|---|
| Vendor ships 4 or more weeks late (expediting, overtime, client penalty) | 0.30 | $120,000 | $36,000 |
| Vision camera fails validation | 0.25 | $60,000 | $15,000 |
| Client changes blister format | 0.15 | $90,000 | $13,500 |
| Compressed air upgrade needed | 0.20 | $35,000 | $7,000 |
| Key validation engineer leaves | 0.10 | $45,000 | $4,500 |
| Total | | | $76,000 |
Sizing the Contingency Reserve
I recommend a contingency reserve of $76,000, about 3 percent of the $2.4 million budget, held by the project manager for these identified risks, with use above $25,000 approved by the sponsor. The management reserve of $120,000 set in the risk plan remains for unknown risks. Kendrick (2015) notes that reserves based on analysis are easier to defend than arbitrary percentages, because they can be traced to specific risks.
Decision Tree: Should We Buy a Spare Camera?
The vision camera vendor offers a pre-validated spare for $18,000. With the spare on hand, a validation failure would cost about $15,000 instead of $60,000, because we could swap the camera and rerun only part of the qualification.
In expectation, buying the spare costs $6,750 more. On expected value alone, we should accept the risk and not buy the spare.
| Branch | Calculation | Expected cost |
|---|---|---|
| No spare | 0.25 x $60,000 | $15,000 |
| Buy spare | $18,000 + 0.25 x $15,000 | $21,750 |
Risk Attitude
Expected value assumes the organization is indifferent to risk. Hillson and Murray-Webster (2007) explain that individuals and organizations differ in risk attitude and that these attitudes should be made explicit. Our client is strongly averse to schedule risk: a validation failure would cost not only $60,000 but two to four weeks against a start date the client has promised its own customers. If the delay's cost to the relationship is counted, the spare looks better. A middle path exists: ask the camera vendor for a loaner during validation, which several vendors offer, avoiding most of the cost while protecting the date.
Simulation
EMV treats risks separately and ignores how they combine. Kendrick (2015) describes Monte Carlo simulation, which samples many possible combinations of activity durations and risk events to produce a distribution of total cost and finish date. A simulation of our schedule and cost model, using the Module 3 estimates and these risk probabilities, would show the chance of exceeding the budget plus contingency, which EMV alone cannot. I recommend running one before the factory acceptance test, when estimates will be firmer.
Recommendations
Set a $76,000 contingency reserve. Do not buy the spare camera; instead negotiate a loaner during validation. Run a Monte Carlo simulation before factory acceptance testing and revisit the reserve then.
Conclusion
Expected monetary value sizes the reserve and frames the camera decision, but the client's aversion to schedule risk and the way risks combine both call for judgment beyond the expected values.
References
Hillson, D., & Murray-Webster, R. (2007). Understanding and managing risk attitude (2nd ed.). Gower.
Kendrick, T. (2015). Identifying and managing project risk: Essential tools for failure-proofing your project (3rd ed.). AMACOM.
Project Management Institute. (2019). The standard for risk management in portfolios, programs, and projects. Project Management Institute.
PJM 5300 Module 4 instructions, in plain terms
The four written assignments in PJM-5300, together worth 20 percent of the grade, cover topics from the modules. This one covers project risk analysis and management. Expect to quantify risk for the project as a whole with expected monetary value, use a decision tree to choose a response, size a contingency reserve and consider when simulation or risk attitude should change a decision. Show calculations in tables and explain what each number means and does not mean. Explain what expected monetary value represents and what it does not, and test at least one response decision against stakeholders' risk attitude. Present each risk's probability and impact in one table.
How this PJM 5300 Module 4 example is built
The paper computes expected monetary value for five risks in a table and explains what the total represents. A section sizes the contingency reserve and sets approval rules. A decision tree table compares buying a spare camera with accepting the risk. A section on risk attitude, with research, explains why the numbers alone may not decide, and suggests a middle path. A section on simulation and recommendations follow. The recommendations include a loaner camera as a middle path and a simulation before factory acceptance testing, when estimates will be firmer, so the analysis leads to concrete next steps. A table shows each risk's probability, impact and expected value, and the text explains what the total does not mean. The camera decision is laid out as two branches with their expected costs.
Reading the PJM 5300 Module 4 grading rubric
Mentors grade this assignment on correct calculations, accurate interpretation of expected value, sound use of decision trees and reserves, and judgment about risk attitude. Papers that explain what expected value does not show demonstrate understanding. Questioning a decision tree result in light of stakeholders' risk attitude shows maturity. Recommending simulation for what EMV cannot capture shows command of the module. Offering a middle path when numbers and risk attitude point different ways shows practical judgment. Timing a simulation to when estimates firm up shows planning sense. Approval rules for using the reserve show governance. Clear tables make the reasoning easy to audit.
PJM 5300 Module 4 help: mistakes that cost marks
Students lose points by treating expected monetary value as a forecast of actual cost, by setting reserves without tying them to risks or by accepting decision tree results without considering risk attitude. Others confuse contingency with management reserve. Explain what EMV means. Tie the reserve to identified risks. Weigh results against stakeholders' risk attitude. Consider simulation where risks combine. Look for a middle path when the numbers and the stakeholders' attitude disagree. Tie your reserve to the risks it covers so it can be defended to a sponsor. A free first sample on your own PJM-5300 risk analysis assignment is available on request.
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PJM 5300 Module 4 questions, answered
Where can I find a free PJM 5300 Module 4 sample paper?
Expected monetary value, a decision tree and a contingency reserve for a packaging line project are worked in the assignment above.
What is expected monetary value?
The sum of each risk's probability multiplied by its impact, an estimate of the average outcome.
How does a decision tree help choose a risk response?
It compares the expected cost of each option, including the response's cost and the remaining risk.
Why might a team reject the decision tree's answer?
Because stakeholders' risk attitude may weigh certain outcomes, such as schedule delay, more heavily than expected value does.
What does Monte Carlo simulation add to EMV?
It shows how risks combine, producing a distribution of total cost and finish date.