CAPM Practice Question: Project Management Fundamentals and Core Concepts
A project manager is assigned to a project that is in the planning phase. The sponsor asks the project manager to include a 10% contingency reserve in the budget. The project manager knows that the project has a high degree of uncertainty. What should the project manager do?
⚠ Common exam trap
A common mix-up: candidates assume the sponsor's request is always correct or that a fixed percentage is standard practice, but the CAPM exam tests the principle that contingency reserves must be justified by risk analysis, not arbitrary figures.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Perform a quantitative risk analysis to determine appropriate contingency reserves.
The project manager should perform a quantitative risk analysis to determine the appropriate contingency reserve based on the project's specific risk exposure, rather than relying on an arbitrary 10% figure. This aligns with the PMBOK Guide's guidance that contingency reserves should be derived from risk analysis, not sponsor preference, especially given the high degree of uncertainty.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Explain that contingency reserves are not allowed in the project budget.
Why it's wrong here
Contingency reserves are standard for known risks.
- ✗
Refuse the request because it is unethical.
Why it's wrong here
It is not unethical; it's about proper planning.
- ✓
Perform a quantitative risk analysis to determine appropriate contingency reserves.
Why this is correct
Risk analysis provides data-driven reserve estimation.
- ✗
Add the 10% contingency reserve as requested.
Why it's wrong here
Reserves should be based on risk analysis, not arbitrary.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This CAPM practice question is part of Courseiva's free PMI certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CAPM exam.