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Applied Methods and Techniques Flashcards

7 cards from real CP3P practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Applied Methods and Techniques flashcards as text

  1. When building a Public Sector Comparator (PSC), which element represents the value of risks the government would keep under both traditional procurement and the PPP?

    Answer: Retained risk

    Retained risk is the risk the procuring authority keeps either way, so it is costed in the PSC and also added to the PPP's cost.

  2. A PSC is adjusted upward to remove advantages a public entity has over a private bidder, such as tax exemptions. What is this adjustment called?

    Answer: Competitive neutrality

    Competitive neutrality adjustments remove cost advantages that come only from public ownership so the PSC and the bids can be compared fairly.

  3. In a quantitative Value for Money test, the PPP option is preferred when its risk-adjusted net present cost is:

    Answer: Lower than the risk-adjusted PSC

    VfM is shown when the risk-adjusted present cost of the PPP is below that of the risk-adjusted PSC.

  4. A project team gives each identified risk a probability and a financial impact, then multiplies the two. What does this produce?

    Answer: The risk's expected value

    Probability multiplied by impact gives the expected value of a risk, which is used to price risk in the PSC.

  5. Which technique runs thousands of simulations with random input values drawn from probability distributions to produce a range of possible project costs?

    Answer: Monte Carlo simulation

    Monte Carlo simulation samples input distributions repeatedly to generate a probability distribution of outcomes such as P50 or P90 costs.

  6. During appraisal, a team changes one key variable at a time (e.g., construction cost +15%) to see how the result moves. This is called:

    Answer: Sensitivity analysis

    Sensitivity analysis tests how outputs respond to a change in one variable while all others stay fixed.

  7. Optimism bias adjustments in project appraisal are mainly used to correct for:

    Answer: Systematic underestimation of costs and durations

    Optimism bias uplifts correct for the well-documented tendency of appraisers to underestimate capital costs, works duration and operating costs.