Deck 12: Project Procurement Management and Contracting

Question 1

Items to be procured during the project are identified

A) as work gets underway during project execution
B) during the WBS process or earlier
C) mostly during the contract negotiation process

Answer 1

during the WBS process or earlier

Question 2

The customer advertises for project price bids usually when

A) scope of the project is complex, requirements are ill-defined, and bidder qualifications are unknown
B) scope of the project is somewhat simple, requirements are well defined, and bidders are pre-qualified.
C) scope of the project is somewhat simple, requirements are well defined, and bidders are pre-qualified
D) the customer is most interested in learning different contractors' ideas about the project
E) the customer is interested in negotiating with contractor to settle on the best process

Answer 2

scope of the project is somewhat simple, requirements are well defined, and bidders are pre-qualified

Question 3

Sole-sourcing means:

A) multiple qualified bidders will be invited to bid
B) among several qualified sources, just one will be invited to bid
C) one (and only one) bidder is qualified and available to do the work

Answer 3

one (and only one) bidder is qualified and available to do the work

Question 4

Single-sourcing means

A) multiple qualified bidders will be invited to bid
B) among several qualified sources, just one will be invited to bid
C) one (and only one) bidder is qualified and available to do the work

Question 5

Multiple sourcing means

A) multiple qualified bidders will be invited to bid
B) among several qualified sources, just one will be invited to bid
C) one (and only one) bidder is qualified and available to do the work

Question 6

Ordinarily, the...

A) prime contractor freely selects its own subcontractors
B) customer chooses the subcontractors that will report to the prime contractor
C) customer selects and manages the subcontractors with the prime contractor's assistance
D) subcontractors to work under the prime contractor are specified in the RFP

Question 7

With a Time and Materials (T&M) contract

A) the customer pays a contracted fixed price that is estimated before the rpoject based on labor time and material
B) the contractor is reimbursed for direct labor hours at a specified per-person hourly rate plus material costs and a mark-up
C) the time represents the duration of the project (start to finish) and the materials are whatever was needed to produce the estimate
D) the contractor has an incentive to perform the work in the shortest time and with the fewest materials

Question 8

Which of the following contracts is most risky to the customer?

A) cost plus fixed fee
B) guaranteed maximum price
C) time & materials
D) firm fixed price

Question 9

Which of the following contracts is most risky to the contractor?

A) cost plus fixed fee
B) guaranteed maximum price
C) time & materials
D) firm fixed price

Question 10

In which of the following kinds of contracts is the actual, final cost of the project unknown until after the project is completed (circle all that apply):

A) cost plus fixed fee
B) fixed price
C) cost plus incentive fee
D) none of these

Question 11

The purpose of contract negotiation is to (circle all that apply):

A) clarify technical terms of the contract
B) reach agreement on time, cost, and performance requirements
C) convince the user that the project has been completed
D) reach a contract agreement to the best advantage of the parties involved

Question 12

Procurement management refers to management of (circle all that apply)

A) "bought" or "purchased" items for the project
B) design work or services provided by contractors
C) items that are produced internally
D) all off-the-shelf items, whether obtained internally of externally
E) "turnkey" items or systems

Question 13

Procurement management can involve which if the following (circle all that apply)

A) definition of work, materials, or services in the WBS or similar process
B) scheduling
C) budgeting
D) RFP/proposal/contracting process
E) logistical planning

Question 14

Procurement management addresses everything associated with (circle all that apply)

A) procuring
B) purchasing and contracting
C) contracted work
D) project scheduling and budgeting
E) working with "hired help"

Question 15

Procurement can include (circle all that apply)

A) acquisition of a complex system
B) purchasing parts and components
C) selecting a supplier of parts and components
D) acquiring the services of a design firm
E) monitoring the work of internal project staff

Question 16

"Procured items" include which of the following (circle all that apply)

A) products
B) materials
C) equipment
D) work
E) services

Question 17

A "solicitation package" includes (circle all that apply)

A) solicitation documents (RFP, RFQ, RFT, etc.)
B) list of qualified bidders
C) final signed contracts
D) proposal evaluation process and criteria
E) project close-out procedures

Question 18

The proposal/negotiation/solicitation method is more appropriate for

A) work that requires design, development, and/or research
B) scope of the project is somewhat simple, requirements are well defined, and bidders are pre-qualified
C) large and somewhat undefined systems
D) artistic work or other work that requires intellectual input

Question 19

During the negotiation process, the project manager

A) must be intimately familiar with the technical details of the proposed system's design and related costs
B) must try to learn about any competitor bidders
C) must be familiar with those parts of the project plan (schedule, work, or price) that are relatively "fixed" and those that can be negotiated
D) try to know as much as possible about the customer's needs and current position

Question 20

The role of contract administration is

A) authorizing work to begin
B) monitoring work
C) insuring compliance to contractors' responsibilities
D) managing waivers and changes
E) ensuring that the customer is invoiced for deliverables

Question 21

Contract administration is responsible for

A) determining which work should be done in-house and which should be outsourced
B) determining whether project end-items meet requirements as specified in the contract
C) determining whether all, some, or none of the deliverables should be accepted
D) precuring RFPs in the initial solicitation process

Question 22

With a Firm Fixed Price Contract (FFP)

A) the customer assumes the risk of cost overruns
B) the price to the customer remains the same
C) the contractor is assured of being reimbursed for all allowable expenses
D) contractor risks underestimating the cost and losing money on the project
E) cutting-corners to reduce costs is a potential risk

Question 23

In a Fixed Price Incentive Fee Contract (FPIF)

A) the customer can pay a lower price if the contractor can reduce costs
B) the incentive can be determined by the cost sharing ratio
C) the contractor can earn a larger profit by reducing costs
D) is not really a fixed-price contract
E) the price is periodically adjusted to allow for changes in materials, labor, or overhead costs

Question 24

With a Cost Plus Fixed Fee (CPFF)

A) the customer assumes the risk of cost overruns
B) the price to the customer remains the same
C) the contractor is assured of being reimbursed for all allowable expenses
D) contractor risks underestimating the cost and losing money on the project
E) cutting-corners to reduce costs is a potential risk

Question 25

With a Cost Plus Incentive Fee (CPIF)

A) the customer can pay a lower price if the contractor can reduce costs
B) the incentive is to come at or below the target cost
C) the contractor can earn a larger profit by reducing costs
D) is not really a cost-reimbursable contract
E) the price is periodically adjusted to allow for changes in materials, labor, or overhead costs

Question 26

Statement: Procurement management refers to the management of items produced or work done internally.

Question 27

Statement: Portions of or even entire work packages might fall under "procurement management."

Question 28

Statement: Procurement management involves selection of the right suppliers, vendors, and contractors.

Question 29

Statement: Major areas of work that must be procured will be identified in the WBS.

Question 30

Statement: The schedule for procured items can be created independently of the project schedule.

Question 31

Statement: Procurement management follows a process similar to the project klife cycle: plan, conduct, control, and close out

Question 32

Statement: The "make or buy" decision can pertain to virtually everything to be done in the project

Question 33

Statement: The "conduct procurement" stage is also referred to as the solicitation or conduct-procurement process

Question 34

Statement: Usually, obligations in subcontracts exist solely between the customer and subcontractors.

Question 35

Statement: With a Cost Plus Incentive Fee (CPIF) the incentive is on meeting a target due date

Question 36

Statement: A Guaranteed Maximum Price (GMP) contract is like a Cost-Plus Fixed Fee contract with a cap on the price.