Deck 12: Project Procurement Management

Question 1

Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts.

Answer 1

False
Explanation: Cost-reimbursable contracts often include fees, such as a profit percentage or incentives for meeting or exceeding selected project objectives. Buyer absorb more of the risk with cost-reimbursable contracts than they do with fixed-price contracts.

Question 2

Reviewing performance records reduces the risk of selecting a supplier with a poor track record.

Answer 2

True
Explanation: A key factor in evaluating bids, particularly for projects involving IT, is the past performance record of the bidder. Reviewing performance records and references reduces the risk of selecting a supplier with a poor track record.

Question 3

The main sections of an RFP can include the statement of work and schedule information.

Answer 3

True
Explanation: The main sections of an RFP usually include its statement of purpose, background information on the organization issuing the RFP, the basic requirements for the products and services being proposed, and the hardware and software environment.

Question 4

The fee in a CPFF contract constantly varies even when the scope of a contract remains the same.

Question 5

An FP-EPA contract carries the least risk for a supplier.

Question 6

A company is considering whether to purchase or lease a piece of equipment for an upcoming project. The cost to purchase is $10,000 plus $100 per day to operate or $500 per day to lease (including operating costs). If the company anticipates using the equipment for a total of 20 days, they will be indifferent as to whether or lease or purchase it.

Question 7

A single contract can include all three categories of contracts.

Question 8

Contents of the procurement management plan vary with project needs.

Question 9

In an FPI contract, all of the risk is borne by the buyer.

Question 10

Indirect costs are those costs can be traced back to a project in a cost-effective way.

Question 11

Project procurement management consists primarily of two processes: assessing procurements and controlling procurements.

Question 12

In unit pricing, the total value of the contract is a function of the quantities needed to complete the work.

Question 13

In project procurement management, a main output of the controlling process is a source selection criteria.

Question 14

Risk registers and stakeholder registers are outputs of the planning procurement process.

Question 15

If an organization has no need to buy any products or services from outside the organization, then it has no need to perform any of the procurement management processes.

Question 16

Suppliers are those organizations or individuals who provide procurement services.

Question 17

All contracts should include specific clauses that take into account issues unique to the project.

Question 18

While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of suppliers.

Question 19

A key factor in evaluating bids, particularly for projects involving information technology, is the past performance record of the bidder.

Question 20

Make-or-buy analysis involves comparing the internal costs of providing a product with the cost of outsourcing.

Question 21

_____ contracts involve payment to the supplier for direct and indirect actual costs and often include fees.

A)Firm-fixed-price
B)Lump sum  
C)Cost-reimbursable contracts
D)Fixed-price incentive fee

Question 22

In project procurement management, the process of _____ involves determining what to procure, when, and how.

A)closing procurements
B)controlling procurements  
C)conducting procurements
D)planning procurement management

Question 23

"Outsourcing to provide extra workers during periods of peak workloads can be much more economical than trying to fill entire projects with internal resources." Which of the following advantages does this characteristic of outsourcing provide organizations?

A)Offers control over all aspects of projects that suppliers carry out  
B)Provides a company flexibility in staffing  
C)Shifts accountability from external suppliers to internal staff  
D)Helps avoid any form of dependency on suppliers

Question 24

Outsourcing suppliers can often provide economies of scale, especially for hardware and software, that may not be available to the client alone. Which of the following benefits does this offer an organization?

A)Reduction in fixed and recurrent costs
B)Increased flexibility  
C)Increased accountability
D)Access to specific skills

Question 25

Outputs of the _____ process consist of selected sellers and resource calendars.

A)closing procurements
B)conducting procurements  
C)planning procurement management
D)controlling procurements

Question 26

Procurement audits are often done during contract closure to identify lessons learned in the entire procurement process.

Question 27

In project procurement management, the process of conducting procurements is part of the _____ process.

A)planning
B)executing  
C)monitoring and controlling
D)closing

Question 28

The closing procurements process involves updating records to reflect final results and archiving information for future use.

Question 29

The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws.

Question 30

The procurement statements of work are an output of the _____ process of project procurement management.

A)planning
B)executing  
C)monitoring and controlling
D)closing

Question 31

A drawback of outsourcing is that:

A)it does not provide access to specific skills or technologies. 
B)it invariably results in an increase in both fixed and recurrent costs. 
C)it can make an organization become overly dependent on particular suppliers. 
D)it cannot increase accountability of suppliers through a written contract.

Question 32

In project procurement management, an output of the _____ monitoring and controlling process.

A)Change requests
B)Selected sellers  
C)Resource calendars
D)Make-or-buy decisions

Question 33

The first step in project procurement management is:

A)closing procurement management.
B)controlling procurements. 
C)conducting procurements.
D)planning procurement management.

Question 34

Which of the following is true of lump-sum contracts?

A)They incur a high degree of risk for the buyer. 
B)They involve a fixed total price for a well-defined product or service. 
C)They consist of a fee based on the satisfaction of subjective performance criteria. 
D)They are also known as cost-reimbursable contracts.

Question 35

"Most organizations are not in business to provide information technology services, yet many have spent valuable time and resources on information technology functions when they should have instead worked on important competencies such as marketing, customer service, and new product design. Outsourcing helps tackle this problem." Which of the following benefits does outsourcing primarily provide in such a scenario?

A)Reduces fixed and recurrent costs  
B)Protects strategic information from being accessible to external suppliers  
C)Increases accountability even without a written contract  
D)Helps focus on an organization's core business

Question 36

"A shortage of qualified personnel is one of the main reason that companies outsource. A project may require experts in a particular field for several months and planning for this procurement ensures that the needed services will be available for the project." Which of the following benefits does this characteristic of outsourcing provide an organization?

A)Reduces focus on its core business  
B)Increases control over all aspects of projects that suppliers carry out  
C)Provides access to specific skills  
D)Reduces dependency on suppliers

Question 37

In project procurement management, the process of _____ involves obtaining seller responses, selecting sellers, and awarding contracts.

A)conducting procurements
B)closing procurements  
C)settling contracts
D)planning procurement management

Question 38

Which of the following processes of project procurement management involves managing relationships with sellers, monitoring contract performance, and making changes as needed?

A)Closing procurements
B)Settling contracts  
C)Deciding on the services to procure
D)Controlling procurements

Question 39

In project procurement management, which of the following processes involve completion and settlement of each contract, including resolution of any open items?

A)Planning procurement management
B)Controlling procurements  
C)Closing procurements
D)Conducting procurements

Question 40

In project procurement management, which of the following is an output of the executing process?

A)Make-or-buy decisions
B)Statements of work  
C)Source selection criteria
D)Resource calendars

Question 41

In which of the following contracts does the buyer pay the supplier for allowable performance costs along with a predetermined percentage based on total costs?

A)FPIF
B)CPIF  
C)CPPC
D)CPAF

Question 42

A(n) _____ is a mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them.

Question 43

A(n) _____ decision is one in which an organization decides if it is in its best interests to make certain products or perform certain services inside the organization, or if it is better to buy them from an outside organization.

Question 44

_____ refers to the process of acquiring goods and/or services from an outside source.

Question 45

_____ management includes the processes required to acquire goods and services for a project from outside the performing organization.

Question 46

The process of choosing suppliers or sellers is known as _____.

A)source selection
B)a bid  
C)WBS
D)a change order

Question 47

In project procurement management, which of the following is one of the main outputs of the conducting procurement process?

A)A selected seller
B)A procurement management plan  
C)A procurement statement of work
D)A closed procurement

Question 48

A(n) _____ contract has the least amount of risk for the buyer.

Question 49

A(n) _____ is a document used to solicit proposals from prospective suppliers.

A)RFQ
B)WBS  
C)RFP
D)SOW

Question 50

From the buyer's perspective, the _____ is the least desirable among all contracts because the supplier has no incentive to decrease costs.

A)CPIF
B)CPFF  
C)CPAF
D)CPPC

Question 51

Procurement statements of work are an output of the _____ process.

Question 52

Which of the following is an output of the contract closure process?

A)Procurement statements of work
B)Updates to organizational process assets  
C)Resource calendars
D)Work performance information

Question 53

The cost at which the contractor assumes total responsibility for each additional dollar of contract cost is known as a(n) _____.

Question 54

A document used to solicit quotes or bids from prospective suppliers is known as a(n) _____.

A)RFQ
B)RFP  
C)WBS
D)SOW

Question 55

The _____ is a description of the work required for a procurement.

A)RFQ
B)RFP  
C)WBS
D)SOW

Question 56

With a(n) _____ contract, the buyer pays the supplier for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs.

A)CPFF
B)FPIF  
C)CPAF
D)CPIF

Question 57

In a(n) _____ contract, the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus.

A)FFP
B)CPIF  
C)CPPC
D)FPIF

Question 58

A(n) _____ contract includes a special provision for predefined final adjustments to the contract price due to changes in conditions such as inflation.

Question 59

A(n) _____ contract carries the least risk for suppliers.

A)CPPC
B)FFP  
C)CPAF
D)FP-EPA

Question 60

After planning for procurement management, which of the following does the next process involve?

A)Determining the evaluation criteria for the contract award  
B)Developing procurement statements of work  
C)Using expert judgement in planning?purchases and acquisitions  
D)Sending appropriate documentation to potential sellers

Question 61

A(n)_____ conference helps ensure that everyone has a clear, common understanding of the buyer's desired products or services.

Question 62

In procurement management, evaluation of any change should include a(n) _____ analysis.

Question 63

What are the four types of cost-reimbursable contracts? Briefly describe each type.

Question 64

_____ contracts are a hybrid of fixed-price and cost-reimbursable contracts.

Question 65

Three types of cost-reimbursable contracts include cost plus incentive fee, cost plus fixed fee, and _____.

Question 66

All procurement documents should be in _____ form in order to facilitate accurate and complete responses from prospective sellers.

Question 67

The final process in project procurement management is _____.

Question 68

The process of source selection involves evaluating proposals from sellers, choosing the best one, negotiating, and awarding the _____.

Question 69

If an SOW is used as part of a contract to describe only the work required for that particular contract, it is called a(n) _____.

Question 70

A(n) _____ system provides the ability to easily organize, find, and archive procurement-related documents.

Question 71

A(n) _____ is also known as a tender or quote, short for quotation.

Question 72

A(n) _____ type of e-procurement that sends requests for information and prices to suppliers and receives the response of suppliers using Internet technology.

Question 73

A contract statement of work is a type of _____ statement that describes the work in sufficient detail to allow prospective suppliers to determine if they can provide the required goods and services and to determine an appropriate price.

Question 74

A(n) _____ is a contract clause that allows the buyer or supplier to end the contract.

Question 75

A(n) _____ is a document prepared by a seller when there are different approaches for meeting buyer needs.

Question 76

List and briefly describe the four main processes of project procurement management.

Question 77

_____ are oral or written acts or omissions by someone with actual or apparent authority that can be construed to have the same effect as a written change order.

Question 78

A(n) _____ type of e-procurement that Identifies new suppliers for a specific category of purchasing requirements using Internet technology.

Question 79

What are some of the advantages that outsourcing offers which is encouraging many companies to adopt it?

Question 80

Tools used in contract closure include procurement audits, _____, and a records management system.