Deck 12: Project Procurement Management and Outsourcing

Question 1

Organizations contemplating an outsourcing decision should keep things quiet until the last minute in order to shield its employees from undue stress.

Answer 1

False

Question 2

Although price is an important consideration,an outsource vendor may be chosen based upon their ability to provide a product or service better or faster.

Answer 2

True

Question 3

All outsourcing relationships should have an exit strategy.

Answer 3

True

Question 4

A project team can considered a buyer of products and services but not a seller.

Question 5

Outsourcing results in an automatic reduction in cost and an increase in performance.

Question 6

A well-written contract should be precise,complete,balanced,and flexible.

Question 7

Selective outsourcing provides flexibility to choose which project processes or deliverables should be outsourced and which should be kept internal.

Question 8

Although some people lose their jobs because of outsourcing,many new,higher-paying jobs are often created.

Question 9

A contract is a document signed by the buyer and seller that serves as a legally-binding agreement that defines the terms,conditions,and remedies of the buyer-seller relationship.

Question 10

A large number of organizations have had negative experiences with outsourced projects and are now starting to bring projects back in-house.

Question 11

A contract must be a complex document so that one party cannot take advantage of the other.

Question 12

A Web site developer negotiates a contract to develop a Web site for $2,000.This would be an example of a Fixed-Price/Lump-Sum contract

Question 13

Outsourcing may be viewed as a more strategic approach,while project procurement management is more tactical.

Question 14

A Cost-Plus-Fixed- Fee would be one type of a Cost-Reimbursable contract

Question 15

Organizations should consider functions that perform poorly or that are poorly understood as prime opportunities for outsourcing.

Question 16

Business processes or functions like accounting,human resources management,and marketing are too important to organizations so they could never be outsourced.

Question 17

A Full-Insourcing approach means that all organizational or project activities and deliverables are the responsibility of external sources.

Question 18

A Time and Material T&M)contract is really a hybrid of cost-reimbursable and fixed-price contracts.

Question 19

The decision whether to purchase or outsource specific project needs is similar to "make or buy" decision that compares the total direct and indirect costs of "making" a particular product or performing a particular service internally to the total direct and indirect costs of "buying" or contracting internally.

Question 20

The trend toward outsourcing can reduce an organization's ability to gain competitive advantage in a knowledge economy.

Question 21

Monitoring contract performance and making changes or taking corrective actions when needed refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 22

Managing the relationship and contract between the buyer and seller is part of _____.

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 23

Under this type of contract,the buyer pays the seller for the time and materials required to complete the work and the unit rates are set.

A)Cost-Reimbursable contract
B)Time and Materials contract
C)Fixed Price/Lump Sum contract
D)Cost plus fixed fee contract
E)Cost-plus-incentive-fee contract

Question 24

A type of contract where the fixed price is negotiated or set as the final price for a specific product or service describes a:

A)Cost-Reimbursable contract
B)Time and Materials contract
C)Fixed Price/Lump Sum contract
D)Cost plus fixed fee contract
E)Cost-plus-incentive-fee contract

Question 25

A contract…

A)Is a legally-binding agreement signed by the buyer and seller
B)Obligates the seller to provide specific products,services,or results
C)Obligates the buyer to provide specific monetary or other consideration
D)Defines such things as responsibilities,authority,technical and project management approaches,financing,schedule,and payments.
E)All of the above are part of a contract

Question 26

Negotiating,selecting,and contracting with a seller for a particular product of service refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 27

Obtaining bids,quotes,proposals,literature,and other information from potential sellers or service providers refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 28

Completing and settling each contract after any open items or settlements are resolved refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 29

Determining whether the contract needs to be amended refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 30

A _____ is when a consulting firm develops an application for a client at a negotiated price.

A)Cost-Reimbursable contract
B)Time and Materials contract
C)Fixed Price/Lump Sum contract
D)Cost plus fixed fee contract
E)Cost-plus-incentive-fee contract

Question 31

Making decisions as to what will be purchased or acquired as well as determining the logistics of when purchases will be made and how refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 32

Negotiating and awarding a contract to a seller for a specific product or service occurs in:

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 33

Documenting the product,services,or results needed as well as identifying potential sellers,vendors,suppliers,contractors,subcontractors,or other service providers refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 34

Which of the following is NOT one of the Project Procurement Management processes outlined in the PMBOK Guide?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Plan Exit Strategy
E)Close Procurements

Question 35

Determining which project needs can be fulfilled internally by the project team and which can be met externally refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 36

Monitoring that all payments are made refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 37

Managing scope in terms of its definition and change control refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 38

According to the PMBOK Guide,Project Procurement Management entails processes necessary to acquire:

A)products
B)services
C)results
D)All of the above
E)None of the above

Question 39

A _____ is when a consulting firm bills the client for developing an application based on the amount of time and cost of materials to complete the work.

A)Cost-Reimbursable contract
B)Time and Materials contract
C)Fixed Price/Lump Sum contract
D)Cost plus fixed fee contract
E)Cost-plus-incentive-fee contract

Question 40

Risk identification,monitoring,and control refers to which of the following Project Procurement Management processes?

A)Plan Procurements
B)Conduct Procurements
C)Administer Procurements
D)Close Procurements
E)Plan Exit Strategy

Question 41

Which of the following would an organization employ if all project deliverables and activities were the responsibility of an internal project team?

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 42

Not actively managing the vendor could lead to the following common outsourcing mistake.

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)Losing control over the outsourced activity

Question 43

Outsourcing core business functions is an example of the following common outsourcing mistake.

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)All of the above are common outsourcing mistakes

Question 44

Which of the following would an organization employ if an organization employ if all project products and services were from external sources?

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 45

Cost-plus-fee,cost-plus-fixed-fee,and cost-plus-incentive-fee are all types of a _____.

A)Cost-Reimbursable contract
B)Time and Materials contract
C)Fixed Price/Lump Sum contract
D)Cost-Penalty contract
E)Time-Reimbursable contract

Question 46

_____ takes advantage of labor arbitrage by procuring a product or service from a company that operates in another country.

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 47

Which of the following approaches provides flexibility to choose which project processes and deliverables should be from external sources and which should be internal to the organization?

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 48

_____ has caused a lot of controversy because of the perception that jobs within one country are replaced by lower wage jobs in another,leading to higher domestic unemployment.

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 49

_____ provides greater flexibility by allowing specific processes to be kept internal while allowing other processes to be outsourced.

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 50

_____ is the procurement of products or services from an external vendor,supplier,or manufacturer.

A)Outsourcing
B)Insourcing
C)Contracting
D)Offshoring
E)None of the Above

Question 51

Failure to include costs of searching for the vendor,writing the contract,or managing the vendor relationship are examples of the following common outsourcing mistake.

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)Overlooking the hidden costs of outsourcing

Question 52

Which of the following is NOT a common outsourcing mistake?

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)All of the above are common outsourcing mistakes

Question 53

Under this type of contract,a payment or reimbursement is made to seller to cover the sellers direct and indirect costs along with an additional fee added on as a profit to the seller.

A)Cost-Reimbursable contract
B)Time and Materials contract
C)Fixed Price/Lump Sum contract
D)Cost-Penalty contract
E)Time-Reimbursable contract

Question 54

_____ is when an organization turns over processes such as Accounting,Human Resources,or Research and Development to an outside organization that specializes in these processes.

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 55

Describe the Project Management Body of Knowledge PMBOK)area called Project Procurement Management.

Question 56

Not verifying the prospective vendor's qualifications as well as their experience and financial strength is an example of the following common outsourcing mistake.

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)All of the above are common outsourcing mistakes

Question 57

Performing due diligence to evaluate the financial strength of the vendor as a going concern helps protect against _____.

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)All of the above are common outsourcing mistakes

Question 58

Not retaining organization-specific knowledge is an example of the following common outsourcing mistake.

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)Losing control over the outsourced activity

Question 59

Not establishing an appropriate balance of power between the client and vendor is an example of the following common outsourcing mistake.

A)Outsourcing activities that should not be outsourced
B)Selecting the wrong vendor
C)Writing a poor contract
D)Overlooking personnel issues
E)All of the above are common outsourcing mistakes

Question 60

Which of the following would an organization employ if it outsourced a particular business function or department like information technology,accounting,research and development?

A)Business process outsourcing
B)Full-Insourcing
C)Full-Outsourcing
D)Offshoring
E)Selective Outsourcing

Question 61

Why is it important than organizations and project managers understand which activities should and should not be outsourced?

Question 62

Describe how a fixed-price or lump-sum contract works.Give an example.

Question 63

What is business process outsourcing?

Question 64

What are some hidden costs of outsourcing? Why is it important to consider these costs?

Question 65

Why is selecting the right vendor important when considering an outsourcing agreement?

Question 66

What are the three types of cost-reimbursable contracts?

Question 67

What is meant by selective outsourcing? Why is selective outsourcing a better approach than full in-sourcing or full outsourcing?

Question 68

What is the purpose of a contract?

Question 69

What is meant by full in-sourcing?

Question 70

What is outsourcing? How does it related to Project Procurement Management?

Question 71

What is offshoring or offshore outsourcing?

Question 72

Describe how a time and materials contract works.Give and example.

Question 73

Why are personnel issues important when an organization or project manager is considering the outsourcing of activities?