Deck 12: Project Procurement Management

Question 1

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

Answer 1

True
Explanation: Controlling procurements ensures that the seller's performance meets contractual requirements. The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws.

Question 2

 Contents of the procurement management plan vary with project needs.

Answer 2

True
Explanation: The procurement management plan is a document that describes how the procurement processes will be managed. Like other project plans, contents of the procurement management plan will vary with project needs.

Question 3

 Suppliers are those organizations or individuals who provide procurement services.

Answer 3

True
Explanation: Organizations or individuals who provide procurement services are referred to as suppliers. Suppliers are also known as vendors, contractors, subcontractors, or sellers.

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

 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 13

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

Question 14

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

Question 15

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

Question 16

 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 17

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

Question 18

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

Question 19

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

Question 20

 A single contract can include all three categories of contracts.

Question 21

 In project procurement management, which is an output of the conducting procurements process?

A) make-or-buy decisions
B) statements of work
C) source selection criteria
D) change requests 

Question 22

 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 benefit 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 23

 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 24

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

A) reduction in costs
B) increased flexibility
C) increased accountability
D) access to specific skills

Question 25

 _____ 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
D) Fixed-price incentive fee

Question 26

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

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

Question 27

 What is the first step in project procurement management?

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

Question 28

 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 benefit 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 29

 In project procurement management, which process involves determining what to procure, when, and how?

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

Question 30

 In project procurement management, which process involves obtaining seller responses, selecting sellers, and awarding contracts?

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

Question 31

 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 32

 Which 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 33

 What is one drawback of outsourcing?

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 34

 Outputs of the _____ process consist of selected sellers and change requests.

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

Question 35

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

A) change requests
B) selected sellers
C) resource calendars
D) make-or-buy decisions

Question 36

 Which process of project procurement management involves managing relationships with sellers, monitoring contract performance, making changes as needed, and closing contracts?

A) negotiating procurements
B) settling contracts
C) deciding on the services to procure
D) controlling procurements

Question 37

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

Question 38

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

Question 39

 In project procurement management, which process involves completion and settlement of each contract, including resolution of any open items?

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

Question 40

 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 advantages does this characteristic of outsourcing provide organizations?

A) offers control over all aspects of projects that suppliers carry out
B) provides flexibility 
C) shifts accountability from external suppliers to internal staff
D) helps avoid any form of dependency on suppliers

Question 41

 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 42

 After planning for procurement management, the next process involves ____.

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 43

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

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

Question 44

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

Question 45

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

A) procurement statements of work
B) open item resolution 
C) resource calendars
D) work performance information

Question 46

 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 47

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

Question 48

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

A) CPPC
B) FFP
C) CPAF
D) FP-EPA

Question 49

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

A) RFQ
B) RFP
C) WBS
D) SOW

Question 50

 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 51

 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 52

 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 53

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

Question 54

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

A) RFQ
B) WBS
C) RFP
D) SOW

Question 55

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

Question 56

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

Question 57

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

Question 58

 In which contract 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 59

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

Question 60

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

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

Question 61

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

Question 62

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

Question 63

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

Question 64

 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 65

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

Question 66

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

Question 67

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

Question 68

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

Question 69

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

Question 70

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

Question 71

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

Question 72

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

Question 73

 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 74

 How is a statement of work (SOW) different from a contract statement of work? What are some of the requirements for creating a contract SOW?

Question 75

 Controlling procurement also involves _____, which is sometimes referred to as contract closure.

Question 76

 _____ 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 77

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

Question 78

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

Question 79

 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 80

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