Question 1

Time and material contracts are used on projects for work that is smaller in scope and has uncertainty or risk.

Accepted Answer

Time and material contracts are typically used on smaller and more uncertain projects, as they provide flexibility in terms of pricing and scope changes. This type of contract involves paying for the actual time and materials used on a project, rather than a fixed price for a predetermined scope of work.

Question 2

Often contracts have a penalty clause if the work is not performed according to the contract.

Accepted Answer

Penalty clauses are a common feature of contracts, intended to ensure that the parties to the agreement fulfill their obligations. These may take the form of financial penalties, such as liquidated damages, or other remedies designed to compensate the injured party for any losses incurred as a result of a breach of contract.

Question 3

On smaller, less complex projects, the procurement team can consist of work teams within the procurement function with special expertise in contracting.

Accepted Answer

False

Question 4

The fixed price contract with price adjustment is used for short projects.

Accepted Answer

The fixed price contract with price adjustment is used for long projects, typically for more than 12 months, where there is significant risk of fluctuation in market prices. The contract includes provisions to adjust the contract price based on agreed upon criteria such as changes in labor rates, material costs, or commodity prices.

Question 5

Just as the project has a scope of work that defines what is included in the project and what work is outside the project, vendors and suppliers have a scope of work that defines what they will produce or supply to the company.

Accepted Answer

This statement is true. Vendors and suppliers have their own scope of work that outlines what they will provide to the company.

Question 6

The providers of commodities are suppliers.

Accepted Answer

Suppliers are the providers of commodities.

Question 7

With a fixed unit price contract, if the estimate of units is not accurate, the contract has to be changed.

Accepted Answer

In a fixed unit price contract, the price per unit is agreed upon, but the total cost can adjust based on the actual number of units required, without needing to change the contract itself.

Question 8

While outsourcing work has both benefits and risks, self-performing work has benefits but no risks.

Accepted Answer

Self-performing work also has risks such as lack of expertise or resources, delays, and potential cost overruns. However, the risks may be more controllable since the organization has direct control over the work being performed.

Question 9

In the case of vendors, instead of issuing a request for proposal RFP) for a list of commodities, the project team issues a request for quote RFQ).

Accepted Answer

A Request for Proposal (RFP) is used when seeking solutions or services, while a Request for Quote (RFQ) is used for obtaining price quotes for specific commodities or products.

Question 10

In partnerships, both parties benefit from the success of a project but the external partner assumes the costs of less successful projects.

Accepted Answer

In partnerships, both parties typically share both the benefits of success and the responsibilities and costs associated with less successful outcomes. The specific distribution of costs and benefits depends on the terms of the partnership agreement.

Question 11

A request for quote focuses on meeting the project quality or schedule requirements.

Accepted Answer

A request for quote (RFQ) is a document issued by a company to request bids from vendors for a specific project or product. The primary focus of an RFQ is to obtain pricing information and delivery schedules from vendors. While quality and schedule requirements may be included in the RFQ, they are not the primary focus. The RFQ is used to compare bids from different vendors and choose the best-suited vendor based on factors such as price, quality, and schedule.

Question 12

The project team typically develops a description of the work that will be outsourced.

Accepted Answer

The answer of The project team typically develops a description...

Question 13

Work done by members of the organization rather than outsiders is work that is self-performed.

Accepted Answer

Work that is performed by members of the organization is called self-performed work.

Question 14

Fixed price contracts require the availability of at least one supplier that has the qualifications and performance history that assures the needs of the project can be met.

Accepted Answer

Fixed price contracts are agreements where the price is set regardless of the resources used or time expended. The availability of a qualified supplier with a strong performance history is beneficial but not a requirement for entering into a fixed price contract.

Question 15

Cost reimbursable contracts are most often used when the scope of work or the costs for performing the work are well known.

Accepted Answer

Cost reimbursable contracts are typically used when the scope of work or the costs for performing the work are uncertain or cannot be accurately estimated at the time of contract award. In these contracts, the seller is reimbursed for their actual costs incurred in performing the work, plus a fee or profit margin.

Question 16

The process of obtaining goods and services from providers within the organization is procurement.

Accepted Answer

Procurement refers to the process of obtaining goods and services from external providers or suppliers, not within the organization.

Question 17

On smaller projects, a procurement organization is established with expertise in purchasing.

Accepted Answer

On smaller projects, a procurement organization is often not established due to the scale of the project; instead, procurement activities may be managed by the project team or a small, dedicated group without the need for specialized procurement expertise.

Question 18

Vendors and suppliers usually require payments during the life of the contract.

Accepted Answer

Vendors and suppliers usually require payments during the life of the contract as per the agreed terms and conditions.

Question 19

A cost reimbursable contract with a fixed fee is used to encourage performance in areas critical to the project.

Accepted Answer

A cost reimbursable contract with a fixed fee primarily provides reimbursement for actual costs plus a fixed fee regardless of performance, rather than specifically encouraging performance in critical areas. Performance incentives would require a different contractual mechanism.

Question 20

The project team develops an RFQ based on the quality and schedule needs of the project and sends the RFQ to the identified qualified suppliers.

Accepted Answer

The project team develops an RFQ (Request for Quotation) based on the quality and schedule needs of the project and sends it to the identified qualified suppliers to collect quotations.

Quiz 12: Project Procurement and Closure