Procurement Management

How should the project manager maintain focus on procurement seller selection

The project team is arguing about the prospective sellers who have submitted proposals. One team member argues for a certain seller, while another team member wants the project to be awarded to a different seller. The BEST thing the project manager should remind the team to focus on in order to make a selection is the:

1. procurement audits
2. procurement management plan
3. evaluation criteria
4. procurement documents

Answer 3. evaluation criteria

You have just started administrating a contract when management decides to terminate the contract. What should you do FIRST?

1. go back to request seller responses
2. go back to plan contracting
3. finish contract administration
4. go to contract closure

Answer 4. go to contract closure

How is Contract closure different from administrative closure?

Contract closure is different from administrative closure in that contract closure:

1. occurs before administrative closure
2. may be done more than once for each contract
3. is the only one to involve the customer
4. includes the return of property

Answer 1. occurs before administrative closure

Outsourcing and proprietary data

The project manager and project sponsor are discussing the project costs and whether it is better to have their own company do part of the project or hire another company to do the work. If they asked for your opinion, you might say it would be better to do the work yourself if:

1. your company resources are limited
2. you do not need control over the work
3. you have the expertise but you do not have the available manpower
4. there is a lot of proprietary data

Answer 4. there is a lot of proprietary data

Concern with choosing a subcontractor

Your project has just been fast tracked and you are looking at bringing in a subcontractor to complete networking quickly. There is no time to issue a request for proposal (REP), so you choose to use a company you have used many times before for software development. A PRIMARY concern in this situation is:

1. collusion between subcontractors.
2. the subcontractor’s evaluation criteria.
3. holding a bidder conference
4. the subcontractor’s qualifications

Answer 4. the subcontractor’s qualifications

Conflict in negotiation

Negotiations between two parties are becoming complex, so party A makes some notes that both parties sign. However, when the work is being done, party B claims that they are not required to provide an item they both agreed to during negotiations, because it was not included in the subsequent contract. In this case, party B is:

1. incorrect, because both parties must comply with what they agreed upon.
2. generally incorrect, because all agreements must be upheld.
3. correct because there was an offer.
4. generally correct, because both parties are only required to perform what is in the contract.

Answer 4. generally correct, because both parties are only required to perform what is in the contract.

Best type of contract to choose?

Your program manager has come to you, the project manager, for help with a bid for her newest project. You want to protect your company from financial risk. you have limited scope definition. What is the BEST type of contract to choose?

1. Time and material (T&M)
2. Fixed price (FP)
3. Cost plus percent of cost (CPPC)
4. Cost plus fixed fee (CPFF)

Answer 4. Cost plus fixed fee (CPFF)

A project manager is in the middle of creating a request for proposal (RFP). What part of the procurement process is he in?

1. Plan purchases and acquisitions
2. request seller responses
3. plan contracting
4. select sellers

Answer 3. plan contracting

Procurement process stage

The project team seems to like to argue; they have argued about everything. Luckily the project manager has set in place a reward system and team building sessions that will help and encourage the team to cooperate more. The latest thing they are arguing about is if they should complete a work package themselves or outsource the work to someone else. What part of the procurement process must they be in?

1. Request seller responses
2. select sellers
3. Contract administration
4. Plan purchases and acquisitions

Answer 4. Plan purchases and acquisitions

Emergency contract terms and conditions

Your company has an emergency and needs contracted work done as soon as possible. Under these circumstances, which of the following would be the MOST helpful to add to the contract?

1. A force majeure classic
2. Requirements as to which subcontractors can be used
3. A clear contract statement of work
4. Incentives

Answer 4. Incentives

With which type of contract is the seller MOST concerned about project scope?

1. fixed price
2. time and material
3. purchase order
4. cost plus fixed fee

Answer 1. fixed price

Which of the following is an advantage of centralized contracting?

Which of the following is an advantage of centralized contracting?
1. Gives more loyalty to the project
2. Allows a contracts person to work on a single project
3. Increases company expertise in contracting
4. Gives easier access to contracting expertise

Answer 3. Increases company expertise in contracting

Type of negotiation strategies

You are in the middle of a complex negotiation when the other party says, “We need to finish in one hour because I have to catch my plane.” That person is using which of the following negotiation strategies?

1. deadline
2. Good guy, bad guy
3. delay
4. extreme demands

Answer 1. deadline

Documentation and indexing of procurement records

As part of the records management system, you are trying to make sure that all records from the procurement are documented and indexed. Which of the following do you NOT have to worry about?

1. proposal
2. statement of work
3. negotiation process
4. terms and conditions

Answer 3. negotiation process

What is the advantage of a fixed price contract for the buyer?

The sponsor and the project manager are discussing what type of contract the project manager plans to use on the project. The buyer points out that the performing organization spent a lot of money hiring a design team to come up with the design.
The project manager is concerned that the risk for the buyer be as small as possible. An advantage of a fixed price contract for the buyer is:

1. risk is shared by all parties
2. cost risk is higher
3. cost risk is lower
4. there is little risk

Answer 3. cost risk is lower

A project performed under a cost reimbursable contract has finally entered the closing process. What must the buyer remember to do?

1. Make sure that the seller is not adding resources
2. Evaluate the fee he is paying
3. Decrease the risk rating of the project
4. Audit seller’s cost submittals

Answer 4. Audit seller’s cost submittals

In a fixed price (FP) contract, the fee or profit is?

In a fixed price (FP) contract, the fee or profit is:

1. applied as a line item to every invoice
2. determined with the other party at the end of the project
3. part of the negotiation involved in paying every invoice
4. unknown

Answer 4. unknown

Which of the following is the BEST thing for a project manager to do in the request seller responses part of procurement management?

1. Confirm that submittals have been sent
2. Answer sellers’ questions about bid documents
3. Confirm that changes to the contract are made
4. Evaluate risks

Answer 2. Answer sellers’ questions about bid documents

Which of the following activities occurs during plan purchases and acquisitions?

Which of the following activities occurs during plan purchases and acquisitions?
1. make-or-buy decisions
2. Creating the request for proposal or bid documents
3. Answering sellers’ questions about the bid documents
4. Creating the contract terms and conditions

Answer 1. make-or-buy decisions

What is one of the KEY objectives during negotiations?

1. Obtain a fair and reasonable price
2. Negotiate a price under the seller’s estimate
3. Ensure that all project risks are thoroughly delineated
4. Ensure that an effective communications management plan is established

Answer 1. Obtain a fair and reasonable price