Chuck Wright Pmp Study Group - Chapter 12

Front 1

What is Privity?

Back 1

It is the legal relationship between a buyer and a seller. You may not have privity with a subcontractor because you don't have a contract with them.

Front 2

What is a contract work breakdown structure?

Back 2

Part of the WBS maintained by the seller.

Front 3

What is an Organizational WBS?

Back 3

It relates the work packages to the organizational structure?

Front 4

Name several negotiation tactics?

Back 4

1) Good Guy / Bad Guy - one person acts if they agree with the other side while other person opposes the other side.

2) Lying - Person doesn't tell the truth.

3) Missing Man - One party cannot agree to what is on the table. He may state they can only agree to a "different form" of what is on the table.

Front 5

What is "Fait Accompli"?

Back 5

The topic is over and cannot be re-opened again.

Front 6

What is "Force Mjeure"?

Back 6

Excuses a party from liability if some unforseen event beyond the control of a party that prevents it from performing it obligations under the contrcat. (i.e. an act of God).

Front 7

What does "contract transfer" mean?

Back 7

It involves shifting the negative impact of a threat along with owenership of the response to a third party.

Front 8

What does "exploit" mean?

Back 8

This helps to eliminate the uncertainty assoicated with a particular upside risk by making the risk definitely happen.

Front 9

In a contract, "words" prevail over "figures." True or False?

Back 9

True.

Front 10

Things to keep in mind when answering "contract" questions during the PMI test.

Back 10

1) Do we have an "over run" or an "under run"? How much?

2) Will sellers fee be increased or decreased? How much? Over run * sellers %

3) Seller fee = Target fee - adjustment.

4) Is the fee between the Max & Min fee described in the contract.

5) Figure out impact to seller in every problem.

Front 11

What is a "design statement of work"?

Back 11

Describes how the buyer wants the seller to accomplish the work.

Front 12

What is a "functional statement of work"?

Back 12

Describes the functional charecteristics required in the end product.

Front 13

What is a "performance statement of work"?

Back 13

Defines performance parameters that product must be able to meet.

Front 14

What is a "statement of objective"?

Back 14

Describes the output buyer is looking for from the seller.

Front 15

What does "terminate for convenience" mean?

Back 15

This must be specified in the contract. It means that one party feels it is in thier best interest to end the contract.

Front 16

What is a "Time & Materials" contract?

Back 16

This is often used when buying services. This is also used when you need a contactor quickly and you don't have a definite quantity of the product set.

Front 17

What is a "fixed price contract?"

Back 17

A fixed price contract is used for acquiring well defined goods, products or services. Uses a well defined Statement of work. Very common type of contract. If costs are more than agreed upon amount, seller bears burden. Buyer has least cost risk. Seller is mostly concerned with procurement SOW which helps them determine price to charge.

Front 18

What is a "cost plus incentive contract?"

Back 18

Allows seller to be paid for actual costs plus a fee if specific contract performance objectives are met

Front 19

What is a "procurement audit"?

Back 19

It is a structured review of the procurement process.

Front 20

What is a "quality audit"?

Back 20

It is a review used to identify inefficient, ineffective policies, processes and proceedures.

Front 21

What is "Centralized Contracting?"

Back 21

A single contract manager handles multiple contracts.

With centralized contracting you typically see increased expertise in contracting, standardized company practices. Many times it is hard to get help in this situation because they may be working many contracts. Clearly defined carreer paths are common in centralized contracting.

Front 22

What is "Decentralized Contracting?"

Back 22

A contract manager is assigned to a project full time and reports to the project manager.

With decentralized contracting, its easier to get access to contracting experience, they tend to have more loyalty to the project and there is usually easier access to contracting experience. Sometimes there is duplication of experience and less standardization of contracting practice from one project to another.

Front 23

Name several ways to handle disputes.

Back 23

1) Negotiation - This is the preferred method of settling claims and disputes.

2) Mediation - Bringing in a third party to help reach a settlement on claims or dispute.

3) Arbitration - Bringing in a third party to make a decision regarding claim or dispute.

4) Litigation - Involves using courts to settle claim or dispute. (Least desirable Option).

Front 24

Descibe a "cost plus award fee" type of contract?

Back 24

The seller is reimbursed for all legitimate costs. Majority of fee is only based on satisfaction of certain

Front 25

Describe a "firm fixed price" type of contract?

Back 25

The seller is paid a price in contract as long as they can deliver.

Front 26

Describe a "fixed price with Point of Total Assumption (PTA)" type of contract?

Back 26

This type of contract is often used when the sellers performance period spans a long period of time and special provisions are needed for changing conditions.

Front 27

Describe a "time and materials" contract?

Back 27

The seller is paid a fixed price per hour or day and then reimbursed for costs.

Front 28

Describe a "Cost plus fixed fee" contract?

Back 28

The sellers profit remains the same when the contract runs over the estimated costs.

Front 29

Describe a "cost plus percentage cost" contract?

Back 29

A seller's profit goes up if the contract over runs the established costs.

Sellers profit goes down if contract runs under the estimated costs.

Front 30

What are the 5 elements of a contract?

Back 30

1) Capacity = The authority to sign contracts for your organization.

2) Consideration = Money paid for the work performed under the contract.

3) Offer = What the buyer is willing to pay the seller for the work of the contract.

4) Legal = Purpose fo which the work will be completed.

5) Acceptance = What the seller agrees to take in payment for the work performed.

Front 31

What is a "proposal"?

Back 31

Also called a bid, tender, or quote, a proposal is a document prepared by the seller to explain the costs, services, terms, etc., by which the seller will meet the terms of the contract with the buyer.

Front 32

What are some other terms for "buyer"?

Back 32

1) Client

2) Customer

3) Prime contractor

4) Contractor

5) Acquiring organization

6) Government agency

7) Service requestor

8) Purchaser

Front 33

What are some other terms for "seller"?

Back 33

1) Contractor

2) Subcontractor

3) Vendor

4) Supplier

5) Service provider

Front 34

What is a "teaming agreement"?

Back 34

A legal, contractural agreement between two or more entities to for a partnership or joint venture.

Front 35

What are 2 noncompetitive forms of procurement?

Back 35

1) Sole Source: There is only one provider of the needed service or product.

2) Single Source: There are multiple sources from which the buyer sleects one, based upon various reasons or criteria.

Front 36

Procurement documentation, organizational process assets updates, change requests, and project management plan updates are tools and techniques for which Project Procurement Management process?

Back 36

Administer Procurements

Front 37

Selected Sellers, procurement contract award, resource calendars, change requests, project management plan updates, and project document updates are outputs for which Project Procurement management process?

Back 37

Conduct Procurements

Front 38

What is the purpose of the contract SOW?

Back 38

To describe the work the contractor will provide in the enough detail that sellers can determine whether they can provide the needed services.

Front 39

What are the characteristivs of a time and material contract?

Back 39

1) The buyer and seller both share the risk of costs.

2) It is a cross between fixed-price and cost plus contracts.

3) The unit price is established but not the quanitity.

4) The scope of work does not have to be known.

5) The total price of the contract is initially unknown.

Front 40

What are some characteristics of a contract?

Back 40

1) It is a formal, mutaully binding agreement between parties.

2) Terms are enforceable by the legal system.

3) Changes must be formally controlled and in writing.

4) All requirements should be stated in the contract.

5) All contractual requirements must be met.

6) All requirements including reporting requirements, payments terms, ownership and copyright terms, etc. must be documented in the the contract.

Front 41

What is PTA (Point of Total Assumption)?

Back 41

PTA is the not to exceed cost, set by the buyer, in a Fixed Price Plus Incentive Fee. When the acutal costs differ from the estimated costs, the buyer and seller split the difference along an agreed-upon split. Any costs above the PTA must be paid solely by the seller.

Front 42

What does the term "completion" mean with regards to procurement?

Back 42

"Completion" is the normal end of a contract after all the work is completed.

Front 43

What does the term "termination" mean with regards to procurement?

Back 43

Termination is the early end of the contract before some aspect of the contract is complete.

Front 44

What does "termination for cause" mean?

Back 44

"Termination for cause" means the contract is

Front 45

What does "completion" mean with regards to contracts?

Back 45

Completion is the normal end of a contract after all the work is completed.

Front 46

What does "termination" mean with regards to contracts?

Back 46

Termination is the early end of the contract before some aspect of the contract is complete.

Front 47

What does "termination by mutual agreement" mean with regards to contracts?

Back 47

Termination by mutual agreement means the contract ends because both parties feel it is in their best interest to end the contract even though there are still obligations on the contract.

Front 48

What does "termination for convenience" mean with regards to contracts?

Back 48

Termination for convenience means that one of the parties, usually the buyer, has the right granted to them in the contract to terminate the contract with or without giving a reason.

Front 49

What are some other terms for "contract"?

Back 49

1) Agreement

2) Understanding

3) Subcontract

4) Purchase Order

Front 50

What is meant by "procurement"?

Back 50

Purchasing goods, services, or results typically from outside the government.

Front 51

What are the 4 Project Procurement Mangement processes?

Back 51

1) Plan Procurements

2) Conduct Procurements

3) Administer Procurements

4) Close Procurements

Front 52

What are the 3 main types of contracts?

Back 52

1) Fixed-price or lump sum contracts

2) Time and material or unit price contracts

3) Cost-reimbursable or cost plus contracts

Front 53

What are some of the components of a procurement management plan?

Back 53

1) Contract types

2) Procurement documents to be used

3) Procedure for managing multiple vendors

4) Processes for handling make-or-buy decisions

5) Outline of requirements for contract WBS

6) List of prequailified sellers

7) Metrics to be used to evaluate and manage sellers

Front 54

Which factors are considered in a make-or-buy analysis?

Back 54

1) Cost

2) Technical ability of the organization to do the work.

3) Capacity of the organization's facilities.

4) Available personnel

5) Time required to complete the project

Front 55

What are some examples of source selection criteria (a tool and technique for Plan Procurements)?

Back 55

1) Purchase Price

2) Understanding of need

3) Financial capacity

4) References

5) Managment approach

Front 56

What is the formula for price?

Back 56

Price = Cost + Profit

Price is a business decision about what the buyer is expected to pay for the services, product, or result.

Front 57

Which types of items or work should not be contracted out?

Back 57

1) Innovative products

2) Trade secrets

3) High-profile products

4) Products that require strict quality control

Front 58

What are the characteristics of a "cost plus" contract?

Back 58

1) The seller is reimbursed for actual costs plus a profit.

2) The buyer has the greatest risk for price unless a ceiling is established on cost and / or price.

3) It is used when there is uncertainty about the project or when the buyer is looking for a solution rather than a specified product.

4) Incentives or penalties can be included.

Front 59

What are the characteristics of a "fixed-price" contract?

Back 59

1) Risk (of cost) is highest for the seller.

2) It is the most common type of contract.

3) The seller sets a fixed price, including costs to compensate for risks.

4) If the scope is not well-defined, the buyer risks not getting what was needed; the seller risks time and cost.

5) Incentives or penalities can be added.

Front 60

Which Project Procurement Management process occurs in the Closing Process Group?

Back 60

Close Procurements

Front 61

Bidder conferences, proposal evaluation techniques, independent estimates, procurement negotiations, expert judgement, advertising, and internet searches are tools and techniques for which Project Procurement Management process?

Back 61

Conduct Procurements

Front 62

Which procurement documents are generally used with each type of contract?

Back 62

1) RFB (request for bid), IFB (invitation for bid) for fixed-price contracts

2) RFQ (request for quote) for time and material contracts

3) RFP (request for proposal) for cost plus contracts

Front 63

Which process concerns itself with completing each procurement?

Back 63

The Close Procurement Process.

Front 64

Describe what "corrective action" is?

Back 64

Action taken to bring the project back in line with the project plan.

Front 65

Describe what "preventive action" is?

Back 65

Action taken to reduce negative results from risks.

Front 66

True or False:

Risk may have a positive or negative effect on a project?

Back 66

True

Front 67

When does "cumulative CPI" usually stabilize?

Back 67

Usually, when the project is 20% complete.