term1 Definition1term2 Definition2term3 Definition3
Please sign in to your Google account to access your documents:
What doctrine causes a party to relinquish rights under a contract because it knowingly fails to execute those rights?
a. Assignment of claimsb. Material breachc. Waiverd. Warranties
c. Waiver
Under the doctrine of waiver, a party can relinquish rights that it otherwise has under the contract. If the seller offers incomplete, defective, or late performance, and the buyer’s project manager knowingly accepts that performance, the buyer has waived its right to strict performance. In some circumstances, the party at fault may remain liable for provable damages, but the waiver will prevent the buyer from claiming a material breach and, thus, from terminating the contract. [Executing]Adams et al. 1997, 275Kerzner, 2009, 850
Which term describes those costs in a contract that are associated with two or more projects but are not traceable to either of them individually?
a. Variableb. Directc. Indirectd. Semivariable
c. Indirect
The nature of an indirect cost is such that it is neither possible nor practical to measure how much of the cost is attributable to a single project. These costs are allocated to the project by the performing organization as a cost of doing business. [Planning]PMI®, PMBOK® Guide, 2013, 202, 365
Contract type selection is dependent on the degree of risk or uncertainty facing the project manager. From the perspective of the buyer, the preferred contract type in a low-risk situation is—
a. Firm-fixed-priceb. Fixed-price-incentivec. Cost-plus-fixed feed. Cost-plus-a-percentage-of-cost
a. Firm-fixed-price
Buyers prefer the firm-fixed-price contract because it places more risk on the seller. Although the seller bears the greatest degree of risk, it also has the maximum potential for profit. Because the seller receives an agreed-upon amount regardless of its costs, it is motivated to decrease costs by efficient production. [Planning]Adams et al. 1997, 229–231PMI®, PMBOK® Guide, 2013, 363
The buyer has negotiated a cost-plus-incentive fee contract with the seller. The contract has a target cost of $300,000, a target fee of $40,000, a share ratio of 80/20, a maximum fee of $60,000, and a minimum fee of $10,000. If the seller has actual costs of $380,000, how much fee will the buyer pay?
a. $104,000b. $56,000c. $30,000d. $24,000
d. $24,000
Comparing actual costs with the target cost shows an $80,000 overrun. The overrun is shared 80/20 (with the buyer’s share always listed first). In this case 20% of $80,000 is $16,000, the seller’s share, which is deducted from the $40,000 target fee. The remaining $24,000 is the fee paid to the seller. [Planning and Closing]Garrett 2007, 123PMBOK® Guide, 2013, 364
Which term describes the failure by either the buyer or the seller to perform part or all of the duties of a contract?
a. Termination of contractb. Partial performancec. Breach of contractd. Contract waiver
c. Breach of contract
A breach of contract is a failure to perform either express or implied duties of the contract. Either the buyer or the seller can be responsible for a breach of contract. [Executing]Adams et al. 1997, 278Ward 2008, 45Kerzner, 2009, 849
In some cases, contract termination refers to—
a. Contract closeout by mutual agreementb. Contract closeout by delivery of goods or servicesc. Contract closeout by successful performanced. Certification of receipt of final payment
a. Contract closeout by mutual agreement
A contract can end in successful performance, mutual agreement, or breach of contract. Contract closeout by mutual agreement or breach of contract is called contract termination. [Closing]Garrett 2007, 185, PMBOK® Guide, 2013, 387
Significant differences between the seller’s price and your independent estimate may indicate all the following EXCEPT the—
a. SOW was not adequateb. Seller misunderstood the SOWc. Sellers failed to respondd. Project team chose the wrong contract type
d. Project team chose the wrong contract type
The contract type is typically dictated by the procurement SOW and chosen by the contracting officer. Independent estimates are a tool and technique in conduct procurements. [Executing]PMI®, PMBOK® Guide, 2013, 376
You are a contractor for a state agency. Your company recently completed a water resource management project for the state and received payment on its final invoice today. A procurement audit has been conducted. Formal notification that the contract has been closed should be provided to your company by the—
a. State’s project managerb. Person responsible for procurement administrationc. Project control officerd. Project sponsor or owner
b. Person responsible for procurement administration
The person responsible for procurement administration should provide, in writing, formal notification that the contract has been completed. Requirements for formal acceptance and closeout should be defined in the contract. [Closing]PMI®, PMBOK® Guide, 2013, 389
Which term describes contract costs that are traceable to or caused by a specific project work effort?
a. Variableb. Fixedc. Indirectd. Direct
d. Direct
Direct costs are always identified with the cost objectives of a specific project and include salaries, travel and living expenses, and supplies in direct support of the project. [Planning]PMI®, PMBOK® Guide, 2013, 202, 207, and 365
When a seller breaches a contract, the buyer cannot receive—
a. Compensatory damagesb. Punitive damagesc. Liquidated damagesd. Consequential damages
b. Punitive damages
Punitive damages are designed to punish a guilty party and, as such, are considered penalties. Because a breach of contract is not unlawful, punitive damages are not awarded. The other remedies listed are available to compensate the buyer’s loss. [Closing]Ward 2008, 357
Need help typing ? See our FAQ (opens in new window)
Please sign in to create this set. We'll bring you back here when you are done.
Discard Changes Sign in
Please sign in to add to folders.
Sign in
Don't have an account? Sign Up »
You have created 2 folders. Please upgrade to Cram Premium to create hundreds of folders!