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20 Cards in this Set
- Front
- Back
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1.The contract type that represents the highest risk to the seller is:
A. Fixed price plus incentive B. Cost reimbursable C. Fixed price D. Cost reimbursable plus incentive |
C
This question was easier than it may have first appeared to be. Fixed price is the highest risk to the seller since the seller must bear the risk of any cost overruns. Choice 'B' would provide the highest risk to the buyer. |
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2. You have been tasked with managing the seller responses to a request for proposal issued by your company. The seller responses were numerous,
and now you have been asked to rank the proposals from highest to lowest in terms of their response. What are you going to use as a means to rank the sellers? A. Expert judgment B. Request for quotation C. Seller response guidelines D. Seller selection matrix |
A
By this time you should be thinking that if you see "expert judgment," it is likely the right answer. Expert judgment is a favored technique in project management, and it is correct in this case because you are conducting the Conduct Procurements process. It is the only tool/technique among the potential answers that is a part of that process. |
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3. Make-or-buy analysis is a tool used in which process?
A. Plan Procurements B. Conduct Procurements C. Administer Procurements D. Analyze Procurements |
A
Make-or-buy analysis is a tool used during the Plan Procurements process where you are deciding which deliverables should be procured and which should be created internally. 'D' is not a real process, and 'B' and 'C' are incorrect because by the time you plan or administer procurements, you need to already know what you are going to make and what you are going to buy. |
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4. Which of the following represents the right sequence of processes?
A. Analyze Procurements, Plan Procurements, Conduct Procurements, Close Procurements B. Determine Make or Buy, Administer Procurements, Conduct Procurements, Close Procurements C. Plan Purchases and Acquisitions, Administer Procurements, Conduct Procurements, Close Procurements D. Plan Procurements, Conduct Procurements, Administer Procurements, Close Procurements |
D
Plan Procurements, Conduct Procurements, Administer Procurements, Close Procurements. The easiest explanation for this one is that 'A', 'B', and 'C' all contain at least one made-up process. |
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5. You are managing a large software project when the need for a new series of database tables is discovered. The need was previously unplanned, and your organization's staff is 100% utilized, so you decide to go outside the company to procure this piece of work. When you meet with prospective sellers, you realize that the scope of work is not completely defined, but everyone agrees that the project is relatively small, and your need is
urgent. Which type of contract makes the MOST sense? A. Fixed price B. Time and materials C. Open ended D. Cost plus incentive fee |
B
Time and Materials. Choice 'A' is incorrect because the scope is not defined enough to establish a fair fixed price. Choice 'C' is a made-up type of contract. Choice 'D' would not make sense in this case since the seller's costs are not abundantly clear, and this type of contract would create too much risk. |
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6. Your project plan calls for you to go through procurement in order to buy a specialty motor for an industrial robot. Because of patent issues, this motor is only available from one supplier that is across the country.
After investigation, you believe that you could procure the motor from this company for a price that is within your budget. What is your BEST course of action? A. Revisit the design and alter the specification to allow for a comparable motor B. Procure the motor from this source even though they are the sole source C. See if the component may be produced in another country, avoiding your country's patent issues D. Take the product out of the procurement management process |
B
This one may trick some who think that it is wrong to use a sole source. In many cases it is the only choice. 'A' would not be good since the design has nothing to do with his. 'C' is not necessary in this case, since the issue is not a legal issue. Choice 'D' would be completely invalid since the item is still being procured outside of your organization. |
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7. You have a supplier that is supplying parts to you under contract. The
terms and conditions give you the right to change some aspects of the contract at any time, and you need to significantly lower the quantities due to a change in project scope. How should you notify the supplier? A. Take them to lunch and explain the situation gently to preserve the relationship B. Have your attorney call their attorney C. Communicate with the supplier via e-mail D. Send thern a formal, written notice that the contract has been changed |
D
Choices 'A' and 'B' are verbal. Contract changes should always be made in writing! 'C' is written, but e-mail is not the proper forum for making important contractual changes. |
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8. Your project has been terminated immediately due to a canceIlation by
the customer. What action should you take FIRST? A. Call a meeting with the customer B. Enter Close Procurements C. Ask your team leads for a final status report. D. Verify this change against the procurement management plan |
B
There are plenty of questions on the PMP Exam that defy (trotzen, die Stirn bieten) common sense. This one asks for your FIRST action, and the most appropriate action is to enter the Close Procurements process. Choices 'A' and 'C' may be appropriate at some point, but if a project is terminated, Close Procurements needs to be performed. |
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9. You are evaluating proposals from prospective sellers.
What process are you involved in? A. Analyze Procurements B. Plan Procurements C. Conduct Procurements D. Administer Procurements |
C
If you are evaluating seller responses, you are performing the process of Conduct Procurements. The seller proposals are brought into this process, and they are screened, weighted, rated, and evaluated against the criteria. |
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10. Your project scope calls for a piece of software that will control a valve in a pressurized pipeline. Your company has some experience with this type of software, but resources are tight, and it is not part of your company's
core competency. You are considering involving other sellers but want to decide whether it is a better decision to produce this within your company or source it externally. What activity are you performing? A. Source selection B. Make-or-buy analysis C. Rational project procurement D. Source evaluation |
B
Make-or-buy analysis is the process where an organization decides whether it should produce the product internally or outsource it. This is done as part of the Plan Procurements process. |
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11. Your organization is holding a bidder conference to discuss the project with prospective sellers, and a trusted seller you have worked with many times in the past has asked if they can meet with the project manager the
day before the conference to cover some sensitive questions they do not wish to ask in front of other sellers. Should your organization meet with the seller? A. Yes, the more that prospective sellers know about the project, the better B. Yes, they are your primary seller, and past history should be factored in C. No, prospective suppliers should be kept on equal footing D. No, that would represent an illegal activity |
C
If you are involved in formal procurement, you should make every effort to keep sellers on equal footing. If one seller is provided with an advantage, it negates much of the value of the procurement process. |
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12. The most important thing to focus on in contract negotiations is:
A. To negotiate the best price possible for your project B. To maintain the integrity of the scope C. To negotiate a deal that both parties are comfortable with D. To make sure legal counsel or the contract administrator has approved your negotiating points |
C
The most important point is to create a deal that everyone feels good about. 'A' sounds like a good choice, but it is incorrect; the best possible price might not be fair to your seller, and that could create a bad scenario for the project in the future. 'B' is important, but that is not the primary focus of negotiations. 'D' may or may not be necessary, depending on the situation. |
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13. If a project manager was performing Administer Procurements, which of the following duties might he be performing?
A. Approving seller invoices B. Negotiating the contract C. Closing the contract D. Weighing seller responses |
A
One of the activities in Administer Procurements is to pay seller invoices or generate invoices if you are the seller. Make sure to learn the primary inputs, tools, techniques, and outputs for the processes. |
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14. Who generally bears the risk in a time and materials contract?
A. The buyer B. The seller C. The buyer early in the project and the seller later on D. It depends on the materials used |
A
In a time and materials contract, the buyer has to pay the seller for all time and materials, and often it involves an incomplete scope definition. Therefore, the buyer is the one most at risk. |
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15. Your company is outsourcing a project in an area where it has little experience. The procurement documents should be:
A. Completely rigid to ensure no deviation from sellers B. Flexible enough to encaurage creativity in seller responses C. Informal D. Reviewed by senior management |
B
In this scenario, you want sellers to respond with their own ideas. Procurement documents should be rigid enough to get responses to the same scope of work, and flexible enough to allow sellers to interject their own good ideas and creativity. Many people incorrectly choose 'A' because they assume that a rigid approach is almost always correct, but in this example, you do not have sufficient experience to rigidly manage the process, and you want your sellers to give you some guidance in their proposals. 'C' was clearly incorrect as procurement is something that should be done formally. 'D' is incorrect because senior management has many functions in an organization, but they would not be expected to review procurement documents. |
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16. The procurement statement of work should provide:
A. Enough detail for the prospective seller to complete the project B. Enough detail to describe the product, but not so much as to divulge trade secrets or sensitive information C. Enough detail to perform make-or-buy analysis D. Enough detail for the prospective seller to know if they are qualified to perform the work |
D
Procurement statements of work should be as complete and concise as possible. At a minimum, they should contain enough information for the seller to determine if they are qualified to do the work. |
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17. You are the project manager for a seller who has heen selected to construct an industrial kitchen for a large food services company.
Before the contract negotiations, the buyer confides in you that design is not finalized, and they want you to begin work with incomplete specifications. What type of contract should you ask for in negotiations? A. Fixed price B. Cost plus incentive fee C. Time and materials D. Cost plus fixed fee |
C
The major clue here is that the scope of work is not completely defined and they want you to begin work anyway. In that case, the project is at a higher risk, and a time and materials contract shifts much of that risk back to the buyer. |
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18. The product or result of the project is created during which process
group? A. Project lifecycle B. Administer Procurements C. Project executing D. Work package processing |
C
This question ties back to Chapter 3 - Process Framework. The actual work packages are completed (or executed) during the Executing process group. |
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19. Your customer has asked to meet with you and inspect the work you have completed to date on the project to ensure that it meets the contractual agreements. What is your customer manager engaged in?
A. Close Procurements B. Seller efficiency audit C. Seller administration D. Procurement performance reviews |
D
Procurement performance reviews are a tool of Administer Procurements, where the buyer arranges a meeting with the seller to review the seller's performance against the plan. This question presents a near-textbook case of this. |
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20. You have completed a project and delivered the full scope of the contract. The buyer agrees that you have technically satisfied the terms of the contract but is not satisfied with the end results. In this case, the contract
is: A. Contested (angefochten) B. Complete C. Poorly written D. Lacking terms and conditions |
B
If the scope of the contract is complete, no other terms were breached, and no claims against the contract have been filed, then the contract is complete. 'A' is not a good choice since no claim was filed. 'C' is not a good guess here since you don't have enough information to state that the problem was that the contract was poorly written. |
