Himanshu Agarwal

Not Just Another Project Manager

Project Procurement Management

  1. Which of the following BEST describes the primary purpose of conducting a procurement audit?
    • To ensure the seller is adhering to the contract terms.
    • To identify lessons learned in the procurement process.
    • To verify that the buyer’s procurement policies were followed.
    • To assess the financial health of the seller.
  2. A project team needs to acquire a complex software system. Due to the specialized nature of the product, there are only a few potential sellers. Which contract type would MOST likely be used in this situation?
    • Firm-Fixed-Price (FFP)
    • Cost-Plus-Fixed-Fee (CPFF)
    • Time and Materials (T&M)
    • Purchase Order
  3. During the Plan Procurement Management process, which document outlines the specific products, services, or results to be acquired from outside the project team?
    • Procurement Management Plan
    • Statement of Work (SOW)
    • Source Selection Criteria
    • Make-or-Buy Analysis
  4. Which of the following is NOT a tool or technique used in the Conduct Procurements process?
    • Bidder conferences
    • Proposal evaluation
    • Independent cost estimates
    • Negotiations
  5. A project manager is managing a contract where the seller is consistently late in delivering key components. What should the project manager do FIRST?
    • Immediately terminate the contract due to breach of agreement.
    • Issue a formal warning letter to the seller outlining the consequences of further delays.
    • Review the contract terms and conditions regarding delays and potential remedies.
    • Withhold payment until the outstanding components are delivered.
  6. What is the PRIMARY output of the Control Procurements process?
    • Closed procurements
    • Seller invoices paid
    • Approved change requests
    • Procurement performance reports
  7. Which of the following describes a unilateral contract?
    • An agreement where both parties make promises.
    • An agreement where one party makes an offer that can only be accepted by the other party’s performance.
    • A contract with clearly defined terms and conditions.
    • A contract that is implied rather than explicitly stated.
  8. During the source selection process, what is the purpose of using weighting systems for evaluation criteria?
    • To ensure all proposals are evaluated equally.
    • To emphasize the importance of certain criteria over others.
    • To simplify the comparison of complex proposals.
    • To comply with organizational procurement policies.
  9. A buyer is using a Cost-Plus-Incentive-Fee (CPIF) contract. The target cost is $100,000, the target fee is $10,000, and the sharing ratio is 80/20 (buyer/seller). If the actual cost is $90,000, what is the total amount the seller will be paid?
    • $98,000
    • $112,000
    • $110,000
    • $108,000
  10. What is the BEST time to involve legal counsel in the procurement process?
    • Only when disputes arise with sellers.
    • After the contract has been drafted by the project team.
    • Early in the Plan Procurement Management process.
    • Just before the contract is signed.
  11. Which of the following is a key benefit of a centralized procurement department?
    • Increased responsiveness to individual project needs.
    • Greater flexibility in negotiating contract terms.
    • Standardization of procurement processes and documents.
    • Enhanced understanding of specific project requirements.
  12. A project team is outsourcing a portion of the project work for the first time. What is the MOST important initial step?
    • Sending out requests for proposals to potential sellers.
    • Conducting a thorough make-or-buy analysis.
    • Developing the procurement management plan.
    • Defining the project requirements in detail.
  13. What is the purpose of a Request for Quotation (RFQ)?
    • To solicit technical proposals from potential sellers.
    • To obtain pricing information for well-defined products or services.
    • To invite sellers to participate in a bidding process.
    • To negotiate the terms and conditions of a contract.
  14. Which contract type carries the MOST risk for the buyer?
    • Firm-Fixed-Price (FFP)
    • Cost-Plus-Award-Fee (CPAF)
    • Time and Materials (T&M)
    • Fixed-Price Incentive Fee (FPIF)
  15. What is a key objective of the Close Procurements process?
    • To ensure all deliverables have been accepted.
    • To formally acknowledge the completion of the contractual relationship.
    • To identify potential sellers for future projects.
    • Both A and B.
  16. During proposal evaluation, which technique involves assigning numerical scores to different aspects of each proposal based on predefined criteria?
    • Screening system
    • Weighting system
    • Independent estimates
    • Negotiation
  17. Which of the following is a common output of the Plan Stakeholder Engagement process that can significantly influence the procurement strategy?
    • Stakeholder register
    • Stakeholder engagement plan
    • Communications management plan
    • Risk management plan
  18. What is the purpose of a performance bond in a contract?
    • To guarantee the seller will complete the work as specified.
    • To protect the buyer against the seller’s financial instability.
    • To ensure the seller pays its subcontractors on time.
    • To provide a financial incentive for early completion.
  19. In a Time and Materials (T&M) contract, what is the buyer’s primary risk?
    • Unexpected increases in material costs.
    • The final cost of the project may be higher than anticipated.
    • The seller may not have the necessary expertise.
    • Delays in project completion due to seller inefficiency.
  20. What is the BEST approach for handling changes to a contract?
    • Implement the changes immediately to keep the project on schedule.
    • Only accept changes that are absolutely necessary.
    • Follow a formal change control process outlined in the contract.
    • Negotiate the cost and schedule impact after the change is implemented.
  21. Which of the following is a key consideration when determining the type of contract to use?
    • The buyer’s preference for risk.
    • The complexity of the requirements.
    • The availability of potential sellers.
    • All of the above.
  22. What is the purpose of bidder conferences (or contractor conferences)?
    • To allow sellers to present their proposals to the buyer.
    • To ensure all prospective sellers have a clear and common understanding of the procurement requirements.
    • To negotiate the final contract terms with the selected seller.
    • To evaluate the technical capabilities of potential sellers.
  23. Which document describes how the procurement processes will be planned, executed, and controlled?
    • Project Management Plan
    • Procurement Management Plan
    • Contract
    • Statement of Work (SOW)
  24. What is the term for a situation where a seller fails to meet the obligations specified in the contract?
    • Breach of contract
    • Force majeure
    • Indemnification
    • Warranty
  25. Which of the following is a characteristic of a well-defined Statement of Work (SOW)?
    • It is flexible and allows for changes as the project progresses.
    • It clearly and concisely describes the work to be done, deliverables, and timelines.
    • It focuses primarily on the high-level objectives of the procurement.
    • It includes pricing details and payment terms.
  26. What is the purpose of a make-or-buy analysis?
    • To determine whether a particular work package should be outsourced or performed by the project team.
    • To evaluate the capabilities of potential sellers.
    • To develop the criteria for selecting a seller.
    • To estimate the cost of the procured items or services.
  27. Which contract type is often used when the exact scope of work is not clearly defined at the outset?
    • Firm-Fixed-Price (FFP)
    • Cost-Plus-Fixed-Fee (CPFF)
    • Fixed-Price Incentive Fee (FPIF)
    • Purchase Order
  28. What is the significance of “privity of contract”?
    • It refers to the legal relationship between the parties who entered into the contract.
    • It ensures that all subcontractors are bound by the terms of the main contract.
    • It allows third parties to enforce the terms of a contract.
    • It defines the ethical obligations of the contracting parties.
  29. During the Control Procurements process, what is used to formally accept and document that the seller has met the contract requirements?
    • Inspection reports
    • Performance reports
    • Payment approvals
    • Contract closure documentation
  30. Which of the following is a potential disadvantage of outsourcing project work?
    • Increased control over the project schedule.
    • Reduced need for specialized skills within the project team.
    • Loss of control over the outsourced work.
    • Lower overall project costs.
  31. What is the purpose of a Request for Proposal (RFP)?
    • To obtain pricing for standard off-the-shelf items.
    • To solicit detailed technical and cost proposals from potential sellers.
    • To invite sellers to negotiate contract terms.
    • To gather information about potential sellers’ qualifications.
  32. In a Cost-Plus-Award-Fee (CPAF) contract, the award fee is typically based on what?
    • The seller’s ability to complete the work under budget.
    • The buyer’s subjective evaluation of the seller’s performance.
    • The seller’s adherence to the project schedule.
    • The seller’s overall profitability on the contract.
  33. What is the BEST way to handle a conflict with a seller during contract execution?
    • Immediately escalate the issue to senior management.
    • Refer to the dispute resolution process outlined in the contract.
    • Publicly criticize the seller’s performance to exert pressure.
    • Unilaterally change the contract terms to resolve the issue.
  34. Which of the following is a key input to the Plan Procurement Management process?
    • Project budget
    • Project schedule
    • Risk register
    • All of the above
  35. What is the purpose of source selection criteria?
    • To define the work that needs to be procured.
    • To evaluate seller proposals and select the most qualified seller.
    • To establish the terms and conditions of the contract.
    • To track the performance of the selected seller.
  36. Which contract type provides the LEAST incentive for the seller to control costs?
    • Firm-Fixed-Price (FFP)
    • Cost-Plus-Fixed-Fee (CPFF)
    • Fixed-Price Incentive Fee (FPIF)
    • Time and Materials (T&M)
  37. What is a common reason for contract termination for convenience?
    • The seller has breached the contract terms.
    • The buyer no longer needs the goods or services.
    • The seller has become insolvent.
    • There has been a significant change in government regulations.
  38. During the Conduct Procurements process, what is the purpose of negotiations?
    • To finalize the contract terms and conditions with the selected seller.
    • To evaluate the technical capabilities of potential sellers.
    • To clarify the buyer’s requirements for all potential sellers.
    • To present the buyer’s preferred solution to the sellers.
  39. Which of the following is a tool or technique used in the Close Procurements process?
    • Performance reviews
    • Inspections
    • Procurement audits
    • Payment systems
  40. What is the potential impact of poorly defined procurement requirements?
    • Increased competition among potential sellers.
    • Difficulty in evaluating seller proposals objectively.
    • Reduced risk of scope creep.
    • Lower overall procurement costs.
  41. Which document formally establishes the buyer-seller relationship and outlines the obligations of each party?
    • Statement of Work (SOW)
    • Procurement Management Plan
    • Contract
    • Request for Proposal (RFP)
  42. In a Fixed-Price Incentive Fee (FPIF) contract, what happens if the seller exceeds the target cost?
    • The seller receives the target fee regardless of the actual cost.
    • The buyer and seller share the cost overrun according to the sharing ratio.
    • The seller is penalized and receives a reduced fee.
    • The contract is renegotiated.
  43. What is the significance of force majeure in a contract?
    • It defines the payment terms and schedule.
    • It specifies the warranties provided by the seller.
    • It outlines unforeseen events that may excuse a party from fulfilling its obligations.
    • It establishes the intellectual property rights related to the procured items.
  44. Which of the following is a key benefit of using standard contract templates?
    • They can be easily customized for any type of procurement.
    • They help ensure consistency and reduce the risk of legal issues.
    • They eliminate the need for legal review.
    • They always offer the most favorable terms for the buyer.
  45. During the Monitor and Control Project Work process, what information might trigger a change request related to a procurement?
    • A delay in a seller’s delivery schedule.
    • A positive performance report from a seller.
    • The successful completion of a contract milestone.
    • The receipt of an invoice from a seller.
  46. What is the BEST approach to managing multiple sellers on a large project?
    • Treat each seller independently and avoid communication between them.
    • Establish clear communication channels and coordination mechanisms.
    • Rely on the sellers to manage their own interfaces.
    • Only communicate with the primary seller and expect them to manage subcontractors.
  47. Which of the following is NOT a typical element of a Procurement Management Plan?
    • Types of contracts to be used.
    • Seller selection criteria.
    • Risk management strategies for procurements.
    • Detailed technical specifications of the procured items.
  48. What is the purpose of a letter of intent (LOI) in procurement?
    • To formally award a contract to a seller.
    • To express the buyer’s preliminary commitment to a seller before a formal contract is signed.
    • To document the detailed requirements of the procurement.
    • To provide feedback to unsuccessful bidders.
  49. In which project management process group is the “Conduct Procurements” process located?
    • Initiating
    • Planning
    • Executing
    • Monitoring and Controlling
  50. What is the term for a clause in a contract that limits one party’s liability to the other?
    • Indemnification clause
    • Warranty clause
    • Limitation of liability clause
    • Termination clause
Answers
  1. To identify lessons learned in the procurement process.
  2. Cost-Plus-Fixed-Fee (CPFF)
  3. Statement of Work (SOW)
  4. Independent cost estimates
  5. Review the contract terms and conditions regarding delays and potential remedies.
  6. Closed procurements
  7. An agreement where one party makes an offer that can only be accepted by the other party’s performance.
  8. To emphasize the importance of certain criteria over others.
  9. $112,000
  10. Early in the Plan Procurement Management process.
  11. Standardization of procurement processes and documents.
  12. Conducting a thorough make-or-buy analysis.
  13. To obtain pricing information for well-defined products or services.
  14. Time and Materials (T&M)
  15. Both A and B.
  16. Weighting system
  17. Stakeholder engagement plan
  18. To guarantee the seller will complete the work as specified.
  19. The final cost of the project may be higher than anticipated.
  20. Follow a formal change control process outlined in the contract.
  21. All of the above.
  22. To ensure all prospective sellers have a clear and common understanding of the procurement requirements.
  23. Procurement Management Plan
  24. Breach of contract
  25. It clearly and concisely describes the work to be done, deliverables, and timelines.
  26. To determine whether a particular work package should be outsourced or performed by the project team.
  27. Cost-Plus-Fixed-Fee (CPFF)
  28. It refers to the legal relationship between the parties who entered into the contract.
  29. Contract closure documentation
  30. Loss of control over the outsourced work.
  31. To solicit detailed technical and cost proposals from potential sellers.
  32. The buyer’s subjective evaluation of the seller’s performance.
  33. Refer to the dispute resolution process outlined in the contract.
  34. All of the above
  35. To evaluate seller proposals and select the most qualified seller.
  36. Cost-Plus-Fixed-Fee (CPFF)
  37. The buyer no longer needs the goods or services.
  38. To finalize the contract terms and conditions with the selected seller.
  39. Procurement audits
  40. Difficulty in evaluating seller proposals objectively.
  41. Contract
  42. The buyer and seller share the cost overrun according to the sharing ratio.
  43. It outlines unforeseen events that may excuse a party from fulfilling its obligations.
  44. They help ensure consistency and reduce the risk of legal issues.
  45. A delay in a seller’s delivery schedule.
  46. Establish clear communication channels and coordination mechanisms.
  47. Detailed technical specifications of the procured items.
  48. To express the buyer’s preliminary commitment to a seller before a formal contract is signed.
  49. Executing
  50. Limitation of liability clause

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