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Question 1

It includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team. It includes the management and control processes required to develop and administer agreements such as contracts, purchase orders, memoranda of agreements (MOAs), or internal service level agreements (SLAs).

Answer 1

Project Procurement Management

Question 2

The process of documenting project procurement decisions, specifying the approach, and identifying potential sellers.

Answer 2

Plan Procurement Management

Question 3

The process of obtaining seller responses, selecting a seller, and awarding a contract.

Answer 3

Conduct Procurements

Question 4

The process of managing procurement relationships, monitoring contract performance, making changes and corrections as appropriate, and closing out contracts.

Answer 4

Control Procurements

Question 5

It should clearly state the deliverables and results expected, including any knowledge transfer from the seller to the buyer.

Answer 5

Contract

Question 6

The key benefit of this process is that it determines whether to acquire goods and services from outside the project and, if so, what to acquire as well as how and when to acquire it.

Answer 6

Plan Procurement Management

Question 7

This category of contracts involves setting a fixed total price for a defined product, service, or result to be provided. These contracts should be used when the requirements are well defined and no significant changes to the scope are expected.

Answer 7

Fixed-price contracts

Question 8

The most used contract type. It is favored by most buying organizations because the price for goods is set at the outset and not subject to change unless the scope of work changes.

Answer 8

Firm fixed price (FFP)

Question 9

This fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation from performance, with financial incentives tied to achieving agreed-upon metrics. Typically, such financial incentives are related to cost, schedule, or technical performance of the seller. Under these contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller.

Answer 9

Fixed price incentive fee (FPIF)

Question 10

This type is used whenever the seller’s performance period spans a considerable period of years, or if the payments are made in a different currency. It is a fixed-price contract, but with a special provision allowing for predefined final adjustments to the contract price due to changed conditions, such as inflation changes or cost increases (or decreases) for specific commodities.

Answer 10

Fixed price with economic price adjustments (FPEPA)

Question 11

This category of contract involves payments to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit. This type should be used if the scope of work is expected to change significantly during the execution of the contract.

Answer 11

Cost-reimbursable contracts

Question 12

The seller is reimbursed for all allowable costs for performing the contract work and receives a fixed-fee payment calculated as a percentage of the initial estimated project costs. Fee amounts do not change unless the project scope changes.

Answer 12

Cost plus fixed fee (CPFF)

Question 13

The seller is reimbursed for all allowable costs for performing the contract work and receives a predetermined incentive fee based on achieving certain performance objectives as set forth in the contract. If the final costs are less or greater than the original estimated costs, then both the buyer and seller share costs from the departures based upon a prenegotiated cost-sharing formula, for example, an 80/20 split over/under target costs based on the actual performance of the seller.

Answer 13

Cost plus incentive fee (CPIF)

Question 14

The seller is reimbursed for all legitimate costs, but the majority of the fee is earned based on the satisfaction of certain broad subjective performance criteria that are defined and incorporated into the contract.

Answer 14

Cost plus award fee (CPAF)

Question 15

They’re a hybrid type of contractual arrangement with aspects of both cost-reimbursable and fixed-price contracts. They are often used for staff augmentation, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed.

Answer 15

Time and material contracts (T&M)

Question 16

It’s used to determine whether work or deliverables can best be accomplished by the project team or should be purchased from outside sources. It may use payback period, return on investment (ROI), internal rate of return (IRR), discounted cash flow, net present value (NPV), benefit/cost analysis (BCA).

Answer 16

Make-or-buy analysis

Question 17

It’s developed from the project scope baseline and defines only that portion of the project scope that is to be included within the related contract. It describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results.

Answer 17

Statement of work (SOW)

Question 18

It’s sometimes used when contracting for services. Similar to the procurement SOW.

Answer 18

Terms of Reference (TOR)

Question 19

The procuring organization may elect to either prepare its own independent estimate or have a cost estimate prepared by an outside professional estimator to serve as a benchmark on proposed responses.

Answer 19

Independent Cost Estimates

Question 20

The key benefit of this process is that it selects a qualified seller and implements the legal agreement for delivery. The end results of the process are the established agreements including formal contracts.

Answer 20

Conduct Procurements

Question 21

(Also called contractor conferences, vendor conferences, and pre-bid conferences) they’re meetings between the buyer and prospective sellers prior to proposal submittal. They are used to ensure that all prospective bidders have a clear and common understanding of the procurement, and no bidders receive preferential treatment.

Answer 21

Bidder Conferences

Question 22

The key benefit of this process is that it ensures that both the seller’s and buyer’s performance meet the project’s requirements according to the terms of the legal agreement.

Answer 22

Control Procurements

Question 23

Contested changes and potential constructive changes are those requested changes where the buyer and seller cannot reach an agreement on compensation for the change or cannot agree that a change has occurred.

Answer 23

Claims Administration

Question 24

If the parties themselves do not resolve a claim, it may have to be handled in accordance with:

Answer 24

alternative dispute resolution (ADR)

Question 25

The buyer, usually through its authorized procurement administrator, provides the seller with formal written notice that the contract has been completed. The project management team should have approved all deliverables prior to closure.

Answer 25

Closed Procurements