18. Procurement Management (Knowledge Area 9)

Question 1

fixed-price economic price adjustment contract

Answer 1

used to adjust the fixed costs over the life of the contract due to economic conditions such as inflation

Question 2

independent cost estimate

Answer 2

generally made by hiring an outside professional estimator to provide a benchmark to determine whether the bids from a seller are adequate for the project

Question 3

source selection criteria

Answer 3

= used to evaluate the sellers and can include things such as costs, delivery dates, experience, financial stability, and management experience

Question 4

preapproved seller lists

Answer 4

= a list of sellers that have been properly vetted by the organization and can be used as potential sellers on a project

Question 5

Process: Plan Procurement Management

Answer 5

A process that determines what the project team should procure, if anything, and how it should be done.

Question 6

When conducting procurement management for a project, what is one of the first things a project manager should research before awarding the contract?

Answer 6

laws and regulations

Question 7

The project manager has negotiated a fixed-price contract with a steel supplier. The contract is for 4 years. The seller has requested that the cost be increased by 4% every year due to inflation and fuel costs.

What type of contract should the project manager use?

Answer 7

fixed-price economic price adjustment contract

Question 8

The project manager has met with the team, and they are currently deciding whether they should develop internal software to meet the needs of the project sponsor or purchase external commercial software.

What process are they currently engaged in?

Answer 8

Process: Plan Procurement Management

Question 9

As the project manager is getting ready to send out the request for proposals for the project, he contacts the PMO for a list of properly vetted sellers.

What is the name of this list?

Answer 9

preapproved seller lists

Question 10

The project manager and the team have come up with a few different criteria they will use when selecting a seller. The criteria include costs, qualifications, licenses, and financial stability of the seller.

What best describes these criteria?

Answer 10

source selection criteria

Question 11

While working on the office renovation project, the project manager has received multiple bids from different vendors. What the project manager thought would be a cost-effective contract turned out to be very expensive. The project manager then hires a professional estimator to determine what the contract should cost.

What is the project manager looking for?

Answer 11

independent cost estimate

Question 12

The project manager and the team have determined that they will procure the installation and configuration of the telephone systems for the new computer network. They have determined that the type of agreement they will use is a cost-plus-fixed-fee contract.

What project document will specify the type of contract that will be used?

Answer 12

procurement strategy document

Question 13

The project manager has met with over six different sellers and has negotiated with them. Finally, he has selected one of the sellers and awarded the contract.

What process group are these activities part of?

Answer 13

Executing - Conduct Procurement

will result in selecting a seller and awarding a contract

Question 14

The project manager is set to start the process of conduct procurement.

What should the project manager have received before starting this process?

Answer 14

seller proposals

should be acquired before the project manager can negotiate and select the seller

Question 15

While working on a large government contract to construct a bridge, the project manager determines that meeting individual sellers will take an extreme amount of time.

What can the project manager do to give out information about the project to multiple sellers in a time-effective manner?

Answer 15

vendor conferences (aka bidder conferences)

Question 16

The project manager has selected a seller to work on a contract that requires insurance and performance bonds. The insurance and performance bonds must be of a certain amount in order for the seller to meet the buyer’s compliance requirements.

Where should the project manager include the insurance and performance bonds?

Answer 16

agreement

An agreement can contain elements such as pricing and payment terms, inspections, warranties, incentives and penalties, and insurance and performance bonds.

Question 17

After being awarded the contract, the seller has begun to do the work listed in the contract. The project manager has also started to inspect the work to ensure that it is getting done according to the contract.

What process best describes these activities?

Answer 17

Process: Control Procurements

Question 18

Process: Control Procurements

Answer 18

part of the monitoring and controlling process groups in which both the buyer and seller meet the requirements outlined in the contract.

Question 19

While working on a lengthy contract, the seller decides to complete more work than was listed in the contract to ensure the quality of the work. The seller then submits an invoice for additional work. The project manager disagrees with how much extra the seller is charging for the additional work.

What should the project manager do next?

Answer 19

Submit the invoice to claims administration and negotiate a settlement.

Question 20

claim

Answer 20

a contested charge that occurs when a seller does additional work that is not listed in a contract; best way to resolve a claim is to negotiate a settlement

Question 21

After meeting with several sellers, a project manager feels that the best contract for the project would be one in which the project team purchases all of the materials to redesign the network and pays the seller a flat fee.

What contract would best fit this scenario?

Answer 21

cost-plus-fixed-fee contract (one of two types of cost-reimbursable contracts)

Question 22

What are the two subtypes of cost-reimbursable contracts?

Answer 22

cost-plus-fixed-fee contracts =

cost-plus-incentive-fee contracts =

Question 23

cost-plus-fixed-fee contract

Answer 23

the project team will purchase all the project materials and then pay the seller a flat fee for their profits

Question 24

What should the project manager do prior to the closure of procurement?

Answer 24

approve all deliverables; should be closed with a formal written notice to the seller that all work has been completed

Question 25

When negotiating a contract between a buyer and seller, what should the project manager look for in terms of pricing?

Answer 25

a fair price between the buyer and seller

Never try to negotiate a one-sided contract that is only good for one party. That will generally lead to conflicts and even low-quality work.

Question 26

While developing a large building complex, the project manager has documented seven different phases the seller will need to complete.

In what document should the project manager include the procurement phases?

Answer 26

procurement strategy document

= documents delivery methods, types of agreements, and the procurement phases of the project

Question 27

procurement strategy document

Answer 27

documents delivery methods, types of agreements, and the procurement phases of the project

outlines how the procured section of the project should be delivered & the contract types & procurement phases

Question 28

The project sponsor is very concerned about the quality of the project work. He has asked the project manager to ensure that the sellers perform a high-quality job; if not, the customers may request refunds on the product.

Where should the project manager include the desired quantity levels and performance for the outsourced section of the project?

Answer 28

procurement statement of work

= outlines what, from the scope baseline, will be outsourced; also contains information such as specifications, desired quality, and quality levels.