18. Procurement Management (Knowledge Area 9) Flashcards
fixed-price economic price adjustment contract
used to adjust the fixed costs over the life of the contract due to economic conditions such as inflation
independent cost estimate
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
source selection criteria
= used to evaluate the sellers and can include things such as costs, delivery dates, experience, financial stability, and management experience
preapproved seller lists
= a list of sellers that have been properly vetted by the organization and can be used as potential sellers on a project
Process: Plan Procurement Management
A process that determines what the project team should procure, if anything, and how it should be done.
When conducting procurement management for a project, what is one of the first things a project manager should research before awarding the contract?
laws and regulations
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?
fixed-price economic price adjustment contract
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?
Process: Plan Procurement Management
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?
preapproved seller lists
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?
source selection criteria
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?
independent cost estimate
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?
procurement strategy document
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?
Executing - Conduct Procurement
will result in selecting a seller and awarding a contract
The project manager is set to start the process of conduct procurement.
What should the project manager have received before starting this process?
seller proposals
should be acquired before the project manager can negotiate and select the seller
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?
vendor conferences (aka bidder conferences)
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?
agreement
An agreement can contain elements such as pricing and payment terms, inspections, warranties, incentives and penalties, and insurance and performance bonds.
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?
Process: Control Procurements
Process: Control Procurements
part of the monitoring and controlling process groups in which both the buyer and seller meet the requirements outlined in the contract.
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?
Submit the invoice to claims administration and negotiate a settlement.
claim
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
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?
cost-plus-fixed-fee contract (one of two types of cost-reimbursable contracts)
What are the two subtypes of cost-reimbursable contracts?
cost-plus-fixed-fee contracts =
cost-plus-incentive-fee contracts =
cost-plus-fixed-fee contract
the project team will purchase all the project materials and then pay the seller a flat fee for their profits
What should the project manager do prior to the closure of procurement?
approve all deliverables; should be closed with a formal written notice to the seller that all work has been completed
When negotiating a contract between a buyer and seller, what should the project manager look for in terms of pricing?
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.
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?
procurement strategy document
= documents delivery methods, types of agreements, and the procurement phases of the project
procurement strategy document
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
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?
procurement statement of work
= outlines what, from the scope baseline, will be outsourced; also contains information such as specifications, desired quality, and quality levels.
