ch12

Question 1

1.Suppliers are those organizations or individuals who provide procurement services.

a.
TRUE

b.
FALSE

Answer 1

ANSWER:
TRUE

Question 2

2.While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of suppliers.

a.
TRUE

b.
FALSE

Answer 2

ANSWER:
TRUE

Question 3

3.Project procurement management consists primarily of two processes: assessing procurements and controlling procurements.

a.
TRUE

b.
FALSE

Answer 3

FALSE

Question 4

4.If an organization has no need to buy any products or services from outside the organization, then it has no need to perform any of the procurement management processes.

a.
TRUE

b.
FALSE

Answer 4

TRUE

Question 5

5.A single contract can include all three categories of contracts.

a.
TRUE

b.
FALSE

Answer 5

ANSWER:
TRUE

Question 6

6.Indirect costs are those costs can be traced back to a project in a cost-effective way.

a.
TRUE

b.
FALSE

Answer 6

ANSWER:
FALSE

Question 7

7.Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts.

a.
TRUE

b.
FALSE

Answer 7

ANSWER:
FALSE

Question 8

8.The fee in a CPFF contract constantly varies even when the scope of a contract remains the same.

a.
TRUE

b.
FALSE

Answer 8

FALSE

Question 9

9.In unit pricing, the total value of the contract is a function of the quantities needed to complete the work.

a.
TRUE

b.
FALSE

Answer 9

TRUE

Question 10

10.All contracts should include specific clauses that take into account issues unique to the project.

a.
TRUE

b.
FALSE

Answer 10

TRUE

Question 11

11.In an FPI contract, all of the risk is borne by the buyer.

a.
TRUE

b.
FALSE

Answer 11

FALSE

Question 12

12.An FP-EPA contract carries the least risk for a supplier.

a.
TRUE

b.
FALSE

Answer 12

FALSE

Question 13

13.Make-or-buy analysis involves comparing the internal costs of providing a product with the cost of outsourcing.

a.
TRUE

b.
FALSE

Answer 13

TRUE

Question 14

14.A company is considering whether to purchase or lease a piece of equipment for an upcoming project. The cost to purchase is $10,000 plus $100 per day to operate or $500 per day to lease (including operating costs). If the company anticipates using the equipment for a total of 20 days, they will be indifferent as to whether or lease or purchase it.

a.
TRUE

b.
FALSE

Answer 14

FALSE

Question 15

15.Contents of the procurement management plan vary with project needs.

a.
TRUE

b.
FALSE

Answer 15

TRUE

Question 16

16.The main sections of an RFP can include the statement of work and schedule information.

a.
TRUE

b.
FALSE

Answer 16

TRUE

Question 17

17.A key factor in evaluating bids, particularly for projects involving information technology, is the past performance record of the bidder.

a.
TRUE

b.
FALSE

Answer 17

TRUE

Question 18

18.Reviewing performance records reduces the risk of selecting a supplier with a poor track record.

a.
TRUE

b.
FALSE

Answer 18

TRUE

Question 19

19.In project procurement management, a main output of controlling procurements is a source selection criteria.

a.
TRUE

b.
FALSE

Answer 19

FALSE

Question 20

20.The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws.

a.
TRUE

b.
FALSE

Answer 20

TRUE

Question 21

21.The closing procurements process involves updating records to reflect final results and archiving information for future use.

a.
TRUE

b.
FALSE

Answer 21

TRUE

Question 22

22.Procurement audits are often done during contract closure to identify lessons learned in the entire procurement process.

a.
TRUE

b.
FALSE

Answer 22

TRUE

Question 23

23.A shortage of qualified personnel is one of the main reason that companies outsource. A project may require experts in a particular field for several months and planning for this procurement ensures that the needed services will be available for the project. Which benefit does this characteristic of outsourcing provide an organization?

a.
reduces focus on its core business
b.
increases control over all aspects of projects that suppliers carry out.

c.
provides access to specific skills
d.
reduces dependency on suppliers

Answer 23

c.
provides access to specific skills

Question 24

24.Outsourcing suppliers can often provide economies of scale, especially for hardware and software, that may not be available to the client alone. Which benefit does this offer an organization?

a.
reduction in costs
b.
increased flexibility

c.
increased accountability
d.
access to specific skills

Answer 24

a.
reduction in costs

Question 25

25. Most organizations are not in business to provide information technology services, yet many have spent valuable time and resources on information technology functions when they should have instead worked on important competencies such as marketing, customer service, and new product design. Outsourcing helps tackle this problem. Which benefit does outsourcing primarily provide in such a scenario?   a.  reduces fixed and recurrent costs b.  protects strategic information from being accessible to external suppliers   c.  increases accountability even without a written contract d.  helps focus on an organization’s core business

Answer 25

d.  helps focus on an organization’s core business

Question 26

26. Outsourcing to provide extra workers during periods of peak workloads can be much more economical than trying to fill entire projects with internal resources. Which advantages does this characteristic of outsourcing provide organizations?   a.  offers control over all aspects of projects that suppliers carry out b.  provides flexibility    c.  shifts accountability from external suppliers to internal staff d.  helps avoid any form of dependency on suppliers

Answer 26

b.  provides flexibility 

Question 27

27. What is one drawback of outsourcing?   a.  it does not provide access to specific skills or technologies b.  it invariably results in an increase in both fixed and recurrent costs   c.  it can make an organization become overly dependent on particular suppliers. d.  it cannot increase accountability of suppliers through a written contract

Answer 27

c.  it can make an organization become overly dependent on particular suppliers.

Question 28

28. What is the first step in project procurement management?   a.  closing procurement management. b.  controlling procurements.   c.  conducting procurements. d.  planning procurement management.

Answer 28

d.  planning procurement management.

Question 29

29. In project procurement management, which process involves determining what to procure, when, and how?   a.  closing procurements b.  controlling procurements   c.  conducting procurements d.  planning procurement management

Answer 29

d.  planning procurement management

Question 30

30. In project procurement management, which process involves obtaining seller responses, selecting sellers, and awarding contracts?   a.  conducting procurements b.  closing procurements   c.  settling contracts d.  planning procurement management

Answer 30

a.  conducting procurements

Question 31

31. Outputs of the _____ process consist of selected sellers and change requests.   a.  closing procurements b.  conducting procurements   c.  planning procurement management d.  controlling procurements

Answer 31

b.  conducting procurements

Question 32

32. Which process of project procurement management involves managing relationships with sellers, monitoring contract performance, making changes as needed, and closing contracts?   a.  negotiating procurements b.  settling contracts   c.  deciding on the services to procure d.  controlling procurements

Answer 32

d.  controlling procurements

Question 33

33. In project procurement management, which process involves completion and settlement of each contract, including resolution of any open items?   a.  planning procurement management b.  controlling procurements   c.  negotiating procurements d.  conducting procurements

Answer 33

b.  controlling procurements

Question 34

34. The procurement statements of work are an output of the _____ process of project procurement management.   a.  planning b.  executing   c.  monitoring and controlling d.  closing

Answer 34

a.  planning

Question 35

35. In project procurement management, obtaining seller responses, selecting sellers, and awarding contracts is part of the _____ process.   a.  planning b.  conducting procurements    c.  controlling d.  closing

Answer 35

b.  conducting procurements 

Question 36

36. In project procurement management, which is an output of the conducting procurements process?   a.  make-or-buy decisions b.  statements of work   c.  source selection criteria d.  change requests 

Answer 36

d.  change requests 

Question 37

37. In project procurement management, which is an output of the planning process?   a.  change requests b.  selected sellers   c.  resource calendars d.  make-or-buy decisions

Answer 37

d.  make-or-buy decisions

Question 38

38. Which is true of lump-sum contracts?   a.  They incur a high degree of risk for the buyer. b.  They involve a fixed total price for a well-defined product or service.   c.  They consist of a fee based on the satisfaction of subjective performance criteria. d.  They are also known as cost-reimbursable contracts.

Answer 38

b.  They involve a fixed total price for a well-defined product or service.

Question 39

39. _____ contracts involve payment to the supplier for direct and indirect actual costs and often include fees.   a.  Firm-fixed-price b.  Lump sum   c.  Cost-reimbursable d.  Fixed-price incentive fee

Answer 39

c.  Cost-reimbursable

Question 40

40. In a(n) _____ contract, the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus.   a.  FFP b.  CPIF   c.  CPPC d.  FPIF

Answer 40

b.  CPIF

Question 41

41. With a(n) _____ contract, the buyer pays the supplier for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs.   a.  CPFF b.  FPIF   c.  CPAF d.  CPIF

Answer 41

a.  CPFF

Question 42

42. In which contract does the buyer pay the supplier for allowable performance costs along with a predetermined percentage based on total costs?   a.  FPIF b.  CPIF   c.  CPPC d.  CPAF

Answer 42

c.  CPPC

Question 43

43. From the buyer’s perspective, the _____ is the least desirable among all contracts because the supplier has no incentive to decrease costs.   a.  CPIF b.  CPFF   c.  CPAF d.  CPPC

Answer 43

d.  CPPC

Question 44

44. A(n) _____ contract carries the least risk for suppliers.   a.  CPPC b.  FFP   c.  CPAF d.  FP-EPA

Answer 44

a.  CPPC

Question 45

45. The _____ is a description of the work required for a procurement.   a.  RFQ b.  RFP   c.  WBS d.  SOW

Answer 45

d.  SOW

Question 46

46. A(n) _____ is a document used to solicit proposals from prospective suppliers.   a.  RFQ b.  WBS   c.  RFP d.  SOW

Answer 46

c.  RFP

Question 47

47. A document used to solicit quotes or bids from prospective suppliers is known as a(n) _____.   a.  RFQ b.  RFP   c.  WBS d.  SOW

Answer 47

a.  RFQ

Question 48

48. After planning for procurement management, the next process involves ____.   a.  determining the evaluation criteria for the contract award b.  developing procurement statements of work   c.  using expert judgement in planning purchases and acquisitions d.  sending appropriate documentation to potential sellers

Answer 48

d.  sending appropriate documentation to potential sellers

Question 49

49. In project procurement management, which is one of the main outputs of the conducting procurement process?   a.  selected seller b.  procurement management plan   c.  procurement statement of work d.  closed procurement

Answer 49

a.  selected seller

Question 50

50. The process of choosing suppliers or sellers is known as _____.   a.  source selection b.  a bid   c.  WBS d.  a change order

Answer 50

a.  source selection