CH12 z quiz Project Procurement management Flashcards
You are the project manager of the Adams Construction Project. Some of the work in the project contains pure risk that you’re not willing to accept. You decided to mitigate the pure risks in this project. Which of the following may be used as a risk mitigation tool? A. Vendor proposal B. Contract C. Quotation D. Project requirements
B. Contracts can be used as a risk mitigation tool. Procurement of risky activities is known as transference; the risk does not disappear, but the responsibility for the risk is transferred to the vendor. A, C, and D are all incorrect. A vendor proposal, a quotation, and project requirements do nothing to serve as a risk mitigation tool.
You are the project manager of the Adams Construction Project. Some of the work in the project contains pure risk that you’re not willing to accept. You decided to mitigate the pure risks in this project. Which of the following may be used as a risk mitigation tool? A. Vendor proposal B. Contract C. Quotation D. Project requirements
You are the project manager for the 89A Project. You have created a contract for your customer. The contract must have what two things?
A. Offer and consideration
B. Signatures and the stamp of a notary public
C. Value and worth of the procured item
D. Start date and acceptance of start date
A. Of all choices presented, A is the best choice. Contracts have an offer and a consideration. B is incorrect, as not all contracts demand signatures and notary public involvement. C is incorrect; a contract may not explicitly determine what the value and worth of the procured product or service is. D is also incorrect; a contract may specify a start date, but the acceptance of the start date is vague and not needed for all contracts.
You are the project manager for the 89A Project. You have created a contract for your customer. The contract must have what two things?
A. Offer and consideration
B. Signatures and the stamp of a notary public
C. Value and worth of the procured item
D. Start date and acceptance of start date
Britney is the project manager of the FTG Software Project. She’s relying on the project scope to help her analyze the procurement needs of the project. The project scope statement can help a project manager create procurement details. Which one of the following best describes this process?
A. The project scope statement defines the contracted work.
B. The project scope statement defines the requirements for the contract work.
C. The project scope statement defines the contracted work, which must support the requirements of the project customer.
D. Both parties must have and retain their own copy of the product description.
C. The project scope statement defines the details and requirements for acceptance of the project, serves as a valuable input to the process of determining what needs to be procured, and defines what the end result will be. When dealing with vendors to procure a portion of the project, the procured work must support the requirements of the project’s customer. A is incorrect because the project scope statement defines the project as a whole, not just the contracted work, which may be just a portion of the project. B is incorrect; the project scope statement does not define the requirements for the contract work. D is also incorrect; the vendor likely will not have a copy of the product description.
Britney is the project manager of the FTG Software Project. She’s relying on the project scope to help her analyze the procurement needs of the project. The project scope statement can help a project manager create procurement details. Which one of the following best describes this process?
A. The project scope statement defines the contracted work.
B. The project scope statement defines the requirements for the contract work.
C. The project scope statement defines the contracted work, which must support the requirements of the project customer.
D. Both parties must have and retain their own copy of the product description.
Yolanda has outsourced a portion of a project to a vendor. The vendor has discovered some issues that will influence the cost and schedule of its portion of the project. How must the agreement be updated?
A. As a new contract signed by Yolanda and the vendor.
B. As directed by the contract change control system.
C. As a memo and SOW signed by Yolanda and the vendor.
D. Project management contracts have clauses that allow vendors to adjust their work according to unknowns.
B. This is the best answer of all the choices presented. The contract change control system will determine the best route to incorporate the change. A, while feasible, is not the best answer to the question. A new contract does not update the original agreement and may cause delays, as the contract may have to be resubmitted, reapproved, and so on. C and D are not viable answers.
Yolanda has outsourced a portion of a project to a vendor. The vendor has discovered some issues that will influence the cost and schedule of its portion of the project. How must the agreement be updated?
A. As a new contract signed by Yolanda and the vendor.
B. As directed by the contract change control system.
C. As a memo and SOW signed by Yolanda and the vendor.
D. Project management contracts have clauses that allow vendors to adjust their work according to unknowns.
You are creating a new contract for some procured work in the project. Your manager wants you to define how issue and claims will be resolved including the possibility of any lawsuits related to the procured work. The United States backs all contracts through which of the following? A. Federal law B. State law C. Court system D. Lawyers
C. All contracts in the United States are backed by the U.S. court systems. A, B, and D are not correct answers.
You are creating a new contract for some procured work in the project. Your manager wants you to define how issue and claims will be resolved including the possibility of any lawsuits related to the procured work. The United States backs all contracts through which of the following? A. Federal law B. State law C. Court system D. Lawyers
Terry is the project manager of the MVB Project. She needs to purchase a piece of equipment for her project. The accounting department has informed Terry that she needs a unilateral form of contract. Accounting is referring to which of the following? A. Statement of work (SOW) B. Legally binding contract C. Purchase order D. Invoice from the vendor
C. A purchase order is an example of a unilateral contract. A, B, and D are all incorrect choices. An SOW is a statement of work. A legally binding contract does not fully answer the question. D, an invoice from the vendor, is not what the purchasing department is requesting.
Terry is the project manager of the MVB Project. She needs to purchase a piece of equipment for her project. The accounting department has informed Terry that she needs a unilateral form of contract. Accounting is referring to which of the following? A. Statement of work (SOW) B. Legally binding contract C. Purchase order D. Invoice from the vendor
You are a project management consultant for the Hopson Company and you’re working with them to determine the best vendor and contract choice for a portion of their project. The purpose of a contract is to distribute between the buyer and seller a reasonable amount of what? A. Responsibility B. Risk C. Reward D. Accountability
B. A fair contract shares a reasonable amount of risk between the buyer and the seller. A is incorrect; a contract may transfer the majority of the responsibility to the vendor. C is incorrect; the reward is not an appropriate answer to the question. D is also incorrect; the accountability of the services contracted to the vendor is not shared between the buyer and the seller.
You are a project management consultant for the Hopson Company and you’re working with them to determine the best vendor and contract choice for a portion of their project. The purpose of a contract is to distribute between the buyer and seller a reasonable amount of what? A. Responsibility B. Risk C. Reward D. Accountability
You are the project manager of the Communications Projects for your organization. Management has stressed that you use privity throughout this project. Privity is what?
A. Relationship between the project manager and a known vendor
B. Relationship between the project manager and an unknown vendor
C. Contractual, confidential information between customer and vendor
D. Professional information regarding the sale between customer and vendor
C. Privity is a confidential agreement between the buyer and seller. A, B, and D are incorrect choices, as these do not fully answer the question.
You are the project manager of the Communications Projects for your organization. Management has stressed that you use privity throughout this project. Privity is what?
A. Relationship between the project manager and a known vendor
B. Relationship between the project manager and an unknown vendor
C. Contractual, confidential information between customer and vendor
D. Professional information regarding the sale between customer and vendor
Sammy is the project manager of the DSA Project. He is considering proposals and contracts presented by vendors for a portion of the project work. Of the following, which contract is least risky to the DSA Project from Sammy’s perspective? A. Cost plus fixed fee B. Cost plus percentage of cost C. Cost plus incentive fee D. Fixed-price
D. A fixed-price contract contains the least amount of risk for a buyer. The seller assumes all of the risk. A, B, and C are incorrect because these contract types carry the risk of cost overruns being assumed by the buyer.
Sammy is the project manager of the DSA Project. He is considering proposals and contracts presented by vendors for a portion of the project work. Of the following, which contract is least risky to the DSA Project from Sammy’s perspective? A. Cost plus fixed fee B. Cost plus percentage of cost C. Cost plus incentive fee D. Fixed-price
Bradley is the project manager of the Warehouse Remodeling Project for his company. He is in the process of determining which contracts to use in this project. His company is risk averse so the correct choice of contract is important to Bradley. In the following contract types, which one requires the seller to assume the risk of cost overruns? A. Cost plus fixed fee B. Cost plus incentive fee C. Lump-sum D. Time and materials
C. A lump-sum contract provides a fixed fee to complete the contract; the seller absorbs any cost overruns. A and B are incorrect because these contracts do not require the seller to carry the risk of cost overruns. D is incorrect, because a time and materials contract requires the buyer to pay for cost overruns on the materials and the time invested in the project work.
Bradley is the project manager of the Warehouse Remodeling Project for his company. He is in the process of determining which contracts to use in this project. His company is risk averse so the correct choice of contract is important to Bradley. In the following contract types, which one requires the seller to assume the risk of cost overruns? A. Cost plus fixed fee B. Cost plus incentive fee C. Lump-sum D. Time and materials
Benji is the project manager of the PLP Project. He has hired an independent contractor for a portion of the project work. The contractor is billing the project $120 per hour plus materials. This is an example of what? A. Cost plus fixed fee B. Time and materials C. Unit price D. Lump-sum
B. The contractor’s rate of $120 per hour plus the cost of the materials is an example of a time and materials contract. A is incorrect; a cost plus fixed fee contract charges the cost of the materials, plus a fixed fee, for the installation or work to complete the contract. C is incorrect; a unit price contract has a set price for each unit installed on the project. D is also incorrect, as a lump-sum contract does not break down the time and materials.
Benji is the project manager of the PLP Project. He has hired an independent contractor for a portion of the project work. The contractor is billing the project $120 per hour plus materials. This is an example of what? A. Cost plus fixed fee B. Time and materials C. Unit price D. Lump-sum
Mary is the project manager of the JHG Project. She has created a procurement statement of work (SOW) for a vendor. What project component is the procurement statement of work based on? A. Project scope statement B. Work breakdown structure (WBS) C. Scope baseline D. WBS dictionary
C. The statement of work is developed from the scope baseline. Choices A, B, and D are all incorrect, as these are the three components of the scope baseline.
Mary is the project manager of the JHG Project. She has created a procurement statement of work (SOW) for a vendor. What project component is the procurement statement of work based on? A. Project scope statement B. Work breakdown structure (WBS) C. Scope baseline D. WBS dictionary
You are the project manager for a software development project for an accounting system that will operate over the Internet. Based on your research, you have discovered that it will cost you $25,000 to write your own code. Once the code is written, you estimate you’ll spend $3,000 per month updating the software with client information, government regulations, and maintenance. A vendor has proposed to write the code for your company and charge a fee based on the number of clients using the program every month. The vendor will charge you $5 per month per user of the web-based accounting system. You will have roughly 1,200 clients using the system per month. However, you’ll need an in-house accountant to manage the time and billing of the system, so this will cost you an extra $1,200 per month. How many months will you have to use the system before it is better to write your own code than to hire the vendor? A. 3 months B. 4 months C. 6 months D. 15 months
C. The monies invested in the vendor’s solution would have paid for your own code in six months. This is calculated by finding your cash outlay for the two solutions: $25,000 for your own code creation; zero cash outlay for the vendor’s solution. The monthly cost to maintain your own code is $3,000. The monthly cost of the vendor’s solution is $7,200. Subtract your cost of $3,000 from the vendor’s cost of $7,200 and this equals $4,200. Divide this number into the cash outlay of $25,000 to create your own code, and you’ll come up with 5.95 months. Of all the choices presented, C, 6 months, is the best choice. A, B, and D are all incorrect, as they do not answer the question.
You are the project manager for a software development project for an accounting system that will operate over the Internet. Based on your research, you have discovered that it will cost you $25,000 to write your own code. Once the code is written, you estimate you’ll spend $3,000 per month updating the software with client information, government regulations, and maintenance. A vendor has proposed to write the code for your company and charge a fee based on the number of clients using the program every month. The vendor will charge you $5 per month per user of the web-based accounting system. You will have roughly 1,200 clients using the system per month. However, you’ll need an in-house accountant to manage the time and billing of the system, so this will cost you an extra $1,200 per month. How many months will you have to use the system before it is better to write your own code than to hire the vendor? A. 3 months B. 4 months C. 6 months D. 15 months
Henry has been negotiating with the ABN Contracting Company for two weeks regarding some procured work on the project. Henry has sent the ABN Contracting Company a letter of intent. This means what?
A. Henry intends to sue the ABN Contracting Company.
B. Henry intends to buy from the ABN Contracting Company.
C. Henry intends to bid on a job from the ABN Contracting Company.
D. Henry intends to fire the ABN Contracting Company.
B. Henry intends to buy from the ABN Contracting Company. A, C, and D are all incorrect; these choices do not adequately describe the purpose of the letter of intent.
Henry has been negotiating with the ABN Contracting Company for two weeks regarding some procured work on the project. Henry has sent the ABN Contracting Company a letter of intent. This means what?
A. Henry intends to sue the ABN Contracting Company.
B. Henry intends to buy from the ABN Contracting Company.
C. Henry intends to bid on a job from the ABN Contracting Company.
D. Henry intends to fire the ABN Contracting Company.
Martha is the project manager of the MNB Project. She wants a vendor to offer her one price to do all of the detailed work. Martha will issue which type of document? A. Request for Proposal (RFP) B. Request for Information (RFI) C. Proposal D. Invitation for Bid (IFB)
D. Martha should issue an Invitation for Bid as this document means the seller will provide a price for the work. A request for proposal means that the seller will provide ideas and suggestions for the project work along with a price. The proposal is what the seller would issue in response to an RFP. A request for information is what Martha what issue if she wanted more information about services the vendor could provide.
Martha is the project manager of the MNB Project. She wants a vendor to offer her one price to do all of the detailed work. Martha will issue which type of document? A. Request for Proposal (RFP) B. Request for Information (RFI) C. Proposal D. Invitation for Bid (IFB)
