Chapter 12 Project Procurement

Question 1

When there is an issue or claim that must be settled before the contract can be closed, the parties involved in the issue or claim will try to reach a settlement through mediation or arbitration.

Answer 1

Alternative dispute resolution

Question 2

From seller to buyer. Price is the determining factor in the decision-making process.

Answer 2

Bid

Question 3

A meeting of all the project’s potential vendors to clarify the contract statement of work and the details of the contract statement of work and the details of the contracted work.

Answer 3

Bidder conference

Question 4

These are disagreements between the buyer and the seller, usually centering on a charge, who did the change, and even whether a change has occurred.

Answer 4

Claims

Question 5

A formal agreement between the buyer and the seller. Written is preferred but can also be oral.

Answer 5

Contract

Question 6

A process in which the project management team determines the cost-effectiveness, benefits, and feasibility or making a product or buying in from a vendor.

Answer 6

Make-or-buy decision

Question 7

The contractual relationship between the buyers and the seller is often considered confidential and secret.

Answer 7

Privity

Question 8

A project management subsidiary plan that documents the decisions made in the procurement planning processes.

Answer 8

Procurement management plan

Question 9

A process to identify which parts of the project warrant procurement from a vendor by the buyer

Answer 9

Procurement planning

Question 10

A document the seller provides to the buyer that includes more than just a fee for the proposed work. It also includes information on the vendor’s skills, reputation and ideas of how the vendor can complete the contracted work for the buyer.

Answer 10

Proposal

Question 11

From the seller to the buyer. Price is the determining factor in the decision-making process.

Answer 11

Quotation

Question 12

From buyer to seller. Requests the seller to provide a proposal to complete the procured work or to provide the procured product.

Answer 12

Request for Proposal (RFP)

Question 13

From buyer to seller. Requests the seller to provide a price for the procured product or service.

Answer 13

Request for quote (RFQ)

Question 14

These are costs incurred by the project in order for the project to exist. Examples include the equipment needed, salaries and expenses tied to the project.

Answer 14

Direct costs

Question 15

A contract that requires the buyer to pay for the costs of the goods and services procured plus a percentage of the costs. The buyer assumes all of the risks for cost overruns.

Answer 15

Cost plus percentage of costs

Question 16

This document requires that the seller fully describe the work to be completed and/or the product to be supplied. It becomes part of the contract between buyer and the seller.

Answer 16

Contract statement of work (SOW also CSOW)

Question 17

This defines the procedures for how the contract may be changed

Answer 17

Contract change control system

Question 18

An “act of God” that may have a negative impact on the project

Answer 18

Force Majeure

Question 19

These estimates are often referred to as “should cost” estimates. They are created by the performing organization or outside experts to predict what the costs of the procured product should be.

Answer 19

Independent estimates

Question 20

These are costs attributed to the cost of doing business.

Answer 20

Indirect costs

Question 21

From the buyer to the seller. Requests the seller to provide a price for the procured product or service.

Answer 21

Invitation for Bid (IFB)

Question 22

Allows the vendor to begin working on a project immediately. It is often used as a stopgap solution.

Answer 22

Letter contract

Question 23

Not a contract but a letter stating that the buyer is intending to create a contractractual relationship with the seller.

Answer 23

Letter of intent