Chapter 12: Project Procurement Management

Question 1

Project ______ Management includes the management and control processes required to develop and administer agreements such as contracts, purchase orders, memoranda of agreements (MOAs), or internal service level agreements (SLAs)

Answer 1

Procurement

Question 2

Project Procurement Management processes include the following:

Answer 2

Plan Procurement Management, Conduct Procurements, Control Procurements

Question 3

True or false: The project manager should ideally be authorized to sign legal agreements regarding the project

Answer 3

False. The project manager is typically not authorized to sign legal agreements binding the organization; this is reserved for those who have the authority to do so

Question 4

Define “winning bidder”

Answer 4

In a market, a bidder is a party offering to buy an asset from a seller at a specific price

Question 5

True or false: The winning bidder may manage the work as a project

Answer 5

True. In such cases: 1. The buyer becomes the customer to subcontractors, suppliers, and service providers and is therefore a key project stakeholder from the seller’s perspective. 2. The seller’s project management team may be concerned with all the processes involved in performing the work or providing the services. 3. The seller itself may become a buyer of lower-tiered products, services, and materials from subcontractors and suppliers. 4. Terms and conditions of the contract and the procurement statement of work (SOW) become key inputs to many of the seller’s management processes

Question 6

Define “decentralized purchasing”

Answer 6

For smaller organizations or startup companies and those without a purchasing, contracting, or procurement department, the project manager may assume the purchasing authority role to negotiate and sign contracts directly

Question 7

Define “centralized purchasing”

Answer 7

or more mature organizations, the actual procurement and contracting functions will be carried out by a separate department with the specific role to purchase, negotiate, and sign contracts

Question 8

Trends and emerging practices for Project Procurement Management include but are not limited to:

Answer 8

Advances in tools, More advanced risk management, Changing contracting processes, Logistics and supply chain management, Technology and stakeholder relations, Trial engagements

Question 9

Because each project is unique, the project manager may need to tailor the way that Project Procurement Management processes are applied. Considerations for tailoring include but are not limited to:

Answer 9

Complexity of procurement, Physical location, Governance and regulatory environment, Availability of contractors

Question 10

True or false: In agile environments, specific sellers may be used to extend the team

Answer 10

True

Question 11

Define the process “Plan Procurement Management”

Answer 11

It is the process of documenting project procurement decisions, specifying the approach and identifying potential sellers. The key benefit of this process is that it determines whether to acquire goods and services from outside the project and, if so, what to acquire as well as how and when to acquire it

Question 12

True or false: Defining roles and responsibilities related to procurement should be done continuously throughout the Plan Procurement Management process

Answer 12

False. Defining roles and responsibilities related to procurement should be done early in the Plan Procurement Management process

Question 13

The organizational process assets that can influence the Plan Procurement Management process include but are not limited to:

Answer 13

Preapproved seller lists, Formal procurement policies, procedures, and guidelines, Contract types, Cost-reimbursable contracts, Time and material contracts (T&M)

Question 14

Define “Fixed-price contracts”

Answer 14

This category of contracts involves setting a fixed total price for a defined product, service, or result to be provided. These contracts should be used when the requirements are well defined and no significant changes to the scope are expected. Types of fixed-price contract include: FFP, FPIF, FPEPA

Question 15

Define “Firm fixed price (FFP)”

Answer 15

The most commonly used contract type is the FFP. It is favored by most buying organizations because the price for goods is set at the outset and not subject to change unless the scope of work changes

Question 16

Define “Fixed price incentive fee (FPIF)”

Answer 16

This fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation from performance, with financial incentives tied to achieving agreed-upon metrics. Typically, such financial incentives are related to cost, schedule, or technical performance of the seller. Under FPIF contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller

Question 17

Define “Fixed price with economic price adjustments (FPEPA)”

Answer 17

This contract type is used whenever the seller’s performance period spans a considerable period of years, or if the payments are made in a different currency. It is a fixed-price contract, but with a special provision allowing for predefined final adjustments to the contract price due to changed conditions, such as inflation changes or cost increases (or decreases) for specific commodities