Manage Procurement Flashcards
A buyer sent a formal invitation to potential vendors. The buyer wishes to receive offers similar in scope and make a selection based on price. Which of the following should he prepare?
A. Request for proposal
B. Invitation for bid
C. Statement of work
D. Request for quotation
B. Invitation for bid
In an invitation for bid, the buyer specifies the product and the solution and
requests a price from the potential supplier.
You are starting a new waste management project that seeks to reduce industrial, household and municipal waste. You need to decide whether a deliverable Will be delivered internally or procured from an external vendor. In a “make or buy” decision, which of the following are good reasons to do the work yourself? (Choose three.)
A. The information is confidential
B. You have resources available
C. Your team does not have the required knowledge
D. You want to transfer the risk
E. Your organization wants to retain knowledge
A. The information is confidential
B. You have resources available
E. Your organization wants to retain knowledge
Not having the required knowledge (answer C) and transferring the risk (answer
D) can be reasons to procure. The remaining option can be good reasons to do
the work yourself.
You recently joined a project that Will build a sports arena. After awarding a services contract to a local vendor, the procurement manager expressed his concern that every contract should be properly complete. In which of the following options is your contract complete?
A. All deliverables have been completed as contracted but the customer is not happy
B. AI deliverables have been completed as contracted but there are still open claims
C. Some contracted project management deliverables have not been completed
D. There was a breach in the contract
A. All deliverables have been completed as contracted but the customer is not happy
If all deliverables have been completed as contracted, the contract is completed.
Senior management requested a procurement management plan. Which of the following statements regarding the procurement management plan is correct?
A. Specifies the procured items
B. Is used to request responses from potential vendors
C. Establishes how contracts should be managed within the organization
D. Is a subsidiary management plan ofthe project management plan
D. Is a subsidiary management plan ofthe project management plan
The procurement management plan is a subsidiary management plan and,
therefore, a part of the project management plan (answer D). The procured
items are specified in the procurement statement of work (answer A). Bid
documents are used to request responses (e.g., proposal) from potential
vendors (answer B). The procurement management plan is not an
organizational contract management policy (answer C).
The team collected the sellers’ proposals and is struggling to select the best alternative. Which of the following would be LEAST helpful?
A. Check the procurement statement of work
B. Exclude potential vendors that do not meet mandatory source selection criteria
C. Review and bargain the different contract elements with potential vendors
D. Organize a vendor conference
D. Organize a vendor conference
Vendor conferences should be organized before receiving the sellers’ proposals
to provide an opportunity to answer questions, identify inconsistencies and
gather improvement recommendations (answer D). The remaining answers
could help to select the best alternative.
John is managing a CRM software implementation across the Middle East that Will be largely based on consulting services provided by third parties. To support the procurement process, John wants to organize a bidder conference. What is the purpose of a bidder conference?
A. They are used to prepare the procurement statement of work
B. They provide potential suppliers an understanding of the technical and contractual requirements of the procurement documents.
C. They are used to collect suppliers’ proposals.
D. They are used to assess the bidders proposals and prepare a short list of potential suppliers.
B. They provide potential suppliers an understanding of the technical and contractual requirements of the procurement documents.
Bidder conferences are meetings organized by the buyer to help potential
suppliers understand the bid documents.
Your construction company has been awarded a fixed price incentive fee contract to build a bridge over a river gorge. The main reason to adopt contract incentive mechanisms is to:
A. Provide a contractual assurance that the products or services Will be supplied according to requirements
B. Synchronize the contracting parties’ objectives
C. Minimize the buyer’s cost risk provisions
D. Reduce the final price
B. Synchronize the contracting parties’ objectives
Contract incentives mechanisms are used to synchronize the contracting
parties’ objectives.
Your company needs to urgently contract the service of an interior design company to design and furnish the new office building. With no time to complete a detail scope analysis, the company should rely on:
A. A fixed-price contract
B. A time & material contract
C. Cost-reimbursable contract with incentives
D. The supplier’s experience
C. Cost-reimbursable contract with incentives
The new contract will include scope (design and furnish). Therefore, a time &
material contract should not be used (answer B). The scope of that contract will
not be well defined. Therefore, a fixed price contract should not be used
(answer A). Supplier’s experience would not be enough to establish a
sustainable contract. Your company should use a cost-reimbursable contract
with contract incentives to synchronize objectives with the supplier.
You are managing an oil-refinery expansion project that needs to procure engineering services from a global provider. You are trying to make sure that potential suppliers have a clear and common understanding of the procurement need. Which of the following is your BEST option?
A. Meet with each potential supplier separately before preparing the statement of work
B. Engage the potential suppliers in the effort to develop the procurement management plan
C. Organize a bidder conference
D. Ensure that potential suppliers receive a copy ofthe request for proposal
C. Organize a bidder conference
Bidder conferences are meetings organized by the buyer to help potential
suppliers to understand the bid documents.
A consulting company has recently started to decentralize its procurement management practices. Which of the following is a valid reason to decentralize the procurement process?
A. Improving control over the organization’s purchasing activities
B. Adopting a more standardized, professional and efficient procurement process
C. Adapting the contract to the project’s needs
D. Benefiting from better pricing
C. Adapting the contract to the project’s needs
Organizations that decentralize the procurement process benefit from a more
flexible procurement management process that will be better able to deliver the
procured products or services in line with the project’s specific requirements
and timings.
You have completed the procurement management plan and issued a request for proposal. You will now need to do perform the conduct procurement process. All of the following options are part of the conduct procurements process, EXCEPT:
A. Search the internet for potential suppliers
B. Issue a letter of intent
C. Report on contract performance
D. Receive proposals, bids or quotations
C. Report on contract performance
Reporting on contract performance is part of the control procurement process.
A team member does not know what the supplier should deliver under a contract. To which document should you direct the team member?
A. Proposal
B. Contract special terms
C. Contract statement of work
D. The project WBS
C. Contract statement of work
The procurement statement of work is a narrative description of the products
and services that Will be acquired under contract.
You decided to outsource a complex deliver of your off-shore Oil exploration project. You have prepared a formal document describing the products and services that should be provided under the contract. Which of the following have you prepared?
A. Proposal
B. WBS
C. Contract Statement of work
D. Scope statement
C. Contract Statement of work
A contract statement of work describes the products and services that should
be provided under the contract.
You are the project manager for a military project that needs to procure a highly specialized service. Your project’s procurement management plan established that the project Will adopt a firm-fixed-price (FFP) contract for its procurement process. Which of the following will be your MAIN concern?
A. Establish contract incentives to synchronize the contracting parties’ interests
B. Determine a clear statement of work
C. Oversee performance to prevent a cost overrun
D. Administer the supplier’s expenditures closely to ensure that you are only invoiced for valid expenditures
B. Determine a clear statement of work
The fixed price contract should be used when the scope can be clearly defined
up front (answer B). The firm-fixed-price contract does not have incentive
mechanisms (answer A). With a fixed price contract, the buyer shifts the cost
risk to the vendor (answer C) and does not need to administer the supplier’s
expenditures (answer D).
Your IT project needs to contract the service of a quality assurance consulting company to ensure that the software meets proper industry standards. Which of the following would be a reason to adopt a fixed-price contract instead of a cost-reimbursable contract?
A. The buyer does not need to administer the supplier’s expenditures
B. Tends to be less expensive than a cost-reimbursable contract
C. Can be negotiated faster than a cost-reimbursable contract
D. It is a flexible contract that can easily incorporate changes
A. The buyer does not need to administer the supplier’s expenditures
The fixed price contract ensures the buyer does not need to administer the
supplier’s expenditures (answer A). The remaining answers represent incorrect
statements.
A potential supplier is proposing a contract where all authorized costs would be reimbursed up to 100,000 plus, plus a fixed amount of 10,000 and an additional 2% for each week in advance. Which contract type is being proposed?
A. CPIF
B. FPIF
C. CPFF
D. A combination of CPFF and FFP
A. CPIF
In a cost plus incentive fee contract (CPIF), all allowable costs are reimbursed,
plus a fixed fee, plus an incentive fee linked to performance objectives.
Five months into an industrial automation project, the vendor produced a deliverable that does not meet the contract statement of work. After conducting an extensive analysis, the customer’s project manager concluded that the deliverable actually meets the business need and that the contract statement of work is inconsistent. How should the customer’s project manager proceed?
A. Formally accept the deliverable because it meets the business need
B. Reject the deliverable because it does not meet the contract statement of work
C. Request a change to the contract statement of work
D. Accept the deliverable and update the project requirements documentation to ensure that the requirements are consistent and address the business need
C. Request a change to the contract statement of work
The customer’s project manager should request a change to the contract
statement of work to ensure that it addresses the business need (answer C).
Formally accepting the deliverable (answer A) and updating the project
requirements documentation (answer D) are not viable answers because the
deliverable would not be delivered according to contract requirements.
Rejecting the deliverable (answer B) would not address the business need.
You were assigned to manage a refurbishment project that needs to procure design services. You received a large number ofvendor proposals after advertising the procurement process in local newspapers. Which of the following can help the MOST in the supplier selection process?
A. Assess potential suppliers using the source selection criteria
B. Conduct a market research
C. Check the list of prequalified sellers
D. Assess potential suppliers using the adopted screening system
A. Assess potential suppliers using the source selection criteria
Source selection criteria provide a logical, transparent and justifiable supplier
selection process (answer A). Market researches (answer B) should have been
performed before receiving the vendor’s proposals as part of procurement
management planning. The prequalified sellers (answer C) and the screening
system (answer D) could help but they should not drive the supplier selection
process.
A senior manager wants to know which products or services Will be procured from an external vendor. You should refer the senior manager to the:
A. Project WBS
B. Procurement management plan
C. Procurement statement of work
D. Project scope statement
C. Procurement statement of work
The procurement statement of work describes the products or services that Will
be procured from an external vendor.
A supplier has just been informed that the customer has no more funds available to finance the project. What should the buyer do FIRST?
A. Stop all work and request a contract change
B. Strongly reduce expenditures and begin negotiations
C. Document lessons learned
D. Initiate contract closure procedures
D. Initiate contract closure procedures
The control procurement process should manage the contract early termination
by following the adopted closure procedures.
The seller has failed to provide the buyer a contracted deliverable. How should the buyer proceed?
A. Send a letter formalizing the default and meet with the supplier to identify a corrective action
B. Send a letter formalizing the default
C. Inform the supplier that such conduct is unacceptable
D. Request a contract change to remove the deliverable from the contract
A. Send a letter formalizing the default and meet with the supplier to identify a corrective action
When there is a breach, the other party should issue a letter formalizing it.
Additionally, the buyer should work collaboratively with the supplier so that the
breach can be corrected.
A company needs to establish a long-term contract with a vendor to build a number of warehouses. What contract would you recommend, to protect the customer from cost risk with a well-defined scope?
A. Fixed Price Incentive Fee (FPIF)
B. Firm Fixed Price (FPP)
C. Cost plus incentive fee
D. Fixed Price with Economic Price Adjustment Contract (FP-EPA)
D. Fixed Price with Economic Price Adjustment Contract (FP-EPA)
The FP-EPA contract is a type of fixed-price contract, usually used in multi-years
procurements, where the price is defined but may be adjusted yearly.
The procurement process faced many issues from the beginning. The team now wants to prevent that the same issues can happen in a future procurement process. Which of the following is the BEST option?
A. Perform a quality audit
B. Perform a procurement audit
C. Organize a team meeting to discuss what could be improved in the future
D. Remove the supplier from future source selection processes
B. Perform a procurement audit
The final purpose of a procurement audit is to identify lessons learned and
improve future procurement initiatives.
The project team is struggling to prepare the procurement performance report because they do not know which procurement performance metrics should be used. Which of the following options would be of MOST help?
A. Procurement audit
B. Bid documents
C. Prequalified sellers
D. Procurement management plan
D. Procurement management plan
The procurement management plan can include metrics used to assess the
suppliers’ performance.
