Procurement Flashcards

1
Q

What is an agreement versus a contract?

A

Agreement: A document or communication that outlines internal or external relationships and their intentions

Contract: A type of written or verbal agreement, typically created with an external entity, where there is some exchange of goods or services for some type of compensation (usually monetary); a contract forms the legal relationship between the entities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the difference between a buyer and a seller?

A

The buyer is the company or person who purchases the goods or services

The seller is the company or person who provides the goods or services (may be called a contractor, subcontractor, supplier, designer, or seller)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

According to the Process Groups model, what processes are involved in procurement management?

A

Plan Procurement Management
Conduct Procurement’s
Control Procurement’s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the difference between centralized and decentralized contracting?

A

Centralized: There is one procurement department, and the procurement manager handles procurement’s for many projects

Decentralized: There is no procurement department or procurement manager assigned, and the project manager may be responsible for the plan, as well as conducting all work on all procurement’s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Describe the project manager’s role in procurements.

A

Know the procurement process
Make sure the contract includes the scope of work and requirements
Be involved during contract negotiations
Define quality requirements
Investigate any issues and take corrective action
Understand contract terms and conditions
Ensure all work in the contract is done
Work with the procurement department to manage contract changes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the three broad categories of contracts?

A

Cost-reimbursable (CR)
Fixed-price (FP)
Time and material (T&M)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a purchase order?

A

A unilateral contract typically used for buying commodities

Purchase orders become contracts when the buyer accepts the terms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is an indefinite delivery, indefinite quantity (IDIQ) contract?

A

Provides for an indefinite number of goods and services within a fixed time frame and within a certain cost range

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who has the cost risk in a fixed-price contract?

A

The risk is borne by the seller

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Who has the cost risk in a cost-reimbursable contract?

A

The risk is borne by the buyer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Name some types of contracts that can be used on an agile project.

A

Graduated fixed-price
Fixed-price work packages
Not-to-exceed time and material
Early termination

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is a standard contract?

A

Contract drafted (or reviewed) by lawyers

Standard contracts generally do not require additional review if used for the purpose for which they were intended

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are some examples of special provisions?

A

May include additions, changes, or deletions to a standard contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a privity?

A

A contractual relationship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

When is a fixed-price contract used?

A

When acquiring goods, products, or services with well-defined requirements or specifications

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Name the advantages and disadvantages of a fixed-price contract.

A

Advantages: Less work for the buyer to manage; seller has a strong incentive to control costs; companies have experience with this type of contract; the buyer knows the total price before the work begins

Disadvantages: Seller may try to make up profits by charging more; seller may try to not complete some of the procurement statement of work; requires more work for the buyer to write the procurement statement of work; can be more expensive than other types if the procurement statement of work is incomplete

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a time and material contract?

A

The buyer pays on a per-hour or per-item basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Name the advantages and disadvantages of a time and material contract.

A

Advantages: Can be created quickly; contract duration is brief

Disadvantages: Every hour or unit billed is profit for the seller; the seller has no incentive to control costs; appropriate only for small levels of effort on projects; requires a great deal of day-to-day oversight

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Define cost-reimbursable contract.

A

A contract where all the seller’s costs are reimbursed by the buyer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Name the advantages and disadvantages of a cost-reimbursable contract.

A

Advantages: Allows for a simpler procurement statement of work; usually requires less work to define scope; generally less costly

Disadvantages: Requires auditing seller’s invoices; requires more work for the buyer; seller has only a moderate incentive to control costs; the total price is unknown

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a fixed-price work package?

A

An agile contract that can be paid in increments when work packages are delivered, rather than paid as one lump sum at the end of the contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What does a sharing ratio describe?

A

How the cost savings or cost overrun will be shared as apportioned by percentage (e.g., 80/20, 80 percent buyer/20 percent seller)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is a nondisclosure agreement?

A

An agreement between the buyer and prospective sellers identifying the information or documents they will control and hold confidential, and who in the organization will have access to the confidential information

24
Q

What is a force majeure?

A

A situation that can be considered an “act of nature” and is an allowable excuse for either party not meeting contract requirements

25
What is the purpose of an incentive in a contract?
Incentives are used to bring the seller’s objectives in line with the buyer’s and to motivate the seller towards efficiency. The buyer will provide an additional fee if the seller meets some cost, performance, or schedule objectives.
26
What happens during the Plan Procurement Management process?
Perform make-or-buy analysis Create a procurement management plan Create a procurement strategy for each procurement Create a procurement statement of work for each procurement Select the appropriate contract type for each procurement Create the bid documents Determine the source selection criteria
27
Name the methods for planning procurement management.
Make-or-buy analysis Logistics and supply chain management Economic measures Source selection analysis
28
What is make-or-buy analysis?
Deciding whether the performing organization should do the project work itself or outsource some or all of the work
29
What artifacts result from the Plan Procurement Management process?
Procurement management plan Procurement strategy Procurement statement of work Source selection criteria Make-or-buy decisions Selected types of bid documents Independent cost estimates Change requests
30
What is source selection analysis?
Determines the criteria that will be used to select sellers
31
What is a procurement management plan?
A plan that documents how procurements will be planned, executed, and controlled
32
What are the types of bid documents?
Request for proposal (RFP) Request for quotation (RFQ) Request for information (RFI) Invitation for bid (IFB)
33
What are source selection criteria?
The factors the buyer will use to evaluate responses from the sellers
34
When are source selection criteria created, and when are they used?
Created during the Plan Procurement Management process Used during the Conduct Procurements process to pick a seller
35
What does noncompetitive procurement mean?
The work is awarded to a single source or a sole source without competition
36
What should a project manager watch out for during a bidder conference?
Collusion Sellers not asking questions in front of the competition Making sure all the questions and answers are documented and distributed to all potential sellers
37
What is the purpose of proposal evaluation?
Provides a basis to quantitatively evaluate proposals and minimize the influence of personal prejudices
38
What does a weighting system do?
Enables the buyer’s evaluation committee to analyze seller responses using the weighted source selection criteria
39
What is an independent cost estimate?
The buyer compares the seller’s proposed cost with an estimate created in-house or with outside assistance during procurement planning efforts This allows the buyer to discover significant differences between what the buyer and seller intend in the procurement statement of work
40
What are the objectives of negotiation?
Obtain a fair and reasonable price Develop a good relationship between the buyer and the seller
41
What is required for a legal contract?
Offer Acceptance Consideration Legal capacity Legal purpose
42
What is a contract change control system?
A system that is described in the contract and includes change procedures, forms, dispute resolution processes, and tracking systems
43
Name methods that can be used during the Control Procurements process.
Performance reviews Inspections and audits Earned value analysis Trend analysis
44
What is the purpose of a performance review during Control Procurements?
To verify that the seller is performing as they should by analyzing all available data
45
What is involved in an inspection regarding procurements?
Inspections may involve walkthroughs of the work site or deliverables reviews to verify compliance with the procurement statement of work Variances or deviations may trigger change requests
46
What is involved in an audit regarding procurements?
An audit is to confirm that the seller’s activities comply with approved procurement policies and processes Variances are identified, formal adjustments are made accordingly, and lessons learned are captured
47
What can trend analysis help determine?
Whether performance is getting better or worse If preventive actions can prevent significant variances in the future It can help to develop forecast estimates and estimate at completion
48
Why might there be conflict between the procurement manager and the project manager?
The procurement manager is the only one with the power to change the contract
49
What would be reasons for termination of a contract?
Cause: The buyer may terminate a contract for cause if the seller breaches the contract (does not perform according to the contract) Convenience: The buyer can also terminate the contract before the work is complete because they no longer want the work done (termination for convenience)
50
What is a constructive change?
A change that occurs when the buyer, through actions or inactions, limits the seller’s ability to perform the work according to the contract
51
What does a records management system do?
Keeps procurement documentation complete, organized, and accessible
52
What is involved in closing a procurement?
Tying up all the loose ends Verifying all work and deliverables are accepted Finalizing open claims Financial closure (ensuring payment)
53
What is the difference between procurement closure and project closure?
Project closure: closing out a project or phase Procurement closure: completing only that particular part of scope that has been procured through a third party
54
When are procurements considered closed?
When a contract is completed When a contract is terminated before the work is completed
55
What needs to be done for procurement closure?
Product validation Procurement negotiation Financial closure Procurement process audit Updates to records Final contract performance reporting Creation of procurement file