Procurement Terminology

Question 1

Administer Procurements

Answer 1

The process of managing the relationship between buyer and seller

Question 2

Bill of Materials (BOM)

Answer 2

A formal document showing the hierarchy of components or pieces and their sub-components or sub-pieces that make up the product

Question 3

Buyer

Answer 3

The person or group in an organization that acquires products, services, or results

Question 4

Claim

Answer 4

A demand for consideration, under the terms of a contract, by a buyer from a seller or by a seller from a buyer

Question 5

Close Procurements

Answer 5

The process of completing the contract; includes settlement on any open items

Question 6

Conduct Procurements

Answer 6

The process of receiving proposals, quotes, and bids, selecting a seller and establishing a contract for goods or services

Question 7

Contract

Answer 7

A mutually binding agreement that requires the services provider to supply the specified services or goods and requires the buyer to pay for them per the terms of the document

Question 8

Cost-plus-fixed-fee (CPFF) Contract

Answer 8

A contract in which the supplier receives payment for allowable costs plus a fixed fee typically based on estimated cost

Question 9

Cost-plus-incentive-fee (CPIF) Contract

Answer 9

A contract in which the supplier receives payment for allowable costs, as well as a pre-negotiated fee and an incentive fee (if incentives are met)

Question 10

Cost-plus-percentage of Cost (CPPC) Contract

Answer 10

A contract that reimburses the seller for cost, plus a negotiated percentage of the total costs

Question 11

Cost-reimbursable (CR) Contract

Answer 11

A contract in which a supplier is paid for direct and indirect cost actually incurred on the project

Question 12

Firm-fixed-price (FFP) Contract

Answer 12

A contract in which the seller provides products or services based on a well defined scope of work for a set price

Question 13

Fixed-price Contract

Answer 13

A contract that pays a seller a fixed price for a well defined or detailed product or service

Question 14

Fixed-price-incentive-fee (FPIF) Contract

Answer 14

A contract in which the seller provides products or services based on a well defined scope of work for a set price; also includes a fee structure that provides more payment for achieving predefined performance objectives

Question 15

Issue

Answer 15

A project item causing confusion or disagreement, or an unresolved item needing attention

Question 16

Make-or-buy Decision

Answer 16

An initial part of the procurement process in which a decision is made to either create the product by the company that needs it, or to outsource it and have another company create it

Question 17

Plan Procurements

Answer 17

The process of determining what to buy, the optimum method to make the purchase and creating the documents associated with it

Question 18

Point of Total Assumption

Answer 18

The total amount of money the buyer will pay regardless of cost overrun on the contract

Question 19

Procurement

Answer 19

The acquisition of goods or services from an outside source (vendor)

Question 20

Procurement Documents (Output/Input)

Answer 20

Documents involved in the bidding and proposal activities; can include request for information (RFI), request for quote (RFQ), or request for proposal (RFP)

Question 21

Procurement Management Plan

Answer 21

The process of attaining goods and services for a project from outside the organization

Question 22

Request for Information (RFI)

Answer 22

A request to a potential seller from the buyer for specific information

Question 23

Request for Proposal (RFP)

Answer 23

A document that describes what the buyer wants from a potential supplier, as well as criteria for acceptability of the vendor

Question 24

Request for Quote (RFQ)

Answer 24

A document used to get bids or quotes from possible suppliers, usually for commodity type items, with minimal customization

Question 25

Retainage

Answer 25

A part of the payment per the terms of the contract that the buyer retains until the project is complete; used to ensure that the seller completes the work per terms of the contract

Question 26

Seller

Answer 26

An individual or company that provides goods or services to a company or individual

Question 27

Statement of Work (SOW)

Answer 27

A description of services, products, and work results to be accomplished on a project or other initiative

Question 28

Termination Clause

Answer 28

A clause in the contract that allows both the buyer and the seller to end the contract

Question 29

Time and Material (T&M) Contract

Answer 29

A contract that provides for acquiring services at specified fixed hourly rates and materials at cost.