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Project Procurement Management Questions

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1. Question

Control Risks activities include:

Identifying risk changes and their trends

Updating and modifying contingency reserves as needed

Verifying compliance with Risk Management policies

All

I ncorrect

Control Risks activities include: Testing project assumptions. Identifying risk changes and their trends. Verifying compliance with Risk Management policies.

Updating and modifying contingency reserves as needed.

2. Question

You are the project manager and decided to outsource a part of the project to a vendor. The vendor discovered some issues that impact the cost and

schedule of its work. How does the vendor update the agreement?

A new contract needs to be signed by your company and the vendor

An SOW needs to be signed by you and the vendor

None

A contract addendum needs to be signed by your company and the vendor

I ncorrect

A contract addendum needs to be signed by your company and the vendor.

3. Question

Which type of contract has the highest risk for the seller?

Reimbursed time

Time and materials

Reimbursed cost

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Fixed price

I ncorrect

In Fixed price contract, the seller assumes the greatest risk because the price is fixed and not going to change. Fixed price- A fixed total price for a well-

defined product may include incentives for meeting or exceeding selected project objectives.

4. Question

Your company requires that before you purchase any routers or switches for the data center you are building, you need to solicit quotes from three

separate suppliers prior to submitting the purchase request to the finance department. This policy belongs to?

Organizational Process Assets

Make-or-Buy Decision

Procurement Management Knowledge Area

Enterprise Environmental Factors

I ncorrect

Any type of corporate policy or formal procurement procedure is an organizational process asset. [PMBOK 5th edition, 7]

5. Question

A project manager wishes to expand an existing list of sellers. Which of the following techniques should she consider?

Analytical techniques

Bidder conferences

Make or buy analysis

Advertis ing

I ncorrect

Advertising is a good avenue to expand existing lists of sellers. Advertisements can be placed in general circulation publications in order to achieve this.

[PMBOK 5th edition, Page 376]

6. Question

Which of these is not an input to the Control Procurements process?

Change requests

Work performance data

Agreements

Work performance reports

I ncorrect

Change requests are not the inputs of the Control Procurement process. The rest of the choices are valid inputs of this process. [PMBOK 5th edition, Page

379]

7. Question

You are the project manager and created a contract for your customer. The contract must have the___________.

Offer and consideration



Signatures and the stamp of a public notary

Start date and acceptance of the start date

All

I ncorrect

A contract must have the offer and consideration. Not all contracts demand signatures of public notary. Contract may specify a start date, but the

acceptance of the start date is not needed for all contracts.

8. Question

The Conduct Procurements process receives bids or proposals and applies criteria to select one or more sellers who are both qualified and acceptable as a

seller. Which of the following techniques is not a valid technique for this process?

Proposal Evaluation Techniques

Advertising

Make-or-buy analysis

Bidder Conference

I ncorrect

The Make-or-Buy analysis is not a valid technique in the Conduct Procurements process. All the other three choices are valid techniques. [PMBOK 5th

edition, 71]

9. Question

You are managing a software development project. The project will involve working with a remote team. One of the requirements is to set up a secure

communication link. The lead-time to setup the link is 45 days. Since the initial phase of the project involves requirements gathering, you feel that the link is

required only after 3 months and are planning accordingly. You would typically do this planning activity in:

The Plan Procurement Management process

The Control Procurements process

The Define Activities process

The Conduct Procurements process

I ncorrect

Determining what, when and how to purchase or acquire is done during the Plan Procurement Management process. [PMBOK 5th edition, Page 358]

10. Question

Which statement is true about Mitigation Plans?

Provision in the pro ject p lan to mitigate cost and schedule risk

Both these statements are true. (1) Pre defined action steps to be taken if an identified risk event should occur (2) Provision in the project plan to

mitigate cost and schedule risk

None

Pre defined action steps to be taken if an identified risk event should occur

I ncorrect

Contingency Plans – Pre defined action steps to be taken if an identified risk event should occur Reserves (Mitigation) – Provision in the project plan to




11. Question

Type of contract where the buyer and seller share in the savings is ______.

Cost reimbursable with incentive fee

Time and materials

Cost reimbursable with fixed fee

Fixed Price

I ncorrect

Cost reimbursable with incentive fee: It is a predetermined fee that is paid if certain conditions of the contract are met. Both parties, buyer and seller, will

benefit from producing above expectations.

12. Question

There has been budget cuts across all agencies in your organization. The program management office has started re-prioritizing all organization’s projects

due to lack of funds. Projects with unrealistic expectations, huge budgets, and incomplete requirements are the first ones to be terminated. Due to high

budget, your project is on the list for early termination and that requires early closing of all your contracts in the project. Which of the following statements

about early termination of contracts is TRUE?

When contracts are terminated early, seller must pay all costs incurred

Early termination of contracts is a part of the close project or phase process

Early termination o f contracts is a part o f the close procurements process

When contracts are terminated early, buyer need not pay anything to the seller

I ncorrect

Early termination of contracts is a special case of procurement closure. This effort is done during close procurements process. When contracts are

terminated early, based upon the contract terms and conditions, the buyer may have to compensate the seller. Therefore, early termination of contracts is

a part of the close procurements process’ is a true statement. [PMBOK 5th edition, Page 387]

13. Question

The Make-or-Buy analysis is a technique that is used as part of the Plan Procurement Management process. It is used to determine whether a particular

product or service can be produced by the project team or should it be purchased. The analysis to arrive at a decision should include:

Direct as well as I nd irect costs

Direct costs only

Indirect costs only

Staffing costs only

I ncorrect

The analysis should include both indirect as well as direct costs. [PMBOK 5th edition, Page 365]

14. Question

The contract statement of work describes the various procurement items in sufficient detail to let the prospective sellers see whether they can provide the

item or items. This is called_______________.

WBS

None

SOW



CSOW

I ncorrect

This contract statement of work (CSOW) is a subset of the SOW. The contract statement of work describes the various procurement items in sufficient detail

to give prospective sellers a guideline to see whether they can provide the item or items

15. Question

The seller is reimbursed for all costs incurred to perform the contracted work, and then the seller receives a percentage of the cost that is agreed upon

before beginning work. Which type of contract is this?

CPIF

CPFF

None

CPPC

I ncorrect

Cost-Plus-Percentage of Cost (CPPC) or CPF (Cost plus fee) : The seller is reimbursed for costs that are incurred for performing the contract work, and then

the seller receives a percentage of the cost that is agreed upon before beginning work. Which type of contract is this? Cost-Plus-Fixed-Fee (CPFF): The seller

is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work.

16. Question

Dina, the project manager of a hardware project, is performing a structured review of the procurement process. She would like to look into each document

from the plan procurement management process through the control procurements process to identify failures. What tool should Dina use?

Procurement audits in the close procurements process

Negotiated settlements in the control procurements process

Procurement audits in the manage procurements process

Performance reports in the conduct procurements process

I ncorrect

A procurement audit is used as a tool in the close procurements process. Procurement audits are carried out to identify successes and failures that

warrant recognition. When this tool is used, all procurement processes are thoroughly checked and corresponding documents are verified for problems.

Therefore, procurement audits in the close procurements process is the correct answer. [PMBOK 5th edition, Page 388]

17. Question

Which of the following is neither an input to nor an output of the Close Procurement process?

Project management plan

Closed procurements

Procurement audits

Procurement documents

I ncorrect

Procurement audits are the tools and techniques of the Close Procurement process. The rest of the choices are either the inputs or the outputs of the

process. [PMBOK 5th edition, Page 386]

18. Question



The types of contracts that can be used in a project are documented in the:

Procurement management p lan

Request for Proposal (RFP)

Procurement statement of work

Work breakdown structure (WBS)

I ncorrect

The types of contracts that can be used in a project are documented in the Procurement Management Plan. [PMBOK 5th edition, Page 366]

19. Question

Which of the following is incorrect regarding a bidders conference?

Bidders conferences should not involve individual face-to-face meetings

Questions from each seller should be handled confidentially and not shared with o ther sellers.

No bidders should receive preferential treatment, even if they are part of the company's existing list of approved suppliers

All prospective sellers should be allowed to have a common understanding of the procurement.

I ncorrect

A key objective of a bidders conference is to ensure that all bidders have the same level of understanding of the procurements. Hence, in order to be

completely fair, buyers must ensure that all sellers hear every question from any individual prospective seller and every answer from the buyer. [PMBOK

5th edition, Page 375]

20. Question

A contract cannot contain:

All

I llegal activities

A deadline for the completion of the work

Penalties and fines for disclosure of intellectual rights

I ncorrect

A contract cannot contain illegal activities. A contract can contain other options available.

21. Question

The types of contracts that can be used in a project are documented in the:

Work breakdown structure (WBS)

Procurement management p lan


Request for Proposal (RFP)

I ncorrect

The types of contracts that can be used in a project are documented in the Procurement Management Plan. [PMBOK 5th edition, Page 366]



22. Question

Make-or-buy decisions measure the cost of both options. What are these two options?

None

Direct, I nd irect

Tactical, Strategic

Management, Project

I ncorrect

Make-or-buy decisions measure the cost of both options. When doing this analysis, it should include both direct and indirect costs so that the final

decision is based on comparisons that are equal.

23. Question

What are common types of cost-reimbursable contracts?

CPF

CPFF

CPIF

All

I ncorrect

Three common types of cost-reimbursable contracts are CPF, CPFF, and CPIF Cost-Plus-Fee (CPF), Cost-Plus-Fixed-Fee (CPFF) and Cost-Plus-Incentive-Fee

(CPIF).

24. Question

What is Privity?

Contractual, confidential in formation between the buyer and seller

Relationship between the project manager and a known vendor

None

Relationship between the project manager and an unknown vendor

I ncorrect

Privity is a confidential agreement between the buyer and seller.

25. Question

Which process involves verification and acceptance of all project deliverable, and hence supports the Close Project or Phase process?

Estimate Activity Durations

Validate Scope

Control Costs

Perform Integrated Change Control

I ncorrect

The Validate Scope process formalizes the acceptance of the completed project deliverables and hence supports the Close Project or Phase process.




26. Question

Which of the following techniques can help clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached

prior to signing the contract between a buyer and a seller?

Advertising

Bidder conferences

Procurement negotiations

Independent estimates

I ncorrect

Procurement negotiations help clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached prior to

signing the contract between a buyer and a seller. The bidders conferences are carried out prior to this stage and they are used to ensure that all

prospective sellers have a clear and common understanding of the procurement requirements. Advertising and Independent Estimates can’t help in this

case. [PMBOK 5th edition, Page 377]

27. Question

The market conditions are a part of the________.

Organizational process assets

Enterprise environmental factors

None

Project management concerns

I ncorrect

The market conditions are a part of Enterprise environmental factors.

28. Question

You are about to contract out a project to a service provider. However, at the time of awarding the contract, you are not sure of the total effort involved. Since

the scope of work cannot be accurately estimated, you want to agree the per unit rates for difference services. Which of the following would best suit your

purpose?

T ime & Material (T&M)

Cost-Plus-Fixed-Fee (CPFF)

Cost-Plus-Incentive-Fee (CPIF)

Fixed Price (FP)

I ncorrect

This type of a project situation calls for a Time & Material type of contract. The contract will be open ended since the effort is not completely known.

However, the unit rates will be negotiated and agreed upon for a particular resource category. [PMBOK 5th edition, Page 364]

29. Question

In a manufacturing project, you have requested bids to procure stainless steel products. But, your sponsor insists you to conduct bidder conferences before

selecting sellers. What mandatory standard in PMI code of ethics and professional conduct would be satisfied by conducting bidder conferences?

Fairness

Respect



Responsibility

Honesty

I ncorrect

Bidder conferences or vendor conferences are used to provide clear understanding on the procurement process for all prospective sellers. This process

ensures that the mandatory standard of Fairness is followed in the bidding process. Fairness in this case means making opportunities equally available to

qualified candidates. [Reference - PMBOK 5th Edition, page 375 & PMI code of Ethics and Professional responsibility, Pages 3, 4]

30. Question

In which phase does source selection happen?

Planning

Initiation

Closing

Execution

I ncorrect

Source selection happens during the Execution phase.

31. Question

A project manager is looking at a make-or-buy analysis as part of the Plan Procurement Management process. What type of costs should the project manager

consider for this analysis?

Indirect costs

Out-of-pocket costs

Direct costs

Bo th d irect as well as ind irect costs

I ncorrect

The make-or-buy analysis needs to be as comprehensive as possible. Hence it should consider all possible costs – both direct and indirect costs. [PMBOK

5th edition, Page 365]

32. Question

A project is contracted as a Cost-Plus-Fixed-Fee (CPFF) type of contract with a fee of 10% of estimated costs. The estimated cost is US$ 50,000. If the project

comes in at US$ 75,000 with no changes in project scope, what would be the total cost of the contract?

US$ 75,000

US$ 125,000

US$ 55,000

US$ 80,000

I ncorrect

In the Cost-Plus-Fixed-Fee (CPFF) type of contract, the seller is reimbursed for allowable costs for performing the contract work and receives a fee

calculated as an agreed-upon percentage of the costs. The costs vary depending on the actual cost. The fee is based on estimated costs unless the scope

of the project changes. For the current project, the agree-upon percentage of costs is 10%. The actual cost is US$ 75,000 even though the initial estimate

was US$ 50,000. However, the fee is calculated as 10% of 50,000 = (10/100) X 50,000 = 5,000. The total cost of the contract is 75,000 + 5,000 = US$ 80,000.




33. Question

Make-or-Buy Analysis is done in the_______.

Control Procurements

Conduct Procurements

Plan Procurement Management

Close Procurements

I ncorrect

Make-or-Buy Analysis is done during Plan Procurement Management process.

34. Question

Which of the following is not an input to the Conduct Procurements process?

Seller proposals

Proposal evaluation techniques

Source selection criteria


I ncorrect

Proposal evaluation techniques are the tools and techniques of the Conduct Procurement process. The rest of the choices are the valid inputs to this


35. Question

You are a project manager and are comparing proposals received from sellers. Comparing proposals received from sellers is done during _______ .




Close Procurements

I ncorrect

Comparing proposals received from sellers is done during Conduct Procurements.

36. Question

Vendor selection and management and documentation of lessons learned are tasks that fall under this process area:

Deliverable management

Procurement management

Scope management


I ncorrect

The Conduct Procurements process involves collecting sellers responses, seller selection and the contract award. [PMBOK 5th edition, Page 371]



37. Question

You are a project manager for your company. Part of the project requires producing 10,000 widgets, which your company will outsource. The company has

agreed to pay all related costs and 5% of the estimated project costs. What type of contract has been negotiated?

Cost-Plus-Incentive-Fee contract

Cost-Plus-Fixed-Fee contract

Time and Material contract

Fixed-price contract

I ncorrect

This is an example of a Cost-Plus-Fixed-Fee contract. This type of contract determines the profit element as a fixed percentage of the estimated project cost.


38. Question

Which of the following is an output of the Conduct Procurements process?

Independent Estimates

Selected Sellers

Advertising

Expert Judgment

I ncorrect

Selected seller is the output of the Conduct Procurements process. The rest of the choices are the tools and techniques of this process. [PMBOK 5th

edition, Page 371]

39. Question

CPFF stands for:

Both Cost-Plus-Fixed-Fee and Cost-Plus-Fine-Fee are correct

Cost-Plus-Fine-Fee

Cost-Plus-Fixed-Fee

None

I ncorrect

Cost-Plus-Fixed-Fee (CPFF): The seller is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work.

40. Question

You have received a proposal against a RFP that was sent to vendors. One of the vendors has indicated that they can do the project for $12,500. The cost for

the project is $10,000 and their profit will be $2,500. Which type of the contracts is most suitable to be used in this situation?

Cost Plus Percentage of Cost

Cost Plus Fixed Fee

Fixed price

Cost Plus Incentive Fee

I ncorrect



Apparently it looks like the vendor is asking for a cost plus fixed fee contract. However, the vendor is actually looking for a fixed price contract when they

asked for a fixed $12,500. The cost and fee are just the components the vendor has estimated to come up with a final price. [PMBOK 5th edition, Page 362,

363]

41. Question

The ______________ provides the information from the seller as to how the requirements of the project can be met through purchasing.

Procurement document

WBS

SOW

Scope statement

I ncorrect

The procurement document is to get information from the seller as to how the requirements of the project can be met through purchasing.

42. Question

Which of the following is not a tool or technique of the Control Procurements process?

Records management system

Payment system

Configuration management system

Contract change control system

I ncorrect

The configuration management system is not a tool and technique of the Control Procurements process. The rest of the choices are valid tools and

techniques of this process. [PMBOK 5th edition, Page 379]

43. Question

Which statement is true about Fixed price or lump-sum contracts?

The seller assumes the greatest risk because the price is fixed.

The seller cannot charge for the extra materials because the price for the contract is already fixed.

If the time it takes to deliver the service or product expands, the seller cannot charge for the extra time and price

All

I ncorrect

Fixed price or lump-sum contracts: The seller assumes the greatest risk because the price is set. If the time it takes to deliver the service or product

expands, the seller cannot charge for the extra time and extra price. The seller cannot charge for the extra materials because the price for the contract is

already fixed. Incentives can be used with a fixed price contract based on meeting project deliverables or exceeding them.

44. Question

The State of New York has contracted your company to provide a claims payment system for Medicaid benefits. In the contract there is a clause that indicates

that the State of New York can review your work processes and deliverables. This is an example of?

Record Management System

Performance Report



I nspections and Audits

Deliverables Checklist

I ncorrect

When a buyer puts in a contract that they can review work and deliverables it is an example of an inspection and audit. [PMBOK 5th edition, Page 383]

45. Question

A project is contracted as a Cost-Plus-Incentive-Fee (CPIF) type of contract. The project is negotiated such that if the final costs are less than expected costs,

the sharing formula for cost savings is 75:25. The targeted cost is US$ 100,000 with an 8% incentive fee on the targeted cost. If the project comes in at US$

80,000, what would be the cost of the total contract?

US$ 93,000

US$ 112,000

US$ 108,000

US$ 91,400

I ncorrect

The correct answer is US$ 93,000. The calculation is as follows: Incentive fee based on budgeted costs = 8% of 100,000 = 8,000 Actual costs = 80,000 Share

of cost savings = 25% of 20,000 = 5,000 (since the cost savings is 100,000 – 80,000) Hence the payout = 80,000 + 8,000 + 5,000 = US$ 93,000. [PMBOK 5th

edition, Page 364]

46. Question

At what part of the Procurement Management process do procurement negotiations happen?


Close Procurements



I ncorrect

The negotiations happen at the Conduct Procurement of the Procurement process.

47. Question

You just found out that a major subcontractor for your project consistently provides deliverables late. The subcontractor approaches you and asks you to

continue accepting late deliverables in exchange for a decrease in project costs. This offer is an example of:

Smoothing

Forcing

Confronting

Compromise

I ncorrect

In this scenario both parties are giving up something, this is an example of compromise. [PMBOK 5th edition, Page 283]

48. Question

A project is contracted as a Cost-Plus-Incentive-Fee (CPIF) type of contract. The project is negotiated such that if the final costs are less than expected costs,



the sharing formula for cost savings is 80:20. The targeted cost is US$ 500,000 with a 10% fee. If the project comes in at US$ 450,000, what would be the cost

of the total contract?

US$ 505,000

US$ 510,000

US$ 550,000

US$ 495,000

I ncorrect

In a Cost-Plus-Incentive-Fee (CPIF) type of contract, the seller is reimbursed for allowable costs for performing the contract work and receives a

predetermined fee. In some cases, if the final costs are less than the expected costs, then both the buyer and the seller benefit from the cost savings based

on a pre-negotiated sharing formula. In the current situation, the predetermined fee is 10% of US$ 500,000 = US$ 50,000. Since the project came in at US$

450,000, the savings is 500,000 – 450,000 = 50,000. The sharing formula is 80:20, hence the additional payout to the seller = (20/100) * 50,000 = 10,000.

Hence the value of the total contract = 450,000 + 50,000 + 10,000 = US$ 510,000. [PMBOK 5th edition, Page 364]

49. Question

Create Procurement document is created during _______.




Close Procurements

I ncorrect

Create Procurement document is created during Plan Procurement Management process.

50. Question

A buyer has just received a final set of deliverables from the seller and finds that they do not conform to the specifications that were originally planned for.

Ideally, where would the buyer expect to find documentation on how to handle non-conforming deliverables?

Communication Plan

The contract

Scope Statement

Quality Plan

I ncorrect

The requirements for formal deliverable acceptance and how to address non-conforming deliverables are usually defined in the contract. [PMBOK 5th

edition, Page 377, 378]

51. Question

The RFP (Request for proposal) is done in the_______.




Close Procurements



I ncorrect

RFP(Request for proposal) is done in Plan Procurement Management process.

52. Question

Your company requires that before you purchase any routers or switches for the data center you are building, you need to solicit quotes from three

separate suppliers prior to submitting the purchase request to the finance department. This policy belongs to?

Organizational Process Assets

Procurement Management Knowledge Area

Make-or-Buy Decision

Enterprise Environmental Factors

I ncorrect

Any type of corporate policy or formal procurement procedure is an organizational process asset. [PMBOK 5th edition, Page 27]

53. Question

What is the purpose of a bidder conference?

Awarding a contract to the most suitable vendor

Developing a comprehensive sellers list

Ensuring all vendors have a clear understanding o f the procurement

Pre-qualifying the potential sellers

I ncorrect

Bidder conferences are also called contractor conferences or vendor conferences. Their purpose is provide all vendors with an understanding of the

project requirements and give all vendors equal time to get their questions answered. [PMBOK 5th edition, Page 375]

54. Question

What are the outputs of the Plan Procurement Management process?

Procurement management p lan , Procurement statements o f Work, Make-or-buy decisions

Procurement management plan, Procurement statements of Work, Qualified sellers lists.

Procurement management plan, Qualified sellers lists, Resource calendars

Procurement management plan, Qualified sellers lists, Selected sellers

I ncorrect

Procurement management plan, Procurement statements of Work, and Make-or-buy decisions are three for the seven outputs of the Plan Procurements


55. Question

Which of these is not a tool or technique for the Control Procurements process?


Recommended Corrective Action

Claims administration



Performance reporting

I ncorrect

Recommended corrective action is not a tool or technique in the Control Procurements process. [PMBOK 5th edition, Page 379]

56. Question

A product description of a project can help in creating procurement details. Which one of the following best describes the product description?

A product description defines the contracted work based on the requirements o f the customer

A product description defines the contracted work

A product description defines the requirements for the contract work

All

I ncorrect

A product description defines the contracted work based on the requirements of the customer.

57. Question

If you had an experience with a particularly good or poor performing vendor, what is the correct way to document this experience for future projects?

Call the vendor and talk to them about the experience

Vow to only work with that vendor from now on

Create a seller performance evaluation

Tell all your friends about it

I ncorrect

A seller performance evaluation is created by the buyer and provides information about the seller’s performance. [PMBOK 5th edition, Page 386]

58. Question

A contract change control system should include:

Vendor contact information, tracking systems, and approval levels necessary for authorizing changes

Paperwork, tracking systems, d ispute reso lution procedures, and approval levels necessary for authoriz ing changes

Information database, dispute resolution procedures, and approval levels necessary for authorizing changes

Tracking systems, legal ramifications for certain actions, and approval levels necessary for authorizing changes

I ncorrect

Having a contract change control system will allow you to establish the procedures and process should you need to modify a contract. It contains

paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes [PMBOK 5th edition, Page 383]

59. Question

Tom has sent a letter of intent to a company. What does that mean?

Tom intends to buy from the company

Tom intends to fire the company

None



Tom intends to sue the company

I ncorrect

Tom intends to buy from the company

60. Question

What is the purpose of a bidder conference?

Ensuring all vendors have a clear understanding o f the procurement

Awarding a contract to the most suitable vendor

Pre-qualifying the potential sellers

Developing a comprehensive sellers list

I ncorrect

Bidder conferences are also called contractor conferences or vendor conferences. Their purpose is provide all vendors with an understanding of the

project requirements and give all vendors equal time to get their questions answered. [PMBOK 5th edition, Page 375]

61. Question

Which is not a valid evaluation criterion for source selection?

Contract requirements

Age o f the contact person at the seller

Technical ability of the seller

Price

I ncorrect

Age of the contact person of the seller should not be considered as an evaluation criterion for source selection.

62. Question

A single source seller is the_____________.

Only seller the company wants to do business with

Only seller in the market

Only the qualified seller

None

I ncorrect

A single source seller is the only seller the company wants to do business with.

63. Question

Making payments to seller is done during _______ .



Contro l Procurements



Close Procurements

I ncorrect

Making payments to seller is done during Control Procurements.

64. Question

You have been chosen by a program management office (PMO) to write a purchase order for your expertise in business writing. You have learned that the

PMO has already selected a seller for a software product and would like to award the procurement contract to the selected seller as a purchase order which

you must prepare. In this scenario, the PMO is administering:

The close procurements process

The control procurements process

The plan procurement management process

The conduct procurements process

I ncorrect

Sellers are selected and procurement contracts are awarded to selected sellers in the conduct procurements process. Contracts can be awarded in the

form of a purchase order. Since PMO selected you to write the purchase order, it is in the process of conducting procurements. [PMBOK 5th edition, Page

371]

65. Question

A project manager is confused about the perspective of the buyer-seller relationship in the context of project procurement management. How would your

clarify this?

The buyer-seller relationship exists only between organizations internal to the acquiring organization.

The buyer-seller relationship exists only between organizations external to the acquiring organization.

The buyer-seller relationship can ex ist at many levels on one pro ject, and between organizations internal to and ex ternal to the

acquiring organization.

The buyer-seller relationship is applicable only when a performing organization is involved.

I ncorrect

Project procurement management is usually looked at within the perspective of buyer-seller relationships. The buyer-seller relationship can exist at many

levels on one project, and between organizations internal to and external to the acquiring organization. [PMBOK 5th edition, Page 357]

66. Question

A contract between an organization and a vendor may include a clause that penalizes the vendor if the project is late. Penalty should be enforced based on

______________.

whether the project manager knew the delay was likely

who caused the delay and what is the reason for delay

whether the project manager could have anticipated the delay

None

I ncorrect

The party that caused the delay is typically the party responsible for the delay.

67. Question



During the procurement process, a contractual relationship gets established between a buyer and a seller. During the contract lifecycle, what is the correct

sequence in which the following terminology is applied to a seller? Vendor, Selected source, and Bidder.

The seller is viewed first as a bidder, then as a vendor, then as a selected source.

The seller is viewed first as a vendor, then as a bidder and then as a selected source.

The seller is viewed first as a b idder, then as a selected source and then as a vendor.

The seller is viewed first as a selected source, then as a bidder and then as a vendor.

I ncorrect

68. Question

The buyer and seller are bound by a________.

Responsibilities

Contract

WBS

Identification

I ncorrect

Contract

69. Question

In the PMBOK, a seller is ________ to the project team

Internal

Assigned

Ex ternal

Outside

I ncorrect

In the PMBOK, a seller is External to the project team

70. Question

Which of the following may help in ensuring that certain bidders in the procurement process do not receive preferential treatment that all prospective sellers

have a clear and common understanding of the procurement?

Use of expert judgment

Use of screening techniques

Use o f b idder conferences

Use of weighted criteria

I ncorrect

Bidder conferences allow prospective sellers and buyers to meet prior to submission of a bid. This ensures that all prospective sellers have a clear and

common understanding of the procurement. This usually prevents any bidders from receiving preferential treatment. [PMBOK 5th edition, Page 375]

71. Question



PMI discusses procurement focusing on the ______ relationship.

Purchasing

Vendor or seller

Buyer or seller

All of the above

I ncorrect

PMI discusses procurement focusing on the buyer or seller relationship

72. Question

What do buyers and seller have in common with regards to Control Procurements?

Both parties have specific resources that can be idle.

Each party ensures that both it and the o ther party meet their contractual ob ligations and that their own legal rights are

protected.

Both parties have a contract change management plan.

Each party has its own project plan and legal team

I ncorrect

Both the buyer and the seller administer the contract for similar purposes. Each party ensures that both it and the other party meet their contractual

obligations and that their own legal rights are protected. [PMBOK 5th edition, Page 380]

73. Question

A number of deliverable were submitted to the buyer as part of a project. Where would the project manager find documentation on the requirements for

formal deliverable acceptance and how non-conforming deliverable can be addressed?

In the SOW

In the deliverable release note.

In the lessons learned document

I n the agreement

I ncorrect

Requirements for formal deliverable acceptance and how to address non-conforming deliverables are usually defined in the agreement. [PMBOK 5th

edition, Page 377, 378]

74. Question

A buyer and seller fixed up the rates for junior engineers, senior engineers, architects, and other predefined roles. In what type of a contract would this be

applicable?

Fixed price with economic price adjustment contract

Fixed price incentive contract

T ime and material contract


I ncorrect



Unit labor or material rates are usually fixed up between the buyer and seller in case of Time and Material contracts. Specific categories such as junior or

senior engineers at specific hourly rates are agreed upon by both parties. [PMBOK 5th edition, Page 364]

75. Question

Which of the following is accurate regarding agreements in the Project Procurement Management?

Agreements are informal documents.

Agreements can never be terminated.

Terms and conditions never include the seller’s proposal

Agreements are legal documents between a buyer and a seller.

I ncorrect

Agreements are legal and formal documents between buyers and sellers. [PMBOK 5th edition, Page 357]

76. Question

The legal nature of the contractual relationship between a buyer and a seller requires that appropriate legal counsel be involved in the project, for specific

activities. Which of the following phases requires legal counsel to be involved.

Each procurement management process

Conduct procurements

Control procurements

Plan procurement management

I ncorrect

Project procurement management includes processes necessary to purchase or acquire products or services needed from outside the project team. If the

legal nature of a contractual relationship between a buyer and a seller requires that appropriate legal counsel is involved with a procurement, the

assistance of the legal counsel will be required for every phase of the procurement management. [PMBOK 5th edition, Page 355]

77. Question

Which of the following is true about the procurement documents?

The project manager creates and selects the bid

Inform the performing organization why the bid is being created.

Ensure receipt o f complete proposals

None

I ncorrect

Procurement documents : details of the requirements for the work to ensure complete proposals from sellers.

78. Question

The State Board of Education is reviewing RFPs for deployment of its new HR system. An outside consultant has been hired to provide an independent

estimate of the same work. This will be used as a_____________.

Real estimate

Benchmark estimate

Procurement verification



Internal audit

I ncorrect

For many procurement items, the procuring organization can either prepare its own independent estimates or have an independent estimate prepared as

a check on proposed pricing. This independent estimate is used as a benchmark estimate. Significant differences from these cost estimates can be an

indications that the procurement statement of work was not adequate, that the prospective seller either misunderstood or failed to respond fully to the

procurement statement of work. [PMBOK 5th Edition, Page 376]

79. Question

The risk management plan should include:

Who is responsible for managing various areas of risk

Results of the Identify Risks and risk quantification processes

How contingency plans will be implemented

All

I ncorrect

Risk management plan should include: Results of the Identify Risks and risk quantification processes. Who is responsible for managing various areas of

risk? How the initial identification and quantification outputs will be maintained. How contingency plans will be implemented. How reserves will be

allocated

80. Question

Delivery dates and availability of resources can be found in the __________detail

SOW

Project Charter

Project Scope Statement

Work Breakdown Structure

I ncorrect

Delivery dates and availability of resources can be found in the WBS details.

81. Question

A Risk Register is a part of the ________

Project Scope Statement

Pro ject management p lan

Project scheduling plan

Project Charter

I ncorrect

A Risk Register is detailed part of the project management plan.

82. Question

Different types of contracts are appropriate for different types of purchases. Which of these is not one of the three broad categories of contracts?



Time and Material

Fixed-price or lump-sum

Cost-reimbursable

Fixed-assessment

I ncorrect

Fixed-assessment is not a category of contracts. [PMBOK 5th edition, Page 362]

83. Question

You are the project manager for a Fortune 100 IT company and you are currently engaged in an important project. You want to choose the best contractor

for a specialized task. What should you do to evaluate potential contractors?

Evaluate proposals

Create a lessons learned document

Conduct a performance review

Perform a Make-or-Buy analysis

I ncorrect

An input to the Conduct Procurements process, seller proposals are prepared by sellers in response to a procurement document package. These are then

evaluated by the buyer to perform source selection. [PMBOK 5th edition, Page 373]

84. Question

Which of these is not an input to the Control Procurement process?

Work performance data

Work performance reports

Agreements

Change requests

I ncorrect

Change requests are not the inputs of the Control Procurement process. The rest of the choices are valid inputs of this process. [PMBOK 5th edition, Page

379]

85. Question

Which statement is true about Contingency Plans?

Both these statements are true. (1) Provision in the project plan to mitigate cost and schedule risk . (2) Provision in the project plan to mitigate cost and

schedule risk

Provision in the project plan to mitigate cost and schedule risk

Pre defined action steps to be taken if an identified risk event should occur

None

I ncorrect

Contingency Plans – Pre defined action steps to be taken if an identified risk event should occur Reserves (Mitigation) – Provision in the project plan to




86. Question

___________ is a group of process required to purchase or acquire products, services, or results needed from outside the project team to perform the work.

Planning Management

Control Management

Procurement Management

Scope Management

I ncorrect

Procurement Management is a groups of processes required to to purchase or acquire the products, services, or results needed from outside the project

team to perform the work.

87. Question

In the procurement process, the seller may be viewed initially as a bidder, then as the selected source and then as the contracted supplier. The seller will

typically manage the work as a project. In such an instance, which of the following is not true?

The Buyer becomes the customer and is thus a key project stakeholder for the seller.

Terms and conditions of the contract become key inputs to many of the seller's management processes. (ex: major deliverables, key milestones, cost

objectives)

There need not be a contractual relationship between the buyer and the seller

The Seller's project management team is concerned with all the processes of project management and not just Procurement management.

I ncorrect

The statement that there need not be a contractual relationship between the buyer and the seller is incorrect. Whenever the seller is external to the

organization, there needs to exist a contractual relationship between the buyer and the seller. The rest of the statements are correct. [PMBOK 5th edition,

Page 357]

88. Question

The seller is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work. Which type of contract is this?

Cost reimbursable with fixed fee

Fixed Price

Cost reimbursable with incentive fee

Time and materials

I ncorrect

Cost-Plus-Fixed-Fee (CPFF): The seller is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work.

89. Question

Which of the following is not a tool or technique of the Control Procurement process?

Configuration management system

Payment system


Records management system

I ncorrect



The configuration management system is not a tool and technique of the Control Procurements process. The rest of the choices are valid tools and

techniques of this process. [PMBOK 5th edition, Page 379]

90. Question

If you are working on a project with constantly changing scope, which contract type would work best when hiring an outside vendor to complete a portion

of the work?

Cost reimbursable

T ime and material

Lump sum

Fixed price

I ncorrect

The Time and Material (T&M) contract will allow the contract to change as the project scope changes. [PMBOK 5th edition, Page 364]

91. Question

A seller was notified that they were one of the selected sellers based on their proposal. The seller immediately circulated an internal newsletter stating that

they had just been awarded a large contract for a term of 5 years. Would the newsletter be factually correct?

The newsletter is likely to be factually correct. A selected seller is one who has been awarded a contract based on the procurement process.

The newsletter is likely to be factually incorrect. A selected seller is one whose proposal has been accepted and a contract has been completed

pending signatures of the authorized parties.

It is likely that the newsletter is factually incorrect. While the seller has been selected for the work, it is unlikely that the term of the project would have

been 5 years.

I t is likely that the newsletter is factually incorrect. A selected seller is one whose proposal has been judged to be in a

competitive range. I t does not mean they have been awarded the work.

I ncorrect

The newsletter will likely be factually incorrect. A selected seller is one who has proposal has been judged to be in a competitive range based on bid

evaluation. The seller would have negotiated a draft contract that can become the actual contract when the award is made. [PMBOK 5th edition, Page 377]

92. Question

The purpose of a contract is to distribute a reasonable amount of ____________between the buyer and seller

Responsibility

R isk

None

Reward

I ncorrect

A fair contract shares a reasonable amount of risk between the buyer and the seller.

93. Question

You are the project manager and have decided to outsource a part of the project to a vendor. You have offered a bonus to the vendor if the work is

completed in two months. This is an example of _____________.



pro ject incentive

fixed price contract

None

project goal

I ncorrect

This is an example of project incentive.

94. Question

Which of the following is accurate regarding agreements in the Project Procurement Management?

Agreements can never be terminated.

Agreements are informal documents.

Terms and conditions never include the seller’s proposal

Agreements are legal documents between a buyer and a seller.

I ncorrect

Agreements are legal and formal documents between buyers and sellers. [PMBOK 5th edition, Page 357]

95. Question

You have an urgent requirement on your project and you hire a vendor to start the work immediately. What contract is needed now?

Letter contract

Fixed fee

None

Incentive contract

I ncorrect

For an immediate work, a letter contract would be sufficient.

96. Question

You are the project manager of a marketing project. You want a vendor to offer you one price to do all the detailed work. Which type of document are you

looking for?

Proposal

RFP

I FB

RFI

I ncorrect

An IFB is a sealed document that lists the seller’s price to complete the detailed work.

97. Question

Complete final contract performance reporting and product verification is done in _______.





Close Procurements


I ncorrect

Complete final contract performance reporting and product verification is done in Close Procurements.

98. Question

Which type of contract has the highest risk for the buyer?

Fixed price

Reimbursed time

Reimbursed cost

T ime and materials

I ncorrect

In a time and materials contract, the buyer agrees to pay for time used by the seller, which creates the risk. Time and Material contract – Seller is paid a

preset amount per unit of service and the total value of the contract is a function of the quantities needed to complete the work.

99. Question

You are building a mansion that will have copper roofs. The duration of the project will be approximately three years, so you have built into the contract that

as the price of copper increases the contract allows for price increases as a percentage of the cost copper. However, all other costs are fixed. This is an

example of what type of contract?

Fixed Price Incentive Fee

Fixed Price with Economic Price Adjustment

Unit Price

Time and Materials

I ncorrect

Since the price increases are tied only to the rising costs of the copper, this is a Fixed Price with Economic Price Adjustment (FP-EPA) contract. This is

common with multiple year contracts. [PMBOK 5th edition, Page 363]

100. Question

The costs on a project are typically classified as direct and indirect costs. The cost of electric utilities for the office would be considered as:

A specific cost

Appraisal cost

An ind irect cost

A direct cost

I ncorrect

The cost of electric utilities for the office would be considered as an indirect cost. Indirect costs are also known as overhead and general and

administrative costs. They are the costs allocated by the project team as a cost of doing business. Ex: Salaries of management indirectly involved in the

project, cost of electric utilities etc. [PMBOK 5th edition, Page 365]



101. Question

You have successfully passed your PMP exam and are leading a project to replace the storage devices in a data center. In the following week, you and your

team of experts will be meeting with a storage device vendor to discuss the status of their deliverable that are due at week’s end. What management process

do these activities reflect?



Contro l Procurements

Close Procurements

I ncorrect

The Control Procurements is the process of monitoring the contract performance. [PMBOK 5th edition, Page 379]

102. Question

The scope of work in a project could not be clearly defined. There was also a strong possibility that the scope would be altered during the course of the

project. Which type of contract would suit this type of situation?


Cost-reimbursable contract

Fixed price with economic price adjustment contract

Fixed price incentive contract

I ncorrect

A cost-reimbursable contract gives the project flexibility to redirect a seller whenever the scope of work cannot be precisely determined at the start of the

project and needs to be altered, or when high risks may exist in the effort. [PMBOK 5th edition, Page 363]

103. Question

A seller started out a project on the basis of a Time and Material contract. The initial contract amount based on the agreed-upon rates and effort was $

100,000 over a 1 year period. However, when the project was completed, the total contract value turned out to be $ 350,000 over a 2 year period. What

mechanism could the buyer have used to prevent this unlimited cost growth and schedule change?

Use of a fixed price contract.

A service level agreement.

Use o f a not-to -exceed value and a time limit on the contract.

A penalty based on the increased cost and timeline.

I ncorrect

Use of not-to-exceed values and time limits placed in T&M contracts help prevent unlimited cost growth or schedule changes. Use of a fixed price contract

is an option, but that is a decision prior to awarding the project and signing the contract. [PMBOK 5th edition, Page 364]

104. Question

There are three general type of contracts: Fixed Price, time and materials, and ________.

Cost reimbursable

Time reimbursable

Simple cost



All

I ncorrect

Three general types of contracts: Fixed Price, time and materials, and cost reimbursable. Time and Material contract – Seller is paid a preset amount per

unit of service, and the total value of the contract is a function of the quantities needed to complete the work. Fixed price – A fixed total price for a well-

defined product, may include incentives for meeting or exceeding selected project objectives. Cost reimbursable contacts – Payment to the seller of actual

costs.

105. Question

In the PMBOK, a buyer is _____________ to the project team

Assigned

I nternal

Outside

External

I ncorrect

In the PMBOK, a buyer is Internal to the project team

106. Question

You are the project manager of a marketing project and need to purchase some equipment. The accounting department needs a unilateral contract from

you. Accounting is referring to which of the following:

Purchase Order

Statement of Work

WBS

Legal Binding Contract

I ncorrect

A unilateral contract is simply a purchase order

107. Question

The termination clause and alternative dispute resolution (ADR) mechanism for each procurement in a project is documented in:

Agreement

Scope Statement

Resource Calendars

Source Selection Criteria

I ncorrect

The termination clause and alternative dispute resolution (ADR) mechanism for each procurement in a project is documented in the respective

procurement agreement. [PMBOK 5th edition, Page 378]

108. Question

The evaluation criteria are determined by the _______.



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Seller

Buyer

Sponsor

Project Mnagager

I ncorrect

The evaluation criteria will often determine whether a seller is even eligible to participate in the proposal process.

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project procurement management questions

Documents

questiona project manager

control procurement

risk changes

testing project assumptions

selected project objectives

new contract

questionwhich type of

highest risk