System Analysis and Design: Project Management Quiz 13 (CH12)
In a(n) _____ contract, the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus. Answers: a. CPIF b. FFP c. CPPC d. FPIF
CPIF
A(n) _____ contract carries the least risk for suppliers Answers: a. CPPC b. FFP c. CPAF d. FP-EPA
CPPC
From the buyer's perspective, the _____ is the least desirable among all contracts because the supplier has no incentive to decrease costs. Answers: a. CPIF b. CPAF c. CPPC d. CPFF
CPPC
In which contract does the buyer pay the supplier for allowable performance costs along with a predetermined percentage based on total costs? Answers: a. CPIF b. CPAF c. FPIF d. CPPC
CPPC
_____ contracts involve payment to the supplier for direct and indirect actual costs and often include fees. Answers: a. Firm-fixed-price b. Fixed-price incentive fee c. Lump sum d. Cost-reimbursable
Cost-reimbursable
A company is considering whether to purchase or lease a piece of equipment for an upcoming project. The cost to purchase is $10,000 plus $100 per day to operate or $500 per day to lease (including operating costs). If the company anticipates using the equipment for a total of 20 days, they will be indifferent as to whether or lease or purchase it. Answers: True False
False
An FP-EPA contract carries the least risk for a supplier. Answers: True False
False
Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts. Answers: True False
False
In an FPI contract, all of the risk is borne by the buyer. Answers: True False
False
In project procurement management, a main output of controlling procurements is a source selection criteria. Answers: True False
False
A(n) _____ is a document used to solicit proposals from prospective suppliers. Answers: a. RFQ b. RFP c. SOW d. WBS
RFP
A document used to solicit quotes or bids from prospective suppliers is known as a(n) _____. Answers: a. RFP b. RFQ c. WBS d. SOW
RFQ
Which is true of lump-sum contracts? Answers: a. They are also known as cost-reimbursable contracts. b. They involve a fixed total price for a well-defined product or service. c. They incur a high degree of risk for the buyer. d. They consist of a fee based on the satisfaction of subjective performance criteria.
They involve a fixed total price for a well-defined product or service
A key factor in evaluating bids, particularly for projects involving information technology, is the past performance record of the bidder. Answers: True False
True
Reviewing performance records reduces the risk of selecting a supplier with a poor track record. Answers: True False
True
In project procurement management, which is an output of the conducting procurements process? Answers: a. make-or-buy decisions b. statements of work c. source selection criteria d. change requests
change requests
In project procurement management, obtaining seller responses, selecting sellers, and awarding contracts is part of the _____ process. Answers: a. closing b. planning c. conducting procurements d. controlling
conducting procurements
In project procurement management, which process involves obtaining seller responses, selecting sellers, and awarding contracts? Answers: a. conducting procurements b. planning procurement management c. closing procurements d. settling contracts
conducting procurements
Most organizations are not in business to provide information technology services, yet many have spent valuable time and resources on information technology functions when they should have instead worked on important competencies such as marketing, customer service, and new product design. Outsourcing helps tackle this problem. Which benefit does outsourcing primarily provide in such a scenario? Answers: a. reduces fixed and recurrent costs b. protects strategic information from being accessible to external suppliers c. increases accountability even without a written contract d. helps focus on an organization's core business
helps focus on an organization's core business
What is one drawback of outsourcing? Answers: a. it does not provide access to specific skills or technologies b. it invariably results in an increase in both fixed and recurrent costs c. it can make an organization become overly dependent on particular suppliers. d. it cannot increase accountability of suppliers through a written contract
it can make an organization become overly dependent on particular suppliers
In project procurement management, which is an output of the planning process? Answers: a. selected sellers b. change requests c. resource calendars d. make-or-buy decisions
make-or-buy decisions
Outputs of the _____ process consist of selected sellers and change requests. Answers: a. planning procurement management b. conducting procurements c. controlling procurements d. closing procurements
.conducting procurements
With a(n) _____ contract, the buyer pays the supplier for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs. Answers: a. CPFF b. CPIF c. FPIF d. CPAF
CPFF
Indirect costs are those costs can be traced back to a project in a cost-effective way. Answers: True False
False
Project procurement management consists primarily of two processes: assessing procurements and controlling procurements. Answers: True False
False
Contents of the procurement management plan vary with project needs. Answers: True False
True
If an organization has no need to buy any products or services from outside the organization, then it has no need to perform any of the procurement management processes. Answers: True False
True
Procurement audits are often done during contract closure to identify lessons learned in the entire procurement process. Answers: True False
True
Suppliers are those organizations or individuals who provide procurement services. Answers: True False
True
While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of suppliers. Answers: True False
True
In project procurement management, which process involves completion and settlement of each contract, including resolution of any open items? Answers: a. controlling procurements b. planning procurement management c. negotiating procurements d. conducting procurements
controlling procurements
Which process of project procurement management involves managing relationships with sellers, monitoring contract performance, making changes as needed, and closing contracts? Answers: a. deciding on the services to procure b. controlling procurements c. settling contracts d. negotiating procurements
controlling procurements
Which of the following is an output of the contract closure process? Answers: a. procurement statements of work b. open item resolution c. work performance information d. resource calendars
open item resolution
The procurement statements of work are an output of the _____ process of project procurement management. Answers: a. planning b. monitoring and controlling c. executing d. closing
planning
In project procurement management, which process involves determining what to procure, when, and how? Answers: a. closing procurements b. controlling procurements c. conducting procurements d. planning procurement mana
planning procurement management
Outsourcing suppliers can often provide economies of scale, especially for hardware and software, that may not be available to the client alone. Which benefit does this offer an organization? Answers: a. reduction in costs b. increased accountability c. increased flexibility d. access to specific skills
reduction in costs
In project procurement management, which is one of the main outputs of the conducting procurement process? Answers: a. procurement management plan b. selected seller c. procurement statement of work d. closed procurement
selected seller
The _____ is a description of the work required for a procurement. Answers: a. RFP b. WBS c. SOW d. RFQ
SOW
In unit pricing, the total value of the contract is a function of the quantities needed to complete the work. Answers: True False
True
Make-or-buy analysis involves comparing the internal costs of providing a product with the cost of outsourcing. Answers: True False
True
The fee in a CPFF contract constantly varies even when the scope of a contract remains the same. Answers: True False
False
A single contract can include all three categories of contracts. Answers: True False
True
All contracts should include specific clauses that take into account issues unique to the project. Answers: True False
True
The closing procurements process involves updating records to reflect final results and archiving information for future use. Answers: True False
True
The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws. Answers: True False
True
The main sections of an RFP can include the statement of work and schedule information. Answers: True False
True
What is the first step in project procurement management? Answers: a. conducting procurements. b. planning procurement management. c. closing procurement management. d. controlling procurements.
planning procurement management.
A shortage of qualified personnel is one of the main reason that companies outsource. A project may require experts in a particular field for several months and planning for this procurement ensures that the needed services will be available for the project. Which benefit does this characteristic of outsourcing provide an organization? Answers: a. reduces focus on its core business b. increases control over all aspects of projects that suppliers carry out. c. provides access to specific skills d. reduces dependency on suppliers
provides access to specific skills
Outsourcing to provide extra workers during periods of peak workloads can be much more economical than trying to fill entire projects with internal resources. Which advantages does this characteristic of outsourcing provide organizations? Answers: a. offers control over all aspects of projects that suppliers carry out b. shifts accountability from external suppliers to internal staff c. helps avoid any form of dependency on suppliers d. provides flexibility
provides flexibility
After planning for procurement management, the next process involves ____. Answers: a. determining the evaluation criteria for the contract award b. using expert judgement in planning purchases and acquisitions c. developing procurement statements of work d. sending appropriate documentation to potential sellers
sending appropriate documentation to potential sellers
The process of choosing suppliers or sellers is known as _____. Answers: a. a bid b. a change order c. WBS d. source selection
source selection
