Project Management Chapter 12

The cost at which the contractor assumes total responsibility for each additional dollar of contract cost in a fixed-price incentive fee contract

Point of Total Assumption (PTA)

A document used to solicit proposals from prospective suppliers

Request for Proposal (RFP)

A document used to solicit quotes or bids from prospective suppliers

Request for Quote (RFQ)

Which of the following is true of lump-sum contracts? a. They involve a fixed total price for a well-defined product or service. b. They incur a high degree of risk for the buyer. c. They consist of a fee based on the satisfaction of subjective performance criteria. d. They are also known as cost-reimbursable contracts.

a

"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 of the following benefits does this characteristic of outsourcing provide an organization? a. Reduces focus on its core business b. Provides access to specific skills c. Reduces dependency on suppliers d. Increases control over all aspects of projects that suppliers carry out

b

In project procurement management, the process of conducting procurements is part of the _____ process. a. planning b. executing c. closing d. monitoring and controlling

b

Which of the following processes of project procurement management involves managing relationships with sellers, monitoring contract performance, and making changes as needed? a. Closing procurements b. Controlling procurements c. Settling contracts d. Deciding on the services to procure

b

A document prepared by sellers to provide pricing for standard items that the buyer has clearly defined; also called a tender or quote (short for quotation)

bid

In project procurement management, which of the following is an output of the executing process? a. Make-or-buy decisions b. Source selection criteria c. Resource calendars d. Statements of work

c

In project procurement management, which of the following is one of the main outputs of the conducting procurement process? a. A procurement statement of work b. A closed procurement c. A selected seller d. A procurement management plan

c

Outsourcing suppliers can often provide economies of scale, especially for hardware and software, that may not be available to the client alone. Which of the following benefits does this offer an organization? a. Access to specific skills b. Increased flexibility c. Reduction in fixed and recurrent costs d. Increased accountability

c

Oral or written acts or omissions by someone with actual or apparent authority that can be construed to have the same effect as a written change order

constructive change orders

A mutually binding agreement that obligates the seller to provide specified products or services and obligates the buyer to pay for them

contract

A contract in which the buyer pays the supplier for allowable performance costs plus an award fee based on the satisfaction of subjective performance criteria

cost plus award fee (CPAF) contract

A contract in which the buyer pays the supplier for allowable performance costs plus a fixed fee payment that is usually based on a percentage of estimated costs

cost plus fixed fee (CPFF) contract

A contract in which the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus

cost plus incentive fee (CPIF) contract

A contract in which the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on total costs

cost plus percentage of costs (CPPC) contract

Contracts that involve payment to the supplier for direct and indirect actual costs

cost-reimbursable contracts

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. a. CPIF b. FPIF c. CPAF d. CPFF

d

A contract with a fixed total price for a well-defined product or service; also called a lump-sum contract

fixed-price contract

A contract with a fixed total price for a well-defined product or service; also called a fixed-price contract

lump-sum contract

An organization's decision to make certain products and perform certain services inside the organization or to buy them from an outside organization

make-or-buy decision

Acquiring goods and services from an outside source

procurement

The processes required to acquire goods and services for a project from outside the performing organization

project procurement management

A document prepared by sellers when there are different approaches for meeting buyer needs

proposal

Contractors, suppliers, or providers who provide goods and services to other organizations

sellers

A description of the work required for procurement

statement of work (SOW)

A contract clause that allows the buyer or supplier to end the contract

termination clause

A hybrid of fixed-price and cost-reimbursable contracts

time and material (T&M) contracts

An approach in which the buyer pays the supplier a predetermined amount per unit of service, and the total value of the contract is a function of the quantities needed to complete the work

unit pricing