Project Management Chapter 12

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.

CPFF

In a(n) _____ contract, the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus.

CPIF

A(n) _____ contract carries the least risk for suppliers.

CPPC

From the buyer's perspective, the _____ is the least desirable among all contracts because the supplier has no incentive to decrease costs.

CPPC

In which contract does the buyer pay the supplier for allowable performance costs along with a predetermined percentage based on total costs?

CPPC

_____ are 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

_____ contracts involve payment to the supplier for direct and indirect actual costs and often include fees.

Cost-reimbursable

T or F: 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.

False

T or F: In an FPI contract, all of the risk is borne by the buyer

False

T or F: In project procurement management, a main output of controlling procurements is a source selection criteria

False

T or F: Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts

False, Buyers absorb more of the risk with cost-reimbursable contracts than they do with fixed-price contracts

T or F: The fee in a CPFF contract constantly varies even when the scope of a contract remains the same

False, This fee does not vary, however, unless the scope of the contract changes

T or F: An FP-EPA contract carries the least risk for a supplier.

False, a CPPC carries the least risk for the supplier

T or F: Project procurement management consists primarily of two processes: assessing procurements and controlling procurements.

False, the three processes are planning procurement management, conducting procurements, and controlling procurements

T or F: Indirect costs are those costs can be traced back to a project in a cost-effective way.

False, these costs cannot be traced back to the project in a cost-effective way

_____ refers to the process of acquiring goods and/or services from an outside source.

Procurement

_____ management includes the processes required to acquire goods and services for a project from outside the performing organization

Project procurement

A(n) _____ is a document used to solicit proposals from prospective suppliers.

RFP

A document used to solicit quotes or bids from prospective suppliers is known as a(n) _____.

RFQ

The _____ is a description of the work required for a procurement.

SOW

Which is true of lump-sum contracts?

They involve a fixed total price for a well-defined product or service.

_____ contracts are a hybrid of fixed-price and cost-reimbursable contracts

Time and material

T or F: A key factor in evaluating bids, particularly for projects involving information technology, is the past performance record of the bidder

True

T or F: A single contract can include all three categories of contracts.

True

T or F: All contracts should include specific clauses that take into account issues unique to the project

True

T or F: Contents of the procurement management plan vary with project needs

True

T or F: 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.

True

T or F: In unit pricing, the total value of the contract is a function of the quantities needed to complete the work

True

T or F: Make-or-buy analysis involves comparing the internal costs of providing a product with the cost of outsourcing

True

T or F: Procurement audits are often done during contract closure to identify lessons learned in the entire procurement process

True

T or F: Reviewing performance records reduces the risk of selecting a supplier with a poor track record

True

T or F: Suppliers are those organizations or individuals who provide procurement services.

True

T or F: The closing procurements process involves updating records to reflect final results and archiving information for future use

True

T or F: The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws

True

T or F: The main sections of an RFP can include the statement of work and schedule information.

True

T or F: While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of suppliers.

True

A(n) _____ is also known as a tender or quote, short for quotation.

bid

A(n)_____ conference helps ensure that everyone has a clear, common understanding of the buyer's desired products or services.

bidders'

In project procurement management, which is an output of the conducting procurements process?

change requests

Controlling procurement also involves _____, which is sometimes referred to as contract closure.

closing procurements

In project procurement management, obtaining seller responses, selecting sellers, and awarding contracts is part of the _____ process.

conducting procurements

In project procurement management, which process involves obtaining seller responses, selecting sellers, and awarding contracts?

conducting procurements

Outputs of the _____ process consist of selected sellers and change requests

conducting procurements

A(n) _____ is a mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them.

contract

The process of source selection involves evaluating proposals from sellers, choosing the best one, negotiating, and awarding the _____.

contract

If an SOW is used as part of a contract to describe only the work required for that particular contract, it is called a(n) _____.

contract statement of work

In project procurement management, which process involves completion and settlement of each contract, including resolution of any open items?

controlling procurements

Which process of project procurement management involves managing relationships with sellers, monitoring contract performance, making changes as needed, and closing contracts?

controlling procurements

Three types of cost-reimbursable contracts include cost plus incentive fee, cost plus fixed fee, and _____.

cost plus percentage of costs

A(n) _____ type of e-procurement that identifies new suppliers for a specific category of purchasing requirements using Internet technology

e-sourcing

A(n) _____ type of e-procurement that sends requests for information and prices to suppliers and receives the response of suppliers using Internet technology

e-tendering

A(n) _____ contract has the least amount of risk for the buyer.

firm-fixed-price

A(n) _____ contract includes a special provision for predefined final adjustments to the contract price due to changes in conditions such as inflation.

fixed-price with economic price adjustment

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?

helps focus on an organization's core business

In procurement management, evaluation of any change should include a(n) _____ analysis.

impact

What is one drawback of outsourcing?

it can make an organization become overly dependent on particular suppliers

A(n) _____ decision is one in which an organization decides if it is in its best interests to make certain products or perform certain services inside the organization, or if it is better to buy them from an outside organization.

make-or-buy

In project procurement management, which is an output of the planning process?

make-or-buy decisions

Tools used in contract closure include procurement audits, _____, and a records management system

negotiated settlements

Which of the following is an output of the contract closure process?

open item resolution

The procurement statements of work are an output of the _____ process of project procurement management

planning

In project procurement management, which process involves determining what to procure, when, and how?

planning procurement management

Procurement statements of work are an output of the _____ process

planning procurement management

What is the first step in project procurement management?

planning procurement management

The cost at which the contractor assumes total responsibility for each additional dollar of contract cost is known as a(n) _____.

point of total assumption

A(n) _____ is a document prepared by a seller when there are different approaches for meeting buyer needs.

proposal

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?

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?

provides flexibility

A(n) _____ system provides the ability to easily organize, find, and archive procurement-related documents

records 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?

reduction in costs

A contract statement of work is a type of _____ statement that describes the work in sufficient detail to allow prospective suppliers to determine if they can provide the required goods and services and to determine an appropriate price.

scope

In project procurement management, which is one of the main outputs of the conducting procurement process?

selected seller

After planning for procurement management, the next process involves ____.

sending appropriate documentation to potential sellers

The process of choosing suppliers or sellers is known as _____.

source selection

A(n) _____ is a contract clause that allows the buyer or supplier to end the contract.

termination clause

All procurement documents should be in _____ form in order to facilitate accurate and complete responses from prospective sellers.

written