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