Question 1

An FP-EPA contract carries the least risk for a supplier.

Accepted Answer

For a seller, an FFP carries the most risk. An FP-EPA contract carries a higher degree of risk for a seller than a CPPC, CPFF, CPIF, CPAF, or an FPI.

Question 2

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

Accepted Answer

Indirect costs are not directly related to the products or services of the project, but they are indirectly related to performing the project. Normally, these costs cannot be traced back to the project in a cost-effective way.

Question 3

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

Accepted Answer

While outsourcing, organizations should be careful to protect strategic information that could become vulnerable in the hands of suppliers.

Question 4

Suppliers are those organizations or individuals who provide procurement services.

Accepted Answer

Organizations or individuals who provide procurement services are referred to as suppliers. Suppliers are also known as vendors, contractors, subcontractors, or sellers.

Question 5

Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts.

Accepted Answer

Cost-reimbursable contracts often include fees, such as a profit percentage or incentives for meeting or exceeding selected project objectives. Buyer absorb more of the risk with cost-reimbursable contracts than they do with fixed-price contracts.

Question 6

Reviewing performance records reduces the risk of selecting a supplier with a poor track record.

Accepted Answer

A key factor in evaluating bids, particularly for projects involving IT, is the past performance record of the bidder. Reviewing performance records and references reduces the risk of selecting a supplier with a poor track record.

Question 7

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.

Accepted Answer

Planning procurements involves identifying which project needs can best be met by using products or services outside the organization. If there is no need to buy products or services from outside the organization, then further procurement management is not needed.

Question 8

In an FPI contract, all of the risk is borne by the buyer.

Accepted Answer

A firm-fixed-price (FFP) contract has the least amount of risk for the buyer, followed by a fixed-price incentive fee (FPIF) contract.

Question 9

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

Accepted Answer

A key factor in evaluating bids, particularly for projects involving IT, is the past performance record of the bidder. The RFP should require bidders to list other similar projects they have worked on and provide customer references for those projects.

Question 10

Risk registers and stakeholder registers are outputs of the planning procurement process.

Accepted Answer

The risk register and the stakeholder register are inputs for the planning procurement process. Other inputs needed for planning procurements include the project management plan, requirements documentation, activity resource requirements, the project schedule, and activity cost estimates, among others.

Question 11

Contents of the procurement management plan vary with project needs.

Accepted Answer

The procurement management plan is a document that describes how the procurement processes will be managed. Like other project plans, contents of the procurement management plan will vary with project needs.

Question 12

The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws.

Accepted Answer

Controlling procurements ensures that the seller's performance meets contractual requirements. The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws.

Question 13

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

Accepted Answer

There are four main processes in project procurement management. These consist of planning procurement management, conducting procurements, controlling procurements, and closing procurements.

Question 14

The fee in a CPFF contract constantly varies even when the scope of a contract remains the same.

Accepted Answer

With a cost plus fixed fee (CPFF) contract, the buyer pays the supplier for allowable performance costs plus a fixed fee payment that is usually based on a percentage of estimated costs. This fee does not vary, however, unless the scope of the contract changes.

Question 15

In unit pricing, the total value of the contract is a function of the quantities needed to complete the work.

Accepted Answer

Unit pricing can be used in various types of contracts to require the buyer to pay the supplier a predetermined amount per unit of product or service. The total value of the contract is a function of the quantities needed to complete the work.

Question 16

In project procurement management, a main output of the controlling process is a source selection criteria.

Accepted Answer

In project procurement management, two of the main outputs of this process are a selected seller and procurement contract award.

Question 17

All contracts should include specific clauses that take into account issues unique to the project.

Accepted Answer

Any type of contract should include specific clauses that take into account issues unique to the project.

Question 18

The main sections of an RFP can include the statement of work and schedule information.

Accepted Answer

The main sections of an RFP usually include its statement of purpose, background information on the organization issuing the RFP, the basic requirements for the products and services being proposed, and the hardware and software environment.

Question 19

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

Accepted Answer

Make-or-buy analysis involves estimating the internal costs of providing a product or service and comparing the estimate to the cost of outsourcing.

Question 20

A single contract can include all three categories of contracts.

Accepted Answer

Three broad categories of contracts are fixed price or lump sum, cost reimbursable, and time and material. A single contract can include all three of these categories if it makes sense for a particular procurement.

Quiz 12: Project Procurement Management