Rita Questions – Ch 12 Procurement Management – Flashcards

Answer C Once signed, a contract is binding. Generally, the inability to perform, get financing, or one party's belief that the contract is null and void does not change the fact that the contract is binding. If, however, both sides agree to terminate the contract, the contract can move into closure. Once closure is completed, the project is considered completed.

Answer C If the seller completes the work specified in the procurement statement of work, the contract is considered complete. That does not mean the same thing as contract closed. The Close Procurements process must still occur. However, in this situation, the contract work is completed. Tricky!

Answer A Often the seller is required to inform the buyer of anything that is missing or unclear in the procurement documents (choice B). It is in the buyer's best interest to discover missing items, since it will save the buyer money and trouble to correct the problem early. Procurement documents must contain terms and conditions and evaluation criteria (choice C), as well as all the work that is to be done, including the procurement statement ofwork (choice D). This is so the seller can price the project and know what is most important to the buyer. Choice A is an important point for the real world and is the best answer.

Answer C Incentives are meant to bring the objectives of the seller in line with those of the buyer. That way both are progressing toward the same objective.

Answer C Since there can be changes in any form of contract, choice A is not the best answer. There are always good ideas (changes) that can add benefit to the project, so choice B cannot be the best answer. In choice D, the word "eliminate" implies that changes will not occur. As that is not true, this cannot be the best answer.

Answer A Notice that choice B is really saying "halt ALL payments," Halting all payments would be a breach of contract on the buyer's part. Choice C is too severe and cannot be done unilaterally. Choice D does not solve the problem presented. A choice that said, "Halt payments on the disputed amount" would probably be the best answer, but it is not offered. The best answer is A.

Answer B As a project manager, you want to develop a relationship during negotiations that will last throughout the project.

Answer D The seller does not have the choice to start over. The contract that exists is binding. Both parties could agree to start over, but this is a drastic step.

Answer C Expect many questions on the exam that require you to know in what part of the procurement process activities are done.

Answer C Many people miss the fact that a contract includes a procurement statement of work(choice A). To have a contract, you must also have acceptance (choice B). One set of signatures is not enough; you must have sign-off (i.e., acceptance) from both parties, so choice D is only partially correct. The address of the seller (choice C) is not required, and therefore is the exception.

Answer C As the project manager, you know what the project risks are. You need to make sure that provisions are included in the contract to address these risks.

Answer A Choices C and D are good ideas, but not the key objective. Negotiations should be win/win, so choice B is not the best choice. A fair and equitable price (choice A) will create a good working atmosphere. Otherwise, you will pay later, on change orders.

Answer A Answering sellers' questions (choice B), advertising (choice C), and proposal evaluation (choice D) occur during the Conduct Procurements process.

Answer D During the Conduct Procurements process, you normally answer questions submitted by the sellers. The risk analysis processes (choice A) are done before the procurement process begins, as procurement is a risk mitigation and transference tool. Selecting a contract type (choice B) is part of Plan Procurements. Changes to the project schedule (choice C) may be an output of the Administer Procurements process.

Answer B Choice A cannot be best because cutting scope decreases profits on this type of contract. Choice C cannot be best, as CPFF contracts generally do not limit fee increases. Choice D cannot be best, as the fee in a CPFF contract is usually paid out on a continuous basis during the life of the project. One of the ways to change the profit in a cost plus fixed fee contract is to invoice for items not chargeable to the project (choice B).

Answer A To the seller, it is known, but this question is from the buyer's perspective. You do not know what profit the seller included in the contract.

Answer B Although a reserve might be decreased for the project overall when one of its contracts enters closure, the risk rating of the project (choice A) may not be affected. Choice C should have been done during the Conduct Procurements process. Although choice D may be a concern during the Administer Procurements process, it is not common during Close Procurements. Choice B, audit seller's cost submittals, is part of the procurement audit and is a required aspect of Close Procurements.

Answer A If you had trouble with this one, you need to remember that the questions are asked from the buyer's perspective unless otherwise noted. In this case, the seller has the most cost risk, and the buyer's risk is lower.

Answer D You will see long, wordy questions consisting of many paragraphs on the exam, but do not let them worry you. Sometimes the briefer questions are harder. To answer this question, you need to know what a records management system is and that it would not be used to keep track of negotiations. The negotiation process is not a document.

Answer C Putting a time limit on the negotiation is an example of deadline.

Answer A Centralized contracting usually means harder access and less loyalty. Therefore, choices B and D are disadvantages. The fact that procurement managers have no home when they're not working on a project (choice C) is also a disadvantage.

Answer A In a fixed price contract, the seller has the cost risk and therefore wants to completely understand the procurement statement of work before bidding.

Answer C If you follow the proper project management process, you ALLWAYS have good definition of scope (choice A). In this situation, you are in a time crunch. Both good scope definition and incentives are required to make it happen. Which provides the better answer? Along with good scope definition, you need the seller to feel your need for speed. Incentives bring the seller's objectives in line with the buyer's and thus would be the MOST helpful. Good scope definition alone does not ensure speed.

Answer D Negotiation occurs during the Conduct Procurements process.

Answer D Selected sellers are an output of the Conduct Procurements process.

Answer B Notice that much of this question is irrelevant? Did you also notice that the words "make-or-buy decision' were not used in the question? Instead, the question used the definition of make-or-buy. Watch out for this on the exam. A make-or-buy decision is needed before the rest of the procurement process can occur. Therefore, the situation must be taking place in one of the early steps of the procurement process.

Answer B In the Plan Procurements process, we create the procurement documents. The request for proposal is one of those documents.

Answer D Of the options given, the only contract that limits fees for large projects with limited scope definition is cost plus fixed fee.

Answer C Party B is only required to deliver what is defined in the contract.

Answer B Although you have used this contractor before, how can you be sure the company is qualified to do the new work, since it is not exactly like the previous work? This is the risk you are taking.

Answer A It is generally better to do the work yourself if using an outside company means you have to turn over proprietary data to the other company.

Answer C The project manager should attend the bidder conference, so choice A is incorrect. Did you select choice B because the question referred to a concern about scope? Then read the choice again. lt talks about negotiation, and negotiation occurs after the seller is selected, not during the bidder conference. The procurement manager usually holds the bidder conference, so choice D is incorrect. Choice C describes one of the many challenges of a bidder conference and is therefore the best answer.

Answer C Any time that a seller does not perform according to the contract, the project manager must take action. The preferred choice might be to contact the seller and ask what is going on, but that choice is not available here. Therefore, the best choice is to let him know he is in default (choice C).

Answer A Choice B cannot be correct since the customer may be involved in lessons learned and procurement audits and would certainly be involved in formal acceptance. Choice C cannot be correct since both Close Procurements and Close Project or Phase involve the return of property. Close Procurements is done only once for each contract, so choice D cannot be correct. Choice A is correct because contracts are closed out before the project is closed out with the Close Project or Phase process.

Answer D If the contract is terminated, the project needs to enter closure. You need those results for historical purposes.

Answer C The evaluation criteria are the primary tools for evaluating potential sellers and should be used by the entire team in order to make a selection.

Answer D Choice A is incorrect, as the change would not impact the entire project management process, only procurement. Loyalty to the project (choice B) would be gained, not lost, in a decentralized environment. In a decentralized procurement situation, there is less focus on maintaining the skill or expertise of the contracting function, making choice D the best answer.

Answer C In choice A, the contract could be wrong, or the customer could be wrong, but this would have/should have been discovered earlier if proper project management was followed. If you picked choice B, you have forgotten that a seller cannot issue a change order (although he could request one). Did you select choice D? If so, remember that project management is not about making every decision with ALL the team members. Choke C involves meeting with the appropriate team member. If such a problem has arisen, it could mean something was wrong in the WBS dictionary or in how the team member completed the work.

Answer A If you got this question wrong, reread it. You need to audit invoices in all contract types, so how do you choose? Look for the answer that is BEST. In this case, it would be the choice that requires the greatest effort. A T&M contract (choice B) should be for small dollars and short duration (remember that a T&M contract has no incentive to finish), so it does not have a great risk. Choices C and D cannot be best because the risk to the buyer is limited-they are still only going to pay the contract price. In a CPFF contract, the buyer pays all costs. The seller could be charging the buyer for costs that should not be allocated to the buyer. Because of the size and dollar amount of these type of contracts and because the risk to the buyer is great, CPFF contracts need the most auditing. Since this question asked for which one you do not want to use, the answer must be choice A.

Answer D When the seller has more expertise than the buyer, the procurement statement of work should describe performance or function rather than a complete list of work. In any case, the procurement statement of work should be as detailed as possible.