Quiz 10: Procurement Management Quiz

Multiple Choice

When conducting procurement management for a project, what is one of the first things a project manager should research before awarding the contract?

• Laws and regulations of the country

• The sponsor requirements

• What terms and conditions to put in the contract

• What a payment terms to put in the contrac

One of the first things to know before setting up a contract between a buyer and seller is the local laws and regulations of that country and how it may affect the contract. Laws and regulations can affect what can and cannot be in a contract.

Multiple Choice

The project manager has met with the team, and they are currently deciding whether they should develop internal software to meet the needs of the project sponsor or purchase external commercial software. What process are they currently engaged in?

• Plan Procurement Management

• Conduct Procurement

• Control Procurement

• Make-or-buy decisions

Plan procurement management is the process of determining what the project team should procure, if anything, and how it should be done.

Multiple Choice

The project manager has negotiated a fixed-price contract with a steel supplier. The contract is for 4 years. The seller has requested that the cost be increased by 4% every year due to inflation and fuel costs. What type of contract should the project manager use? 

• Firm Fized Price

• Fixed-price Incentive Fee

• Fixed-price Economic Price Adjustment

A fixed-price economic price adjustment contract is used to adjust the fixed costs over the life of the contract due to economic conditions such as inflation.

Multiple Choice

As the project manager is getting ready to send out the request for proposals for the project, he contacts the PMO for a list of properly vetted sellers. What is the name of this list?

• Qualified seller list

• Prequalified seller list

• Preapproved seller list

• Approved seller list

A preapproved seller lists is a list of sellers that have been properly vetted by the organization and can be used as potential sellers on a project. All other choices are made-up terms.

Multiple Choice

The project manager and the team have come up with a few different criteria they will use when selecting a seller. The criteria include costs, qualifications, licenses, and financial stability of the seller. What best describes these criteria?

• Procurement documents

• Agreements

• Request for proposal

• Source selection criteria

Source selection criteria are used to evaluate the sellers and can include things such as costs, delivery dates, experience, financial stability, and management experience.

Multiple Choice

The project team has determined they will use an outside consultant to configure the network routers on the network upgrade project. They’re not sure what type of configuration they should put in the routers or how it should be done. They will depend on the expertise of the consultant. They would also like to keep the risks as low as possible. What contract best fits this project?

• Firm fixed price

• Time and material

• Cost plus fixed fee

• Cost plus incentive

Although the question states that they would like to keep risks low, and a time and material contract has the highest risk, the project team does not have a detailed project scope. Without a detailed project scope, you cannot use firm fixed-price or even cost-reimbursable contracts, such as cost-plus-fixed-fee contracts.

Multiple Choice

While working on the office renovation project, the project manager has received multiple bids from different vendors. What the project manager thought would be a cost-effective contract turned out to be very expensive. The project manager then hires a professional estimator to determine what the contract should cost. What is the project manager looking for?

• Outside estimate

• Building cost estimate

• Independent cost estimate

• PMO

An independent cost estimate is generally made by hiring an outside professional estimator to provide a benchmark to determine whether the bids from a seller are adequate for the project.

Multiple Choice

While preparing different documents to procure work for the project, the project manager creates the procurement statement of work and the procurement management plan. What is the difference between the two documents?

• The procurement management plan documents what components of the project will be procured, while the procurement statement of work documents how to manage the procurement process

• The procurement management plan documents how to manage procurement processes, while the procurement statement of work documents what components of the project will be procured

• There is no difference between the doccuments

• The procurement statement of work is part of the procurement management plan

The procurement management plan is part of the project management plan, while the procurement statement of work is a project document. The procurement management plan contains the activities necessary to conduct the procurement processes. The procurement statement of work outlines what components of the project will be obtained from an outside source.

Multiple Choice

The project manager and the team have determined that they will procure the installation and configuration of the telephone systems for the new computer network. They have determined that the type of agreement they will use is a cost-plus-fixed-fee contract. What project document will specify the type of contract that will be used?

• Procurement management plan

• Procurement strategu

• Statement of work

• Bid documents

The procurement strategy will outline how the procured section of the project should be delivered. It will also outline the contract types and procurement phases.  

Multiple Choice

The project manager has met with over six different sellers and has negotiated with them. Finally, he has selected one of the sellers and awarded the contract. What process group are these activities part of?

• Planning

• Executing

• Monitor and controlling

• Closing

The process the project manager is currently engaged in is conduct procurement, which will result in selecting a seller and awarding a contract. This process is part of the executing process group.

Multiple Choice

The project manager is set to start the process of conduct procurement. What should the project manager have received before starting this process?

• Procurement management plan

• Bid documents

• Procurement statement of work

• Seller proposals

The seller proposals should be acquired before the project manager can negotiate and select the seller. All other choices are documents created by the project manager and the project team.

Multiple Choice

While working on a large government contract to construct a bridge, the project manager determines that meeting individual sellers will take an extreme amount of time. What can the project manager do to give out information about the project to multiple sellers in a time-effective manner?

• Advertising

• Bid reviews

• Proposal evaluation techniques

• Vendor conferences

Vendor conferences, also known as bidder conferences, are meetings between the buyer and prospective sellers prior to proposal submission.

Multiple Choice

The project manager has selected a seller to work on a contract that requires insurance and performance bonds. The insurance and performance bonds must be of a certain amount in order for the seller to meet the buyer’s compliance requirements. Where should the project manager include the insurance and performance bonds?

• Procurement statement of work

• Procurement management plan

• Agreement

• Request for proposal

An agreement can contain elements such as pricing and payment terms, inspections, warranties, incentives and penalties, and insurance and performance bonds.

Multiple Choice

After being awarded the contract, the seller has begun to do the work listed in the contract. The project manager has also started to inspect the work to ensure that it is getting done according to the contract. What process best describes these activities?

• Monitor procurement

• Managed procurement

• Control procurement

• Close procurement

Control procurement is part of the monitoring and controlling process groups in which both the buyer and seller meet the requirements outlined in the contract.

Multiple Choice

While working on a lengthy contract, the seller decides to complete more work than was listed in the contract to ensure the quality of the work. The seller then submits an invoice for additional work. The project manager disagrees with how much extra the seller is charging for the additional work. What should the project manager do next?

• Submit the invoice to claims administration and negotiate a settlement

• Inform the seller they will not be paid due to the contract

• Inform the seller they will be paid due to the quality of the work

• Submit a change request for additional funds

A claim is a contested charge that occurs when a seller does additional work that is not listed in a contract. The best way to resolve a claim is to negotiate a settlement.

Multiple Choice

After meeting with several sellers, a project manager feels that the best contract for the project would be one in which the project team purchases all of the materials to redesign the network and pays the seller a flat fee. What contract would best fit this scenario?

• Cost reimbursable

• Fixed price

• Time and material

• Fixed price with materials

A cost-reimbursable contract has two subtypes, cost-plus-fixed-fee and cost-plus-incentive-fee contracts. The contract described in the question is a cost-plus-fixed-fee contract, in which the project team will purchase all the project materials and then pay the seller a flat fee for their profits.

Multiple Choice

The procurement is now completed and the seller has completed all the work in the contract. Who should approve all of the deliverables prior to closure of the procurement?

• Project manager

• Project team

• Project sponsor

• Company management

The project manager should approve all deliverables prior to the closure of procurement. It should be closed with a formal written notice to the seller that all work has been completed.

Multiple Choice

When negotiating a contract between a buyer and seller, what should the project manager look for in terms of pricing?

• A price that is good for the buyer

• A price that is good for the seller

• A fair price between the buyer and the seller

• A fixed-price contract

When negotiating a contract, the project manager should find a fair price between the buyer and seller. Never try to negotiate a one-sided contract that is only good for one party. That will generally lead to conflicts and even low-quality work.

Multiple Choice

While developing a large building complex, the project manager has documented seven different phases the seller will need to complete. In what document should the project manager include the procurement phases?

• Procurement management plan

• Procurement statement of work

• Bid documents

• Procurement strategy

The procurement strategy documents delivery methods, types of agreements, and the procurement phases of the project.

Multiple Choice

The project sponsor is very concerned about the quality of the project work. He has asked the project manager to ensure that the sellers perform a high-quality job; if not, the customers may request refunds on the product. Where should the project manager include the desired quantity levels and performance for the outsourced section of the project?

• Procurement management plan

• Procurement statement of work

• Bid documents

• Procurement strategy

The procurement statement of work outlines what, from the scope baseline, will be outsourced. It also contains information such as specifications, desired quality, and quality levels.