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25 Cards in this Set
- Front
- Back
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You are the project manager of the GHY Project for your organization. A portion of this project includes dangerous work; although members of the project team could likely complete the work, your sponsor doesn’t want to accept the risk. In this situation, which of the following may be used as a risk mitigation tool?
A. A vendor proposal B. A contract C. A quotation D. Project requirements |
B. A contract can be used as a risk mitigation tool. Procurement of risky activities is known as transference—the risk does not disappear, but the responsibility for the risk is transferred to the vendor. A, C, and D are all incorrect. A vendor proposal, a quotation, and project requirements do nothing to serve as risk mitigation tools. |
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As a PMP candidate you must understand the provisions of project procurement even if your typical projects do not include procurements. Based on the information in this chapter, a contract cannot have provisions for which one of the following?
A. A deadline for the completion of the work B. Illegal activities C. Subcontracting the work D. Penalties and fines for disclosure of intellectual rights |
B. A contract cannot include provisions for illegal activities.
A is incorrect because a contract can stipulate a deadline for the project work. C is incorrect because contracts can specify rules for subcontracting the work. D is also incorrect because a contract can assess a penalty and fines for disclosing intellectual rights and secret information. |
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You are the project manager for the 89A Project. You have created a contract for your customer. The contract must have what two things?
A. An offer and consideration B. Signatures and the stamp of a notary public C. The value and worth of the procured item D. A start date and an acceptance of the start date |
A. Of all the answers presented, A is the best. Contracts have an offer and a consideration.
B is incorrect because not all contracts demand signatures and notary public involvement. C is also incorrect. A contract may not explicitly determine what the value and worth of the procured product or service is. D is incorrect because a contract may specify a start date, but the acceptance of the start date is vague and not needed for all contracts. |
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The WBS and the WBS dictionary can help a project manager plan for purchases and acquisitions. Which one of the following best describes this process?
A. The WBS defines the specific contracted work. B. The WBS defines the requirements for the specific contracted work. C. The WBS defines the specific contracted work, which must support the requirements of the project customer. D. Both parties must have and retain their own copy of the WBS. |
C. The WBS defines the details and requirements for acceptance of the project. This information also serves as valuable input to the process of determining what needs to be procured. The WBS defines what the end result of the project will be. In dealing with vendors to procure a portion of the project, the work to be procured must support the requirements of the project’s customer.
A is incorrect because the WBS defines the project scope as a whole, not just the contracted work, which may be just a portion of the project. B is incorrect because the WBS does not define the requirements for the contract work. D is incorrect because the vendor likely will not have a copy of the WBS. |
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Yolanda has outsourced a portion of the project to a vendor. The vendor has discovered some issues that will influence the cost and schedule of its portion of the project. How must the vendor and Yolanda update the agreement?
A. As a new contract signed by Yolanda and the vendor B. By submitting the change request to the contract change control system C. As a memo and SOW signed by Yolanda and the vendor D. By submitting the change request to the cost change control system |
B is the best answer. Because the question is asking for the vendor to update the agreement, the change should follow the details of the contract change control system.
A, although feasible, is not the best answer to the question. A new contract does not update the original agreement and may cause delays because the contract may have to be resubmitted, reapproved, and so on. C and D are not viable answers. |
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You are the project manager of the HHQ Project for your company. You have hired a vendor to complete a portion of the project, but the vendor doesn’t seem to have met the project requirements as defined in the contract. You have tried alternative dispute resolutions to no avail and you think the claims administration may have to be escalated. The United States backs all contracts through which of the following?
A. Federal law B. State law C. Court system D. Lawyers |
C. All contracts in the United States are backed by the U.S. court systems.
A, B, and D are incorrect. Often the county and state court systems will make determinations of contract disputes if the need arises. The best answer is simply the court system, not federal law, state law, or lawyers. |
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Terry is the project manager of the MVB Project. She needs to purchase a piece of equipment for her project. The accounting department has informed Terry she needs a unilateral form of contract. Accounting is referring to which of the following?
A. The SOW B. A legally binding contract C. A purchase order D. An invoice from the vendor |
C. A unilateral form of a contract is simply a purchase order.
A is incorrect because an SOW is a statement of work. B is incorrect because a legally binding contract does not fully answer the question. D, an invoice from the vendor, is not what the purchasing department is requesting. |
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Bonnie is the project manager for the HGH Construction Project. She has contracted a portion of the project to the ABC Construction Company and has offered a bonus to ABC if they complete their portion of the work by August 30. This is an example of which one of the following?
A. A project requirement B. A project incentive C. A project goal D. A fixed-price contract |
B. A bonus to complete the work by August 30 is an incentive.
A is incorrect because the question does not specify August 30 as a deadline. C is incorrect because “project goal” does not fully answer the question. D is incorrect because the contract details are not disclosed in this question. |
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You are a project manager for your organization and are progressing through the procurement management processes. Who should receive the procurement document package?
A. Your client B. Your project sponsor C. Your accounting/finance department D. Each seller that will participate in the bidding |
D. Each vendor that participates in the bidding will need to receive the procurement document package.
A, B, and C are all incorrect because these parties do not need the procurement document package. |
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You are the project manager for a company that completes the installation of electrical fixtures in manufacturing environments. Part of your typical contractual agreement included coverage of intellectual rights and privity. Privity is what?
A. The relationship between the project manager and a known vendor B. The relationship between the project manager and an unknown vendor C. The contractual, confidential information between the customer and the vendor D. The professional information regarding the sale between the customer and the vendor |
C. Privity is a confidential agreement between the buyer and the seller.
A, B, and D are incorrect because they do not fully answer the question. |
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Sammy is the project manager of the DSA Project. He is considering proposals and contracts presented by vendors for a portion of the project work. Of the following, which contract is least dangerous to the DSA Project?
A. Cost plus fixed fee B. Cost plus percentage of cost C. Cost plus incentive fee D. Fixed price |
D. A fixed-price contract contains the least amount of risk for a project. The seller assumes all of the risk because cost overruns are the seller’s responsibility.
A, B, and C are incorrect because these contract types carry the risk of cost overruns being assumed by the buyer. |
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Bennie is the project manager for his company and he’s working with his project stakeholder to determine the pros and cons of the different contract types for a portion of his project. Of the following contract types, which one requires the seller to assume the risk of cost overruns?
A. Cost plus fixed fee B. Cost plus incentive fee C. Lump sum D. Time and materials |
C. A lump sum is a fixed fee to complete the contract; the seller absorbs any cost overruns.
A and B are incorrect because these contracts require the seller to carry the risk of cost overruns. D is incorrect because time and materials contracts require the buyer to pay for cost overruns on the materials and the time invested in the project work. |
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Benji is the project manager of the PLP Project. He has hired an independent contractor for a portion of the project work. The contractor is billing the project $120 per hour, plus materials. This is an example of which one of the following?
A. Cost plus fixed fee B. Time and materials C. Unit price D. Lump sum |
B. The contractor’s rate of $ 120 per hour plus the cost of the materials is an example of a time and materials contract.
A is incorrect because a cost plus fixed fee charges the cost of the materials, plus a fixed fee, for the installation or work to complete the contract. C is incorrect because a unit price has a set price for each unit installed on the project. D is incorrect because a lump sum does not break down the time and materials. |
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Mary is the project manager of the JHG Project. She has created a contract statement of work (SOW) for a vendor. All of the following should be included in the contract SOW except for which one?
A. The items being purchased B. The signatures of both parties agreeing to the SOW C. The expected quality levels D. A description of the collateral services required |
B. A signature of both parties agreeing to the SOW is not required. That stipulation will be included in the contract.
A, C, and D are incorrect because these things are generally included in the SOW. |
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You are the project manager for a software development project for an accounting system that will operate over the Internet. Based on your research, you have discovered it will cost you $25,000 to write your own code. Once the code is written, you estimate you’ll spend $3000 per month updating the software with client information, government regulations, and maintenance. A vendor has proposed to write the code for your company and charge a fee based on the number of clients using the program every month. The vendor will charge you $5 per month per user of the web-based accounting system. You will have roughly 1200 clients using the system each month. However, you’ll need an in-house accountant to manage the time and billing of the system, so this will cost you an extra $1,200 per month. How many months can you use the system before it’s better to write your own code rather than hire the vendor?
A. 3 months B. 4 months C. 6 months D. 15 months |
C. The monies invested in the vendor’s solution would have paid for your own code in 6 months. This is calculated by finding your cash outlay for the two solutions: $25,000 for your own code creation and zero cash outlay for the vendor’s solution. The monthly cost to maintain your own code is $3000. The monthly cost of the vendor’s solution is $7200. Subtract your cost of $3000 from the vendor’s cost of $7200, which equals $4200. Divide this number into the cash outlay of $25,000 to create your own code, and you’ll come up with 5.95 months. Of all the choices presented, C, 6 months, is the best choice.
A, B, and D do not correctly answer the question. |
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You are the project manager of a project that will span six years in Columbus, Ohio. You are negotiating with your project customer for considerations for inflation, cost of utilities, and other cost factors that will likely fluctuate over the course of the project. What type of contract should your project have?
A. Cost plus award fee B. Fixed price with economic price adjustments C. Lump sum D. Fixed-price incentive fee |
B. Projects that last for several years often use a fixed price with economic price adjustments for cost categories that are likely to increase over the project duration.
A, C, and D are all incorrect because these contract types do not accommodate fluctuations in the contract price for economic variables such as inflation. |
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A contract between an organization and a vendor may include a clause that penalizes the vendor if the project is late. The lateness of a project has a monetary penalty. Thus, the penalty should be enforced or waived based on which one of the following?
A. Whether the project manager could have anticipated the delay B. Whether the project manager knew the delay was likely C. Whether the delay was because of an unseen risk D. Who caused the delay and the reason why |
D. This choice is the best answer because it answers the question fully. The party that caused the delay is typically the party responsible for it. It would not be acceptable for the project manager to cause a delay willingly and then penalize the contractor because the project was late.
A, B, and C are all incorrect. While these choices may be valid reasons for why a project is late, the best, all-inclusive answer is to determine who caused the delay and why. Choosing any of the other answers eliminates all other possible reasons for delaying the project and the assigned accountability for the lateness. |
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A project manager is considering the marketplace and how it may affect the pricing on the procured portion of her project. She determines that in her market, there is only a single-source seller. A single-source seller means what?
A. There is only one qualified seller. B. There is only one seller the company wants to do business with. C. There is a seller that can provide all aspects of the project procurement needs. D. There is only one seller in the market. |
B. A single-source seller means there is only one seller the company wants to do business with.
A describes a “sole-source” seller. C is incorrect. There may be multiple sellers that can satisfy the project needs. D is also incorrect. Just because there is only one seller in the market does not mean the seller can adequately and fully fill the project needs. |
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Thomas is the project manager for his organization, and he is preparing the procurement process for his project. Several enterprise environmental factors and organizational process assets assist Thomas in making the vendor selection. In the enterprise environmental factors are several evaluation criteria that Thomas must consider when he chooses a vendor for the project. Which one of the following is not a valid evaluation criterion for source selection?
A. The age of the contact person at the seller B. The technical capability of the seller C. Financial capacity D. Price |
A. The age of the contact person at the seller should not influence the source selection. The experience of the person doing the work, however, can.
B, C, and D are all incorrect because technical capability, financial capacity, and price can be valid evaluation criteria. |
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Henry has sent the ABN Contracting Company a letter of intent. This means which one of the following?
A. Henry intends to sue the ABN Contracting Company. B. Henry intends to buy from the ABN Contracting Company. C. Henry intends to bid on a job from the ABN Contracting Company. D. Henry intends to fire the ABN Contracting Company. |
B. Henry intends to buy from the ABN Contracting Company.
A, C, and D are all incorrect because they do not describe the purpose of the letter of intent. |
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Martha is the project manager of the MNB Project. She wants a vendor to offer her one price to do all of the detailed work. Martha is looking for which type of document?
A. A request for proposal B. A request for information C. A proposal D. An invitation for bid |
D. An IFB is typically a request for a sealed document that lists the seller’s firm price to complete the detailed work.
A and B are incorrect because both are documents from the buyer to the seller requesting information about completing the work. C does not list the price to complete the work, but instead offers solutions to the buyer for completing the project needs. |
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In your organization, all project procurement must pass through a centralized contracting office. All correspondence between you and the vendors must be recorded and stored as part of the procurement records management system. These rules also provide instructions for the project’s procurement document packages from procurement planning through contract closure. Which one of the following is true about procurement document packages?
A. They offer no room for bidders to suggest changes. B. They ensure the receipt of complete proposals. C. They inform the performing organization why the bid is being created. D. The project manager creates and selects the bid. |
B. Procurement document packages detail the requirements for the work to ensure complete proposals from sellers.
A is incorrect because procurement documents allow input from the seller to suggest alternative ways to complete the project work. C is incorrect because informing the performing organization on why the bid is being created is not the purpose of the procurement documents. D is not realistic. |
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A key component of the project procurement management knowledge is the actual seller selection. Seller selection is based on many inputs and enterprise environmental factors by which the project manager must abide. From a PMP candidate’s perspective, in what process group does source selection happen?
A. Initiating B. Planning C. Executing D. Closing |
C. Source selection happens during the execution process group.
A, B, and D are all incorrect because these process groups do not include source selection. |
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Within your organization, all project managers are required to document the performance quality ratings, delivery performance, and contractual compliance of each vendor with which they interact. This is known as what?
A. A requirement B. A seller rating system C. Procurement selection D. An incentive contract |
B. This scenario describes the seller rating system, which can help future project managers choose the best vendor based on past performance.
A is incorrect because requirements describe the scope of the project or the procured items. C is incorrect because this term is not valid. D is incorrect because an incentive contract would define the reward or penalties for adhering to or failing to adhere to the contract requirements. |
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You are the project manager for a seller, but you are managing another company’s project as well. Things have gone well on the project, and the work is nearly complete. There is still a significant amount of funds in the project budget. The buyer’s representative approaches you and asks that you complete some optional requirements to use up the remaining budget. You should do which one of the following?
A. Negotiate a change in the contract to take on the additional work. B. Complete a contract change for the additional work. C. Submit the proposed change through the contract change control system. D. Deny the change because it was not in the original contract. |
C. Any additional work is a change in the project scope. Changes to the project scope should be approved by the mechanisms in the change control system. The stakeholders need to approve the changes to the project scope.
A, B, and D are not realistic expectations of the project. These questions could fall into the realm of the PMP Code of Ethics and Professional Conduct. Typically, when a project scope has been fulfilled, the project work is done. The difference in this situation is that the additional tasks are optional requirements for the project scope. |
