Chapter 12 - Project Procurement Management Part 1

Chapter 12 - Project Procurement Management True / False 1. Suppliers are those organizations or individuals who provide procurement services. a. True b. Fals e ANSWER: True RATIONALE: Feedback: Organizations or individuals who provide procurement services are referred to as suppliers. Suppliers are also known as vendors, contractors, subcontractors, or sellers. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.506 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.86 - LO: 12-1 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: The Importance of Project Procurement Management KEYWORDS: Bloom's: Knowledge 2. While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of suppliers. a. True b. Fals e ANSWER: True RATIONALE: Feedback: While outsourcing, organizations should be careful to protect strategic information that could become vulnerable in the hands of suppliers. POINTS: 1 DIFFICULTY: Difficulty: Moderate REFERENCES p.509 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.86 - LO: 12-1 BJECTIVES: Page 1 Chapter 12 - Project Procurement Management NATIONAL STUnited States - BUSPROG: Analytic ANDARDS: TOPICS: The Importance of Project Procurement Management KEYWORDS: Bloom's: Comprehension 3. Project procurement management consists primarily of two processes: assessing procurements and controlling procurements. a. True b. Fals e ANSWER: False RATIONALE: Feedback: There are three main processes in project procurement management. These consist of planning procurement management, conducting procurements, and controlling procurements. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.510-511 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.86 - LO: 12-1 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: The Importance of Project Procurement Management KEYWORDS: Bloom's: Knowledge 4. 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. a. True b. Fals e ANSWER: True RATIONALE: Feedback: 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. Page 2 Chapter 12 - Project Procurement Management POINTS: 1 DIFFICULTY: Difficulty: Moderate REFERENCES p.512 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: Analytic ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Comprehension 5. A single contract can include all three categories of contracts. a. True b. Fals e ANSWER: True RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.512 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Knowledge 6. Indirect costs are those costs can be traced back to a project in a cost-effective way. Page 3 Chapter 12 - Project Procurement Management a. True b. Fals e ANSWER: False RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Moderate REFERENCES p.513 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: Analytic ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Comprehension T 7. Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts. a. True b. Fals e ANSWER: False RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Moderate REFERENCES p.513 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: Analytic ANDARDS: Page 4 Chapter 12 - Project Procurement Management TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Comprehension 8. The fee in a CPFF contract constantly varies even when the scope of a contract remains the same. a. True b. Fals e ANSWER: False RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Moderate REFERENCES p.513-514 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: Analytic ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Comprehension 9. In unit pricing, the total value of the contract is a function of the quantities needed to complete the work. a. True b. Fals e ANSWER: True RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Moderate REFERENCES p.515 5 Page Chapter 12 - Project Procurement Management : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: Analytic ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Comprehension 10. All contracts should include specific clauses that take into account issues unique to the project. a. True b. Fals e ANSWER: RATIONALE: True Feedback: Any type of contract should include specific clauses that take into account issues unique to the project. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES: p.515 QUESTION TYPE:True / False HAS VARIABLES: False LEARNING OBJE INFO.SCHW.14.87 - LO: 12-2 CTIVES: NATIONAL STAN United States - BUSPROG: - Comprehension DARDS: Planning Procurement Management TOPICS: Bloom's: Knowledge KEYWORDS: 11. In an FPI contract, all of the risk is borne by the buyer. a. True b. Fals e ANSWER: False RATIONALE: Feedback: A firm-fixed-price (FFP) contract has the least amount of risk for the buyer, followed by a fixed-price incentive fee (FPIF) contract. Page 6 Chapter 12 - Project Procurement Management POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES: p.512 QUESTION TY True / False PE: HAS VARIABL False ES: LEARNING OBINFO.SCHW.14.87 - LO: 12-2 JECTIVES: NATIONAL ST United States - BUSPROG: - Comprehension ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Knowledge E D: 12. An FP-EPA contract carries the least risk for a supplier. a. True b. Fals e ANSWER: False RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.515 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Knowledge 13. Make-or-buy analysis involves comparing the internal costs of providing a product with the cost of outsourcing. a. True Page 7 Chapter 12 - Project Procurement Management b. Fals e ANSWER: True RATIONALE: Feedback: Make-or-buy analysis involves estimating the internal costs of providing a product or service and comparing the estimate to the cost of outsourcing. POINTS: 1 DIFFICULTY: Difficulty: Moderate REFERENCES p.516 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: Analytic ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Comprehension 14. A company is considering whether to purchase or lease a piece of equipment for an upcoming project. The cost to purchase is $10,000 plus $100 per day to operate or $500 per day to lease (including operating costs). If the company anticipates using the equipment for a total of 20 days, they will be indifferent as to whether or lease or purchase it. a. True b. Fals e ANSWER: False RATIONALE: Feedback: If the company uses the equipment for 20 days, they would be better off with a lease at a total cost of $10,000 (20 x $500). The purchase cost of $10,000 will be increased by $2,000 of operating costs (20 x $100). POINTS: 1 DIFFICULTY: Difficulty: Challenging REFERENCES p.517 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: Technology ANDARDS: Page 8 Chapter 12 - Project Procurement Management TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Application 15. Contents of the procurement management plan vary with project needs. a. True b. Fals e ANSWER: True RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.518 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Knowledge 16. The main sections of an RFP can include the statement of work and schedule information. a. True b. Fals e ANSWER: True RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.520 : Page 9 Chapter 12 - Project Procurement Management QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Knowledge 17. A key factor in evaluating bids, particularly for projects involving information technology, is the past performance record of the bidder. a. True b. Fals e ANSWER: True RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.525 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Knowledge 18. Reviewing performance records reduces the risk of selecting a supplier with a poor track record. a. True b. Fals Page 10 Chapter 12 - Project Procurement Management e ANSWER: True RATIONALE: Feedback: 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. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.525 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.87 - LO: 12-2 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: Planning Procurement Management KEYWORDS: Bloom's: Knowledge 19. In project procurement management, a main output of controlling procurements is a source selection criteria. a. True b. Fals e ANSWER: False RATIONALE: Feedback: The main outputs of this process include closed procurements, work performance information, procurement documentation updates, change requests, project management plan updates, project documents updates, and organizational process assets. POINTS: 1 DIFFICULTY: Difficulty: Easy REFERENCES p.511 : QUESTION TYTrue / False PE: HAS VARIABLFalse ES: LEARNING O INFO.SCHW.14.88 - LO: 12-3 BJECTIVES: NATIONAL STUnited States - BUSPROG: - Comprehension ANDARDS: TOPICS: Conducting Procurements KEYWORDS: Bloom's: Knowledge Page 11