(1) The fixed price contract is advantageous to the buyer because it:

a. requires extremely well defined specifications

b. requires formal procedures for scope changes

c. seller assumes financial and technical risk

d. has a known cost

Answer:C

Hint: Read about Fixed-price contracts under Sec 12.1.1.9, Page 362 PMBOK 5

(2) The contract administration function includes:

A. funding management

b. managing relationships and interfaces

c. performance control

d. all of the above

Answer: D

Hint: PMBOK 5, Page 379, Sec 12.3

(3) The major type(s) of standard warranty used in the business environment is(are):

a. express

b. implied

c. negotiated

d. A and B

e. A, B, and C

Answer: D

Hint: Warranty types include express and implied. Negotiated is not a warranty type.

(4) A Unit Price (UP) contract provides:

a. a reimbursement of allowable costs plus a fixed fee which is paid proportionately as the contract
progresses

b. a reimbursement of allowable cost of services performed plus an agreed upon percentage of the
estimated cost as profit

c. the supplier with a fixed price for delivered performance plus a predetermined fee for superior
performance
d. a fixed price where the supplier agrees to furnish goods and services at unit rates and the final price is
dependent on the quantities needed to carry out the work.

Answer:D

Hint: Time and Materials Contract, Page 364, PMBOK 5

(5) The process of managing procurement relationships, monitoring contract performance, and making
changes as appropriate is called

a.Plan Procurement Management

b. Control Procurements

c. Close Procurements

d. Conduct Procurements

Answer:B

Hint: PMBOK 5, Page 355, Section 12.3

(6) From a contract management perspective, the project manager must consider the:

a. acquisition process

b. contract administration

c. ecological environment

d. offer, acceptance, and consideration

e. a and b

Answer: E

Hint: Options C and D are not related to contracts

(7) The tools and techniques used in the process of Plan Procurement Management includes all but

a. Make-or-buy analysis

b. Market Research

c. Bidder Conferences

d. Expert Judgment

Answer: C

Hint: PMBOK 5, Page 356, Sec. 12.1

(8) Which contract type places the most risk on the seller?
 a. Cost plus percentage fee
b. Cost plus incentive fee
c. Cost plus fixed fee
d. Fixed price plus incentive fee
e. Firm fixed price

Answer: E

Hint: Read about types of contracts under Sec 12.1.1.9, Page 362 PMBOK 5

(9) Decisions made in developing the procurement management plan can also influence the project
schedule and are integrated with Develop Schedule, Estimate Activity Resources, and make-or-buy
analysis.� The statement is

True

False

Not sure

Incomplete Information

Answer: A

Hint: PMBOK 5, Page 360, 2nd Para.

(10) What is the last item a project manager must do to finalize the project closing?

a. Reassign the team

b. Contract completion

c. Archive the project records

d. Complete lessons learned

Answer: B

Hint: Contract completion is most important

(11) The process that includes the contract management and change control processes required to
develop and administer contracts or purchase orders issued by authorized project team members is
known as:

a. Project Procurement Management

b. Project Time management

c. Project Cost Management

d. Project Risk Management

Answer: A
Hint: PMBOK 5, Page 355

(12) For the processes in the Project Procurement Management,

1. Plan Procurement Management

2. Control Procurements

3. Conduct Procurements

4. Close Procurements

The correct sequence is:

A. 1-2-3-4

B. 1-3-2-4

C. 1-4-3-2

D. 3-1-2-4

Answer: B

Hint: PMBOK 5, Page 355, Fig. 12-1

(13) The inputs used in the process of Conduct Procurements includes all except

A. Seller Proposals

b. Procurement statement of work

c. Source Selection Criteria

d. Agreements

Answer: D

Hint: Agreements are the output on conduct procurements process

(14) The contractual agreement under Fixed Price Contracts, which influences the Plan Procurement
project and is the favored by buyers because the price for goods is set at the outset and doesn�t
change until scope of work changes, is known as

a. Firm Fixed Price Contracts (FFP)

b. Fixed Price Incentive Fee Contracts (FPIF)

c. Fixed Price with Economic Price Adjustment Contracts ( FP- EPA)

d. None of the above

Answer: A
Hint: PMBOK 5, Page 363

(15) 15. The contractual agreement under Fixed Price Contracts ,which influences the Plan Procurement
project and gives the buyer and seller some flexibility in that it allows for deviation from performance,
with financial incentives tied to achieving agreed upon metrics is called

Fixed Price Incentive Fee Contracts (FPIF)

Fixed Price with Economic Price Adjustment Contracts (FP- EPA)

Firm Fixed Price Contracts (FFP)

Fixed Assets Price (FAP)

Answer: A

Hint: PMBOK 5, Page 363

(16) The contractual agreement under Cost-reimbursable Contracts, which influences the Plan
Procurement project and where if the final costs are less or greater than the original estimated costs,
then both the buyer and seller share costs from the departures based upon a pre-negotiated cost
sharing formula ,is called

Cost Plus Fixed Fee Contracts ( CPFF)

Cost Plus Award Fee Contracts (CPAF)

Cost Plus Incentive Fee Contracts ( CPIF)

Cost Plus Percentage Completion (CPPC)

Answer: C

Hint: PMBOK 5, Page 364

(17) The contractual agreement under Cost-reimbursable Contracts, which influences the Plan
Procurement project and where the seller is reimbursed for all the legitimate costs , but the majority of
the fee is earned only based in the satisfaction of certain broad subjective performance criteria defined
and incorporated into the contract is called

Cost Plus Fixed Fee Contracts ( CPFF)

Cost Plus Award Fee Contracts (CPAF)

Cost Plus Incentive Fee Contracts ( CPIF)

Cost Plus Firm Fixed Fee Contracts ( CPFFF)

Answer: B

Hint: PMBOK 5, Page 364

(18) The component of the project management plan that describes how a project team will acquire
goods and services from outside the performing organization is called

Procurement Management Plan

Procurement Statement of Work

Procurement Documents

None of the above

Answer: A

Hint: PMBOK 5, Page 366, Sec. 12.1.3.1

(19) A general management technique used to determine whether particular work can best be
accomplished by the project team or should be purchased from outside sources is called

a. Market Research

Make-or-buy Analysis

Expert Judgment

None of the above

Answer: B

Hint: PMBOK 5, Page 365, Sec. 12.1.2.1

(20) The type of hybrid contracts which influences the Plan Procurement project is called

a. Time and Material Contracts (T&M)

b. Cost-reimbursable Contracts

c. Fixed Price Contracts

d. Both B & C

Answer: A

1. Contract closeout is a process that involves:

Discuss

A.

Customer satisfaction analysis and final payment

B.

Administrative closeout and archiving records

C.
Final contractor payment and lessons learned

D.

Product verification and administrative closeout

2. The process of monitoring contract performance, making payments, and awarding contract
modifications occurs during:

A. Contract administration

B. The award phase

C. The closeout phase

D. Contract resolution

3. Ending a contract before the objectives have been met by either mutual agreement or breach is
called:

A. Partial completion

B. Closeout

C. Cessation

D. Termination

4. Which term describes those costs in a contract that are associated with two or more project but are
not traceable to each of them individually?

A. Variable

B. Direct

C. Indirect

D. Semivariable

5. Contract type selection is dependent on the degree of risk or uncertainty facing the project manager.
From the perspective of the buyer, preferred contract type in a low risk situation is:

A. Firm fixed price

B. Fixed price incentive

C. Cost-plus fixed fee

D. Cost-plus-a-percentage-of-cost

6. Which term describes the failure by either the buyer or seller to perform part or all of the duties of
the contract?

A. Termination of the contract

B. Partial performance

C. Breach of contract

D. Contract waiver

7. Which of the following is an input to contract closeout?

A. The contract file

B. Contract documentation

C. The procurement audit

D. Formal acceptance

8. In some cases, contract termination refers to:

A. Contract closure by mutual agreement

B. Contract closure by delivery of goods and services

C. Contract closure by successful performance

D. Certification of receipt of final payment

9. Which of the following terms is an expression by one party of its compliance to certain terms in the
contract provided that the other party expresses its compliance to the identical terms?

A. Offer

B. Bargain

C. Proposal

D. Excahange

10. Which term is not a common name for a procurement document that solicits an offer from
prospective sellers?

A. Invitation for bid

B. Request for information

C. Request for quotation

D. Invitation for negotiation

11. A procurement contract will include terms and conditions, and may incorporate other items that the
buyer specifies to establish what the seller is to provide or perform.

A. True

B. False

12. Sellers are always external to the company performing the project.
A. True

B. False

13. The Plan Procurements process includes consideration of the risks involved with each make-or-buy
decision.

A. True

B. False

14. In project procurement management, the performance data file consists of:

A. The project WBS

B. Cost information

C. Invoice and payment records

D. Cost, schedule, and quality information

15. Requirements for formal acceptance and closure of the contract are usually defined in the:

A. Proposal

B. Statement of Work

C. Contract

D. Procurement audit report

16. Which of the following activities is an important element of effective contract administration?

A. Holding a bidders conference

B. Establishing the appropriate contract type

C. Implementing a contract change control system

D. Developing a statement of work

17. Contract closeout and administrative closure are similar in that they both require:

A. That someone other than the project manager manage the activities involved

B. Verification that no errors occurred at any time while the work was being performed

C. That a WBS was prepared

D. Verification that the work was completed satisfactorily

18. Requirements for inspection and acceptance are defined in the:

A. Contract

B. Procurement management plan

C. Overall project plan

D. Specifications

19. During solicitation planning, the project team is responsible for:

A. Determining the make or buy decision

B. Developing the procurement documents

C. Specifying the schedule perimeters in the form of delivery dates

20. Teaming agreements are not legal documents, they are formulated between team members only

A. True

B. False

21. A make-or-buy analysis is a general management technique used to determine whether particular
work can be best accomplished by the project team or must be purchased from outside sources

A. True

B. False

22. Budget constraints are not considered when making make-or-buy decisions

A. True

B. False

23. Many companies have a lawyer on staff to manage the procurement management.

A. True

B. False

24. The guaranteed profit type of contract for a third party supplier is the fixed cost contract.

A. True

B. False

25. The type of contract that includes performance incentives is called:

A. FP-EPA

B. FFP

C. FPIF

D. CPFF

1. The process of Control Procurements falls under which process group

Planning
Closing

Monitoring and Control

Executing

CORRECT: C. Control procurement is part of Monitoring and Control process group.

2. Sam Consultancy has a large internal project to be initiated. To staff this project, Sam Consultancy is
working with People Consultancy to provide three resources for six months. The resources will be part
of the team managed by Sam Consultancy for six months. Which contract type should be used by Sam
Consultancy?

Purchase Order

Cost plus Fee

Fixed cost

Time and Material

CORRECT: D. This is a case of Staff Augmentation. These projects are managed in Time and Material.

3. Sam Consultancy is planning to buy ten desktops for $1500 each from a leading computer store.
Which type of contract will get signed in this case?

Purchase Order

Cost plus Fee

Fixed cost

Time and Material

CORRECT: A. Purchase Order is used.

4. Tree Consultancy is getting 200 computers installed from a vendor. The vendor will be paid the cost
involved and a 10% incentive. Which contract will be used in this case?

CPPC

CPIF

CPFF

Fixed Cost

CORRECT: A. Cost plus percentage of the cost

5. Alice is a Project Manager. She is coordinating a bidder conference to allow vendors to get
clarification on the work that needs to be performed. Which phase of Project Management is in
progress.

Conduct Procurements
Plan Procurements

Control Procurements

Close Procurements

CORRECT: A. During the Conduct Procurements process, bidders can clarify their doubts using bidder
conference.