ProcureMENT  Knowledge Area

 

This Knowledge Area is about the various types of contracts and the procedures to select a vendor, prepare a statement of work or contract, and manage the work done by the vendor.

For each project, you need to work with vendors as well as internal divisions to procure the required products or services.

As a project manager, you will involve the procurement and finance teams, but the project manager needs to be the interface with the parties, and help prepare the required documents.

Questions for the Procurement Knowledge Area
 
Question 1
  • Samuel Simpson needs to assess whether the required software modules can be developed internally or must be outsourced to a consulting organization. His project sponsor suggests that in the interest of time, they look at available software products and purchase one off-the-shelf. When Samuel presented the purchase option to the engineering manager, the manager raised several questions about required customization. Which of the following techniques can Samuel use to identify the most suitable option? Note that he cannot ignore the constraints specified in the project charter.

    1. Cost-benefit analysis

    2. Multi-criteria decision analysis

    3. Expert judgment

    4. Alternatives analysis

Question 2

  • Which of the following contract type poses the least risk for the buyer?

  1. Time & Material (T&M) contracts

  2. Cost Plus Fixed Fee (CPFF)

  3. Cost Plus Incentive Fee (CPIF)

  4. Fixed Price with Incentive Fee (FPIF)

 

Question 3

  • A procurement document that has the various procurement phases, available delivery techniques and prepared agreement types to be used when engaging with a vendor is called:

    1. Procurement strategy

    2. Procurement statement of work (SOW)

    3. Procurement terms of reference (TOR)

    4. Procurement management plan

Question 4

  • Gary Gibson is a project manager for a global airlines company at the headquarters in Dallas. He is managing a project to upgrade the aircraft maintenance platform. He is working with the global procurement team to purchase several equipment for aircraft servicing and inspection. Which of the following would be the last activity for the project?

    1. Complete and archive lessons learned.

    2. Measure customer satisfaction for the installed aircraft service stations.

    3. Complete equipment maintenance training for the operations team.

    4. Make sure that the vendor invoices are paid, and the purchase orders are closed.

    

 

Question 5

  • James Jacobson is a project manager for a large project in which he has 8 bidders, who have been pre-selected and invited to submit responses for a request for proposal (RFP). Several bidders have questions and need clarifications. James organizes a bidder conference to make sure that everyone gets the same information. Which process is James in now?

  1. Conduct Procurements

  2. Plan Procurement Management

  3. Control Procurements

  4. Manage Stakeholder Engagement

Question 6

  • Kim Amberley, a project manager for a cloud service provider, needs to purchase licenses for a software application, but is not sure of the quantity. She develops a contract where the price per license is fixed but the total amount can be later changed. Such a contract is called:

    1. Fixed price contract

    2. Cost reimbursable contract

    3. Time and material contract

    4. Unit price contract

 

Question 7

  • A seller is awarded a fixed price with award fee (FPAF) contract for $100,000 per month for 12 months. The award is for $25,000 for the month that the SLA expectations are met or exceeded, which actually happened for 4 out of 12 months. What is the amount paid to the service provider?

    1. $1,200,000

    2. $1,000,000

    3. $1,300,000

    4. $1,000,000

 

Question 8

  • A seller is awarded a fixed price with incentive fee (FPIF) contract for $2M for 24 months. However, if the seller can complete the project in less than 24 months, the seller will get an incentive of $200,000 per month that it finished earlier. The seller was able to complete the project in 18 months. What is the amount paid to the seller?

A.  $2.0M

B.  $3.0M

C.  $3.6M

D.  $3.2M

 

Question 9

  • James Jacobson is a project manager for a large project in which he has eight bidders, who have been pre-selected and invited to submit responses for a request for proposal (RFP). Several bidders have questions and need clarifications. James organizes a bidder conference to make sure that everyone gets the same information. Which process is James in now?

    1. Plan Procurement Management

    2. Control Procurements

    3. Conduct Procurements

    4. Manage Stakeholder Engagement

 

AnswerS

ANSWER 1

       The correct answer is Choice 4. 

All the provided choices are good techniques to select the vendor. But alternatives analysis is the best answer. It is used to evaluate various options and then select the optimum (most suitable) solution.

 

ANSWER 2

      The correct answer is Choice 4. 

Contracts with Fixed Fee (FF) are least risky for the buyer because that the buyer is paying is not going to increase in the future.     

ANSWER 3

       The correct answer is Choice 1.

A procurement strategy has the procurement phases, delivery methods and types of agreements.  See the table on Page 481 of the PMBOK.

ANSWER 4

        The correct answer is Choice 4. 

Paying the vendor invoices could be the last activity. There is a procurement team to do the administrative work and close the purchase orders, with help from the project manager.

ANSWER 5

       The correct answer is Choice 1.

Bidder conferences are held during the Conduct Procurements process. It is a meeting between the buyer and all prospective sellers to clarify doubts and answer questions. It ensures fairness in providing information.

ANSWER 6

      The correct answer is Choice 4. 

 Since the price per unit is fixed, it is a unit price contract.

 

ANSWER 7

     The correct answer is Choice 3.

Total price for the FPAF contract

= fixed fee for 12 months + award for 4 months

= ($100,000/month * 12 months) + ($25,000/month * 4 months)

= $1,200,000 + $100,000

= $1,300,000

The answer is $1,300,000.00 or $1.3M.

ANSWER 8

       The correct answer is Choice 4.

 The total price for the FPIF contract

= fixed fee + incentive for completing 6 months in advance

= $2M + ($200,000/month * 6 months)

= $2M + $1,200,000 

= $3,200,000

 The answer is $3,200,000 or $3.2M.

 

ANSWER 9

     The correct answer is Choice 3.

Bidder conferences are held during the Conduct Procurements process. It is a meeting between the buyer and all prospective sellers to clarify doubts and answer questions. It ensures fairness in providing information.   

This guide is based on the PMBOK 6th Edition® and is meant for PMP® Exams conducted until December 31, 2020