Chapter 12: Project Procurement Management
True / False
1. Suppliers are those organizations or individuals who provide procurement services.
a.
True
b.
False
True
suppliers. Suppliers are also known as vendors, contractors, subcontractors, or sellers.
1
Difficulty: Easy
p.466
INFO.SCHW.14.86 – LO: 12-1
The Importance of Project Procurement Management
Bloom’s: Knowledge
2. While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of
suppliers.
a.
True
b.
False
True
that could become vulnerable in the hands of suppliers.
1
Difficulty: Moderate
p.469
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Technology
The Importance of Project Procurement Management
Bloom’s: Comprehension
3. Project procurement management consists primarily of two processes: assessing procurements and controlling
procurements.
a.
True
b.
False
False
1
Difficulty: Easy
p.470
United States – BUSPROG: Technology
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.
False
True
1
Difficulty: Moderate
p.471
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Analytic
Planning Procurement Management
Bloom’s: Comprehension
5. Risk registers and stakeholder registers are outputs of the planning procurement process.
a.
True
b.
False
False
1
Difficulty: Easy
p.471
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
6. A single contract can include all three categories of contracts.
a.
True
b.
False
True
1
Difficulty: Easy
p.471-472
Bloom’s: Knowledge
7. Indirect costs are those costs can be traced back to a project in a cost-effective way.
a.
True
b.
False
False
1
Difficulty: Moderate
p.472-473
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Analytic
Planning Procurement Management
Bloom’s: Comprehension
8. Buyers absorb lesser risk with cost-reimbursable contracts than they do with fixed-price contracts.
a.
True
b.
False
False
1
Difficulty: Moderate
p.473
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Analytic
Planning Procurement Management
Bloom’s: Comprehension
9. The fee in a CPFF contract constantly varies even when the scope of a contract remains the same.
a.
True
b.
False
False
1
p.474
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
10. In unit pricing, the total value of the contract is a function of the quantities needed to complete the work.
a.
True
b.
False
True
1
Difficulty: Moderate
p.474
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Comprehension
11. All contracts should include specific clauses that take into account issues unique to the project.
a.
True
b.
False
True
1
Difficulty: Easy
p.474
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
12. In an FPI contract, all of the risk is borne by the buyer.
a.
True
b.
False
False
1
Difficulty: Easy
p.472
United States – BUSPROG: Analytic
United States – BUSPROG: Analytic
Planning Procurement Management
Bloom’s: Comprehension
13. An FP–EPA contract carries the least risk for a supplier.
a.
True
b.
False
False
degree of risk for a seller than a CPPC, CPFF, CPIF, CPAF, or an FPI.
1
Difficulty: Easy
p.475
INFO.SCHW.14.87 – LO: 12-2
Planning Procurement Management
Bloom’s: Knowledge
14. Make-or-buy analysis involves comparing the internal costs of providing a product with the cost of outsourcing.
a.
True
b.
False
True
or service and comparing the estimate to the cost of outsourcing.
1
Difficulty: Moderate
p.476
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG – Technology
Planning Procurement Management
Bloom’s: Comprehension
15. 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.
False
False
1
Difficulty: Difficult
p.476
United States – BUSPROG: Technology
Bloom’s: Knowledge
16. Contents of the procurement management plan vary with project needs.
a.
True
b.
False
True
procurement management plan will vary with project needs.
1
Difficulty: Easy
p.477
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
17. The main sections of an RFP can include the statement of work and schedule information.
a.
True
b.
False
True
1
Difficulty: Easy
p.477
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
18. A key factor in evaluating bids, particularly for projects involving information technology, is the past performance
record of the bidder.
a.
True
b.
False
True
1
Difficulty: Easy
INFO.SCHW.14.87 – LO: 12-2
Bloom’s: Comprehension
19. Reviewing performance records reduces the risk of selecting a supplier with a poor track record.
a.
True
b.
False
True
1
Difficulty: Easy
p.481
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
20. In project procurement management, a main output of the controlling process is a source selection criteria.
a.
True
b.
False
False
selected seller and procurement contract award.
1
Difficulty: Easy
p.482
INFO.SCHW.14.88 – LO: 12-3
United States – BUSPROG: Technology
Conducting Procurements
Bloom’s: Knowledge
21. The contractual relationship is a legal relationship, which means it is subject to state and federal contract laws.
a.
True
b.
False
True
1
Difficulty: Easy
p.483
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
22. The closing procurements process involves updating records to reflect final results and archiving information for
future use.
a.
True
b.
False
True
1
Difficulty: Easy
p.484
INFO.SCHW.14.90 – LO: 12-5
United States – BUSPROG: Technology
Closing Procurements
Bloom’s: Knowledge
23. Procurement audits are often done during contract closure to identify lessons learned in the entire procurement
process.
a.
True
b.
False
True
business processes, including procurement management.
1
Difficulty: Easy
p.484-485
INFO.SCHW.14.90 – LO: 12-5
United States – BUSPROG: Technology
Closing Procurements
Bloom’s: Knowledge
Multiple Choice
24. “A shortage of qualified personnel is one of the main reason that companies outsource. A project may require experts
in a particular field for several months and planning for this procurement ensures that the needed services will be available
for the project.” Which of the following benefits does this characteristic of outsourcing provide an organization?
a.
Reduces focus on its core business
b.
Increases control over all aspects of projects that suppliers carry out
c.
Provides access to specific skills
d.
Reduces dependency on suppliers
Bloom’s: Knowledge
25. Outsourcing suppliers can often provide economies of scale, especially for hardware and software, that may not be
available to the client alone. Which of the following benefits does this offer an organization?
Reduction in fixed and recurrent costs
b.
Increased flexibility
Increased accountability
d.
Access to specific skills
Difficulty: Moderate
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
26. “Most organizations are not in business to provide information technology services, yet many have spent valuable
time and resources on information technology functions when they should have instead worked on important
competencies such as marketing, customer service, and new product design. Outsourcing helps tackle this problem.”
Which of the following benefits does outsourcing primarily provide in such a scenario?
a.
Reduces fixed and recurrent costs
b.
Protects strategic information from being accessible to external suppliers
c.
Increases accountability even without a written contract
d.
Helps focus on an organization’s core business
the success of the organization.
Difficulty: Moderate
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Difficulty: Moderate
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
Chapter 12: Project Procurement Management
27. “Outsourcing to provide extra workers during periods of peak workloads can be much more economical than trying to
fill entire projects with internal resources.” Which of the following advantages does this characteristic of outsourcing
provide organizations?
a.
Offers control over all aspects of projects that suppliers carry out
b.
Provides a company flexibility in staffing
c.
Shifts accountability from external suppliers to internal staff
d.
Helps avoid any form of dependency on suppliers
Difficulty: Moderate
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
28. A drawback of outsourcing is that:
a.
it does not provide access to specific skills or technologies.
b.
it invariably results in an increase in both fixed and recurrent costs.
c.
it can make an organization become overly dependent on particular suppliers.
d.
it cannot increase accountability of suppliers through a written contract.
Difficulty: Moderate
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
29. The first step in project procurement management is:
closing procurement management.
b.
controlling procurements.
conducting procurements.
d.
planning procurement management.
to do it. This is the first step of project procurement management.
p. 470
30. In project procurement management, the process of _____ involves determining what to procure, when, and how.
closing procurements
b.
controlling procurements
conducting procurements
d.
planning procurement management
Difficulty: Moderate
p. 470
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
31. In project procurement management, the process of _____ involves obtaining seller responses, selecting sellers, and
awarding contracts.
conducting procurements
b.
closing procurements
settling contracts
d.
planning procurement management
Difficulty: Moderate
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
32. Outputs of the _____ process consist of selected sellers and resource calendars.
closing procurements
b.
conducting procurements
planning procurement management
d.
controlling procurements
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
33. Which of the following processes of project procurement management involves managing relationships with sellers,
monitoring contract performance, and making changes as needed?
Closing procurements
b.
Settling contracts
Deciding on the services to procure
d.
Controlling procurements
d
performance, and making changes as needed.
1
Difficulty: Moderate
p.470
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Technology
The Importance of Project Procurement Management
Bloom’s: Comprehension
34. In project procurement management, which of the following processes involve completion and settlement of each
contract, including resolution of any open items?
Planning procurement management
b.
Controlling procurements
Closing procurements
d.
Conducting procurements
1
Difficulty: Moderate
p.470
INFO.SCHW.14.86 – LO: 12-1
United States – BUSPROG: Analytic
The Importance of Project Procurement Management
Bloom’s: Comprehension
35. The procurement statements of work are an output of the _____ process of project procurement management.
planning
b.
executing
monitoring and controlling
d.
closing
p.470
INFO.SCHW.14.91 – LO:12-1
United States – BUSPROG: Technology
The Importance of Project Procurement Management
Bloom’s: Knowledge
36. In project procurement management, the process of conducting procurements is part of the _____ process.
planning
b.
executing
monitoring and controlling
d.
closing
b
1
Difficulty: Easy
p.470
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
37. In project procurement management, which of the following is an output of the executing process?
Make-or-buy decisions
b.
Statements of work
Source selection criteria
d.
Resource calendars
d
1
Difficulty: Easy
p.470
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Bloom’s: Knowledge
38. In project procurement management, an output of the _____ monitoring and controlling process.
Change requests
b.
Selected sellers
Resource calendars
d.
Make-or-buy decisions
1
Difficulty: Easy
p.470
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge
39. Which of the following is true of lump-sum contracts?
a.
They incur a high degree of risk for the buyer.
b.
They involve a fixed total price for a well-defined product or service.
c.
They consist of a fee based on the satisfaction of subjective performance criteria.
d.
They are also known as cost-reimbursable contracts.
1
Difficulty: Moderate
p.472
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Comprehension
40. _____ contracts involve payment to the supplier for direct and indirect actual costs and often include fees.
Firm-fixed-price
b.
Lump sum
Cost-reimbursable contracts
d.
Fixed-price incentive fee
Difficulty: Easy
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Analytic
Planning Procurement Management
Bloom’s: Knowledge
41. In a(n) _____ contract, the buyer pays the supplier for allowable performance costs along with a predetermined fee
and an incentive bonus.
FFP
b.
CPIF
CPPC
d.
FPIF
b
Difficulty: Easy
INFO.SCHW.14.87 – LO: 12-2
United States – BUSPROG: Technology
Planning Procurement Management
Bloom’s: Knowledge