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Procurement & Contract Management Flashcards

7 cards from real CAPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Procurement & Contract Management flashcards as text

  1. In a Cost Plus Incentive Fee (CPIF) contract, what happens if the seller's actual costs are below the target cost?

    Answer: The seller and buyer share the savings according to a formula

    In a CPIF contract, cost underruns are shared between buyer and seller based on a pre-agreed share ratio, incentivizing cost efficiency.

  2. What does 'privity of contract' mean in project procurement?

    Answer: A direct contractual relationship between two parties

    Privity of contract means only parties who are directly named in the contract have legal rights and obligations under it.

  3. Which process involves documenting completed deliverables and formally accepting the seller's work?

    Answer: Close Procurements

    Close Procurements finalizes all procurement activities, confirms work is complete, and provides formal acceptance of seller deliverables.

  4. What is the main risk to the buyer in a Time and Material (T&M) contract?

    Answer: Total costs can grow unchecked if the scope is not controlled

    T&M contracts have no fixed ceiling, so costs can escalate indefinitely if hours or materials are not carefully monitored.

  5. A project manager discovers a seller is consistently delivering below the quality standards in the contract. What is the most appropriate first action?

    Answer: Issue a formal letter documenting the performance issue

    Issuing a formal written notice documents the deficiency and gives the seller an opportunity to cure the performance problem as required by most contracts.

  6. What is an 'Invitation for Bid' (IFB) most commonly used for?

    Answer: Procurements where price is the primary evaluation criterion

    An IFB (also called Invitation for Tender) is used when requirements are well-defined and the contract will be awarded primarily on lowest price.

  7. Which tool used during procurement planning helps identify whether a particular need should be internally sourced or contracted?

    Answer: Make-or-Buy Analysis

    Make-or-Buy Analysis evaluates the costs and benefits of producing goods/services internally versus procuring them from an external seller.