CAPM Procurement & Contract Management 5 — Questions and Answers
Question 1: Which PMBOK process involves obtaining seller responses, selecting a seller, and awarding a contract?
- Plan Procurement Management
- Conduct Procurements (Correct answer)
- Control Procurements
- Close Procurements
Correct answer: Conduct Procurements
Conduct Procurements is the process of receiving seller bids, applying selection criteria, negotiating, and awarding the contract.
Question 2: What does 'Point of Total Assumption' (PTA) refer to in procurement?
- The moment a contract is officially signed by both parties
- The cost point in an FPIF contract above which the seller bears all cost overruns (Correct answer)
- The date when ownership of goods transfers from seller to buyer
- The budget threshold that triggers a contract renegotiation
Correct answer: The cost point in an FPIF contract above which the seller bears all cost overruns
The PTA in a Fixed Price Incentive Fee contract is the cost ceiling beyond which the seller assumes 100% of additional costs with no further fee.
Question 3: A Statement of Work (SOW) should be written in enough detail to allow sellers to:
- Determine the buyer's maximum budget
- Provide accurate pricing and understand what is required (Correct answer)
- Negotiate scope additions after contract award
- Assign their most junior resources to the work
Correct answer: Provide accurate pricing and understand what is required
A well-written SOW gives sellers sufficient clarity about deliverables, standards, and requirements to submit accurate and complete proposals.
Question 4: During contract negotiations, what is the purpose of establishing a 'Best Alternative to a Negotiated Agreement' (BATNA)?
- To identify the highest price the buyer is willing to pay
- To clarify your walk-away position if negotiations fail (Correct answer)
- To legally bind both parties to a preliminary agreement
- To document lessons learned from previous negotiations
Correct answer: To clarify your walk-away position if negotiations fail
BATNA defines the best outcome you can achieve if negotiations break down, strengthening your negotiating position and clarifying when to walk away.
Question 5: What is a 'Warranty' in the context of a procurement contract?
- A seller's guarantee of performance for a specified period after delivery (Correct answer)
- A clause that limits the buyer's right to inspect deliverables
- An agreement to extend the contract if additional work is needed
- A financial bond posted by the seller to ensure contract completion
Correct answer: A seller's guarantee of performance for a specified period after delivery
A warranty is a contractual commitment by the seller to repair or replace defective goods or services within a defined period after acceptance.
Question 6: Which of the following is an output of the Close Procurements process?
- Approved Change Requests
- Closed Procurements documentation and final payment (Correct answer)
- Procurement Statement of Work
- Qualified Sellers List
Correct answer: Closed Procurements documentation and final payment
Closed Procurements documentation, including final acceptance, formal closure notices, and records of lessons learned, are outputs of the Close Procurements process.
Question 7: When a buyer and seller cannot resolve a contract dispute through negotiation, the next preferred method per the PMBOK Guide is:
- Litigation in a court of law
- Mediation or Alternative Dispute Resolution (ADR) (Correct answer)
- Immediate contract termination
- Escalation to the project sponsor only
Correct answer: Mediation or Alternative Dispute Resolution (ADR)
The PMBOK Guide recommends Alternative Dispute Resolution (ADR) such as mediation or arbitration before resorting to costly litigation.
CAPM Procurement & Contract Management 5
Which PMBOK process involves obtaining seller responses, selecting a seller, and awarding a contract?