CAPM Procurement Management 2 — Questions and Answers
Question 1: Which document formally authorizes a seller to begin work on a project?
- Statement of Work
- Contract (Correct answer)
- Procurement Management Plan
- Request for Proposal
Correct answer: Contract
A contract is the legally binding document that authorizes the seller to begin performing work for the buyer.
Question 2: In a Fixed-Price-Incentive-Fee (FPIF) contract, the fee is adjusted based on what factor?
- The seller's overhead costs
- The relationship between final costs and target costs (Correct answer)
- The number of change orders issued
- The buyer's satisfaction rating
Correct answer: The relationship between final costs and target costs
In FPIF contracts, the incentive fee is adjusted by comparing final negotiated costs to the target cost using a predetermined share ratio.
Question 3: What is the purpose of a procurement audit?
- To evaluate contractor bids for accuracy
- To review the procurement process for lessons learned (Correct answer)
- To verify invoices submitted by the seller
- To update the procurement management plan
Correct answer: To review the procurement process for lessons learned
A procurement audit is a structured review of the procurement process to identify successes and failures for use in future projects.
Question 4: Which of the following is an example of a Time and Material (T&M) contract?
- The seller is paid $500,000 regardless of actual costs
- The seller is paid $75/hour plus materials at cost (Correct answer)
- The seller is paid actual costs plus a fixed fee of $50,000
- The seller is paid based on a percentage of project savings
Correct answer: The seller is paid $75/hour plus materials at cost
T&M contracts combine a fixed rate per unit of time with reimbursement for actual material costs, making them hybrids of fixed-price and cost-reimbursable contracts.
Question 5: A project manager receives competing bids from multiple vendors. What process does evaluating these bids belong to?
- Plan Procurement Management
- Conduct Procurements (Correct answer)
- Control Procurements
- Close Procurements
Correct answer: Conduct Procurements
Conduct Procurements is the process where seller responses are received, sellers are selected, and contracts are awarded.
Question 6: What is a 'make-or-buy' analysis used to determine in procurement management?
- Whether to use a fixed-price or cost-reimbursable contract
- Whether to produce something internally or purchase it externally (Correct answer)
- Whether to accept or reject a seller's proposal
- Whether to use competitive or sole-source procurement
Correct answer: Whether to produce something internally or purchase it externally
A make-or-buy analysis evaluates whether it is more cost-effective and strategic to produce goods/services internally or procure them from external vendors.
Question 7: Which procurement document is most appropriate when the buyer wants maximum flexibility in how the seller solves a problem?
- Invitation for Bid (IFB)
- Request for Quotation (RFQ)
- Request for Proposal (RFP) (Correct answer)
- Purchase Order (PO)
Correct answer: Request for Proposal (RFP)
An RFP solicits proposals that include the seller's approach, methodology, and solution, giving sellers flexibility in how they address the buyer's needs.
CAPM Procurement Management 2
Which document formally authorizes a seller to begin work on a project?