CAPM Procurement Management 4 — Questions and Answers
Question 1: A project manager is managing a contract where the seller is paid $200,000 in costs plus a bonus if costs come in under the target. This describes which contract type?
- Firm Fixed Price
- Cost Plus Fixed Fee
- Cost Plus Incentive Fee (Correct answer)
- Fixed Price Incentive Fee
Correct answer: Cost Plus Incentive Fee
Cost Plus Incentive Fee (CPIF) reimburses the seller's actual costs and adds an incentive fee when predetermined performance criteria (such as cost targets) are met.
Question 2: What does a 'point of total assumption' (PTA) represent in a Fixed Price Incentive Fee contract?
- The point at which the project manager assumes full oversight of the contract
- The cost level above which the seller bears all additional costs (Correct answer)
- The maximum profit the seller can earn on the contract
- The point at which quality inspections begin
Correct answer: The cost level above which the seller bears all additional costs
The PTA is the cost threshold in an FPIF contract above which the seller assumes 100% of additional cost overruns, effectively converting it to a firm fixed price.
Question 3: During Control Procurements, a project manager reviews seller invoices and approves payments. Which tool or technique is being applied?
- Procurement audits
- Inspection and audits
- Payment systems (Correct answer)
- Claims administration
Correct answer: Payment systems
Payment systems are a tool of Control Procurements that involve reviewing and approving seller invoices in accordance with contract terms.
Question 4: A project manager wants to use competitive sealed bidding to select a vendor. Which solicitation document is most appropriate?
- Request for Proposal (RFP)
- Request for Information (RFI)
- Invitation for Bid (IFB) (Correct answer)
- Request for Quotation (RFQ)
Correct answer: Invitation for Bid (IFB)
An Invitation for Bid (IFB) is used when the buyer wants competitive bids based on a defined scope and will award to the lowest qualified bidder.
Question 5: Which of the following is NOT typically included in a procurement statement of work (SOW)?
- Specifications and quantities required
- Location of performance
- Seller's profit margin (Correct answer)
- Acceptance criteria
Correct answer: Seller's profit margin
A procurement SOW describes what the buyer needs from the seller; the seller's profit margin is internal to the seller's pricing strategy and is not part of the SOW.
Question 6: A project manager is closing a contract after all deliverables have been accepted. Which document formally records that the contract has been completed?
- Procurement audit report
- Contract closure notice (Correct answer)
- Final performance report
- Lessons learned register
Correct answer: Contract closure notice
A formal written notice of contract closure, issued by the authorized procurement administrator, formally documents that all contractual obligations have been fulfilled.
Question 7: What is the role of a 'source selection criteria' document in procurement management?
- It defines how the seller will manage subcontractors
- It establishes the weighted factors used to evaluate seller proposals (Correct answer)
- It outlines the terms and conditions of the final contract
- It documents the results of the procurement audit
Correct answer: It establishes the weighted factors used to evaluate seller proposals
Source selection criteria define and weight the factors (such as price, technical capability, and past performance) used to objectively evaluate and compare seller proposals.
CAPM Procurement Management 4
A project manager is managing a contract where the seller is paid $200,000 in costs plus a bonus if costs come in under the target.
This describes which contract type?