CPC Project Procurement & Contracts 1 — Questions and Answers
Question 1: A fixed-price contract transfers the majority of cost risk to:
- The seller (vendor) (Correct answer)
- The buyer (project organization)
- Both parties equally
- The project sponsor
Correct answer: The seller (vendor)
In a fixed-price contract, the seller agrees to deliver for a set price regardless of actual costs, bearing the risk of overruns.
Question 2: A cost-reimbursable contract transfers the majority of cost risk to:
- The buyer (Correct answer)
- The seller
- Both parties equally
- The project coordinator
Correct answer: The buyer
In a cost-reimbursable contract, the buyer pays all allowable costs, so cost overruns fall on the buyer.
Question 3: A Statement of Work (SOW) in procurement is used to:
- Describe the work to be performed by a vendor in sufficient detail for bidding (Correct answer)
- List all project team members and their hourly rates
- Define the project charter
- Document lessons learned after contract close
Correct answer: Describe the work to be performed by a vendor in sufficient detail for bidding
The SOW provides sellers with the information they need to understand the scope and prepare accurate bids or proposals.
Question 4: Which document is used to solicit competitive bids from multiple vendors for clearly defined goods or services?
- Request for Proposal (RFP) or Invitation for Bid (IFB) (Correct answer)
- Project charter
- Scope baseline
- Risk register
Correct answer: Request for Proposal (RFP) or Invitation for Bid (IFB)
An RFP or IFB is sent to potential vendors to obtain competitive offers on defined requirements.
Question 5: What is the primary purpose of source selection criteria in procurement?
- To provide an objective basis for evaluating and comparing vendor proposals (Correct answer)
- To limit the number of vendors who can submit proposals
- To set the fixed price for the contract before bidding
- To document the project's risk tolerance
Correct answer: To provide an objective basis for evaluating and comparing vendor proposals
Source selection criteria define weighted factors (price, technical approach, experience) used to fairly compare proposals.
Question 6: Make-or-buy analysis in procurement helps the project team decide:
- Whether to produce goods/services internally or procure them externally (Correct answer)
- Which vendor to select from a shortlist
- How to structure a contract's payment terms
- When to close out a vendor contract
Correct answer: Whether to produce goods/services internally or procure them externally
Make-or-buy analysis weighs the cost, risk, capability, and strategic implications of internal production versus outsourcing.
CPC Project Procurement & Contracts 1
A fixed-price contract transfers the majority of cost risk to: