CPP Procurement & Contract Management 3

Question 1

Which contract type transfers the MOST cost risk to the seller?

Accepted Answer

Firm-Fixed-Price (FFP)

Answer

Under a Firm-Fixed-Price contract, the seller bears all cost overrun risk because the price does not change regardless of actual costs incurred.

Question 2

A project manager wants to procure custom software development but cannot fully define the requirements upfront. Which contract type is MOST suitable?

Accepted Answer

Time and Materials (T&M)

Answer

T&M contracts are appropriate for unclear or evolving scopes because they compensate the seller for actual time and materials used, providing flexibility.

Question 3

What distinguishes a unilateral contract modification from a bilateral one?

Accepted Answer

Unilateral changes are issued by the buyer alone; bilateral require both parties to agree

Answer

A unilateral modification (change order) can be issued by the contracting officer alone under the Changes clause; a bilateral modification requires mutual agreement.

Question 4

The make-or-buy analysis in procurement planning is used to determine which of the following?

Accepted Answer

Whether to produce goods internally or acquire them from external sources

Answer

Make-or-buy analysis evaluates the cost, capability, and strategic factors to decide whether the project team should produce something in-house or outsource it.

Question 5

Which document formally authorizes a seller to begin work before a definitive contract is signed?

Accepted Answer

Letter Contract (Undefinitized Contract Action)

Answer

A letter contract or undefinitized contract action allows work to begin immediately while final contract terms are still being negotiated.

(CPP) Certified Project Professional Practice Test

(CPP) Certified Project Professional Practice Test

CPP Procurement & Contract Management 3