PCC PCC Contract Management & Procurement 1 — Questions and Answers
Question 1: Which contract type places the most financial risk on the buyer?
- Cost-plus-fixed-fee (Correct answer)
- Firm-fixed-price
- Time-and-materials
- Cost-plus-incentive-fee
Correct answer: Cost-plus-fixed-fee
Cost-plus contracts reimburse all allowable costs, so the buyer bears the risk if costs exceed estimates.
Question 2: In project controls, a procurement baseline is used primarily to:
- Track vendor performance against contracted deliverables and costs (Correct answer)
- Negotiate lower prices with suppliers
- Identify preferred vendors for sole-source awards
- Establish payment terms for all contracts
Correct answer: Track vendor performance against contracted deliverables and costs
The procurement baseline measures actual vendor cost and schedule performance against what was contractually agreed.
Question 3: What document formally authorizes a seller to begin work on a contract?
- Request for Proposal (RFP)
- Notice to Proceed (NTP) (Correct answer)
- Statement of Work (SOW)
- Purchase Order (PO)
Correct answer: Notice to Proceed (NTP)
A Notice to Proceed (NTP) is the official authorization issued to a contractor to begin work under the contract.
Question 4: Which procurement document provides the most detailed technical and administrative requirements for a project?
- Request for Information (RFI)
- Request for Quotation (RFQ)
- Statement of Work (SOW) (Correct answer)
- Invitation for Bid (IFB)
Correct answer: Statement of Work (SOW)
The Statement of Work (SOW) defines in detail the work to be performed, deliverables, schedule, and technical requirements.
Question 5: A project controller reviewing contract terms notices the contract includes a liquidated damages clause. This clause is intended to:
- Penalize the contractor for poor quality work
- Compensate the owner for losses if the contractor misses key milestones (Correct answer)
- Allow the owner to terminate the contract without cause
- Require the contractor to post a performance bond
Correct answer: Compensate the owner for losses if the contractor misses key milestones
Liquidated damages are pre-agreed financial penalties assessed against the contractor for schedule delays that cause owner losses.
Question 6: In contract administration, a change order is best described as:
- A unilateral decision by the project owner to change the scope
- A formal amendment modifying the contract scope, schedule, or cost (Correct answer)
- A contractor's request to substitute materials
- A document tracking subcontractor performance
Correct answer: A formal amendment modifying the contract scope, schedule, or cost
A change order is a mutually agreed formal modification to the contract that adjusts scope, cost, or schedule.
PCC PCC Contract Management & Procurement 1
Which contract type places the most financial risk on the buyer?