Project Risk Management Contract & Procurement Risk 2

Question 1

Which elements are typically included in a procurement risk register?

Accepted Answer

Vendor performance history, contract terms risks, and supply chain vulnerabilities

Answer

Project budget baseline and earned value metrics

Answer

Internal team skill gap assessments and training plans

Answer

Stakeholder communication preferences and escalation paths

Question 2

What is the purpose of source selection criteria in project procurement?

Accepted Answer

To evaluate and rank vendor proposals objectively and consistently

Answer

To define the scope of work for prospective vendors

Answer

To set milestone payment schedules within contracts

Answer

To outline warranty and performance bond requirements

Question 3

A project manager learns a key vendor is experiencing significant financial difficulties. Which risk response is most appropriate?

Accepted Answer

Develop a contingency plan including an alternative qualified vendor

Answer

Ignore the risk since the contract legally protects the project

Answer

Immediately terminate the existing contract to avoid further exposure

Answer

Increase contract payments to help stabilize the vendor financially

Question 4

What does 'contract risk allocation' mean in project procurement management?

Accepted Answer

Assigning financial and performance responsibilities between the buyer and seller

Answer

Distributing contract documents to all project stakeholders for review

Answer

Allocating procurement budget funds across different contract categories

Answer

Setting up escrow accounts to hold funds pending contract milestones

Question 5

Which procurement strategy best reduces the risk of schedule delays caused by vendor non-performance?

Accepted Answer

Including liquidated damages clauses tied to milestone dates

Answer

Using a single preferred vendor for all contracted work

Answer

Avoiding fixed-price contracts to maintain schedule flexibility

Answer

Removing acceptance criteria to speed up delivery acceptance

Question 6

In procurement risk management, what does a 'force majeure' clause address?

Accepted Answer

Excusing contract non-performance due to unforeseeable extraordinary events

Answer

Buyer authority to change contract scope without penalty

Answer

Mandatory seller insurance coverage and bonding requirements

Answer

Financial penalties for deliverable scope deviations

Question 7

What is the primary risk to the buyer when using a time-and-materials (T&M) contract for a long-duration project?

Accepted Answer

The buyer assumes open-ended cost risk because total price is not fixed

Answer

The seller has a guaranteed profit margin regardless of efficiency

Answer

The contract terms cannot be amended during project execution

Answer

The seller bears all financial responsibility for any cost overruns