Project Procurement Management Questions

3/3/2014
Project Procurement Management Questions
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1. Question
Control Risks activities include:
Identifying risk changes and their trends

Updating and modifying contingency reserves as needed
Verifying compliance with Risk Management policies
All
I n co rrect
Control Risks activities include: Testing project assumptions. Identifying risk changes and their trends. Verifying compliance with Risk Management policies.
Updating and modifying contingency reserves as needed.
2. Question
You are the project manager and decided to outsource a part of the project to a vendor. The vendor discovered some issues that impact the cost and
schedule of its work. How does the vendor update the agreement?
A new contract needs to be signed by your company and the vendor

An SOW needs to be signed by you and the vendor
None
A co n tract ad d en d u m n eed s to b e sig n ed b y yo u r co mp an y an d th e ven d o r
I n co rrect
A contract addendum needs to be signed by your company and the vendor.
3. Question
Which type of contract has the highest risk for the seller?
Reimbursed time
Time and materials
Reimbursed cost
http://www.pmpden.com/pmbok-5-exam-questions/project-procurement-management-questions/
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Fix ed p rice
I n co rrect
In Fixed price contract, the seller assumes the greatest risk because the price is fixed and not going to change. Fixed price- A fixed total price for a welldefined product may include incentives for meeting or exceeding selected project objectives.
4. Question
Your company requires that before you purchase any routers or switches for the data center you are building, you need to solicit quotes from three
separate suppliers prior to submitting the purchase request to the finance department. This policy belongs to?
O rg an iz atio n al Pro cess Assets

Make-or-Buy Decision
Procurement Management Knowledge Area
Enterprise Environmental Factors
I n co rrect
Any type of corporate policy or formal procurement procedure is an organizational process asset. [PMBOK 5th edition, Page 27]
5. Question
A project manager wishes to expand an existing list of sellers. Which of the following techniques should she consider?
Analytical techniques
Bidder conferences
Make or buy analysis
Ad vertisin g
I n co rrect
Advertising is a good avenue to expand existing lists of sellers. Advertisements can be placed in general circulation publications in order to achieve this.
[PMBOK 5th edition, Page 376]
6. Question
Which of these is not an input to the Control Procurements process?
C h an g e req u ests
Work performance data
Agreements
Work performance reports
I n co rrect
Change requests are not the inputs of the Control Procurement process. The rest of the choices are valid inputs of this process. [PMBOK 5th edition, Page
379]
7. Question
You are the project manager and created a contract for your customer. The contract must have the___________.
O ffer an d co n sid eratio n
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Signatures and the stamp of a public notary
Start date and acceptance of the start date
All
I n co rrect
A contract must have the offer and consideration. Not all contracts demand signatures of public notary. Contract may specify a start date, but the
acceptance of the start date is not needed for all contracts.
8. Question
The Conduct Procurements process receives bids or proposals and applies criteria to select one or more sellers who are both qualified and acceptable as a
seller. Which of the following techniques is not a valid technique for this process?
Proposal Evaluation Techniques

Advertising
Make-o r-b u y an alysis
Bidder Conference
I n co rrect
The Make-or-Buy analysis is not a valid technique in the Conduct Procurements process. All the other three choices are valid techniques. [PMBOK 5th
edition, Page 371]
9. Question
You are managing a software development project. The project will involve working with a remote team. One of the requirements is to set up a secure
communication link. The lead-time to setup the link is 45 days. Since the initial phase of the project involves requirements gathering, you feel that the link is
required only after 3 months and are planning accordingly. You would typically do this planning activity in:
T h e Plan Pro cu remen t Man ag emen t p ro cess

The Control Procurements process
The Define Activities process
The Conduct Procurements process
I n co rrect
Determining what, when and how to purchase or acquire is done during the Plan Procurement Management process. [PMBOK 5th edition, Page 358]
10. Question
Which statement is true about Mitigation Plans?
Pro visio n in th e p ro ject p lan to mitig ate co st an d sch ed u le risk

Both these statements are true. (1) Pre defined action steps to be taken if an identified risk event should occur (2) Provision in the project plan to
mitigate cost and schedule risk
None
Pre defined action steps to be taken if an identified risk event should occur
I n co rrect
Contingency Plans Pre defined action steps to be taken if an identified risk event should occur Reserves (Mitigation) Provision in the project plan to
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11. Question
Type of contract where the buyer and seller share in the savings is ______.
C o st reimb u rsab le w ith in cen tive fee

Time and materials
Cost reimbursable with fixed fee
Fixed Price
I n co rrect
Cost reimbursable with incentive fee: It is a predetermined fee that is paid if certain conditions of the contract are met. Both parties, buyer and seller, will
benefit from producing above expectations.
12. Question
There has been budget cuts across all agencies in your organization. The program management office has started re-prioritizing all organizations projects
due to lack of funds. Projects with unrealistic expectations, huge budgets, and incomplete requirements are the first ones to be terminated. Due to high
budget, your project is on the list for early termination and that requires early closing of all your contracts in the project. Which of the following statements
about early termination of contracts is TRUE?
When contracts are terminated early, seller must pay all costs incurred
Early termination of contracts is a part of the close project or phase process
Early termin atio n o f co n tracts is a p art o f th e clo se p ro cu remen ts p ro cess
When contracts are terminated early, buyer need not pay anything to the seller
I n co rrect
Early termination of contracts is a special case of procurement closure. This effort is done during close procurements process. When contracts are
terminated early, based upon the contract terms and conditions, the buyer may have to compensate the seller. Therefore, early termination of contracts is
a part of the close procurements process is a true statement. [PMBOK 5th edition, Page 387]
13. Question
The Make-or-Buy analysis is a technique that is used as part of the Plan Procurement Management process. It is used to determine whether a particular
product or service can be produced by the project team or should it be purchased. The analysis to arrive at a decision should include:
Direct as w ell as I n d irect co sts

Direct costs only
Indirect costs only
Staffing costs only
I n co rrect
The analysis should include both indirect as well as direct costs. [PMBOK 5th edition, Page 365]
14. Question
The contract statement of work describes the various procurement items in sufficient detail to let the prospective sellers see whether they can provide the
item or items. This is called_______________.
WBS
None
SOW
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CSOW
I n co rrect
This contract statement of work (CSOW) is a subset of the SOW. The contract statement of work describes the various procurement items in sufficient detail
to give prospective sellers a guideline to see whether they can provide the item or items
15. Question
The seller is reimbursed for all costs incurred to perform the contracted work, and then the seller receives a percentage of the cost that is agreed upon
before beginning work. Which type of contract is this?
CPIF
CPFF
None
C PPC
I n co rrect
Cost-Plus-Percentage of Cost (CPPC) or CPF (Cost plus fee) : The seller is reimbursed for costs that are incurred for performing the contract work, and then
the seller receives a percentage of the cost that is agreed upon before beginning work. Which type of contract is this? Cost-Plus-Fixed-Fee (CPFF): The seller
is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work.
16. Question
Dina, the project manager of a hardware project, is performing a structured review of the procurement process. She would like to look into each document
from the plan procurement management process through the control procurements process to identify failures. What tool should Dina use?
Pro cu remen t au d its in th e clo se p ro cu remen ts p ro cess

Negotiated settlements in the control procurements process
Procurement audits in the manage procurements process
Performance reports in the conduct procurements process
I n co rrect
A procurement audit is used as a tool in the close procurements process. Procurement audits are carried out to identify successes and failures that
warrant recognition. When this tool is used, all procurement processes are thoroughly checked and corresponding documents are verified for problems.
Therefore, procurement audits in the close procurements process is the correct answer. [PMBOK 5th edition, Page 388]
17. Question
Which of the following is neither an input to nor an output of the Close Procurement process?
Project management plan

Closed procurements
Pro cu remen t au d its
Procurement documents
I n co rrect
Procurement audits are the tools and techniques of the Close Procurement process. The rest of the choices are either the inputs or the outputs of the
process. [PMBOK 5th edition, Page 386]
18. Question
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The types of contracts that can be used in a project are documented in the:
Pro cu remen t man ag emen t p lan

Request for Proposal (RFP)
Procurement statement of work
Work breakdown structure (WBS)
I n co rrect
The types of contracts that can be used in a project are documented in the Procurement Management Plan. [PMBOK 5th edition, Page 366]
19. Question
Which of the following is incorrect regarding a bidders conference?
Bidders conferences should not involve individual face-to-face meetings

Q u estio n s fro m each seller sh o u ld b e h an d led co n fid en tially an d n o t sh ared w ith o th er sellers.
No bidders should receive preferential treatment, even if they are part of the company's existing list of approved suppliers
All prospective sellers should be allowed to have a common understanding of the procurement.
I n co rrect
A key objective of a bidders conference is to ensure that all bidders have the same level of understanding of the procurements. Hence, in order to be
completely fair, buyers must ensure that all sellers hear every question from any individual prospective seller and every answer from the buyer. [PMBOK
5th edition, Page 375]
20. Question
A contract cannot contain:
All
I lleg al activities
A deadline for the completion of the work
Penalties and fines for disclosure of intellectual rights
I n co rrect
A contract cannot contain illegal activities. A contract can contain other options available.
21. Question
The types of contracts that can be used in a project are documented in the:
Work breakdown structure (WBS)

Pro cu remen t man ag emen t p lan
Request for Proposal (RFP)
I n co rrect
The types of contracts that can be used in a project are documented in the Procurement Management Plan. [PMBOK 5th edition, Page 366]
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22. Question
Make-or-buy decisions measure the cost of both options. What are these two options?
None
Direct, I n d irect
Tactical, Strategic
Management, Project
I n co rrect
Make-or-buy decisions measure the cost of both options. When doing this analysis, it should include both direct and indirect costs so that the final
decision is based on comparisons that are equal.
23. Question
What are common types of cost-reimbursable contracts?
CPF
CPFF
CPIF
All
I n co rrect
Three common types of cost-reimbursable contracts are CPF, CPFF, and CPIF Cost-Plus-Fee (CPF), Cost-Plus-Fixed-Fee (CPFF) and Cost-Plus-Incentive-Fee
(CPIF).
24. Question
What is Privity?
C o n tractu al, co n fid en tial in fo rmatio n b etw een th e b u yer an d seller

Relationship between the project manager and a known vendor
None
Relationship between the project manager and an unknown vendor
I n co rrect
Privity is a confidential agreement between the buyer and seller.
25. Question
Which process involves verification and acceptance of all project deliverable, and hence supports the Close Project or Phase process?
Estimate Activity Durations

Valid ate S co p e
Control Costs
Perform Integrated Change Control
I n co rrect
The Validate Scope process formalizes the acceptance of the completed project deliverables and hence supports the Close Project or Phase process.
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26. Question
Which of the following techniques can help clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached
prior to signing the contract between a buyer and a seller?
Advertising
Bidder conferences
Pro cu remen t n eg o tiatio n s
Independent estimates
I n co rrect
Procurement negotiations help clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached prior to
signing the contract between a buyer and a seller. The bidders conferences are carried out prior to this stage and they are used to ensure that all
prospective sellers have a clear and common understanding of the procurement requirements. Advertising and Independent Estimates cant help in this
case. [PMBOK 5th edition, Page 377]
27. Question
The market conditions are a part of the________.
Organizational process assets

En terp rise en viro n men tal facto rs
None
Project management concerns
I n co rrect
The market conditions are a part of Enterprise environmental factors.
28. Question
You are about to contract out a project to a service provider. However, at the time of awarding the contract, you are not sure of the total effort involved. Since
the scope of work cannot be accurately estimated, you want to agree the per unit rates for difference services. Which of the following would best suit your
purpose?
T ime & Material (T &M)

Cost-Plus-Fixed-Fee (CPFF)
Cost-Plus-Incentive-Fee (CPIF)
Fixed Price (FP)
I n co rrect
This type of a project situation calls for a Time & Material type of contract. The contract will be open ended since the effort is not completely known.
However, the unit rates will be negotiated and agreed upon for a particular resource category. [PMBOK 5th edition, Page 364]
29. Question
In a manufacturing project, you have requested bids to procure stainless steel products. But, your sponsor insists you to conduct bidder conferences before
selecting sellers. What mandatory standard in PMI code of ethics and professional conduct would be satisfied by conducting bidder conferences?
Fairn ess
Respect
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Responsibility
Honesty
I n co rrect
Bidder conferences or vendor conferences are used to provide clear understanding on the procurement process for all prospective sellers. This process
ensures that the mandatory standard of Fairness is followed in the bidding process. Fairness in this case means making opportunities equally available to
qualified candidates. [Reference - PMBOK 5th Edition, page 375 & PMI code of Ethics and Professional responsibility, Pages 3, 4]
30. Question
In which phase does source selection happen?
Planning
Initiation
Closing
Ex ecu tio n
I n co rrect
Source selection happens during the Execution phase.
31. Question
A project manager is looking at a make-or-buy analysis as part of the Plan Procurement Management process. What type of costs should the project manager
consider for this analysis?
Indirect costs
Out-of-pocket costs
Direct costs
Bo th d irect as w ell as in d irect co sts
I n co rrect
The make-or-buy analysis needs to be as comprehensive as possible. Hence it should consider all possible costs both direct and indirect costs. [PMBOK
5th edition, Page 365]
32. Question
A project is contracted as a Cost-Plus-Fixed-Fee (CPFF) type of contract with a fee of 10% of estimated costs. The estimated cost is US$ 50,000. If the project
comes in at US$ 75,000 with no changes in project scope, what would be the total cost of the contract?
US$ 75,000
US$ 125,000
US$ 55,000
US $ 80,000
I n co rrect
In the Cost-Plus-Fixed-Fee (CPFF) type of contract, the seller is reimbursed for allowable costs for performing the contract work and receives a fee
calculated as an agreed-upon percentage of the costs. The costs vary depending on the actual cost. The fee is based on estimated costs unless the scope
of the project changes. For the current project, the agree-upon percentage of costs is 10%. The actual cost is US$ 75,000 even though the initial estimate
was US$ 50,000. However, the fee is calculated as 10% of 50,000 = (10/100) X 50,000 = 5,000. The total cost of the contract is 75,000 + 5,000 = US$ 80,000.
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33. Question
Make-or-Buy Analysis is done in the_______.
Control Procurements
Conduct Procurements
Plan Pro cu remen t Man ag emen t
Close Procurements
I n co rrect
Make-or-Buy Analysis is done during Plan Procurement Management process.
34. Question
Which of the following is not an input to the Conduct Procurements process?
Seller proposals
Pro p o sal evalu atio n tech n iq u es
Source selection criteria
I n co rrect
Proposal evaluation techniques are the tools and techniques of the Conduct Procurement process. The rest of the choices are the valid inputs to this
35. Question
You are a project manager and are comparing proposals received from sellers. Comparing proposals received from sellers is done during _______ .
C o n d u ct Pro cu remen ts
Plan Procurement Management
Close Procurements
I n co rrect
Comparing proposals received from sellers is done during Conduct Procurements.
36. Question
Vendor selection and management and documentation of lessons learned are tasks that fall under this process area:
Deliverable management
Procurement management
Scope management
I n co rrect
The Conduct Procurements process involves collecting sellers responses, seller selection and the contract award. [PMBOK 5th edition, Page 371]
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37. Question
You are a project manager for your company. Part of the project requires producing 10,000 widgets, which your company will outsource. The company has
agreed to pay all related costs and 5% of the estimated project costs. What type of contract has been negotiated?
Cost-Plus-Incentive-Fee contract
C o st-Plu s-Fix ed -Fee co n tract
Time and Material contract
Fixed-price contract
I n co rrect
This is an example of a Cost-Plus-Fixed-Fee contract. This type of contract determines the profit element as a fixed percentage of the estimated project cost.
38. Question
Which of the following is an output of the Conduct Procurements process?
Independent Estimates
S elected S ellers
Advertising
Expert Judgment
I n co rrect
Selected seller is the output of the Conduct Procurements process. The rest of the choices are the tools and techniques of this process. [PMBOK 5th
edition, Page 371]
39. Question
CPFF stands for:
Both Cost-Plus-Fixed-Fee and Cost-Plus-Fine-Fee are correct

Cost-Plus-Fine-Fee
C o st-Plu s-Fix ed -Fee
None
I n co rrect
Cost-Plus-Fixed-Fee (CPFF): The seller is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work.
40. Question
You have received a proposal against a RFP that was sent to vendors. One of the vendors has indicated that they can do the project for $12,500. The cost for
the project is $10,000 and their profit will be $2,500. Which type of the contracts is most suitable to be used in this situation?
Cost Plus Percentage of Cost

Cost Plus Fixed Fee
Fix ed p rice
Cost Plus Incentive Fee
I n co rrect
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Apparently it looks like the vendor is asking for a cost plus fixed fee contract. However, the vendor is actually looking for a fixed price contract when they
asked for a fixed $12,500. The cost and fee are just the components the vendor has estimated to come up with a final price. [PMBOK 5th edition, Page 362,
363]
41. Question
The ______________ provides the information from the seller as to how the requirements of the project can be met through purchasing.
Pro cu remen t d o cu men t

WBS
SOW
Scope statement
I n co rrect
The procurement document is to get information from the seller as to how the requirements of the project can be met through purchasing.
42. Question
Which of the following is not a tool or technique of the Control Procurements process?
Records management system

Payment system
C o n fig u ratio n man ag emen t system
Contract change control system
I n co rrect
The configuration management system is not a tool and technique of the Control Procurements process. The rest of the choices are valid tools and
techniques of this process. [PMBOK 5th edition, Page 379]
43. Question
Which statement is true about Fixed price or lump-sum contracts?
The seller assumes the greatest risk because the price is fixed.
The seller cannot charge for the extra materials because the price for the contract is already fixed.
If the time it takes to deliver the service or product expands, the seller cannot charge for the extra time and price
All
I n co rrect
Fixed price or lump-sum contracts: The seller assumes the greatest risk because the price is set. If the time it takes to deliver the service or product
expands, the seller cannot charge for the extra time and extra price. The seller cannot charge for the extra materials because the price for the contract is
already fixed. Incentives can be used with a fixed price contract based on meeting project deliverables or exceeding them.
44. Question
The State of New York has contracted your company to provide a claims payment system for Medicaid benefits. In the contract there is a clause that indicates
that the State of New York can review your work processes and deliverables. This is an example of?
Record Management System

Performance Report
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I n sp ectio n s an d Au d its
Deliverables Checklist
I n co rrect
When a buyer puts in a contract that they can review work and deliverables it is an example of an inspection and audit. [PMBOK 5th edition, Page 383]
45. Question
A project is contracted as a Cost-Plus-Incentive-Fee (CPIF) type of contract. The project is negotiated such that if the final costs are less than expected costs,
the sharing formula for cost savings is 75:25. The targeted cost is US$ 100,000 with an 8% incentive fee on the targeted cost. If the project comes in at US$
80,000, what would be the cost of the total contract?
US $ 93,000
US$ 112,000
US$ 108,000
US$ 91,400
I n co rrect
The correct answer is US$ 93,000. The calculation is as follows: Incentive fee based on budgeted costs = 8% of 100,000 = 8,000 Actual costs = 80,000 Share
of cost savings = 25% of 20,000 = 5,000 (since the cost savings is 100,000 80,000) Hence the payout = 80,000 + 8,000 + 5,000 = US$ 93,000. [PMBOK 5th
edition, Page 364]
46. Question
At what part of the Procurement Management process do procurement negotiations happen?
Close Procurements
I n co rrect
The negotiations happen at the Conduct Procurement of the Procurement process.
47. Question
You just found out that a major subcontractor for your project consistently provides deliverables late. The subcontractor approaches you and asks you to
continue accepting late deliverables in exchange for a decrease in project costs. This offer is an example of:
Smoothing
Forcing
Confronting
C o mp ro mise
I n co rrect
In this scenario both parties are giving up something, this is an example of compromise. [PMBOK 5th edition, Page 283]
48. Question
A project is contracted as a Cost-Plus-Incentive-Fee (CPIF) type of contract. The project is negotiated such that if the final costs are less than expected costs,
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the sharing formula for cost savings is 80:20. The targeted cost is US$ 500,000 with a 10% fee. If the project comes in at US$ 450,000, what would be the cost
of the total contract?
US$ 505,000
US $ 510,000
US$ 550,000
US$ 495,000
I n co rrect
In a Cost-Plus-Incentive-Fee (CPIF) type of contract, the seller is reimbursed for allowable costs for performing the contract work and receives a
predetermined fee. In some cases, if the final costs are less than the expected costs, then both the buyer and the seller benefit from the cost savings based
on a pre-negotiated sharing formula. In the current situation, the predetermined fee is 10% of US$ 500,000 = US$ 50,000. Since the project came in at US$
450,000, the savings is 500,000 450,000 = 50,000. The sharing formula is 80:20, hence the additional payout to the seller = (20/100) * 50,000 = 10,000.
Hence the value of the total contract = 450,000 + 50,000 + 10,000 = US$ 510,000. [PMBOK 5th edition, Page 364]
49. Question
Create Procurement document is created during _______.
Close Procurements
I n co rrect
Create Procurement document is created during Plan Procurement Management process.
50. Question
A buyer has just received a final set of deliverables from the seller and finds that they do not conform to the specifications that were originally planned for.
Ideally, where would the buyer expect to find documentation on how to handle non-conforming deliverables?
Communication Plan
T h e co n tract
Scope Statement
Quality Plan
I n co rrect
The requirements for formal deliverable acceptance and how to address non-conforming deliverables are usually defined in the contract. [PMBOK 5th
edition, Page 377, 378]
51. Question
The RFP (Request for proposal) is done in the_______.

Close Procurements
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I n co rrect
RFP(Request for proposal) is done in Plan Procurement Management process.
52. Question
Your company requires that before you purchase any routers or switches for the data center you are building, you need to solicit quotes from three
separate suppliers prior to submitting the purchase request to the finance department. This policy belongs to?
O rg an iz atio n al Pro cess Assets

Procurement Management Knowledge Area
Make-or-Buy Decision
Enterprise Environmental Factors
I n co rrect
Any type of corporate policy or formal procurement procedure is an organizational process asset. [PMBOK 5th edition, Page 27]
53. Question
What is the purpose of a bidder conference?
Awarding a contract to the most suitable vendor

Developing a comprehensive sellers list
En su rin g all ven d o rs h ave a clear u n d erstan d in g o f th e p ro cu remen t
Pre-qualifying the potential sellers
I n co rrect
Bidder conferences are also called contractor conferences or vendor conferences. Their purpose is provide all vendors with an understanding of the
project requirements and give all vendors equal time to get their questions answered. [PMBOK 5th edition, Page 375]
54. Question
What are the outputs of the Plan Procurement Management process?
Pro cu remen t man ag emen t p lan , Pro cu remen t statemen ts o f Wo rk, Make-o r-b u y d ecisio n s
Procurement management plan, Procurement statements of Work, Qualified sellers lists.
Procurement management plan, Qualified sellers lists, Resource calendars
Procurement management plan, Qualified sellers lists, Selected sellers
I n co rrect
Procurement management plan, Procurement statements of Work, and Make-or-buy decisions are three for the seven outputs of the Plan Procurements
55. Question
Which of these is not a tool or technique for the Control Procurements process?

R eco mmen d ed C o rrective Actio n
Claims administration
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Performance reporting
I n co rrect
Recommended corrective action is not a tool or technique in the Control Procurements process. [PMBOK 5th edition, Page 379]
56. Question
A product description of a project can help in creating procurement details. Which one of the following best describes the product description?
A p ro d u ct d escrip tio n d efin es th e co n tracted w o rk b ased o n th e req u iremen ts o f th e cu sto mer

A product description defines the contracted work
A product description defines the requirements for the contract work
All
I n co rrect
A product description defines the contracted work based on the requirements of the customer.
57. Question
If you had an experience with a particularly good or poor performing vendor, what is the correct way to document this experience for future projects?
Call the vendor and talk to them about the experience

Vow to only work with that vendor from now on
C reate a seller p erfo rman ce evalu atio n
Tell all your friends about it
I n co rrect
A seller performance evaluation is created by the buyer and provides information about the sellers performance. [PMBOK 5th edition, Page 386]
58. Question
A contract change control system should include:
Vendor contact information, tracking systems, and approval levels necessary for authorizing changes
Pap erw o rk, trackin g systems, d isp u te reso lu tio n p ro ced u res, an d ap p ro val levels n ecessary fo r au th o riz in g ch an g es
Information database, dispute resolution procedures, and approval levels necessary for authorizing changes
Tracking systems, legal ramifications for certain actions, and approval levels necessary for authorizing changes
I n co rrect
Having a contract change control system will allow you to establish the procedures and process should you need to modify a contract. It contains
paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes [PMBOK 5th edition, Page 383]
59. Question
Tom has sent a letter of intent to a company. What does that mean?
T o m in ten d s to b u y fro m th e co mp an y
Tom intends to fire the company
None
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Tom intends to sue the company
I n co rrect
Tom intends to buy from the company
60. Question
What is the purpose of a bidder conference?
En su rin g all ven d o rs h ave a clear u n d erstan d in g o f th e p ro cu remen t

Awarding a contract to the most suitable vendor
Pre-qualifying the potential sellers
Developing a comprehensive sellers list
I n co rrect
Bidder conferences are also called contractor conferences or vendor conferences. Their purpose is provide all vendors with an understanding of the
project requirements and give all vendors equal time to get their questions answered. [PMBOK 5th edition, Page 375]
61. Question
Which is not a valid evaluation criterion for source selection?
Contract requirements
Ag e o f th e co n tact p erso n at th e seller
Technical ability of the seller
Price
I n co rrect
Age of the contact person of the seller should not be considered as an evaluation criterion for source selection.
62. Question
A single source seller is the_____________.
O n ly seller th e co mp an y w an ts to d o b u sin ess w ith

Only seller in the market
Only the qualified seller
None
I n co rrect
A single source seller is the only seller the company wants to do business with.
63. Question
Making payments to seller is done during _______ .

C o n tro l Pro cu remen ts
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Close Procurements
I n co rrect
Making payments to seller is done during Control Procurements.
64. Question
You have been chosen by a program management office (PMO) to write a purchase order for your expertise in business writing. You have learned that the
PMO has already selected a seller for a software product and would like to award the procurement contract to the selected seller as a purchase order which
you must prepare. In this scenario, the PMO is administering:
The close procurements process

The control procurements process
The plan procurement management process
T h e co n d u ct p ro cu remen ts p ro cess
I n co rrect
Sellers are selected and procurement contracts are awarded to selected sellers in the conduct procurements process. Contracts can be awarded in the
form of a purchase order. Since PMO selected you to write the purchase order, it is in the process of conducting procurements. [PMBOK 5th edition, Page
371]
65. Question
A project manager is confused about the perspective of the buyer-seller relationship in the context of project procurement management. How would your
clarify this?
The buyer-seller relationship exists only between organizations internal to the acquiring organization.
The buyer-seller relationship exists only between organizations external to the acquiring organization.
T h e b u yer-seller relatio n sh ip can ex ist at man y levels o n o n e p ro ject, an d b etw een o rg an iz atio n s in tern al to an d ex tern al to th e
acq u irin g o rg an iz atio n .
The buyer-seller relationship is applicable only when a performing organization is involved.
I n co rrect
Project procurement management is usually looked at within the perspective of buyer-seller relationships. The buyer-seller relationship can exist at many
levels on one project, and between organizations internal to and external to the acquiring organization. [PMBOK 5th edition, Page 357]
66. Question
A contract between an organization and a vendor may include a clause that penalizes the vendor if the project is late. Penalty should be enforced based on
______________.
whether the project manager knew the delay was likely

w h o cau sed th e d elay an d w h at is th e reaso n fo r d elay
whether the project manager could have anticipated the delay
None
I n co rrect
The party that caused the delay is typically the party responsible for the delay.
67. Question
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During the procurement process, a contractual relationship gets established between a buyer and a seller. During the contract lifecycle, what is the correct
sequence in which the following terminology is applied to a seller? Vendor, Selected source, and Bidder.
The seller is viewed first as a bidder, then as a vendor, then as a selected source.
The seller is viewed first as a vendor, then as a bidder and then as a selected source.
T h e seller is view ed first as a b id d er, th en as a selected so u rce an d th en as a ven d o r.
The seller is viewed first as a selected source, then as a bidder and then as a vendor.
I n co rrect
68. Question
The buyer and seller are bound by a________.
Responsibilities
C o n tract
WBS
Identification
I n co rrect
Contract
69. Question
In the PMBOK, a seller is ________ to the project team
Internal
Assigned
Ex tern al
Outside
I n co rrect
In the PMBOK, a seller is External to the project team
70. Question
Which of the following may help in ensuring that certain bidders in the procurement process do not receive preferential treatment that all prospective sellers
have a clear and common understanding of the procurement?
Use of expert judgment

Use of screening techniques
Use o f b id d er co n feren ces
Use of weighted criteria
I n co rrect
Bidder conferences allow prospective sellers and buyers to meet prior to submission of a bid. This ensures that all prospective sellers have a clear and
common understanding of the procurement. This usually prevents any bidders from receiving preferential treatment. [PMBOK 5th edition, Page 375]
71. Question
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PMI discusses procurement focusing on the ______ relationship.
Purchasing
Vendor or seller
Bu yer o r seller
All of the above
I n co rrect
PMI discusses procurement focusing on the buyer or seller relationship
72. Question
What do buyers and seller have in common with regards to Control Procurements?
Both parties have specific resources that can be idle.

Each p arty en su res th at b o th it an d th e o th er p arty meet th eir co n tractu al o b lig atio n s an d th at th eir o w n leg al rig h ts are
p ro tected .
Both parties have a contract change management plan.
Each party has its own project plan and legal team
I n co rrect
Both the buyer and the seller administer the contract for similar purposes. Each party ensures that both it and the other party meet their contractual
obligations and that their own legal rights are protected. [PMBOK 5th edition, Page 380]
73. Question
A number of deliverable were submitted to the buyer as part of a project. Where would the project manager find documentation on the requirements for
formal deliverable acceptance and how non-conforming deliverable can be addressed?
In the SOW
In the deliverable release note.
In the lessons learned document
I n th e ag reemen t
I n co rrect
Requirements for formal deliverable acceptance and how to address non-conforming deliverables are usually defined in the agreement. [PMBOK 5th
edition, Page 377, 378]
74. Question
A buyer and seller fixed up the rates for junior engineers, senior engineers, architects, and other predefined roles. In what type of a contract would this be
applicable?
Fixed price with economic price adjustment contract

Fixed price incentive contract
T ime an d material co n tract
I n co rrect
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Unit labor or material rates are usually fixed up between the buyer and seller in case of Time and Material contracts. Specific categories such as junior or
senior engineers at specific hourly rates are agreed upon by both parties. [PMBOK 5th edition, Page 364]
75. Question
Which of the following is accurate regarding agreements in the Project Procurement Management?
Agreements are informal documents.

Agreements can never be terminated.
Terms and conditions never include the sellers proposal
Ag reemen ts are leg al d o cu men ts b etw een a b u yer an d a seller.
I n co rrect
Agreements are legal and formal documents between buyers and sellers. [PMBOK 5th edition, Page 357]
76. Question
The legal nature of the contractual relationship between a buyer and a seller requires that appropriate legal counsel be involved in the project, for specific
activities. Which of the following phases requires legal counsel to be involved.
Each p ro cu remen t man ag emen t p ro cess

Conduct procurements
Control procurements
Plan procurement management
I n co rrect
Project procurement management includes processes necessary to purchase or acquire products or services needed from outside the project team. If the
legal nature of a contractual relationship between a buyer and a seller requires that appropriate legal counsel is involved with a procurement, the
assistance of the legal counsel will be required for every phase of the procurement management. [PMBOK 5th edition, Page 355]
77. Question
Which of the following is true about the procurement documents?
The project manager creates and selects the bid

Inform the performing organization why the bid is being created.
En su re receip t o f co mp lete p ro p o sals
None
I n co rrect
Procurement documents : details of the requirements for the work to ensure complete proposals from sellers.
78. Question
The State Board of Education is reviewing RFPs for deployment of its new HR system. An outside consultant has been hired to provide an independent
estimate of the same work. This will be used as a_____________.
Real estimate
Ben ch mark estimate
Procurement verification
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Internal audit
I n co rrect
For many procurement items, the procuring organization can either prepare its own independent estimates or have an independent estimate prepared as
a check on proposed pricing. This independent estimate is used as a benchmark estimate. Significant differences from these cost estimates can be an
indications that the procurement statement of work was not adequate, that the prospective seller either misunderstood or failed to respond fully to the
procurement statement of work. [PMBOK 5th Edition, Page 376]
79. Question
The risk management plan should include:
Who is responsible for managing various areas of risk

Results of the Identify Risks and risk quantification processes
How contingency plans will be implemented
All
I n co rrect
Risk management plan should include: Results of the Identify Risks and risk quantification processes. Who is responsible for managing various areas of
risk? How the initial identification and quantification outputs will be maintained. How contingency plans will be implemented. How reserves will be
allocated
80. Question
Delivery dates and availability of resources can be found in the __________detail
SOW
Project Charter
Project Scope Statement
Wo rk Breakd o w n S tru ctu re
I n co rrect
Delivery dates and availability of resources can be found in the WBS details.
81. Question
A Risk Register is a part of the ________
Project Scope Statement

Pro ject man ag emen t p lan
Project scheduling plan
Project Charter
I n co rrect
A Risk Register is detailed part of the project management plan.
82. Question
Different types of contracts are appropriate for different types of purchases. Which of these is not one of the three broad categories of contracts?
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Time and Material
Fixed-price or lump-sum
Cost-reimbursable
Fix ed -assessmen t
I n co rrect
Fixed-assessment is not a category of contracts. [PMBOK 5th edition, Page 362]
83. Question
You are the project manager for a Fortune 100 IT company and you are currently engaged in an important project. You want to choose the best contractor
for a specialized task. What should you do to evaluate potential contractors?
Evalu ate p ro p o sals

Create a lessons learned document
Conduct a performance review
Perform a Make-or-Buy analysis
I n co rrect
An input to the Conduct Procurements process, seller proposals are prepared by sellers in response to a procurement document package. These are then
evaluated by the buyer to perform source selection. [PMBOK 5th edition, Page 373]
84. Question
Which of these is not an input to the Control Procurement process?
Work performance data

Work performance reports
Agreements
C h an g e req u ests
I n co rrect
Change requests are not the inputs of the Control Procurement process. The rest of the choices are valid inputs of this process. [PMBOK 5th edition, Page
379]
85. Question
Which statement is true about Contingency Plans?
Both these statements are true. (1) Provision in the project plan to mitigate cost and schedule risk . (2) Provision in the project plan to mitigate cost and
schedule risk
Provision in the project plan to mitigate cost and schedule risk
Pre d efin ed actio n step s to b e taken if an id en tified risk even t sh o u ld o ccu r
None
I n co rrect
Contingency Plans Pre defined action steps to be taken if an identified risk event should occur Reserves (Mitigation) Provision in the project plan to
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86. Question
___________ is a group of process required to purchase or acquire products, services, or results needed from outside the project team to perform the work.
Planning Management
Control Management
Pro cu remen t Man ag emen t
Scope Management
I n co rrect
Procurement Management is a groups of processes required to to purchase or acquire the products, services, or results needed from outside the project
team to perform the work.
87. Question
In the procurement process, the seller may be viewed initially as a bidder, then as the selected source and then as the contracted supplier. The seller will
typically manage the work as a project. In such an instance, which of the following is not true?
The Buyer becomes the customer and is thus a key project stakeholder for the seller.
Terms and conditions of the contract become key inputs to many of the seller's management processes. (ex: major deliverables, key milestones, cost
objectives)
T h ere n eed n o t b e a co n tractu al relatio n sh ip b etw een th e b u yer an d th e seller
The Seller's project management team is concerned with all the processes of project management and not just Procurement management.
I n co rrect
The statement that there need not be a contractual relationship between the buyer and the seller is incorrect. Whenever the seller is external to the
organization, there needs to exist a contractual relationship between the buyer and the seller. The rest of the statements are correct. [PMBOK 5th edition,
Page 357]
88. Question
The seller is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work. Which type of contract is this?
C o st reimb u rsab le w ith fix ed fee

Fixed Price
Cost reimbursable with incentive fee
Time and materials
I n co rrect
Cost-Plus-Fixed-Fee (CPFF): The seller is reimbursed for allowable costs and then receives a fee that is agreed upon before beginning the work.
89. Question
Which of the following is not a tool or technique of the Control Procurement process?
C o n fig u ratio n man ag emen t system

Payment system
Records management system
I n co rrect
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The configuration management system is not a tool and technique of the Control Procurements process. The rest of the choices are valid tools and
techniques of this process. [PMBOK 5th edition, Page 379]
90. Question
If you are working on a project with constantly changing scope, which contract type would work best when hiring an outside vendor to complete a portion
of the work?
Cost reimbursable
T ime an d material
Lump sum
Fixed price
I n co rrect
The Time and Material (T&M) contract will allow the contract to change as the project scope changes. [PMBOK 5th edition, Page 364]
91. Question
A seller was notified that they were one of the selected sellers based on their proposal. The seller immediately circulated an internal newsletter stating that
they had just been awarded a large contract for a term of 5 years. Would the newsletter be factually correct?
The newsletter is likely to be factually correct. A selected seller is one who has been awarded a contract based on the procurement process.
The newsletter is likely to be factually incorrect. A selected seller is one whose proposal has been accepted and a contract has been completed
pending signatures of the authorized parties.
It is likely that the newsletter is factually incorrect. While the seller has been selected for the work, it is unlikely that the term of the project would have
been 5 years.
I t is likely th at th e n ew sletter is factu ally in co rrect. A selected seller is o n e w h o se p ro p o sal h as b een ju d g ed to b e in a
co mp etitive ran g e. I t d o es n o t mean th ey h ave b een aw ard ed th e w o rk.
I n co rrect
The newsletter will likely be factually incorrect. A selected seller is one who has proposal has been judged to be in a competitive range based on bid
evaluation. The seller would have negotiated a draft contract that can become the actual contract when the award is made. [PMBOK 5th edition, Page 377]
92. Question
The purpose of a contract is to distribute a reasonable amount of ____________between the buyer and seller
Responsibility
R isk
None
Reward
I n co rrect
A fair contract shares a reasonable amount of risk between the buyer and the seller.
93. Question
You are the project manager and have decided to outsource a part of the project to a vendor. You have offered a bonus to the vendor if the work is
completed in two months. This is an example of _____________.
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p ro ject in cen tive
fixed price contract
None
project goal
I n co rrect
This is an example of project incentive.
94. Question
Which of the following is accurate regarding agreements in the Project Procurement Management?
Agreements can never be terminated.

Agreements are informal documents.
Terms and conditions never include the sellers proposal
Ag reemen ts are leg al d o cu men ts b etw een a b u yer an d a seller.
I n co rrect
Agreements are legal and formal documents between buyers and sellers. [PMBOK 5th edition, Page 357]
95. Question
You have an urgent requirement on your project and you hire a vendor to start the work immediately. What contract is needed now?
Letter co n tract
Fixed fee
None
Incentive contract
I n co rrect
For an immediate work, a letter contract would be sufficient.
96. Question
You are the project manager of a marketing project. You want a vendor to offer you one price to do all the detailed work. Which type of document are you
looking for?
Proposal
RFP
I FB
RFI
I n co rrect
An IFB is a sealed document that lists the sellers price to complete the detailed work.
97. Question
Complete final contract performance reporting and product verification is done in _______.
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C lo se Pro cu remen ts
I n co rrect
Complete final contract performance reporting and product verification is done in Close Procurements.
98. Question
Which type of contract has the highest risk for the buyer?
Fixed price
Reimbursed time
Reimbursed cost
T ime an d materials
I n co rrect
In a time and materials contract, the buyer agrees to pay for time used by the seller, which creates the risk. Time and Material contract Seller is paid a
preset amount per unit of service and the total value of the contract is a function of the quantities needed to complete the work.
99. Question
You are building a mansion that will have copper roofs. The duration of the project will be approximately three years, so you have built into the contract that
as the price of copper increases the contract allows for price increases as a percentage of the cost copper. However, all other costs are fixed. This is an
example of what type of contract?
Fixed Price Incentive Fee

Fix ed Price w ith Eco n o mic Price Ad ju stmen t
Unit Price
Time and Materials
I n co rrect
Since the price increases are tied only to the rising costs of the copper, this is a Fixed Price with Economic Price Adjustment (FP-EPA) contract. This is
common with multiple year contracts. [PMBOK 5th edition, Page 363]
100. Question
The costs on a project are typically classified as direct and indirect costs. The cost of electric utilities for the office would be considered as:
A specific cost
Appraisal cost
An in d irect co st
A direct cost
I n co rrect
The cost of electric utilities for the office would be considered as an indirect cost. Indirect costs are also known as overhead and general and
administrative costs. They are the costs allocated by the project team as a cost of doing business. Ex: Salaries of management indirectly involved in the
project, cost of electric utilities etc. [PMBOK 5th edition, Page 365]
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101. Question
You have successfully passed your PMP exam and are leading a project to replace the storage devices in a data center. In the following week, you and your
team of experts will be meeting with a storage device vendor to discuss the status of their deliverable that are due at weeks end. What management process
do these activities reflect?
C o n tro l Pro cu remen ts
Close Procurements
I n co rrect
The Control Procurements is the process of monitoring the contract performance. [PMBOK 5th edition, Page 379]
102. Question
The scope of work in a project could not be clearly defined. There was also a strong possibility that the scope would be altered during the course of the
project. Which type of contract would suit this type of situation?
C o st-reimb u rsab le co n tract
Fixed price with economic price adjustment contract
Fixed price incentive contract
I n co rrect
A cost-reimbursable contract gives the project flexibility to redirect a seller whenever the scope of work cannot be precisely determined at the start of the
project and needs to be altered, or when high risks may exist in the effort. [PMBOK 5th edition, Page 363]
103. Question
A seller started out a project on the basis of a Time and Material contract. The initial contract amount based on the agreed-upon rates and effort was $
100,000 over a 1 year period. However, when the project was completed, the total contract value turned out to be $ 350,000 over a 2 year period. What
mechanism could the buyer have used to prevent this unlimited cost growth and schedule change?
Use of a fixed price contract.

A service level agreement.
Use o f a n o t-to -ex ceed valu e an d a time limit o n th e co n tract.
A penalty based on the increased cost and timeline.
I n co rrect
Use of not-to-exceed values and time limits placed in T&M contracts help prevent unlimited cost growth or schedule changes. Use of a fixed price contract
is an option, but that is a decision prior to awarding the project and signing the contract. [PMBOK 5th edition, Page 364]
104. Question
There are three general type of contracts: Fixed Price, time and materials, and ________.
C o st reimb u rsab le
Time reimbursable
Simple cost
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All
I n co rrect
Three general types of contracts: Fixed Price, time and materials, and cost reimbursable. Time and Material contract Seller is paid a preset amount per
unit of service, and the total value of the contract is a function of the quantities needed to complete the work. Fixed price A fixed total price for a welldefined product, may include incentives for meeting or exceeding selected project objectives. Cost reimbursable contacts Payment to the seller of actual
costs.
105. Question
In the PMBOK, a buyer is _____________ to the project team
Assigned
I n tern al
Outside
External
I n co rrect
In the PMBOK, a buyer is Internal to the project team
106. Question
You are the project manager of a marketing project and need to purchase some equipment. The accounting department needs a unilateral contract from
you. Accounting is referring to which of the following:
Pu rch ase O rd er
Statement of Work
WBS
Legal Binding Contract
I n co rrect
A unilateral contract is simply a purchase order
107. Question
The termination clause and alternative dispute resolution (ADR) mechanism for each procurement in a project is documented in:
Ag reemen t
Scope Statement
Resource Calendars
Source Selection Criteria
I n co rrect
The termination clause and alternative dispute resolution (ADR) mechanism for each procurement in a project is documented in the respective
procurement agreement. [PMBOK 5th edition, Page 378]
108. Question
The evaluation criteria are determined by the _______.
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Seller
Bu yer
Sponsor
Project Mnagager
I n co rrect
The evaluation criteria will often determine whether a seller is even eligible to participate in the proposal process.
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