You are the project manager of the GHY
Project for your organization. A portion of
this project includes dangerous work;
although members of the project team
could likely complete the work, your
sponsor doesn’t want to accept the risk. In
this situation, which of the following may be
used as a risk mitigation tool?
B. A contract can be used as a risk
mitigation tool. Procurement of risky
activities is known as transference—the
risk does not disappear, but the
responsibility for the risk is transferred to
the vendor.
A. A vendor proposal
B. A contract
A, C, and D are all incorrect. A vendor
proposal, a quotation, and project
requirements do nothing to serve as risk
mitigation tools.
C. A quotation
D. Project requirements
As a PMP candidate you must understand
the provisions of project procurement even
if your typical projects do not include
procurements. Based on the information in
this chapter, a contract cannot have
provisions for which one of the following?
A. A deadline for the completion of the work
B. Illegal activities
C. Subcontracting the work
B. A contract cannot include provisions for
illegal activities.
A is incorrect because a contract can
stipulate a deadline for the project
work. C is incorrect because contracts can
specify rules for subcontracting the
work. D is also incorrect because a
contract can assess a penalty and fines for
disclosing intellectual rights and secret
information.
D. Penalties and fines for disclosure of
intellectual rights
You are the project manager for the 89A
Project. You have created a contract for
A. Of all the answers presented, A is the
best. Contracts have an offer and a
your customer. The contract must have
what two things?
A. An offer and consideration
B. Signatures and the stamp of a notary
public
C. The value and worth of the procured
item
consideration.
B is incorrect because not all contracts
demand signatures and notary public
involvement. C is also incorrect. A contract
may not explicitly determine what the value
and worth of the procured product or
service is. D is incorrect because a
contract may specify a start date, but the
acceptance of the start date is vague and
not needed for all contracts.
D. A start date and an acceptance of the
start date
The WBS and the WBS dictionary can help
a project manager plan for purchases and
acquisitions. Which one of the following
best describes this process?
A. The WBS defines the specific contracted
work.
C. The WBS defines the details and
requirements for acceptance of the project.
This information also serves as valuable
input to the process of determining what
needs to be procured. The WBS defines
what the end result of the project will be. In
dealing with vendors to procure a portion of
the project, the work to be procured must
support the requirements of the project’s
customer.
B. The WBS defines the requirements for
the specific contracted work.
C. The WBS defines the specific contracted
work, which must support the requirements
of the project customer.
D. Both parties must have and retain their
own copy of the WBS.
Yolanda has outsourced a portion of the
project to a vendor. The vendor has
discovered some issues that will influence
A is incorrect because the WBS defines
the project scope as a whole, not just the
contracted work, which may be just a
portion of the project. B is incorrect
because the WBS does not define the
requirements for the contract work. D is
incorrect because the vendor likely will not
have a copy of the WBS.
B is the best answer. Because the
question is asking for the vendor to update
the agreement, the change should follow
the cost and schedule of its portion of the
project. How must the vendor and Yolanda
update the agreement?
A. As a new contract signed by Yolanda
and the vendor
B. By submitting the change request to the
contract change control system
the details of the contract change control
system.
A, although feasible, is not the best answer
to the question. A new contract does not
update the original agreement and may
cause delays because the contract may
have to be resubmitted, reapproved, and
so on. C and D are not viable answers.
C. As a memo and SOW signed by
Yolanda and the vendor
D. By submitting the change request to the
cost change control system
You are the project manager of the HHQ
Project for your company. You have hired a
vendor to complete a portion of the project,
but the vendor doesn’t seem to have met
the project requirements as defined in the
contract. You have tried alternative dispute
resolutions to no avail and you think the
claims administration may have to be
escalated. The United States backs all
contracts through which of the following?
A. Federal law
B. State law
C. Court system
D. Lawyers
C. All contracts in the United States are
backed by the U.S. court systems.
A, B, and D are incorrect. Often the county
and state court systems will make
determinations of contract disputes if the
need arises. The best answer is simply the
court system, not federal law, state law, or
lawyers.
Terry is the project manager of the MVB
Project. She needs to purchase a piece of
equipment for her project. The accounting
department has informed Terry she needs
a unilateral form of contract. Accounting is
referring to which of the following?
A. The SOW
B. A legally binding contract
C. A unilateral form of a contract is simply
a purchase order.
A is incorrect because an SOW is a
statement of work. B is incorrect because a
legally binding contract does not fully
answer the question. D, an invoice from
the vendor, is not what the purchasing
department is requesting.
C. A purchase order
D. An invoice from the vendor
Bonnie is the project manager for the HGH
Construction Project. She has contracted a
portion of the project to the ABC
Construction Company and has offered a
bonus to ABC if they complete their portion
of the work by August 30. This is an
example of which one of the following?
A. A project requirement
B. A project incentive
B. A bonus to complete the work by August
30 is an incentive.
A is incorrect because the question does
not specify August 30 as a deadline. C is
incorrect because “project goal” does not
fully answer the question. D is incorrect
because the contract details are not
disclosed in this question.
C. A project goal
D. A fixed-price contract
You are a project manager for your
organization and are progressing through
the procurement management processes.
Who should receive the procurement
D. Each vendor that participates in the
bidding will need to receive the
procurement document package.
document package?
A. Your client
A, B, and C are all incorrect because these
parties do not need the procurement
document package.
B. Your project sponsor
C. Your accounting/finance department
D. Each seller that will participate in the
bidding
You are the project manager for a company
that completes the installation of electrical
fixtures in manufacturing environments.
Part of your typical contractual agreement
included coverage of intellectual rights and
privity. Privity is what?
A. The relationship between the project
manager and a known vendor
B. The relationship between the project
manager and an unknown vendor
C. Privity is a confidential agreement
between the buyer and the seller.
A, B, and D are incorrect because they do
not fully answer the question.
C. The contractual, confidential information
between the customer and the vendor
D. The professional information regarding
the sale between the customer and the
vendor
Sammy is the project manager of the DSA
Project. He is considering proposals and
contracts presented by vendors for a
portion of the project work. Of the following,
D. A fixed-price contract contains the least
amount of risk for a project. The seller
assumes all of the risk because cost
overruns are the seller’s responsibility.
which contract is least dangerous to the
DSA Project?
A. Cost plus fixed fee
A, B, and C are incorrect because these
contract types carry the risk of cost
overruns being assumed by the buyer.
B. Cost plus percentage of cost
C. Cost plus incentive fee
D. Fixed price
Bennie is the project manager for his
company and he’s working with his project
stakeholder to determine the pros and cons
of the different contract types for a portion
of his project. Of the following contract
types, which one requires the seller to
assume the risk of cost overruns?
A. Cost plus fixed fee
B. Cost plus incentive fee
C. Lump sum
C. A lump sum is a fixed fee to complete
the contract; the seller absorbs any cost
overruns.
A and B are incorrect because these
contracts require the seller to carry the risk
of cost overruns. D is incorrect because
time and materials contracts require the
buyer to pay for cost overruns on the
materials and the time invested in the
project work.
D. Time and materials
Benji is the project manager of the PLP
Project. He has hired an independent
contractor for a portion of the project work.
The contractor is billing the project $120
per hour, plus materials. This is an example
of which one of the following?
B. The contractor’s rate of $ 120 per hour
plus the cost of the materials is an example
of a time and materials contract.
A is incorrect because a cost plus fixed fee
A. Cost plus fixed fee
B. Time and materials
charges the cost of the materials, plus a
fixed fee, for the installation or work to
complete the contract. C is incorrect
because a unit price has a set price for
each unit installed on the project. D is
incorrect because a lump sum does not
break down the time and materials.
C. Unit price
D. Lump sum
Mary is the project manager of the JHG
Project. She has created a contract
statement of work (SOW) for a vendor. All
of the following should be included in the
contract SOW except for which one?
B. A signature of both parties agreeing to
the SOW is not required. That stipulation
will be included in the contract.
A. The items being purchased
B. The signatures of both parties agreeing
to the SOW
A, C, and D are incorrect because these
things are generally included in the SOW.
C. The expected quality levels
D. A description of the collateral services
required
You are the project manager for a software
development project for an accounting
system that will operate over the Internet.
Based on your research, you have
discovered it will cost you $25,000 to write
your own code. Once the code is written,
you estimate you’ll spend $3000 per month
updating the software with client
information, government regulations, and
maintenance. A vendor has proposed to
write the code for your company and
charge a fee based on the number of
C. The monies invested in the vendor’s
solution would have paid for your own code
in 6 months. This is calculated by finding
your cash outlay for the two solutions:
$25,000 for your own code creation and
zero cash outlay for the vendor’s solution.
The monthly cost to maintain your own
code is $3000. The monthly cost of the
vendor’s solution is $7200. Subtract your
cost of $3000 from the vendor’s cost of
$7200, which equals $4200. Divide this
number into the cash outlay of $25,000 to
clients using the program every month. The
vendor will charge you $5 per month per
user of the web-based accounting system.
You will have roughly 1200 clients using the
system each month. However, you’ll need
an in-house accountant to manage the time
and billing of the system, so this will cost
you an extra $1,200 per month. How many
months can you use the system before it’s
better to write your own code rather than
hire the vendor?
create your own code, and you’ll come up
with 5.95 months. Of all the choices
presented, C, 6 months, is the best choice.
A, B, and D do not correctly answer the
question.
A. 3 months
B. 4 months
C. 6 months
D. 15 months
You are the project manager of a project
that will span six years in Columbus, Ohio.
You are negotiating with your project
customer for considerations for inflation,
cost of utilities, and other cost factors that
will likely fluctuate over the course of the
project. What type of contract should your
project have?
A. Cost plus award fee
B. Fixed price with economic price
adjustments
C. Lump sum
B. Projects that last for several years often
use a fixed price with economic price
adjustments for cost categories that are
likely to increase over the project duration.
A, C, and D are all incorrect because these
contract types do not accommodate
fluctuations in the contract price for
economic variables such as inflation.
D. Fixed-price incentive fee
A contract between an organization and a
vendor may include a clause that penalizes
the vendor if the project is late. The
lateness of a project has a monetary
penalty. Thus, the penalty should be
enforced or waived based on which one of
the following?
D. This choice is the best answer because
it answers the question fully. The party that
caused the delay is typically the party
responsible for it. It would not be
acceptable for the project manager to
cause a delay willingly and then penalize
the contractor because the project was
late.
A. Whether the project manager could have
anticipated the delay
B. Whether the project manager knew the
delay was likely
C. Whether the delay was because of an
unseen risk
A, B, and C are all incorrect. While these
choices may be valid reasons for why a
project is late, the best, all-inclusive answer
is to determine who caused the delay and
why. Choosing any of the other answers
eliminates all other possible reasons for
delaying the project and the assigned
accountability for the lateness.
D. Who caused the delay and the reason
why
A project manager is considering the
marketplace and how it may affect the
pricing on the procured portion of her
project. She determines that in her market,
there is only a single-source seller. A
single-source seller means what?
A. There is only one qualified seller.
B. There is only one seller the company
wants to do business with.
C. There is a seller that can provide all
B. A single-source seller means there is
only one seller the company wants to do
business with.
A describes a “sole-source” seller. C is
incorrect. There may be multiple sellers
that can satisfy the project needs. D is also
incorrect. Just because there is only one
seller in the market does not mean the
seller can adequately and fully fill the
project needs.
aspects of the project procurement needs.
D. There is only one seller in the market.
Thomas is the project manager for his
organization, and he is preparing the
procurement process for his project.
Several enterprise environmental factors
and organizational process assets assist
Thomas in making the vendor selection. In
the enterprise environmental factors are
several evaluation criteria that Thomas
must consider when he chooses a vendor
for the project. Which one of the following is
not a valid evaluation criterion for source
selection?
A. The age of the contact person at the
seller
A. The age of the contact person at the
seller should not influence the source
selection. The experience of the person
doing the work, however, can.
B, C, and D are all incorrect because
technical capability, financial capacity, and
price can be valid evaluation criteria.
B. The technical capability of the seller
C. Financial capacity
D. Price
Henry has sent the ABN Contracting
Company a letter of intent. This means
which one of the following?
A. Henry intends to sue the ABN
Contracting Company.
B. Henry intends to buy from the ABN
Contracting Company.
B. Henry intends to buy from the ABN
Contracting Company.
A, C, and D are all incorrect because they
do not describe the purpose of the letter of
intent.
C. Henry intends to bid on a job from the
ABN Contracting Company.
D. Henry intends to fire the ABN
Contracting Company.
Martha is the project manager of the MNB
Project. She wants a vendor to offer her
one price to do all of the detailed work.
Martha is looking for which type of
document?
A. A request for proposal
B. A request for information
C. A proposal
D. An IFB is typically a request for a sealed
document that lists the seller’s firm price to
complete the detailed work.
A and B are incorrect because both are
documents from the buyer to the seller
requesting information about completing
the work. C does not list the price to
complete the work, but instead offers
solutions to the buyer for completing the
project needs.
D. An invitation for bid
In your organization, all project
procurement must pass through a
centralized contracting office. All
correspondence between you and the
vendors must be recorded and stored as
part of the procurement records
management system. These rules also
provide instructions for the project’s
procurement document packages from
procurement planning through contract
closure. Which one of the following is true
about procurement document packages?
A. They offer no room for bidders to
suggest changes.
B. Procurement document packages detail
the requirements for the work to ensure
complete proposals from sellers.
A is incorrect because procurement
documents allow input from the seller to
suggest alternative ways to complete the
project work. C is incorrect because
informing the performing organization on
why the bid is being created is not the
purpose of the procurement
documents. D is not realistic.
B. They ensure the receipt of complete
proposals.
C. They inform the performing organization
why the bid is being created.
D. The project manager creates and
selects the bid.
A key component of the project
procurement management knowledge is
the actual seller selection. Seller selection
is based on many inputs and enterprise
environmental factors by which the project
manager must abide. From a PMP
candidate’s perspective, in what process
group does source selection happen?
A. Initiating
B. Planning
C. Source selection happens during the
execution process group.
A, B, and D are all incorrect because these
process groups do not include source
selection.
C. Executing
D. Closing
Within your organization, all project
managers are required to document the
performance quality ratings, delivery
performance, and contractual compliance
of each vendor with which they interact.
This is known as what?
A. A requirement
B. This scenario describes the seller rating
system, which can help future project
managers choose the best vendor based
on past performance.
A is incorrect because requirements
describe the scope of the project or the
procured items. C is incorrect because this
term is not valid. D is incorrect because an
B. A seller rating system
incentive contract would define the reward
or penalties for adhering to or failing to
adhere to the contract requirements.
C. Procurement selection
D. An incentive contract
You are the project manager for a seller,
but you are managing another company’s
project as well. Things have gone well on
the project, and the work is nearly
complete. There is still a significant amount
of funds in the project budget. The buyer’s
representative approaches you and asks
that you complete some optional
requirements to use up the remaining
budget. You should do which one of the
following?
A. Negotiate a change in the contract to
take on the additional work.
B. Complete a contract change for the
additional work.
C. Submit the proposed change through
the contract change control system.
D. Deny the change because it was not in
the original contract.
C. Any additional work is a change in the
project scope. Changes to the project
scope should be approved by the
mechanisms in the change control system.
The stakeholders need to approve the
changes to the project scope.
A, B, and D are not realistic expectations
of the project. These questions could fall
into the realm of the PMP Code of Ethics
and Professional Conduct. Typically, when
a project scope has been fulfilled, the
project work is done. The difference in this
situation is that the additional tasks are
optional requirements for the project scope.