The Project Procurement Management knowledge area accounts for 4 percent (12) of the questions on the CAPM exam. The PMBOK Guide, Sixth Edition, Sections 12.1 through 12.3, cover the three processes in the Project Procurement Management knowledge area.

This chapter focuses on the topic of Project Procurement Management, which, like the other knowledge areas, begins with a process of planning, which in this case produces a procurement management plan. It then uses this plan to carry out the procurement work, which involves making decisions about whether to procure goods, services, or resources from external sources and, if so, how to advertise and award the contract and what form of contract to use. Procurement management also involves monitoring contractual terms for performance and includes making sure all contracts are formally closed.

The 12 practice questions in this chapter are mapped to the style and frequency of question types you will see on the CAPM exam.

Q QUESTIONS

1.   Which of the following processes produces the procurement management plan?

A.   Close Procurements

B.   Plan Procurement Management

C.   Conduct Procurements

D.   Develop Procurement Management Plan

2.   The organization seeking to procure external resources to provide goods or services on a project is known as what?

A.   Procurement specialist

B.   Seller

C.   Lawyer

D.   Buyer

3.   You are the seller of a potential good or service and are responding to an RFP document where there is a poorly defined scope of work. What type of contract would you prefer to enter?

A.   Fixed-price

B.   Fixed price incentive fee

C.   Cost-reimbursable

D.   Time and materials

4.   The document that describes and defines the portion of the project scope to be included within the related contract is known as what?

A.   Procurement management plan

B.   Organizational process assets

C.   Scope statement

D.   Procurement statement of work

5.   A technique that considers a variety of factors to determine whether the particular project work is best done by the project team or done by external sources is known as what?

A.   Expert judgment

B.   Market research

C.   Make-or-buy analysis

D.   Proposal evaluation techniques

6.   All the following could be included as part of your source selection criteria except what?

A.   Intellectual property rights

B.   Technical capability

C.   Financial capacity

D.   Organizational process assets

7.   You have decided to engage the services of a quantity surveyor to review the prices received from sellers responding to your procurement requests. What tool or technique are you using?

A.   Delphi technique

B.   Independent estimates

C.   Analytical techniques

D.   Bidder conferences

8.   You and your team are in the process of negotiating a contract for a service required on your project. Which process are you in?

A.   Plan Procurement Management

B.   Conduct Procurements

C.   Control Procurements

D.   Close Contracts

9.   Who is responsible for carrying out audits on contracts?

A.   Only the buyer

B.   Only the seller

C.   An independent legal professional

D.   Both buyer and seller

10.   Which tool or technique would be most useful for storing information about procurement documentation and records?

A.   Records management system

B.   Project management information system

C.   Contract change control system

D.   Procurement performance reviews

11.   All the following conditions can lead to early termination of a contract except what?

A.   Mutual agreement by both parties

B.   Default of one party

C.   Convenience of the buyer if provided for in the contract

D.   An incomplete procurement statement of work

12.   Which of the following is not a form of alternative dispute resolution?

A.   Mediation

B.   Arbitration

C.   Litigation

D.   Audit

QUICK ANSWER KEY

1. B

2. D

3. D

4. D

5. C

6. D

7. B

8. B

9. D

10. A

11. D

12. D

A ANSWERS

1.   Which of the following processes produces the procurement management plan?

A.   Close Procurements

B.   Plan Procurement Management

C.   Conduct Procurements

D.   Develop Procurement Management Plan

  B. The Plan Procurement Management process has the procurement management plan as its primary output.

  A, C, and D are incorrect. A is incorrect because the Close Procurements process is a name from the PMBOK Guide, Fifth Edition, and was the process that closed contracts after they had been fulfilled. C is incorrect because Conduct Procurements uses the procurement management plan. D is incorrect because Develop Procurement Management Plan is a made-up process name.

2.   The organization seeking to procure external resources to provide goods or services on a project is known as what?

A.   Procurement specialist

B.   Seller

C.   Lawyer

D.   Buyer

  D. The buyer is the organization that is requiring goods or services to be performed and is asking for external sources to do the work via a negotiated contract.

  A, B, and C are incorrect. A is incorrect because the procurement specialist may be an expert that you choose to use as part of your decision to procure from external sources. B is incorrect because the seller is the organization or individual who is responding to a request from a buyer for the provision of goods and services. C is incorrect because a lawyer can act for either buyer or seller.

3.   You are the seller of a potential good or service and are responding to an RFP document where there is a poorly defined scope of work. What type of contract would you prefer to enter?

A.   Fixed-price

B.   Fixed price incentive fee

C.   Cost-reimbursable

D.   Time and materials

  D. Given that there is a poorly defined scope of work, you want to enter into the type of contract that represents the least risk to you, the seller, which is a time and materials contract.

  A, B, and C are incorrect. A is incorrect because a fixed-price contract would represent the greatest risk to the seller in the face of a poorly defined scope of work. B is incorrect because a fixed price incentive fee contract does little to remove the risk to the seller with a poorly defined scope of work. C is incorrect because a cost-reimbursable form of contract may be preferable to a fixed-price form of contract where there is a poorly defined scope of work, but it still represents more risk to the seller than a time and materials contract.

4.   The document that describes and defines the portion of the project scope to be included within the related contract is known as what?

A.   Procurement management plan

B.   Organizational process assets

C.   Scope statement

D.   Procurement statement of work

  D. The procurement statement of work describes and defines the portion of the project scope to be completed as part of a negotiated contract.

  A, B, and C are incorrect. A is incorrect because the procurement management plan provides guidelines for carrying out the entire procurement management process. B is incorrect because organizational process assets include templates, historical information, and other guidelines of use in carrying out the procurement management process, but they do not describe or define the work to be done as part of the contract. C is incorrect because the project scope statement defines and describes all the work to be done as part of the project; the procurement statement of work is a subset of the project scope statement specifically related to the work to be done as part of a contract.

5.   A technique that considers a variety of factors to determine whether the particular project work is best done by the project team or done by external sources is known as what?

A.   Expert judgment

B.   Market research

C.   Make-or-buy analysis

D.   Proposal evaluation techniques

  C. Make-or-buy analysis is the technique that considers a variety of factors to determine whether you should complete the work in-house or outsource it.

  A, B, and D are incorrect. A is incorrect because expert judgment is used as a tool and may contribute to the make-or-buy analysis, but it is not the best answer. B is incorrect because market research is a technique that examines the number of potential sellers and their interest in responding to your procurement documents. D is incorrect because proposal evaluation techniques are used after sellers have responded to your requests in order to determine which sellers advance in the procurement process.

6.   All the following could be included as part of your source selection criteria except what?

A.   Intellectual property rights

B.   Technical capability

C.   Financial capacity

D.   Organizational process assets

  D. Organizational process assets may help you with the procurement management processes, but they would not be included as part of your source selection criteria.

  A, B, and C are incorrect. A is incorrect because intellectual property rights are an important consideration in your source selection criteria to determine who ultimately owns the work performed as part of a contract. B is incorrect because technical capability will be considered as part of your source selection criteria to ensure that the selected seller has the technical capability to perform the required work. C is incorrect because financial capacity will be considered as part of your source selection criteria to ensure that the sellers chosen are of sufficient financial strength and stability to be able to complete the work.

7.   You have decided to engage the services of a quantity surveyor to review the prices received from sellers responding to your procurement requests. What tool or technique are you using?

A.   Delphi technique

B.   Independent estimates

C.   Analytical techniques

D.   Bidder conferences

  B. Independent estimates are a technique used to determine if prices received from sellers are accurate.

  A, C, and D are incorrect. A is incorrect because the Delphi technique is a tool used to solicit information from participants anonymously to reach consensus. C is incorrect because analytical techniques are a particular tool used to evaluate a variety of elements and seller responses, not just price. D is incorrect because bidder conferences are used to provide information to prospective sellers on a fair and equitable basis.

8.   You and your team are in the process of negotiating a contract for a service required on your project. Which process are you in?

A.   Plan Procurement Management

B.   Conduct Procurements

C.   Control Procurements

D.   Close Contracts

  B. The Conduct Procurements process uses the project management plan and seeks to negotiate contracts with potential sellers.

  A, C, and D are incorrect. A is incorrect because the Plan Procurement Management process is focused on the production of the procurement management plan and procurement statement of work, which will assist with the Conduct Procurements process, during which contracts are negotiated. C is incorrect because the Control Procurements process monitors the negotiated contracts but does not actually negotiate them. D is incorrect because Close Contracts is a made-up term.

9.   Who is responsible for carrying out audits on contracts?

A.   Only the buyer

B.   Only the seller

C.   An independent legal professional

D.   Both buyer and seller

  D. Both buyer and seller are responsible for carrying out audits on contracts, because they are both parties to the contract and have responsibilities under the negotiated terms and conditions.

  A, B, and C are incorrect. A is incorrect because the seller is also responsible for carrying out audits on contracts to ensure that both they and the buyer are meeting the agreed-to terms and conditions. B is incorrect because the buyer also has responsibility for carrying out audits of the contracts because they initiated the process and have obligations as well. C is incorrect because an independent legal professional may be engaged by either buyer or seller, but the ultimate responsibility lies with both buyer and seller.

10.   Which tool or technique would be most useful for storing information about procurement documentation and records?

A.   Records management system

B.   Project management information system

C.   Contract change control system

D.   Procurement performance reviews

  A. The records management system is a subset of the project management information system devoted to storing information about procurement documentation and records.

  B, C, and D are incorrect. B is incorrect because the project management information system includes the records management system, which is the better answer to this question because it specifically focuses upon storing information about procurement documentation and records. C is incorrect because the contract change control system records information about requested contractual changes and the status. D is incorrect because procurement performance reviews gather information about whether each party to a contract is carrying out their obligations and responsibilities. Information gathered from procurement performance reviews will be stored in a records management system.

11.   All the following conditions can lead to early termination of a contract except what?

A.   Mutual agreement by both parties

B.   Default of one party

C.   Convenience of the buyer if provided for in the contract

D.   An incomplete procurement statement of work

  D. An incomplete procurement statement of work may lead to disagreements, change requests, and claims but not generally to an early termination of the contract except under extreme circumstances.

  A, B, and C are incorrect. A is incorrect because both parties can, by way of mutual agreement, agree to terminate the contract early. B is incorrect because the default of one party to a contract is considered sufficient cause for early termination of a contract. C is incorrect because some forms of contracts have written into them that early termination can occur if it is convenient to the buyer. These contracts normally include some form of compensation to the seller.

12.   Which of the following is not a form of alternative dispute resolution?

A.   Mediation

B.   Arbitration

C.   Litigation

D.   Audit

  D. An audit is used to determine whether parties to a contract are carrying the contract out as per the agreed-to terms and conditions.

  A, B, and C are incorrect. A is incorrect because mediation is a form of alternative dispute resolution that seeks to reach an agreement with both parties. B is incorrect because arbitration is a form of alternative dispute resolution that brings in a third party to make a decision that is binding on both parties. C is incorrect because litigation is a form of alternative dispute resolution that involves some form of court involvement.