Flash cards - 12. Procurement Management

Below are flash cards simulation questions on the chapter Procurement management.
Both question and answer are given below.
Answer is hidden by giving the font color of text and background color as same. 
To see the answer, pls highlight text by selecting it with mouse cursor.

1. What are different Types of contracts. (Too see answer, select text below with mouse/ cursor)
Answer:

• Fixed price contract
• Time and Material contract
• Cost reimbursable 

2. What do you know about Firm fixed price contract (who bears risk; How much is profit; what happens if scope changes). (Too see answer, select text below with mouse/ cursor)

Answer:

Firm fixed Price contracts –FFP = setting a fixed total price for a defined product, service, or result

·         Risk is for seller (contractor). Profit is not known. Cost increases due to adversities--> borne by seller

·         Most common type. If scope changes, specs change, renegotiate contract

  3. What is Fixed price incentive Fee contract (FPIF). (Too see answer, select text below with mouse/ cursor)
Answer:

·         Incentive OR penalty – based on achieving agreed metrics

·         Final contract price is determined after completion of work and evaluating performance targets

·         Any costs above ceiling price is responsibility of seller

Concept of “Point of Total assumption” = target cost +[(ceiling price-target price)/buyer ratio]

4. What is Fixed price Award Fee (FPAF). (Too see answer, select text below with mouse/ cursor)
Answer: FPIF is potential award or penalty BUT FPAF is always award (not a compulsory fee)

5. What is Fixed price with Economic Price Adjustment Contracts. (Too see answer, select text below with mouse/ cursor)
Answer:

·         For very long term contracts

·         Adjusted for inflation, $ exchange, crude oil price hikes

6. What is Cost reimbursable contract. (Too see answer, select text below with mouse/ cursor)
Answer:

Cost reimbursable contracts = when scope is not precisely defined at the start or when there are high risks, this type provides some flexibility to contractor

e.g. R&D projects

7. What is Cost Plus Fixed Fee. (Too see answer, select text below with mouse/ cursor)
Answer:

Payments to seller =All legitimate actual costs incurred + Fixed fee (determined at the start);

Fee doesn’t change based on performance. It may change if Scope changes;

8. What is Cost plus incentive Fee. (Too see answer, select text below with mouse/ cursor)
Answer:

Payments to seller = All legitimate actual costs incurred + [Fixed fee + Incentive based on % of savings]

·         Fixed Fee = Min fee or Target fee or Max fee

·          [Fixed fee + Incentive based on % of savings] should not exceed max fee

·         If no savings, cost exceeds the target, only min fee he will get. No incentives

·        e.g.  Target cost 1,00,000, Fee (Min 9k, target 12k, max 14k), sharing ratio 80:20

·         If work finished for 95k  seller gets 95k+ 12k (i.e. target fee) + 20% of  savings ( i.e. 100k – 95k = 5k) = 95k +12k+ 1k = 108k

·        If work finished for 85k  seller gets 85k+ [12k + 20% of (1L – 85k)] = 85k + 15k-> but max fee is 14k, so 85k+14k = 99k

If work finishes for 1,20,000 ,  seller gets 120k+ 9k = 129k

9. what is Cost Plus Award Fee. (Too see answer, select text below with mouse/ cursor)
Answer:

Payments to seller = All legitimate actual costs incurred + Fee (determined based on subjective performance, not fixed at start)

Award = bonus

Cost plus incentive fee is potential award or penalty BUT cost plus award fee is always potential award

10. What is Cost Plus Percentage of Costs (CPPC) or Cost plus Fee. (Too see answer, select text below with mouse/ cursor)
Answer:

Cost Plus Percentage of Costs (CPPC) or Cost plus Fee:

e.g. cost + 10% of total cost as fee

11. What is Time and Material contract? (Too see answer, select text below with mouse/ cursor)
Answer:

Time and Material contracts

Hybrid type – for staff augmentation, acquisition of experts etc

·         Buyer pay a rate for resource (like fixed contract)

·         But these also resemble cost-reimbursable because they may be left open ended and so subject to cost increase for buyer

T&M contracts may have ‘Not-to-exceed (NTE)’ stipulations to avoid risks. Usually preferred when scope is changing continuously – we cant go for Fixed contract in this case and T&M has lesser cost risk than Cost reimbursable contacts

12. What is difference between Agreements and contracts. (Too see answer, select text below with mouse/ cursor)
Answer:

Agreements	Contracts
Contract is one type of agreement but all agreements not necessarily contracts. Agreement is super set and contract is subset (mathematically)	Contract = exchange of goods or service for some compensation
E.g. of Agreement but not a contract: Service level agreement, Charter, PM plan, letter of intent etc	Contract can be written or verbal; but mostly formal-written
Agreements can be internal agreement or external agreement	Typically created with external parties. E.g. Procurement contracts
Agreements generally encompass documents or communications that outline internal/external relationships and their intentions	Contracts form the legal relation between entities

13. What are different things done during Plan procurement management process. (Too see answer, select text below with mouse/ cursor)

Answer:

Make or Buy decision

Create procurement SoW, procurement docs, terms n conditions

Select contract type

create source selection criteria

create Procurement management plan

14. What are different things done during Conduct Procurements. (Too see answer, select text below with mouse/ cursor)

Answer:

Find possible sellers (through advt or through OPA’s qualified seller list)

Send procurement docs (RFP, IFB, RFQ, RFI, PO etc to sellers

Answer seller’s questions (bidder conference etc)

Receive and analyze sellers responses (Bids, sellers’ response to procurement docs, proposal evaluation techniques etc)

Select seller

15. What are different things done during 

Control procurments. 

(Too see answer, select text below with mouse/ cursor)
Answer:

Monitor performance, Perform inspection and audits, conduct performance reviews

Review cost submittals and make payments

Issue change requests to contract if buyer’s needs changed

Accept verified deliverable

16. 

 What are different things done during  

Close procurments. 

(Too see answer, select text below with mouse/ cursor)

Answer:

Negotiate settlements

Validate product -

issue formal acceptance

Audit procurement process

create lessons learnt - update records

Closure of contracts/ all procurements

17. What are differences between Quality audit, Process audit and procurement audit. (Too see answer, select text below with mouse/ cursor)
Answer:

Quality audit	Risk audit	Procurement audit
During execution process	During monitoring and control process	During closing process
During Perform quality assurance	During Control risk	During close procurements

Flash cards - 13. Project Stakeholder Management

Below are flash cards simulation questions on the chapter Project Stake holder management.
Both question and answer are given below.
Answer is hidden by giving the font color of text and background color as same. 
To see the answer, pls highlight text by selecting it with mouse cursor.

Questions and Answers:

1. Who is positive stake holder. (Too see answer, select text below with mouse/ cursor)
Answer:
The one who wants the project to get succeed. He may be either active participant or not. 

2. Who is negative stake holder. (Too see answer, select text below with mouse/ cursor)
Answer:
The one who DOES NOT want the project to get succeed. He may be either active participant or not. He may be resisting the project or he may be refusing to cooperate. He maybe active or passive

3.Stake holder influence - will it increase or decrease with time. (Too see answer, select text below with mouse/ cursor)
Answer:

Stake holder influence, Risk in the project decrease with time. Only 'accumulated costs' increase with time.

4. What is stakeholder analysis. (Too see answer, select text below with mouse/ cursor)
Answer:

Stakeholder analysis is a technique of systematically gathering and analyzing quantitative and qualitative information to determine whose interests should be taken into account throughout the project.

5. What is power interest grid. How to handle various stakeholders depending upon their (high or low) power and (high or low) interest. (Too see answer, select text below with mouse/ cursor)
Answer:

High power- High interest = Manage closely
High power - Low interest = Keep satisfied
Low power - High interest = Keep informed
Low power - Low interest = Monitor

6. What are various levels of engagement of stakeholders. (Too see answer, select text below with mouse/ cursor)
Answer:
Unaware =Unaware of potential impacts .
Resistant =Aware of potential impacts but Resistant to change.
Neutral = Aware of potential impacts;  neither supportive nor resistant to change/ project.
Supportive = Aware of potential impacts; supportive to change.
Leading = Actively engaged to help project success.

7. What is Salience Model with respect to stake holder analysis. (Too see answer, select text below with mouse/ cursor)
Answer:

It considers - power, urgency and legitimacy of stakeholders. This model is part of stakeholder analysis, which is one of the tool/technique of identify stakeholder processes

8. What are Profile analysis meetings in the context of stakeholder management. (Too see answer, select text below with mouse/ cursor)
Answer:

Profile analysis meetings to develop understanding of stakeholders, and to exchange and analyze information about roles, interests, knowledge, and the overall position of each stakeholder.

9. What is Stakeholder engagement assessment matrix. (Too see answer, select text below with mouse/ cursor)
Answer:

One of the tools and techniques for the process - Plan stakeholder management. Gaps between current and desired levels identified and actions/ communications required to close this gap identified during the process. Looks like below:

	Unaware	Resistor	Neutral	Supportive	leading
Stakeholder1	C			D
Stakeholder2			C	D
Stakeholder3				CD

Blog on PMP preparation

Hi All.

Main intention of this blog is to help you clear PMP examination.
Will do it using the steps below.
1. Providing synopsis of PMBOK concepts to help you better understand the concepts
2. Providing flash cards within blog posts so that you can check your understanding
3. Providing mock questions to make you get ready for examination.