TWELVE Procurement Management 13. The sponsor is worried about the seller derivi
ID: 343952 • Letter: T
Question
TWELVE Procurement Management 13. The sponsor is worried about the seller deriving extra proft on the cost plus fixed fee (CPFF contract. Each month he requires the projoct manager to sabmit CPi cakculations and am analysis of the cost to complete. The project manager explains to the sponsor that extra grofits sid NOT be a worry on this project because A. The team is making sure the seller does not cut scope B. All costs invoiced are being audired C. There can only be a maximum 10 percent increase if there is an unexpected cost overrun D. The fee is only received by the seller when the project is completed. 14 In a fixed-price (FP) contract, the fee or profht is A. Unknown. B. Part of the negotiation involved in paying every invoice C. Applied as a line item to every invoice D. Determined with the other party at the end of the project. 15. A project performed under a cost-reimbursable contract has finally entered the Close Procurements process. What MUST the bayer remember to do A. Decrease the risk rating of the project B. Audit sellers cost subemittals CEvaluate the fee she is paying. D. Make sure the seller is not adding resources. 16. The sponsor and the project manager are discussing what type of contract the project muanager plans to use on the project. The sponsor points out that the performing organization spent a lot of money hiring a design team to come up with the design. The project manager is concerned that the risk for the buyer be as small as possible. An advantage of a fixed-price contract for the buyer is A. Cost risk is lower B. Cost risk is higher C. There is little risk D. Risk is shared by all parties 17. As part of the records management system, you are trying to make sure all recoeds from the procurement are documented and indexed. Which ofthe following do you NOT harve to worry about A. Proposal B. Procurement statement of work C. Terms and conditions D. Negotiation process I&. You are in the middle of a complex negotiation when the other party says. "Wie need to Enish in one hour because I have to catch my plane. That person is using which of the olowing negotiation strategies A. Good guy, bad guy B. Delay C. Dead ine D. Extreme demands 517Explanation / Answer
Answer 13
B. All costs invoiced are being audited.
Explanation:
Option A cannot be the answer as cutting scope reduces profits in this type of contract. Option C also cannot correct for the given question, because usually there is no limit on fee increases under Cost plus Fixed Fee contracts. Option D cannot be selected, because the fee in a Cost plus Fixed Fee contract is generally paid out on a constant basis during the life of the project. The best way to change the profit in a cost plus fixed fee contract is invoice for costs or items that are not chargeable to the project.
Answer 14
A. Unknown
Explanation:
From buyer’s perspective, the fee or profit included by the seller in the contract is unknown.
Answer 15
B. Audit seller's cost submittals
Explanation:
Audit seller's cost submittals, is component of the procurement audit and is a vital part of Close Procurements.
Answer 16
A. Cost risk is lower
Explanation:
It is generally assumed that questions are asked from the buyer's view point unless otherwise stated. In this case, the most cost risk is on the shoulders of seller, so the buyer's risk is lower.
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