Section 10: Procurement Management
Your project team has been informally meeting with sellers to discuss the sellers’ "best practices" relative to upcoming potential work from your company. During one of these sessions, a seller offers to give you tickets to a sporting event if you will tell him the names of other companies you have been meeting with. What is the BEST response?
A. Ignore the question and refuse to meet with him again.
B. Answer the question, but respectfully refuse the offer.
C. Ask him why he needs to know.
D. Refuse to answer the question and remove the company from consideration for future work.
You need to protect your company’s interests and limit sellers from gaining information that can be used to their advantage in subsequent negotiations. You might also wonder what other confidential information the company may try to acquire if you were to work with them.
Source: PMP® Exam Prep Page: 489
Although your company is not the lowest bidder for a project, the client has come to expect good performance from your company and wants to award the contract to you. To win the contract, the client asks you to eliminate your project management costs. The client says that your company has good project processes, and project controls unnecessarily inflate your costs. What should you do under these circumstances?
A. Eliminate your project management costs and rely on experience.
B. Remove costs associated with project team communications, meetings, and customer reviews.
C. Remove meeting costs but not the project manager’s salary.
D. Describe the costs incurred on past projects that did not use project management.
Project management activities are not optional. Choice D addresses the real problem by giving the client information that they may not have. An alternate choice is to explain that project management and its associated costs are reasons for the company’s past performance and success.
Source: PMP® Exam Prep Page: 422
In the planning process group of your project, it is apparent that factions within the client’s company have significantly different views on how the project should be structured and how the deliverables should be defined. Which of the following is the BEST thing to do?
A. Ask the client when they will be in agreement on the project requirements.
B. Work with leadership from each area to collaboratively engineer a mutually acceptable solution.
C. Make sure the terms and conditions of the contract are clear.
D. List the consequences of changes in the requirements section of the contract.
You need to encourage the client to realize that they have a problem and to finalize their requirements. Choice A is withdrawal. Choice C will help only after the fact. Choice D is a penalty.
Source: PMP® Exam Prep Page: 154
A major negotiation with a potential subcontractor is scheduled for tomorrow when you discover there is a good chance the project will be cancelled. What should you do?
A. Do not spend too much time preparing for the negotiations.
B. Cut the negotiations short.
C. Only negotiate major items.
D. Postpone the negotiations.
Choice D is more ethical and demonstrates good faith. Why spend time in negotiations?
Source: PMP® Exam Prep Page: 489
A project manager working for a construction company works closely with a design firm. Part of his responsibility is to negotiate and approve bid documents with the design firm. The design firm offers the project manager a job with the firm, which he accepts. When the project manager gives his two weeks’ notice to the construction company, he is not asked nor does he mention that the design firm will employ him. For the next two weeks, the project manager continues to negotiate and approve bids and designs submitted by the design firm. In this situation:
A. The departure of the project manager provides both companies with benefits by allowing the companies to strengthen their relationship and enhance communication.
B. The construction company did not ask and the project manager is not obligated to inform the company of his new job position.
C. There is a conflict of interest.
D. The project manager is required to inform the construction company in his departure interview.
The project manager’s primary obligation is to the construction firm, and not to the design firm, while still employed by the construction firm. There is a conflict of interest in this case. The project manager’s failure to fully disclose his new position and continuing to negotiate and approve bids on behalf of his current employer is not appropriate.
Source: PMP® Exam Prep Page: 490
You are managing a procurement for a project and have arranged a bidder conference with the potential proposers. All of the following are appropriate for a bidder conference EXCEPT:
A. A walkthrough of the project scope.
B. An explanation of why particular terms and conditions are in the contract.
C. A request for bidders to offer their thoughts on problems with the scope of the work.
D. Working with the bidders to determine alternative solutions for the project.
It is not common for alternatives to be discussed at the bidder conference. They may be included in bids or proposals and discussed later.
Source: PMP® Exam Prep Page: 452
You are in the process of reviewing bids from various vendors for work on your project. One of the bidding vendors has a history of delivering on time and within budget, and you have personally worked with this company successfully on previous engagements. You receive a call from the manager submitting the bid inquiring about how the process is going. He asks to have lunch with you to discuss the bid. What is the BEST response?
A. Do not mention the other bidders but simply inform him that based on past experience, he has a good chance of winning the business.
B. Inform him that it would be inappropriate to discuss the matter at all and document the conversation.
C. Inform him that it would not be appropriate to discuss the matter over the phone during business hours, but that an informal lunch discussion would be more appropriate.
D. Politely avoid continuing the conversation and disregard the bid.
It is never appropriate to carry on private discussions regarding the status of any bids with a bidding party. All communications between the solicitor and the bidders must be formal and open to all parties.
Source: PMP® Exam Prep Page: 489
You are working on your research and development project when your customer asks you to include a particular component in the project. You know this represents new work, and you do not have excess funds available. What should you do?
A. Delete a lower-priority work package to make more time and funds available.
B. Use funds from the contingency reserve to cover the cost.
C. Follow the contract change control system.
D. Ask for more funds from the project sponsor.
This is a common occurrence on many projects. When you take the exam, always assume that a change requires evaluation and formal change (choice C), unless it says otherwise. The request from the customer is a change and should be handled as a change. Choices A and D could be done, but only after evaluation and customer approval and as part of choice C. Choice B could be done only if the situation had been identified as a risk and was included in the reserve.
Source: PMP® Exam Prep Page: 460
You have a cost plus fee (CPF) contract with the customer and an arrangement with your manager whereby you will receive 10 percent of the contract amount as your payment for services. While completing the project, you discover that the actual cost will be lower than expected, thus decreasing your fee. What should you do?
A. Find ways to add activities to the project that provide more customer benefits and increase costs.
B. Expand the critical path activities so they cost more.
C. Purchase more expensive equipment.
D. Notify the project sponsor of the probable decreased cost.
This situation tests ethics. Choice A is gold plating and should not be done without the customer’s approval.
Choice B is even worse because it provides no additional benefit to the customer. Choice C, in theory, provides benefit to the customer if the more expensive equipment provides value, but it should not be done without customer approval.
Source: PMP® Exam Prep Page: 486
A project has a tight budget when you begin negotiating with a seller for a piece of equipment. The seller has told you that the equipment price is fixed. Your manager has told you to negotiate the cost with the seller. What is your BEST course of action?
A. Make a good faith effort to find a way to decrease the cost.
B. Postpone negotiations until you can convince your manager to change his mind.
C. Hold the negotiations, but only negotiate other aspects of the project.
D. Cancel the negotiations.
There is always a way to decrease costs on the project. How about offering to feature the seller in your next television ad? The best choice is A.
Source: PMP® Exam Prep Page: 454