Palgrave Macmillan - Business - Project Management

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Which of the following statements are true in a cost plus contract?
I The only firm figure is the fee
II The total man-hours cannot be estimated
III The equipment rate is not firm
1. I only
2. II only
3. I and II only
4. I, II and III
The make or buy decision is usually made at which stage of the contracting cycle?
1. Requirement
2. Solicitation
3. Award
4. Contract management
When is a FFP contract typically sought by the customer's project manager?
1. When the risk and consequences associated with the contracted project are large
2. When the customer is proficient at dealing with the contracted project activities
3. When neither the contractor nor the project manager understand the scope of the task
4. When the project manager's company has excess production capacity
Which of the following is not a function of contract administration?
1. Contract change management
2. Specification interpretation
3. Determination of breach of contract
4. Selection of the project manager
Which of the following does not affect a contractor's ability to perform the contracted activities after the contract is signed?
1. A poor definition of contract deliverables
2. The extent of project sub-contracting
3. The complexity of the contracted effort
4. The contract type
Using the data shown below, if the cost of the work is £13,000, then what will be the final price paid by the customer?
Target Cost: £12,000
Target Fee: £1,000
Sharing Ratio: 80% / 20%
Price Ceiling: £14,000
1. £12,000
2. £12,800
3. £13,000
4. £13,800
In which of the following types of contract is it most important for the contractor to maintain tight control of cost, schedule and scope changes?
1. Unit price
2. Cost Plus Incentive Fee
3. Cost Plus Fixed Fee
4. Firm Fixed Price
Which of the following should be considered in the negotiation and selection of a contract type?
I The degree of clarity with which the end product is defined
II Price competition
III Period of performance
1. I only
2. II only
3. I and II only
4. I, II and III
Using the data shown below, what is the profit at the point of total assumption?
Target Cost: £12,000
Target Fee: £1,000
Sharing Ratio: 80% / 20%
Price Ceiling: £14,000
1. £300
2. £500
3. £750
4. £800
In which of the following contract types is it easiest to change the scope of the contract?
1. Firm Fixed Price
2. Fixed Price Plus Incentive Fee
3. Cost Plus Incentive Fee
4. Letter contract

Chapter 6 material - Self-assessment review questions and answers for Chapter 6