A project requires a component with well-understood specifications. Performance targets are established at the outset, and the final contract price is determined after completion of all work based on the seller's performance. The most appropriate agreement with the supplier is:
Answer(s): B
12.1.1.9 Organizational Process AssetsDescribed in Section 2.1.4. The various types of contractual agreements used by the organization also influence decisions for the Plan Procurement Management process. The organizational process assets that influence the Plan Procurement Management process include, but are not limited to:• Formal procurement policies, procedures, and guidelines. Most organizations have formal procurement policies and buying organizations. When such procurement support is not available, the project team should supply both the resources and the expertise to perform such procurement activities.• Management systems that are considered in developing the procurement management plan and selecting the contractual relationships to be used.• An established multi-tier supplier system of prequalified sellers based on prior experience.All legal contractual relationships generally fall into one of two broad families: either fixed-price or cost reimbursable. Also, there is a third hybrid type commonly in use called the time and materials contract. The more popular contract types in use are discussed below as discrete types, but in practice it is not unusual to combine one or more types into a single procurement.• Fixed-price contracts. This category of contracts involves setting a fixed total price for a defined product, service, or result to be provided. Fixed-price contracts may also incorporate financial incentives for achieving or exceeding selected project objectives, such as schedule delivery dates, cost and technical performance, or anything that can be quantified and subsequently measured. Sellers under fixed-price contracts are legally obligated to complete such contracts, with possible financial damages if they do not. Under the fixed-price arrangement, buyers need to precisely specify the product or services being procured. Changes in scope may be accommodated, but generally with an increase in contract price.○○ Firm Fixed Price Contracts (FFP). The most commonly used contract type is the FFP. It is favored by most buying organizations because the price for goods is set at the outset and not subject to change unless the scope of work changes. Any cost increase due to adverse performance is the responsibility of the seller, who is obligated to complete the effort. Under the FFP contract, the buyer should precisely specify the product or services to be procured, and any changes to the procurement specification can increase the costs to the buyer.○○ Fixed Price Incentive Fee Contracts (FPIF). This fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation from performance, with financial incentives tied to achieving agreed upon metrics. Typically such financial incentives are related to cost, schedule, or technical performance of the seller. Performance targets are established at the outset, and the final contract price is determined after completion of all work based on the seller’s performance. Under FPIF contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller, who is obligated to complete the work.○○ Fixed Price with Economic Price Adjustment Contracts (FP-EPA). This contract type is used whenever the seller’s performance period spans a considerable period of years, as is desired with many long-term relationships. It is a fixed-price contract, but with a special provision allowing for pre defined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases (or decreases) for specific commodities. The EPA clause needs to relate to some reliable financial index, which is used to precisely adjust the final price.The FP-EPA contract is intended to protect both buyer and seller from external conditions beyond their control.• Cost-reimbursable contracts. This category of contract involves payments (cost reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit.Cost-reimbursable contracts may also include financial incentive clauses whenever the seller exceeds, or falls below, defined objectives such as costs, schedule, or technical performance targets. Three of the more common types of cost-reimbursable contracts in use are Cost Plus Fixed Fee (CPFF), Cost Plus Incentive Fee (CPIF), and Cost Plus Award Fee (CPAF).A cost-reimbursable contract provides the project flexibility to redirect a seller whenever the scope of work cannot be precisely defined at the start and needs to be altered, or when high risks may exist in the effort.○○ Cost Plus Fixed Fee Contracts (CPFF). The seller is reimbursed for all allowable costs for performing the contract work, and receives a fixed-fee payment calculated as a percentage of the initial estimated project costs. A fee is paid only for completed work and does not change due to seller performance. Fee amounts do not change unless the project scope changes.○○ Cost Plus Incentive Fee Contracts (CPIF). The seller is reimbursed for all allowable costs for performing the contract work and receives a predetermined incentive fee based upon achieving certain performance objectives as set forth in the contract. In CPIF contracts, if the final costs are less or greater than the original estimated costs, then both the buyer and seller share costs from the departures based upon a pre-negotiated cost-sharing formula, for example, an 80/20 split over/under target costs based on the actual performance of the seller.○○ Cost Plus Award Fee Contracts (CPAF). The seller is reimbursed for all legitimate costs, but the majority of the fee is earned only based on the satisfaction of certain broad subjective performance criteria defined and incorporated into the contract. The determination of fee is based solely on the subjective determination of seller performance by the buyer, and is generally not subject to appeals.• Time and Material Contracts (T&M). Time and material contracts are a hybrid type of contractual arrangement that contain aspects of both cost-reimbursable and fixed-price contracts. They are often used for staff augmentation, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed. These types of contracts resemble cost-reimbursable contracts in that they can be left open ended and may be subject to a cost increase for the buyer. The full value of the agreement and the exact quantity of items to be delivered may not be defined by the buyer at the time of the contract award. Thus, T&M contracts can increase in contract value as if they were cost-reimbursable contracts. Many organizations require not-to-exceed values and time limits placed in all T&M contracts to prevent unlimited cost growth. Conversely, T&M contracts can also resemble fixed unit price arrangements when certain parameters are specified in the contract. Unit labor or material rates can be preset by the buyer and seller, including seller profit, when both parties agree on the values for specific resource categories, such as
Which enterprise environmental factors may influence Plan Schedule Management?
Answer(s): D
6.1.1.3 Enterprise Environmental FactorsDescribed in Section 2.1.5. The enterprise environmental factors that influence the Plan Schedule Management process include, but are not limited to:Organizational culture and structure can all influence schedule management;Resource availability and skills that may influence schedule planning;Project management software provides the scheduling tool and alternative possibilities for managing the schedule;Published commercial information, such as resource productivity information, is often available from commercial databases; andOrganizational work authorization systems.Process: 6.1 Plan Schedule ManagementDefinition: The process of establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule.Key Benefit: The key benefit of this process is that it provides guidance and direction on how the project schedule will be managed throughout the project. Inputs1. Project management plan2. Project charter3. Enterprise environmental factors4. Organizational process assetsTools & Techniques1. Expert judgment2. Analytical techniques3. MeetingsOutputs1. Schedule management plan
Which type of dependency used in the Sequence Activities process is sometimes referred to as preferred logic, preferential logic, or soft logic?
Answer(s): C
6.3.2.2 Dependency DeterminationDependencies may be characterized by the following attributes: mandatory or discretionary, internal or external, as described below. Dependency has four attributes, but two can be applicable at the same time in following ways: mandatory external dependencies, mandatory internal dependencies, discretionary external dependencies, or discretionary internal dependencies.Mandatory dependencies. Mandatory dependencies are those that are legally or contractually required or inherent in the nature of the work. Mandatory dependencies often involve physical limitations, such as on a construction project, where it is impossible to erect the superstructure until after the foundation has been built, or on an electronics project, where a prototype has to be built before it can be tested.Mandatory dependencies are also sometimes referred to as hard logic or hard dependencies. Technical dependencies may not be mandatory. The project team determines which dependencies are mandatory during the process of sequencing the activities. Mandatory dependencies should not be confused with assigning schedule constraints in the scheduling tool.Discretionary dependencies. Discretionary dependencies are sometimes referred to as preferred logic, preferential logic, or soft logic. Discretionary dependencies are established based on knowledge of best practices within a particular application area or some unusual aspect of the project where a specific sequence is desired, even though there may be other acceptable sequences. Discretionary dependencies should be fully documented since they can create arbitrary total float values and can limit later scheduling options. When fast tracking techniques are employed, these discretionary dependencies should be reviewed and considered for modification or removal. The project team determines which dependencies are discretionary during the process of sequencing the activities.External dependencies. External dependencies involve a relationship between project activities and non- project activities. These dependencies are usually outside the project team’s control. For example, the testing activity in a software project may be dependent on the delivery of hardware from an external source, or governmental environmental hearings may need to be held before site preparation can begin on a construction project. The project management team determines which dependencies are external during the process of sequencing the activities.Internal dependencies. Internal dependencies involve a precedence relationship between project activities and are generally inside the project team’s control. For example, if the team cannot test a machine until they assemble it, this is an internal mandatory dependency. The project management team determines which dependencies are internal during the process of sequencing the activities.
When the business objectives of an organization change, project goals need to be:
Answer(s): A
Which of the Perform Quality Assurance tools and techniques may enhance the creation of the work breakdown structure (VVBS) to give structure to the decomposition of the scope?
8.2.2 Perform Quality Assurance: Tools and Techniques8.2.2.1 Quality Management and Control ToolsThe Perform Quality Assurance process uses the tools and techniques of the Plan Quality Management and Control Quality processes. In addition, other tools that are available include (see also Figure 8-10):Affinity diagrams. The affinity diagram is similar to mind-mapping techniques in that they are used to generate ideas that can be linked to form organized patterns of thought about a problem. In project management, the creation of the WBS may be enhanced by using the affinity diagram to give structure to the decomposition of scope.Process: 8.2 Perform Quality AssuranceDefinition: The process of auditing the quality requirements and the results from quality control measurements to ensure that appropriate quality standards and operational definitions are used.Key Benefit: The key benefit of this process is that it facilitates the improvement of quality processes.Inputs1. Quality management plan2. Process improvement plan3. Quality metrics 4. Quality control measurements5. Project documentsTools & Techniques1. Quality management and control tools2. Quality audits3. Process analysisOutputs1. Change requests2. Project management plan updates3. Project documents updates4. Organizational process assets updates
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