PMI PMP Procurement Contracts and Suppliers Practice Test

 

Topic 14 covers procurement contracts and suppliers for the PMI Project Management Professional (PMP) certification. These original scenarios apply the July 2026 exam objectives across predictive, agile and hybrid projects. Use the stated constraints to select one answer unless the question specifies otherwise. For broader preparation, visit the PMP Exam Dumps page. Each option has an explanation of its role in the decision.

Question 1

A project is buying standard cabinets with a complete specification and objective acceptance tests. Several suppliers have delivered the same design, and the buyer wants the seller to carry the risk of ordinary manufacturing cost overruns for unchanged scope. Which pricing arrangement best fits?

1. Reimbursement of actual costs with a savings-sharing incentive.
2. Payment for labor hours and materials at agreed rates.
3. A fixed monthly payment for an unspecified level of cabinet production.
4. Reimbursement of actual production cost plus a fixed fee.
5. Firm fixed price for the specified cabinets.

Correct Answer: E

 

Correct Answer

Answer E is correct because defined scope and repeatable production support a price established before performance. Under this arrangement, ordinary manufacturing cost overruns reduce the seller’s margin instead of automatically increasing the buyer’s payment.

Incorrect Answers

Answer A is incorrect because the incentive can encourage efficiency, but the buyer still reimburses costs under the arrangement. The buyer specifically seeks a fixed price for stable deliverables.

Answer B is incorrect because a rate agreement controls unit prices but leaves total payment dependent on consumption. It does not provide the desired fixed total for well-defined cabinets.

Answer C is incorrect because a periodic amount does not establish a fixed price for the required quantity and acceptance result. The purchased deliverable needs to be defined in the pricing commitment.

Answer D is incorrect because this compensates the seller for allowable actual costs, leaving more cost exposure with the buyer. It may suit uncertain development, but that uncertainty is absent here.

 

Question 2

A hybrid replacement project must integrate with undocumented legacy interfaces. Suppliers cannot credibly price implementation until they investigate them. The buyer can fund six weeks of discovery before deciding whether to proceed. What procurement approach best fits this uncertainty?

1. Commit the implementation team under time and materials using its initial staffing plan as the total funding basis.
2. Use the buyer’s integration estimate as the common fixed-price allowance in every supplier offer.
3. Contract a bounded discovery phase and price implementation afterward.
4. Award a whole-project fixed price based on the suppliers’ current interface assumptions.
5. Request final implementation quotes after suppliers review the existing architecture documents.

Correct Answer: C

 

Correct Answer

Answer C is correct because the first phase purchases the information needed to define integration scope. A separate implementation decision avoids presenting a speculative whole-project fixed price as reliable cost certainty.

Incorrect Answers

Answer A is incorrect because time and materials can fit uncertain work, but an implementation staffing forecast does not resolve the unknown interfaces or justify the full commitment. The buyer has a bounded six-week opportunity to learn before deciding whether to proceed.

Answer B is incorrect because a shared allowance improves consistency only if its basis is credible. The estimate remains unverified, so equal assumptions across bids do not establish the implementation scope or its actual cost.

Answer D is incorrect because the price would depend on assumptions that discovery has not tested. A fixed total can therefore conceal exclusions and later changes, while the funded discovery phase can first establish a credible scope.

Answer E is incorrect because document review can inform the investigation, but the interfaces are explicitly undocumented and require discovery. It does not yet supply the evidence needed for a reliable implementation commitment.

 

Question 3

A project needs 3,000 fixtures. Making them requires a new $24,000 setup plus $18 per fixture; buying costs $30 per fixture delivered. Existing equipment depreciation is a sunk cost, and quality and timing are equivalent. Ignoring tax and discounting, which option has the lower relevant cost?

1. Make, at $54,000 versus $90,000 to buy.
2. Buy, at $66,000 after crediting the avoided internal setup.
3. Make, at $78,000 versus $90,000 to buy.
4. Buy, because its $30 unit price avoids all setup cost.
5. Treat the alternatives as equal because equipment depreciation is sunk.

Correct Answer: C

 

Correct Answer

Answer C is correct because making costs $24,000 + 3,000 x $18 = $78,000. Buying costs 3,000 x $30 = $90,000, so making saves $12,000 on the stated incremental basis.

Incorrect Answers

Answer A is incorrect because $54,000 includes only internal variable cost. The new setup is a relevant future cost and must be included even though the decision still favors making.

Answer B is incorrect because buying costs $90,000 in actual future expenditure. Subtracting an avoided cost from that payment mixes alternatives rather than comparing their complete costs.

Answer D is incorrect because avoiding setup is beneficial but must be compared with the higher variable price across all units. At this quantity, the $36,000 variable-cost difference exceeds the $24,000 setup.

Answer E is incorrect because excluding sunk depreciation is appropriate, but the alternatives still have different future setup and unit costs. Sunk-cost treatment does not erase those differences.

 

Question 4

Internal development would cost $80,000 in additional cash; a supplier offers equivalent delivery for $110,000. Using the internal team would also prevent an approved activity expected to contribute $50,000, with no other staff able to perform it. Policy requires comparing prospective economic costs. What should the project manager recommend?

1. Make, because its cash estimate is $30,000 lower.
2. Buy, because its $160,000 economic cost includes the displaced contribution.
3. Make, because the approved internal activity should be evaluated separately from this project’s procurement.
4. Buy, because $110,000 is below the $130,000 economic cost of making.
5. Make, because the $50,000 is not an invoice.

Correct Answer: D

 

Correct Answer

Answer D is correct because the internal alternative consumes $80,000 cash and forgoes $50,000 contribution. Including that opportunity cost gives $130,000, making the supplier $20,000 cheaper on the required basis.

Incorrect Answers

Answer A is incorrect because this is the cash-only comparison. It excludes the explicitly required value of the activity displaced by using the constrained internal team.

Answer B is incorrect because the supplier costs $110,000 and does not displace the internal activity. The $50,000 opportunity cost belongs to making, so adding it to the purchase misallocates the relevant cost even though the recommendation names the preferred alternative.

Answer C is incorrect because separate project budgets do not remove the use of a constrained team from the economic comparison. The stem expressly requires prospective economic costs, including the contribution that internal development would displace.

Answer E is incorrect because economic cost can include a forgone contribution even without a cash payment. The stated policy expressly requires that broader prospective comparison.

 

Question 5

Two qualified suppliers meet the same service requirements for three years. Supplier A charges $50,000 setup, $30,000 at each year’s end, and $10,000 to exit. Supplier B charges $80,000 setup, $18,000 at each year’s end, and $5,000 to exit. Ignore discounting and taxes. Which has the lower three-year cost?

1. Supplier A at $50,000.
2. Both suppliers at $150,000.
3. Supplier A at $140,000.
4. Supplier B at $139,000.
5. Supplier B at $134,000.

Correct Answer: D

 

Correct Answer

Answer D is correct because supplier B totals $80,000 + 3 x $18,000 + $5,000 = $139,000. A totals $150,000, so B’s higher setup cost is offset by lower recurring and exit costs.

Incorrect Answers

Answer A is incorrect because this considers only setup. It excludes the three required annual payments and exit charge, which are part of the common decision horizon.

Answer B is incorrect because supplier A does total $150,000, but B totals $139,000. Equal service requirements do not imply equal costs when the payment structures differ.

Answer C is incorrect because setup plus three annual charges gives $140,000, but A also requires a $10,000 exit payment. Omitting exit understates its lifecycle cost.

Answer E is incorrect because this includes B’s setup and annual payments but omits its $5,000 exit charge. The correct alternative is identified using an incomplete total.

 

Question 6

A supplier will build a product incrementally within a fixed release budget. The backlog will evolve, and the parties want to exchange comparable items without reopening the entire agreement. Which TWO provisions best support that approach? Choose TWO.

1. Define measurable acceptance criteria for each agreed increment.
2. Pay solely for the number of stories created in the tracking tool.
3. Allow the product owner to change payment milestones whenever backlog priorities change.
4. Use the first increment’s acceptance results to establish criteria for increments already being developed.
5. Permit backlog exchanges whenever the number of stories remains unchanged.
6. Define who can approve backlog exchanges and how price and date effects are handled.

Correct Answers: A, F

 

Correct Answers

Answer A is correct because incremental delivery still needs a shared basis for determining whether the purchased work is acceptable. Demonstrations alone can reveal progress without settling contractual acceptance.

Answer F is correct because a bounded exchange mechanism supports adaptation while preserving commercial control. It distinguishes a permitted substitution from an addition that changes the agreed obligation.

Incorrect Answers

Answer B is incorrect because creating a story is not delivery or acceptance, and story counts can vary with slicing. That measure does not establish the value or completeness of the increment.

Answer C is incorrect because backlog ordering does not by itself confer authority over payment terms. Commercial decision rights must be defined so adaptation does not create unintended changes to the agreement.

Answer D is incorrect because feedback can refine future criteria, but work being purchased needs an agreed acceptance basis when it is committed. Retrospective criteria leave the parties exposed to disputes about completed or ongoing work.

Answer E is incorrect because equal story counts do not establish equal effort, risk, or commercial impact. The parties need a bounded exchange rule and decision authority that reflect the actual obligation being changed.

 

Question 7

A private contract sets a firm fixed price of $200,000 for specified equipment. It contains no cost-adjustment clause, and neither scope nor buyer instructions have changed. The seller’s manufacturing costs rise $15,000. Under these stated terms, what is the buyer’s contractual price for the equipment?

1. $200,000, unless the parties authorize a separate modification.
2. $215,000 because verified actual costs are reimbursable.
3. $185,000 because cost overruns must be deducted from price.
4. An unknown price until the seller completes its final cost audit.
5. $207,500 because both parties share unplanned costs equally.

Correct Answer: A

 

Correct Answer

Answer A is correct because ordinary seller cost growth does not itself change this fixed price. A different payment would require a basis in the agreement or an authorized modification, neither of which is present.

Incorrect Answers

Answer B is incorrect because reimbursement is not the stated pricing mechanism. Evidence that the seller incurred additional cost does not create an automatic buyer obligation under these terms.

Answer C is incorrect because an overrun reduces the seller’s margin; it is not a price credit to the buyer. No penalty or deduction of this kind is specified.

Answer D is incorrect because the buyer’s price has already been established. A final cost audit may inform internal performance analysis but is not a stated price-determination step.

Answer E is incorrect because equal sharing would require an agreed formula. The scenario supplies no sharing term, so a 50/50 split cannot be presumed.

 

Question 8

A contract specifies target cost $100,000, target profit $20,000, and a seller share of 20% of cost overruns, deducted from target profit. Final price equals actual cost plus adjusted profit, capped at $130,000. Actual allowable cost is $120,000. What is the final price?

1. $136,000.
2. $130,000.
3. $124,000.
4. $140,000.
5. $120,000.

Correct Answer: B

 

Correct Answer

Answer B is correct because the $20,000 overrun reduces profit by 20% x $20,000 = $4,000. Cost plus adjusted profit is $136,000, but the explicit ceiling limits payment to $130,000.

Incorrect Answers

Answer A is incorrect because this correctly applies the sharing formula but ignores the final price ceiling. The ceiling controls once the calculated price exceeds $130,000.

Answer C is incorrect because this adds the seller’s $4,000 overrun share to actual cost as if it were the fee. The share instead reduces the original $20,000 target profit.

Answer D is incorrect because adding unchanged target profit to actual cost ignores both the seller’s 20% overrun share and the $130,000 ceiling.

Answer E is incorrect because actual cost alone omits the remaining profit and the contract’s price formula. Even after the ceiling applies, payment exceeds actual cost by $10,000.

 

Question 9

One bidder asks whether data migration is included in a solicitation. The specification is ambiguous, and the answer will materially affect pricing. Procurement policy requires material clarifications to be issued to every bidder in writing. Which TWO actions should the project manager support? Choose TWO.

1. Issue the clarification to all bidders and allow time to revise offers.
2. Resolve the scope ambiguity with the authorized procurement team.
3. Let each bidder state its own migration assumption and compare headline prices.
4. Evaluate all bids as if each supplier included migration.
5. Add the migration requirement only to the eventual winner’s contract.
6. Answer the questioning bidder now and include the clarification in the other bidders’ award notifications.

Correct Answers: A, B

 

Correct Answers

Answer A is correct because common written information and adequate response time preserve a comparable competition. The scenario’s policy applies to this material pricing issue.

Answer B is correct because a substantive answer needs agreement on what is actually being purchased. The project team should establish that scope before asking bidders to price inconsistent interpretations.

Incorrect Answers

Answer C is incorrect because disclosing assumptions is useful, but offers that include different material scope still cannot be ranked by headline price alone. The required common clarification should establish the purchase basis before revised offers are compared.

Answer D is incorrect because that assumption does not repair ambiguous instructions or suppliers’ actual offers. It risks comparing prices for different obligations.

Answer E is incorrect because introducing a material requirement after comparison undermines the price and scope basis on which the award was selected.

Answer F is incorrect because the other bidders would receive material information too late to price it. The stated policy requires a common written clarification during the competition, with time for revised offers.

 

Question 10

A cost-plus-incentive-fee contract reimburses allowable actual cost. Target cost is $500,000 and target fee is $50,000. The seller earns 30% of cost savings as added fee, but total fee cannot exceed $70,000. Actual allowable cost is $400,000. What total payment follows these terms?

1. $450,000.
2. $430,000.
3. $570,000.
4. $470,000.
5. $480,000.

Correct Answer: D

 

Correct Answer

Answer D is correct because savings are $100,000, producing a calculated fee of $50,000 + $30,000 = $80,000. The $70,000 maximum applies, so total payment is $400,000 + $70,000.

Incorrect Answers

Answer A is incorrect because this reimburses cost and adds only the target fee. It omits the earned savings incentive that increases fee until the maximum is reached.

Answer B is incorrect because the $30,000 savings share is an addition to the target fee, not the entire fee. Replacing the base fee with that amount underpays the stated formula.

Answer C is incorrect because this adds maximum fee to target cost instead of actual allowable cost. The reimbursement portion follows actual cost, which is $400,000.

Answer E is incorrect because this pays the uncapped $80,000 fee. The explicit maximum reduces that fee to $70,000 even though the savings formula alone yields more.

 

Question 11

A project change board approves an extra interface for a supplier-built system. The organization’s policy allows only the procurement director to amend supplier contracts, and no amendment has been executed. What should the project manager do next?

1. Obtain the authorized contract modification before directing the extra work.
2. Charge the extra interface against contingency and omit the amendment.
3. Instruct the supplier to start because change-board approval binds both parties.
4. Ask a technical lead to sign an informal interface note as the amendment.
5. Obtain the supplier’s email agreement to the interface and treat the signed amendment as a closure activity.

Correct Answer: A

 

Correct Answer

Answer A is correct because internal scope approval establishes project permission, but the stated policy assigns commercial authority separately. The supplier’s changed obligation needs the authorized contractual step.

Incorrect Answers

Answer B is incorrect because a funding source does not establish contractual scope, price, or schedule obligations. Reserve availability and change authorization address different controls.

Answer C is incorrect because the board’s project decision does not satisfy the explicit contract-authority requirement. Starting now risks work being performed without agreed commercial terms.

Answer D is incorrect because technical expertise does not confer the procurement director’s authority. The signature would not follow the organization’s stated process.

Answer E is incorrect because agreement in principle can help prepare a modification, but it does not replace the procurement director’s stated authority. Deferring execution until closure leaves the extra work without the required authorized commercial terms.

 

Question 12

An adaptive investigation uses time and materials with agreed labor rates, a $120,000 ceiling, and written buyer authorization required to exceed it. Which TWO controls best manage its cost exposure while the work evolves? Choose TWO.

1. Verify billed hours and labor categories against authorized work.
2. Forecast remaining effort and seek a decision before the ceiling is reached.
3. Let the supplier exceed the ceiling whenever additional work is technically useful.
4. Treat the ceiling as a guaranteed fixed price for all possible findings.
5. Focus only on whether hourly rates match the signed schedule.
6. Delay invoice review until the final investigation report.

Correct Answers: A, B

 

Correct Answers

Answer A is correct because fixed rates do not validate the quantities or categories charged. Checking actual work supports accurate invoices and detects consumption inconsistent with the engagement.

Answer B is correct because the cap limits authorization, but the team still needs advance visibility of whether the investigation can finish within it. Early forecasting permits a scope, funding, or stop decision.

Incorrect Answers

Answer C is incorrect because useful work still requires written authorization above the cap. Technical merit alone does not satisfy the stated expenditure authority.

Answer D is incorrect because a ceiling bounds authorized expenditure; it does not make undefined investigation outcomes a fixed deliverable obligation under the stated terms.

Answer E is incorrect because rates can be correct while hours exceed need or consume the ceiling too soon. Both quantity and future exposure require control.

Answer F is incorrect because by then substantial unauthorized or misclassified consumption could have accumulated. Ongoing review supports timely control of an evolving engagement.

 

Question 13

Equipment arrives on time and the warehouse signs a receipt. The contract requires a witnessed performance test and acceptance by the quality manager before the acceptance milestone is payable. The test has not occurred. What is the correct status?

1. Accepted, because any buyer employee’s signature completes acceptance.
2. Payable as an accepted milestone because the delivery date was met.
3. Provisionally accept the equipment and retain part of the milestone payment until testing.
4. Rejected, because delivery occurred before the acceptance test.
5. Received, with contractual acceptance still pending.

Correct Answer: E

 

Correct Answer

Answer E is correct because the receipt confirms physical delivery, while the stated acceptance conditions require test evidence and a designated approval. Those separate conditions have not yet been met.

Incorrect Answers

Answer A is incorrect because the contract explicitly identifies the quality manager and witnessed test. The warehouse’s receipt cannot be substituted for those conditions.

Answer B is incorrect because meeting a date does not satisfy the specified performance test. Payment for this milestone depends on acceptance, not timeliness alone.

Answer C is incorrect because a retention arrangement may be valid when agreed, but none is provided here. The stated contract requires witnessed performance evidence and quality-manager acceptance before this milestone becomes payable.

Answer D is incorrect because delivery followed by testing is consistent with the given terms. Pending acceptance does not establish nonconformance or justify rejection by itself.

 

Question 14

A solicitation awards to the highest weighted score: cost score has weight 40%, and quality score 60%. Higher scores are better, and both suppliers pass all mandatory conditions. A scores 90 for cost and 70 for quality; B scores 70 for cost and 90 for quality. Which result follows the stated method?

1. The suppliers tie at 80 points each.
2. B wins with 82 points; A has 78.
3. A wins with 82 points; B has 78.
4. A wins because the cost score is the mandatory first criterion.
5. B wins only if the buyer changes the quality weight to 70%.

Correct Answer: B

 

Correct Answer

Answer B is correct because supplier A scores 0.4 x 90 + 0.6 x 70 = 78. B scores 0.4 x 70 + 0.6 x 90 = 82, so the larger quality weight determines the result.

Incorrect Answers

Answer A is incorrect because an unweighted average produces eighty for both but ignores the unequal weights. Equal averaging is not the stated award method.

Answer C is incorrect because this reverses the announced weights, effectively giving cost 60% and quality 40%. The published method gives the larger weight to quality.

Answer D is incorrect because cost is a weighted factor, not a separate first-pass ranking in this solicitation. Both suppliers already meet the mandatory conditions.

Answer E is incorrect because supplier B already has the higher score under the announced 60% quality weighting. Changing weights is unnecessary and would alter the selection basis.

 

Question 15

A procurement requires a working in-country hosting service at award. The approved policy provides no waiver, and this condition was disclosed as mandatory. The lowest-priced supplier offers to establish hosting six months later; a higher-priced supplier meets the condition now. How should the project team evaluate the low-priced offer?

1. Treat it as failing the mandatory eligibility condition.
2. Keep the offer eligible by adding a hosting-delay credit to its evaluated price.
3. Give it half credit and keep it in the weighted competition.
4. Award to it and use the savings to fund future compliance.
5. Move the residency check to final acceptance without amending the solicitation.

Correct Answer: A

 

Correct Answer

Answer A is correct because a future promise does not meet the explicitly timed requirement. Price comparisons among eligible offers cannot override a nonwaivable condition at award.

Incorrect Answers

Answer B is incorrect because a price adjustment can compare eligible offers but cannot satisfy a nonwaivable condition that must hold at award. The proposed credit leaves the mandatory hosting capability absent.

Answer C is incorrect because the condition is a gate rather than a scored preference. Partial points would replace the published evaluation rule with a different one.

Answer D is incorrect because the policy requires the capability at award, not after a funded improvement period. Savings do not supply a waiver that the policy withholds.

Answer E is incorrect because changing the timing after bids are received materially alters the stated eligibility condition. The team cannot silently substitute a later checkpoint.

 

Question 16

A supplier’s increment fails an agreed acceptance test. The contract provides a ten-working-day correction period after written defect notice, and procurement manages contractual remedies. Which TWO actions should the project manager take now? Choose TWO.

1. Propose a lower test threshold so that acceptance can proceed while the supplier improves later increments.
2. Ask procurement to begin termination immediately based on the failed acceptance result.
3. Approve conditional acceptance now and track the failed criterion in the next increment’s backlog.
4. Withhold the estimated rework cost from the next invoice before procurement reviews the remedy.
5. Coordinate correction and retesting with the supplier and procurement.
6. Document the failed criteria and provide the evidence for formal notice.

Correct Answers: E, F

 

Correct Answers

Answer E is correct because the agreement offers a defined opportunity to correct the failure. Planning retesting protects the delivery forecast while keeping commercial remedies with the designated owner.

Answer F is correct because precise test results establish what failed and allow the supplier to reproduce and correct it. The written notice also starts the correction process specified in the contract.

Incorrect Answers

Answer A is incorrect because no changed requirement or evidence of an inappropriate threshold is supplied. Relaxing it to accommodate the failed result bypasses the agreed correction opportunity and changes what the buyer accepts.

Answer B is incorrect because the agreement first provides a ten-working-day correction period after written notice. A failed test supports that notice and retesting process, not skipping directly to the contemplated remedy.

Answer C is incorrect because backlog tracking would not demonstrate that this increment met its contractual test. The agreed correction and retest process should resolve the failure before treating the increment as accepted.

Answer D is incorrect because the correction provision and procurement authority govern the response. An estimated rework amount alone does not establish a contractual deduction or authorize the project manager to impose it.

 

Question 17

A private supply contract has a base price of $200,000. Its adjustment clause applies the percentage change in a named index only to 40% of the base price; the other 60% remains fixed. The index rises by 10%. What is the adjusted price?

1. $280,000.
2. $220,000.
3. $212,000.
4. $200,000.
5. $208,000.

Correct Answer: E

 

Correct Answer

Answer E is correct because the indexed portion is $200,000 x 40% = $80,000. Its 10% increase is $8,000, which is added to the base price while the other $120,000 remains unchanged.

Incorrect Answers

Answer A is incorrect because $80,000 is the component subject to adjustment, not the increase. That component rises by ten percent rather than being added in full.

Answer B is incorrect because applying the 10% increase to the entire price ignores the clause’s 40% exposure limit. Only the indexed component is eligible for adjustment.

Answer C is incorrect because this applies the increase to the fixed 60% instead of the indexed 40%. The contract explicitly leaves the $120,000 component unchanged.

Answer D is incorrect because a general fixed-price label would not erase an explicit economic adjustment clause. The specified index movement triggers an $8,000 increase under these terms.

 

Question 18

A cloud supplier’s service has been accepted, but the exit schedule makes final exit payment conditional on three further actions: validating a usable data export, revoking supplier access, and returning buyer-owned devices. Which THREE records directly demonstrate readiness for that payment? Choose THREE.

1. The project manager’s favorable overall supplier satisfaction score.
2. A reconciled receipt for the returned buyer-owned devices.
3. The original signed service acceptance certificate by itself.
4. A purchase order showing that the replacement supplier can start next week.
5. Evidence that the exported data can be read and reconciled.
6. Confirmation that the supplier’s access has been revoked.

Correct Answers: B, E, F

 

Correct Answers

Answer B is correct because the buyer needs evidence that its property has been returned, not merely a supplier assurance. A receipt matched to the asset list supports that condition.

Answer E is correct because a file’s existence alone does not prove a usable export. Readability and reconciliation substantiate the data condition that the exit schedule expressly requires.

Answer F is correct because access termination is a separate stated condition. Prior service acceptance does not establish that accounts and privileges have actually been removed.

Incorrect Answers

Answer A is incorrect because satisfaction can inform future sourcing but does not prove any of the three specified exit conditions. It cannot substitute for their completion evidence.

Answer C is incorrect because the stem separates service acceptance from the three remaining exit conditions. That earlier certificate therefore cannot authorize this later conditional payment on its own.

Answer D is incorrect because replacement readiness may support continuity, but it does not prove the outgoing supplier completed the three exit obligations. The payment conditions still need their own evidence.

 

Question 19

A cost-plus-fixed-fee agreement estimates cost at $90,000 and fixes the fee at $10,000. The buyer authorizes the required funding, actual allowable cost reaches $110,000, and scope and fee remain unchanged. What is the total payment?

1. $130,000.
2. $120,000.
3. $122,222, rounded to the nearest dollar.
4. $110,000.
5. $100,000.

Correct Answer: B

 

Correct Answer

Answer B is correct because reimbursement follows the $110,000 allowable actual cost, while the fee remains $10,000. A fixed fee is not the same as a fixed total contract price.

Incorrect Answers

Answer A is incorrect because adding the $20,000 cost overrun as extra fee misclassifies reimbursed cost. The overrun is already included in the $110,000 actual cost.

Answer C is incorrect because scaling the fee in proportion to cost converts it into a percentage-based amount. The contract fixes the fee at $10,000 despite the cost increase.

Answer D is incorrect because this reimburses actual cost but leaves out the agreed fee. The seller is entitled to both components under the supplied terms.

Answer E is incorrect because this adds the original cost estimate to the fee and treats the estimate as a fixed price. The stated reimbursement basis uses actual allowable cost.

 

Question 20

A selected supplier provides a critical component available from no currently qualified alternative. Before award, due diligence reveals severe cash-flow pressure but no present delivery failure. Which TWO actions best address the procurement risk? Choose TWO.

1. Exclude the supplier immediately and assume a new source can meet the unchanged date.
2. Offer full advance payment as the initial response to the reported cash-flow pressure.
3. Evaluate the cost and lead time of qualifying a backup source.
4. Assess the supplier’s ability to finance the promised delivery plan.
5. Rely on the proposed performance credit as the primary continuity response.
6. Use recent technical test success as sufficient evidence that the supplier can sustain the delivery plan.

Correct Answers: C, D

 

Correct Answers

Answer C is correct because an alternative only reduces exposure if it can become usable in time. Qualification effort and lead time make the continuity option concrete enough to compare with the risk.

Answer D is correct because a low price and technical qualification do not establish that the supplier can fund materials and production. Evidence about financing directly tests the identified source of delivery exposure.

Incorrect Answers

Answer A is incorrect because there is no currently qualified alternative, and no delivery failure has occurred. Qualification lead time and the incumbent’s actual financing position need assessment before treating replacement as a viable schedule solution.

Answer B is incorrect because advance funding may be one negotiated option after assessment, but it increases buyer exposure and may not address the underlying shortfall. Financing evidence and safeguards should inform that decision before the buyer commits the full amount.

Answer E is incorrect because a credit may compensate part of a loss after failure but cannot supply the critical component. The liquidity signal requires evidence about deliverability and a feasible continuity option.

Answer F is incorrect because successful tests demonstrate capability, while cash-flow pressure concerns the resources needed to keep performing. The financial constraint requires its own due diligence.

 

Question 21

A proposed private contract caps the supplier’s liability for the specified delay event at $100,000. The buyer estimates that the same event could cause $400,000 in operational loss, with no insurance covering the difference. Assuming the clause applies as stated, what should the project manager report?

1. The supplier must pay $400,000 whenever actual loss is documented.
2. Up to $300,000 of this modeled loss remains with the buyer.
3. All $400,000 has been transferred because delay is mentioned in the contract.
4. The buyer’s maximum operational loss becomes $100,000.
5. Set the buyer’s retained-loss allowance at $100,000 because that is the contractual cap.

Correct Answer: B

 

Correct Answer

Answer B is correct because the scenario’s maximum recovery is $100,000 against a modeled $400,000 loss. The remaining $300,000 needs a buyer response; the cap does not prevent the operational event.

Incorrect Answers

Answer A is incorrect because documentation does not override the stated cap in this scenario. The question supplies the applicable term rather than inviting an assumption about external law.

Answer C is incorrect because naming the event does not remove the explicit recovery limit. Risk transfer is bounded by the agreed coverage and does not guarantee full compensation.

Answer D is incorrect because the cap limits supplier liability, not the buyer’s physical or commercial loss. Confusing those quantities understates the project’s exposure.

Answer E is incorrect because the cap is the maximum modeled supplier recovery, not the uncovered portion of the buyer’s loss. Against a $400,000 loss, the unrecovered difference is $300,000 under the supplied terms.

 

Question 22

A buyer’s approved commercial policy pays for accepted usable increments. A supplier proposes invoicing the same amount whenever a two-week development period ends, regardless of delivered functionality. What issue must be resolved before signing?

1. Require more detailed timesheets while retaining automatic time-based payment.
2. Pay only at project closure even when increments are accepted earlier.
3. Let the supplier define usable after submitting each invoice.
4. Link invoice milestones to agreed acceptance evidence for usable increments.
5. Rename each development period a milestone without changing its payment trigger.

Correct Answer: D

 

Correct Answer

Answer D is correct because the proposed elapsed-time trigger does not establish the result required by the buyer’s policy. Defined deliverables and evidence align payment with the actual commercial purchase.

Incorrect Answers

Answer A is incorrect because timesheets support effort verification, but effort is not the required acceptance basis. Additional detail cannot substitute for usable functionality.

Answer B is incorrect because the policy permits incremental payment and does not require end-only payment. That change would sacrifice the intended incremental commercial structure unnecessarily.

Answer C is incorrect because a unilateral retrospective definition prevents predictable acceptance and pricing. The standard should be agreed before the work is purchased.

Answer E is incorrect because changing the label does not change what makes payment due. The mismatch remains if time alone satisfies the clause.

 

Question 23

A product team must be able to migrate its records within 30 days after supplier exit. The proposal provides screen access during the subscription but says nothing about export or transition assistance. Which TWO terms should the team clarify before award? Choose TWO.

1. The export format, included data, and validation method.
2. A promise to discuss export only after the subscription is terminated.
3. An unchanged archive subscription available after termination at the normal monthly rate.
4. A demonstration of the supplier’s ordinary reporting screens.
5. The timing and price of supplier transition assistance.
6. A general statement that the buyer retains ownership of its records.

Correct Answers: A, E

 

Correct Answers

Answer A is correct because screen access does not establish that complete records can be transferred into another system. A defined and testable export makes the portability obligation measurable.

Answer E is correct because the thirty-day migration limit depends on when support is available and what it includes. Agreed assistance terms prevent a critical exit dependency from remaining unpriced and unscheduled.

Incorrect Answers

Answer B is incorrect because that leaves the critical format and support decisions unresolved until the migration window has begun. The project needs those terms before dependence is established.

Answer C is incorrect because continued viewing can help preserve access, but it does not ensure migration in a usable format within thirty days. It also leaves transition assistance and the actual export obligation undefined.

Answer D is incorrect because a screen demonstration shows current functionality but does not create a complete data export or exit assistance obligation. It cannot establish the contractual means to meet the migration deadline.

Answer F is incorrect because ownership language may be useful, but it does not specify how records will be extracted, validated, and delivered within thirty days. The operational portability gap remains without concrete export obligations.

 

Question 24

A supplier has missed three delivery dates. The contract requires a ten-day cure notice before the contemplated termination, and only the procurement head may issue termination. No cure notice has been issued. What should the project manager do now?

1. Ask the procurement head to issue termination today based on the three missed dates.
2. Give procurement the performance evidence and request the specified cure process.
3. Replace the supplier and assume no termination payment can arise.
4. Replace the missed commitments with the supplier’s latest forecast and evaluate performance only against those new dates.
5. Obtain another informal recovery promise and postpone the contractual cure process until that date is missed.

Correct Answer: B

 

Correct Answer

Answer B is correct because the repeated failures justify action, but the agreement and policy define its sequence and owner. Evidence supports the authorized notice and a realistic recovery or replacement decision.

Incorrect Answers

Answer A is incorrect because this uses the right decision owner but skips the required ten-day cure notice. The evidence should support the contractual sequence before the contemplated termination is considered.

Answer C is incorrect because replacement may be a contingency option, but financial consequences depend on the agreement. The scenario provides no automatic zero-payment rule.

Answer D is incorrect because a recovery forecast helps plan forward work but does not replace the contractual performance record. Procurement needs the original commitments and actual failures to administer the specified cure process.

Answer E is incorrect because three misses already support escalation through the agreed process. An additional informal promise would defer the defined remedy without establishing the notice that the contract requires.

 

Question 25

A project team does not know which commercial technologies can meet an unusual monitoring need. It is not ready to define a detailed specification or award a contract. Which procurement activity best addresses this information gap?

1. Negotiate a volume discount with the incumbent before exploring technical alternatives.
2. Conduct a request for information focused on capabilities and constraints.
3. Create a supplier shortlist based on prior contract values and request final commercial offers.
4. Request binding fixed quotations against an unstated specification.
5. Invite the incumbent to submit a priced proposal for its current product as the basis for award.

Correct Answer: B

 

Correct Answer

Answer B is correct because a market inquiry can reveal feasible approaches, limits, and supplier capacity before the team defines a competitive purchase. It need not imply an award commitment.

Incorrect Answers

Answer A is incorrect because a discount may reduce price for a known solution, but the team has not established which technology can satisfy the unusual need. Commercial optimization is premature before the capability gap is understood.

Answer C is incorrect because purchasing history can inform supplier familiarity but does not show which technologies meet the unusual need. Final offers require a clearer requirement and capability basis than past contract values provide.

Answer D is incorrect because suppliers cannot produce comparable firm prices without a clear purchase basis. This asks for cost certainty before the solution space is understood.

Answer E is incorrect because an incumbent proposal may be informative, but moving directly toward award narrows the solution before the team understands available capabilities. A market inquiry better addresses the stated technical information gap.

 

Question 26

Making a component requires $36,000 setup and $12 per unit. Buying costs $24 per unit with no setup charge. Costs are linear and all other effects are equal. At what quantity do the two alternatives have equal relevant cost?

1. 1,500 units.
2. 6,000 units.
3. 4,500 units.
4. 2,000 units.
5. 3,000 units.

Correct Answer: E

 

Correct Answer

Answer E is correct because setting $36,000 + $12Q = $24Q gives $36,000 = $12Q, so Q = 3,000. At that quantity, both alternatives cost $72,000.

Incorrect Answers

Answer A is incorrect because dividing setup by the purchase price ignores internal variable cost. The setup is recovered through the $12 per-unit saving, not the full $24 purchase price.

Answer B is incorrect because at this quantity, making costs $108,000 and buying $144,000. The $36,000 advantage demonstrates that the alternatives are no longer equal.

Answer C is incorrect because this quantity is above the equality point and already favors making. It is not obtained from the stated $36,000 fixed cost and $12 unit difference.

Answer D is incorrect because this would require an $18 per-unit saving, which the stated prices do not produce. At 2,000 units, making still costs $12,000 more.

 

Question 27

A supplier invoices 120 units. The project has delivery and acceptance records for only 100, and the contract pays for accepted units with no advance-payment provision. Which TWO actions are appropriate? Choose TWO.

1. Use the supplier’s dispatch notice for the extra twenty units as the acceptance record.
2. Pay all 120 units now and plan to offset any unsupported quantity against the next shipment.
3. Approve all 120 units because the supplier’s invoice is a formal document.
4. Reconcile the twenty-unit difference with the supplier and receiving records.
5. Hold every payment under the contract until the supplier resubmits all delivery documentation.
6. Route payment using the verified accepted quantity and the contract’s dispute process.

Correct Answers: D, F

 

Correct Answers

Answer D is correct because the discrepancy could reflect an error or missing evidence, so the facts need checking. The invoice alone does not establish the additional payment entitlement.

Answer F is correct because the stated payment basis is accepted units. Verified entitlement can be processed while the unexplained balance is handled through the applicable commercial procedure.

Incorrect Answers

Answer A is incorrect because dispatch can support reconciliation but does not demonstrate buyer acceptance. The payment clause requires accepted units, so the twenty-unit balance still needs the relevant evidence.

Answer B is incorrect because this advances payment for an unverified quantity despite the stated payment basis and lack of an advance provision. A possible future offset does not establish current entitlement.

Answer C is incorrect because a formal invoice remains a claim for payment that must match the contract and acceptance evidence. Its format does not establish delivery.

Answer E is incorrect because the discrepancy concerns twenty units, while one hundred have verified acceptance. The project should reconcile the balance and use the applicable dispute process rather than impose a blanket hold without a contractual basis.

 

Question 28

A supplier delay threatens integration. The project manager may coordinate work but cannot amend price or delivery obligations. The supplier says acceleration is possible at additional cost. What should the project manager do first?

1. Tell the supplier to recover at any cost without checking the agreement.
2. Escalate the missed date to the sponsor and postpone recovery analysis until the next steering meeting.
3. Direct recovery at the original price because the contract already contains a delivery date.
4. Promise the acceleration payment and seek approval after delivery.
5. Obtain a costed recovery proposal for the authorized commercial decision.

Correct Answer: E

 

Correct Answer

Answer E is correct because the team needs concrete options and delivery effects to choose a response. Requesting a proposal supports coordination without promising payment or changing obligations beyond the manager’s authority.

Incorrect Answers

Answer A is incorrect because the cause, responsibility, and applicable terms are not given. The project manager cannot assume unlimited unpaid acceleration is contractually required.

Answer B is incorrect because escalation can be useful, but a concrete recovery proposal is already available to investigate. Waiting to develop that option reduces decision time while providing the sponsor no assessed cost or delivery tradeoff.

Answer C is incorrect because a delivery date alone does not establish the cause of delay or entitlement to every proposed acceleration measure. A costed recovery proposal lets the authorized owner evaluate obligations and options.

Answer D is incorrect because that creates a commitment outside the stated authority. Urgency supports rapid evaluation, not an assumed right to bind the buyer.

 

Question 29

A private contract specifies a delivery credit of $2,000 for each qualifying day of delay, capped at $10,000 for this delivery. The parties agree that six days qualify and no exclusions apply. What credit follows this clause?

1. $6,000.
2. $2,000.
3. $10,000.
4. No credit until the buyer proves its exact lost profit.
5. $12,000.

Correct Answer: C

 

Correct Answer

Answer C is correct because six days at $2,000 gives $12,000 before the cap. The explicit $10,000 maximum limits the credit for this delivery, regardless of the uncapped amount.

Incorrect Answers

Answer A is incorrect because this effectively uses $1,000 per day, which is not the stated rate. The $2,000 rate applies before the maximum is checked.

Answer B is incorrect because the clause applies per qualifying day, not once per delivery. A single daily credit understates six agreed days of delay.

Answer D is incorrect because the scenario expressly provides an applicable agreed credit and qualifying days. It supplies no additional lost-profit condition to satisfy.

Answer E is incorrect because this calculates the daily amount correctly but omits the contractual maximum. The agreed cap is part of the same calculation.

 

Question 30

A supplier says a buyer instruction changed its work and requests additional payment. The agreement requires written notice within five working days and joint review of supporting records. Responsibility has not been determined. Which TWO actions best support resolution? Choose TWO.

1. Reject the claim solely because the project budget has no remaining contingency.
2. Preserve the instruction, baseline scope, and contemporaneous work records.
3. Admit the entire claimed amount to preserve collaboration.
4. Limit the review file to the signed scope and formally approved changes.
5. Route the claim promptly through the contractual notice and review process.
6. Complete the technical impact estimate before initiating the contractual notice process.

Correct Answers: B, E

 

Correct Answers

Answer B is correct because those facts allow the parties to compare the purchased obligation with what was requested and performed. Reliable evidence is needed before accepting or rejecting the claimed change.

Answer E is correct because the five-day rule creates a concrete timing requirement. Following it preserves an orderly evaluation without assuming the claim is valid merely because it was submitted.

Incorrect Answers

Answer A is incorrect because budget capacity does not determine whether an instruction changed a contractual obligation. Funding and entitlement need separate assessment.

Answer C is incorrect because collaboration does not require accepting unsupported entitlement or quantum. The joint review exists to establish those matters from the agreement and evidence.

Answer D is incorrect because those records are essential but may omit the instruction that allegedly changed the work. Contemporaneous communications and performance evidence are needed to assess the disputed request without prejudging it.

Answer F is incorrect because the estimate may take longer than the five-working-day notice period. Timely notice and evidence preservation can proceed while the parties develop the detailed impact assessment.

 

Question 31

A supplier delivers 98% of shipments on time, but first-pass acceptance has fallen from 95% to 70%. Buyer integration is repeatedly delayed by rework. What should the project manager prioritize in the supplier review?

1. Increase safety stock using the existing on-time delivery rate as the basis for the buffer.
2. Raise the on-time delivery target to 100% and keep quality outside the review.
3. Replace the supplier immediately without reviewing contract remedies or causes.
4. A defect-focused corrective plan linked to acceptance and integration impact.
5. Rate the supplier successful because the strongest metric remains high.

Correct Answer: D

 

Correct Answer

Answer D is correct because punctual arrival is no longer a sufficient description of performance. The falling acceptance rate explains why the buyer cannot use the deliveries and identifies where corrective action should focus.

Incorrect Answers

Answer A is incorrect because inventory may mitigate some delays, but the sharp fall in first-pass acceptance is the identified cause of unusable supply. A buffer based on arrival timing alone leaves the defect and rework problem unaddressed.

Answer B is incorrect because a two-point improvement in arrival timing does not address the large acceptance decline. The bottleneck is usable conforming supply.

Answer C is incorrect because replacement may eventually be justified, but the evidence first supports a targeted performance intervention and evaluation of applicable options. An immediate switch has unassessed costs and timing risks.

Answer E is incorrect because selecting the favorable measure hides a material failure in the buyer’s outcome. The procurement requires acceptable deliveries, not just timely shipments.

 

Question 32

An adaptive contract purchases a stable supplier team for four iterations at an agreed price. It does not guarantee a fixed number of stories. The buyer now asks the project manager to certify that every current backlog item is included. What is the best response?

1. Certify the entire backlog because a fixed price always guarantees fixed scope.
2. Use the highest completed-iteration throughput as the guaranteed delivery rate for all four iterations.
3. Forecast the likely scope with the team and clarify any additional commitment commercially.
4. Treat every uncompleted story as an automatic supplier breach.
5. Certify the backlog after converting every story to the smallest agreed acceptance slice.

Correct Answer: C

 

Correct Answer

Answer C is correct because the agreement purchases capacity, while achievable output depends on the work and demonstrated delivery rate. A new scope guarantee requires explicit agreement rather than an unsupported certification.

Incorrect Answers

Answer A is incorrect because a fixed payment can purchase a defined amount of capacity. The scenario explicitly excludes a fixed story commitment, so the price alone cannot establish one.

Answer B is incorrect because one strong iteration is evidence, not a guarantee of future output for a different work mix. The agreement buys team capacity and does not convert a historical maximum into a commitment to the full backlog.

Answer D is incorrect because breach cannot be inferred from a promise the agreement does not contain. Performance must be assessed against the purchased capacity and other explicit obligations.

Answer E is incorrect because slicing can improve flow and clarify a forecast, but it does not prove that the purchased four iterations can deliver every item. A fixed scope commitment still requires capacity evidence and explicit commercial agreement.

 

Question 33

A supplier agreement permits the buyer’s product owner to exchange unstarted items of equal estimated effort when delivery dates and quality remain unchanged. Net additions require a procurement amendment. Which TWO requests fit the product owner’s existing exchange authority? Choose TWO.

1. Add a four-hour dashboard while retaining every existing item.
2. Exchange equal-effort items while moving the contractual delivery date.
3. Replace a completed report with a new report of the same original estimate.
4. Exchange an unstarted eight-hour item for a twelve-hour item without changing price.
5. Replace two unstarted four-hour screens with one agreed eight-hour screen under the same dates and quality.
6. Replace an unstarted eight-hour report with an agreed eight-hour export, leaving dates and quality unchanged.

Correct Answers: E, F

 

Correct Answers

Answer E is correct because the clause concerns equal estimated effort rather than equal item count. Eight hours removed and eight added satisfy that boundary when the other conditions remain unchanged.

Answer F is correct because this is an equal-effort substitution of unstarted work within every stated boundary. It changes priority without expanding the purchased effort or other commitments.

Incorrect Answers

Answer A is incorrect because this increases the total obligation. Even a small useful addition falls outside an exchange authority that requires no net increase.

Answer B is incorrect because the clause specifically preserves delivery dates. A date change needs the commercial process even when effort is unchanged.

Answer C is incorrect because completed effort cannot be removed from future work as an unstarted exchange. The proposed request adds new effort after the original obligation was performed.

Answer D is incorrect because the replacement is not equal in estimated effort. The product owner’s limited authority does not cover this net addition.

 

Question 34

A subcontractor is late with a critical subcomponent. The buyer’s agreement makes the prime supplier responsible for all subcontracted deliverables, and the buyer has no authority to direct the subcontractor. What should the project manager request?

1. Pay the subcontractor separately and reduce the prime’s invoice automatically.
2. An integrated recovery plan from the prime supplier.
3. Track the subcomponent in a separate subcontractor report and assess the prime only on its own manufactured parts.
4. Ask the buyer’s integration team to own the subcontractor recovery plan because it needs the component next.
5. Issue direct work orders to the subcontractor and approve its extra charges.

Correct Answer: B

 

Correct Answer

Answer B is correct because the prime owns the contractual delivery obligation and can coordinate its subcontractor. A consolidated plan lets the buyer assess dates, interfaces, and residual exposure through the responsible party.

Incorrect Answers

Answer A is incorrect because no direct payment or offset mechanism is provided. The project manager should use the agreed commercial structure rather than invent a settlement arrangement.

Answer C is incorrect because separate detail may help diagnosis, but the prime remains responsible for the complete contracted deliverable. Excluding subcontracted work from its performance assessment obscures the integration obligation.

Answer D is incorrect because the receiving team can assess impacts, but dependency does not transfer control of the subcontractor. The prime holds that responsibility and must supply the integrated recovery plan.

Answer E is incorrect because the scenario expressly withholds that authority. Direct commitments could create confusion while bypassing the prime’s delivery accountability.

 

Question 35

A project will buy a specialized installation for a fixed shutdown window. The draft solicitation lists equipment but omits installation interfaces, acceptance evidence, and the selection method. Which THREE planning outputs should be completed before requesting comparable proposals? Choose THREE.

1. An equipment-only request for quotation with interface responsibilities deferred to negotiation.
2. Agreed acceptance evidence and the role authorized to approve it.
3. A documented evaluation method tied to the project’s procurement needs.
4. A commitment to select the lowest headline price and agree acceptance tests after award.
5. A requirement that every supplier use the project team’s internal task estimates without qualification.
6. A statement of work covering installation interfaces and the shutdown constraint.

Correct Answers: B, C, F

 

Correct Answers

Answer B is correct because the buyer and supplier need a common completion standard and a clear accepting authority. Defining these before competition avoids disputes about what the purchased result means.

Answer C is correct because consistent factors let the buyer compare proposals for the same purpose. Deciding the method before offers are evaluated reduces arbitrary selection based on a preferred bidder.

Answer F is correct because suppliers need to price the actual obligation and its timing dependencies. An equipment list alone leaves substantial scope and delivery assumptions open to incompatible interpretations.

Incorrect Answers

Answer A is incorrect because deferring the interfaces leaves bidders pricing different installation assumptions for a fixed shutdown. The missing scope needs definition in time for comparable proposals.

Answer D is incorrect because headline price is not comparable when installation obligations are incomplete, and late acceptance criteria can change what was purchased. Both missing decisions belong in procurement preparation.

Answer E is incorrect because estimates may inform planning, but forcing unverified quantities does not resolve missing interfaces or acceptance rules. Suppliers need a clear obligation and a way to expose assumptions.