PMI PMP-Project Management Professional Practice Exam Q. 1241 to 1250
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Set of 10 Questions
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Q. 1241: Contract type selection is dependent on the degree of risk or uncertainty facing the project manager. From the perspective of the buyer, the preferred contract type in a low-risk situation is:
A. Firm-fixed-price
B. Fixed-price-incentive
C. Cost-plus-fixed fee
D. Cost-plus-a-percentage-of-cost
Section: Mix Questions
Justification in favor of the correct answer:
Buyers prefer the firm-fixed-price contract because it places more risk on the seller. Although the seller bears the greatest degree of risk, it also has the maximum potential for profit. Because the seller receives an agreed-upon amount regardless of its costs, it is motivated to decrease costs by efficient production.
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Q. 1242: The buyer has negotiated a cost-plus-incentive-fee contract with the seller. The contract has a target cost of $300,000, a target fee of $40,000, a share ratio of 80/20, a maximum fee of $60,000, and a minimum fee of $10,000. If the seller has actual costs of $380,000, how much fee will the buyer pay?
A. $104,000
B. $56,000
C.$30,000
D.$24,000
Section: Mix Questions
Justification in favor of the correct answer:
Comparing actual costs with the target cost shows an $80,000 overrun. The overrun is shared 80/20 (with the buyer’s share always listed first). In this case 20% of $80,000 is $16,000, the seller’s share, which is deducted from the $40,000 target fee. The remaining $24,000 is the fee paid to the seller.
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Q. 1243: Which term describes the failure by either the buyer or the seller to perform part or all of the duties of a contract?
A. Termination of contract
B. Partial performance
C. Breach of contract
D. Contract waiver
Section: Mix Questions
Justification in favor of the correct answer:
A breach of contract is a failure to perform either express or implied duties of the contract. Either the buyer or the seller can be responsible for a breach of contract.
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Q. 1244: In some cases, contract termination refers to:
A. Contract closeout by mutual agreement
B. Contract closeout by delivery of goods or services
C. Contract closeout by successful performance
D. Certification of receipt of final payment
Section: Mix Questions
Justification in favor of the correct answer:
A contract can end in successful performance, mutual agreement, or breach of contract. Contract closeout by mutual agreement or breach of contract is called contract termination.
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Q. 1245: Significant differences between the seller’s price and your independent estimate may indicate all the following EXCEPT the:
A. SOW was not adequate
B. Seller misunderstood the SOW
C. Sellers failed to respond
D. Project team chose the wrong contract type
Section: Mix Questions
Justification in favor of the correct answer:
The contract type is typically dictated by the procurement SOW and chosen by the contracting officer. Independent estimates are a tool and technique in conduct procurements.
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Q. 1246: You are a contractor for a state agency. Your company recently completed a water resource management project for the state and received payment on its final invoice today. A procurement audit has been conducted. Formal notification that the contract has been closed should be provided to your company by the:
A. State’s project manager
B. Person responsible for procurement administration
C. Project control officer
D. Project sponsor or owner
Section: Mix Questions
Justification in favor of the correct answer:
The person responsible for procurement administration should provide, in writing, formal notification that the contract has been completed. Requirements for formal acceptance and closeout should be defined in the contract.
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Q. 1247: Which term describes contract costs that are traceable to or caused by a specific project work effort?
A. Variable
B. Fixed
C. Indirect
D. Direct
Section: Mix Questions
Justification in favor of the correct answer:
Direct costs are always identified with the cost objectives of a specific project and include salaries, travel and living expenses, and supplies in direct support of the project.
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Q. 1248: When a seller breaches a contract, the buyer cannot receive:
A. Compensatory damages
B. Punitive damages
C. Liquidated damages
D. Consequential damages
Section: Mix Questions
Justification in favor of the correct answer:
Punitive damages are designed to punish a guilty party and, as such, are considered penalties. Because a breach of contract is not unlawful, punitive damages are not awarded. The other remedies listed are available to compensate the buyer’s loss.
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Q. 1249: Which term is NOT a common name for a procurement document that solicits an offer from prospective sellers?
A. Contractor initial response
B. Request for information
C. Request for quotation
D. Invitation for negotiation
Section: Mix Questions
Justification in favor of the correct answer:
Procurement documents are used to solicit proposals from prospective sellers. A request for information is generally used by the buyer to have potential sellers propose various pieces of information related to a product, service, or result or to a seller capability.
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Q. 1250: Because you are working under a firm-fixed-price contract, management wants you to submit the final invoice and close out the contract as soon as possible. Before final payment on the contract can be authorized, you must:
A. Prepare a contract completion statement
B. Audit the procurement process
C. Update and archive contract records
D. Settle subcontracts
Section: Mix Questions
Justification in favor of the correct answer:
All payments due must be settled by the seller before the contract can be officially closed. The other items listed are activities performed by the buyer.
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