BAB 16

1. Trade-offs are almost always necessary because:

A. Project managers are incapable of planning correctly.
B. Line managers are unable to provide accurate estimates.
C. Executives are unable to properly define project objectives.
D. Circumstances can change, thus mandating trade-offs to take place.

2. The person who may be ultimately responsible for approving the trade-off is the:
A. Project manager
B. Line manager
C. Project sponsor
D. Customer

3. The most common trade-offs occur on:

A. Time, cost, and quality
B. Risk, cost, and quality
C. Risk, time, and quality
D. Scope, quality, and risk

4. If the start date of a project is delayed but the budget and specifications remain fixed, what
would the project manager most likely trade off first?
A. Scope
B. Time
C. Quality
D. Risk

BAB 18

1. According to learning curve theory, learning takes place at a fixed rate whenever the production
levels:
A. Increase higher than normal
B. Increase, but at a lower than normal rate
C. Double
D. Quadruple

2. Learning curve theory is most appropriate for estimating which costs?

A. R&D
B. Engineering
C. Marketing
D. Manufacturing

3. On a 90 percent learning curve, the 100th unit required 80 hours. How many hours would
the 200th unit require?
A. 200
B. 180
C. 100
D. 90

4. Which of the following can be a source of improvement to a learning curve?

A. New, more efficient production processes
B. Product redesigns
C. Higher-quality raw materials
D. All of the above
BAB 19

1. The contractual statement-of-work document is:

A. A nonbinding legal document used to identify the responsibilities of the contractor
B. A definition of the contracted work for government contracts only
C. A narrative description of the work/deliverables to be accomplished and/or the resource
skills required
D. A form of specification

2. A written or pictorial document that describes, defines, or specifies the services or items to
be procured is:
A. A specification document
B. A Gantt chart
C. A blueprint
D. A risk management plan

3. The “order of precedence” is:

A. The document that specifies the order (priority) in which project documents will be
used when it becomes necessary to resolve inconsistencies between project documents
B. The order in which project tasks should be completed
C. The relationship that project tasks have to one another
D. The ordered list (by quality) of the screened vendors for a project deliverable

4. In which type of contract arrangement is the contractor least likely to want to control
costs?
A. Cost plus percentage of cost
B. Firm-fixed price
C. Time and materials
D. Purchase order

5. In which type of contract arrangement is the contractor most likely to want to control costs?
A. Cost plus percentage of cost
B. Firm-fixed price
C. Time and materials
D. Fixed-price-incentive-fee

6. In which type of contract arrangement is the contractor at the most risk of absorbing all
cost overruns?
A. Cost plus percentage of cost
B. Firm-fixed price
C. Time and materials
D. Cost-plus-incentive-fee

7. In which type of contract arrangement is the customer at the most risk of absorbing excessive
cost overruns?
A. Cost plus percentage of cost
B. Firm-fixed price
C. Time and materials
D. Fixed-price-incentive-fee

8. What is the primary objective the customer’s project manager focuses on when selecting a
contract type?
A. Transferring all risk to the contractor
B. Creating reasonable contractor risk with provisions for efficient and economical performance
incentives for the contractor
C. Retaining all project risk, thus reducing project contract costs
D. None of the above

9. Which type of contract arrangement is specifically designed to give a contractor relief for
inflation or material/labor cost increases on a long-term contract?
A. Cost plus percentage of cost
B. Firm-fixed price
C. Time and materials
D. Firm-fixed price with economic price adjustment

10. Which of the following is not a factor to consider when selecting a contract type?
A. Type/complexity of the requirement
B. Urgency of the requirement
C. Extent of price competition
D. All are factors to consider.

11. In a fixed-price-incentive-fee contract, the “point of total assumption” refers to the point in
the project cost curve where:
A. The customer assumes responsibility for every additional dollar that is spent in fulfillment
of the contract.
B. The contractor assumes responsibility for every additional dollar that is spent in fulfillment
of the contract.
C. The price ceiling is reached after the contractor recovers the target profit.
D. None of the above

12. A written preliminary contractual instrument prepared prior to the issuance of a definitive
contract that authorizes the contractor to begin work immediately, within certain limitations,
is known as a:
A. Definitive contract
B. Preliminary contract
C. Letter contract/letter of intent
D. Purchase order

13. A contract entered after following normal procedures (i.e., negotiation of terms, conditions,
cost, and schedule) but prior to initiation of performance is known as a:
A. Definitive contract
B. Completed contract
C. Letter contract/letter of intent
D. Pricing arrangement

14. Which of the following is not a function of the contract administration activity?
A. Contract change management
B. Specification interpretation
C. Determination of contract breach
D. Selection of the project manager

15. A fixed-price contract is typically sought by the project manager from the customer’s organization when:
A. The risk and consequences associated with the contracted task are large and the customer
wishes to transfer the risk.
B. The project manager’s company is proficient at dealing with the contracted activities.
C. N either the contractor nor the project manager understand the scope of the task.
D. The project manager’s company has excess production capacity.

16. Which of the following are typical actions a customer would take if the customer received
nonconforming materials or products and the customer did not have the ability to bring the
goods into conformance?
A. R eject the entire shipment but pay the full cost of the contract
B. Accept the entire shipment, no questions asked
C. Accept the shipment on condition that the nonconforming products will be brought
into conformance by the vendor at the vendor’s expense.
D. Accept the shipment and resell it to a competitor
17. If a project manager requires the use of a piece of equipment, what is the breakeven point
where leasing and renting are the same?
Cost Categories Renting Costs Leasing Costs
Annual maintenance $ 0.00 $3,000.00
Daily operation $ 0.00 $ 70.00
Daily rental $100.00 $ 0.00
A. 300 days
B. 30 days
C. 100 days
D. 700 days

18. In which type of incentive contract is there a maximum or minimum value established on
the profits allowed for the contract?
A. Cost-plus-incentive-fee contract
B. Fixed-price-incentive-fee contract
C. Time-and-material-incentive-fee contract
D. Split-pricing-incentive-fee contract

19. In which type of incentive contract is there a maximum or minimum value established on
the final price of the contract?
A. Cost-plus-incentive-fee contract
B. Fixed-price-incentive-fee contract
C. Time-and-material-incentive-fee contract
D. Split-pricing-incentive-fee contract

20. A cost-plus-incentive-fee contract has the following characteristics:

Sharing ratio: 80/20
Target cost: $100,000
Target fee: $12,000
Maximum fee: $14,000
Minimum fee: $9,000
How much will the contractor be reimbursed if the cost of performing the work is
$95,000?
A. $98,000
B. $100,000
C. $108,000
D. $114,000

21. Using the same data from Problem 20, and the same contract type, how much will the contractor
be reimbursed if the cost of performing the work is $85,000?
A. $97,000
B. B. $99,000
C. C. $112,000
D. $114,000

22. Using the same data from Problem 20, and the same contract type, how much will the contractor
be reimbursed if the cost of performing the work is $120,000?
A. $112,000
B. B. $119,000
C. C. $126,000
D. $129,000

23. A fixed-price-incentive-fee contract has the following characteristics:

Sharing ratio: 70/30
Target cost: $100,000
Target fee: $8,000
Price ceiling: $110,000
How much will the contractor be reimbursed if the cost of performing the work is
$90,000?
A. $91,000
B. $101,000
C. $103,000
D. $110,000

24. Using the same data from Problem 23, and the same contract type, how much will the contractor
be reimbursed if the cost of performing the work is $102,000?
A. $104,000
B. B. $107,400
C. C. $109,400
D. $110,000

25. Using the same data from Problem 23, and the same contract type, how much will the contractor
be reimbursed if the cost of performing the work is $105,000?
A. $105,000
B. B. $106,500
C. C. $110,000
D. $111,500