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The cost estimate with the most precise estimate

(i.e., the smallest range of error) is the ________
estimate.
A. engineering
Answer: D
B. budget
C. concept
D. definitive
E. contingency
The cost estimate that has a range for error of

minus 10 percent to plus 25 percent is the
________ estimate.
A. budget
Answer: A
B. definitive
C. parametric
D. analogy
E. contingency
There are usually two types of reserves in a

project's budget. The ________ reserve is for cost
variances from the plan because of inaccurate
estimates or pricing and costs overruns, while the
________ is to accommodate costs for project
work that were not included in the plan through
Answer: C
error or oversight.
A. project; budget overrun allowance
B. engineering; management allowance
C. management; contingency allowance
D. management; mismanagement allowance
E. planned; unplanned work allowance
Feasibility studies are evaluations of both the

technical and economic aspects of a potential
project. In the economic area, one would look at
such items as interest rates, present worth factors,
capitalization costs, and ________.
Answer: B
A. human resource skills
B. depreciation costs
C. prospective projects managers
D. implementation of cost controls
E. availability of cost accounting methods
Project financing can be extremely complex and

can come from a variety of sources. However,
________ is not a potential source of financing for
a project.
A. borrowing money from a bank Answer: D
B. selling stocks in the project or corporation
C. selling bonds on the project
D. selling lottery tickets on the project
E. leasing or renting existing property to another
Life cycle costing is a concept whereby all costs for

a system are computed to determine the total cost
of ownership. Life cycle cost categories include
________.
A. purchase, repair, and operation
Answer: B
B. development, procurement, and
operation/maintenance
C. procurement, lease, and disposal
D. procurement, operation, and disposal
E. operation, maintenance, and storage
The integration of cost and schedule to provide

measures of the project's performance is the
earned value system, or contract performance
measurement. The baseline for the earned value
system is depicted as a slight "S" curve because
________.
A. there are fewer costs at project initiation until the
work force is fully staffed
B. there are workers who have not been paid, so
Answer: C
the expense is not shown on the chart
C. there are more expenses to get a project started
than are required on a normal operating basis
D. this is just a traditional method of plotting the
costs and has no relationship to the actual
expenditures
E. this approximation has proven to be nearly
correct when all costs and expenditures have been
accounted for at project completion
The pricing of a project can be extremely complex

in the development of valid cost estimates and
price quotes from vendors. The tool that facilitates
the pricing of a project by a structured
decomposition of the total into individual elements
of labor, material, and equipment is the ________. Answer: E
A. project management plan
B. budget
C. responsibility matrix
D. configuration management plan
E. work breakdown structure
In estimating the cost of work, the best source of

cost information can be obtained from the
________.
A. customer
Answer: B
B. historical records
C. senior engineers
D. top management
E. independent consultants
Setting up a cost control system requires matching Answer: E

the work packages to the cost accounting system.
The direct mapping of the work packages to the
accounting is accomplished by establishing a
________.
A. work package cost/price
B. work breakdown structure element
C. cost correlation matrix
D. computer coded bar chart
E. code of accounts
Cost overruns on a project have major impacts on

the profitability of operations, but ________ do(es)
not necessarily contribute to cost overruns of a
project budget.
A. a change in contract scope Answer: A
B. delays in schedule
C. lack of work force experience
D. integration uncertainty for project elements
E. contractor claims for out-of-scope work
Suppose the contingency allowance established to

cover unforeseen activities of a project has been
set at eight percent of the total project cost. The
total dollars in the contingency allowance should
be ________ as the project nears completion.
A. retained at the remaining dollar level Answer: E
B. increased to meet unidentified surprises
C. decreased to reduce the accounting work
D. spent to ensure there is no extra money shown
in the budget
E. reduced to a percentage of the remaining work
Suppose a contract has been in force for six

months and the work is progressing, and then the
buyer requests some changes in the design. The
changes do not affect completed work but add
some new items and subtract some existing items.
The cost to the buyer to accomplish these changes
is ________.
A. increased by the amount of added work Answer: E
B. unchanged because the contract is in place
C. decreased because the work has not been
started
D. unchanged because the buyer (customer) is
always right
E. unknown because the cost of the changed work
is not specified
In the earned values system, the focus is on "cost

of work," which is divided into "scheduled" and
"performed" work. This is further defined as
"budgeted" and "actual" work. The formula "BCWP
- BCWS" provides the ________.
Answer: B
A. cost difference
B. schedule variance
C. overrun conditions
D. schedule difference
E. cost variance
Indices can provide an indication of the status of a

project. In the earned values system, there are two
indices
Cost Performance Index (CPI) and Schedule
Performance Index (SPI). The formula for CPI is
________. Answer: C
A. ACWP/BCWS
B. ACWP/BCWP
C. BCWP/ACWP
D. BCWS/ACWP
E. BCWS/BCWP
Suppose that in the earned value system, the

status of the project is reported as BCWS = 100,
ACWP = 110, BCWP = 95. The project is now
________.
A. underspent and behind schedule Answer: D
B. overspent and ahead of schedule
C. underspent and ahead of schedule
D. overspent and behind schedule
E. cannot be determined from available data
Projects have direct and indirect costs that the

project manager must track to ensure the budget is
not exceeded. The project manager has the most
control over direct costs such as ________.
A. bonuses, fees, and awards Answer: B
B. labor, materials, and equipment
C. labor, supervision, and fees
D. overhead, G&A, and fees
E. G&A, facilities, and transportation
A project is being advertised to solicit bidders. The

buyer has asked for two types of price first, if
payment is made in total upon completion of the
project; second, if payment is made 50 percent at
the midpoint of completion and 50 percent upon
total completion. This is a two-year project that is
being priced at $10,000,000 when the cost of
money is not included. Assume money is borrowed
in two equal increments-at the start of year 1 and
Answer: D
year 2. If the interest rate over the two years is
eight percent, the total bid under each option (i.e.,
payment at the end; payment at midpoint) is
________.
A. $11,844,000; $11,412,000
B. $10,400,000; $10,040,000
C. $10,800,000; $10,400,000
D. $11,232,000; $10,832,000
E. $12,484,000; $11,244,000
The cost of money and cash flow can adversely

affect the financial status of the project. One
method of encouraging early payment of invoices
is to offer a discount for payment within a few days.
If an invoice for $10,000 was paid within (x) days
(see each possible answer for value of x), the
method "two 10, net 30" would provide a savings of Answer: D
________.
A. $100 (x = 30)
B. $200 (x = 30)
C. $300 (x = 10)
D. $200 (x = 10)
E. cannot be determined from available data
Project financial audits are used to determine the

current status of the financial health of a project,
but ________ is/are not an area for financial audit.
A. a project budget system
Answer: B
B. a project computer system
C. a project change control
D. a project status reporting
E. cash-flow projections
A project audit is often a three-step process using

different skills to assess the condition of the health
of the project. The first audit, or first audit
opportunity, is at the ________ phase.
A. start of the planning Answer: C
B. start of the implementation
C. end of the planning
D. end of the implementation
E. middle of the implementation
The budget for a project is the baseline from which

future expenditures are measured. Of the following,
________ do(es) not cause change to the budget
baseline during project implementation.
A. change orders to the contract
Answer: B
B. expenditures to buy materials
C. revised cost estimates made in-house
D. changes to subcontractor's scope of work
E. correction to the work breakdown structure to
eliminate some tasks
In the earned value system for determining project

status, there are several methods of accepting
credit for the completion of work. In the most
common method, full credit is allowed after the
work package is complete. A second method is to
allow full credit when 50 percent of the work
package is complete to permit the performing
contractor (seller) to receive credit for work-in-
process. From the seller's point of view, ________.
A. either method is acceptable under an
incremental payment schedule contract
Answer: D
B. the credit at 100 percent completion is better for
either a lump-sum or incremental payment contract
because the accounting is more accurate
C. the credit at 100 percent completion is better
because the accounting lags the work-in-process
by 30 days in any type of payment schedule
D. the credit at 50 percent completion is better
because it improves the cash flow under an
incremental payment schedule
E. the credit at 50 percent completion is better
because it reduces the billing cycle
Because of the investment or risk associated with a

project, the decision may be to ensure a high
profitability. When this is the case, senior
management should agree on profit ________ of
the project.
Answer: D
A. capability at the beginning
B. margin (rate) at the midpoint
C. margin (rate) at the end
D. goals at the beginning
E. goals at the end
Estimating costs for a project is difficult because of

the lack of historical cost records, the uncertainty
regarding the future state of the economy, and the
lack of understanding as to the full scope of work.
Successive estimating is one method of accounting
for the uncertainty of cost estimating by ________.
A. making three estimates and taking the average
B. continually making estimates as the project Answer: C
progresses
C. also including the range of potential error for an
estimated item
D. using two or more cost estimating techniques to
arrive at an average cost
E. delaying estimates until all information is
acquired
The degree of uncertainty (lack of information) in a

project affects the ability of cost estimators to make
precise estimates to determine the total cost. One
method to resolve the uncertainty is influence
diagramming, which is used to evaluate ________.
A. price, net worth, and net present value Answer: B
B. alternative outcomes, risk factors, and given
quantities
C. risk factors, price, and alternatives
D. price, quantities, and time of purchase
E. risk factors, contract type, and project duration
The most accurate estimates (and the most

expensive to produce) are _______.
A. analogous estimates
B. parametric estimates Answer: D
C. top-down estimates
D. bottom-up estimates
E. function point estimates
The ________ identifies the project elements that

costs will be allocated to.
A. work breakdown structure
B. PERT estimates Answer: A
C. earned value
D. order of magnitude estimate
E. BCWR
The EAC is a forecasting technique based on past

project performance. It can be calculated using the
formula ________.
A. cumulative actuals + (ETC X CPI)
B. cumulative actuals + new estimate for cost of Answer: D
work remaining
C. cumulative actuals + remaining budget
D. all of the above
E. none of the above
The best way to manage the costs of change

requests is to ________.
A. accept them orally
B. allow them to happen in ad hoc fashion Answer: D
C. impose change unilaterally
D. document and authorize all changes
E. use the earned value system
Materials management is crucial to the success of

the project when resources are needed at a
specified time and place to ensure continued
progress. An assessment of the materials costs
should consider not only the cost of purchase but
also ________. Answer: C
A. transportation, deterioration, and storage
B. storage, damage, and deterioration
C. transportation, storage, and shortage
D. transportation, storage, and loss
E. quantities, storage, and damage
. Project financing is critical to large projects where Answer: E

neither the owner (buyer) or contractor (seller) has
sufficient funds available to cover the costs
incurred during project implementation. In such
cases, a third party must provide the necessary
capital. The third party evaluates the feasibility of
financing the project based on ________.
A. the participants' business reasons for the project
B. the share of ownership to be retained
C. the level of risk the participants are to share
D. the project's anticipated cash flow and tax
benefits, if any
E. all of the above
The financing plan for a project should detail the

methods of obtaining and dispensing the capital
over the full duration of the project. In preparing the
plan and considering risk and reward, management
should ensure that participants' credit standing is
preserved, maximum leverage is used, tax benefits
are optimized, flexibility is incorporated into
Answer: C
ownership, and ________.
A. additional tax relief is pursued
B. lines of credit are opened
C. accesses to sources of new capital are
maintained
D. maximum financing is used
E. late receipt of funds is avoided
Investors are often used to obtain the necessary

financing for major projects, which can transfer the
ownership to the investors. The system is then
leased back for operation and use. The major
advantage for the investors is ________ , and the
major advantage for the user of the system is
________.
A. control of a business; low risk for operation and Answer: C
maintenance
B. high internal rate of return; favorable tax write-off
C. favorable tax write-off; new source of funds
D. ownership without risk of operation; favorable
tax write-off
E. reduced quality (performance) risk; reduced cost
risk
Which is not an element of procurement

management?
A. Purchasing
B. Expediting Answer: E
C. Acquisition
D. Marketing
E. C and D
The purchasing cycle consists of all the following

elements except?
A. Defined Need
Answer: C
B. Transmit Need
C. Inspection
D. Price & Terms
The cost of corrective action taken by the

purchaser and chargeable to the supplier under the
terms of the contract is
A. Payment authorization Answer: D
B. Bid cost considerations
C. Release payment
D. Back charge
__________ is a narrative description of the work

to be accomplished or resource to be supplied.
A. Purchase order
Answer: C
B. Level of effort work
C. Scope of work
D. Contract stipulation
By which means is a contractor able to control

costs overruns due to changing requirements?
A. Project Data review
Answer: C
B. Change order
C. Change Control
D. Contract negotiations
_________ is a written order directing the

contractor to make changes according to the
provisions of the contract documents.
A. Change order/purchase order Amendment Answer: A
B. Contract order Modifications.
C. Contractor claim
D. Owner Directive
_________ is a request for interim stoppage of

work due to non conformance, funding or technical
considerations
A. Bid Protest Answer: B
B. Stop Work order
C. Notice to Proceed
D. Supplier Default Notice
_________ defines when the work is ready for or is

being used for the purpose intended and is so
certified.
A. Final Completion Answer: B
B. Substantial Completion
C. Final Acceptance
D. Mechanical Completion
The process that may be used by an unsuccessful

supplier to seek remedy for a non award of work is
A. Bid Protest
Answer: A
B. Stop Work Order
C. Back charge
D. Contract Dispute
The __________ specification describes, defines

or specifies the goods/services to be supplied.
A. Performance
B. Functional Answer: C
C. Technical
D. Bid
E. General Requirements
The Bid Evaluation process is characterized by all

of the following activities except?
A. Evaluation of suppliers financial resources
B. Ability to comply with technical specifications, Answer: E
C. Delivery schedule and Cost factors
D. Performance Record
E. Competitors' method of sourcing
Which is not a consideration in a make or buy

decision?
A. Cost factors
B. Sales Volume Answer: B
C. Existence of sufficient administration/technical
personnel
D. Political and, social factors with the organization
There are four methods of government

procurement. Which is not one of these methods?
A. Assistance
B. Sealed Bidding Answer: D
C. Competitive proposals
D. Acquisition
E. Small Purchases
A purchasing operation does not contain this

classification of work
A. Management
B. Buying Answer: D
C. Follow up and expedition
D. Marketing
E. Clerical
__________ is a register of suppliers invited to

submit bids for goods/services as specified.
A. Procurement invitation
Answer: B
B. Bid List
C. Resource Identification
D. Supplier's Rankings
__________ is a formal invitation to submit a price

for goods and/or services as specified.
A. Request for Quotation
B. Bid Response Answer: A
C. Intention for Bid
D. Invitation for Bid
E. Request for Proposal
Which contract type should be used by the owner

on a high risk project?
A. Cost Plus Percentage of Cost
B. Cost Plus Incentive Fee Answer: C
C. Lump Sum
D. Fixed Price Plus Incentive Fee
E. C and D
Cost Reimbursable contracts are equivalent to

A. Progress Payment Contracts
B. Extra Work Order Contracts Answer: C
C. Cost Plus Contracts
D. Fixed Price Contracts
Fixed price and incentive type contracts place

responsibility for performance and financial risks
associated with delay or non performance on the
A. Contractor Answer: A
B. Owner
C. Lending Institution
D. Project Manager
__________ is based on information gathered and

analyzed about demand and supply. This forecast
provides a prediction of short and long term prices
and the underlying reasons for those trends.
Answer: D
A. Sales forecast
B. Consumer Price Index
C. Production forecast
D. Price forecast
The contract is signed at the end of the

A. Pre-award phase
B. Award phase
Answer: E
C. Post-award phase
D. Solicitation phase
E. Award cycle
Definitive contract terms are spelled out in the

A. Pre-award phase
B. Award phase
C. Post-award phase Answer: C
D. Purchasing phase
E. Pre-award phase for fixed cost contracts, and
Award phase for cost plus contracts
A bilateral RFP is preferred to an invitation to bid

when
A. supplier and terms are specified
B. the product or service is relatively low value and
readily available Answer: C
C. the product or service has high value and is
unique
D. the product or service has high value, but is
easy to obtain
PMI suggests which of the following behaviors as

part of contract negotiations?
A. Protocol, probing, scratching
B. Sniffing and smelling (olfactory) Answer: A
C. Touching and caressing (tactile)
D. Mind-reading and extra-sensory perception
E. None of the above
The bid package is developed in the

A. Requirements phase
B. Requisition cycle
Answer: B
C. Solicitation cycle
D. Award cycle
E. Award phase
The Award phase includes the

A. requirements, requisition and award cycles
B. award and contractual cycles
Answer: D
C. requisition and solicitation cycles
D. solicitation cycle
E. cycles required for the contract
To relieve pressure on the project schedule, Diane

decided to fast-track and hire a contractor to do
part of the work. Which form of contract(s) should
she consider?
A. None. Fast-tracking is a very poor time to
Answer: E
consider a contractor.
B. Fixed lump sum
C. Cost plus incentive
D. Cost plus percentage of cost
E. c and d
Which is not a factor in choosing a contractor?

A. Complexity of requirements
B. Price competition
Answer: E
C. Competency
D. Capacity
Requirements and specifications are always

changing in the systems integration business.
Therefore, the best form of contract for this
environment would be
A. the form of contract required to get the best Answer: C
contractor
B. Fixed price
C. Cost plus
D. Overseas
In the area of contracting, there are two basic types

of contracts that reflect how the total price is
determined. The ________ contract has an
objective of a pre-determined end price while the
________ contract has an objective of a target end
price. Answer: D
A. full value; partial value
B. definitive; undefined
C. incentive fee; award fee
D. fixed price; cost-plus
E. end price; target price
A contract is a promise to provide goods and/or

services to one party in return for something of
value from that party. To define the goods,
services, and something of value in a legal
document, the contract must be comprised of
________.
A. an explicit work and product description
B. a generic statement of the requirements
Answer: C
C. a basic contract, a statement of work, a
specification, and a list of documentation
requirements
D. statements of the requirements using language
that describes the physical characteristics and the
amount of money to be paid for the delivered
products
The selection of the type of contract is important

because of the cost risk involved. In most cases,
the buyer (owner) will attempt to transfer the risk to
the seller (project sponsor). The buyer, therefore,
will always attempt to award a(n) ________
contract to the seller. Answer: A
A. fixed price
B. cost-plus
C. time and materials
D. definitive
E. incentive fee
The buyer has not completely defined all the

requirements for the project but has enough
definition to start. The type of contract that will most
likely be awarded while additional requirements are
being finalized is the ________ contract.
Answer: B
A. letter
B. cost-plus
C. fixed price
D. variable price
E. temporary
Contracts may be written in any form that is

understandable and enforceable, and often project
personnel attempt to be "creative" in developing
the document. Given a choice, it is best to
________ to meet the requirements of the project.
Answer: C
A. prepare a unique contract
B. tailor an old contract
C. use standard clauses in contracts
D. avoid using contractual documents
E. mix standard and unique clauses
A purchase order can be considered a contract

with a vendor to provide a number of parts or
components that will be used in project
implementation. The purchase order becomes a
"contract" when it is ________.
A. issued by the project procurement section Answer: D
B. received by the vendor
C. filled by the vendor
D. accepted and signed by the vendor
E. completed through delivery of the products by
the vendor
The marketplace often dictates the price of

products and services through competitive or non-
competitive supply situations, which will vary from
many suppliers to one supplier. However,
________ is not a market condition.
Answer: A
A. mixed competition
B. pure competition
C. monopolistic competition
D. oligopoly
E. monopoly
The contracting process for the negotiation and

legal execution is divided into pre-award, award,
and post-award phases and five cycles that
describe the activities under the phases. The first
cycle under the pre-award phase is the ________
cycle. Answer: B
A. requisition
B. requirement
C. solicitation
D. award
E. contractual
Project management, as an integration function,

has the need to either make or buy components of
the system. The decision to make or buy is based
on all the following but ________.
A. availability of people Answer: B
B. availability of funds
C. technology/know-how
D. availability of contractors/manufacturers
E. price
A contract is a stand-alone legal document and

must be individually managed to ensure the proper
performance. Many projects have several contracts
to be initiated and executed throughout the life of
the project. Therefore, it is best to have a
________ that anticipates and describes the types
Answer: D
of contracts required for the project.
A. responsibility matrix
B. listing of contracts
C. contracting manual
D. project contract management plan
E. project configuration management plan
Contracts for projects require revisions to meet the

project needs as those needs evolve. The correct
method of initiating a change to the contract is to
prepare a ________ for submission to the
customer (buyer).
Answer: D
A. change notice
B. new contract
C. change order
D. proposal
E. plan
Changes to a contract are approved and signed by

both the buyer and seller as the desired
performance requirements. These changes are
________.
A. separate contracts between the customer and
the project
Answer: C
B. stand-alone subcontracts to the prime contract
C. an integral part of the prime contract as an
amendment
D. secondary in legality to the prime contract
E. primary in legality and the prime contract
becomes secondary
The concept of warranty is based upon one party's

assurance that the product or service will meet
certain standards of quality, including ________.
A. function, performance, durability, and desirability
B. appearance, desirability, reliability, and
maintainability
Answer: D
C. desirability, reliability, durability, and
maintainability
D. reliability, maintainability, function, and
repairability
E. condition, reliability, description, and
function/performance
Warranties are given in two manners, either implied

or expressed. The implied warranty differs from the
expressed warranty in that the implied warranty
________.
A. is always given by a sales person
B. is always written at the time of sale Answer: D
C. gives specific descriptions of the product's
qualities
D. is not a recorded statement of the
characteristics of the product
A project manager may issue a "waiver" on items

received from a vendor because the items are less
than the purchase order specified. If the project
manager knowingly accepts faulty material, the
vendor is usually ________ any damages that the
material may cause. Answer: B
A. held responsible for
B. relieved of responsibility for
C. made to pay a percentage of
D. willing to repair/correct
E. not paid in the amount of
A contract may include a clause that imposes a

penalty on the project for late delivery of the
completed system. Although the contract specifies
a specific monetary penalty for delays, the key(s)
to the issue is/are ________.
A. whether the delays were necessary for safety
B. whether the delay could be anticipated by the Answer: C
project manager
C. who caused the delay (buyer or seller) and the
nature of the interruption
D. why the delay affected the delivery of the
system
E. all of the above
A contract is a promise to provide goods and/or

services to one party in return for something of
value from that party. To define the goods,
services, and something of value in a legal
document, the contract must be comprised of
________.
A. an explicit work and product description
B. a generic statement of the requirements
Answer: C
C. a basic contract, a statement of work, a
specification, and a list of documentation
requirements
D. statements of the requirements using language
that describes the physical characteristics and the
amount of money to be paid for the delivered
products
The selection of the type of contract is important

because of the cost risk involved. In most cases,
the buyer (owner) will attempt to transfer the risk to
the seller (project sponsor). The buyer, therefore,
will always attempt to award a(n) ________
contract to the seller. Answer: A
A. fixed price
B. cost-plus
C. time and materials
D. definitive
E. incentive fee
The buyer has not completely defined all the

requirements for the project but has enough
definition to start. The type of contract that will most
likely be awarded while additional requirements are
being finalized is the ________ contract.
Answer: B
A. letter
B. cost-plus
C. fixed price
D. variable price
E. temporary
Contracts may be written in any form that is

understandable and enforceable, and often project
personnel attempt to be "creative" in developing
the document. Given a choice, it is best to
________ to meet the requirements of the project.
Answer: C
A. prepare a unique contract
B. tailor an old contract
C. use standard clauses in contracts
D. avoid using contractual documents
E. mix standard and unique clauses
A purchase order can be considered a contract

with a vendor to provide a number of parts or
components that will be used in project
implementation. The purchase order becomes a
"contract" when it is ________.
A. issued by the project procurement section Answer: D
B. received by the vendor
C. filled by the vendor
D. accepted and signed by the vendor
E. completed through delivery of the products by
the vendor
The marketplace often dictates the price of

products and services through competitive or non-
competitive supply situations, which will vary from
many suppliers to one supplier. However,
________ is not a market condition.
Answer: A
A. mixed competition
B. pure competition
C. monopolistic competition
D. oligopoly
E. monopoly
The contracting process for the negotiation and

legal execution is divided into pre-award, award,
and post-award phases and five cycles that
describe the activities under the phases. The first
cycle under the pre-award phase is the ________
cycle. Answer: B
A. requisition
B. requirement
C. solicitation
D. award
E. contractual
Project management, as an integration function,

has the need to either make or buy components of
the system. The decision to make or buy is based
on all the following but ________.
A. availability of people Answer: B
B. availability of funds
C. technology/know-how
D. availability of contractors/manufacturers
E. price
A contract is a stand-alone legal document and

must be individually managed to ensure the proper
performance. Many projects have several contracts
to be initiated and executed throughout the life of
the project. Therefore, it is best to have a
________ that anticipates and describes the types
Answer: D
of contracts required for the project.
A. responsibility matrix
B. listing of contracts
C. contracting manual
D. project contract management plan
E. project configuration management plan
Contracts for projects require revisions to meet the

project needs as those needs evolve. The correct
method of initiating a change to the contract is to
prepare a ________ for submission to the
customer (buyer).
Answer: D
A. change notice
B. new contract
C. change order
D. proposal
E. plan
Changes to a contract are approved and signed by

both the buyer and seller as the desired
performance requirements. These changes are
________.
A. separate contracts between the customer and
the project
Answer: C
B. stand-alone subcontracts to the prime contract
C. an integral part of the prime contract as an
amendment
D. secondary in legality to the prime contract
E. primary in legality and the prime contract
becomes secondary
The concept of warranty is based upon one party's

assurance that the product or service will meet
certain standards of quality, including ________.
A. function, performance, durability, and desirability
B. appearance, desirability, reliability, and
maintainability
Answer: D
C. desirability, reliability, durability, and
maintainability
D. reliability, maintainability, function, and
repairability
E. condition, reliability, description, and
function/performance
Warranties are given in two manners, either implied Answer: D

or expressed. The implied warranty differs from the
expressed warranty in that the implied warranty
________.
A. is always given by a sales person
B. is always written at the time of sale
C. gives specific descriptions of the product's
qualities
D. is not a recorded statement of the
characteristics of the product
A project manager may issue a "waiver" on items

received from a vendor because the items are less
than the purchase order specified. If the project
manager knowingly accepts faulty material, the
vendor is usually ________ any damages that the
material may cause. Answer: B
A. held responsible for
B. relieved of responsibility for
C. made to pay a percentage of
D. willing to repair/correct
E. not paid in the amount of
A contract may include a clause that imposes a

penalty on the project for late delivery of the
completed system. Although the contract specifies
a specific monetary penalty for delays, the key(s)
to the issue is/are ________.
A. whether the delays were necessary for safety
B. whether the delay could be anticipated by the Answer: C
project manager
C. who caused the delay (buyer or seller) and the
nature of the interruption
D. why the delay affected the delivery of the
system
E. all of the above
Performance bonds are required by some

contracts to ensure the project is completed and
the system functions as specified. A performance
bond should never be for less than ________
percent of the contract price.
Answer: D
A. 25
B. 50
C. 75
D. 100
Payment bonds are often required by the contract

and require specific actions under the stated
conditions. Payment bonds are specifically
designed to ensure payment of ________ by the
prime contractor.
Answer: D
A. insurance premiums
B. weekly payrolls
C. incremental earned value charges
D. subcontractors, laborers, and materials
E. damages for accidents caused
. Some contracts are not completed because the

contractor fails or refuses to complete the
contractual conditions. This situation is called a
________ for which damages can be assigned.
A. breech Answer: A
B. stop-work
C. flawed contract
D. contract in situ
The time of delivery for a contract is often specified

to ensure that both parties, the buyer and seller,
understand the need for the product, service, or
system on or before that date. When a time is not
specified in a contract, it is assumed that
performance must be completed ________.
A. at the same pace as other work Answer: E
B. sooner than contracts of a lesser dollar value
C. in the order in which the work (contract) was
accepted
D. as soon as possible, but without causing the
seller any additional expense
E. within a reasonable time
The project manager is responsible for all the

activities within a project and interfaces with
external functions, all of which consume his/her
time. Therefore, when a contract administrator is
assigned to the project, the project manager
________ the contract.
Answer: C
A. does not need to manage
B. can transfer all responsibility to the contract
administrator for matters related to
C. must still manage all major aspects of
D. must know only the general contents of
E. is not concerned with the management of
The final step on a project is the close-out phase

where all activities are to be terminated in a
business-like fashion. From a contractual point of
view, the prime consideration is to determine
________.
A. the profit made on this project
B. who must be notified that the contract is
completed Answer: C
C. the degree to which the project met the
provisions of the contract
D. what reports are required to terminate the
contract
E. how many changes were made in the course of
the project and whether all the changes are
accounted for
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The cost estimate with the most precise estimate

The cost estimate that has a range for error of

There are usually two types of reserves in a

Feasibility studies are evaluations of both the

Project financing can be extremely complex and

Life cycle costing is a concept whereby all costs for

The integration of cost and schedule to provide

The pricing of a project can be extremely complex

In estimating the cost of work, the best source of

Setting up a cost control system requires matching Answer: E

Cost overruns on a project have major impacts on

Suppose the contingency allowance established to

Suppose a contract has been in force for six

In the earned values system, the focus is on "cost

Indices can provide an indication of the status of a

Suppose that in the earned value system, the

Projects have direct and indirect costs that the

A project is being advertised to solicit bidders. The

The cost of money and cash flow can adversely

Project financial audits are used to determine the

A project audit is often a three-step process using

The budget for a project is the baseline from which

In the earned value system for determining project

Because of the investment or risk associated with a

Estimating costs for a project is difficult because of

The degree of uncertainty (lack of information) in a

The most accurate estimates (and the most

The ________ identifies the project elements that

The EAC is a forecasting technique based on past

The best way to manage the costs of change

Materials management is crucial to the success of

. Project financing is critical to large projects where Answer: E

The financing plan for a project should detail the

Investors are often used to obtain the necessary

Which is not an element of procurement

The purchasing cycle consists of all the following

The cost of corrective action taken by the

__________ is a narrative description of the work

By which means is a contractor able to control

_________ is a written order directing the

_________ is a request for interim stoppage of

_________ defines when the work is ready for or is

The process that may be used by an unsuccessful

The __________ specification describes, defines

The Bid Evaluation process is characterized by all

Which is not a consideration in a make or buy

There are four methods of government

A purchasing operation does not contain this

__________ is a register of suppliers invited to

__________ is a formal invitation to submit a price

Which contract type should be used by the owner

Cost Reimbursable contracts are equivalent to

Fixed price and incentive type contracts place

__________ is based on information gathered and