Document Types and vendor contracts

Question 1

Without this, costs can increase dramatically for time and materials contracts.

Answer 1

NTE clause.

Question 2

• Written by buyer
• Tells vendor what exactly what goods and services you wish to buy.

Answer 2

SOW

Question 3

What is an activity list, and what rule should it follow?

Answer 3

An activity list describes the activities required to complete each work package on the WBS.

Activities should follow the 8/80 Rule: an activity should not be decomposed to less than 8 hours and should not take longer than 80 hours to complete.

Project managers should decompose the work to map to the ideal 8-to-80 hours window to avoid Parkinson’s law.

Question 4

What is management reserve and what two documents are associated with it?

Answer 4

Management reserve is 10 to 15 percent of the project time.
It is appended to the project schedule and considered part of the network diagram. As tasks overruns occur, the extra time is subtracted from the management reserve.

Question 5

What is the purpose of a project charter?

Answer 5

*It authorizes the project to begin

*Specifies the objectives and vision of the project.

*The charter is shared with the company as a whole,

Question 6

What is the WBS?

Answer 6

• A decomposition of the work needed to complete a project
• Made up of work packages which in turn are made up of activity lists
• Tasks are not recorded on the WBS, but they are listed on the project schedule.

Question 7

What is a Balanced Score Card?

Answer 7

Strategic management tool used to measure the activities and processes a business uses to meet its strategic goals.
It’s a way to determine whether the performance of the organization is measuring up to its goals.
The balanced score card measures elements such as financial goals, business processes, innovation, the customer experience, and customer satisfaction.
The balanced score card methodology focuses on strategic areas of the business and monitors a small number of important data elements.
Balanced score card measures are usually communicated throughout the organization and are tied to individual performance reviews.

Question 8

KPI vs KPP?

Answer 8

Key Performance Indicator :
• Must be numerically quantifiable.
• Communicated to the project team and stakeholders.
• Any value that shows if the project is reaching intended goals.

Key performance parameters :
• The minimum acceptable performance levels for a system.
• KPPs are used primarily for military systems and equipment.
• Used for setting target goals.

Question 9

What is EVM?

Answer 9

A performance measurement technique that compares what your project has produced to what you’ve spent by monitoring the planned value, earned value, and actual costs expended to produce the work of the project.

The primary functions of EVM analysis techniques are to determine and document the cause of the variance, to determine the impact of the variance, and to determine whether a corrective action should be implemented as a result.
EVM looks at schedule, cost, and scope project measurements together and compares them to the actual work completed to date. EVM is usually performed on the work packages or other WBS components. To perform the EVM calculations, you need to first gather these three measurements: planned value, actual cost, and earned value.

Question 10

Which project tool can identify all of the roles in a project and the associated responsibilities of the project work?

Answer 10

A roles and responsibilities matrix lists all of the roles needed in the project and then corresponds with the activities within the project.

The intersection of a role and a responsibility designate what actions are required by the role. Typical actions include participate, sign-off, control, and test.

The resource assignment matrix and resource pool description are useful tools, but they don’t define the roles and responsibilities in the project.

Question 11

Which contract type would you choose if you wanted to offer an incentive for the vendor to complete their project work ahead of schedule while minimizing costs?

Answer 11

The best choice for this scenario is a fixed-price incentive fee contract.

This contract type has a fixed cost for the project work, but allows for incentives to finish the project work early.

Question 12

What is a fixed-price contract?

Answer 12

The fixed-price contract is a contract that defines a flat fee for completing the project work

Question 13

What is the benefit and downside of a cost-plus incentive fee?

Answer 13

A cost-plus incentive fee can offer a bonus for completing the work early, but you’re responsible for all of the costs incurred in the work, such as wasted materials.

Question 14

What is usually considered the riskiest and worst contract for the buyer and why?

Answer 14

A cost-plus percentage of costs contract, it doesn’t offer an incentive to complete the work early.

Question 15

What is PV?

Answer 15

The planned value (PV) is the cost of work that has been authorized and budgeted for a specific schedule activity or WBS component (such as a work package) during a given time period or phase.

Question 16

What is AC?

Answer 16

Actual Cost Actual cost (AC) is the actual cost of completing the work component in a given time period.

Actual costs might include direct and indirect costs but must correspond to what was budgeted for the activity.

For example, if the budgeted amount did not include indirect costs, do not include them here.

Question 17

What is EV?

Answer 17

Earned value (EV) is the value of the work completed to date as it compares to the budgeted amount (PV) for that period.

EV is typically expressed as a percentage of the work completed compared to the budget.

EV cannot exceed the total project budget, but it may exceed the PV for a work component or period of performance if the team is ahead of schedule because they completed work planned for a future period during the measurement period.

For example, if our budgeted amount is $1,000 and you have completed 30 percent of the work so far, your EV is $300.

Question 18

Scope statement
Project schedule
Communication plan
Resource plan
Procurement plan
Project budget
Quality management plan
Risk management plan
Are all components of what?

Answer 18

PMP

Question 19

What is the PMP?

Answer 19

The final, approved documented plan (root document containing other documents) that you’ll use throughout the remainder of the project to measure project progress and, ultimately, project success.

Question 20

Outlines the desires and actions of both parties before entering into a contract or other mutually binding agreement.
It’s a negotiable document and can be thought of as an agreement to agree on the terms and conditions.

Answer 20

Letter of intent

Question 21

An agreement that outlines specific performance criteria or expectations between two parties.

Used when a legal agreement can’t be created between the parties such as between two government organizations.

Not legally enforceable.

Answer 21

MOU

Question 22

Defines service performance expectations among two or more parties.

Answer 22

SLA

Question 23

Written by the buyer
Describes the specifications, quantities, and price of the goods or services being purchased.
Once accepted by the seller, it is a legally binding document.

Answer 23

PO
(purchase order)

Question 24

Guarantees that a product will perform as stated for a specified period of time. This document expires.

Answer 24

Warranty

Question 25

What is a Nondisclosure Agreement?

Answer 25

Nondisclosure agreements (NDA) are used when organizations engage the services of an outside entity and want to assure that sensitive or trade secret information is not shared outside the organization. An NDA assures that what’s discussed, discovered, or developed is kept within the organization.

Question 26

A contract is a legal, mutually binding document that describes the goods or services that will be provided, the costs of the goods or services, and any penalties for noncompliance.
Most contracts fall into one of the following 3 categories:

Answer 26

fixed-price contracts

cost-reimbursable contracts

time and materials contract

Question 27

What is a Fixed-Price Contract, who benefits the most, and what is the benefit?

Answer 27

A fixed-price contract states a fixed fee or price for the goods or services provided. This type of contract works best when the statement of work is clear and concise.

This type of contract is the riskiest for the seller: If problems arise during the course of the project the seller bears the burden of paying the additional expenses or paying the penalty for not delivering the goods on time.

Question 28

What is a Cost-Reimbursable Contract, who benefits the most, and what is the benefit?

Answer 28

A cost-reimbursable contract reimburses the seller for all the allowable costs associated with producing the goods or services outlined in the contract.

This type of contract is riskiest for the buyer because the total costs are unknown until the project is completed.

The advantage in this type of contract is that the buyer can easily change scope.

Question 29

What is a Time and Materials Contract, who benefits the most, and what is the benefit?

Answer 29

A time and materials contract is a cross between fixed-price and cost-reimbursable contracts. The buyer and the seller agree on a unit rate, such as the hourly rate for a programmer, but the total cost is unknown and will depend on the amount of time spent to produce the product.

This type of contract is often used when contract workers are brought on to perform specific tasks.

Question 30

Difference between Warranty, SLA, MOU, and PO?

Answer 30

Warranty is for product performance while SLA is for service performance and written by the seller.

PO is written by the buyer and details what the buyer intends to purchase.

MOU is a nonbinding agreement of expectations, usually done between government agencies.

Question 31

What is the difference EVM and balance score card?

Answer 31

The primary functions of EVM analysis techniques are to determine and document the cause and impact of variance, and whether a corrective action should be implemented.

A balance score card is a way to determine whether the performance of the organization is measuring up to its strategic goals by monitoring a small number of important data elements.
Balanced score card measures are usually communicated throughout the organization and are tied to individual performance reviews.