CCC Contract Management & Procurement 1 — Questions and Answers
Question 1: Which contract type places the greatest financial risk on the contractor?
- Firm Fixed Price (FFP) (Correct answer)
- Cost Plus Fixed Fee (CPFF)
- Time and Materials (T&M)
- Cost Plus Incentive Fee (CPIF)
Correct answer: Firm Fixed Price (FFP)
In a Firm Fixed Price contract, the contractor bears all cost risk because the price is set regardless of actual costs incurred.
Question 2: A cost controller notices a vendor's invoice includes charges outside the agreed contract scope. This is best addressed through which process?
- Contract change order review (Correct answer)
- Variance at completion analysis
- Earned value baselining
- Schedule compression
Correct answer: Contract change order review
Out-of-scope charges require a formal change order review to determine if the scope change was authorized and properly priced.
Question 3: What is the primary purpose of a procurement audit in cost control?
- To verify that procurement processes were followed and costs are legitimate (Correct answer)
- To renegotiate vendor contracts after award
- To establish baseline budgets for future projects
- To eliminate underperforming vendors from the approved list
Correct answer: To verify that procurement processes were followed and costs are legitimate
A procurement audit verifies compliance with procurement procedures and confirms that expenditures are justified and properly authorized.
Question 4: Which procurement method is most appropriate when the project scope is not fully defined?
- Request for Proposal (RFP) (Correct answer)
- Invitation for Bid (IFB)
- Purchase Order (PO)
- Blanket Order Agreement
Correct answer: Request for Proposal (RFP)
An RFP is used when scope is uncertain, allowing vendors to propose both technical solutions and pricing, giving flexibility to negotiate.
Question 5: In contract cost management, 'should-cost' analysis is used to:
- Estimate what a product or service reasonably ought to cost based on labor, materials, and overhead (Correct answer)
- Calculate the actual cost of work performed
- Determine the earned value of completed deliverables
- Forecast the final contract price at completion
Correct answer: Estimate what a product or service reasonably ought to cost based on labor, materials, and overhead
Should-cost analysis independently estimates what a product should cost using cost engineering principles, helping buyers negotiate fair prices.
Question 6: A contract includes a ceiling price and a target cost with shared savings above target. This describes which contract type?
- Cost Plus Incentive Fee (CPIF) (Correct answer)
- Firm Fixed Price (FFP)
- Cost Plus Fixed Fee (CPFF)
- Time and Materials (T&M)
Correct answer: Cost Plus Incentive Fee (CPIF)
CPIF contracts set a target cost and fee, with a ceiling price and a sharing ratio where both parties benefit when actual costs are below target.
Question 7: When evaluating contract bids, a cost controller should use which document to verify that all bid submissions are comparable?
- Contract Data Requirements List (CDRL)
- Work Breakdown Structure (WBS)
- Bill of Materials (BOM)
- Basis of Estimate (BOE) (Correct answer)
Correct answer: Basis of Estimate (BOE)
A Basis of Estimate documents the assumptions, methods, and data sources behind each bid, enabling apples-to-apples comparisons between proposals.
CCC Contract Management & Procurement 1
Which contract type places the greatest financial risk on the contractor?