L3M3 Contract Administration Questions and Answers

Explanation

There is no obligation to buy under a framework arrangement; and a framework can be used for consultancy services.

Explanation

When a company's goals, resources, plans are aligned we should hope for better performance. And when the employee's values are also aligned, it just gets better.

Explanation

Indemnity.

As in 'an indemnity clause'.

'The supplier hereby indemnifies the buyer against / in the event of...'

Explanation

This is true. Profit is what is left over after you've covered all your costs. In simple terms.

Explanation

Supplier liquidations are to be expected; workers' strikes likewise.

Cargo ships do sink, and your course creator has had cargo in at least two ships which have sunk on the high seas, one of them in The English Channel.

A global pandemic (Covid-19) was highly unlikely (2019), but arrived with devastating conse-quences for commerce and people. Low likelihood, huge impact.

Just because it seems unlikely doesn't mean it's not going to happen.

If you're seriously interested on the effect of apparently chance happenings in our lives, read Nassim Nicholas Taleb - you'll either love him or hate him.

Explanation

Early supplier engagement - one of the assessment criteria for this course (3.1)

Explanation

2011 is the correct answer.

You may wish to search for the Guiding Principles to familiarise yourself a little.

Explanation

Comparison of prices across different suppliers would be called 'price analysis'; drilling down into costs of making or doing something would be called 'cost analysis'.

Explanation

The Executive Summary summarises the situation for busy executives to save them working all the way through the detail.

The summary needs to be very well written, accurately reflective of the entire document, and in-clude the key points needed to make a balanced decision.

The executive summary should be written last of all the sections, and is often the only part of a document which will be read.

Explanation

Weaknesses.

One might use a SWOT analysis when appraising potential suppliers for a significant purchase.

Explanation

The calculation which needs to be done is one hundred thousand (dollars) divided by the contribu-tion per bottle. The contribution per bottle is one dollar minus the variable cost - 25 cents. Thus the contribution is 75 cents. One hundred thousand divided by $0.75 = 133,333. Note the answer is in units - in response to the QUESTION NO: of how many bottles / units must be sold to break even.

For people who feel they have difficulty with calculations, just look at the possible answers. If the contribution is a bit less than a dollar, and the fixed costs are 100,000, we would expect the answer to be a number a little over 100,000 - one of the answers fits the bill, and this is the correct answer. So the QUESTION NO: may look complicated or difficult, but if you stay calm and think it through, it's not that difficult.

Explanation

Both penetration pricing and promotional pricing begin with the market price. Marginal pricing and rate of return pricing both look at the costs of doing something, and base their calculations on cost. These last two are therefore cost-based approaches to pricing.

Explanation

Win-win negotiation is not a 'zero-sum game': the sum of the value achieved is greater than zero - fresh value is created. It is a 'positive sum game'.

Explanation

1948 is the correct answer: the UN issued the UDHR in 1948, three years after the end of World War 2.

More than 70 years later, we know that in many supply chains, there are individuals' human rights being breached, for example, in modern slavery.

CIPS is strongly opposed to modern slavery, and we should do our utmost to eradicate such prac-tices within our supply chains.

Explanation

'Invitation to treat' is less than an offer ie it is not capable of being accepted in any contractual sense.

A common example given of an invitation to treat are goods on display in a shop window.

Explanation

Rewarding poor performance is not to be encouraged.

The other three options shown are often capable of motivating suppliers.

Explanation

'Five-Why Analysis' or 'Why-Why Analysis' is an approach to trying to determine the cause of an event. It can be used to link to / in conjunction with an Ishikawa diagram. The principle is thatone repeatedly (as often as necessary, not necessarily limited to five) asks 'why?', and eventually an un-derlying reason will emerge, which if addressed effectively, will successfully resolve the problem. This is something which can often be observed naturally in small children. 'Why, Daddy?'. 'But why, Daddy?. Etc. (Or Mummy)

Explanation

Bidders compete against each other, reducing bid prices until one winner is found - this is the sub-mission of the lowest-priced bid (unless stated otherwise in the auction documentation).

Explanation

These are 'model form' contracts. Industry standard templates eg NEC ('New Engineering Con-tract'); or FIDIC model form contracts. You will find some examples produced by CIPS on the CIPS website eg for IT procurements.

Explanation

The answer is an Ishikawa Diagram.

Can be used in addressing quality problems, problems of under-performance, etc.

The other Japanese-sounding names shown as possible answers are spurious - two are novelists, and Fukushima was a serious environmental radioactive leak at a nuclear power station on the coast of Japan.

Explanation

Non-disclosure agreement, also known as a confidentiality agreement.

Explanation

Breakeven point. The firm breaks even: covers all of its fixed costs. At this point the firm has made neither a profit nor a loss, and hopefully is about to enter profitability.

Explanation

The business case will justify the expenditure.

Of the other answers offered, the only one which needs explanation presumably is 'cost analysis'. This needs to be distinguished from 'price analysis'.

Explanation

The best quotation is selected, which would meet the specification as well as meeting the other re-quired criteria; and in order to progress things round the procurement cycle, a purchase order would be issued.