L3M3 Contract Administration Questions and Answers

Explanation

It's a retrospective rebate, and can be a highly significant way of (often hidden) discounting for many businesses - sometimes a 'life-saver'. Something to think about in an open book costing situa-tion - are there rebates to suppliers which are 'forgotten' in discussions?

Explanation

All of those shown are barriers to trade.

Quotas place a numerical limit on what may be imported; embargoes ban certain goods (for exam-ple, no goods originating in Israel may be imported); duties discourage imports; subsidies of local industries undercut foreign competitors (have a search for stories on large airlines being subsidised in various countries, commonly for reasons of prestige); complex customs procedures make import-ing foreign goods difficult (great examples involving France); exchange controls limit the amount of a currency which can be converted into another currency, limiting payment possibilities for imports. Etc.

Of course, most countries using any of these mechanisms repeatedly eulogise on the benefits of free trade....

Explanation

What is the likelihood of an event occurring?

What will be the impact of that event occurring?

This is the basis of almost all modern risk management.

CIPS has good content at Advanced Diploma level on the subject of Risk Management, and I have prepared tests for the two subjects in this area. :)

Sadgrove's book on business risk, in my view, is excellent; and NN Taleb's work (eg 'Antifragile') on risk, although difficult is, in my opinion, fascinating.

Explanation

Title. In order to be sure you own something, you have to make sure you have acquired 'good title'.

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

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

The benefit of in-depth interviews is that one may unearth deeper thoughts, ideas or concerns than through a larger quantitative exercise. Qualitative exercises lend themselves to more freedom to ex-plore interesting issues.

Explanation

MEAT: Most economically advantageous tender

An approach to tendering which takes account not only of the selling price, but also other relevant factors.

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

Since performance specifications are all to do with outputs, 'input-driven' leaps out as being the cor-rect answer here.

Explanation

Cost of setting up the tender which is not a cost of the item itself.

All the other costs are related to the item itself.

Explanation

Selling price minus variable costs = contribution., or more accurately 'contribution towards fixed costs and making a profit'. I find this longer term for 'fixed costs' to be quite helpful in clarifying exactly what we are talking about here.

Explanation

Political.

It's a close-run thing with economic, but the reference to 'stability of governing regimes' clinches if for 'political'.

Explanation

Socio-cultural. The only 'S' in the framework.

Explanation

The three-year contract is a term contract.

The other requirements shown are of a 'one-off' nature, and could therefore be called 'spot' purchases.

Explanation

If it's included with the goods, it's likely to be a delivery note; and the buyer's equivalent would be a goods received note.

Explanation

Trading blocs eg EU, EFTA, ASEAN aim to free up trade within the bloc; the other answers of-fered will negatively affect free trade.

Explanation

Probing.

Qualitative research enables a researcher to develop themes of interest, in more depth than simpler quantitative research.

Explanation

This is about risk, and the answer is 'treat'.

Risk management strategies can be classified into 'the 4 T's', which you need to know for your ex-am.

Treating the risk is essentially seeking to minimise the likelihood or impact of the risk. An example might be to carefully monitor key suppliers' ongoing financial performance to minimise the likeli-hood of their going into liquidation during the course of a contract with us. Etc.

Explanation

2011 is the correct answer.

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

Explanation

EFTA.

The European Free Trade Agreement countries.

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

'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 that one 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

The answer is fixed costs. Their counterpart are variable costs, which do vary as business activity increases or decreases.

Direct and indirect costs are a different method of categorizing costs within an organisation.