Free Practice Questions for the CIPS Level 6 Professional Diploma in Procurement and Supply L6M5 Exam (2026 Updated)

The correct statements are that a set figure is decided in advance, it must be a genuine estimate of the loss, and liquidated damages can be claimed when a warranty is breached.

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The NEC contract is known for its flexibility and collaborative approach, matching the client’s requirements.

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The Person-Organization Fit model helps in hiring employees whose values align with the organization (p.194).

Option A relates to performance management , not hiring.

Option C addresses diversity policies, not cultural fit .

Option D focuses on supplier relations, not internal recruitment . [P.194]

Open-Book Costing (p.2.1) ensures visibility into supplier costs and margins , which matches the CEO’s request.

Cost Reimbursable (B) covers unknown costs, but does not provide transparency .

Bottom-Up Pricing (C) estimates project costs from smaller parts .

Activity-Based Costing (D) assigns costs per activity, but does not guarantee supplier transparency . [P.2.1]

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Project 1 - Full Turnkey & Top-down Pricing

The project is a full turnkey contract because XYZ is responsible for both design and construction , and ownership is transferred to the client upon completion.

The pricing mechanism is top-down , as it is determined based on past experience of similar projects.

Project 2 - Design and Operate & Rolling Pricing

This is a design and operate contract since XYZ is managing the facility for 6 years after construction.

The rolling pricing mechanism applies because the budget changes continuously over the years due to industry volatility.

Project 3 - Management Contracting & Zero Pricing

Management contracting applies because XYZ was involved early but does not carry design risk.

The pricing mechanism is zero , meaning the budget resets at the beginning of each new accounting period.

Project 4 - Partial Turnkey & Activity-Based Pricing

This is a partial turnkey contract because XYZ is responsible for only certain aspects of the design and build, while another contractor is also involved.

Activity-based pricing is used since XYZ is paid upon milestone completion .

Project 5 - Design Build Operate and Ownership & Bottom-up Pricing

This project follows a Design Build Operate and Ownership (DBOO) model because XYZ is responsible for construction and will operate the toll bridge for 6 years before transferring full control.

The pricing is bottom-up , as it includes raw materials, labor costs, and a profit margin .

The correct answers are 1, 3, and 4 (p.8). Option 2 is incorrect as it describes a DBO (Design-Build-Operate) contract rather than an EPC contract. Option 5 is incorrect because it describes a PPP (Public-Private Partnership) contract , not an EPC contract. [P.8]

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Project 1 - NEC & Target Costing

NEC (New Engineering Contract) is used in public sector projects because of its flexibility and collaborative nature.

The Target Costing pricing mechanism is used, as cost savings are shared between the client and the contractor .

Project 2 - FIDIC & Fixed Lump Sum

FIDIC (Fédération Internationale des Ingénieurs-Conseils) is known as the " Rainbow Suite " , which is rigid and does not allow changes.

The Fixed Lump Sum pricing mechanism applies since the price was set at contract signing .

Project 3 - Joint Venture Contract & Bill of Quantities

Joint Venture Contracts are commonly used in international construction projects , such as wind turbine projects.

Bill of Quantities pricing applies since the cost is calculated per unit (each wind turbine) .

Project 4 - JCT & Cost Reimbursable

JCT (Joint Contracts Tribunal) is the most popular contract type in the construction industry , and it includes a Contract Administrator .

The Cost Reimbursable pricing mechanism is used because costs are shared plus a profit margin .

Project 5 - IMechE & Activity-Based Pricing

IMechE (Institution of Mechanical Engineers) is used for ICT and engineering-related projects .

Activity-Based Pricing applies because payments are milestone-based .

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Project 1 - Parametric & Positional Power

Parametric estimation uses an algorithm based on existing data to estimate project costs.

Positional power applies because the leader is the founder of the organisation.

Project 2 - Analogous & Expert Power

Analogous estimation uses historical project data to estimate costs, aligning with the Head of R & D using past projects .

Expert power applies since the project lead is a PhD-qualified Data Scientist .

Project 3 - Bottom-up & Positional Power

Bottom-up estimation involves creating a Bill of Materials and summing up individual costs , which matches this project.

Positional power applies because the project leader is a key stakeholder .

Project 4 - 3-Point Estimate & Negative Power

3-Point Estimation calculates the best, worst, and most likely cost scenarios , matching the given description.

Negative power applies because the leader has the authority to cancel the project at any time .

Project 5 - Expert Judgement & Personal Power

Expert Judgement applies because the leader used his own research to determine the budget.

Personal power applies because the project leader is well-liked and selected a team he is comfortable with .

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Company 1 - Power Culture & Control System

The founder has centralised power, meaning this is a Power Culture .

The Control System is strong due to the strict financial management and reward structure.

Company 2 - Person Culture & Symbols

Employees work independently and focus on their own clients, indicating a Person Culture .

The Symbols aspect comes from the strong corporate branding and identity .

Company 3 - Role Culture & Organisation Structure

A Role Culture is present due to the strict hierarchy and bureaucracy.

The Organisation Structure influences this, as it determines salary and responsibilities.

Company 4 - Task Culture & Ritual

The focus on small teams and dynamic work assignments suggests a Task Culture .

The weekly meetings reflect an important ritual in the company’s culture.

Company 5 - Power Culture & Stories

Power is concentrated in senior leadership, making this a Power Culture .

The company culture is reinforced through Stories of past successes.