Donate to the Development Fund. Procurement Management
Sample Questions
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Sample Questions

1. A unilateral contract under which the seller is paid a preset amount per unit of service is called:
  1. A cost reimbursable contract
  2. A lump sum contract
  3. A unit price contract
  4. A fixed price contract
  5. b or d

2. Which of the following is considered during the Procurement Planning Process?
  1. Whether to procure
  2. How to procure and how much to procure
  3. What and when to procure
  4. b and c
  5. all of the above

3. From a buyer's standpoint, which of the following is true?
  1. Procurement planning should include consideration of potential subcontracts
  2. Procurement planning does not include consideration of potential subcontracts since this is the duty of the contractor.
  3. Subcontractors are first considered during the Solicitation Process
  4. none of the above
4. Which of the following processes involves obtaining information (bids and proposals) from prospective sellers?
  1. Procurement Planning
  2. Source Selection
  3. Contract Administration
  4. Solicitation
  5. Solicitation Planning
5. Which of the following is true about procurement documents?
  1. Procurement documents are used to solicit proposals from prospective sellers.
  2. Invitation for Bid and Request for Proposal are two examples of procurement documents
  3. Procurement documents should be structured to facilitate accurate and complete responses from prospective sellers
  4. b and c
  5. all of the above
6. Which of the following is a method for quantifying qualitative data in order to minimize the effect of personal prejudice on source selection?
  1. Weighting system
  2. Screening system
  3. Selecting system
  4. none of the above
  5. all of the above
7. Which of the following is true concerning evaluation criteria?
  1. Can often be found in procurement documents
  2. Can be objective or subjective
  3. Used to rate or score proposals
  4. May be limited to purchase price if procurement item is readily available from number of sources
  5. all of the above
8. Which of the following are inputs to the Source Selection Process?
  1. Evaluation criteria
  2. Organizational policies
  3. Procurement documents
  4. a and b
  5. all of the above
9. A significant difference between independent estimates and proposed pricing could mean that:
  1. The independent estimates are most likely incorrect and the proposed pricing correct
  2. The SOW was not adequate
  3. The prospective seller either misunderstood or failed to respond fully to the SOW
  4. b or c
  5. a or c
10. Which of the following are examples of indirect costs?
  1. Salaries of corporate executives
  2. Salaries of full-time project staff
  3. Overhead costs
  4. a and b
  5. a and c
11. Which of the following contract types places the greatest risk on the seller?
  1. Cost-plus-fixed-fee contract
  2. Cost plus-incentive-fee contract
  3. Fixed-price-incentive contract
  4. Firm-fixed-price contract
12. In which of the following contract types is the seller's profit limited?
  1. Cost-plus-percentage-cost contract
  2. Cost-plus-fixed-fee contract
  3. Fixed-price-plus-incentive
  4. b and c
  5. none of the above
13. A cost-plus-percentage-cost (CPPC) contract has an estimated cost of $120,000 with an agreed profit of 10% of the costs. The actual cost of the project is $130,000. What is the total reimbursement to the seller?
  1. $143,000
  2. $142,000
  3. $140,000
  4. $132,000
14. A cost-plus-incentive-fee (CPIF) contract has an estimated cost of $150,000 with a predetermined fee of $15,000 and a share ratio of 80/20. The actual costs of the project is $130,000. How much profit does the seller make?
  1. $31,000
  2. $19,000
  3. $15,000
  4. none of the above
15. A fixed-price-plus-incentive-fee (FPI) contract has a target cost of $130,000, a target profit of $15,000, a target price of $145,000, a ceiling price of $160,000, and a share ratio of 80/20. The actual cost of the project was $150,000. How much profit does the seller make?
  1. $10,000
  2. $15,000
  3. $0
  4. $5,000
16. Under what circumstances is it better for a contractor to subcontract?
  1. The subcontractor possesses special technical and engineering skills that the contractor does not have
  2. The work to be subcontracted represents almost all of the overall work effort
  3. The subcontractor can perform the work at a lower cost than the contractor
  4. all the above
  5. a and c
17. Which type of bilateral contract is used for high dollar, standard items?
  1. Purchase order
  2. Request for proposal (RFP)
  3. Invitation for bid (IFB)
  4. Request for quotation (RFQ)
  5. all of them are appropriate
18. Which of the following are characteristics of a purchase order?
  1. A bilateral contract used for low dollar items
  2. A unilateral contract used when routine, standard cost items are required
  3. A bilateral contract used for high dollar, standard items
  4. a and c
19. In which stage of the negotiation meeting are points of concession identified?
  1. probing
  2. closure
  3. agreement
  4. scratch bargaining
20. Which type of warranty is enacted if a service or product does not meet the level of quality specified in the contract?
  1. Implied warranty of merchantability
  2. Implied warranty of specified quality
  3. Express warranty
  4. none of the above
21. Which is not an element of procurement management?
  1. Purchasing
  2. Expediting
  3. Acquisition
  4. Marketing
  5. C and D

22. The purchasing cycle consists of all the following elements except?
  1. Defined need
  2. Transmit Need
  3. Inspection
  4. Price and Terms

23. The cost of corrective action taken by the purchaser and chargeable to the supplier under the terms of the contract is:
  1. Payment authorization
  2. Bid cost considerations
  3. Release payment
  4. Back charge

24. __________ is a narrative description of the work to be accomplished or resource to be supplied.
  1. Purchase order
  2. Level of effort work
  3. Scope of work
  4. Contract stipulation

25. By which means is a contractor able to control costs overruns due to changing requirements?
  1. Project data review
  2. Change order
  3. Change control
  4. Contract negotiations

26. __________ is a written order directing the contractor to make changes according to the provisions of the contract documents.
  1. Change order / purchase order amendment
  2. Contract order modifications
  3. Contractor claim
  4. Owner directive

27, __________ defines when the work is ready for or is being used for the purpose intended and is so certified.
  1. Final completion
  2. Substantial completion
  3. Final acceptance
  4. Mechanical completion

28. __________ is a request for interim stoppage of work due to non conformance, funding or technical considerations.
  1. Bid protest
  2. Stop work order
  3. Notice to proceed
  4. Supplier default notice

29. The process that may be used by an unsuccessful supplier to seek remedy for a non award of work is:
  1. Bid protest
  2. Stop work order
  3. Back charge
  4. Contract dispute

30. The __________ specification describes, defines or specifies the goods / services to be supplied.
  1. Performance
  2. Functional
  3. Technical
  4. Bid
  5. General Requirements

31. The Bid Evaluation process is characterized by all of the following activities except?
  1. Evaluation of suppliers financial resources
  2. Ability to comply with technical specifications
  3. Delivery schedule and cost factors
  4. Performance record
  5. Competitors method of sourcing

32. Which is not a consideration in a make or buy decision?
  1. Cost factors
  2. Sales volume
  3. Existence of sufficient administrative / technical personnel
  4. Political and social factors with the organization

33. There are four methods of government procurement. Which is not one of these methods?
  1. Assistance
  2. Sealed bidding
  3. Competitive proposals
  4. Acquisition
  5. Small purchases

34. A purchasing operation does not contain this classification of work?
  1. Management
  2. Buying
  3. Follow-up and expedition
  4. Marketing
  5. Clerical

35. __________ is a register of suppliers invited to submit bids for goods / services as specified.
  1. Procurement invitation
  2. Bid list
  3. Resource identification
  4. Supplier's rankings

36. __________ is a formal invitation to submit a price for goods and / or services as specified.
  1. Request for quotation
  2. Bid response
  3. Intention to bid
  4. Invitation for bid
  5. Request for proposal

37. Which contract type should be used by the owner on a high risk project?
  1. Cost plus percentage of cost
  2. Cost plus incentive fee
  3. Lump sum
  4. Fixed price plus incentive fee
  5. C and D

38. Cost reimbursable contracts are equivalent to:
  1. Progress payment contracts
  2. Extra work order contracts
  3. Cost plus contracts
  4. Fixed price contracts

39. Fixed price and incentive type contracts place responsibility for performance and financial risks associated with delay or non-performance on the:
  1. Contractor
  2. Owner
  3. Lending institution
  4. Project manager

40. __________ is based on information gathered and analyzed about demand and supply. this forecast provides a prediction of short and long term prices and the underlying reasons for those trends.
  1. Sales forecast
  2. Consumer price index
  3. Production forecast
  4. Price forecast

41. The contract is signed at the end of the:
  1. Pre-award phase
  2. Award phase
  3. Post-award phase
  4. Solicitation
  5. Award cycle

42. Definitive contract terms are spelled out in the:
  1. Pre-award phase
  2. Award phase
  3. Post-award phase
  4. Purchasing phase
  5. Pre-award phase for fixed cost contracts, and award phase for cost plus contracts

43. A bilateral RFP is preferred to an invitation to bid when:
  1. Supplier and terms are specified
  2. The product or service is relatively low value and readily available
  3. The product or service has high value and is unique
  4. The product or service has high value, but is easy to obtain

44. PMI suggests which of the following behaviors as part of contract negotiations?
  1. Probing, scratching, and small bites
  2. Sniffing and smelling (olfactory)
  3. Touching and caressing (tactile)
  4. Mind-reading and extra-sensory perception
  5. None of the above

45. The bid package is developed in the:
  1. Requirements phase
  2. Requisition cycle
  3. Solicitation cycle
  4. Award cycle
  5. Award phase

46. The award phase includes the:
  1. Requirements, requisition, and award cycles
  2. Award and contractual cycles
  3. Requisition and solicitation cycles
  4. Solicitation cycle
  5. Cycles required for the contract

47. To relieve pressure on the project schedule, Richard decided to fast-track and hire a contractor to do part of the work. Which form of contract(s) should he consider?
  1. None. Fast-tracking is a very poor time to consider a contractor
  2. Fixed lump sum
  3. Cost plus incentive
  4. Cost plus percentage of cost
  5. C and D

48. Which is not a factor in choosing a contractor?
  1. Complexity of requirements
  2. Price competition
  3. Competency
  4. Capacity
  5. None of the above

49. Requirements and specifications are always changing in the systems integration business. Therefore, the best form of contract for this environment would be:
  1. The form of contract required to get the best contractor
  2. Fixed price
  3. Cost plus
  4. Overseas

50. In the area of contracting, there are two basic types of contracts that reflect how the total price is determined. The __________ contract has an objective of a pre-determined end price while the __________ contract has an objective of a target end price.
  1. Full value; Partial value
  2. Definitive; undefined
  3. Incentive fee; award fee
  4. Fixed price; Cost-plus
  5. End price; target price

51. A contract is a promise to provide goods and / or services to one party in return for something of value from that party. To define the goods, services, and something of value in a legal document, the contract must be comprised of __________:
  1. An explicit work and product description
  2. A generic statement of the requirements
  3. A basic contract, a statement of work, a specification, and a list of documentation requirements
  4. Statements of the requirements using language that describes the physical characteristics and the amount of money to be paid for the delivered products
  5. None of the above

52. The selection of the type of contract is important because of the cost risk involved. In most cases, the buyer (owner) will attempt to transfer the risk to the seller (project sponsor). The buyer, therefore, will always attempt to award a(n) __________ contract to the seller.
  1. Fixed price
  2. Cost-plus
  3. Time and materials
  4. Definitive
  5. Incentive fee

53. The buyer has not completely defined all the requirements for the project but has enough definition to start. The type of contract that will most likely be awarded while additional requirements are being finalized is the __________ contract.
  1. Letter
  2. Cost-plus
  3. Fixed price
  4. Variable price
  5. Temporary

54. Contracts may be written in any form that is understandable and enforceable, and often project personnel attempt to be "creative" in developing the document. Given a choice, it is best to __________ to meet the requirements of the project.
  1. Prepare a unique contract
  2. Tailor an old contract
  3. Use standard clauses in contracts
  4. Avoid using contractual documents
  5. Mix standard and unique clauses

55. A purchase order can be considered a contract with a vendor to provide a number of parts or components that will be used in project implementation. The purchase order becomes a "contract" when it is __________.
  1. Issued by the project procurement section
  2. Received by the vendor
  3. Filled by the vendor
  4. Accepted and signed by the vendor
  5. Completed through delivery of the products by the vendor

56. The marketplace data often dictates the price of products and services through competitive or noncompetitive supply situations, which will vary from many suppliers to one suppliers. However, __________ is not a market condition.
  1. Mixed competition
  2. Pure competition
  3. Monopolistic competition
  4. Oligopoly
  5. Monopoly

57. The contracting process for the negotiation and legal execution is divided into pre-award, award, and post-award phases and five cycles that describe the activities under the phases. the first cycle under the pre-award phase is the __________ cycle.
  1. Requisition
  2. Requirement
  3. Solicitation
  4. Award
  5. Contractual

58. Project management, as an integration function, has the need to either make or buy components of the system. The decision to make or buy is based on all the following but __________.
  1. Availability of people
  2. Availability of funds
  3. Technology / know-how
  4. Availability of contractors / manufactures
  5. Price

59. A contract is a stand-alone legal document and must be individually managed to ensure the proper performance. Many projects have several contracts to be initiated and executed throughout the life of the project. Therefore, it is best to have a __________ that anticipates and describes the types of contracts required for the project.
  1. Responsibility matrix
  2. Listing of contracts
  3. Contracting manual
  4. Project contract management plan
  5. Project configuration management plan

60. Contracts for projects require revisions to meet the project needs as those needs evolve. The correct method of initiating a change to the contract is to prepare a __________ for submission to the customer (buyer).
  1. Change notice
  2. New contract
  3. Change order
  4. Proposal
  5. Plan

61. Changes to a contract are approved and signed by both the buyer and seller as the desired performance requirements. These changes are __________.
  1. Separate contracts between the customer and the project
  2. Stand-alone subcontracts to the prime contract
  3. An integral part of the prime contract as an amendment
  4. Secondary in legality to the prime contract
  5. Primary in legality and the prime contract becomes secondary

62. The concept of warranty is based upon one party's assurance that the product or service will meet certain standards of quality, including __________.
  1. Function, performance, durability, and desirability
  2. Appearance, desirability, reliability, and maintainability
  3. Desirability, reliability, durability, and maintainability
  4. Reliability, maintainability, function, and reparability
  5. Condition, reliability, description, and function / performance

63. Warranties are given in two manners, either implied or expressed. The implied warranty differs from the expressed warranty in that the implied warranty __________.
  1. Is always given by a sales person
  2. Is always written at the time of sale
  3. Gives specific descriptions of the product's qualities
  4. Is not a recorded statement of the characteristics of the product
  5. None of the above

64. A project manager may issue a "waiver" on items received from a vendor because the items are less than the purchase order specified. If the project manager knowingly accepts faulty material, the vendor is usually __________ any damages that the material may cause.
  1. Held responsible for
  2. Relieved of responsibility for
  3. Made to pay a percentage of
  4. Willing to repair / correct
  5. Not paid in the amount of

65. A contract may include a clause that imposes a penalty on the project for late delivery of the completed system. Although the contract specifies a specific monetary penalty for delays, the key(s) to the issue is / are __________.
  1. Whether the delays were necessary for safety
  2. Whether the delay could be anticipated by the project manager
  3. Who caused the delay (buyer or seller) and the nature of the interruption
  4. Why the delay affected the delivery of the system
  5. All of the above

66. Performance bonds are required by some contracts to ensure the project is completed and the system functions as specified. A performance bond should never be less than __________ percent of the contract price.
  1. 25
  2. 50
  3. 75
  4. 100
  5. None of the above

67. Payment bonds are often required by the contract and require specific actions under the stated conditions. Payment bonds are specifically designed to ensure payment of __________ by the prime contractor.
  1. Insurance premiums
  2. Weekly payrolls
  3. Incremental earned value charges
  4. Subcontractors, laborers, and materials
  5. Damages for accidents caused

68. Some contracts are not completed because the contractor fails or refuses to complete the contractual conditions. This situation is called a __________ for which damages can be assigned.
  1. Breech
  2. Stop-work
  3. Flawed contract
  4. Contract in situ
  5. None of the above

69. The time of delivery for a contract is often specified to ensure that both parties, the buyer and seller, understand the need for the product, service, or system on or before that date. When a time is not specified in a contract, it is assumed that performance must be completed __________.
  1. At the same pace as other work
  2. Sooner than contracts of a lesser dollar value
  3. In the order in which the work (contract) was accepted
  4. As soon as possible, but without causing the seller any additional expense
  5. Within a reasonable time

70. The project manager is responsible for all the activities within a project and interfaces with external functions, all of which consume his time. Therefore, when a contract administrator is assigned to the project, the project manager __________ the contract.
  1. Does not need to manage
  2. Can transfer all responsibility to the contract administrator for matters related to
  3. Must still manage all major aspects of
  4. Must know only the general contents of
  5. Is not concerned with the management of

71. The final step on a project is the close-out phase where all activities are to be terminated in a business-like fashion. From a contractual point of view, the prime consideration is to determine __________.
  1. The profit made on this project
  2. Who must be notified that the contract is completed
  3. The degree to which the project met the provisions of the contract
  4. What reports are required to terminate the contract
  5. How many changes were made in the course of the project and whether all the changes are accounted for

72. In initiating a contract, the primary focus is on obtaining a product or service without regard for the termination. The contract for goods or services should have a termination provision (after successful completion) that __________.

73. The language of contracts does not preclude misunderstanding and situations that adversely affect project completion. Therefore, a contract should always have a method of removing the obstacles to progress. One method is to form a __________ committee to address matters that the project manager and the customer's representative cannot handle.
  1. Top management
  2. Disputes resolution
  3. Problem processing
  4. Steering
  5. None of the above

74. It is important to review the performance of subcontractors during post-contract evaluations. This review establishes the baseline for __________.
  1. Payment of current bills and incentive bonuses
  2. Demonstrated performance and future potential
  3. Future pricing and costs
  4. Work measurement and work standards
  5. None of the above

75. Project contracts can be separated into two broad categories: cost reimbursable and fixed price. In a fixed price contract the owner (buyer) must be specific in __________ and minimize __________.
  1. How the work is to be performed; who will perform the work
  2. What procedures are to be used; how the work will be performed
  3. When the work is to be performed; what performance standards will be used
  4. What the contractor (seller) is to provide; how the work is to be performed
  5. Who may be used to perform the work; the procedures to be used

76. In a cost-reimbursable contract, the owner (buyer) accepts most of the __________. therefore, the owner has more input as to how the work is accomplished as compared to a fixed price contract.
  1. Risk and exercises more control over the project
  2. Cost and has a greater interest in the schedule
  3. Design work and influences the end product
  4. Project management and daily direction of the work force
  5. Planning function and cost disbursements for the project

77. During the proposal and bidding phase, the owner (buyer) must assess the capability of the contractor (seller) to perform the work. For example, if the owner believes the proposed team consists of some individuals who do not have the requisite qualifications and suggests that these individuals be replaced, the contractor should __________.
  1. Disregard the owner's suggestions unless it precludes the contractor from obtaining the contract
  2. Immediately make changes to follow the owner's suggestions although the contractor believes the replacements are less qualified
  3. Discuss the suggestions with the owner and clarify the qualifications of individuals priors to making a change
  4. Tell the owner that personnel working on the contract are not his responsibility and make no changes
  5. Tell the owner that the individuals will be replaced and ignore the situation (the owner is not responsible for personnel selection)

78. The contractor (seller) accepts all liability for engineering errors, poor workmanship, and consequential damages under a(n) __________ contract.
  1. Letter
  2. Incentive fee
  3. Cost-plus
  4. Fixed price
  5. Variable production

79. Contracting for project work follows a set sequence of activities that ensures a favorable contracting strategy. The sequence of contracting activities includes the following: develop a contracting plan; screen contractors; select bidders; prepare invitations for bid; issue invitations for bid; __________; and award contract.
  1. Receive invitation for bid; review invitation for bid; submit bid
  2. Prepare proposals; submit proposals; select bidder
  3. Prepare proposals; receive proposals; review proposals
  4. Prepare proposals; review proposals, submit proposals
  5. Receive proposals; evaluate proposals; select winner

80. Contractor screening is important to ensure that candidates are capable of performing the work and the number is neither excessive, which will make the proposal evaluation process difficult, nor too few, which will minimize the competition. The four key items to be used in contractor screening are __________.
  1. Capacity, experience, capability, and interest
  2. Capital, capacity, experience, and location
  3. Experience, interest, financial stability, and skills
  4. Facilities, capital, capacity, and capability
  5. Industry, experience, risk, and cost

81. When invitations for bid are issued to the contractors, the bids (proposals) must be submitted in a standard format because __________.
  1. The owner (buyer) has a format that he routinely uses and wants to force the contractors to meet his requirements
  2. The Uniform Commercial Code specifies that all proposals will comply with the law and the standard format
  3. The government has specified that proposals must meet the requirements of contract law and this assures the incorporation of all items
  4. The Association of Contractors has prescribed the format to which all bidders must comply to meet a legal proposal
  5. It gives the greatest assurance that all items are covered and the proposals can be evaluated in a uniform manner

82. Submission of proposals to perform work is the avenue for acquiring most projects. The proposals, when submitted, must contain specific items to obligate or bind the tendering organization. the most important item is __________.
  1. The complete description of the work to be performed
  2. The list of terms and conditions
  3. The signature of a corporate officer
  4. A statement of work that describes how the work will be accomplished
  5. A price for the complete work to be performed

83. The most critical aspect of selecting a contractor and awarding a contract is the proposal evaluation (or bid review) process. The evaluators must be aware of the need to balance fact versus judgment, objective versus subjective reasoning, work tasks versus costs, time versus price, and __________.
  1. Certainty versus uncertainty
  2. Quality versus cost
  3. Quality versus price
  4. Risk versus opportunity
  5. None of the above

84. Contracting is a means of obtaining required goods and / or services that are required to meet the needs of a project. The contract defines the legal relationship between the participants and what each participant is expected to do before the contract can be concluded. The contract also forms a __________ in which the participants strive to work toward the common goal of successfully completing the legal obligations in the most efficient manner.
  1. Union
  2. Partnership
  3. Consortium
  4. Single team
  5. Situation of opposition

85. The proposal preparation is in itself a short-term project that requires intense effort to be completed in the owner's (buyer's) format and time frame, while being responsive to the requirements of the formal invitation for bid. A company bidding for projects can ease the workload and enhance the potential for successfully "winning" contracts by __________.
  1. Appointing the proposal manager early in the process
  2. Identifying a proposal staff early in the process
  3. Having a technical information data base
  4. Having standard scopes of services
  5. All of the above

86. Similar to a small project, the proposal preparation process is started by a __________ meeting where the technical, legal, and compensation considerations are reviewed and assignments of responsibility are made.
  1. Preliminary proposal
  2. Planning and approval
  3. Kick-off
  4. Technical assessment
  5. Staff assignment

87. When entering into a contract, it is often assumed that the performance of the work will be as specified and no disputes will be raised during the performance period. On the contrary, it is better to assume that there will be disputes and include a procedure in the contract as to the means for dispute resolution because __________.
  1. It is more economical to resolve disputes as soon as claims are made and before time and effort are wasted
  2. The tracking of claims is important for the best "win" position during the subsequential litigation
  3. Disputes must be brought before the National Contract Arbitration Board to obtain equitable resolution
  4. There will be a hostile relationship between the contract participants once the contract is signed
  5. Contracts by their very nature, create situations where disputes will arise, but they can be easily resolved with good procedures

88. A contract is a promise to do or not do something in exchange for some form of consideration. A negotiated contract is one where both participants agree on the basis for principal considerations: __________.
  1. The period of performance and the specifications for the project
  2. How the work will be performed, at what time, and for what price
  3. The services to be rendered by one party and the price to be paid by the other party
  4. Who will perform the work and who will pay for the work
  5. The description of services to be rendered and the description of the payment and payment schedule.

89. In abstract theory, a contract is not essential to the performance of a project. Contracts are, however, useful when the performance involves __________, particularly when they are interdependent.
  1. Personnel, money, and material
  2. Cost, schedule, and quality
  3. New, unique, and complex work
  4. Substantial, complex, and extended commitments
  5. Subcontractors, vendors, and suppliers


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