CIPS L3M3 Contract Administration Exam Practice Test

Explanation

High level of power and a high level of interest.

You should hope that in your exam you get such an easy QUESTION NO: !

Explanation

Economic.

I think foreign exchange at least couldn't fit into any other STEEPLE factor, so that's a clincher and it has to be 'economic'.

Explanation

Consideration is one of the essential elements of a contract in English law, and it essentially means the exchange of something of value for something else of value, typically goods or services for money.

Normally it is the price to be paid in exchange for goods or services.

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

Strengths.

Explanation

Managed.

This an old management adage, which is intended to encourage managers to measure helpful indica-tors (not everything!).

Explanation

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

Explanation

Probing.

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

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

Milestone plan.

This is difficult, and if you opted for 'staged', that is understandable. 'Milestone' or 'gateway' are terms often used to describe a situation in which a particular point must be reached on a project, pri-or to release of funds. By this means, a close linkage can be made between outputs achieved and payments made. The idea of stages goes towards this, and 'progress payments' ie payment based on alleged progress or simply time, have been shown in many cases, to be ineffective in achieving value for money.

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

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

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

'Is it acceptable, feasible and suitable?' are the tests.

Explanation

The contract clause may refer to or include both gainshare and painshare elements. If all goes well, gains to be shared; if things go badly, pain to be shared. The ratio does need to be 5050 - the parties can discuss / negotiate as they wish / agree.

One is actively discouraged from talking about penalties, which contain a notion of punishment, de-spite the rather odd fact that your syllabus contains the term 'penalty clauses'.

Explanation

The seller tries to penetrate the market, to build market share, depriving competitors of those sales, and hoping to retain the customers for future sales. This is penetration pricing.

'Cost mark-up' would be based on cost - add a certain amount to create the selling price. For exam-ple, in UK clothing retail often simply 100% added to the cost of the goods - simple, fast and hope-fully sufficient to coverall costs, as well to enable the goods to sell. This approach hinges on effec-tive buying, at the right cost.

Promotional pricing is a temporary price drop to encourage purchases of a particular product or range.

Competitive pricing would simply mean pricing at around the market level - monitoring market and competitor prices.

Explanation

Other customer data.

It would, I think, be very unusual for a contract manager to feel it appropriate to ask for information from a supplier representative about other customers. Business partners normally want their dealings to be private. However, in informal discussions, in the normal course of conversation, information is often transferred in a benign manner.

Explanation

Win-win negotiations require a collaborative approach.

Explanation

The items are complementary. Complements.

For example, a Tesla car and a Tesla charging point.

Explanation

The 'contribution' (selling price minus variable cost) for each bottle is 50 cents. Divide the fixed costs by the contribution (100,000 / 0.5) = 200,000

If your textbook or tutor has not covered this type of calculation, don't worry; it is a difficult ques-tion and is unlikely to be a significant issue in the CIPS examination.

Explanation

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

Explanation

Contract price adjustment.

A contract may contain a contract price adjustment clause if the parties feel that costs may move significantly over the contract period. For example, in respect of commodities, metals, currencies or even sometimes, labour. Normally reference would be made to an index or indices which would help determine the direction and extent of adjustment in a minimally controversial way. An example of a widely-used index / formula in the UK is the BEAMA formula.

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

Cost transparency - this requires a high trust level, as both parties open up and share information on the costs of their operations.

Open book costing is a one-way share - the seller allows the buyer to look at their actual costs.

Explanation

Political.

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

Explanation

All of them.

This QUESTION NO: is a bit of a gift for you, but you may wish to just think about the dates and the nature of the legislation. If there is any UK bias in your CIPS examination, this may be time well spent. For students based in the UK: these Acts are powerful and significant. At managerial level at least, one would wish to be familiar with the broad thrust of each of these, plus the implications of The Equality Act.

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.