Free CIPS L6M5 Exam Questions

Which of the following statements about the Critical Path are true? Select all that apply

In a fixed lump sum contract, this pricing mechanism doesn't allow for any changes in price. Is this statement TRUE?

Which of the following processes for managing change is the most passive?

Giant Construction Company is working on 5 large scale projects. Below are details of each project.

Project 1: Giant is working closely with the client to construct a hospital. The client has provided an estimate of what they think the construction will cost, and any savings will be shared between the parties. This form of contract is popular in the public sector and is being used due to its flexibility.

Project 2: This suite of contracts is known collectively as ‘the rainbow suite’ and is very rigid, not allowing for changes later down the line. The price of the construction was set on the date the contract was signed.

Project 3: This project is for the construction of wind turbines and is an international project. The pricing mechanism accounts for the cost of construction of each individual turbine.

Project 4: This is the most popular form of contract used in the construction industry and uses a Contract Administrator role who is responsible for the timely flow of information to all parties. The scope of the project was not clearly defined at the onset, so Giant is working with the client by sharing their costs incurred plus a small profit margin.

Project 5: This project is for the provision of ICT services and software provision. Giant is paid when certain milestones are met in the implementation of the project.

For each project, select the type of contract and pricing mechanism being used. Complete the table below by listing the type of contract and pricing mechanism being used for each project; CIPS, FIDIC, IMechE, JCT, Joint Venture Contract, NEC, Bill of Quantities, Cost Reimbursable, Cost plus award fee, Fixed Lump Sum, Activity Based Pricing, Target Costing.

Which of the following will you put into box 4?

Glitter Kitten Ltd is a leading manufacturer of cat food and is currently looking into expanding its operations into new markets. The CEO has committed to providing the funds for expansion and he has commissioned a financial appraisal of two different options. The Senior Leadership team are currently reviewing the Net Present Values of each option.

The CEO is getting frustrated with the length of time the Senior Leadership are taking in their appraisals so has done a quick analysis using the payback method. The second option, to expand into making dog food, produced the best results, which are based on an estimated total outflow of £50m and annual inflows of £10m.

The CEO is also looking into methods for improving current products. He has assembled a Project Team of researchers who is looking into their current range of cat food, taking particular notice of customer opinions and reviews. The goal is to, based on this research, investigate opportunities within the supply chain to enhance the quality of the product, as well as potentially reducing the costs of manufacturing.

Raw materials for Glitter Kitten’s most popular cat food will soon be provided by Paw Ltd who is a new supplier. The contract is still under negotiation and is expected to last for the next 3 years. The CEO is keen to have visibility over Paw Ltd’s costs and profit margin.

5. Which of the following pricing mechanisms is most suitable for use with Paw Ltd?