Exam 14: Contract Management

As the total dollar value/unit cost of the contract decreases, purchasers must spend more effort creating effective pricing mechanisms.

In a _____ contract, the supplier receives reimbursement for all of its allowable costs up to a predetermined amount plus a fixed fee, which typically represents a percentage of the targeted cost of the good or service being procured.

A _____ is defined as a purchase that is made on a nonrecurring or limited basis with little or no attention of developed an ongoing relationship with the supplier.

In a fixed price contract with escalation, all price changes should be keyed to a third-party price index, preferably to a well-established, widely published index.

To be successful, a good long-term contract needs to only consider the needs of the buyer.

In global commerce, people assume that the terms of one market are acceptable in another and do not recognize cultural or legal landmines.

Perhaps the most important clause of a consulting contract to the consultant is the assurance of payment.

It is often easy to go back and negotiate what contractual terms actually mean once the contract has been signed and a period of time has passed.

Which of the following is not one of the potential disadvantages of using long-term contracts?

A/An _____ generally runs for a 12-month period and may or may not come up for renewal at the end of the year.

Which of the following is not one of the potential advantages of using long-term contracts?

Taking a dispute into the jurisprudence system should be an automatic step in resolving the dispute, and not viewed as a last resort.

The _____ clause of a contract stipulates whether either party has the ability to terminate the contract at any time, and how much advance notice must be given.

The _____ clause in a contract provides specific details on how the supplier's performance will be measured and if any compensation will be awarded by the supplier to the buyer if these certain defined levels of performance are not maintained.

The _____ clause in a contract describes how an issue will be addressed if a portion of the agreement is void or unenforceable, and which court of law will resolve the difference.

With pure ______ contracts, allowable costs are shared between the parties on a predetermined percentage basis.

In a firm fixed price contract, if the supplier increases its contract price in anticipation of rising costs, and the anticipated conditions do not occur, then the purchaser has paid too high a price for the good or service.

The _____ clause of a contract defines all of the important terms contained within the contract and is important so everyone understands exactly what each term means.

To be most effective, cost-based contracts should include cost productivity improvements in order to drive continuous cost reduction over the life of the contract.

A/An _____ contract is designed to provide access to expensive computer networks and software that single companies are unable to afford on their own.