L3M3 Contract Administration Questions and Answers

Explanation

Since performance specifications are all to do with outputs, 'input-driven' leaps out as being the cor-rect answer here.

Explanation

Inability to touch something.

Services are intangible, which may present challenges when specifying / buying.

Explanation

English law, with Scots and European law being different.

In many Commonwealth countries, the legal system used is based on historic English law, thus many lawyers around the world are familiar with many of the fundamental concepts of English law, including the law of contract.

Contracts should state which legal system applies.

Explanation

Offer and acceptance together make up 'agreement'.

Explanation

The answer is fixed costs. Their counterpart are variable costs, which do vary as business activity increases or decreases.

Direct and indirect costs are a different method of categorizing costs within an organisation.

Explanation

'Five-Why Analysis' or 'Why-Why Analysis' is an approach to trying to determine the cause of an event. It can be used to link to / in conjunction with an Ishikawa diagram. The principle is thatone repeatedly (as often as necessary, not necessarily limited to five) asks 'why?', and eventually an un-derlying reason will emerge, which if addressed effectively, will successfully resolve the problem. This is something which can often be observed naturally in small children. 'Why, Daddy?'. 'But why, Daddy?. Etc. (Or Mummy)

Explanation

When price is discussed as a % of costs to be added on, the term is 'mark-up'.

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

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

Explanation

Supplier liquidations are to be expected; workers' strikes likewise.

Cargo ships do sink, and your course creator has had cargo in at least two ships which have sunk on the high seas, one of them in The English Channel.

A global pandemic (Covid-19) was highly unlikely (2019), but arrived with devastating conse-quences for commerce and people. Low likelihood, huge impact.

Just because it seems unlikely doesn't mean it's not going to happen.

If you're seriously interested on the effect of apparently chance happenings in our lives, read Nassim Nicholas Taleb - you'll either love him or hate him.

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

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

The 'firm and unequivocal offer' and 'the basis of a contract' indicate the reference to a formal and binding tender procedure. The answer is therefore 'invitation to tender'.

Explanation

Specification creep - where the requirement becomes more complex or sophisticated than originally thought necessary for the buying organisation's purposes. Naturally, this can be expected to increase cost to the buying organisation.

Explanation

Comparison of prices across different suppliers would be called 'price analysis'; drilling down into costs of making or doing something would be called 'cost analysis'.

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

'Invitation to treat' is less than an offer ie it is not capable of being accepted in any contractual sense.

A common example given of an invitation to treat are goods on display in a shop window.

Explanation

Best alternative to a negotiated agreement; and a zone of potential agreement.

The other terms shown are just fictions.

Explanation

The answer is 'environmental'.

Explanation

MEAT: Most economically advantageous tender

An approach to tendering which takes account not only of the selling price, but also other relevant factors.

Explanation

Win-win negotiation is not a 'zero-sum game': the sum of the value achieved is greater than zero - fresh value is created. It is a 'positive sum game'.

Explanation

Indemnity.

As in 'an indemnity clause'.

'The supplier hereby indemnifies the buyer against / in the event of...'

Explanation

The benefit of in-depth interviews is that one may unearth deeper thoughts, ideas or concerns than through a larger quantitative exercise. Qualitative exercises lend themselves to more freedom to ex-plore interesting issues.

Explanation

The fact that the time period and the total quantity is known means it is a 'call-off' contract. The volumes of product are 'called off' from the contract as required by the buying organisation.

Make sure you understand the difference between a call-off contract and a framework arrangement.

Under a framework arrangement, there is no obligation on the part of the buyer to use the goods / services specified.