CIPS L4M2 Cert Guide PDF 100% Cover Real Exam Questions [Q81-Q101]

QUESTION 81
OMK is a Russian steel firm that is expanding market abroad. It plans to build a steel plant in a foreign country. Due to intricate technical requirements, the plant design will be very complex. Procurement department or technical department alone cannot draft the specification. OMK senior management decides that this task must be treated as a project. Which of the following should be done before writing the specification for new steel plant?

Develop the performance framework for the supplier

Draft the terms and conditions for plant construction contract

Invite suppliers to the tendering process

Develop project initial document

The writing of a complex specification should be treated as a project because it requires the brain power from different stakeholders. Many tools and processes of project management can be applied to complex specification development. Before engaging with the stakeholders and implementing the project, the project initial document should developed.
A Project Initiation Document (PID) is one of the most important components of project manage-ment, which forms the foundation for a company project. It is a reference point during the entire project, for the client as well as for the project team.
A PID bundles documentation into a logical reference work that collects all important information needed to start and run a project from a good foundation. After that, Project Initiation Document must be transferred to all stakeholders, including business sponsors.
This forms the basis for the project management. The documentation from which the PID is com-posed include the business case in which the project’s justification can be found, the communica-tion plan and the project plan.
The PID is composed out of collected information and includes, among others, the following com-ponents:
– Project goal(s); what do you want to achieve with the project?
– Project size; how large is the project, how long does it take and how many people are involved?
– Project organisation; who are involved in the project, what are their tasks, responsibilities and authority?
– Limits and risks; what can cause a project to stagnate and are there risks related to the project?
– Stakeholders; who has a stake in the success of the project?
– Project checks and frame reporting; by carefully taking into account evaluation moments, it is clear to everyone what sample tests can be carried out during the process.
In addition, it is important that the Project Initiation Document also contains the following infor-mation:
– The background and occasion of the project, which together provide information about the con-text.
– The project organisational structure, which describes who has which management responsibility in the project.
– The project quality plan, describing who controls the quality of the products to be delivered and how it will take place.
– The total project planning, including the duration of all activities.
– The exception process, which describes how exceptions are dealt with and the steps of the escalation procedure.
– The risk log, including the measures that will be taken when there are unforeseen risks.
– The documentation structure of the project, in which the encoding and storage of all documents and products to be provided by the project has been recorded in advance.
Reference:
– CIPS study guide page 148
– Project Initiation Document (PID), a project management tool | ToolsHero LO 3, AC 3.3

QUESTION 82
According to Porter’s value chain, which of the following activities is categorised as support activity?

Product warranties and special services

Storage of raw materials

Distribution of products from factory to retailer

Supervising the production line

Develop digital SRM technology to manage suppliers better

QUESTION 83
Which of the following are likely to be disadvantages of using outcome-based specifications? Select THREE that apply

Time consuming to produce

Stifling innovation

Difficulty to measure performance

Long time delay between action and result

Responsibility for product failure falling to buyer

Ambiguity of outcome

QUESTION 84
Product development consists of various stages, including planning and analysis, design develop-ment, pre-production, production and maintenance. At which stages the opportunities for cost re-duction will be the greatest?
1. Planning stage
2. Pre-design stage
3. Detail design stage
4. Production stage
5. Logistics support stage

2 and 3 only

2 and 5 only

1 and 2 only

1 and 4 only

QUESTION 85
When a procurement manager considers a substitution, the number and nature of additional func-tions that substitute provides should be taken into account carefully. Which of the following ratio could help the procurement manager to make the right decision?

Value to price ratio

Price to Earnings ratio

Reserve requirement ratio

Price to book value ratio

QUESTION 86
Which of the following is an advantage of competitive benchmarking over other types of bench-marking?

Limited access to competitor’s data

Similarity among processes

Different corporate culture

Cost effectiveness

QUESTION 87
EV Inc is facing the following challenges:
1. The capital investment is enormous.
2. Most of company’s working capital is in form of inventories, which include raw materials, work-in-progress and finished goods.
3. Competitors are increasingly deploying robotics and automation to boost productivity.
Which of the below business sectors does EV Inc belong to?

Construction

Manufacturing

Financial services

Retails

QUESTION 88
Which of the following are typical social considerations throughout the contract life cycle? Select the TWO that apply.

Using recycled materials

Minimizing use of non-renewable resources

Support small local businesses

Managing waste

Health and safety

QUESTION 89
Which of the following can directly affect labour variance? Select TWO that apply:

Wage rate per hour

Inflation

Company’s budget

Overhead expenditure

Overtime

QUESTION 90
Which of the following are recognised competitive strategies?
1. Winning new business at all cost
2. Getting more customers’ attention
3. Creating stand-out products and brands
4. Focusing on niche market
5. Acquiring competitors

3 and 4 only

3 and 5 only

1 and 2 only

2 and 5 only

QUESTION 91
Which of the following are main focuses of ISO 27001:2013 standard?
1. Confidentiality
2. Logistics
3. Process
4. Life cycle

1 and 3 only

3 and 4 only

2 and 3 only

2 and 4 only

This International Standard (ISO 27001:2013) has been prepared to provide requirements for establishing, implementing, maintaining and continually improving an information security management system. The adoption of an information security management system is a strategic decision for an organization. The establishment and implementation of an organization’s information security management system is influenced by the organization’s needs and objectives, security requirements, the organizational processes used and the size and structure of the organization. All of these influencing factors are expected to change over time.
The information security management system preserves the confidentiality, integrity and availability of information by applying a risk management process and gives confidence to interested parties that risks are adequately managed.
It is important that the information security management system is part of and integrated with the organization’s processes and overall management structure and that information security is considered in the design of processes, information systems, and controls. It is expected that an information security management system implementation will be scaled in accordance with the needs of the organization.
This International Standard can be used by internal and external parties to assess the organization’s ability to meet the organization’s own information security requirements.
The order in which requirements are presented in this International Standard does not reflect their importance or imply the order in which they are to be implemented. The list items are enumerated for reference purpose only.
ISO/IEC 27000 describes the overview and the vocabulary of information security management systems, referencing the information security management system family of standards (includ-ing ISO/IEC 27003[2], ISO/IEC 27004[3] and ISO/IEC 27005[4]), with related terms and defini-tions.
Reference:
– ISO/IEC 27001:2013 Information technology – Security techniques – Information security management systems – Requirements LO 3, AC 3.1

QUESTION 92
Which of the following might be consequences of over-specification? Select TWO that apply:

Reducing motion waste

Higher cost due to inessential features

Limiting competition in supply market

Lack of essential features

Better contract management

QUESTION 93
Which of the following always impact negatively on a company’s cash flow? Select TWO that ap-ply

Increasing revenue

More inventory

Depreciation of fixed asset

Supplier shortens their payment period

Customers agree to pay immediately

QUESTION 94
Total cost of ownership of a solar panel is $5,000 and it is expected that the panel will make a sav-ing of $1,000 each year. So it would take 5 years for the benefits to repay the investment. Therefore, the firm plans to keep the solar panel for at least 5 years. Is payback period calculation right for making the business decision?

Yes, because it takes everything into account

No, because payback period can be only used to calculate the depreciation of a fixed asset

No, because payback period doesn’t take into account price fluctuations

Yes, because payback period shows how long the firm recovers the investment

QUESTION 95
This is the information on an organisation’s activities over the past year
* Sale were $5,000,000. The value of accounts receivable was $450,000 at the start of the year and $525,000 at the end of the year
* The value of direct costs was $2,500,000 and 75% of this was bought on credit
* Indirect costs were $3,000,000 and 25% of this was bought on credit
* During the year the organization spent $1,500,000 on new assets and sold $150,000 of old assets. $1,000,000 of the spend on assets was funded by a bank loan
* The organization declared a dividend of $200,000 at the end of the year but this was not paid for another two months
* Opening balance was $175,000
Which of the following is the bank balance of that organization at the end of the year?

$1,675,000

$1,875,000

$1,700,000

$2,025,000

QUESTION 96
What is the purpose of sending value engineering analysis to external suppliers?

To improve early supplier involvement

To improve the existing products

To analyse the supply market

To standardise production processed

QUESTION 97
A company has a lists of items that make up 15% of total spend. These items also do not largely impact on quality of final product. The supply continuity is secured. Which of the following will be the most appropriate managing approach to purchase these items?

Enhance supply continuity

Simplify procurement process

Build partnership with suppliers

Drive down cost based on market competition

QUESTION 98
XYZ Ltd is a large supermarket chain which operates mainly in the UK and Europe. Their custom-ers are increasingly concerned about sustainability. Therefore, procurement manager is required to source the products from suppliers who have good environmental performance. Which of the fol-lowing can be an assurance that the supplier has procedures and policies to enhance its environmental performance?

ISO 14001:2015 certificate

ISO 13485:2016 certificate

ISO 22716:2007 certificate

ISO 9001:2015 certificate

QUESTION 99
Which of the following sources of information are considered as primary data? Select TWO that apply.

The information about specific market sectors from trade associations

Commercial publishers of market reports

The collection of data from surveying customers

RFI

Reports in business magazines

QUESTION 100
When procuring an IT equipment, at which stage the buyer’s expectations are translated into a technical specification?

Installation

Design

In-service support

Customer support

QUESTION 101
Which of the following are the causes of material cost variance?
1. The buyer updates purchase-to-pay system to track payment and delivery
2. An unprocessed goods received note is missing
3. The employees must work overtime to catch up with the customers’ orders
4. The purchase is made in emergency

2 and 4 only

1 and 4 only

1 and 3 only

2 and 3 only

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