PMP Procurement Questions

Procurement questions test whether you understand how contracts allocate risk. The exam may describe uncertainty, scope clarity, seller performance, or a requested change. Your job is to choose the contract or action that fits the situation.

The three contract families you must recognize are fixed price, cost-reimbursable, and time and materials.

Fixed Price Contracts

Fixed price contracts work best when the scope is well defined. The seller agrees to deliver for a set price, so more cost risk sits with the seller.

PMP clues include:

• Clear requirements
• Stable scope
• Competitive bidding
• Buyer wants cost predictability
• Seller accepts delivery responsibility

Fixed price does not mean no changes are possible. It means changes must be controlled through the contract change process.

Cost-Reimbursable Contracts

Cost-reimbursable contracts are useful when the work is uncertain and the buyer needs flexibility. The buyer pays allowable costs and usually adds a fee.

More cost risk sits with the buyer because the final price may change as actual costs are incurred.

Common variations include:

• Cost Plus Fixed Fee
• Cost Plus Incentive Fee
• Cost Plus Award Fee

These contracts require strong cost monitoring and clear definitions of allowable costs.

Time and Materials Contracts

Time and materials contracts combine elements of fixed price and cost-reimbursable work. The buyer pays for labor hours and materials, often using agreed rates.

They are useful for staff augmentation, consulting, support work, or short-term assignments where the exact scope is not fully known.

The risk is that costs can grow if the work is not controlled. For that reason, time and materials contracts often include not-to-exceed limits.

Procurement Change Questions

If a seller requests more money or time, do not automatically approve. The project manager should review the contract, analyze the claim, check supporting evidence, and follow the procurement management plan.

If the seller is not performing, the project manager should refer to the contract terms before taking action. Contracts define obligations, remedies, acceptance criteria, and dispute processes.

Make-or-Buy Scenarios

Some PMP questions ask whether work should be done internally or externally. The project manager may compare cost, capability, schedule, risk, and strategic value.

Do not choose purely on the lowest price. A cheap option can be poor if it increases risk, reduces quality, or creates dependency on an unreliable vendor.

A Contract Risk Rule

Fixed price: more risk to seller.

Cost-reimbursable: more risk to buyer.

Time and materials: flexible, but needs cost control.

When reading a procurement question, identify who owns the uncertainty. That usually points toward the best answer.