CIPS Exam L4M3 Topic 2 Question 44 Discussion

Actual exam question for CIPS's L4M3 exam

Question #: 44
Topic #: 2

[All L4M3 Questions]

A procurement manager is preparing a long-term contract with a major supplier. She decides to use the variable pricing arrangement using price indices. The payment terms describe the circumstances and mechanism where the price is allowed to change. In order to successfully manage this type of contract, the buying organisation should have...?

AGood market knowledge

BSelection of base year

CValue for money

DEconomy of scale

Show Suggested Answer

Suggested Answer: C

Performance management framework often consists of KPIs, targets and consequences that arise from achieved scores. To ensure that the framework has binding effect on contracting parties, it should be developed, appended to the main contract document and agreed by both parties. So the answer should be 'Yes, because the framework should have legal standing as a part of contract'.

LO 1, AC 1.1

by Lilli at Sep 18, 2024, 09:37 PM

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Chaya

30 days ago

Wow, these options are a mixed bag. I'm going to have to go with B). The base year selection is just too important to overlook.

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Glenn

1 months ago

Ha! D) Economy of scale? Really? That's not even close to being relevant for this type of contract management. I'm going with A).

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Devon

23 hours ago

User 2: B) Selection of base year is also important to ensure accurate price adjustments.

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Aileen

16 days ago

User 1: A) Good market knowledge is crucial for managing variable pricing contracts.

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Giuseppe

1 months ago

Hmm, I'm not sure. I think C) Value for money is the key here. The goal should be to ensure the contract provides the best value for the organization.

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