Free Preparation Discussions
MENU
CIPS L4M2 Exam Questions
- Topic 1: Understand how to develop a business case for requirements to be sourced from external suppliers: This section of the exam measures the skills of Procurement Analysts and focuses on understanding how business needs influence sourcing decisions. It covers identifying different types of purchases such as new, modified, and straight rebuys, and analyzing their implications on procurement strategies. Learners are expected to understand how procurement contributes to developing a strong business case by assessing costs, prices, and market data. It also includes estimating direct and indirect costs, applying whole-life asset management principles, and using financial models and budgets to control purchasing activities.
- Topic 2: Understand market management in procurement and supply: This section of the exam evaluates the expertise of Supply Chain Managers in managing and analyzing different markets. It includes understanding procurement considerations across sectors such as manufacturing, construction, retail, financial, agriculture, and services. Candidates are tested on their ability to compare competitive forces that influence markets, including supplier and buyer bargaining power, threats from substitutes, and new entrants. The section also focuses on differentiating between direct and indirect costs, identifying reliable sources of market data, and using this information to estimate costs, prepare budgets, and analyze potential cost variability.
- Topic 3: Understand the use of specifications in procurement and supply: This part of the exam assesses the capabilities of Procurement Officers and focuses on how specifications are developed and used in procurement. It involves understanding various types of specifications, such as conformance and performance specifications, and identifying key information sources including internal expertise, external standards, and sustainability factors. The section highlights the importance of structuring specifications with clear scope, definitions, testing, acceptance, and change control mechanisms, while integrating environmental, social, and governance criteria. Additionally, it covers the risks of poor specification design and how to mitigate them through monitoring, review, and improvement. Candidates are also expected to recognize opportunities for standardization, value analysis, and value engineering to enhance specification quality and support long-term procurement performance.
Free CIPS L4M2 Exam Actual Questions
Note: Premium Questions for L4M2 were last updated On Mar. 18, 2026 (see below)
Which of the following sources of information are considered as primary data? Select TWO that apply.
Explanation
The aim of this question is to check students' understanding of different types of data. There are 2 types of data:
- Primary data is the collection of original or raw data which are generated from field research. In this case, only RFI and surveys from customers are considered as primary data.
- On the other hand, secondary data is public information that has been collected by others. It is typically free or inexpensive to obtain and can act as a strong foundation to any research project --- provided you know where to find it and how to judge its worth and relevance. Examples of secondary data are government statistics, industry associations, trade publications, published market reports, etc.
LO 1, AC 1.2
A company is building a new two-storey office block and will need to purchase new desks and chairs. There will not be much space available. What should be included in the specification for these desks and chairs?
A buyer can use sources of information to review indirect costs associated with the manufacture of goods to support supplier negotiations. Is this statement true?
Comprehensive and Detailed Explanation (from CIPS L4M2 -- Cost Management and Analysis)
CIPS teaches that indirect costs (e.g. overheads, admin, factory costs) can be estimated by using:
Supplier financial statements,
Benchmarking,
Industry cost models.
Analysing these supports negotiations by revealing true cost drivers.
Therefore, Option B is correct --- buyers can and should assess indirect costs when evaluating total cost and negotiating.
Relevant L4M2 references:
''Understanding direct and indirect cost elements''
''Cost analysis and should-cost models in business case preparation''
Outcome specifications should be used when:
Comprehensive and Detailed Explanation (from CIPS L4M2 -- Specification Types)
Outcome (or output) specifications define what outcome must be achieved, leaving suppliers freedom to decide how.
They are appropriate when multiple solutions can deliver the same performance.
Option C directly reflects this.
Options A, B, and D contradict the flexibility principle.
Relevant L4M2 references:
''Performance and outcome-based specifications''
''Encouraging innovation through output requirements''
Which of the following are likely to be disadvantages of using outcome-based specifications? Select THREE that apply
An Outcome Based Specification (OBS) focuses on the desired outcome of a service in business terms, rather than a detailed technical specification of how the service is to be provided; this allows providers scope to propose innovative solutions that might not have occurred to the procurement team. Outcome should be distinguished from output, which is the measurable results of a set of inputs. The example of difference between outcome and output is written at the bottom of page 123 in the study guide.
Outcomes should be the starting point in making new specification. However, using outcome-based specification has some setbacks:
- First, it is not easy to measure the outcomes. Usually, outcome of a project is a statement like 'increase customer satisfaction', 'maintain ambient temperature' or 'provide a convenient way to do something'. They are not easy to measure as output.
- Second, sometimes the desired outcomes require time to be materialised
- Third, outcomes can be ambiguous
LO3, AC 3.1
- Select Question Types you want
- Set your Desired Pass Percentage
- Allocate Time (Hours : Minutes)
- Create Multiple Practice tests with Limited Questions
- Customer Support
Hyman
1 hour agoMinna
7 days agoEllen
15 days agoKiley
23 days agoDoug
1 month agoPeggy
1 month agoFelicitas
2 months agoValentin
2 months agoClaudio
2 months agoClemencia
2 months agoHassie
3 months agoDannette
3 months agoHollis
3 months agoJulian
3 months agoLatosha
4 months agoJody
4 months agoMarci
4 months agoMarjory
4 months agoBilly
5 months agoElise
5 months agoFranklyn
5 months agoLorean
5 months agoAnnabelle
6 months agoLashaun
6 months agoEarleen
6 months agoTimothy
6 months agoFrederica
7 months agoKyoko
7 months agoRoy
9 months agoChaya
9 months agoJohnson
11 months agoSharen
1 year agoBrice
1 year agoKimbery
1 year agoNieves
1 year agoRoyce
1 year agoEllen
1 year agoNathan
1 year agoCraig
1 year agoTanja
1 year agoNaomi
1 year agoSkye
1 year agoTora
1 year agoJoni
1 year agoDarrin
1 year agoDelbert
1 year agoFelicidad
1 year agoElbert
2 years agoMonte
2 years agoJudy
2 years agoPaola
2 years agoRoslyn
2 years agoJame
2 years agoGiovanna
2 years agoGlendora
2 years agoVan
2 years agoSilvana
2 years agoAntione
2 years agoMarnie
2 years agoFernanda
2 years ago