CIPS L4M8 Exam Questions with Verified
Answers.
Stage 13: Assets management/end of life - Correct answer the procurement
professional should evaluate whether the need is still current. If it is and unchanged, the
procurement cycle process commences again but from a different stage as the need is
already known and understood. If the need is not required the buyer should manage the
end of life by reducing stock levels and informing the supplier
Anti-bribery procedures - Correct answer -Proportionate procedures: should be in line
with the type of bribery risk and scale that is likely to be faced
-Top level commitment: High level execs should set an example and issue statements,
updates and feedback on the procedures and expectations
-Risk assessment: Regular and documented risk assessment of the likelihood and
impact of bribery
-Due diligence: Documented procedures should cover and be enforced by all of the
organization within the supply chain
-Communication: Ongoing training and updates should be provided to keep the
organization and its workforce aware of current developments
-Monitoring and reviewing: Methods should be implemented to review compliance with
the policies and procedures
Business case for whole life asset management - Correct answer -Introduction
-Objective
-Approach
-Resources
-Benefits
Procurement Cycle - Correct answer the cyclical process of key steps when procuring
goods or services.
Steps of the Procurement Cycle - Correct answer 1. Understand Need and develop
High level Spec.
2. Market/Commodity and options (ink make or buy assessment).
3. Develop Strategy/plan
4. Pre-procurement market test and market engagement.
5. Develop documentation, PPQ/detailed spec/combine with 1.
6. Supplier selection to participate in ITT/RFQ/negotiation.
7. Issue ITT/RFQ.
8. Bid/Tender Evaluation and validation.
9. Contract award and implementation.
10. Warehouse logistics and receipt.
11. Contract performance review and continuous improvement.
12. SRM and SC management and development.
13. Asset management/end of life and lessons learnt.
,Terms and Conditions and the Developing of Contracts - Correct answer are a very
important element of developing contracts, helping to minimize contractual risks and
exposure when doing business.
Supplier Evaluation - Correct answer the process of evaluating and approving existing
and potential suppliers by quantitative assessment against specific business criteria.
Sourcing - Correct answer a critical activity that commands increasing attention as
managing supply chains becomes more complex (Trumann et al., 2009). It is used at
both tactical and strategic levels and is concerned with what needs to be purchased
(product/service), in what quantities, for what purpose and where.
Whole life cycle costing - Correct answer takes into account the total cost of a product
or service over its lifetime, from concept through to disposal including purchase, hire or
lease, maintenance, operation, utilities, training and disposal. It is important for
procurement to take all these elements into consideration when making decisions and
comparing the costs of buying, renting or leasing equipment particularly. In most cases
the purchase costs are only a small proportion of the cost of operating it.
Corporate Social Responsibility (CSR) - Correct answer a way of ensuring that the
business monitors its compliance with the law and industry standards. It embraces the
company's obligations and creates a positive impact through its activities and in some
cases relates to a company going beyond its obligations in terms of its effect on the
environment and impact on social welfare.
Diversity and Inclusion - Correct answer Businesses not only have a responsibility to
respect and value all forms of difference including race and ethnicity, culture and belief,
gender and sexuality, age and social status and ability. There is also a huge business
advantage to be had: diverse teams are more innovative, but also people want to be
part of them and stay part of them.
Modern Slavery - Correct answer possession or control of a person deprived of their
rights with the intention of exploiting them
Sustainable and Ethical Procurement - Correct answer consider the impact of
environmental, economic and social factors along with price and quality. This is
important in terms of how the buyer conducts their relationship with suppliers, including
contract negotiation especially when sourcing globally with unfamiliar work cultures.
Supplier Diversity - Correct answer a proactive business program which encourages the
use of minority-owned, women owned, veteran owned, LGBT-owned [1], service
disabled veteran owned, historically underutilized business, and Small Business
Administration (SBA)-defined small business concerns as suppliers.
,Social Value - Correct answer a way of thinking about how scarce resources are
allocated and used. It involves looking beyond the price of each individual contract and
looking at what the collective benefit to a community is, when a public body chooses to
award a contract.
Implied terms - Correct answer always present in a contract and are set by the law of
the land.
Express terms - Correct answer are written into the contract. They usually relate to
items that can be negotiated and agreed between the parties involved. Examples
include payment terms, the specification, delivery details, quantities, and indemnity
clauses, etc.
Model Form Contracts - Correct answer are a template contract comprising of
standardized and non-negotiated terms and conditions. Can be used to reduce the time
required to negotiate specific terms for each agreement.
Conditions - Correct answer are fundamentally at the heart of the contract. If they are
breached, they give the injured party the full range of remedies, including the right to
terminate.
Warranties - Correct answer are minor terms. If there is a breach, the injured party still
have the right to claim compensation but might not be able to take any other form of
redress.
Liquidated Damages - Correct answer are fixed amounts of money agreed between the
parties that becomes payable upon a breach of contract. They are enforceable by law.
Liquidated damages - Correct answer are an unspecified amount of money. And are
used when the amount of money that will compensate the aggrieved party is unable to
be predetermined.
Exclusion clause - Correct answer are used in contracts in order to try and totally
exclude the amount of liability which would otherwise arise from some breach of
contract.
Indemnity Clause - Correct answer are designed to secure an undertaking from the
other party that it will accept liability and risk for any loss arising from events in carrying
out the contract, and will make good the loss to the injured party or parties.
Weighted Scorecard - Correct answer this is a tool that provides a systematic and fair
process for selecting suppliers based on predetermined criteria.
Whole life asset management - Correct answer relates to fixed assets. It is the process
of evaluating the total price and all other costs associated with the item so an informed
, decision can be made about which option will provide the best value for money for the
organization.
Fixed Assets - Correct answer assets that are relatively permanent, such as land,
buildings, and equipment
1st stage of whole-life cycle asset management - Correct answer identify the need,
objectives and risk. For example, objectives could include being more energy efficient,
reducing cost or keeping up with the competition.
Current Assets - Correct answer Assets that companies expect to convert to cash or
use up within one year or the operating cycle, whichever is longer.
2nd stage of whole-life cycle asset management - Correct answer procurement. The
procurement team should consider all the elements within the whole-life asset
management cycle in their process to be sure that the best value is gained.
3rd stage of whole-life cycle asset management - Correct answer construction. Much of
the cost of the asset is derived from this stage. A readily available or mass-produced
asset has lower design and manufacturing costs than bespoke items.
4th stage of whole-life cycle asset management - Correct answer commissioning. This
means bringing the asset into working condition. Costs incurred at this stage include
installation, training, insurance, testing, operational efficiencies and performance and
quality.
5th stage of whole-life cycle asset management - Correct answer deterioration and
maintenance. Assets that last longer without deterioration represent better value.
Depreciation gives an indication of how quickly an asset loses value over time.
Maintenance costs include the reliability of the asset, price and availability of spare
parts, cost of skilled technicians or engineers, frequency of service requirements and
downtime due to maintenance.
6th stage of whole-life cycle asset management - Correct answer condition performance
monitoring. This is carried out by a system that monitors key aspects such as
temperature, vibration, speed, output, etc. in order to identify any defects early so
decisions can be made to prevent stoppages.
7th stage of whole-life cycle asset management - Correct answer decommissioning.
This means withdrawing an asset from service. Costs incurred at this stage include the
costs of removal and transport, labor, and downtime. The asset could be reconditioned
at this stage to extend its life-cycle.
8th stage of whole-life cycle asset management - Correct answer renewal and
replacement. This is when the whole cycle starts again as the decision is made about
