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NEW QUESTION 48
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?

• A. Develop the performance framework for the supplier
• B. Develop project initial document
• C. Draft the terms and conditions for plant construction contract
• D. Invite suppliers to the tendering process

Answer: B

Explanation:
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

NEW QUESTION 49
GSC Ltd is a manufacturer of car parts. To accommodate growing demands of electric cars, the company is developing a new component which requires different type of steel. The project team estimates that the component will be ready for production in 1.5 years. Until then, they need to keep the production busy.
After checking the inventory records, the production team sees that the company has 3 months of stock. The lead time for each batch is two months. Which of the following should be a priority ac-tion of the company?

• A. Create new specification to current supplier
• B. Standardise the specification
• C. Create new specification to new supplier
• D. Make a call-off order to current supplier

Answer: D

Explanation:
The scenario is very long with many distracting data. Students need to read carefully and use their experience to solve this problem.
The company is developing a new component which requires different type of material. But this component will not be available for mass production in 1.5 years. This means the company still needs to produce the current components with current materials until the development is finished. They must continue purchase the materials from current supplier through call-off orders. This situation is an example of straight re-buy.
Reference:
LO 1, AC 1.1

NEW QUESTION 50
When procuring an IT equipment, at which stage the buyer's expectations are translated into a technical specification?

• A. Design
• B. Customer support
• C. In-service support
• D. Installation

Answer: A

Explanation:
IT equipment is typically linked with through-life contracts. This type of contract not only deal with the specification and the price of a machinery, but also other stages such as design, manufacture, installation, in-service support, decommission and disposal. Among these stages, the design stage is when buyer's requirements are translated into technically correct specification.
Reference:
LO 3, AC 3.2

NEW QUESTION 51
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