Question 1

The UN Guiding Principles on Business and Human Rights (UNGP) - which recognise that business enterprises must respect human rights – were adopted in which year?

Accepted Answer

B

Explanation: 2011 is the correct answer. You may wish to search for the Guiding Principles to familiarise yourself a little.

Question 2

In legal circles, ownership of something is often called:

Accepted Answer

C

Explanation: Title. In order to be sure you own something, you have to make sure you have acquired 'good title'.

Question 3

‘The CIPS Code of Conduct states that procurement professionals should not accept any business gifts under any circumstances.’ True or false?

Accepted Answer

B

Explanation: Surprisingly, 'declared gifts of nominal value' can be accepted.

Question 4

Revenue-earning possibilities which are foregone as a result of implementing a plan; the cost of not doing something else.

Accepted Answer

A

Explanation: An opportunity cost is the cost of not being able to do something else. For example, if a firm opts to build a new factory, it may not be able to create ten new retail outlets which was another option open to it, in spending these particular funds. Or if you buy a holiday, you may not be able to buy a new television. The television is the opportunity cost of the holiday ie the benefit foregone. The other types of cost shown are methods of classifying actual (real) costs. Opportunity costs are, in a sense, not real; they are hypothesized and therefore do not show in the balance sheet or profit and loss account of a business.

Question 5

Contracts published by third party experts such as trade associations or professional bodies, widely regarded as favouring neither buyer nor seller, are called:

Accepted Answer

B

Explanation: These are 'model form' contracts. Industry standard templates eg NEC ('New Engineering Con-tract'); or FIDIC model form contracts. You will find some examples produced by CIPS on the CIPS website eg for IT procurements.

Question 6

A justification of an action (expenditure) that is to be taken by an organisation.

Accepted Answer

C

Explanation: The business case will justify the expenditure. Of the other answers offered, the only one which needs explanation presumably is 'cost analysis'. This needs to be distinguished from 'price analysis'.

Question 7

Win-win style negotiations are said to be:

Accepted Answer

A

Explanation: Win-win negotiations require a collaborative approach.

Question 8

Which one of the following could not be classed as a form of performance specification?

Accepted Answer

D

Explanation: Since performance specifications are all to do with outputs, 'input-driven' leaps out as being the cor- rect answer here.

Question 9

Which of the following are internal factors in supplier decision-making? Choose two.

Accepted Answer

B, C

Explanation: Cost of production, and shareholder and managerial expectations of profit, are both internal factors in decision-making. Although shareholders may be outside the firm, management will condition shareholders' expectations. Customer perception of value and the extent of marketplace competition are significantly outwith the control of the company.

Question 10

What do we call the point when the supply firm makes neither a profit nor a loss ie where all costs are covered yet no profit is made?

Accepted Answer

B

Explanation: Breakeven point. The firm breaks even: covers all of its fixed costs. At this point the firm has made neither a profit nor a loss, and hopefully is about to enter profitability.

Question 11

'Agreement' is composed of:

Accepted Answer

B

Explanation: Offer and acceptance together make up 'agreement'.

Question 12

The official power to make legal decisions and judgments in a given location, for example

Accepted Answer

D

Explanation: Jurisdiction. American movies seem to spend half the time with law enforcement people arguing about who has jurisdiction. Jurisprudence means the theory or study of law; Jurassic is about an age. de jure means practices which are legally recognised, as opposed to de facto which is about the reali- ty (Wikipedia).

Question 13

‘PTN’ stands for:

Accepted Answer

B

Explanation: Post-tender negotiation. In my opinion, potentially a very rewarding activity where the rules permit.

Question 14

Which of the following is unlikely to be regarded as a conformance specification?

Accepted Answer

B

Explanation: Outputs link to the concept of a performance (or 'output') specification, not a conformance specifi- cation.

Question 15

Which of the following would not normally be included in a whole life cost calculation?

Accepted Answer

B

Explanation: Cost of setting up the tender which is not a cost of the item itself. All the other costs are related to the item itself.

Free CIPS L3M3 Actual Exam Questions