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| Certification Vendor: | CIPS |
|---|---|
| Exam Name: | Defining Business Need |
| Exam Number: | L4M2 |
| Exam Duration: | 90 minutes |
| Related Certifications: | CIPS Level 4 Diploma in Procurement and Supply |
| Available Languages: | English |
| Exam Format: | Objective Response (Multiple Choice) |
| Real Exam Qty: | 60 |
| Passing Score: | 70% |
| Sample Questions: | CIPS L4M2 Sample Questions |
| Exam Way: | Computer-based exam at accredited centres |
| Pre Condition: | Recommended 2+ years relevant business experience |
| Official Syllabus URL: | https://www.cips.org/qualifications/diploma-in-procurement-supply/defining-business-need |
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CIPS L4M2 Certification Exam is a crucial step for professionals who want to advance their careers in the field of business analysis. L4M2 exam is designed to test the candidate's knowledge and understanding of the process of defining business needs. It aims to assess their ability to identify the requirements of stakeholders, analyze business processes, and recommend solutions to meet the needs of the organization.
NEW QUESTION # 179
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?
Answer: D
NEW QUESTION # 180
Which of the following are typically reasons why an organisation implements value analysis? Select TWO that apply:
Answer: E
Explanation:
Value analysis is a systematic review of the production, purchasing and product design processes to reduce overall product costs. This can be accomplished through a variety of activities, including the following:
- Designing products to use lower-tolerance parts that are less expensive
- Switching to lower-cost components
- Standardizing parts across product platforms in order to achieve volume discounts
- Altering production processes to minimize the amount of production cycle time, thereby reducing labor costs
- Introducing automation to strip labor costs out of the production process
- Altering product packaging to lower its cost while still protecting the product The process is not a wholesale attack on costs. Costs are only reduced when the result will not im-pact the perceived level of quality experienced by customers, or the level of customer satisfaction.
Reference: CIPS study guide page 160-163
LO 3, AC 3.4
NEW QUESTION # 181
When analysing competitive forces in a market, which of the following can be seen as a supplier having low bargaining power? Select TWO that apply.
Answer: B,D
Explanation:
Comprehensive and Detailed Explanation (from CIPS L4M2 - Market Analysis) Supplier power is low when:
* Buyers can easily substitute products (Option B).
* Switching costs are low, so buyers can change suppliers without difficulty (Option D).
Low competition (A) or low innovation (E) strengthens supplier power, not weakens it. High quality (C) increases supplier leverage.
Relevant L4M2 references:
* "Factors influencing supplier bargaining power"
* "Porter's Five Forces model - supplier power and substitution"
NEW QUESTION # 182
Interserve is a construction contractor in UK. When receiving a huge and complex project, Inter-serve's procurement manager assesses the risks by quantifying them and recommends other stake-holders to plan mitigating actions. Is the procurement manager's action justified?
Answer: D
Explanation:
Assessing the risks by quantifying them should be done. Even with qualitative risk assessment, quantifying is still important since risks need to be prioritised.
Risk assessment can be qualitative or quantitative. Perform qualitative and perform quantitative risk analysis are two processes within the project risk management knowledge area, in the planning process group. While qualitative risk analysis should generally be performed on all risks, for all projects, quantitative risk analysis has a more limited use, based on the type of project, the project risks, and the availability of data to use to conduct the quantitative analysis.
Qualitative Risk Analysis
A qualitative risk analysis prioritises the identified project risks using a pre-defined rating scale. Risks will be scored based on their probability or likelihood of occurring and the impact on project objectives should they occur.
Probability/likelihood is commonly ranked on a zero to one scale (for example, .3 equating to a 30% probability of the risk event occurring).
The impact scale is organizationally defined (for example, a one to five scale, with five being the highest impact on project objectives - such as budget, schedule, or quality).
A qualitative risk analysis will also include the appropriate categorization of the risks, either source-based or effect-based.
Quantitative Risk Analysis
A quantitative risk analysis is a further analysis of the highest priority risks during a which a numerical or quantitative rating is assigned in order to develop a probabilistic analysis of the project.
A quantitative analysis:
- Quantifies the possible outcomes for the project and assesses the probability of achieving specific project objectives
- Provides a quantitative approach to making decisions when there is uncertainty
- Creates realistic and achievable cost, schedule or scope targets
In order to conduct a quantitative risk analysis, you will need high-quality data, a well-developed project model, and a prioritized lists of project risks (usually from performing a qualitative risk analysis).
NEW QUESTION # 183
A procurement manager is discussing with other stakeholders about the scope and the implementation of the upcoming construction project. A stakeholder argues that the construction projects are often risky as the overall scope of the work can't be accurately estimated from the beginning. Furthermore, the project spans over a long period, the costs of materials can fluctuate widely. The procurement manager suggests that the pricing structure should be able to cover the supplier's costs plus 10% markup on total costs. This arrangement is known as...?
Answer: B
Explanation:
As you can see from the scenario, the procurement manager is suggesting to use cost plus pricing arrangement.
A cost-plus contract is an agreement to reimburse a company for expenses incurred plus a specific amount of profit, usually stated as a percentage of the contract's full price. These type of contracts are primarily used in construction where the buyer assumes some of the risk but also provides a degree of flexibility to the contractor.
Cost-plus contracts can be separated into four categories. They each allow for the reimbursement of costs as well as an additional amount for profit:
1. Cost-plus award fee contracts allow the contractor to be awarded a fee usually for good per-formance.
2. Cost-plus fixed-fee contracts cover both direct and indirect costs, in addition to a fixed fee.
3. Cost-plus incentive fee contracts happen when the contractor is given a fee if his or her perfor-mance meets or exceeds expectations.
4. Cost-plus percent-of-cost contracts allow the amount of reimbursement to rise if the contrac-tor's costs rise.
In the scenario, the procurement manager suggests a pricing structure that covers supplier's costs and adds
10% markup. This is cost-plus fixed-percentage.
Reference:
- Cost-Plus Contract Definition (investopedia.com)
- CIPS study guide page 30-36
LO 1, AC 1.2
NEW QUESTION # 184
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