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CIPS L4M2 Exam Syllabus Topics:

SectionWeightObjectives
Use specifications in procurement and supply20-25%- Types of specifications
  • 1. Output/outcome-based specifications
  • 2. Conformance vs performance specifications
  • 3. Drawings, samples, brands, technical standards
- Advantages and limitations of specification types
  • 1. Risk, cost, flexibility, supplier innovation impact
- Sources for developing specifications
  • 1. Suppliers, industry benchmarks, regulatory requirements
  • 2. Internal stakeholders, technical experts, standards bodies
Legal and regulatory considerations10-15%- Legislation affecting requirements definition
  • 1. Procurement regulations, competition law, standards
- Sustainability and ethical requirements
  • 1. Environmental, social, ethical criteria
Stakeholder management in defining needs15-20%- Identify and classify stakeholders
  • 1. Power/interest matrix and engagement strategies
  • 2. Internal vs external stakeholders
- Communicate and consult with stakeholders
  • 1. Resolving conflicting requirements
  • 2. Methods for gathering requirements
- Align needs with organisational objectives
  • 1. Strategic alignment and value contribution
Market management in procurement and supply20-25%- Evaluate market information sources
  • 1. Supplier intelligence and market research
  • 2. Industry reports, government data, trade journals
- Analyse market structures and competition
  • 1. Impact of market structure on procurement strategies
  • 2. Perfect competition, monopoly, oligopoly, monopolistic competition
- Assess market forces and trends
  • 1. Supply and demand dynamics
  • 2. Technological, legal, economic, social factors
  • 3. Global vs local market conditions
Devise a business case for requirements sourced externally20-25%- Criteria for creating business cases
  • 1. Benchmarking requirements
  • 2. Costs, benefits, options, alignment, timescales
- Estimate costs and prices for procurement activities
  • 1. Direct and indirect costs
  • 2. Total cost of ownership / whole life costing
  • 3. Market data sources for cost/price information
  • 4. Cost estimation and budgeting methods
- Interpret financial budgets for purchase control
  • 1. Cash flow and cost entries
  • 2. Purpose and structure of budgets
  • 3. Budget performance and variance management
- Influence of business needs on procurement decisions
  • 1. Types of purchase: new, modified rebuy, straight re-buy
  • 2. Procurement's role in developing business cases
  • 3. Impact of business needs on purchase types

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CIPS Defining Business Needs Sample Questions (Q251-Q256):

NEW QUESTION # 251
Facing fiercer competition at home and abroad, IKEA, the leading furniture retailer, needs to im-prove its competitiveness. In order to do this, IKEA must decrease operating costs and improve quality of current and new retail stores. The company establishes a project team. The job of the team is to collect data on performance from multiple stores in several countries, then select the best performing one. The team will work closely with best performing store and study its processes. After the research, the team will recommend best practices to other retail stores. IKEA management can also apply these practices to new stores in the future. Which of the following correctly describe the process undertaken by IKEA project team?

Answer: D

Explanation:
Basically, IKEA project team is undertaking the following process:
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This is a typical benchmarking process. Benchmarking is defined as the process of measuring products, services, and processes against those of organizations known to be leaders in one or more aspects of their operations. Benchmarking provides necessary insights to help you understand how your organization compares with similar organizations, even if they are in a different business or have a different group of customers.
In the scenario, benchmarking process is undertaken within subsidiaries of IKEA, thus it is internal.


NEW QUESTION # 252
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: B

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).
Reference:
LO 3, AC 3.3


NEW QUESTION # 253
Which of the following sources of information are considered as primary data? Select TWO that apply.

Answer: C,E

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.


NEW QUESTION # 254
Which of these are variable costs?
* Staff overtime
* Premises costs
* Insurance costs
* Material costs

Answer: B


NEW QUESTION # 255
A market has a considerable number of buyers and suppliers. Analysis of the market reveals that loyalty from buyers is relatively low and switching to alternative providers is commonplace. Which of the following market characteristics is supporting this type of buyer behaviour?

Answer: D


NEW QUESTION # 256
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