Question 3) Management Professional Certification

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Objective: Project Planning
SubObjective: Plan Purchases and Acquisitions

Single Answer Multiple Choice

 

You are performing a make-or-buy analysis. Which factor are you LEAST likely to consider?

 

A. the availability of outside vendors
B. the sensitivity of the project details
C. the cost of performing the work internally
D. expertise of resources within your organization

 

Answer:
A. the availability of outside vendors

 

Tutorial:
You are LEAST likely to consider the availability of vendors. A make-or-buy analysis is an analysis used to determine whether it would be more cost effective to produce a product or purchase the product. The important questions to consider when performing a make-or-buy analysis are as follows:

 

 

  • Does the organization have the expertise in-house to perform the work?
  • Does the work to be performed involve trade secrets or confidential or proprietary information? Are there time and resources available internally to perform the work?
  • Would it be less or more expensive to perform the work internally?
  • Will there be missed revenue opportunities if the organization performs the work internally?
  • Is the work to be performed something that the organization routinely does or is good at?

 

All of the other options are incorrect because these would be primary considerations in a make-or-buy analysis.

 

When performing a make-or-buy analysis, it would be better to perform the work in-house when it would be less expensive to perform the work internally and resources and expertise are available and when data relating to the project is highly confidential or proprietary.

 

When performing a make-or-buy analysis, it would be better to use an outside company to perform the work when you do not have internal expertise to perform the work, when you do not have time or resources to perform the work, and when it would be less expensive to have an outside company perform the work.

 

Reference:
1. A Guide to the Project Management Body of Knowledge – PMBOK Guide 3rd Edition – Project Procurement Management – 12.1.2 Plan Purchases and Acquisitions: Tools and Techniques

 

These questions are derived from the Self Test Software practice test for the Project Management Institute’s exam #PMP3ED: Project Management Professional, Third Edition.

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