L6M5 Practice Questions

Redundancy is a strategic tool for cultural change (p.208).

Options A & B relate to cost-cutting and downsizing, not change.

Option D involves expansion, not workforce reduction. [P.208]

Understanding the local culture is crucial for integrating the new factory and ensuring the project's

success.

Acceptance Criteria should be set before the project starts in the Project Initiation Document (PID)

(p.137).

Option A is too late, as the project is already completed.

Option B is iterative, but criteria should be predefined.

Option D is for evaluation, not definition. [P.137]

The next stage after a business justification is a Feasibility Study (p.18-19). This assesses financial

viability and risks before moving forward. Concept design and project brief come after feasibility, and

the construction manager is appointed much later in the process. [P.18-19]

An open book costing system involves sharing financial details transparently between the parties.

Cost-plus pricing is best suited for high-risk environments (p.93), such as fluctuating commodity

markets. It reduces risk for suppliers by allowing cost adjustments based on actual expenses plus a

margin. Option A is incorrect because low-risk projects favor fixed pricing. [P.93]

A Project Audit (p.141) occurs post-completion to assess:

Financial health

Performance evaluation

Lessons learned

It is not a planning tool (Option B), nor is it for active budget management (A) or solely for senior

leadership (C). [P.141]

Target costing requires a collaborative relationship between the client and contractor. The other

options do not accurately describe the target costing approach.

Discounted cash flow accounts for the time value of money and allows for an accurate comparison of

projects with different durations.

The correct answer is 1 (p.13). The scope is clearly defined by the client, making it easier for the

contractor to plan and execute the project efficiently. Option 2 is incorrect because not all EPC

contracts offer an early completion bonus. Option 3 is incorrect because EPC contracts can include

subcontractors. Option 4 is incorrect because risks are shared between the client and contractor.

[P.13]