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CIPS L6M5 Exam Syllabus Topics:
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NEW QUESTION # 12
Fred is comparing two possible projects that will last for different durations.
His company can only select one project due to financial constraints.
He needs a method to compare the financial benefits of both projects.
Q: Is a payback analysis a useful tool for Fred to use?
Answer Options:
- A. No - there is no formula to calculate this, and a discount factor must be used
- B. No - this will not account for the difference in duration of the two projects
- C. Yes - this will provide Fred with a rate of return that is useful to accurately forecast profits
- D. Yes - this will account for the difference in duration of the two projects
Answer: D
Explanation:
A Payback Analysis (p.72) calculates how long it takes for a project to recover its initial investment. It accounts for project duration but does not provide a rate of return (Option C). Discount factors (Option D) are used in Net Present Value (NPV) analysis, not Payback Analysis. [P.72]
NEW QUESTION # 13
Petra is setting up a contract for a new construction project that must be robust with little flexibility. The contract stipulates that the client will bear the risk of unforeseen negative circumstances. Which type of contract is most suitable?
- A. NEC
- B. FIDIC
- C. JCT
- D. IMechE
Answer: B
Explanation:
FIDIC contracts are known for their robustness and low flexibility, placing risk on the client.
NEW QUESTION # 14
Scenario (same as Question 16):
Fin Inc is working with the new client. What type of costing system is being used?
- A. bottom up
- B. fixed fee
- C. open book
- D. bill of quantities
Answer: C
Explanation:
An open book costing system involves sharing financial details transparently between the parties.
NEW QUESTION # 15
The Royal Institute of Chartered Surveyors and the Royal Institute of British Architects are two founding members of which organisation that creates contracts for the construction industry?
- A. New Engineering Contract
- B. Institution of Mechanical Engineers
- C. International Federation of Consulting Engineers
- D. Joint Contracts Tribunal
Answer: D
Explanation:
The Joint Contracts Tribunal (JCT) is the organisation with these founding members.
NEW QUESTION # 16
Green Thumb Ltd, a landscaping company, is considering investing in a new lawn mower costing £10,000. The CFO estimates that the new machinery would increase annual income by approximately £2,000. What is the payback period of the investment?
- A. £8,000
- B. 10 years
- C. 20%
- D. 5 years
Answer: D
Explanation:
Payback period = Investment Cost ÷ Annual Cash Flow = £10,000 ÷ £2,000 = 5 years.
NEW QUESTION # 17
Which of the following statements about NEC contracts are true? Select all that apply
- A. The contracts use simple English in the present tense
- B. The contracts are commonly used in the private sector
- C. The suite of contracts is commonly known as the Rainbow Suite
- D. The contracts are commonly used in the IT and financial industries
- E. The contracts are designed to be flexible and allow for a range of payment options
Answer: A,E
Explanation:
NEC contracts are designed to be flexible with various payment options and use simple, present-tense English.
NEW QUESTION # 18
Why might a Public Sector Organisation use a PPP style of contract to build a new police station? Select ALL that apply.
- A. to monetise under-performing assets
- B. there is less administration involved
- C. it is a legal requirement as it shows value for money
- D. due to not having the budget to complete the construction themselves
- E. to ensure the highest quality of work
Answer: A,D
Explanation:
PPP contracts are used when budgets are tight and to monetise under-performing assets. They are not mandated by law nor do they inherently ensure high quality or less administration.
NEW QUESTION # 19
What is the purpose of Cybernetic Control within Project Management?
Answer Options:
- A. To assign resources
- B. To monitor progress
- C. To reduce errors
- D. To increase value
Answer: C
Explanation:
Cybernetic Control reduces errors by monitoring distortions in a project (p.112-113). It uses automated tracking systems to signal when deviations occur, enabling quick corrective actions. Option A relates to resource planning, C to project valuation, and D to general tracking, but not specifically error reduction. [P.112-113]
NEW QUESTION # 20
Which of the following aspects of culture make up the 'paradigm of the working environment' according to Gerry Johnson and Kevan Scholes? Select all that apply
- A. control systems
- B. stories
- C. rituals
- D. symbols
- E. artifacts
Answer: A,B,C,D
Explanation:
Stories, rituals, symbols, and control systems are part of the Cultural Web. The other two aspects of the Cultural Web (organisational structure and power structure) are not listed here.
NEW QUESTION # 21
A programme is a framework which allows multiple projects to be completed simultaneously. Is this TRUE?
- A. yes - programmes ensure that projects are viable and successful in their implementation
- B. no - a project is a set of programmes which are run simultaneously
- C. no - a programme is a type of project which helps the business achieve its objectives
- D. yes - projects are co-ordinated to achieve the strategic objectives of the business
Answer: D
Explanation:
A programme is designed to coordinate multiple projects to achieve strategic objectives.
NEW QUESTION # 22
Skipped
Kathryn is considering accepting a job at a new company. She is doing some research into the company to find out if it would be a good cultural fit for her. Which of the following would be classed as an 'espoused value' of the new company?
- A. The office furnishings and dress code
- B. Company cars given to all members of the senior leadership team
- C. The product slogans
- D. The way people are greeted in reception
- E. The company's mission statement
Answer: C,E
Explanation:
Espoused values are what the company says is important to them. Therefore, the correct answers are B and C. This is taken from Schein's Three Levels of Culture, which you can find on p.155 of the study guide.
Options A, D, and E would be classed as Artefacts, as they express culture in terms of physical attributes.
Domain: 3.1
NEW QUESTION # 23
In a fixed lump sum contract, this pricing mechanism does not allow for any changes in price. Is this statement TRUE?
Fixed lump sum contracts are widely used in construction and infrastructure projects.
Answer Options:
- A. Yes - the price is fixed before the contract is signed
- B. Yes - the contractor assumes all risks should they exceed the budget
- C. No - price changes are allowed as it is impossible to predict prices concretely in advance
- D. No - price variations are permitted if they are written into the contract
Answer: D
Explanation:
Fixed Lump Sum contracts allow limited price changes under specific conditions (p.55), such as client variation requests, force majeure, or inflation adjustments. Firm Fixed Price contracts, however, do not allow any changes. [P.55]
NEW QUESTION # 24
Juno is completing a Variance Analysis on the sales department's spend for the first quarter. He concludes that there is a Favourable Variance. What does this mean?
- A. the department has more money in the budget than what they have spent so far
- B. the results are better than expected
- C. the results are worse than expected
- D. the department has spent more than the allocated budget
Answer: B
Explanation:
A favourable variance means that the actual performance was better than expected.
NEW QUESTION # 25
Which of the following pieces of information is required to create a Bill of Quantities? Select all that apply
- A. volume of materials used
- B. price of material
- C. quality of materials
- D. dimensions of materials
- E. manufacturer of material
Answer: A,B,D
Explanation:
A Bill of Quantities is based on the volume/dimensions and price of the materials. Quality and manufacturer details are typically specified elsewhere.
NEW QUESTION # 26
Fire Light Corporation has secured a contract to design a new bridge for a local council. The council wants a price set in advance but allows for minor adjustments due to unforeseen circumstances. Which pricing mechanism is most suitable?
- A. bill of quantity
- B. fixed lump sum
- C. firm fixed price
- D. target costing
Answer: B
Explanation:
A fixed lump sum contract sets the price in advance while permitting small adjustments if necessary.
NEW QUESTION # 27
Jennifer is drafting a contract with a "termination for convenience" clause.
Q: What obligations should be included in this clause? (Select all that apply.)
- A. The destruction of confidential information
- B. The smooth transition of services to a new supplier
- C. The return of any advance payments
Answer: A,B,C
Explanation:
A termination for convenience clause outlines the responsibilities when a contract is ended early by mutual agreement (p.135).
Returning advance payments ensures fairness.
Destroying confidential data prevents misuse.
Smooth service transition minimizes disruptions.
A review meeting is not mandatory, so it is incorrect. [P.135]
NEW QUESTION # 28
Skipped
Which of the following statements is true of a business that operates in a 'low-context culture' country?
- A. There is a blending of work and home life
- B. Employees are more loyal
- C. Religion is not important
- D. Communication is direct and meetings are therefore shorter
Answer: D
Explanation:
Communication is direct and meetings are therefore shorter. This is from p. 182:
"In low-context cultures, communication is much more direct and explicit, which can result in shorter meetings and a reliance on rules to govern procedures." CIPS gives the UK and USA as examples of a low-context culture.
Domain: 3.2
NEW QUESTION # 29
Liability limitation often focuses on which of the following types of loss, which is said to be the most unpredictable and most significant in the case of a default on a contract?
- A. repudiatory
- B. anticipatory
- C. consequential
- D. direct
Answer: C
Explanation:
Consequential loss is considered the most unpredictable and significant, hence it is often the focus of liability limitations.
NEW QUESTION # 30
Manchester City Council is planning to construct a new hospital using an EPC style of contract. Which two of the following are the greatest risks to the Council?
- A. ensuring the specification is correct
- B. ensuring the contractor limits the use of subcontractors
- C. setting an accurate budget before the contract is signed
- D. including a time-is-of-the-essence clause within the contract
- E. accurately communicating the requirements to the contractor
Answer: A,E
Explanation:
The main risks are ensuring that the specification is correct and that the requirements are accurately communicated to the contractor.
NEW QUESTION # 31
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