Exam Questions and Answers for L6M5 Study Guide Questions and Answers!
Strategic Programme Leadership Certification Sample Questions and Practice Exam
NEW QUESTION # 38
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. No - price changes are allowed as it is impossible to predict prices concretely in advance
- B. Yes - the contractor assumes all risks should they exceed the budget
- C. Yes - the price is fixed before the contract is signed
- 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 # 39
What is the purpose of a Project Audit?
Answer Options:
- A. To ensure the budget is managed effectively
- B. To present findings to senior leadership
- C. To assess project requirements
- D. To review financial and performance status after completion
Answer: D
Explanation:
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]
NEW QUESTION # 40
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 # 41
KCJ Ltd is a public sector organisation planning five projects for the next financial year. Each project has a distinct cost estimation method and source of power for the project leader.
Your task is to match the correct cost estimation method and source of power to each project.
Project Descriptions
Project 1
Description: Budget estimation is calculated using an algorithm.
Project Lead's Power: Founder of the organisation.
Project 2
Description: The Head of R&D (PhD in Data Science) is using costing from similar past projects to determine the budget.
Project Lead's Power: Expertise in Data Science.
Project 3
Description: The project is led by a key stakeholder and involves creating a Bill of Materials. Costs are worked out item by item.
Project Lead's Power: Authority due to stakeholder influence.
Project 4
Description: The Project Leader has calculated the base cost, most likely cost, and worst-case scenario.
Project Lead's Power: Has the authority to cancel the project at any time.
Project 5
Description: The project leader is a well-liked Board Member who has selected a team he is comfortable with. He determined the budget based on his own research.
Project Lead's Power: Personal relationships with team members.
Answer:
Explanation:
NEW QUESTION # 42
Below are descriptions of five companies in the UK. Each company has a unique organisational culture and a key Cultural Web Influence that shapes its structure and operations.
Your task is to match the correct type of organisational culture and cultural web influence to each company.
Company Descriptions
Company 1
Description: Authority is centred around the founder. There are strict financial systems and a reward/bonus scheme for meeting targets.
Company 2
Description: Employees operate independently and often bring in their own clients. There is a strong corporate identity and branding.
Company 3
Description: Strict hierarchy determines salary and job titles. The organisation is described as bureaucratic and follows stringent rules.
Company 4
Description: Employees work in small teams or individually on projects. There is a strong emphasis on weekly team meetings where tasks for the upcoming week are discussed.
Company 5
Description: Authority is held by senior leadership who make all decisions. There are few rules, and culture is reinforced by storytelling about past successes.
Answer:
Explanation:
NEW QUESTION # 43
Under which style of contract is the client, rather than the construction company, responsible for the design of a building?
- A. DBOO
- B. Management Contracting
- C. DBO
- D. EPC
Answer: B
Explanation:
In Management Contracting, the client retains responsibility for the design.
NEW QUESTION # 44
Which of the following is NOT a benefit or function of a professional body?
Professional bodies are established organizations that promote industry standards, ethical conduct, and professional development.
Answer Options:
- A. Raising productivity
- B. Creating international networks
- C. Ensuring prices remain low
- D. Governance and ethical standards
Answer: C
Explanation:
Professional bodies do NOT control pricing in the industry, as this would be market interference. Governance, productivity improvements, and networking are valid functions. [P.31]
NEW QUESTION # 45
Cyril Engineering entered into a contract with Dojo Ltd for electrical engineering services to a power station.
The contract was successful for two years, but Cyril Engineering failed to fulfill obligations recently.
Q: What is this situation known as?
Answer Options:
- A. Consequential Loss
- B. Direct Loss
- C. Damages
- D. Default
Answer: D
Explanation:
Failure to meet contractual obligations is classified as Default (p.123).
Consequential Loss (A) refers to indirect financial loss due to contract failure.
Damages (B) are legal remedies for breaches.
Direct Loss (D) relates to immediate financial impact, but default is the correct term for a failure to meet obligations. [P.123]
NEW QUESTION # 46
XYZ is a large construction organization running five different projects. Each project has a specific type of contract and pricing mechanism.
Your task is to match the correct type of contract and pricing mechanism to each project.
Projects and Descriptions
Project 1
Description: Construction of an apartment block, where XYZ is responsible for both design and construction. Upon completion, ownership is transferred to the client.
Pricing Mechanism: Based on past experience of similar projects.
Project 2
Description: Facilities management for a 6-year period after construction. The budget is constantly adjusted due to industry volatility.
Pricing Mechanism: Budget changes continuously over time.
Project 3
Description: XYZ was involved from an early stage, but does not bear the design risk. The budget resets at the start of each new accounting period.
Pricing Mechanism: The budget is refreshed periodically.
Project 4
Description: XYZ is responsible for certain parts of the design and build, while another company handles other aspects. XYZ is paid upon milestone completion.
Pricing Mechanism: Payment is milestone-based.
Project 5
Description: Construction of a new toll bridge which will be operated by XYZ for the first 6 years post-construction. The pricing includes costs of raw materials, labor, and a profit margin.
Pricing Mechanism: Costs plus profit.
Answer:
Explanation:
NEW QUESTION # 47
Golden Rainbow Ltd has invested £4m in a new research project started three years ago. The CFO calculates that the average rate of return on the project is -6%. Is this possible?
- A. no - a rate of return is expressed in years rather than as a percentage
- B. no - a rate of return is always displayed as a positive number
- C. yes - projects can have a negative rate of return
- D. yes - but this is likely to change to a positive figure shortly
Answer: C
Explanation:
A negative rate of return indicates that the project is generating a loss of 6% per annum.
NEW QUESTION # 48
What is the purpose of Cybernetic Control within Project Management?
Answer Options:
- A. To monitor progress
- B. To reduce errors
- C. To assign resources
- D. To increase value
Answer: B
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 # 49
Glitter Kitten Ltd negotiates a contract with Paw Ltd (new supplier).
Q: What pricing mechanism is best for visibility into supplier costs and margins?
Answer Options:
- A. Open-Book Costing
- B. Activity-Based Costing
- C. Bottom-Up Pricing
- D. Cost Reimbursable Contract
Answer: A
Explanation:
Open-Book Costing (p.2.1) ensures visibility into supplier costs and margins, which matches the CEO's request.
Cost Reimbursable (B) covers unknown costs, but does not provide transparency.
Bottom-Up Pricing (C) estimates project costs from smaller parts.
Activity-Based Costing (D) assigns costs per activity, but does not guarantee supplier transparency. [P.2.1]
NEW QUESTION # 50
Giant Construction Company is working on five large-scale projects. Each project has a specific contract type and pricing mechanism.
Your task is to match the correct contract type and pricing mechanism to each project.
Project Descriptions
Project 1
Description: Giant is collaborating closely with the client to construct a hospital. The client has provided a cost estimate, and any savings will be shared between the parties. This contract is popular in the public sector due to its flexibility.
Project 2
Description: This suite of contracts is known as the "rainbow suite". It is rigid, meaning no changes can be made after signing. The price was fixed at the date of signing.
Project 3
Description: This international project involves the construction of wind turbines. The pricing mechanism calculates costs for each individual turbine.
Project 4
Description: The most popular form of contract in construction, utilizing a Contract Administrator to ensure timely information flow. Since the scope was not clearly defined, Giant is working with the client on a cost-sharing basis plus a small profit margin.
Project 5
Description: The project involves ICT services and software provision. Payments are linked to milestone completion during the project implementation phase.
Answer:
Explanation:
NEW QUESTION # 51
Which of the following statements about investment appraisal techniques are true? (Select all that apply.) Answer Options:
- A. Return on Capital Employed (ROCE) is expressed as a percentage of the value of assets used to generate profit
- B. Non-discounted cash flow methods focus on profit maximization
- C. Payback analysis ignores cash flow after the business recovers its costs
- D. Internal Rate of Return (IRR) can be used with Net Present Value (NPV)
Answer: A,C,D
Explanation:
Option B is correct - ROCE is expressed as a percentage (p.87).
Option C is correct - Payback Analysis only considers the break-even point (p.83).
Option D is correct - IRR and NPV are often used together (p.82).
Option A is incorrect - Profit maximization is not the primary focus of non-discounted cash flow methods. [P.82-87]
NEW QUESTION # 52
Scenario (same as Question 16):
Which type of contract would be the most suitable for working with the new client?
- A. IMechE
- B. NEC
- C. JCT
- D. FIDIC
Answer: B
Explanation:
The NEC contract is known for its flexibility and collaborative approach, matching the client's requirements.
NEW QUESTION # 53
Which type of organisational culture has a flat hierarchy and a fast responsiveness to change?
- A. role
- B. power
- C. person
- D. task
Answer: C
Explanation:
This is the Person Culture. Refer to the comparison table of Handy's 4 Culture Types for details on responsiveness and hierarchy.
NEW QUESTION # 54
Skipped
An End-Of-Project Review may include the hiring of an external consultant to audit a project. This is particularly true in the Public Sector and for high-value/high-risk projects. The Auditor is likely to review the project's performance against what?
- A. Other similar projects completed by the organization
- B. The project plan
- C. Projects completed in the private sector
- D. Configuration management
Answer: B
Explanation:
The audit will compare the results of the project with the project plan (i.e., what the project set out to achieve vs. what it actually achieved). This is from p. 142.
Domain: 2.4
NEW QUESTION # 55
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