Project and Contract Management — 2022

KNEC Diploma in Supply Chain Management, Module III. Original examination questions with explained answers for revision. Answers are independently prepared for study and are not an official KNEC marking scheme.

November 2022

Paper codes: 2903/306; 3306
Time: Not shown in supplied scan
Instructions: Cover instructions not included in supplied scan.

Question 1(a) — 10 marks

Explain five features that distinguish a project from an operation.

Answer

  1. A project has a defined beginning and end, while operations normally continue repeatedly.
  2. A project creates a distinct output or change, while operations deliver recurring products or services.
  3. Project resources are assembled around temporary objectives, while operating resources support continuing activities.
  4. Project tasks often involve greater novelty and uncertainty, while operating tasks are more standardised.
  5. Project success is assessed against agreed scope, time and cost, while operations emphasise sustained efficiency and service performance.

Question 1(b) — 10 marks

Pauline is a consultant who does not maintain an accurate payment schedule during contract work. Highlight five disadvantages of this omission.

Answer

  1. Cash needs cannot be forecast reliably, creating funding shortfalls.
  2. Late contractor or supplier payments can interrupt work and damage relationships.
  3. Duplicate, premature or omitted payments become harder to detect.
  4. Contractual interest, claims and disputes may arise from missed payment obligations.
  5. Management loses a reliable basis for reconciling certified work, expenditure and remaining commitments.

Question 2(a) — 10 marks

Reporting is a critical component in project planning. Justify the importance of reporting in project planning.

Answer

  1. Communicates objectives, assumptions and responsibilities to those preparing and approving the plan.
  2. Provides evidence about progress, costs and resource requirements.
  3. Highlights risks and deviations that require planning adjustments.
  4. Supports coordination of interdependent activities and stakeholder decisions.
  5. Creates an accountable record for approval, evaluation and lessons for later projects.

Question 2(b) — 10 marks

Feasibility study is one of the stages in the project life cycle. Highlight five activities that should be carried out at this stage.

Answer

  1. Market or user demand indicates whether the proposed output meets a real need.
  2. Technical feasibility shows that suitable methods, skills and technology can deliver the output.
  3. Financial and economic appraisal compares expected benefits with investment and operating costs.
  4. Legal, environmental and social assessment identifies approvals, impacts and stakeholder acceptance.
  5. Resource, schedule and risk assessment tests whether the project can be implemented and sustained realistically.

Question 3(a) — 10 marks

Explain five challenges that may be encountered when using the concessioning method in project procurement.

Answer

  1. Forecasting long-term demand and revenue is difficult and can undermine viability.
  2. Complex allocation of construction, operating and market risks makes negotiation demanding.
  3. Large financing requirements and long payback periods can limit suitable bidders.
  4. Monitoring service standards and prices over many years requires strong client capability.
  5. Policy changes, renegotiations and disagreements over public interests can disrupt the arrangement.

Question 3(b) — 10 marks

Describe five features of a turn-key project.

Answer

  1. A contractor has broad responsibility for delivering a completed facility ready for use.
  2. Design, procurement, construction and commissioning are commonly integrated within the agreed scope.
  3. The client deals mainly with one principal contractor for the contracted delivery package.
  4. Performance and completion requirements are defined for acceptance and handover.
  5. Operational control passes to the client after testing and completion, with continuing warranties as agreed.

Question 4(a) — 10 marks

Explain five indicators of a good project plan.

Answer

  1. Clear objectives and scope make the required result understandable.
  2. Realistic activities, dependencies and timings provide a feasible work schedule.
  3. Defined responsibilities identify who must deliver each activity and decision.
  4. Adequate budgets and resource allocations support the planned work.
  5. Risk controls, progress measures and review arrangements support monitoring and adjustment.

Question 4(b) — 10 marks

Pamba Limited has decided to sub-contract some aspects of a contract it is undertaking. Outline five reasons that may have influenced the company in making this decision.

Answer

  1. Specialist work requires skills or technology unavailable internally.
  2. Additional capacity is needed to meet the agreed completion schedule.
  3. A qualified specialist can deliver the work at lower total cost.
  4. The main contractor needs to concentrate management effort on its core responsibilities.
  5. Local expertise, equipment or access can improve execution of a particular work package, subject to contractual approval.

Question 5(a) — 10 marks

The management of Kinga Limited has decided to adopt the team approach in the management of its projects. Explain five advantages of this move to the company.

Answer

  1. Combines complementary technical and managerial expertise.
  2. Improves coordination between interdependent project activities.
  3. Generates more alternatives and better scrutiny when solving problems.
  4. Participation strengthens commitment to agreed project decisions.
  5. Shared learning and mutual support improve the team’s ability to respond to difficulties.

Question 5(b) — 10 marks

Outline five reasons that make it necessary to undertake suppliers prequalification during project procurement process.

Answer

  1. Confirms that potential suppliers meet stated eligibility requirements.
  2. Identifies firms with relevant technical experience and competence.
  3. Tests financial and resource capacity before detailed tendering.
  4. Reduces the number of clearly unsuitable offers and related evaluation effort.
  5. Reduces delivery risk by establishing a credible pool of capable competitors.

Question 6(a) — 10 marks

A certain client has been involved in a long standing dispute with one of his project contractors. Explain five measures that the client should take to eliminate the dispute.

Answer

  1. Review the contract, correspondence and evidence to define the actual disputed issues.
  2. Hold good-faith negotiations with authorised representatives and seek a documented settlement.
  3. Use an agreed mediator or conciliator where direct discussion does not resolve the disagreement.
  4. Apply the contractual adjudication, arbitration or competent court procedure where required.
  5. Implement the settlement or decision and improve change, payment and communication controls to prevent recurrence.

Question 6(b) — 10 marks

Highlight five reasons that may cause delays in the closure of a project after its execution.

Answer

  1. Incomplete work and outstanding defects may prevent final acceptance.
  2. Missing test results, manuals or handover documents may hold up approval.
  3. Unresolved variations, claims and final-account disagreements may delay settlement.
  4. Pending statutory inspections or client sign-offs may prevent formal completion.
  5. Weak coordination of demobilisation, resource release and record archiving may prolong closure.

Question 7(a) — 10 marks

The management of Hapa Limited has constituted a team to prepare a project plan for for an upcoming project. Explain five factors that the team should consider when undertaking the task.

Answer

  1. Project objectives, scope and required outputs define what the plan must deliver.
  2. Available finance, people, equipment and materials limit feasible methods and scale.
  3. Required completion dates and activity dependencies determine the schedule.
  4. Technical, legal, environmental and stakeholder requirements constrain execution.
  5. Risks, assumptions and contingency needs determine the resilience of the proposed plan.

Question 7(b) — 10 marks

Explain five likely negative consequences to a firm that fails to adhere to the rules that govern the opening of project tenders.

Answer

  1. Bid confidentiality or integrity may be compromised, allowing manipulation.
  2. Unfair treatment can reduce genuine competition and value for money.
  3. Aggrieved bidders may challenge the process and delay the project.
  4. Awards may require cancellation or corrective action under the applicable rules.
  5. Reputational damage and accountability consequences may arise for the firm and responsible officers.
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