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CIPS L4M2 Exam - Topic 1 Question 40 Discussion

SET Group are a start-up company trying to estimate the direct costs of materials for a project. The organisation has limited procurement records available. Would using general industry averages as a benchmark provide an accurate estimation of the project costs?
B) No, the organisation will not have access to industry benchmarks as they are a new organisation
A) Yes, industry benchmarks are always kept up to date to consider real-time market conditions
C) No, industry benchmarks do not consider specific specifications, quality requirements, or real-time market conditions
D) Yes, cost predictions do not need to be accurate as they are just an initial guess

CIPS L4M2 Exam - Topic 1 Question 40 Discussion

Actual exam question for CIPS's L4M2 exam
Question #: 40
Topic #: 1
[All L4M2 Questions]

SET Group are a start-up company trying to estimate the direct costs of materials for a project. The organisation has limited procurement records available. Would using general industry averages as a benchmark provide an accurate estimation of the project costs?

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Suggested Answer: B

Those items make up small portion of spend and the supply risk is low. So it is tactical item according to Kraljic portfolio matrix. Procurement should bundle these items into larger contracts, simplify procurement process.

LO 2, AC 2.1


by Cammy at Jul 15, 2024, 01:49 AM

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Leslie
7 months ago
Initial guesses can lead to big problems later on!
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Wynell
8 months ago
No way, they won't have the latest benchmarks as a new company.
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Kallie
8 months ago
Surprised to see people think averages are enough. What about quality?
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Emeline
8 months ago
I totally agree, specific needs matter a lot!
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Art
8 months ago
Industry benchmarks can be helpful, but they might not fit every project.
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Jesusita
9 months ago
I practiced a question similar to this, and I think the answer was that benchmarks don't account for specific quality needs, which is crucial for accurate cost estimation.
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Arthur
9 months ago
I'm not entirely sure, but I feel like the benchmarks might not be up to date with current market conditions.
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Jules
9 months ago
I think I read somewhere that using averages can lead to inaccuracies, especially if the project has unique requirements.
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Evan
9 months ago
I remember discussing how industry benchmarks can be useful, but they might not reflect the specific needs of a new project.
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Joesph
9 months ago
Option D seems a bit risky to me. Even if it's an initial guess, I'd want the cost estimation to be as accurate as possible.
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Silva
9 months ago
I think the key here is that SET Group is a start-up with limited data. Using industry averages might not be the best approach in this case.
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Mabelle
9 months ago
Hmm, I'm leaning towards option C. Industry benchmarks might not capture the specific requirements of this project.
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Muriel
9 months ago
This seems like a tricky one. I'm not sure if industry averages would be accurate enough, given the limited procurement records mentioned.
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Delpha
9 months ago
Okay, let me think this through step-by-step. To prepare a list of invoices due for payment, you'd need to create some kind of payment proposal or payment plan, right? So I'm going to go with B. Payment proposal as my answer.
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Gerardo
9 months ago
Key strategy here: look for Patriot Act specific restrictions. The shell bank prohibition feels like a definite correct choice.
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Jeannine
10 months ago
I'm a bit confused by the wording of this question. The options seem to cover different aspects of the Item Master Flexfield, and I'm not sure which one is the most appropriate answer. I'll need to think this through carefully.
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Florencia
1 year ago
I'm going with Option C. Industry benchmarks? More like industry smoke and mirrors. Real-time market conditions? Good luck keeping up with that rollercoaster.
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Kallie
1 year ago
Agreed, it's better to gather more procurement records for a more precise estimation.
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Ronna
1 year ago
We need more accurate estimations than just general industry averages.
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Elly
1 year ago
Exactly, they don't consider specific specifications or quality requirements.
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Carol
1 year ago
Option C. Industry benchmarks? More like industry smoke and mirrors.
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Iesha
1 year ago
Option D all the way! Cost predictions are just a fancy way of saying 'wild guess.' Accuracy is overrated when you're trying to get a project off the ground.
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Avery
1 year ago
Option C is the way to go. Industry benchmarks are about as reliable as a broken calculator. Gotta consider the nitty-gritty to get a true picture.
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Salley
1 year ago
Using general industry averages may not give us an accurate estimation of the project costs.
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Gearldine
1 year ago
We need to take into account the unique specifications and quality requirements of our project.
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Ernestine
1 year ago
I agree, industry averages can be misleading when it comes to specific project requirements.
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Benton
1 year ago
As a new startup, they should just throw a dart at the wall and call it a day. Accurate cost estimates? That's for the big guys with deep pockets.
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Lisbeth
1 year ago
B) No, the organisation will not have access to industry benchmarks as they are a new organisation
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Franklyn
1 year ago
C) No, industry benchmarks do not consider specific specifications, quality requirements, or real-time market conditions
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Omer
1 year ago
A) Yes, industry benchmarks are always kept up to date to consider real-time market conditions
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Nicolette
1 year ago
Industry benchmarks? More like industry fairy tales! Real-time market conditions? More like a never-ending game of catch-up.
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Stefan
1 year ago
It's true, using general industry averages as a benchmark may not provide an accurate estimation of project costs.
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Desirae
1 year ago
Industry benchmarks are not always accurate, they don't consider specific specifications or real-time market conditions.
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Odette
1 year ago
I agree with Pedro, industry benchmarks may not consider all factors.
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Pedro
1 year ago
I disagree, we need more specific data for accurate estimation.
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Samira
1 year ago
I think using industry averages could be helpful.
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