CIPS L3M3 Practice Exams
Last updated on Oct 21,2026- Exam Code: L3M3
- Exam Name: Contract Administration
- Certification Provider: CIPS
- Latest update: Oct 21,2026
The UN Guiding Principles on Business and Human Rights (UNGP) – which recognise that business enterprises must respect human rights C were adopted in which year?
- A . 1929
- B . 2011
- C . 1948
- D . 1977
B
Explanation:
2011 is the correct answer.
You may wish to search for the Guiding Principles to familiarise yourself a little.
Revenue-earning possibilities which are foregone as a result of implementing a plan; the cost of not doing something else.
- A . Opportunity cost
- B . Absorption cost
- C . Indirect cost
- D . Overhead cost
A
Explanation:
An opportunity cost is the cost of not being able to do something else.
For example, if a firm opts to build a new factory, it may not be able to create ten new retail outlets which was another option open to it, in spending these particular funds. Or if you buy a holiday, you may not be able to buy a new television. The television is the opportunity cost of the holiday ie the benefit foregone.
The other types of cost shown are methods of classifying actual (real) costs. Opportunity costs are, in a sense, not real; they are hypothesized and therefore do not show in the balance sheet or profit and loss account of a business.
The letters ‘ESE’ stand for:
- A . Early supply estimate
- B . External storage environment
- C . External supplier expertise
- D . Early supplier engagement
D
Explanation:
Early supplier engagement – one of the assessment criteria for this course (3.1)
If your organisation takes out insurance cover to address various risks, which one of the following risk management strategies is it adopting?
- A . Treat
- B . Terminate
- C . Tolerate
- D . Transfer
D
Explanation:
Transfer.
Some of the risk has been transferred to the insurance company.
Where the buying organisation’s contract manager feels that a contractor has under-performed, which one of the following actions is normally not recommended?
- A . Implementing any liquidated damages clause in the contract
- B . Issuing a termination notice
- C . Serving a deficiency notice to indicate the significance of the situation
- D . Offering a bonus payment for remedying any defects
D
Explanation:
Rewarding poor performance is not to be encouraged.
The other three options shown are often capable of motivating suppliers.
When negotiating, it is highly desirable to have both a:
- A . ZOPA and a TABNA
- B . BATNA and a ZOPA
- C . DOPA and a BANTA
- D . BATNA and a FOPA
B
Explanation:
Best alternative to a negotiated agreement; and a zone of potential agreement.
The other terms shown are just fictions.
‘When the best XXX is selected, a formal YYY ZZZ is prepared and sent to the supplier. Choose the most likely words to replace XXX, YYY and ZZZ.
- A . Specification, purchase order
- B . Specification, delivery address
- C . Quotation, purchase order
- D . Quotation, order acknowledgement
C
Explanation:
The best quotation is selected, which would meet the specification as well as meeting the other re-quired criteria; and in order to progress things round the procurement cycle, a purchase order would be issued.
Which of these costs would be classified as an indirect cost in manufacturing?
- A . Material used in products
- B . Wages for assembly line workers
- C . Factory maintenance
- D . Shipping costs for finished goods
Which one of the following is a trading bloc?
- A . EFTA
- B . EFTAT
- C . EFTPOS
- D . EFT
A
Explanation:
EFTA.
The European Free Trade Agreement countries.
In this course, the acronym ‘NDA’ stands for:
- A . Non-delivery area
- B . Non-distribution agreement
- C . Non-dispute agreement
- D . Non-disclosure agreement
D
Explanation:
Non-disclosure agreement, also known as a confidentiality agreement.