Source Selection Criteria

Correct Answer: Total cost of ownership

The source selection approach that is being used by the project manager in the provided question is the 'Total cost of ownership'. This approach not only focuses on the initial purchasing price but also considers other essential factors such as life-cycle costs (including installation, operation, maintenance, and decommission), product support, compatibility, and past performance. These factors contribute to the total cost of ownership of the product, which is why this approach is used to make a holistic and economical decision. On the other hand, 'Lowest price' as a criterion focuses only on the initial cost of purchase and ignores other long-term costs and factors. 'Weighted criteria' is incorrect because the question doesn't mention about grading or scoring system for different criteria which usually characterizes the 'Weighted Criteria' approach. The question given does not strictly fit the "Most innovative offer" choice, as this would typically emphasize the novelty or uniqueness of the solutions rather than a broad evaluation of cost and performance factors.

Correct Answer: Choose another vendor with less risk of litigation

In project management, Source Selection Criteria is used to make a balanced decision considering factors like cost, quality, risk, past performance, etc. Choosing the vendor with less risk of litigation might seem costlier but would safeguard against potential conflicts and lawsuits, preventing possible time and financial drains in the future. Choosing the cheapest vendor irrespective of past would not consider potential risks involved due to their litigious past. Similarly, negotiating with the cheapest vendor for zero litigations would not guarantee that there would be no litigations in future because agreements can be breached. Hiring legal counsel to mitigate risk from the cheapest vendor would add an additional ongoing cost to the project, eliminating the cost benefit of choosing the cheapest vendor.

Correct Answer: Quality-based

Quality-based selection criteria are the best answer for procurement planning. These criteria prioritize factors such as the seller's technical capability, management approach, and relevant experience over simply choosing the lowest price option. Price-based selection focuses solely on the lowest price, neglecting other important factors. Time-based selection emphasizes the speed of delivery but may compromise quality and other critical aspects. Location-based selection prioritizes geographic proximity but does not necessarily ensure the best overall fit for the project's needs. Therefore, quality-based selection criteria provide a comprehensive approach to evaluating potential sellers and selecting the one most likely to deliver a successful project outcome.