Certified Professional Public Buyer (CPPB) Practice Test

What are non-value added activities?

1. Activities that generate profit without investments.

2. Activities that generate zero or negative return on investment.

3. Activities that are crucial to project completion.

4. Activities that are legally mandated.

The correct answer is: Activities that generate zero or negative return on investment.

Non-value added activities refer to those processes or tasks that do not contribute to the value of a product or service from the customer's perspective. Selecting the option indicating activities that generate zero or negative return on investment aligns with the definition of non-value added activities because such tasks either consume resources without yielding any benefits or may even detract from overall value when considering the cost incurred. In the context of project management and procurement, recognizing non-value added activities is crucial, as they can lead to wasted time and resources. Identifying and minimizing these kinds of activities can lead to improved efficiency and effectiveness in operations. On the other hand, options that suggest generating profit without investments, being crucial for project completion, or having legal mandates involve situations where those activities may indeed provide value, either through compliance, necessity, or financial gain. These aspects do not necessarily define non-value added activities, as they contribute positively in various contexts. Understanding these distinctions is fundamental in process improvement methodologies like Lean, which aim to streamline operations by eliminating waste.