Certified Professional Public Buyer (CPPB) Practice Test

What is involved in price analysis?

1. Estimating future market trends

2. Evaluating price without cost analysis

3. Calculating potential savings

4. Assessing contractor performance history

The correct answer is: Evaluating price without cost analysis

Price analysis involves evaluating the price of goods or services through various methods without delving into a detailed breakdown of costs associated with those prices. This process includes comparing prices with similar products or services in the market, considering factors like market trends, vendor pricing strategies, and historical pricing data. Choosing to evaluate price without cost analysis means focusing on the overall price itself, rather than the underlying cost structure that led to that price. This approach is essential for determining if the price offered by a vendor is reasonable in relation to the market and can help ensure that funds are being spent wisely, especially when the detailed cost of production isn't available or necessary for the procurement decision. Other options involve elements that do not directly pertain to the fundamental process of price analysis. For instance, estimating future market trends or calculating potential savings may provide useful insights but are separate from the core practice of price evaluation. Additionally, assessing contractor performance history is primarily focused on the contractor’s past work and reliability rather than the direct comparison and evaluation of pricing. Thus, understanding price analysis fundamentally centers around the evaluation of price itself without diving into the costs that constitute that price.