CFM CFM - Certified Facility Manager Finance and Business 2

Question 1

What does Total Cost of Ownership (TCO) mean in facility asset management?

Accepted Answer

The sum of all costs associated with an asset over its entire lifecycle, including acquisition, operation, maintenance, and disposal

Answer

The purchase price of a piece of equipment

Answer

The annual depreciation value of building assets

Answer

The cost to replace an asset at today market prices

Question 2

What is zero-based budgeting and how does it differ from traditional incremental budgeting?

Accepted Answer

Zero-based budgeting builds every budget line from scratch each cycle, requiring justification for all spending; incremental budgeting adjusts the prior year figures

Answer

Zero-based budgeting starts from the prior year budget and adds a percentage increase; incremental budgeting builds from scratch

Answer

Zero-based budgeting eliminates all capital expenditures; incremental budgeting funds capital separately

Answer

They are two terms for the same budgeting method

Question 3

What financial metric is used to compare the profitability of potential facility investments and select the one generating the most value per dollar invested?

Accepted Answer

Return on Investment (ROI)

Answer

Net Present Value (NPV)

Answer

Internal Rate of Return (IRR)

Answer

Payback period

Question 4

A facility manager is asked to reduce operating costs by 10 percent next fiscal year. Which approach represents best practice?

Accepted Answer

Analyze each cost driver, identify inefficiencies, and target reductions where they have the least impact on service quality

Answer

Reduce all budget lines by an equal percentage across the board

Answer

Eliminate all preventive maintenance to save labor costs

Answer

Defer all non-emergency capital expenditures regardless of lifecycle implications

Question 5

What is benchmarking in facility management financial management?

Accepted Answer

Comparing FM costs and performance metrics against industry peers or best-in-class organizations to identify improvement opportunities

Answer

Setting the minimum acceptable performance standard for all staff

Answer

The process of preparing the annual operating budget

Answer

Evaluating contractor bids against each other

Question 6

What is the difference between a capital expenditure (CapEx) and an operating expenditure (OpEx) in facility accounting?

Accepted Answer

CapEx covers investments in long-term assets that are depreciated over time; OpEx covers day-to-day operational costs expensed in the period incurred

Answer

CapEx is planned spending; OpEx is unplanned emergency spending

Answer

CapEx is paid by tenants; OpEx is paid by the building owner

Answer

There is no accounting difference between CapEx and OpEx