CFM - Certified Facility Manager Finance and Business Questions and Answers

Question 1

A facility manager is preparing the annual budget and wants to ensure every single expense, from maintenance contracts to utility costs, is justified for the upcoming fiscal year, regardless of previous allocations.
Which budgeting method is being employed?

Accepted Answer

Zero-Based Budgeting (ZBB)

Answer

Incremental Budgeting

Answer

Capital Budgeting

Answer

Activity-Based Budgeting

Question 2

When evaluating the purchase of a new, energy-efficient HVAC system versus repairing the existing one, a facility manager calculates the total cost of ownership, including initial purchase, installation, energy consumption, maintenance, and disposal costs over the asset's entire lifespan. What is this financial analysis technique called?

Accepted Answer

Life Cycle Cost Analysis (LCCA)

Answer

Return on Investment (ROI) Analysis

Answer

Payback Period Calculation

Answer

Net Present Value (NPV)

Question 3

A facility manager is negotiating a contract for janitorial services. The agreement specifies the exact cleaning chemicals to be used, the specific schedule for tasks, and the precise methods for floor polishing. This high level of detail leaves little room for the contractor's discretion. Which type of contract is this?

Accepted Answer

Prescriptive Contract

Answer

Performance-Based Contract

Answer

Cost-Plus Contract

Answer

Time and Materials Contract

Question 4

Which of the following is considered a capital expense in a facility management budget?

Accepted Answer

A complete roof replacement project

Answer

Monthly utility payments

Answer

Annual landscaping contract

Answer

Routine pest control services

Question 5

A facility department provides services like space planning and event setup to other departments within the same organization. To account for these costs, the facility department charges the user departments a fee for the services rendered. What is this internal accounting practice called?

Accepted Answer

Chargeback

Answer

Outsourcing

Answer

Procurement

Answer

Capitalization

Question 6

When developing a strategic sourcing plan for facility services, what is the primary goal of the procurement process?

Accepted Answer

To select a provider who offers the best overall value, balancing cost, quality, and reliability

Answer

To select the vendor with the absolute lowest price

Answer

To establish a long-term contract with a single supplier for all services

Answer

To ensure the process is completed as quickly as possible

A facility manager is preparing the annual budget and wants to ensure every single expense, from maintenance contracts to utility costs, is justified for the upcoming fiscal year, regardless of previous allocations.Which budgeting method is being employed?

A facility manager is preparing the annual budget and wants to ensure every single expense, from maintenance contracts to utility costs, is justified for the upcoming fiscal year, regardless of previous allocations.
Which budgeting method is being employed?