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CFM - Certified Facility Manager Finance and Business Flashcards

6 cards from real CFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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

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

    TCO provides a complete financial picture of an asset true cost, enabling better procurement and lifecycle decisions.

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

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

    Zero-based budgeting requires justifying all expenditures from zero each period, eliminating automatic carryover of prior-year spending.

  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?

    Answer: Return on Investment (ROI)

    ROI expresses the net return as a percentage of the investment, making it easy to compare projects of different sizes.

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

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

    Targeted, analytically driven cost reduction preserves service quality while identifying genuine inefficiencies.

  5. What is benchmarking in facility management financial management?

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

    Benchmarking reveals where FM costs or performance diverge from industry norms, guiding improvement priorities.

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

    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

    The CapEx vs OpEx distinction affects how costs are recognized on financial statements and how they impact organizational budgets.