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

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

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

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

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

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

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

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

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

CFM - Certified Facility Manager Practice Test

CFM - Certified Facility Manager Practice Test

CFM CFM - Certified Facility Manager Finance and Business 2