CMM Infrastructure & Capital Projects 4

Question 1

A municipality issues revenue bonds for a water treatment plant. What is the primary security pledged to bondholders?

Accepted Answer

Net revenues generated by the water utility

Answer

Revenue bonds are secured solely by the revenues generated by the specific enterprise (e.g., water utility fees), not by the municipality's general taxing authority.

Question 2

What is the purpose of a 'constructability review' in the pre-construction phase of a capital project?

Accepted Answer

To identify design elements that may be difficult, costly, or impossible to build as specified

Answer

A constructability review examines construction documents for buildability issues, conflicts, and ambiguities before bidding to reduce costly change orders during construction.

Question 3

Which federal program provides low-interest loans to municipalities for water infrastructure projects, including drinking water and wastewater systems?

Accepted Answer

State Revolving Fund (SRF)

Answer

The Clean Water and Drinking Water State Revolving Fund programs provide low-interest loans to municipalities for eligible water infrastructure projects.

Question 4

A city council member argues that a new fire station should be built using fund balance rather than bonds. What is the primary disadvantage of this approach for large capital projects?

Accepted Answer

It depletes reserves needed for emergencies and provides no intergenerational equity

Answer

Using fund balance depletes emergency reserves and requires current taxpayers to fully fund assets that future taxpayers will also use, violating the principle of intergenerational equity.

Question 5

What is Earned Value Management (EVM) used to assess in capital project oversight?

Accepted Answer

Whether a project is on schedule and within budget by comparing planned value, earned value, and actual cost

Answer

EVM integrates scope, schedule, and cost to provide objective performance metrics, enabling early identification of cost and schedule variances.

(CMM) Certified Municipal Manager Practice Test

(CMM) Certified Municipal Manager Practice Test

CMM Infrastructure & Capital Projects 4