CPRE Capital Improvement Planning and Asset Management 2 — Questions and Answers
Question 1: When preparing a capital improvement plan, which approach ensures that projects align with the agency's long-term strategic goals?
- Prioritizing projects based solely on project costs from lowest to highest
- Linking each proposed capital project to adopted strategic plan goals and community needs assessments (Correct answer)
- Selecting projects based on the personal preferences of elected officials
- Funding all projects identified in public feedback sessions regardless of feasibility
Correct answer: Linking each proposed capital project to adopted strategic plan goals and community needs assessments
A defensible CIP connects proposed projects to strategic plan priorities and documented community needs, ensuring capital investments advance the agency's mission and withstand public scrutiny.
Question 2: What is 'life-cycle costing' in the context of capital asset management?
- Calculating the total cost of a program from launch to discontinuation
- Estimating all costs associated with an asset from acquisition through operation, maintenance, and disposal (Correct answer)
- Tracking the career lifecycle costs of senior recreation professionals
- Measuring the revenue generated by a facility over its operational life
Correct answer: Estimating all costs associated with an asset from acquisition through operation, maintenance, and disposal
Life-cycle costing accounts for acquisition, installation, operation, maintenance, rehabilitation, and disposal costs to give decision-makers a complete financial picture before committing to a capital investment.
Question 3: A general obligation (GO) bond for parks capital projects is typically repaid through:
- User fees collected at park facilities
- Property taxes levied on residents within the jurisdiction (Correct answer)
- Federal transportation grants
- Concession revenues from park vendors
Correct answer: Property taxes levied on residents within the jurisdiction
General obligation bonds are backed by the full faith and credit of the issuing government and are repaid through property tax revenues, often requiring voter approval.
Question 4: Which document typically accompanies a parks capital project to analyze whether projected revenues or benefits justify the proposed investment?
- Marketing plan
- Cost-benefit analysis or feasibility study (Correct answer)
- Staff performance appraisal
- Volunteer recruitment plan
Correct answer: Cost-benefit analysis or feasibility study
A cost-benefit analysis or feasibility study evaluates projected costs against anticipated financial returns, usage, and community benefits, helping leadership and governing bodies make informed investment decisions.
Question 5: Which term describes the annual budget allocation specifically reserved to fund future capital asset replacements without taking on debt?
- Operating contingency fund
- Capital replacement reserve fund (Correct answer)
- Petty cash account
- Performance bond escrow
Correct answer: Capital replacement reserve fund
A capital replacement reserve fund (or sinking fund) accumulates contributions annually so that when an asset reaches the end of its useful life, funds are available for replacement without requiring new borrowing.
Question 6: In a parks CIP, what does a 'five-year forecast' typically show?
- Projected staffing levels and salary increases for all departments
- Planned capital projects, estimated costs, funding sources, and phasing over a five-year period (Correct answer)
- Five-year marketing and advertising expenditure projections
- Anticipated annual changes to park user fees and admission prices
Correct answer: Planned capital projects, estimated costs, funding sources, and phasing over a five-year period
A five-year CIP forecast presents each planned capital project with its estimated cost, identified funding source (bonds, grants, reserves), and the year(s) in which expenditures will occur, enabling long-range financial planning.
Question 7: A parks executive is evaluating whether to renovate an aging community center or build a new one. Which factor is LEAST relevant to this capital decision?
- Facility condition index score and remaining useful life
- Community needs assessment and service gaps
- Social media follower count for the facility's Instagram page (Correct answer)
- Life-cycle costs comparing renovation versus replacement
Correct answer: Social media follower count for the facility's Instagram page
Social media metrics are a marketing indicator and do not inform the financial and service-level analysis required for a capital investment decision between renovation and replacement.
CPRE Capital Improvement Planning and Asset Management 2
When preparing a capital improvement plan, which approach ensures that projects align with the agency's long-term strategic goals?