CVS CVS Cost Analysis and Life Cycle Costing Questions and Answers 2

Question 1

Which of the following is an example of a 'disposal cost' in Life Cycle Cost analysis?

Accepted Answer

Decommissioning and environmental remediation at end of service life

Answer

Initial equipment purchase price

Answer

Annual preventive maintenance labor

Answer

Training costs for operators during installation

Question 2

Sensitivity analysis in VM LCC studies is performed to:

Accepted Answer

Test how changes in key assumptions affect the results and identify critical cost drivers

Answer

Rank team members by their analytical skills

Answer

Determine the optimal workshop schedule

Answer

Confirm that the basic function has been correctly identified

Question 3

The discount rate used in Life Cycle Cost analysis primarily accounts for:

Accepted Answer

The time value of money and opportunity cost of capital

Answer

Contractor markup percentages

Answer

Material price inflation only

Answer

Government-mandated interest rate caps

Question 4

When performing function cost allocation, indirect costs are typically:

Accepted Answer

Distributed to functions based on a reasonable allocation method such as labor hours or space

Answer

Excluded from VM analysis entirely

Answer

Assigned equally to all functions

Answer

Only considered in the Post-Study Phase

Question 5

A VM team compares two HVAC design alternatives using LCC. Alternative A has a lower first cost but higher annual energy use. Alternative B costs more upfront but is energy-efficient. VM recommends:

Accepted Answer

Evaluate the present worth of total life cycle costs before choosing

Answer

Always choose Alternative A to minimize initial project budget

Answer

Choose Alternative B because energy efficiency is always better

Answer

Defer the decision to the project owner without analysis

Question 6

Which VM document formally presents the cost analysis and life cycle cost data supporting each developed alternative?

Accepted Answer

The VM Proposal or Value Change Proposal

Answer

The Function Analysis System Technique (FAST) diagram

Answer

The project schedule baseline

Answer

The stakeholder engagement plan