Facility Financial Management Flashcards
6 cards from real FMP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Facility Financial Management flashcards as text
Which budgeting approach requires justifying every expense from zero each budget cycle?
Answer: Zero-based budgeting
Zero-based budgeting requires every expense to be justified from scratch each period.
What financial metric measures the ratio of deferred maintenance to current replacement value?
Answer: Facility Condition Index
The Facility Condition Index divides total deferred maintenance costs by current replacement value.
How does lifecycle cost analysis differ from simple payback analysis?
Answer: Lifecycle cost analysis evaluates all costs over the entire asset life, while simple payback only measures time to recover initial investment
Lifecycle cost analysis provides a comprehensive view of all costs throughout an asset life.
What is benchmarking in facility financial management?
Answer: Comparing facility performance metrics against industry standards or similar organizations
Benchmarking compares facility costs against industry standards or peers to identify improvement opportunities.
When should a facility manager recommend equipment replacement over continued repair?
Answer: When repair costs consistently exceed 50 percent of replacement cost and reliability is declining
The general guideline is to replace when ongoing repair costs exceed half of replacement cost.
What is the purpose of variance analysis in facility budget management?
Answer: To compare actual expenditures against budgeted amounts and investigate significant differences
Variance analysis identifies differences between actual and budgeted expenditures to improve financial control.