Cost Estimation & Budgeting Flashcards
7 cards from real FPE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Estimation & Budgeting flashcards as text
Which life cycle cost component typically represents the largest long-term expense for a fire sprinkler system in a commercial building?
Answer: Periodic maintenance and repairs over the system's lifespan
Periodic maintenance and repairs over the system's 25–50 year lifespan typically exceed initial installation costs when evaluated on a present-value basis.
In a cost-benefit analysis for a fire protection retrofit, the 'net present value' (NPV) is positive when:
Answer: Discounted benefits over the analysis period exceed discounted costs
NPV is positive when the present value of all future benefits (insurance savings, avoided losses, etc.) exceeds the present value of all costs.
When applying the 'value of statistical life' (VSL) approach in fire protection cost-benefit analysis, the VSL figure is used to:
Answer: Monetize the expected reduction in fire fatality risk
VSL translates small reductions in fatality probability into monetary terms, enabling comparison against the cost of implementing a fire safety measure.
A fire alarm system upgrade is estimated at $150,000 installed. If the annual insurance premium reduction is $12,000 and maintenance increases by $2,000/year, what is the simple payback period?
Answer: 15 years
Net annual benefit = $12,000 − $2,000 = $10,000; simple payback = $150,000 ÷ $10,000 = 15 years.
Which cost estimation approach uses historical cost data from similar completed fire protection projects and adjusts for size or scope differences?
Answer: Analogous estimating
Analogous estimating relies on actual costs from past similar projects, adjusted by scaling factors, and is common in early-stage budgeting.
In fire protection project budgeting, a 'design contingency' allowance is distinct from a 'construction contingency' because it specifically covers:
Answer: Cost growth resulting from design evolution and incomplete scope definition
Design contingency addresses uncertainty in an incomplete or evolving design, while construction contingency covers unforeseen field conditions during execution.
Which factor most significantly increases the unit cost of a wet-pipe sprinkler system in a high-rise building compared to a low-rise structure of the same floor area?
Answer: Increased water pressure requirements and booster pump costs
High-rise installations require pressure-boosting pump systems and additional pressure zones, substantially increasing material and equipment costs per square foot.