IFMA Finance and Business Module

1) A facility manager submits a request for building management to repair a broken window in their new space. What type of cost is this?

1. Direct cost

2. Fixed cost

3. Opportunity cost

4. Indirect cost

2) Which activity does not provide reasonable cost containment opportunities for facility management?

1. As contracts expire, bring all outsourced services in-house

2. Sale of vacant property

3. Analyze risk sharing with vendors

4. Invest in productivity improvements

3) Which of the following is a plausible measure to assess the overall performance of a service provider?

1. Conformance to regulations and standards

2. Expenditure limits

3. All of the statements

4. Time-related targets

4) What type of contract typically solicits multiple bids and tries to move all risk to the contractor?

1. Fixed price

2. Time and materials

3. Open book

4. Cost reimbursement

5) What is an appropriate practice when implementing cost containment initiatives?

1. Secure organizational commitment before taking action

2. Use only proven industry best practices

3. Make sure actions are quantifiable and measurable

4. All of the statements

6) Which method is best suited to comparing the net present values for two capital investment projects when the cash flows vary?

1. Sensitivity analysis

2. Scenario analysis

3. Payback period method

4. Life-cycle cost analysis

7) Multiple suppliers bid on a contract for construction services. The suppliers' qualifications and experience will be assessed, and they will be rated against a minimum passing score. Which is a logical selection criterion?

1. Evaluated bid

2. Unique service

3. Lowest responsive bid

4. Single source

8) What do asset management ratios indicate about an organization?

1. The relative mix of debt and equity financing.

2. How well resources are used to generate revenue.

3. The target performance benchmark.

4. Management's ability to control expenses in relation to sales.

9) Which type of budget requires a facility manager to perform an in depth analysis of all line items and meticulously justify all expenditures?

1. Zero-based budget

2. Operational budget

3. Incremental budget

4. Capital budget

10) Which type of budget will identify the financial implications of undertaking a major renovation of the fitness center in a large commercial property, including the use of sustainable materials, improving the interior air quality, making energy efficiency enhancements, and providing greater access to daylight and view?

1. Capital budget

2. Flexible budget

3. Operational budget

4. Incremental budget

11) Which statement about key performance indicators (KPIs) is false?

1. The facility manager must write KPIs clear and concisely so they can be easily understood.

2. The facility manager must develop KPIs that are quantifiable.

3. The facility manager must ensure KPIs reflect the goals of the organization.

4. The facility manager must translate KPIs into actionable steps for employees and service providers.

12) A life-cycle cost (LCC) analysis is being used to help determine whether the purchase of a high-performance heating ventilating and air conditioning (HVAC) system is cost-effective. What would this analysis not consider?

1. Comparison with other measures of economic evaluation.

2. Appropriate risk and uncertainty assessments.

3. Cash flows made time-equivalent by converting them to present values.

4. Customer satisfaction survey responses.

13) Which statement about double-entry accounting is false?

1. It ensures the journal is always balanced.

2. It does not require the total value of credit accounts and debit accounts to be equal.

3. It looks at both the debit and credit sides of an account.

4. It requires transactions to be recorded in at least two places.

14) A new piece of equipment requires special software for diagnostics and maintenance purposes. Once the software is purchased, it will not need to be purchased again. Which contract mechanism would most likely be used to procure this software?

1. National buy contract

2. Blanket purchase order

3. One-time purchase order

4. Fixed type contract

15) One budgeting approach is for top management to set the facility management budget. The goal is to reflect the organization's strategic objectives and control the decisions. What type of approach is this?

1. Authoritative budgeting

2. Flexible budgeting.

3. Zero-based budgeting

4. Participative budgeting

16) What helps ensure the goal, constraints, and terms and conditions outlined in a contract are monitored and accomplished?

1. Contract negotiations

2. Contract monitoring

3. Contract closeout

4. Contract administration

17) Which section of the cash-flow statement reports information on the purchase of new air conditioning equipment?

1. Supplemental information

2. Financing activities

3. Operating activities

4. Investing activities

18) Which service best exemplifies out-tasking a specific function in facility management procurement?

1. Janitorial service

2. HR services

3. Move management

4. Marketing and leasing properties

19) Why is an understanding of finance and business management a key skill for facility managers?

1. All of the statements.

2. Facility managers are entrusted with one of the most expensive assets of the organization, real estate

3. A facility manager who is unable to recognize financial pitfalls may incur unexpected expenses that could be detrimental to the bottom-line.

4. A lack of financial expertise can hinder a facility manager's contribution to discussions involving departmental and organizational strategy

20) What information should not be included in a business case?

1. The key assumptions behind the initiative,

2. A deadline for when the business case must be reviewed and approved or denied.

3. An explanation of why the initiative is necessary and recommendations,

4. Financial and non-financial analysis results.

21) The CFO of the demand organization asks for a list of the items you track in your accounting system. Which financial document is the CFO referring to?

1. Financial statement

2. Capital budget

3. Chart of accounts

4. Balance sheet

22) A facility management pro forma cash flow statement has beginning accounts receivable and payable balances of 18,000,000 (Japanese Yen) and 20,000,000 respectively. The facility manager estimates ending balances for accounts receivable will decrease and accounts payable will increase. What is the combined effect on cash available?

1. Depends on the timing of the cash flows.

2. Cash will decrease.

3. Not possible to determine.

4. Cash will increase.

23) What type of cost is the oil needed to maintain a large piece of equipment?

1. Indirect cost

2. Fixed cost

3. Variable cost

4. Opportunity cost

24) A service contract includes the statement, "Bathrooms shall appear clean and soap shall be refilled before it is empty." What is this contract wording called?

1. Performance specification

2. Service level agreement

3. Service protocol

4. Prescriptive specification

25) Which tasks would facility managers complete as part of their planning activities?

1. Installing motion sensor light switches to provide immediate reduction in electricity expenses.

2. Educating building occupants on best practices for conserving energy.

3. Identifying methods to increase profits by improving energy efficiency.

4. Monitoring energy efficiency programs to ensure they are being carried out.

26) A facility manager is applying the concept of best value in assessing different vendor proposals for the cafeteria and vending areas in a property. Which evaluation criteria for the sourcing decision exemplifies best value?

1. Hard and soft measures and a comparison of all costs with required quality

2. Strict adherence to customary practices and procedures for outsourcing common support area services

3. The inclusion of non-discriminatory specifications and a transparent, open bidding process

4. Anticipated retention of existing tenants and attractiveness to prospective clients

27) As a newcomer to an organization, you are collecting information for the annual budgeting process. Which activity would not be appropriate to help formulate assumptions for the facility management operating budget?

1. Review of FM benefit requirements, vacation, holiday, and non-productive time, including sick leave.

2. Projecting income and expenses for five to ten years in the future.

3. Comparisons of actual versus budgeted costs for the past several years to discover trends or patterns.

4. Discussions with accounting personnel in other organizations to gain ideas about improvements and cost trends.

28) What happens at the end of binding mediation in a construction dispute when there are one or more disputed items that remain unresolved?

1. Either party may escalate the unresolved items to litigation.

2. Either party can request a new mediator.

3. The mediator renders a final and binding decision on those items.

4. The mediator must help the parties renegotiate the contract.

29) A new piece of equipment is purchased for 15,000 (SGD Singapore Dollars). The expected lifetime of the asset is five years. Which depreciation method depreciates exactly 3,000 SGD each year?

1. Modified Accelerated Cost Recovery System (MACRS)

2. Accelerated depreciation

3. Activity method

4. Straight-line

30) Facility management food service does not have a formally approved internal billing rate. The markup percentages for catered events vary depending upon what type of function is being catered. Which chargeback system is a logical choice for this scenario?

1. Tiered rates

2. Rates based upon actual costs and market price

3. Flat fee negotiated rates at the time of request

4. None of the statements

31) A facility manager is negotiating a contract with the owner of a construction company. They both agree that the facility manager will pay $20,000 for the services of the construction company. The facility manager and a sales representative from the construction company sign the contract. The construction company's legal team reviews the contract and declares it void. What is most likely the reason this contract was considered void?

1. The cost of the services described in the contract is more than $20,000.

2. The sales representative from the construction company did not have the authority to sign the contract.

3. The legal team did not think the contract had a lawful purpose.

4. There was no mutual agreement made between the facility manager and the construction company's legal team.