Certified Facility Manager (CFM) Practice Exam

Which of the following best describes a potential reason for not operating from replacement reserve funds?

1. Covering unforeseen emergencies

2. Supporting building expansion projects

3. Funding routine maintenance

4. Investing in safety equipment

The correct answer is: Supporting building expansion projects

The best reason for not operating from replacement reserve funds is that these funds are generally earmarked specifically for the replacement of major building components and not for projects related to the expansion of existing facilities. Replacement reserves are intended to ensure that there are adequate funds available for future capital expenditures such as replacing roofs, HVAC systems, or other significant components of a facility as they reach the end of their useful life. Supporting building expansion projects typically requires a strategy that aligns with long-term growth goals and may involve different funding sources, such as operational budgets, capital improvement plans, or financing options. Using replacement reserve funds for expansion undermines their primary purpose and can jeopardize the facility's maintenance and operational sustainability by depleting resources meant for necessary replacements. In contrast, covering unforeseen emergencies, funding routine maintenance, and investing in safety equipment are typically more aligned with ongoing operational costs and crisis management strategies, which can often be funded through other budgeting mechanisms.