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SAVE International Value Methodology Associate Sample Questions (Q55-Q60):

NEW QUESTION # 55
Which of the following best defines an activity?

A. A task, action, or operation that describes why a function is performed
B. A specific task, action, or operation with a high level of abstraction
C. A specific task, action, or operation that is generic and changes viewpoints
D. A task, action, or operation that describes how a function is performed

Answer: D

Explanation:
In Value Methodology's Function Analysis, the concepts of functions and activities are distinct but related, as taught in the VMF 1 course (Core Competency #2: Function Analysis). According to SAVE International's Value Methodology Standard, "a function is defined as what a product, process, or system does, expressed in a verb-noun format (e.g., 'contain liquid'), while an activity is a task, action, or operation that describes how a function is performed." For example, the function of a teacup might be "contain liquid," and the activity to achieve that function could be "holding the liquid in a ceramic structure." Activities are the actionable steps or processes that enable the function, often identified during the creation of a FAST diagram or Random Function Identification table (as noted in Question 19). The "how" aspect aligns with the How-Why logic of FAST diagrams, where activities detail the practical execution of a function.
* Option A (A task, action, or operation that describes why a function is performed) is incorrect because
"why" relates to the higher-order function or purpose (e.g., Question 20), not the activity, which focuses on "how."
* Option B (A specific task, action, or operation that is generic and changes viewpoints) is incorrect because activities are not about changing viewpoints; they are specific actions to perform a function.
* Option C (A task, action, or operation that describes how a function is performed) is correct, as it aligns with the definition of an activity in VM.
* Option D (A specific task, action, or operation with a high level of abstraction) is incorrect because activities are practical and specific, not abstract; functions are more abstract (e.g., verb-noun format).
:
SAVE International, VMF 1 Core Competency #2 (Function Analysis), distinguishing between functions (what) and activities (how).
SAVE International, "Value Methodology Standard," section on Function Analysis, defining activities as the tasks or operations that describe how functions are performed.

NEW QUESTION # 56
Which of the following defines the nominal rate of increase in the value of money over time, after subtracting for inflation?

A. Discount Rate
B. Return on Investment (ROI)
C. Simple Payback (or Breakeven Point)
D. Present Worth (or Net Present Value)

Answer: A

Explanation:
In the context of Value Methodology, cost analysis often involves financial concepts to evaluate the economic impact of alternatives, including understanding the time value of money. The VMF 1 course, under Core Competency #4 (Cost Analysis), includes basic financial metrics relevant to value studies, such as discounting cash flows to assess long-term value. The nominal rate of increase in the value of money over time, after subtracting for inflation, refers to thereal discount rate. In financial terms, as per standard economic principles taught in VMF 1, the discount rate is the rate used to discount future cash flows to their present value, and thereal discount rateis the nominal discount rate adjusted for inflation (i.e., real discount rate = nominal discount rate # inflation rate). This measures the true increase in the value of money over time, excluding inflationary effects.
* Option A (Simple Payback or Breakeven Point) is incorrect because payback measures the time required to recover an investment, not the rate of increase in money's value.
* Option B (Return on Investment or ROI) is incorrect because ROI measures the profitability of an investment as a percentage, not the rate of increase in money's value over time.
* Option C (Discount Rate) is correct because the real discount rate, after subtracting inflation, defines the nominal rate of increase in the value of money over time, as used in financial analyses within VM studies.
* Option D (Present Worth or Net Present Value) is incorrect because NPV is the result of discounting future cash flows to their present value using a discount rate, not the rate itself.
:
SAVE International, VMF 1 Core Competency #4 (Cost Analysis), which includes financial concepts like discounting and the time value of money in value studies.
SAVE International, "Value Methodology Standard," section on cost analysis, referencing economic evaluation techniques such as discounting for long-term cost analysis.

NEW QUESTION # 57
All-the-time functions are:

A. Outside the study scope
B. Continuous
C. A drain on resources
D. Undesirable

Answer: B

Explanation:
In Value Methodology's Function Analysis, functions are classified based on their characteristics, as taught in the VMF 1 course (Core Competency #2: Function Analysis). According to SAVE International's Value Methodology Standard, "all-the-time functions are those that occur continuously or are always active during the operation of the system." In a FAST diagram, all-the-time functions are often shown vertically (e.g.,
"when" direction) alongside the critical path, indicating they are ongoing while the main functions are performed. For example, in a car, "provide safety" (e.g., through seatbelts) is an all-the-time function because it is always active when the car is in use. This aligns with the FAST diagramming convention of showing simultaneous functions.
* Option A (Outside the study scope) is incorrect because all-the-time functions are within the scope if they are part of the system's operation, though they may be supporting functions.
* Option B (A drain on resources) is incorrect because all-the-time functions are not necessarily resource- intensive; they are simply continuous.
* Option C (Continuous) is correct, as it matches the definition of all-the-time functions in VM.
* Option D (Undesirable) is incorrect because all-the-time functions are not inherently undesirable; they may be essential (e.g., "provide safety").
:
SAVE International, VMF 1 Core Competency #2 (Function Analysis), defining all-the-time functions as continuous in FAST diagramming.
SAVE International, "Value Methodology Standard," section on Function Analysis, describing all-the-time functions as those that occur continuously during system operation.

NEW QUESTION # 58
During the life cycle of a project or product, the greatest possibility to influence impacts and costs takes place during:

A. Operating
B. Planning
C. Maintaining
D. Organizing

Answer: B

Explanation:
Value Methodology emphasizes applying VM early in a project or product lifecycle to maximize its impact on costs and outcomes, as taught in the VMF 1 course (Core Competency #1: Value Methodology Overview).
According to SAVE International's Value Methodology Standard, "the greatest opportunity to influence a project's impacts and costs occurs during the planning phase, when decisions about design, scope, and requirements are made." Early intervention allows the VM team to optimize functions and reduce costs before they are locked in by detailed design or implementation. This principle is often illustrated by the "cost influence curve," which shows that the ability to influence costs decreases as the project progresses, while the cost to make changes increases.
* Option A (Operating) is incorrect because, during operation, most costs are already incurred, and changes are costly and limited in impact.
* Option B (Planning) is correct, as it is the phase where VM can most effectively influence design and cost decisions, per VM standards.
* Option C (Organizing) is incorrect because organizing is a management function, not a distinct lifecycle phase for applying VM.
* Option D (Maintaining) is incorrect because maintenance occurs late in the lifecycle, when cost influence is minimal.
:
SAVE International, "Value Methodology Standard and Body of Knowledge," available athttps://www.value- eng.org, emphasizing early application of VM in the planning phase.
SAVE International, VMF 1 Core Competency #1 (Value Methodology Overview), highlighting the cost influence curve and the importance of early VM intervention.

NEW QUESTION # 59
In which costing technique is the time value of money essential?

A. Simple Payback
B. Life Cycle Cost
C. Break-even point
D. Return on Investment

Answer: B

Explanation:
Cost analysis in Value Methodology often involves financial techniques to evaluate the economic feasibility of alternatives, as taught in the VMF 1 course (Core Competency #4: Cost Analysis). According to SAVE International's Value Methodology Standard, "the time value of money is essential in costing techniques that account for costs and benefits over time, such as Life Cycle Cost (LCC)."Life Cycle Costis defined as "the total cost of a system or product over its entire life, including acquisition, operation, maintenance, and disposal, discounted to present value using the time value of money." The time value of money ensures that future costs and benefits are adjusted to their present value using a discount rate (as noted in Questions 6 and
7), making LCC a comprehensive method for comparing alternatives in VM studies.
* Option A (Return on Investment) is incorrect because, while ROI can consider the time value of money in some calculations, it is not essential; ROI is often calculated as a simple percentage (Profit ÷ Investment).
* Option B (Life Cycle Cost) is correct, as LCC inherently requires the time value of money to discount future costs to present value, ensuring a fair comparison over the project's life.
* Option C (Simple Payback) is incorrect because simple payback (as calculated in Question 26) does not account for the time value of money; it simply divides the initial investment by annual savings.
* Option D (Break-even point) is incorrect because the break-even point (similar to payback) typically does not incorporate the time value of money; it focuses on the point where costs equal revenues.
:
SAVE International, VMF 1 Core Competency #4 (Cost Analysis), which includes Life Cycle Cost as a technique requiring the time value of money.
SAVE International, "Value Methodology Standard," section on cost analysis, defining Life Cycle Cost and its reliance on discounting (consistent with Question 7 on Present Worth).

NEW QUESTION # 60
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SAVE International Value Methodology Associate Sample Questions (Q55-Q60):

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