IREM Certified Property Manager (CPM) Practice Test 2025 – All-in-One Guide to Exam Success!

The technique that involves using past expenses to inform future budgets is known as Historical Data Analysis. This method relies on analyzing previous financial records and expenditures to predict future spending patterns and allocate budgets accordingly. By examining trends, variances, and historical costs, property managers can create more accurate and reliable budgets that reflect anticipated needs and expenses for upcoming periods. This can be particularly helpful in identifying consistent patterns or anomalies in spending that may influence future financial planning.

In contrast, Zero-Based Budgeting starts from a "zero base" and requires justification for every expense rather than relying on past expenditures. Comparative Budgeting involves analyzing budgetary performance against similar organizations or industry standards, rather than focusing solely on historical data. Incremental Budgeting adjusts previous budgets by adding or subtracting based on factors such as inflation or changes in service levels, which does not specifically emphasize the analysis of past expenses in the same way Historical Data Analysis does.