Financial Analysis Report

STUDENT
FINANCIAL ANALYSIS REPORT

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Contents
TASK – A: RISK MANAGEMENT..............................................................................2
EXECUTIVE SUMMARY.............................................................................................2
INTRODUCTION...........................................................................................................3
PROJECT BACKGROUND..........................................................................................4
PROJECT RISK MANAGEMENT..............................................................................4
Technical Aspects of ERP Project Risks...............................................................................4
PROJECT CONTROL SYSTEM..................................................................................7
01. Regular Meetings of the CMT...................................................................................7
02. Risk Assessment for the Project................................................................................7
03. Staff Training for Internal Control...........................................................................7
04. Regular Communication with Staff..........................................................................8
05. Testing and Monitoring of Environment..................................................................8
CRITICAL EVALUATION...........................................................................................9
Characteristics Analysis Method (CAM)..............................................................................9
01. Organizational...............................................................................................................9
02. Entrepreneurial..............................................................................................................9
03. Related to Business.......................................................................................................9
04. Financial.......................................................................................................................9
05. Technological..............................................................................................................10
06. Contractual..................................................................................................................10
Risk Analysis Method (RAM).............................................................................................10
CONCLUSION..............................................................................................................11

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TASK – B: FINANCE...................................................................................................12
EXECUTIVE SUMMARY...........................................................................................12
INTRODUCTION: SCENARIO – 1............................................................................13
INTRODUCTION: SCENARIO – 2............................................................................13
DEVELOPMENT PLAN..............................................................................................14
SCENARIO – 1..............................................................................................................14
INTERPRETING ANALYSES....................................................................................15
INTERPRETING RESULTS.......................................................................................16
SCENARIO – 2..............................................................................................................16
INTERPRETING ANALYSES....................................................................................18
INTERPRETING RESULTS.......................................................................................18
DEVELOPMENT PROPOSAL...................................................................................18
INTERPRETING VALUATIONS...............................................................................19
01. The Residual Method...............................................................................................19
02. The Term & Reversion Method..............................................................................20
03. The HARDCORE/Layer Method............................................................................20
INTERPRETING APPRAISALS................................................................................22
CONCLUSION..............................................................................................................24
LIST OF REFERENCES..............................................................................................24
APPENDIX: TASK – A................................................................................................26

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ACCOUNTING FINANCIAL ANALYSIS REPORT
TASK – A: RISK MANAGEMENT
EXECUTIVE SUMMARY
The focus of this report is on the construction project of St. Martin Hospital based in
San Francisco. In construction sector projects, most entrepreneurs have the tendency of
establishing a process for risk management. Such a process is incorporated in their
projects, with the purpose of improving the project’s working performance and
increasing profits. Enterprise Resource Planning (ERP) is one of the most widely
chosen tool by entrepreneurs for risk management in their project. The aim of this report
is to analyse the critical risks which the project being discussed can face. In this case
study, involving St. Martin Hospital Project located in San Francisco, ERP has been
used through adoption of a process which is spread over the following two stages –
1. In the first stage, the analysis uses the Characteristics Analysis Method (CAM).
This method is used as per the specific requirements of the project, thereby
providing recommendations which help in dividing the project into smaller Sub-
Projects, allowing them to be managed easily.
2. In the second stage, the analysis uses the Risk Analysis Method (RAM). This
method first identifies the risks in the project and then assesses them critically.
With the successful implementation of the Enterprise Resource Planning (ERP)
systems, the entrepreneur can link all the important functions of the project, including
management of the orders, administrative process, financial systems, human resources
and controlling the external suppliers and the patient records, into an ‘integrated
system’. This also allows the entrepreneur to share all the data, thereby enhancing its
usefulness for the Board of Management. The primary motive of an ERP system, after
implementation is to generate potential in enterprise for enhancing the overall
competitiveness.

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INTRODUCTION
The project is concerned with the construction of an hospital by incorporating an
innovative health system, creation of wards for critical patients and also by
incorporating the latest ‘Infection Control Systems’ which is going to limit the risks to
the patients, the staff as well as the visitors. The aim is also to enhance the hospital’s
environment and atmosphere (Loosemore et al., 2012).
It is a factual that risks tend to be higher for entrepreneurs because of ‘Cost Overruns’
experienced by them as delay in the process of construction can put financial strain on
the enterprise and may even result in slowing down the construction activity
(Loosemore et al., 2012). To facilitate the entrepreneurs in such difficult times, there are
various tools and methods available which can help the entrepreneurs to improve
management of the project by using the ERP systems (Hillson, 2012). From the various
models available, this study has chosen Characteristics Analysis Method (CAM) and
Risk Analysis Method (RAM) for this specific project so that the hospital can
improvise the impact on the environment. The process makes use of CAM to facilitate
the recommendations proposed under ERP about dividing the project into small
manageable Sub-Projects and RAM for analysing various critical risks for the project,
which can be identified and assessed through the use of ERP process (Hillson, 2012).
PROJECT BACKGROUND
In this section, a brief discussion will allow a glimpse of this project related to St.
Martin Hospital. This project is under the management of St. Martin Foundation which
was founded in 1926 and presently is involved in maintaining 12 such hospitals in and
around the state of California. This project will incorporate a most modern Operation
Theatre, two Outpatient Centres and in-house Diagnostic Centre in San Francisco. With
more than a century of experience, St. Martin Foundation has the combination of an old
thought process and the latest technology to make this project a success technologies
(Davis & Jarvis, 2007).
Hence, St. Martin Hospital project can effectively, safely and economically incorporate
all the recommendations proposed in this report. This report will also discuss the
capabilities of the hospital’s workforce and the management in implementing major
disease-management solutions, while bringing about an environment control program

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during the course of this project’s development (Mcneil, Frey & Embrechts, 2010). This
project is also about the incorporation of a new ‘Heart Centre’ and a ‘Research Centre’
which will accommodate the most modern, state of the art equipment and technology
(Davis & Jarvis, 2007).
PROJECT RISK MANAGEMENT
Technical Aspects of ERP Project Risks
Research studies have evaluated the ERP risks and on the basis of those analysis, this
report has prepared a checklist of six main risks (these have been discussed under
Critical Evaluation Section), which an entrepreneur must look into while implementing
the ERP Project Risk procedures:
1. Organizational
2. Entrepreneurial
3. Related to Business
4. Financial
5. Technological
6. Contractual
Further to the checklist described above, this report carries on with three important
aspects associated with Risk Management and these have been discussed briefly
hereunder.
Stage 1: Risk Identification
Spectrum covering projects is very large as well as diverse. The nature of projects is
also so different that it can be very difficult to categorize them using a simple method.
More common classes under which risks can be placed are Economical, Technical and
Managerial (Hillson, 2012). A possible method can be to scrutinise the project as a
system and then identify the risks likely to affect the project, thereby evolving a
database of relevant risks for the project. On the basis of this, it can be inferred that the
identified risks and the impact they have on the project, can be stated as the driving
forces and this can help in developing a risk management strategy or a risk management
policy (Loosemore et al., 2012). In the view of this report, risks can be broadly
categorized as Top Down and Bottom Up. The first category shall provide list of risks
which are perceived by the project’s top-level management and would refer to strategic
issue risks. On the other hand, the second category shall provide list of risks which are
of operational nature (Das, 2006).