Financial Analysis of Management Projects: Assessments Report

This report comprehensively analyzes project cost management, encompassing formative and summative assessments. It begins with an examination of resource requirements, followed by a comparative analysis of vendor quotations for IT solutions. The report delves into budgetary planning, cash flow management, and methods for determining financial availability. It also explores internal control procedures, strategies for minimizing management accounting shortfalls, and accessing financial plans. Further sections cover personnel budgeting, data requirements for profit and loss accounts, and checklist preparation for report writing, along with error identification and the need for appropriate financial reports. The report also addresses project management sections in final accounts and communication methods. It concludes with an analysis of record-keeping significance, trial balance preparation, service cost analysis, variance importance, cost-benefit analysis, and business purchasing policies, including project-based assessments and budgetary analyses. This report is intended for students and provides a detailed overview of financial project management principles.

MANAGEMENT PROJECT
COST

TABLE OF CONTENTS
FORMATIVE ASSESSMENT........................................................................................................1
ACTIVITY 1....................................................................................................................................1
Factors which needs to considered while determining resource requirements......................1
ACTIVITY 2....................................................................................................................................1
A. Quote of Access IT Company...........................................................................................1
B. Quote of Vision IT Technical Consultants........................................................................1
C. Quotation of Total IT Solution..........................................................................................2
ACTIVITY 3....................................................................................................................................2
1. Reasons due to which scope and nature of budgetary planning activity needs to be
discussed with colleagues.......................................................................................................2
2. Significance of cash flow budget.......................................................................................2
3. Method through which availability of financials can be determined.................................3
ACTIVITY 4....................................................................................................................................4
Requirements to review internal control procedures..............................................................4
ACTIVITY 5....................................................................................................................................4
1. Strategies to minimise shortfalls of the management accounting......................................4
2. Process needs to consider for accessing financial plans.....................................................5
3. Comment on the statement provided and implications for expenditures...........................5
ACTIVITY 6....................................................................................................................................5
1. Information which included in personnel budget...............................................................5
2. Necessity for providing evidence in order to support conclusions.....................................6
ACTIVITY 7....................................................................................................................................6
Data required in P&L account for particular job and method for evaluating the information6
ACTIVITY 8....................................................................................................................................7
1. Preparing checklist which can be considered at the time of report writing........................7
2. Five errors which incur while preparing financial reports.................................................7
3. Need of appropriate reports and financial information for managing project....................8
4. Steps need to take while charges wrongfully added in BRS..............................................8
5. Calculation of net income...................................................................................................9

ACTIVITY 9....................................................................................................................................9
1. Ways to include project management sections while finalising accounts..........................9
2. Communication methods....................................................................................................9
3. Information needs from project and relation with costing...............................................10
ACTIVITY 10................................................................................................................................10
Significance of collecting as well as maintaining appropriate records................................10
ACTIVITY 11................................................................................................................................10
1. System which needs to chose...........................................................................................10
2. Comment on information provided in table.....................................................................11
SUMMATIVE ASSESSMENT 1..................................................................................................11
QUESTION 1.................................................................................................................................11
Preparation of Trial Balance sheet.......................................................................................11
QUESTION 2.................................................................................................................................12
Description of services cost analysis and ways for undertaking this analysis.....................12
QUESTION 3.................................................................................................................................12
Importance of variance.........................................................................................................12
QUESTION 4.................................................................................................................................13
Information included in cost-benefit analysis along with its advantages and drawbacks....13
QUESTION 5.................................................................................................................................14
Objectives of business purchasing policies as well as aspects involved in them.................14
SUMMATIVE ASSESSMENT 2..................................................................................................15
PROJECT 1....................................................................................................................................15
PROJECT 2....................................................................................................................................17
Budget...................................................................................................................................17
PROJECT 3....................................................................................................................................19
REFERENCES..............................................................................................................................31

FORMATIVE ASSESSMENT
ACTIVITY 1
Factors which needs to considered while determining resource requirements
A material which needed in order to meet something in the organisation and any
workplace is known as the resource. There are various kinds of resources included when an
entity is going to consider a new project in the workplace. Such resources include financial,
human, raw materials, equipment, processes, intangible assets etc (Mályusz and Varga, 2017). At
the time of determining that, which resources will be required in the project some aspects should
consider. Further, factors need to keep in mind are listed below:
 Very first thing to be considered is that businesses or projects are of the what type or
nature like professional, services, manufacturing, sales etc.
 Estimated users of those resources which are going to provide them for utilisation.
 Size of the company such as sole trader, limited, national, international etc.
 Geographical location
 Scope of the project or operations
ACTIVITY 2
A. Quote of Access IT Company
Cost of AIS = $84000 for 7 years
Additional cost = 6000 per year
Therefore, each year total cost of Access IT firm's quotation is worth of
Cost of AIS + additional cost = ($84000 / 7) + 6000
= $12000 + $6000
= $18000 per year
B. Quote of Vision IT Technical Consultants
Cost of AIS = $105000 for 10 years
Service cost = $500 twice a year
Total cost of quotation per year:
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= ($105000 / 10) + ($500 * 2)
= 10500 + 1000
= $11500 per year
C. Quotation of Total IT Solution
Cost of AIS = $65000 for 5 years
Additional cost = $22500 for 5 years
Total cost of quotation per year:
= ($65000 / 5) + ($22500 / 5)
= 13000 + 4500
= $17500 per year
Therefore, quotation given by Vision IT Technical Consultants is the most cost-effective
where total cost is worth of $11500 per year which least than other two quotations.
ACTIVITY 3
1. Reasons due to which scope and nature of budgetary planning activity needs to be discussed
with colleagues
Budgetary planning is one of the highly important aspect in each and every kind of the
project. On the basis of this procedure, overall financial estimations about the project can be
easily assessed and predetermined. While making plan of the budget, it is mandatory to discuss
with the relevant colleagues. The reason behind this is that, they provide adequate and
appropriate information about the project expenses. (Nicholas and Steyn, 2017). Due to which all
the colleagues follow the proposed tactics and meet objective of project easily and properly.
2. Significance of cash flow budget
In any kind of the project cash or liquidity has the very pivotal place which helps to run
and complete the tasks. The statement in which cash incomes as well as cash receipts are
included and which shows liquidity position to the manager is known as cash flow budget.
Further, importance of this budget is as follows:
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 It provides information to the manager that up to which level total incomes will be
incurred in the project at the end of a year. Apart from this, by considering this particular
statement total expenses which will occur in the project are also predetermined.
 At the end of upcoming year how much cash will be available with the company is
analysed through cash flow budget. On the basis of this, needs or requirements of
financials will be easily predetermined (Nordmeyer, 2016).
 Along with this, it shows that in next period company will be whether in profitable
situation or not. Therefore, correction and strategies can be made by the project manager .
Therefore, it can avoid financial shortfalls and boost up overall performance.
 The cash flow budget helps the manager in order to compare actual data generated at the
end of next year. Therefore, it can be assessed that whether entity meet budgeted values
and improve performance or not.
3. Method through which availability of financials can be determined
In the project or company financials are the basic requirement where it is necessary to
assess its availability within workplace. There are number of methods included which help to
ascertain financial availability which are such as follows:
 One of the very best tool is cash flow analysis for the company where receipts and
payments both values involved. In this, cash balance at the year ending is determined and
corrective actions taken for raising fund.
 Another method is profitability ratio analysis where all the incomes are measured after
taking base to the year ending revenue (Shen and et.al., 2017). It clearly indicates that, up
to which level company generates profit and required amount. The net income and
retained earnings are indication of the cash in the business or project.
 Liquidity ratios measure that company has up to which level cash at the end of an
accounting period. On the basis of this, availability of financials determined in an
appropriate and adequate manner.
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ACTIVITY 4
Requirements to review internal control procedures
The process in which internal aspects of the accounting or any other thing are reviewed
within project is known as the internal control. On the basis of this, all the element and resources
involved in completion of the project are assessed properly. One of the key requirement for using
internal control procedure is to analyse efficiency of the employees and workforce. If they not
perform well and less productive, then corrective actions made to boost up their existing level of
efficiency. Apart from this, it is required to analyse cost aspect that whether expenses are high or
proper as compared to budgeted. After reviewing this specific element, strategies made in order
to modify the conditions. With the project various kinds of issues and risks associated and to
determine them internal control process is highly needed (Internal Control Review, 2017).
Henceforth, in order to identify risks and eliminate them the mentioned process is required for
project manager.
ACTIVITY 5
1. Strategies to minimise shortfalls of the management accounting
The management accounting includes wide range of benefits which help to the
accountant in order to make effective financial decisions. However, it has some limitations also
which can be minimised by the accountant through below mentioned tactics:
 The accountant must enhance proper and effectual coordination among different
functions of the project. It helps to take highly effective decisions in the project and
reduce total cost of the activities. The reason is that, management accounting not focuses
on coordination as well as continuity.
 Apart from this, the accountant of project should make proper objective because in
management accounting objectivity is not better (Fregonara, 2017). When the objective is
framed then easily able to minimise and avoid drawback regarding to this aspect.
 Further, the accountant manager requires employing cost management strategies in the
project. On the basis of this, issue of the management accounting i.e. expensive can be
minimised and resolved in the proper direction.
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2. Process needs to consider for accessing financial plans
In order to assess efficiency of a team or section or company or division, financial plan
and information used by the analyst. There are different kinds of the procedures involved for
accessing such data. One of the best way is to consider financial statements of the entity under
which different types of the financials included. Along with this, data given after segregating
different divisions of the company in the financial disclosures. Another way in order to access
financial information is annual report of the enterprise. In this kind of report all the required data
included which is one of the best and reliable method (Papke-Shields and Boyer-Wright, 2017).
On the websites of firm also such kind of information provided which are highly authentic.
Therefore, to complete this particular task company's website should consider to the researcher.
3. Comment on the statement provided and implications for expenditures
In the company, various kinds of the employees and staff included who have the
important place while preparing budgets and taking business decisions. The present statement
indicates towards the operational staff who are highly able to identify and assess issues or
constraints relating to the budgets of job costing. As they provide information to the project
manager about raising issues of the costing then able to use corrective strategies. On the basis of
this, it can be clearly identified that organisation must consider and involve operational
employees at the time of framing budgets. After involving the staff of operating department
when management formulate budget then can estimate expenses in proper direction. Apart from
this, the operational workforce has knowledge that at which stage of product manufacturing or
project process more financial, raw materials or other resources required. Along with this, they
give information related to wastage of the products which lead to impose additional costs on the
overall project (Suk and et.al., 2017). When these all the data and scope of expenses considered
while preparing budget then effective and achievable budget can be formulated. Hence, costs
given by operational staff must be implicated by the organisation at the time of framing different
budgets.
ACTIVITY 6
1. Information which included in personnel budget
The estimation statement prepared in the company on the basis of employees and their
expenses is considered as the personnel budget. Key purpose of this particular kind of budget is
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to explain various types of costs associated with the workforce within an organisation after
segregating them on the basis of designation. When looking at the variance concept then it
reflects difference between actual and budgeted expenses of the employees. The reason behind
occurring large negative variance in this budget is that, affecting efficiency of the workforce in
an adverse direction. Along with this, sometimes workers may go on leave for long period.
Further, in the personnel budget wages and salaries provided to employees by the company is
included (Wang, Yang and Zhao, 2017). Apart from this, benefits, monetary rewards, various
allowances, bonuses, commissions etc. are also involved. After including and summing these all
the employee expenses an appropriate personnel budget is framed.
2. Necessity for providing evidence in order to support conclusions
Reporting is one of the highly pivotal part in the company under which all the financial
statements are disclosed in the market or industry. Further, financial reporting procedure is
completed on the yearly basis within an organisation. In order to complete this process, it is
mandatory to show evidence because through this it can be clearly defined that whether all the
accounting standards and principles are properly followed or not. In addition to this, evidence of
financial statements are notes or disclosures of the financials in which process, principles,
theories, rules and standards of the accounting are mentioned. On the basis of this, an auditor or
external party can easily understand about the accounting treatments. Further, with the help of
such evidence it must be assured that while preparing financial statements any kind of unfair
practices are not adopted.
ACTIVITY 7
Data required in P&L account for particular job and method for evaluating the information
The statement which presents profitability condition of the company or job is known as
the profit and loss account. For this different data required which are classified into two sections
like income and expenses. In order to prepare P&L for the specific job some information needed
among them basic is income generated within work in process. Further, expenses associated in
order to accomplish the job, are required to prepare P&L within company. When talking about
only expenditures then indirect costs are supposed to not considered. On the other hand, direct
expenses like material, labour etc. and other operating costs are taken into account. After
considering this kind of data net income for the particular job is determined (Yang and Hao,
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2017). Once the statement prepared then all the transactions are cross checked which helps to
ensure that used information are accurate. Along with this, internal auditing procedure is another
one of the best method for assuring that data is error free and appropriate.
ACTIVITY 8
1. Preparing checklist which can be considered at the time of report writing
At the time of writing reports some things are necessary to keep in mind which make it
effective and better. Further, checklist in order to write report is stated below:
 Title Page
 Acknowledgements
 Contents of the main sections, figures and tables
 Abstract or executive summary
 Introduction
 Methodology
 Results and findings
 Discussion
 Conclusions and suggestions
 References
 Appendices
 Writing style
2. Five errors which incur while preparing financial reports
When an accountant prepare final accounts of the company then various errors come into
consideration. Among them five typical discrepancies are listed below:
 Errors of principle
 Incorrectly classified data
 Errors of omission
 Data entry errors (Day, 2008)
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 Preventing errors
3. Need of appropriate reports and financial information for managing project
Reports show actual scenario of the project and on the basis of that future decisions are
taken by manager in order to accomplish objectives. Proper and timely reports are needs for the
project managers in order to assess live status of the project along with costs or resources used.
Along with this, such reports provide information about the daily activities and expenses like
revenue, production, selling, promotion, research, administration etc. On the basis of this, it has
been analysed that how much amount is available within project (Attig and et.al., 2016).
Therefore, projects manager taken decision that whether financials needs to raise or not. Along
with this, in order to take effective decisions related to strategic as well as operations the
accurate and timely reports needed. Further, data or information which required for management
in order to manage financial includes expenses or costs associated with the project within
specific period of time. Along with this, efficiency of managers in order to utilise financial
resources is also known to manager because it helps to taken decisions for raising capital. Sales
which can be generated throughout the project is also required for the manager.
In order to manage financial resources of the project responsible department is financial
governance within working environment. Along with this, financial manager takes care of the
finance and monetary terms of the whole project.
4. Steps need to take while charges wrongfully added in BRS
In the bank reconciliation statement when charges are allocated in inappropriate manner
then it shows distort scenario. In order to manager this situation some steps should take which
are such as follows:
 Must cross-check some entries like: opening and closing balance, date of start and end of
the statement etc (Jung, 2017).
 Needs to check that whether all the transactions are recorded in Sage 50 or not.
 Necessary to check about the outstanding costs entries and treatments.
5. Calculation of net income
Net Income for the year ending June 31st 2015
Particulars Amount (in $)
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Sales 825000
Less: Cost of goods sold 260000
Gross profit 565000
Add: Interest earnings 15000
Total earnings 580000
Less: Operating expenses
Administration and sales expenses 180000
Depreciation 65000
Total operating expenses 245000
Operating income 335000
Less: interest paid on loans 35000
Less: Tax @ 30% 100500
Net income $199500
ACTIVITY 9
1. Ways to include project management sections while finalising accounts
In the project management various parts associated which help to accomplish tasks and
achieve goals. Such sections are included in the account's finalisation through costs and
expenditures incurred. At the step of selection and implementation procedure involvement of the
costs and expenses begin (Aragonés-Beltrán, García-Melón and Montesinos-Valera, 2017).
Further, level of expenses are involved of each section and step in the accounts and then total
cost of project is derived.
2. Communication methods
In order to communicate with project manager, direct email method will be used. To
communicate with stakeholders, face to face or email mode would be suitable. Apart from this, at
the section of project team and monthly project status meetings face to face and conference call
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