Resource Planning, Budgeting, and Financial Analysis

This report provides a comprehensive analysis of resource planning, budgeting, and financial management in a project context. It begins by defining resources and outlining key considerations for determining resource requirements, including business type, size, and location. The report then delves into a cost-effectiveness analysis of different IT system suppliers for Safe Hands Insurance Company, comparing quotes and calculating annual costs. Furthermore, the report emphasizes the importance of confirming the scope of budgetary planning with relevant colleagues and highlights the significance of cash flow budgets and reports in project planning. It also describes the process of determining financial support availability and the role of internal controls. The report concludes by examining the limitations of accounting information in decision-making and explaining procedures for accessing financial data and addressing budget variances.

Running Head: Resource Planning

Resource Planning 1
ACTIVITY 1
What are resources? Describe the resources that should be considered when
determining resource requirement?
While undertaking a project, different resources are required to be utilised to carry each task
necessary to complete the project. There can be a wide range of required resources such as
labour, infrastructures, hardware etc. to reach at the finish point of the project venture. The
absence of any of the important resource can hamper the project’s work flow. Anything
which a firm requires to ensure the viability of its operations and for the successful
accomplishment of its goals and objectives, can be termed as resource. Both storable as well
as non-storable resources can be utilised in the project. There are certain resources that are
generally utilised for every project such as money, stock, vehicles etc. however some
resources are used in the particular projects depending upon their nature and use.
To determine the resource requirement for a project, following points must be taken into
account:
 The business type for which the resources are required (service unit or manufacturing unit or
sales unit)
 The intended users of the resources (i.e. their level of education, competencies, cultural
background etc.)
 The business size (small, medium or large) and the scope of its operations (local or
international).
 The geographical location of the business (i.e. regional, rural or urban area).
The ultimate requirement of resource requirement is dictated by the firm itself which is
intended to undertake the project depending upon its goals and objectives.
ACTIVITY 2

Resource Planning 2
Calculate which of the following suppliers is the most cost-effective:
a) Safe Hands Insurance Company has received a number of quotations for their
new AIS. Calculate how much each system will cost per year and determine
which of the quotes is most cost-effective.
Access IT Company has provided a quote of $84,000. The system will last for
seven years. They provide free services and maintenance. They offer technical
support for an additional cost of $6,000 a year. All the required hardware has
been included in the cost of the quote.
The details of the services provided by the AIS and the quotations offered by the software
provided are given below:
Cost of AIS is $ 84000 and the useful life will be 7 years.
Therefore, the cost can be evenly distributed to these 7 years.
Cost per year would be $12000.
No additional charges for after sale services and maintenance.
The provider will charge a fees of $6000 per year to provide the technical support.
Thus, the yearly cost per system will be $ 18000 ($12000+$6000).
b) Vision IT Technical Consultants has provided a quote of $105,000. The system
will last for 10 years. Their quote includes technical support. The quote
includes all the required hardware; however, the hardware must be checked
and serviced by them, twice a year at a cost of $500 per service.
Quote offered by Vision IT consultants is detailed below:
Total quote= $ 105000

Resource Planning 3
Useful life= 10 years
Cost distribution per year= $ 10500
Technical support fees= Nil
Hardware cost= Already included.
Maintenance and Service Charges= $ 1000 per year.
Total cost per year= $ 11500.
c) Total IT Solutions has provided a quote of $65,000. The system will last for
five years. The cost of technical support, services and maintenance are included
in the price. The hardware required will cost an additional $22,500.
Total quote= $ 65000
Useful life= 5 years
Cost distribution per year= $ 13000
Technical support fees= Nil
Hardware cost= Already included.
Maintenance and Service Charges= Nil
Total Hardware cost (extra) = $22500
Per year allocation of Hardware cost = $4500
Total cost per year= $ 17500

Resource Planning 4
From the above calculations it is quite clear that Total IT Solutions is quoting highest and
therefore purchasing of AIS from it will prove to be expensive in comparison to other
providers.
Hence, purchasing of AIS Vision IT Technical Consultants will be cost effective as its quote
is lowest and also its software will serve the company for a longer term i.e. 10 years.
ACTIVITY 3:
a. Why is it necessary to determine and confirm scope and nature of budgetary
planning activity with relevant colleagues?
It is quite necessary to confirm the scope and the nature, as well, of the budgetary planning
activities of the project with all the significant partners working on that particular venture
project so as to identify all the necessary areas where funds and other resources will be
required. While preparing the financial plans, it is necessary to involve the colleagues as there
are various factors that can affect the spending arrangements. Such as:
 The changes in the monetary framework.
 Development of new directions.
 Movement of market patterns.
 Extent of project venture.
 Human resource necessity.
The above mentioned factors can directly or indirectly influence the firm’s representatives.
Any change in the budgetary plans or the projections may require to train and monitor the
executives working on the project. The proper communication of all the budgetary activities
and plans will not only help them to be aware of the desired performance and objectives but

Resource Planning 5
also it will practically enable them to perform effectively and efficiently. Moreover, such
involvement of all the colleagues will generate the confidence among them when their ideas
and thoughts will be entertained in the overall project development. This will ultimately
contribute positively to the project growth.
b) What is the importance of cash flow budget or report?
Cash flow budget is an important tool that can is used in project planning. It allows the firm
to manage it cash flows in the most efficient manner. Both cash budgets and reports allows
the firm to make sound and informed economic decisions with the use of relevant and
necessary information provided in these budgetary plans and reports. It also helps the
managers in evaluating its overall performance of the business. The report can offer the
review of the functioning of the entity. These reports and budgets helps the business
managers in formulating the necessary strategies and policies for the successful conduct of
the business. These budgets enables the managers to assess the availability of resources with
the business and the key areas whether they must be distributed to generate the desired
results. Therefore, these reports provides the strategic direction and platform to the business.
c) Describe the process through which you would go to determine whether
financial support is available to allow the requirements of an organization
to be achieved?
An approximation of cost of a project or unit is called its cost estimation. The
person who prepares the cost estimates is referred to as the cost estimators. The cost
estimation process decides the value of the assets that are used in the project. There
can be various cost estimators such as building cost estimator, electric cost
estimator. The process of estimation of cost involves making judgements and
guesses. This estimated cost is used to conclude the extended exercises. The process
emphasises on determining the ideal cost of the projects by aggregating the

Resource Planning 6
individual element’s costs. This estimation enables the managers to determine
whether the project will be profitable to be conducted or not. If following criteria
are met the project can be called as profitable:
The scope of the project is developed on-budget and on schedule.
The expectations of quality are met.
The benefits that were expected are received by the stakeholders.
ACTIVITY 4
The Project manager is concerned about the internal control procedures currently in
place. Why is it important that these be reviewed and, if necessary, modifications made?
Internal controls are the measures of ensuring the achievement of the goals of the business,
the operational and financial effectiveness of the business, the appropriateness of the
budgetary announcements, the consistency in complying with the laws and regulations and
the sound financial reporting practices. In the wider sense, internal controls covers all the
necessary controls that prevents the organisation’s functioning from being hampered due to
the internal environment of the business. Internal controls facilitates the coordination among
the critical elements of the business and their constant monitoring and checking process.
To continuously review the internal control procedures of the organisation is quite important
because it helps in ensuring that the required internal controls exists and functions on the
regular basis in the business of the entity. Review of Internal control procedures helps the
managers to ascertain whether the controls that are in place are adequate and sound enough to

Resource Planning 7
safeguard the operational efficiency of the business. Evaluation of internal controls involves
following activities:
 Identification of key areas where internal controls are necessary.
 Reviewing the related arrangements, techniques and documentation for each key area.
 Discussion about the implementation and execution of controls with the respective
management team of all the levels.
 Observing the continuity and functioning of internal controls.
 Testing and verification of controls.
The management of the company must make necessary efforts to establish appropriate
internal controls in the organisation and they must ensure that employees at all the level are
adhering to the controls in the most effective manner.
ACTIVITY 5:
1. Accounting information is used to inform decision making but it has
limitations. Conduct appropriate research into financial decision making in a
project management context and describe what the accountant can do to
minimize the limitation of management accounting?
Accounting is considered as the language of entities business. It helps in collecting, recording
and maintain the necessary set of information regarding the business in the financial terms.
However, the system of accounting supplies the administrative information to determine
whether the business has earned sufficient profits or has faced the misfortunes during the
normal course of its operations. Accounting system also contains the information regarding
the amount of fund owed by the company to others and the amount of funds that is owed by

Resource Planning 8
the other parties to the business. However, accounting is undertaken on the basis of various
assumptions and estimates that proves to be unrealistic for the business. Moreover, at times
the accounting information provided by the management of the entity may be manipulated to
mislead the readers of the information so as to hide the weak financial position of the
business. The management accountants must use various advanced techniques and tools of
trend analysis and estimations so as to promote their effectiveness and adequacy.
2. Explain the procedures you might need to follow to access the financial data
and plans necessary for efficient operation of a team/section/division?
To improve the financial planning of the organisation, a model must be created to show the
budgetary plans which must be achieved by the business of the firm. Following budgets must
be prepared:
 Long term budgets.
 Short term budgets.
 Operational arrangements.
 Monetary based projections.
 Income projections.
 Key performance indicators.
Budgets or the financial plans can be prepared taking into consideration the demand and
spending of the organisation. Determining the cash inflows of the business and the sources of
the inflow of funds in the business must be ascertained. The management must constantly
monitor the funds requirement and must set up the reports accordingly on the regular interval
basis.

Resource Planning 9
ACTIVITY 6:
1. You have been asked by management to prepare a report on why the personnel
budget has a large negative variance. What information would you include in
your report?
The variance that is indicated negatively shows that the results are adversely affected by the
mismatching of actual and budgeted results. It shows two scenarios. First, lower actual
income than the budgeted one and secondly, it may be due to higher cost incurrence than the
budgeted one. The financial plans covers the desired results from the normal business
operations in the given situation. However, there can be various circumstances under which
planned performance cannot be undertaken and therefore the ultimate results deviates from
the planned results. The report must quantify the deviations along with the reasons that has
caused those deviations. Moreover, the impact of fluctuation of the results must also be
shown in the report so as to enable the readers to assess the overall impact of changes in the
situation or business environment. Along with the quantum of deviations and reasons
thereupon, the report must also contain the recommended actions that needs to be taken to
deal with the deviations and to minimise them.
2. When reporting, why is it necessary to provide evidence to support your
statements or conclusion?
While reporting it is quite essential to provide necessary evidences to support the
points incorporated in the report. The evidences gives objective support to the
arguments and claims made by the reporting entity about its report. It makes the

Resource Planning 10
information more reliable than the mere collection of data incorporated at the single
place. Evidences includes statements as well as facts to support the content of the
report. It increases the credibility of the reports in the eyes of the users and hence it
makes easy for them to base their decision on whatever is incorporated in the
reports.
ACTIVITY 7:
You have been asked to provide an accurate and up to date profit and loss
report on work in process for a particular job. What data might you draw on,
what reports might you need to access and how would you ensure that the
information you provide is error free and comprehensive?
The report of profit or loss which is also known as wage articulation, explains the business’s
productivity over a period of time. The time period covered by such reports can be based on
the monthly framework or quarterly or annually. The profit and loss report is an important
document to check the business performance. To the business managers, the profit and loss
report identifies the areas of key success of the business and the areas which are contributing
negatively to the business success. The stakeholders of the entity uses the profit and loss
report to access the financial health of the business. These reports helps the readers to identify
the overall profitability of the project venture in which the entity is indulged.
As a basic rule, the report is bifurcated into 2 major parts: the income part and the cost part.
Income part covers all the elements that brings in revenue for the business whether directly or
indirectly. All the monetary benefits are hence recorded on the income side of the report
whether they are generated from the primary business exercises or the secondary exercises.

Resource Planning 11
Whereas, the cost part covers all the elements that causes outflow of money from the
business. It covers the aspects that consumes the business resources whether directly or in the
indirect ways. This side also covers the losses incurred by the business due to basic essential
activities or secondary activities.
With the use of report of profit and loss, following things can be calculated to understand the
overall profitability of the business.
 Gross profit =
Net Revenue
Less: Cost of goods sold
 Gross profit margin =
Gross profit x 100
Net Revenue
 Operating profit =
Gross profit
Less: operating expenses
 Net profit =
Operating profit
Less: (taxes + interest)
To ensure whether the report provided by the management is free from any errors and is
comprehensive, the report must be cross verified with the original data and the report must be
kept in the simplest form so that it can easily be accessed by the users.