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10-year strategic plan for Utility Funds (water/sewer/Storm sewer) for the City of Lexington, Minnesota
Storm and rainwater management has become very important on the need to control pollution and spread of diseases through storm water and flooding. It is also a necessary public mater in so far as preventing damage to installations in homes and property is concerned. There is a high range of rainfall and storms are a norm in the state. So the maintenance and continuance of storm water management is paramount to the state. In this regard the state has already passed laws and some laws are individual to each county. Metropolitan areas have demands that are unique to them. In a metropolitan area, primarily there is commuting, on a large scale each day and thus there is a large daily movement of population from the suburbs to the central city for business, and many other needs that could be or tourism, shopping, schooling and so on. (Trent, 2007)
These shifts in the population also are determining the costs and the means of transports, accommodation and host of problems that is related to the large travel of such population and the attendant medical needs and hygiene. It also cast huge demands on the counties for expending resources on natural waste management. Waste management can be divided into managing of water, sewers, and storm water discharge. Of these the city ensures water supply by the use of separate water governing authorities and sewers and storm water drains are maintained by the city. There are maintenance, filling and expanding capacity and also the case of pollution. The costs of maintenance, expansion and the revenue and cost -- benefit also have to be looked into in all these three cases. A strategy in the view point of the organization or board is based on the entire business that the operation is involved, and this being the core, decisions of business units or in this case the affected partners who seek to achieve their immediate goals have to be linked and be in accordance with the holistic general objective. Business wise it also has to have a business advantage in some form or another namely a competitive advantage. (Trent, 2007)
Thus in the case of the development of the city storm water management sewer and rainwater harvest must be a white paper that highlights the current situation and also highlight the causes of all pollutants and sources of pollution. Strategy involves comparing costs and creating a set of viable actions that can mitigate the issue or nullify it. The serious problem is the rejection of the affected persons who we may call the stake holders and the caused delay and cost escalation. In examining the stakeholders it can be seen that the major stake holders are the city's population and the taxpayer. Others include the participant tenderers and the stake holders thus are numerous and hence responsible handling of the matter was necessary. The creation of synergy between the various participants is what integrating strategic management in the process is all about. Thus the city council takes decisions based on input from the stakeholders even before the project is begun. This forms the basis of strategy implementation.
Why do most projects undertaken by the public utilities fail or is not up to the mark? That is a question that has to be answered first. In looking at available literature it is found that the major failure always occurs in the costs of implementation of the project. The major failure always occur with the costs of implementation going out of control and secondly the non-acceptance or resistance of the end users of the system. The costs in the project usually cross the million marks, and the renegotiation of the contracts escalate the costs. The costs get doubled because the project was delayed beyond a reasonable period. The second failure often occurs in the technology of the new systems and procedures and this though is a major factor is not the case of just a system failure and delay in implementation. (Trent, 2007)
Looked closely, the problems may stem from the very concept and the way the contracts were awarded. Thus there always will be more than one issue involved. Problems often begin from the stage of the strategy or plan involved and implemented. If there is no pre-planned strategy at the time of the tender or beginning there is likely to be problems at every stage of the implementation process. In all these cases the concept of cost accounts plays an important role and the costing of the project is one of the key systems that ensure its success. (West, 2003)
Accountants hitherto were service providers who more or less towed the lines that the management dictated. Today accountants have to comply with approved standards and they are now redefined in roles that give them managerial responsibilities. They are to be current and at the same time diligent. Today the accountant is more of a consultant to management. Thus the accounting occupation has been transformed to an authority with occupational responsibility. (West, 2003)
It is the decisions based on the financial documents and timely advice from the CPA that come to the fore in controversies. Therefore accounting and costing will determine the cost effectiveness of the project and the ultimate utility. If the revenue that is obtained for the project is less than the costs and the surplus could be fairly invested then the city could in the long-term be able to expand the services in these areas. Thus the analysis of cash flow, the utility rate and the basic construction and requirements coupled with the distribution of the spread of cost and demand that would arise in future would form the basis of the analysis.
The table shows the regions that would come under the cost analysis:
Percent of total project
Cost percentage per 1000 dollar cost
Design and Construction Engineering
Capitalized Interest Costs
Small Purchase Construction
The above is based on apportionment as may be done for a standard sewer or water conservation-based project. (Michigan Government Documents, n. d.) Thus the costing theory that must be used also relates to the use of cost accounting in determining the pre- project issues of sustainability.
Today accounting is a part of all business activity. Not only that the critical financial information about a business is interpreted, it is the core of all financial information that an entity or company requires. It can therefore be seen that there must be understanding of the language in a global context in which the financial information is transmitted. This is also necessary to file taxes and other statutory requirements and also is necessary for the managers, investors and those with a financial concern of the company or business entity. The process of accounting is also a part of the global awareness of critical issues like water conservation and pollution. Some of the studies like the one in 1978 by the International Joint Commission showed an alarming increase in pollution and deterioration of water quality on account of urban non-point source pollution.
The international commission recommends methods for protection of water though it has no direct power to enforce the objectives. A study conducted by Brabec and Kumble (2005) showed that there must be a very effective land-based best management practices with reference to the Great Lakes and the change in water quality on account of urban and urbanizing development within the Great Lakes Basin. The researchers analyzed the methods and the techniques for storm water best management practices that can stem the effect of urbanization on water quality. In answering the questions about the tools and techniques, they also considered the recommendations of the IJC that is recommended for federal and state to play in effective water quality planning and watershed development decisions. (Brabec; Kumble, 2005)
This leads to the discussion of what could be the appropriate strategy? One example is the State Revolving Fund loan -- SRF assistance for the correction of combined sewer overflows and this uses the Justifiable Expenditure -- AJE methodology will be used to identify and separately account for pollution control and non-pollution control costs, and to arrive at a percentage of the construction costs, which can be attributed to pollutant abatement. This method then follows the standard accounting technique that is used to apportion costs which concern the eligibility of storm sewers is cost-effectiveness. The construction of storm sewers must be the cost-effective method to separate the existing combined sewers. (Michigan Government Documents, n. d.)
The factors that need be further considered is the reuse and modification of the existing infrastructure and creating new infrastructure. The major thrust must be to construct sewers, rainwater management infrastructure, drains and storm…[continue]
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