Budget Creation, Management And Actions For X Company Term Paper

Length: 4 pages Sources: 3 Subject: Economics Type: Term Paper Paper: #86490172 Related Topics: Value Creation, Cybersecurity, Cyber Security, Personal Finance
Excerpt from Term Paper :

¶ … Company is a corporate development, management, Information Communications Technology (ICT), and support consultancy firm, offering its clients solutions to confidently research, survey, set up, and profit from business, as well as other opportunities. The firm aids civil society, public, and private clients in developing required relationships, advances in bonds and securing the required support services and systems in a cost-effective manner, in order to run optimally and accomplish their specified goals. Our objective is providing our clients with essential professional services, to be utilized as a springboard for instituting their business, as well as offering them and others the flexibility of operating without an office; that is, they can simply avail themselves of our Virtual Office Service as a start. X Company's strengths include:

Human Resource: Our Company is constituted of a Resourceful Managers' team, with highly- qualified members having strong preference for knowledge generation, dissemination and utilization. As knowledge workers, our human resource department and services, are familiar with ICT advancements. Generation and application of novel ideas to meet our clients' needs is our forte.

Collaborative Values and Culture: We have a global network of specialists. X Company's collaborative culture signifies that we are affiliated to several networks worldwide, that assist us in providing the necessary support at a moment's notice. We extend our collaboration to clients, as well. The feedback received from them guarantees that we remain at the forefront of technological evolution.

Specialties

Organizational Development (OD), Information Communications Technology (ICT), Management, Support, Consulting Services and Cyber-Security.

Why the company should prepare and manage a budget

A budget denotes a statement translating organizational plans into finance. They encompass, broadly of the funds utilized for accomplishing the firm's planned activities (expenditure) and finance that must be generated for covering costs of completing organizational activities (income). Budget is only an estimate (i.e., an informed guess) regarding the amount of funds required for carrying out desired activities (Shapiro).

Budget preparation and monitoring will enable X Company to identify any wasteful outlay, adapt rapidly to changing financial situations, and accomplish fixed financial targets. Budget creation also reduces the possibility of unforeseen expenses as no surprises come with budgets (personal finance at duke, n.d.). Budget represents a fundamental management tool. Being without any budget would be similar to a pilot without instruments, attempting to navigate in darkness.

A budget compels one to think rigorously through the consequences of one's activity planning. Quite often, the process of budgeting opens one's eyes to reality, forcing one to reconsider one's plans for the firm.

A budget forms the basis for business transparency and accountability. When all concerned parties know the amount that ought to have been received and spent, they can question discrepancies in a more- informed way.

Without a budget, a firm cannot raise funds from patrons. Financiers make use of the budget to decide whether the funds a firm requests for are sensible and planned well.

Positive financial outcomes for this company if it budgets properly

A budget, when used properly, tells a firm when it requires certain sums of money for conducting company activities.

It enables firms to monitor their income and expenses, and spot any issues.

It informs a firm regarding the amount of finance needed for conducting its activities.

Negative financial outcomes for this company in case of improper budgeting

The most obvious adverse consequence of a budget is erroneous budgeting. This results from wrong planning. Those who plan the budget are blameworthy, not the budget itself. A flawed budget will lead them to nothing but failure. One example of improper budgeting is setting aside too many funds for insignificant elements, like costly cars, unnecessary vacations, overly plush office settings, etc. Here, one cannot expect any return of investment.

High-level budget plan for the company

High-level budget implies an outline of projected costs for completing high-level venture targets. In general, three kinds of costs may be incorporated into a high-level budget:

Material costs

Labor costs

Non-labor costs.

Principles for developing a high level budget

Assessing project costs requires a union of

...

Several guidelines to be borne in mind are:

Place emphasis on costs factors, which depend on a project's particular needs (for instance, a systems development venture may show different cost-requirements when compared to a venture for new network-installation.)

Look up estimated costs of similar past projects, which proved to be accurate.

Ask for project participants' feedback and opinions for obtaining a broad range of information, opinion and experience (DoIT Project Management Advisor, 2006).

Recommended actions and strategies

The different means for estimating project costs are described in the table given below.

What to do

How to do it

Estimate all high-level target costs

Cost categorization may be as material, labor, and other relevant costs.

Examples of cost factors:

Labor - Labor Costs

Material - Vendor Quotations

Material - Cost of Platform Site

Other - Training Expenses

Estimate cost of on-going support and maintenance

This entails incorporation of cost estimates for current support and maintenance, if such information is essential for the venture.

Estimate costs at a level that can be easily understood

For long-duration projects, predicting project costs for a year into the future, or longer, is difficult. In such cases, providing a high-level estimated cost for the whole project, and a comprehensive estimate for works in the project's next phase or time-period, is helpful.

Determine project expenditure by fiscal year or fiscal quarter

Determine budgeting period based on customer needs and project size.

Document the grounds for projected cost

Determine fundamental assumptions for developing, calculating or explaining cost estimates (e.g., labor cost calculation may be based on some standard rate of labor multiplied by working hours.

Recommended budgeting phases for the company

1. Preparation and submission

1. Approval

1. Execution

1. Audit and Evaluation

Methods and techniques that the company should use to manage its budget over time in preparation for the fact that budgets are ever changing.

Continually forecast the budget

Running a project without regular supervision and revision or re-forecasting of budget will most likely result in failure. This is because regular budget supervision prevents it from getting out of one's control. Correcting a 10% budget over-run, definitely, is easier than correcting a 50% overrun. One's chances of staying on track are far greater with regular budget plan review than if forecasting is done once, and then neglected.

Regularly forecast resource usage

Just as one must constantly review the budget for remaining on track, resource usage must also be reviewed, as those who work on the venture, add to its expenditure. Project managers must review the project's current workforce, as well as future resource requirements, on a weekly basis, regularly. This ensures that the firm is fully utilizing its resources, and has adequate resources for the remainder of the venture. A regular visitation of resource forecast helps in maintaining the budget on target.

Keep the team informed

The team assigned with the project must be informed of budget forecast, as this empowers the team and helps it assume proper project ownership. By staying informed on budget status, the team will more likely supervise project charges, reducing project 'grey area' hours (i.e., the hours they worked, but weren't sure what was being worked on.)

Manage scope meticulously

A leading cause for overrun of projects is scope creep. Unplanned work in the project increase billable hours, thereby making the budget spin out of control. Scope must be carefully managed by changing orders for tasks that are not covered by initial project requirements. These authorize additional project funding for covering costs of added work, therefore, keeping the project open to a fresh budget (Westland, 2011).

Action plan to resolve the budget misalignment

For resolving budget misalignment, X Company must create operational strategies for actual work (also termed as business plans or action plans). The project or organization starts with strategic planning in a standard planning cycle. Here the issue to be dealt with is studied, as is the precise role of the project or organization in dealing with it. Subsequently, this is linked to the actual activities that must be undertaken for achieving the planned outcome. This refers to the action plan, which must be "costed." No budget can be prepared unless one knows what one is intending to do. Only when actual work is done, will operational costs (i.e. direct costs) be incurred. The action plan's steps are:

1. Assess what was done previously, towards or to achieve an aim, efficiency and effectiveness.

1. Reassess and clarify project vision, mission, plan, and aims.

1. Prepare operational plans.

1. Evaluate the resources required for meeting plan requirements -- estimate costs.

1. Draft a budget for covering activities. Discuss, modify, and finalize it.

1. Apply plans, check impact, expenses, and income -- make adjustments wherever required (Shapiro).

Recommended budgeting technique to resolve the budget and actual discrepancies

The recommended budgeting technique is zero-based budgeting. In the technique of zero-based budgeting, previous figures are not employed as starting points. Budgeting begins from "scratch," incorporating…

Sources Used in Documents:

References

DoIT Project Management Advisor. (2006). Stage 2: Initiate the Project. Retrieved August 4, 2015, from http://www.pma.doit.wisc.edu/initiate/5/how.html

Personal finance at duke. (n.d.). What is a budget and why is it important? Retrieved August 4, 2015, from http://personalfinance.duke.edu/manage-your-finances/budget/overview

Shapiro, J. (n.d.). Budgeting Toolkit. Civicus.

Westland, J. (2011, June 23). Project Management: 4 Ways to Manage Your Budget. Retrieved from CIO: http://www.cio.com/article/2406862/project-management/project-management -- 4-ways-to-manage-your-budget.html


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