Financial Management - Report Example

Executive summary This is a report to be submitted to the Head of the Department of Information and Communication. It involves an analysis of the proposed student common room to be constructed in the department. The report basically focuses on an evaluation of the cost that is involved in the construction of the room. It clearly states the purpose of the new room and how it contributes to the enhancement of facilities for students and the department. Introduction: The new project is about constructing a new room for the students to gather. The new room is not intended as a class room but rather a place where the students can interact with their friends about the matters relating to studies and where they can conduct many activities such as group discussion etc. This report attempts to submit clear information to the Head of the department regarding the project of Student Common Room. The project of construction of the room involves many activities. Several resources are to be brought together for the purpose of completing the project in the best possible way. The report will enumerate the cost and other infrastructural requirements of the project. Along with cost requirement, the purpose of the project is also discussed. When the project becomes complete it will be very helpful for the department to improve students’ facilities in terms of innovative learning. Concerned organization: MMU is one of the best universities in the country. “The University has a varied population, attracting students from a broad range of backgrounds and countries, which contributes to its lively and dynamic atmosphere.” (Manchester Metropolitan University. 2008). The University has students from various countries. It also offers a wide variety of courses on various disciplines. The University is further very much focused on maintaining a high level of quality in the teaching methodology. The students of the University enjoy a better atmosphere in the college. The Department of Information and Communications (DIC) of the University has been contributing in a significant manner for excellence of their students. They provide and upgrade the courses according to the fast paced changes in the technology. The new plan of the Head of the Department to construct a ‘Student common room’ is an attempt by the department to encourage the students to learn through the processes of discussion and interaction. Scope of the project: The given project is to construct a common room for students. The scope of the project is wide. The project is helpful for the students to interact with their groups, among the friends. It will also facilitate them to have an interaction with their professors. Such discussions can be in the form of a social setup and will help the students to learn things better. When the students are given a more congenial environment to interact and involve in studies their performance level will improve significantly. Ultimately, this will result in the betterment of the university too and so the scope of the project can be seen as extending to the mission of the University. Objectives of the project: The objective of the project is to provide better facilities for the students to have social interaction. It intends to provide the students a basic platform for interacting with other students on matters relating to their studies. Overall, the objective of this project is to bring innovative learning process in the department. Requirements and resources of the project: Part of this report describes the various requirements and resources of the project. The requirements refer to the construction materials, the employees associated with planning and construction of the room, the furnishing, electrical equipments and others. The cost of construction materials consumes the major portion of the overall cost of the project. Planning stage is expected to incur less cost. Furnishing of the room is another area where expenditure is involved by way of furniture, equipments, etc. The anticipated cost is listed below. Cost requirement: Items Cost Employees – planning stage £3000 Construction companies £20000 Furniture £5000 Electrical equipments £15000 Stationery £200 TOTAL £43200 In the above cost structure, the first item is salary to the employees at the planning stage. The employees at the planning stage are those who prepare the project plan, do the feasibility research and other initial activities related to the project. The construction process will be assigned to any of the construction companies. The cost of construction work is a major contributor to the entire project cost. The room is different from a seminar hall. This room will house a long circular table with chairs laid around it. Other equipments such as air conditioner, computer system and proper lighting system are required to be installed. Besides stationery items will also entail some cost during the stage of the project. Cost behaviour Cost behaviour refers to the nature of the cost to vary on the basis of variation in range of production or sales. “Cost behaviour is nothing more than the sensitivity of costs to changes in production or sales volume.” (Myers 2005). The cost structure usually changes on any change in the volume of production and sales. But there are certain cost that does not change according to the changes in production and sales. The cost that varies according to the changes is called variable cost and the cost that remains constant irrespective of the changes is called fixed cost. There is another range of cost known as mixed cost. This contains both fixed as well as the variable elements. “Mixed costs consist of a fixed component and a variable component.” (What are mixed costs, 2006). Mixed cost basically relates to a whole activity that involves different costs. An example of a mixed cost is the annual cost of maintaining a car, which involves the cost of fuel, insurance, depreciation, spare parts cost etc. In this, the costs of insurance and depreciation are fixed, whereas the cost of fuel and spare parts vary. Analysis of the cost of given project: In the given project there are no production or sales elements. The cost of the given project can be classified into two. First is the initial investment and second the cost of maintenance. The initial investment forms a major part of cost of the project and the expenditure for includes charges like cleaning, electricity bill, magazines etc. Since there is no production or sales process being carried on in this project there is no cash inflow here. Work breakdown structure: Work breakdown structure refers to dividing the entire job into smaller tasks in order to facilitate better performance. This is mostly associated to a project. A complex project is usually split into different sub projects in order to reduce the complexity. Each sub project is usually assigned to different experts in that particular area. “A Work Breakdown Structure is a results-oriented family tree that captures all the work of a project in an organized way.” (Chapman 2007). This project of student common room can be divided into several sub projects. Here the main project can be divided into three parts. The first part of the project will deal with the planning process, the second part with the financing and the third part with the actual implementation. The planning section will do all the initial planning process of the project the estimated cost of implementation, the time frame of the project etc. The second part’s function is only to allow necessary funds required to finish the project and the third part will look after the construction of the project. The work breakdown structure is give below. Conclusion: This project report has summarised clearly the total cost requirement of the project. The report has concluded that the project is feasible for the department. When the construction is over, the room will be a landmark for the department. Even though there is no cash inflow for the project, it is beneficial for the university in the sense that the students are given better way for interaction. The added facility will add an extra dimension to the existing infrastructure available in the university, which, in turn, will attract more students. Bibliography CHAPMAN, James R (February 26, 2007). Introduction to WBS. [online]. Work Breakdown Structure. http://www.hyperthot.com/pm_wbs.htm Manchester Metropolitan University. (2008). [online]. MMU. Last accessed 8 March 2008 at: http://www.mmu.ac.uk/about/ MYERS, Gerald M (August 3, 2005). Cost behaviour. [online]. Last accessed 8 March 2008 at: http://www.plu.edu/~mgtacctg/cost_behavior.htm What are Mixed Costs. (July 5, 2006). [online]. AccountingCoach.com. Last accessed 8 March 2008 at: http://blog.accountingcoach.com/mixed-costs-fixed-costs-variable-costs/ Read More