An investigation of budgeting and budgetary control: Case

59740002_4228218631

BUU iThesis 59740002 independent study / recv: 22072562 10:28:22 / seq: 25

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An investigation of budgeting and budgetary control: Case of ABC heavy industries

Public Company Limited (ABCHI)

JAMIE JUNG PARK

Burapha University

2018

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JAMIE JUNG PARK

งานนิพนธ์น้ีเป็นส่วนหน่ึงของการศึกษาตามหลกัสูตรบริหารธุรกิจมหาบณัฑิต (หลกัสูตรนานาชาติ)

วทิยาลยัพาณิชยศาสตร์ มหาวทิยาลยับูรพา 2561

ลิขสิทธ์ิของมหาวทิยาลยับูรพา

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AN INVESTIGATION OF BUDGETING AND BUDGETARY CONTROL: CASE OF

ABC HEAVY INDUSTRIES PUBLIC COMPANY LIMITED (ABCHI)

JAMIE JUNG PARK

AN INDEPENDENT STUDY SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR MASTER OF BUSINESS ADMINISTRATION

(INTERNATIONAL PROGRAM)

IN BUSINESS ADMINISTRATION

GRADUATE SCHOOL OF COMMERCE

BURAPHA UNIVERSITY

2018

COPYRIGHT OF BURAPHA UNIVERSITY

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D

ABST RACT

59740002: MAJOR: BUSINESS ADMINISTRATION; M.B.A. (BUSINESS

ADMINISTRATION)

KEYWORDS: FPSO, OFFSHORE PROJECT, MODULES BUDGET, COST

CONTROL

JAMIE JUNG PARK : AN INVESTIGATION OF BUDGETING AND

BUDGETARY CONTROL: CASE OF ABC HEAVY INDUSTRIES PUBLIC

COMPANY LIMITED (ABCHI). ADVISORY COMMITTEE: SUPASIT

LERTBUASIN, 2018.

During the project is reaching to the completion, buffer time in project

management is critical, reasons such as when the extra time was required or when

unexpected critical chain duration has been changed due to different deviation results.

In this independent study, financial management and possible assumption to predict

how to reduce the cost for the project, also will be finding out the key main solutions

involving.

The main example of this project will be “P70 off-shore Modularization

Project (TUPI FPSO Project)” fabricated by ABC Heavy Industries Public Company

Ltd (ABCHI). Off-Shore Modularization Project is one of a large scale of fabrication

job including the scope of engineering, procurement and construction (EPC). The

company is required to estimate the cost of EPC scope, all different duties and buffer

cost to be calculated properly in order to have net profit margins. Therefore, P70

project will be the case of how ABCHI to be calculated and managed to predict the

amount of cost consumption and measurement can be improved. ABCHI had been

completed previous projects called P66, P69, which means they have the past

experience of completing the replicant modularization projects. P70 will be described

and possible solutions for how to make proper budgetary will be concluded in this

independent study including human perspectives.

Objective of this study is to determine whether budget is actually

important for their business and how it needs to be estimated the cost in order to make

sure the project cost to be in the budget. There can be possible many reasons and

causes that why the results are different, and this independent study (IS) will identify

the issues and make possible new solutions for the heavy industries company. A

budget is a functional statement prepared prior to a predetermined period of time of

the policy to be pursued during that period for the purpose of obtaining given

objectives. Budgeting and budgetary control systems play a leading role in every

company or institution by helping in establishing an efficient management control

system for creating sustainable competitive advantage. The aim of this study was to

conduct research concerning the budgeting practice in ABCHI.

This case study of research enables to define problem. This research

identifies possible problems relate to budgeting at ABCHI.

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E

ACKNOWLEDGEMENT S

ACKNOWLEDGEMENTS

I would like to acknowledge my warmest thanks to my advisor, Dr.Supasit

Lertbuasin who made this work possible. His friendly expert advice have been invaluable

throughout all stages of the work.

I would also like to express my special appreciation and thanks to Mr.Young Jun

Lee. I am truly grateful that he supported me all the way through to accomplish this

journey. He is my life guidance and this work would not have been possible without his

support.

I owe a special thanks to Ms.Teerapan Qanwaree who helped me through out

during my thesis submission, without her support, I cannot imagine how I could organise

everything by myself, truly appreciate her kindness.

Nobody has been more important to me in the pursuit of this project than

Ms.Chanchira Smakthai, who provide unending inspiration. I would like to thank to her,

whose love and guidance are with me.

Lastly, I want to thank to my family, especially my mother being so

understanding and for putting up with me through the toughest moments of my life.

Jamie jung Park

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TABLE OF CONTENTS

Page

ABSTRACT .................................................................................................................. D

ACKNOWLEDGEMENTS .......................................................................................... E

TABLE OF CONTENTS ............................................................................................... F

LIST OF TABLES ......................................................................................................... 1

LIST OF FIGURES ....................................................................................................... 1

CHAPTER 1 INTRODUCTION ................................................................................... 1

Background of the study and statement of the problem ............................................ 1

Purpose of the study ................................................................................................. 10

Conceptual framework ............................................................................................. 10

Contribution to new knowledge ............................................................................... 12

Scope of study .......................................................................................................... 12

Limitations ............................................................................................................... 12

Definition of terms ................................................................................................... 13

CHAPTER 2 LITERATURE REVIEWS .................................................................... 15

Company introduction ............................................................................................. 15

Main types of budget (fixed and flexible budget) ................................................... 18

Budget manual objectives ........................................................................................ 27

Financial management ............................................................................................. 29

Development of financial management ................................................................... 32

Related researches ................................................................................................... 33

CHAPTER 3 RESEARCH METHODOLOGY .......................................................... 35

Research design ....................................................................................................... 35

Research methodology ............................................................................................. 37

Population and sample size ...................................................................................... 46

Research instruments ............................................................................................... 46

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Data collection ......................................................................................................... 47

Data analysis ............................................................................................................ 48

CHAPTER 4 RESULTS .............................................................................................. 54

Qualitative results .................................................................................................... 54

Learning and knowledge management .................................................................... 71

Quantitative results .................................................................................................. 71

CHAPTER 5 CONCLUSION, DISCUSSION AND RECOMMENDATIONS ......... 80

Conclusion ............................................................................................................... 80

Discussion ................................................................................................................ 82

Recommendation from the research ........................................................................ 86

Recommendation for the future research ................................................................. 86

REFERENCES ............................................................................................................ 88

APPENDICES ............................................................................................................. 93

APPENDIX 1 ........................................................................................................... 94

APPENDIX 2 ........................................................................................................... 98

APPENDIX 3 ......................................................................................................... 119

APPENDIX 4 ......................................................................................................... 123

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LIST OF TABLES

Page

Table 1 Procedures of jobs Lv 1 to Lv 4 ........................................................................ 5 Table 2 Breakdowns of task of activity for costing ...................................................... 41

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LIST OF FIGURES

Page

Figure 1 Completed schedule of 03B project ............................................................... 2 Figure 2 FPSO diagram ............................................................................................... 3 Figure 3 Image of scope of modules for ABCHI........................................................... 4

Figure 4 Diagram of conceptual framework for the concept of budget and actual ... 11 Figure 5 Overview of budget review ........................................................................... 28 Figure 6 Estimated and actual operation cost from 2015-2017 (Quarter basis) ....... 40 Figure 7 Gross benefits that is increasing in consumption under the demand curve. 52 Figure 8 Operation Cost Results for Replicant EPSO Project ................................... 72

Figure 9 Detailed breakdown of Operation Cost for Replicant FPSO Project .......... 78 Figure 10 Flow chart for summary of budgetary and cost control ............................ 84

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CHAPTER 1

INTRODUCTION

Background of the study and statement of the problem

Budgeting allows the company to create spending plans, so it always has

enough money for the ability of the company to purchase and maintain the ability to

properly operate the business under control of the budgeting cost plan. If the company

is currently in debt, following the budget or spending plan also frees the company

from debt. In the context of business management, budgetary objectives include

income and expenses, forecasts of profitability from it, tools for decision-making, and

a means to monitor performance. Budget management for funds It is a way that a

company is deliberate about how to spend money.

It is not always possible to determine the value of a particular asset.

However, it is important to consider the different types of decisions that the financial

sector faces, as management is constantly faced with decisions about which assets to

invest. It may be necessary to discuss how to estimate the benefits and costs

associated with the possible decisions.

ABCHI is an example of understanding how budgeting is necessary and find

out why the budget and the actual cost spending are different. This study also

investigates the issues of different cost calculations and provides possible solutions.

Floating Production Storage and Offloading (FPSO) will be the case study of

this company’s modularization scope. ABCHI has completed 03B modularization

projects. Each project had a total of 4 modules to complete; each module was

replicant for 03B; the modules are CO2 Compression (M01), Export Gas

Compression (M04), Main Gas Compression (M06), and VRU System and Gas

Injection Compression (M07).

Completed schedule from 2015-2017 for above modules are available on the

next page.

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2

Figure 1 Completed schedule of 03B project

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What are a Floating Production Storage and Offloading (FPSO)?

The Floating Production Storage and Offloading (FPSO) is considered as a

facility to keep oil tank in a hull. It contains hydrocarbon where unit to process for

crude oil, water and gas separation and processing, which arrives onboard from a

bottom oil well via a flexible pipeline.

The processed oil then transport to the tank of the cargo which located at the

hull of FPSO. Those extracted gas may use for power generation as it could be used

as fuel, and the surplus gas could resend to the pipeline, export to the land or to the

reservoir. However, discharging to the reservoir or to the land could be only permitted

by certain allowed environmental law level.

The FPSO may allow oil production to be active in a number of remote

locations and deeper than before in the water level as well, these were possible

through getting advanced technology and economically being supported for this

production. In addition, there is a capacity for the storage for produced processed

crude oil and does not necessarily to have pipeline to transport the oil on land,

however, unload to transfer the oil to the tanker for transport to the refinery is

necessary, it all has a system.

Turret mooring system is also another feature of FPSO. It is mounted inside

the FPSO hull and consolidate into the hull. FPSO can be freely rotated 360° around

the turret (“weathering”). FPSO usually goes into a general environment.

Figure 2 FPSO diagram

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Figure 3 Image of scope of modules for ABCHI

Statement of the problem

For further explanation for the scope of ABCHI, modules M01, M04, M06

and M07 were the jobs for which the company was awarded a contract to complete

the EPC (Engineering, procurement, construction) job.

Possible statement of problems are such as what are the exact scopes or the

budget to be approved to proceed. In order to find out the differences and the

operation costs and actual budget to be compared and find the problem where the

most highest cost that company is spending and how shall be prevented.

This case study of ABCHI operation costs of Replicant FPSO Units project

(03B) has been analyzed from 2015 to 2017 on a quarterly basis; the cost is analyzed

by each section as follows:

Direct material, Consumables, Labor, Services & Rentals, Transportation,

Overhead and Cost. Every these costs are recorded by both actual and estimated cost.

These differences will be discussed further.

Procedures of each step of completing the jobs are described in the table

below for further clarification. Lv 1 to Lv 4 been added. Lv 1 is the most critical to be

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considered and then so on up to Lv 4. Steps been added as in order until the load is

out.

Table 1 Procedures of jobs Lv 1 to Lv 4

Level Category Job description Comment

L1 Management Management Plan for

Project

L1 Engineering Engineering execution

plan

L2 Structure Structure design

L3 Structure Structure details-main/

Secondary/ Tertiary

L4 Structure Shop drawing

L4 Structure Cutting plan

L2 Piping Piping design

L3 Piping Pipe and Instrumentation

Drawing (P&ID)

L4 Piping Isometric drawing

L4 Piping Cutting plan

L2 Equipment Equipment design

L3 Equipment Equipment layout plan

L4 Equipment Equipment support

drawing

L4 Equipment Equipment installation

drawing

For TUPI BV, issued by

Critical Long Lead Item

(CLLI) vendor

L2 E&I E&I design

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Table 1 (Continued)


L3 E&I Pipe and Instrumentation

Drawing (P&ID)

L3 E&I Electrical distribution plan Layout plan for Power,

Grounding and control,

Lighting, Telecommunication

L4 E&I Cable tray drawing

L4 E&I Cable route drawing

L3 E&I Instrumentation plan Layout for instrumentation

L4 E&I Hook-up drawing

L1 Procurement Procurement execution

plan

L2 Structure Purchase order for

structure

Shape/ Plate/ Handrail/

Grating/ etc.

L2 Piping Purchase order for piping Pipe/ Fitting/ Flange/ Manual

valve/ etc.

L2 Equipment Purchase order for

equipment

For TUPI BV, Pre-issue item

(CLLI)/ Vessel scope by

constructor

L2 E&I Purchase order for E&I Cable/ Cable tray/ Instrument

L1 Construction Construction & assembly

plan

L2 Structure C&A for structure

L3 Structure Fabrication & installation

L4 Structure Cutting materials

L4 Structure Fabrication

L4 Structure Coating

L4 Structure Assembly

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Table 1 (Continued)


L3 Structure Test & inspection of

structure

L4 Structure NDE inspection

L4 Structure Dimension inspection

L2 Equipment C&A for equipment

L3 Equipment Installation

L4 Equipment Assembly of skid/

equipment on ground

If required (normally,

supplier finished assembly by

skid)

L4 Equipment Milling for equipment

support

L4 Equipment Installation of equipment

L3 Equipment Test & inspection of

equipment

L4 Equipment Leveling survey

L4 Equipment Pre-shaft alignment If required (normally, activity

shall be done in integration

yard)

L3 Equipment Preservation

L2 Piping C&A for piping

L3 Piping Fabrication & installation

L4 Piping Cutting material

L4 Piping Fabrication

L4 Piping Coating

L4 Piping Installation of support

L4 Piping Assembly pipe line

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Table 1 (Continued)


L4 Piping Insulation After finishing test &

inspection

L4 Piping Inertization By nitrogen

L3 Piping Test & inspection of

piping

L4 Piping NDE inspection

L4 Piping Bore scope Include video inspection

L4 Piping Bolt torque/ Tensioning

L4 Piping Leak test With equipment & valves

L3 Piping Preservation

L2 E&I C&A for E&I

L3 E&I Fabrication & installation

L4 E&I Fabrication of support for

cable tray

L4 E&I Installation of cable tray/

Support

L4 E&I Pulling cable line

L4 E&I Fabrication of support for

instrument

L4 E&I Installation of support/

Instrument

L4 E&I Connection with tubing

line

L3 E&I Test & inspection for

piping

L4 E&I NDE inspection for

support

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Table 1 (Continued)


L4 E&I Calibration of instrument Before installation of

instrument

L4 E&I Cable continuity test

L4 E&I Air supply & leak test for

tubing

L4 E&I Function test/ Lighting lux

test

L4 E&I Instrument loop test

L3 E&I Preservation

L1 Load-out Load-out & sea

transportation

L2 Load-out Packing & preparation for

load-out

L3 Load-out Packing & disassembly

plan

L3 Load-out Disassembly ship loose

part

L4 Load-out For load-out Scope by constructor in

integration yard

(INCOTERM : CFR)

L4 Load-out For lifting on site Scope by owner in

integration yard

(INCOTERM : CFR)

L3 Load-out Packing ship loose items

L4 Load-out Packing list

L4 Load-out Packing by ship loose/

Container

L3 Load-out Weighing

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Table 1 (Continued)


L3 Load-out Preparation for load-out

L2 Load-out Load-out

L3 Load-out Load-out manual/ Plan

L3 Load-out Load-out activity

L3 Load-out Test & inspection

L4 Load-out NDE inspection for

grillage & sea-fastening

L4 Load-out Marine warranty survey

L4 Load-out Certificate of approval for

items

From marine warranty

surveyor

L3 Load-out Sea transportation

L4 Load-out Issuing documents for

transportation

Packing list/ Commercial

invoice/ Bill of lading

L4 Load-out Certificate of approval for

sail away

From marine warranty

surveyor

L4 Load-out Move out from port

Purpose of the study

The purpose of this study is to determine the impact on the actual cost of the

entire process of a project, and to properly calculate the budget to reduce unexpected

or unnecessary spending on the project. This case study focuses not only on numbers,

but also on human error, different understandings, survey methods, etc., to find out

what's the whole thing as accurate.

Conceptual framework

Conceptual framework provides a general system of how the project to be

awarded and the budget to be prepared. There shall be a basic concept of framework

in their organization making a question before start such as ‘what are the possible

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reasons and solutions?’ or the actual project spent cost and project budget are

different? From using this beginning period of questioning may support to make

summary with a simple concept of understanding.

Actual project spent cost

Quantitative

Depth interviews with top

management

Cost estimation and

calculation

Qualitative

Project budgetary

Solutions based on the research

Project

What are the possible reasons and

solutions?

If different, why?

Figure 4 Diagram of conceptual framework for the concept of budget and actual

project cost

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Contribution to new knowledge

This research can addresses possible assumptions of cost budget and

management’s experience to share their knowledge through interviews, and able to

apply to decision making to organization. Each different perspectives of their different

opinions to summarize in order to provide new ideas and knowledge of possible

solutions for their business.

Scope of study

This research consists of 4 scopes of study including;

1. Scope of content

The content of this research comprise of off shore fabrication projects

involving qualitative and quantitative methods to find out how the cost control can be

created most efficiently.

2. Scope of population

The population of this research is manpower who is all involved in this

03B Project as in quantitative method samples are 1,200 and for qualitative method,

top management was involved and samples are 4.

3. Scope of location

The location of this research is in Thailand at ABCHI Public Company Ltd,

Rayong, at the main office.

4. Scope of time

The timing period of this research has been conducting since 2017 until

2018.

Limitations

This study is limited to ABC Heavy Industries Plc. As an organization that

considers that the company itself must compete with competitors, applying the

concept of budgeting in Rayong and its business operations. This may not justify the

credibility of all information can be used for any other all companies.

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Definition of terms

Cable tray – Refer to covering and support electrical cables to control

electrical charge to manage.

Construction – Refer to manufacturing skills to fabricate all parts of

fabricating jobs, such as piping, installation, welding, inspection, painting and others.

Consumable – Refer to items that can be replaced easily in a short period of

time.

C&A – Certification and Accreditation for projects are required to satisfy

certain requirement to accomplish.

Direct material – Refer as raw materials in order to complete the project.

Engineering – Refer to designed and calculate the whole module to

complete the set.

Equipment – Refer to items that to be installed in the module, which is a

complete set of item that can be used through the line.

E&I – Equipment and Instrument that are referring to be installed as a

machine to operating in the modules.

Fabrication – Refer to a process of manufacturing or constructing

FPSO – Floating Production Storage and Offloading is considered as a

facility to keep oil tank in a hull.

Hydrostatic test – Test involving with water pressure to make sure the lines

to be complied to required pressure to be taken.

Inertization – Refer to decrease the flammability of materials inerting a gas

to reduce chemical reactions

Leveling survey – Refer to checking a level of height and elevation of line

to be equivalent.

Module – Each required structure parts and E&I to be installed as a building

to contain as a unit of oil and gas to keep.

NDE inspection – Nondestructive testing that to make sure the materials are

not destructed

Overhead cost – Fixed expenses for operating business, meaning it could be

related to constant amount of cost that to be spent.

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Procurement – Refer to action of purchasing, delivering and make sure all

the required specifications are met to comply for the project.

P&ID – A piping and instrumentation diagram for engineers to able to

check in details.

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CHAPTER 2

LITERATURE REVIEWS

The literature review consist of

1. Company introduction

2. Main types of budget (fixed and flexible budget)

3. Other types budget

4. Budget manual objectives

5. Financial management

6. Development of financial management

7. Related researches

A total of about 20 literature reviews were used as a reference to analyze and

paraphrase their information on the topic ‘An investigation of budgeting and

budgetary control: a case study of ABC Heavy Industries Public Company Limited

(ABCHI)’. References have been indicated for each statement to support their

information, and the literature reviews were found from reliable sources such as

google scholar, university websites, and books. Each of the references has been added

and shown in the final reference list. The intention is to use literature reviews to

support this thesis statement in order to achieve a wide range of perspectives for the

concept of budgeting and budgetary control.

Company introduction

ABC Heavy Industries Public Company Limited (ABCHI) was established

in Rayong on April 19 1994 with a capital investment of 24 million baht. During this

initial period, the company had one small office and one shop with a total area of

11,200 sq.m. ABC started its business by fabricating small structures and site

installations in the industrial area of Mapthaput, Rayong.

Rayong was a designated area where the Thai government had a long term

plan for development of energy related industries such as petrochemical, chemical,

refineries etc. ABCHI started its business in order to satisfy the needs of engineering,

procurement, and construction related to this industrial area.

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Since its establishment, ABCHI has mostly been involved in the national

industrial estate development. ABCHI was involved in completing the fabrication of

32 storage tanks for the Refinery Project. The project was successfully completed and

this lead ABCHI to be contracted to another project called ‘Aromatic Plant’ to

fabricate 52 storage tanks. All of these were awarded in the first year of ABCHI's

establishment, 1994.

In 1996-1998, ABCHI faced the IMF crisis. However, ABCHI continued to

fabricate mechanical equipment with an excellent quality standard. Even facing

difficult times, ABCHI was able to contract for a large scale Fertilizer Plant Project.

ABCHI was responsible for 10,000 tons of steel structure, piping, spools, and

mechanical equipment.

ABCHI was gradually increasing their business capability with local

construction until the year 2000. ABCHI moved and expanded their factory in

Nikompattana with a total area of 550,000 sq.m. ABCHI was able to expand its

production capability and size in 2001 by re-investing the profits accumulated from

completed projects. This was a step forward to the future for ABCHI.

Starting from the year 2000, manufacturing reformers and fired heaters were

among the critical business items that allowed ABCHI to be well-positioned in the

equipment manufacturing market. ABCHI joint ventured with an Italian engineering

company called ITT S.P.A. This joint venture synergy created more business

opportunities and expertise to achieve various jobs of manufacturing reformers and

fired heaters. ABCHI successfully completed many projects such as Saudi Polyolefin

project 450,000 MPTA, Port Jerome H2 Plant France, Caojing Hyco-1 China, Priolo

H2 Plant Italy, Lavera H2 Plant France, CCR Unit for Aromatics Complex Project

ATC/ Thailand, CCR Unit for Aromatic Complex Project KPPC/ Kuwait, Ammonia

Urea Project Reformer Pakistan, Jurong Project Reformer Singapore, 2 Reformers

with Priminary Reformers Qatar, 2 Reformers-MHI Algeria, and H2 reformer

associated equipment Hermes H2 Reformer Project Singapore, etc. 100 units of

fabricating reformers and fired heaters were completed over 10 years in the 2000s.

Through those 10 years of experience and know-how, ABCHI have gained a positive

reputation as a specialized company in the field of fabricating mechanical equipment.

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The company was constantly growing, ISO 9001 was certified in 2002 and

became a certified BOI and ASME stamp holder in 2003, and then SQL was certified

in 2004.

In 2005 and 2006, ABCHI was contracted for the project ‘Alcan Gove 3

Expansion Project’. This was the first onshore modularization project in the mining

sector business, which consisted of calcination units, liquid purification units, gas

filter house, and alumina handling units. After successfully completing the job,

ABCHI was able to expose itself to the Australian market and strengthened their

Australian marketing activities to create more business opportunities.

In 2008, ABCHI had a difficult time again due to the huge international

global financial crisis. The direct effect of the crisis could have been very active

concerns. ABCHI have been challenged competitively in the field of overseas project

development. While many businesses acted very conservatively on starting jobs,

ABCHI continuously looked for more projects regardless of location and was

awarded with a job in D.R. Congo. In 2009, ABCHI completed a major on-site

construction project in Singapore called Hermes H2 Reformer Project. Even during

the difficult global financial crisis, ABCHI established a local company in

D.R. Congo to undertake a major on-site construction project, which proves that the

capability of ABCHI management is limitless even during the difficult season.

In 2011, ABCHI was awarded the modularization scope for the Australia

Pacific LNG Pty Limited (APLNG) Project, this was the highest valued contract that

ABCHI had signed since their establishment. The contract was for upstream phase 1

which consisted of 15 trains of pre-assembled units (Pre-treatment of coal seam gas)

with 1,200 units of wellhead separators. All modularized units included E&I and all

functions were tested and commissioned before delivery to Australia. This was

another step forward for modularization business. ABCHI also gained the taxpayer

recognition award from the Thai government that year.

In 2014, after 3 years of preparation for listing on the Thai Stock market

(SET), ABCHI officially opened to the public market. ABCHI changed their status to

Public Company Limited under the name of ‘ABC Heavy Industries Public Company

Limited’. Moreover, ABCHI was officially included in the SET100 and Morgan

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Stanley Capital Index (MSCI) global small cap indexes the following year. In

addition, ABCHI was certified ISO 14001 and OHSAS 18001.

Based on lot of previous experience and various kinds of know-how,

ABCHI was offered the first offshore projects (FPSO) by Petrobras in 2015. This

project was on hold for 3 years due to the Petrobras corruption scandal. ABCHI

completed the QGI FPSO Project (P75/ P77) and TUPI FPSO Project (P66/ P69/ P70)

in a very limited time. With the completion of these projects, ABCHI and Petrobras

built a strong business relationship. ABCHI was able to expose itself to the Brazilian

market with a positive reputation. It became another good opportunity for ABCHI to

connect in the Brazilian offshore heavy industries.

Main types of budget (fixed and flexible budget)

Budgeting is a well-known and considered as a critical short-term planning

job, that is, a numerical plan that shows how a company's resources can be distributed

to achieve the desired profit. Creating a budget will support the company to decide

how much the cost will go into and how much it will cost, so it will serve both

administrative and planning purposes. And since the budget is a guide to long-term

implementation, the plan requires a great deal of careful consideration (Agu, 2006,

p. 244). This literature review reviews and discusses theoretical literature research

conducted by scholars on the concepts of budgeting and budgeting style. There is also

a presentation of the main budget types and theories about the major budget elements.

Forecasting, and issues related to budgeting and management. In addition,

examine the relationship between analysis of variance and performance.

Robinson and Last (2009) states that companies for budgeting is to use a

framework for sharing of spending and the revenue. Therefore, system for budgeting

could be critical to make sure that resources are not getting wasted. The system for

cost control may support the goal of achieving their targeted incomes and outcomes

including their production.

Finance viability depends on the level of income that a company can

maintain at any time (Robinson & Last, 2009). Companies should have clear controls

in place to keep budgets in place, allocate as needed, and strictly follow, which means

differences could be understood if possible. Robin and Last (2009), however, argue

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that if a company's income is inadequate, borrowing and tax restructuring requires to

find an alternative option to fund for their estimated budget.

There are a number of determinants that affect the effective implementation

of inter-organizational budgets. According to Singh and Srinivasan (2005), these

determinants include: budget, skilled human resources, and the process of staffing and

other stakeholders involved in the budgeting process.

Despite the sufficient availability of financial resources, companies are

sufficient to consider the execution of production and decision of the enterprise, for

example, funds may support the budget execution to be active. There are a various

resources and system of structure of financial system, which means that the company

is required to make sure that accessing the funding source to fund the project and

perform its activities. According to Da Costa and Jerjen (2002), the plan of

management level is required to establish an estimated budget before carrying out the

organization project.

The budget period may not generally considered to use over than one year.

The plan of the budget and their draft financial statement should be in parallel to

match together with the company's statement and their business strategy, however in

the short term of the budget year there may be circumstances that may alter this

objective. It is important for the budget manager to receive feedback through the

monthly budget report. These reports compare budgets to actual positions and explain

the differences known as technical differences.

Management teams need to define these spending and revenue patterns over

the life of the project or through the activities the company is doing.

It may require to create a defined budget for the costs that may occur when

carrying out the planned production of the project. Realistic budgetary plan is

essential to the implementation of projects and programs (Hemanta, 2003). Budget

planning needs to be properly adjusted to remove all possible bottlenecks. In order to

save time and costs, individual budgets need to be coordinated with each other to

ensure that the implementation process takes place properly (Horngren, Forster, &

Dater, 1997). Therefore, before developing the budget, it is necessary to establish the

policy to be process for the next trading period (Da Costa & Jerjen, 2002).

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Once the budget has been finalized to use, it is required to keep monitoring

and control the budget in order to achieve the maximum efficiency to control the cost,

also it may able to adjust the budget easily in the future wise (Horngren et al., 1997).

Proper system of the budgetary plan may support fund to be available to investors,

development finance partners, and domestic and international donors (Hansen, Otley,

& Van der Stede, 2003). This could be achieved through the budget and cost control,

also not to be impacted directly from the actual results in case of any unexpected

situation such as adjustments for the stated differences between actual cost and

previous budget.

According to the article “Budget and budget management for performance

Improvement: A review of specific Food and Beverage Companies in Nigeria” by the

European Journal of Economics, Akintoye (2008), budgets and budgets apply to the

Bible era, especially the days. The Ministry of Finance reported that nothing was

obtained unless an order was written in Egypt. Joseph has a history of budgeting and

stocking grain that followed the Egyptians during the several years of starvation.

The budget was made in the early 1920s as a job to manage the cost and the

actual cash flow for industrializations jobs. Johnson and Broder (1996) say that it was

in the 1960s that companies started using the budget to indicate what they needed.

Performance improvements in the 1970s were more based on the

achievement of financial goals than on effectiveness. In the 1980s, companies faced

problems as their budget was extremely tight and they did not consider to spend any

more budget for their project. A lot of companies could not consider for customers, it

was only essential to meet sales goals.

Budgeting for corporate companies were related to the emergence of

industrial capitalism especially for the revolution in the 18th century for

industrialization, this brought challenges to the level of management. Glautier and

Underdown (2001) demonstrates that the management philosophy scientifically

focuses on information for decision-making in order to develop the management

system and their actual budgeting methods.

Budgeting in the beginning period of development was related to preparing

and demonstrating capability of organizing information to justify accountability to

enable correct performance assessment with the best results. The function of

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budgeting has been changed rapidly. As business organizations become more

complicated, environments become dynamic, and also emerging trends, the terms

budget and cost control have been defined and examined differently in a various

ways.

Omolehinwa (1989) is an organization whose budget is expressed

financially and shows how to use available resources to achieve what the prevailing

individuals agree, subject to concerning of imposing by respondents and the

environment. It is a priority. The meaning of strike that it recognizes the constraints

imposed on the budget, which is to confirm that the goals and goals and budget to be

achieved. Pandey and Pandey (2003) define budgets as short-term budget control

plans. It could consider as a plan to instruct management by achieving the goals for

the company.

Lucey (2003), in the definition, it states that a budget as a qualitative

description is defined as periods, including planned income, expenditures, assets,

liabilities, and cash flows. Budgets focus on the organization, support coordinate

activities, and facilitate control, however controls are generally practiced through a

comparison of actual and estimate budgets. Lucey (2003) defines that the current

budget as a quantitative concept of the whole business, department, functions for

production, or action plan prepared for financial resources such as cash or capitalism.

The process of budget preparation and agreement is a means of transforming an

organization’s overall goals into detailed and actionable action plans.

Welsh (2003) is the only comprehensive management approach that has

been developed so far, and fully aware of the manager’s dominant role when used

with sophisticated and appropriate judgment. Effective communication, participatory

development, effective control, proper feedback, responsible accounting, exception

decision making, and management flexibility. The Maestri Board of Tennessee States

the budget as the process by which an institution’s plans are transformed into

itemized, approved, systematic operational plans expressed in any currency for a

specific period.

At the management and operation levels, the budget determines what to

achieve in the future. Controls check whether the plan is realized and take corrective

action if deviations or short term falls occur (Egan, 1997). Egan (1997) emphasized

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that in the absence of effective controls, companies remain at the center of internal

and outside of forces that impede their unawareness. Such companies should be

capable to fight with powers. When a budget control system is used, a budget is

established that describes the manager's responsibilities from a financial point of view

which related to the requirements of the company’s overall requirement. There is a

comparison between actual and budgetary draft results. This is intended to ensure the

purpose of the policy, or even to demonstrate a basis for revising the policy, through

administrator actions.

Morgan (1997) states that the budget has increased beyond being merely a

cost instrument. It may consider as a management tool among others. In essence, it is

considered as the most effective tool to ensure for critical resources, especially in

performance resources, where allocated to priorities and results. This type of strategy

may allow administrators to find out when to revise the plans as they do not respond

to budgetary assumptions, such as unanticipated results, or environmental conditions,

economic conditions, market conditions, or changes in technology.

Morgan stressed that the budget should be considered to use for planning or

management tool. According to Hudson and Hudson (2008), controlling may relate to

making decisions based on information that are related to plans and actions that can

develop the use of efficiency assets and services to company’s management.

Positive management is to be based on criteria that where may compare the

actual performance. Without standards, there may not be an effective result of

achievement. Hudson and Hudson (2008) defined on the five categories in which the

standard falls, which are time, quantity, complaints, quality and values. Positive

management is a critica; management tool that demonstrates that the company is in

balance with what is needed to ensure its long-term basis of success.

According to Kawalkowski (1963), qualitative researchers state that the

literature review are based on data collection, and the literature review may effect on

the researcher's concept of their research. Morse and Field (1994) argue that the

literature review could mislead researchers to make exact decisions in research.

In this view, every results or situation to be clarified based on the view of

involvement of participants rather than prior of information. Researchers could

predict that a literature review was considered as important information to provide as

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a guideline for identifying through the past studies. Kawalkowski (1963) states that

literature review may provide a background understanding for the current information

of the topic. After the research results, analyzed and interpreted, the researchers may

review the literature again in order to associate the results which relate to the current

knowledge.

There is also a common understanding from the authors to avoid any failure

in business area, companies have a vision of gaining a strategic business plan which

require to be made accordingly that are close to the function and proper business

analysis. Long-term plans are detailed into a number of procedures in order to have

objectives of the enterprise for business. The end result of this plan is to minimize the

spending and maximize profits. This is also a possible guideline to determine the

management performance of a profit plan. This is usually done from an agreed or

approved budget. Willsmore (1934) states that budgeting is a function of service, and

are not a substitute to management, furthermore, this observes that plans for

budgeting to move from bottom up to flow up are top down.

Although Reynolds, Saunders, and Reynolds (1984) agreed with Willsmore

(1934), budget planning was the key to surviving in today’s highly technologically

competitive environment and was avoided by profit planning.

Reynolds et al. (1984) also established the official budget structure as

follows and listed the results of the credibility to use.

1. Loss of sales due to lack of production.

2. Excess inventory costs due to overproduction.

3. Excessive personnel changes.

4. General lack of control over the results of business operations in terms of

profits.

Fish and Brigham (1978) are consistent with Reynolds et al. (1984)

However, it is a guide for the budget not to limit the spending. Alternatively, it could

consider another way of using operations by carefully planning and managing, and a

tool to use corporate resources in the most productive and profitable way.

Horngren et al. (1997) defines that the budget shall not understand as a

minor concept for business operation. It is to be agreed with any possible assumptions

and opinions of other researchers. In addition, the budget is to coordinate and

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implement properly. Well-managed companies may have their own possible

guidelines or procedures for budget cycle, possible draft similar procedure could be

referred to below:

1. Plan any possible performance for the company. The level of

management should be informed in prior and shall agree on what to expect.

2. Provide a set of specific expectations that serve as the basis for

measuring actual results. Investigate the differences from the plan.

3. Take corrective action following the investigation.

4. Make another plan, taking into account the conditions and any possible

feedback charged.

According to Agu (2006), budgeting and budget management for

organization, “budget management” is for the budget as a means of guiding business

operations. In that case, the budget will be the basis for managing business operations

to define which planned targets and objectives have been achieved, and to prevent

offline drift in ‘time’. While budget management agrees to follow the budget

preparation, the budget will be supported not only by the top management but also by

the participation of the budget holder in the investigation of the solution to the

problem that has occurred.

Osisioma and Enahoro (2006) states that there is no objection with the above

with Agu (2006)’s statement referencing to the study of budgeting and budgeting in

business organizations, however budgeting may have more than one requirements

generally for management’s business operation.

Feed forward: May require to provide a basic concept of control plan at the

point of action, ie for management’s decision making.

Feedback: May require to provide measuring of management’s action plan.

According to Odeleye (1991), “to take corrective action as needed, and

perhaps to fill the gap between budget and actual performance” and prevent the

unrealistic and unexpected budgets spending.

There is no opposite perspective for claiming by the Kansas Historical

Society (1975), as management’s attention is focused mainly on the business that does

not function as planned.

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Fixed budgets

Fixed budgets are budgets that are created to remain to be the same

regardless of the productivity or sales achieved. Which means, it could be considered

as a single budget without cost analysis. The purpose of fixed cost shall be made at

the planning stage to support to clarify the broader purpose of the company that does

not split cost analysis into fixed and variable. Fixed budgets rarely have practical

value for the purpose of controlling, unless the plan is found to be as planned.

Flexible budgets are budgets that are made to change as the amount of possible

circumstances of changes, by figuring out different pattern of receiving the costs. It is

essential to use flexible budgeting for management purposes. Any kind of control can

only be performed by comparing what the actual activity level should have with the

costs incurred.

Flexible budgets

Flexible budgets often reflect changes in business plan across the company.

A number of organizations, may change in some organization and small in others.

Some organizations able to produce more units than expected without involving any

high additional demand costs, however, others may increase or decrease costs in

direct proportion to increasing or decreasing production. A flexible budget tries to

address this situation with great accuracy. This support to keep spending at the lowest

possible activity level and makes it easier to manage the spending cost.

In order to create budgets with flexibility including high accuracy, overhead

costs need to be classified as fixed as possible so as semi-variable, and variables. For

variable costs, an exact or detailed total or standard time per unit of production to be

set, and the total variable costs to be gained by multiplying the unit cost divide by the

unit or time.

Other type’s budget

The specific type of budget created by managing an organization depends on

many factors, including the size, nature, complexity, or operation process. However,

in practical situation, the possible following budgets can be considered as common

knowledge.

1. Funding budget: Funding budget includes a specific estimation of

expected cash flow for the next or next fiscal year. It could possibly to consider that

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companies to be keep existing and to be able to operating without profit as much as

can, however the company could be suspicious without liquidity. Funding budgets

identify potential cash shortage periods or money surpluses to the company. Thus, the

company mitigates any negative effects of handling money curtailment (shortage of

cash) possibly while preparing overdrafts or maximizing profits related to surplus

funds through short-term investments.

2. Profit planning: Profit planning is an understanding concept set of

budgets covering company’s operations in a given period of time. This planning is a

key achievement of the system for budgeting. This could be a high beneficial plan,

linking all business operations of the company. It consists of a variety separate

budgets which are independent, such as operating budget and financial budget.

3. Operational budget: This demonstrates how to operate the company’s

products and services. The essence of an operating budget is that an organization can

match the demand for their products.

4. Financial budgeting: This demonstrates how the company gets financial

resources while in a budgeting period of time.

5. Sales budget: The sales budget demonstrates the quantity and planned

price of their products to sell in planning. This budget may consider as very critical

concept as this is an estimate of the revenue receiving from the operation of their

business. This may support to provide a forecast of total revenue, which is an estimate

of cash receipts from customers, and also provides basic data to build a budget for

manufacturing costs and sales.

The first step in budgeting is the determination of the main budget elements.

The main factors of budget is the level of limit for the organization's operation at

some point. Usually, it is customer demand, but Borrman (1992) claims that for most

companies in developing countries like Nigeria, production equipment and

availability depend on accurate predictions of cost behavior patterns.

Reynolds et al. (1984) Many well-managed companies are achieved by

comparing their actual spending to previously set quantities adjusted for various

levels of production

On going budget or ongoing budget is a type of flexible budget that is

updated more regularly. Owler and Brown (1984) define rolling budgets by saying

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months or quarters further so that the budget can reflect the current situation. A

budget of 12 months is available at any time, and future months or quarters will be

added once the month or quarter has expired.

The desirability of continuous budgeting stems from the fact that

management is constantly looking to the future and tracking changes in the business

environment. After determining the key budget elements, forecasts are made, budget

schedules are fixed to limiting factors and their patterns. Forecasting could be an

important activity because budget effectiveness is based on accurate forecasts.

The purpose of the budget manual is to formalize the budget process for the

following reasons:

1. There is no fixed budget cycle.

2. Need to clarify the roles and responsibilities of key stakeholders in the

budget review process.

3. Improve financial effectiveness and efficiency.

It is important to manage the budget and implement it before the start of a

new fiscal year. Management should be able to know in advance what their spending,

their income level, and our potential operating margin will be next year. You can then

take action and make decisions about the group’s future based on budgetary

assumptions. By doing so, management is in the best position to know where to

allocate resources and how much cost needs to be reduced to achieve the group’s

stated goals. This will also help the Executive Committee to decide on “Persons in

charge of internal executor” and also issue a “do list” in line with the controls to

achieve the group’s goals.

Budget manual objectives

The purpose of the budget manual is to have a suitable procedure or a

guideline for a cycle of budget and to determine high-level processes in order to

follow the benefits that are to be achieved and also able to define any changes are to

be implemented:

1. Update budget and shorten completion period.

2. Identify the roles and responsibilities of those who provide the necessary

budget information.

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3. To be a clear reflection of the underlying business of the budget.

4. Reflect the evolving business management model in the budget process.

5. Integrate and understand all detailed functional budgets.

6. Review and understand the entire budget to ensure that it meets project

goals, regional strategies, and group guidelines.

7. To make the budget review process easier to understand.

8. Look at the budget to monitor planned performance.

It provides as a meaning of educating management levels, and to achieve a

proper understanding of responsibilities for the company and workers.

By conception on budget preparation and execution. This will help managers

develop a team spirit when they are encouraged to participate in the budgeting

process.

Budget review process flowcharts

The key meetings and reporting requirements for the ABCHI Company

system group are shown below:

Figure 5 Overview of budget review

Key Actors Month 1 Month 2 Month 3 Month 4

Main BoardConsideration

& Approval

Management

Board

CEO, CFO,

GOMs

Review and

Approved TT

Review &

Comment

Regions/Projects SOW Submitted Agreed on Input

Budget TeamTime Table

Issued

Input SOW in

the Budget

Agreed Input to

meet the

standard

Working

Document

Overview of Budget Review

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Financial management

In this section, it is to attempt to define the general environment in finance,

through explaining the conceptual framework for financial functions, financial

management, working capital management, and dairy farming.

Given the recent developments in dairy farming and the complexity involved

with funding, many studies have been conducted to cover different aspects of the field

of financial management and dairy farming separately, so the details about

multidimensionality. Getting started with research details the aspects of financial

management that are appropriate.

Financial management is a management activity that involves planning and

managing a company’s resources. It could be a division of business and economics

during the 1890s. Even in these days, management of finance may not have their own

fixed organization and only relies on economics theoretically.

Financial management is critical especially for practitioners. At this point,

the problem is at a developing period, there is no unanimous solution. Regardless of

the form of the business organization, people who are working at different levels are

may only be interested in certain issue rather than others in order to gain analytical

insights during processing the finances of the business concerns in their operation.

With the help of theoretical and analytical concept, this may able to perform the

functions of financial management sufficiently. The functions of this performace are

called “financial functions”.

Maximizing profit: The main point of financial management is to maximize

the margins. The company may attempt to earn their highest profit both in the short

and long term. Due to the business uncertainty, it cannot guarantee profits in the long

run. However, companies can earn the greatest profits in the long run.

The financial manager makes the appropriate financial decisions.

Maximizing assets maximizing assets (maximizing shareholder value) could also be a

primary idea for financial management. Maximizing assets could understand as

making the largest asset for our shareholders. Therefore, the financial manager tries to

give the shareholders the largest dividend. They are also trying to maximize the value

of market stocks. The value of market stocks could be connecting to the company’s

business operation. The higher achievement, the higher the market value of the stock.

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Therefore, financial managers must attempt to increase the value of shareholders for

stock.

Financial requirements for estimation: To have proper financial

requirements could relate to connecting with financial management level, meaning

financial department may require to calculate and estimate any possible requirements,

and also to figure out how much money needs have to operate business or project.

The financial department may require to find the way for the company’s

fixed and working capitals. There is a chance of shortage funds or surplus. Finance

requires considering of a variety of factors, such as involving advanced technology,

the number of employees, the size of company (cost control), and requirements of

legality.

Mobilization: Collection of funds are critical impacts for financial operation.

After plan the possible requirements for finance, the financial department must

determine the source of the financials. A various funding could be received through

such as stocks, bank loans or bonds etc. There shall be an appropriate balance for

funds for spending and receiving. Companies may have loans at lowest interest rates

as possible.

Procedure of using finance: Finance managers need to make the most of

their finances. They have to use profitable funds and not to waste company money.

Also deciding on investigation shall be cautious, especially funds in other projects. It

can be critical to not fix company funds in inventor, and should only have a short term

of credit period.

Maintaining cash flow: Cash flow is a short-term investigation of financial

management. Companies may require to have a system of cash flow to pay for daily

expenses such as purchasing raw materials, and salaries, rent fees, and more. There

are many opportunities, such as receiving discounts in purchasing, or crediting

customers. Find a way of reducing expenses are survival in business and success of

the company.

Company survival: Most critical point of financial management is to have

competitive strong point of their own skills. Financial managers may to be careful

while have decision makings. One decision may take changes and risks.

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Reserve creation: Create a reserve may support financial management.

Distributing all profits as dividends to shareholders may not be a must or a required

strategy. It is necessary to maintain profits as part of the reserve. Reserves can support

in growth for the future for expansion. In the future, we may face unexpected

situations, therefore it shall be prevented.

Coordination: Coordination between all departments is necessary especially

for making a financial statement as it can be their face of the company, therefore if

financial department requests any information, it shall be transparent and have all

records being audited. Even the future plan of the company strategy shall be informed

to financial department if requested.

Create Goodwill: Financial management can create the image and reputation

of the company providing financial statement, as it is the easiest way to check their

company especially for investors. Goodwill may support to maintain the company in

the short and the long term.

Improve efficiency: To improve the efficiency of all parts of the company.

By properly allocating finance across all departments, the efficiency of whole general

improvement.

Financial discipline: Financial discipline (1) Invest with high productivity.

This gives the company a high return (profit), (2) To avoid wasting money and misuse

of finances.

Capital cost reduction: Financial management attempts to reduce capital

cost. In other words, company attempts to have a loan at low interest rates.

Financially it is required to plan the structure to minimize the cost of capital.

Operational risk mitigation: The financial management department is also

working to mitigate operational risk. Businesses have many risks and uncertainties.

Financial managers need to take steps to mitigate these risks.

Preparation of capital structure: This determines the ratio of how much

owned and borrowed for funds. This balance will create a record of capital sources,

and necessary for liquidity, flexibility, and stability in economic system.

In order to have a better understanding of the role for financial managers and

department, their functions are critical to review, it could be a important key to track

the changing the function of finance as a discipline. At the beginning of century,

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corporate finance was as an independent research area, but before that it was mainly

considered as part of economics.

Capital blocks, large incomes and equity are in every circumstances. Also,

the establishment, mergers, mergers, etc. of the new company required regulation on

financial records, and the development innovation and new industry in 1920 raised

awareness about liquidity and funding. Considerable attention has been connected to

describing a number of methods of external and internal funding. Mildenberg and

Hurter (1985) states that business companies were creating in “common stock” for

funding source, which is a new idea of funding in 1920.

In funding research on the defensive aspects of survival, attention was paid

to maintaining liquidity, bankruptcy, clearing and restructuring. Conservatism was

considered important, and companies began to maintain a structure for finance.

Finance was running traditionally that developed from the twenties to the

thirties during the forties. In this approach, companies were analyzed not from the

insider's point of view but from the investor's or lender's opinion. However, in cash

flows while being analyzed, the planning and management of cash flows from within,

evolved during this period.

Finance is certainly a critical point, however also it is considered as a

difficult key point of predicting what will happen in the future including numbers for

handling cash flow. As finance creating numbers and stabilize the cash flow, this may

support a great success, however it is also has to be a long term study for their

company even with clear confident that any decision could be succeed. Decision

making can be difficult as there shall be no 100% correct answer.

Development of financial management

Schuckett and Mock (1979), demonstrates that financial management needs

to have a change in years. Meaning, only the traditional strategy emphasizes external

funding. Over the decades, the focus has shifted from funding to asset management as

investor demand has increased. This demand has led to the improvement of a number

of analytical systems to determine the effectiveness of management.

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The convenient procurement of the allocation of funds may separate into

two critical divisions of financial management, and were taken care of by various

individuals of SMEs and large companies for better achievement of them.

With the development of financial management, the Ministry of Finance for

financing including tax matters, cash management, insurance processes, and the

management of lending and collection, and independent including accounting, and

procedures, planning and cost control.

Related researches

A related study that supports this is the “budget study: three theoretical

aspects and criteria for selective integration” written by MacIntosh and Hopper

(2005). This research focuses on budgeting being most widely studied topics

especially in accounting, and is also study relate to a theoretical understanding and

point of view in sociology and psychology as well. The reason for choosing this case

study as a related study is that those theories are the main research subject, level of

analysis, predictions relate to equilibrium, rationality and important similarities and

differences between budgeting and non-budgeting Focusing on the three theoretical

viewpoints.

This study describes the factors of an economic perspective that can be

considered how to incorporate psychological expressions about how budgets affect

individuals. Economics also states that it can realize the process of organization and

able to consider sociologically including restrictions whether supervisors should start

budgeting.

This study contains a psychological perspective on budget, which may

support this present independence. This survey can draw clear conclusions, especially

including the psychological factors of budgeting, to determine how a business can

influence the psychological case.

This related study states that there are three stages of the impact of

budgeting practices that can be characterized as follows: The first two phases-

individual mental state, behavior and performance (budgeting → mental state →

behavior → performance etc). This study shows how human behavior and its

understanding are important for budgeting.

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Also would like to note that participatory budget-based incentives reduce a

rate of employees stress, however if the company is having difficulties with budgets,

this may increase employees stress rapidly which may lead working performance to

be not effective. Employees may development their performance by providing trust

and justice from the company that can stimulate employee efforts, in addition efforts

to be constantly checked and implemented through incentive contracts (Organ, 1988;

Podsakoff, Mackenzie, & Podsakof, 2000). This research may demonstrate that

providing incentives is one of the strategies to be used and that it is supported by

qualitative studies.

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CHAPTER 3

RESEARCH METHODOLOGY

To conduct this research, the researcher identifies the research

methodology in the following;

1. Research design

2. Research methodology

3. Population and sample size

4. Research instruments

5. Data collection

6. Data analysis

Research design

This study is based on qualitative and quantitative methods. The reason for

including both methods is to conduct academic interviews with management levels

and use scholarly research to obtain various opinions that are considered as accurate

results.

Qualitative research design

This research is self-designed interviews to have information from the

respondents, it could be flexible and a quick way to derive and collect information.

Researchers used interviews in this study because this information cannot be

quantified and interviews are occasionally expressed as qualitatively of study. These

techniques of sample may provide the detailed information where is it required of the

study. The information and answers obtained from questions to determine whether

ABCHI's budget and budget management currently managing efficiently.

This survey discusses budgetary objectives and why it is important to

monitor the cost of doing business. The research approach is qualitative and

quantitative.

Grove, Burns, and Ihlenfeld (2007) describe the qualitative method a

“systematic subjective approach used to describe life experiences and situations.”

Parahoo (1997) states that qualitative research not only focusing on humans past

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experiences but also emphasizes their individuality of the individual. Holloway and

Wheeler (2002) describes that qualitative method could be connected to social

research which focuses on interpretation and understand their experiences and their

lifestyle.

Researcher use a qualitative research to empathize people’s behavior, each

person’s point of view, experiences and emotions, also concept of perspective factors.

A humanitarian perspective and point of view for understanding human experiences

without focusing on concrete concepts of standard (Morse & Field, 1994).

The researcher focused on the experience from the point of the participants.

The purpose was to achieve to have their point of view, researcher was involved in

research and were devoted. The participation of researchers in research has made

information collection more unique (Carpenter, 1999). However, in cases, a full of

analyzed information is not possible, and the qualitative method cannot be perfectly

accurate, as humans may not think logically or predictably based on every person’s

education or their perspective, also including emotions, may not be able to be

predictable always (Holloway & Wheeler, 2002).

Quantitative research design

The purpose of quantitative studies is to clarify the connection between

independent variables and dependent variables. A quantitative study design could be

descriptive (a single measurement) or experimental (subject measured before). In

studies, the association between variables is established.

A high participation rate from randomly selected samples from the

population, then it is a less chance of possibly that bias in relationship estimates will

occur. In this research, bias is less possibly to occur when cases are assigned to join

the interview randomly, or when researchers are blinded to each of participants of

research.

In studies, characteristics may a critical point and effective case for the

relationships. Limit the impact by using less heterogeneous subject samples or

including in the analysis. To measure variables to explain the treatment mechanism in

the experiment could be important.

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Research methodology

The difference of between quantitative and qualitative methods is method of

measurement. In general, quantitative methods are not very flexible. As an example,

in a quantitative method such as a questionnaire or questionnaire, researchers may use

the exact same questions to all participants. Participants may select as “closed end”.

The beneficial thing of this method is that responses able to compare significant

between participants and research. However, this may need an in-depth of

understanding of what questions to use, or what will be the most efficient way to ask

participants, including the possible range of what will be their responses.

Qualitative methods to be more flexible as it is able to greater autonomy and

able to easily interact between interviewees and participants. For example, in the

qualitative method, there are mainly “free answer” each participant can respond how

they want and provide their own opinions, it is free to talk and no limited of their

voice.

Furthermore, in qualitative methods, the relationship between researchers

and participants is tend to be casual than quantitative research. Interviewers

commonly have a chance to talk causally and to be more detailed than with

quantitative methods. The researcher then able to respond appropriately to the

participant's remarks by aligning suitable questions with the provided information by

the participant.

However, it should be noted that perhaps there could be a wide range of

different information between quantitative and qualitative methods. The flexibility

may not indicate the strength of scientifically methods, which to be critical especially

in researches. However, the study of flexibility may imply some understanding of the

issues being pursued using this method.

Qualitative methods

A draft self-designed interview questionnaires were provided to participants

of the company’s top management personnel to solicit feedback on in-house

budgeting and control issues and concerns. The results of this study show that an

appropriate budgeting and budgeting system has been adopted and used to prepare the

company’s budget, but also reveals some issues related to ethical issues became. The

results demonstrated that the system is required to have a basic procedure to allow

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management to plan ahead in order to promote the efficient use of limited resources

within the company.

Qualitative research means emphasizing the quality of an entity, as well as

the process that has not been experimentally considered or measured, when the

meaning has not been measured at all. Qualitative researcher provides the nature of

socially built situation, the links between researchers and research objects, and the

contextual constraints inquiry.

The strength of qualitative research may able to provide complexity

descriptions of humans experience with a particular of study subject. Information

regards to the “human” with problem could be a contradictory behavior, opinions, and

personal social interaction relationship. Qualitative methods could be effective for

identifying factors such of social norms, sociological, gender studies, ethnicities,

religions and etc. Used in combination of quantitative and qualitative methods may

support interpreting of the meaning of complexity of reality and quantitative data in a

given situation. Survey results from qualitative data to be explore in depth of research

in order to understand people with characteristics of the research population, however

deepen complexity of understanding with only a certain social background or

education. In this case, qualitative method is could be possibly different from

scientific research.

Possible advantage of qualitative research could not be forced to limited

from fixed answers such as quantitative research, however by using opened questions

and probing, participants can use their own words and provide opportunity to answer.

For open-ended questions, you can invoke the following answers:

1. Be meaningful and culturally distinctive for the participants

2. Any unexpected results

3. Descriptive casually

Another possible advantage for qualitative method that for researchers the

flexibility to investigate the first participant’s responses, that is, why and how.

Researchers listen carefully to the participants’ comments, participate according to

their individuality and style, and use probes to explain the responses in detail.

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Possible most common qualitative research described in each modules of

participants for investigation, detailed interviews for each participants. Different

methods are suitable for acquiring detailed types of research.

1. Interviewers observations are good in gathering information on

spontaneous behavior in normal context.

2. In-depth interviews are great for gathering information about an

individual’s personal history, different opinions, and experience.

3. Participants may suitable in extracting information especially relate to

different cultures, experience and extracting a wide overview of the concerns for the

cultural groups and subgroups being represented.

Therefore, in this case, conducting the data for qualitative research will be

done through in-depth interviews. The qualitative method chosen will be conducting

an interview with each top manager, including AMD (Financial Director), AMD

(Planning Director), Project manager, and Marketing director. The types of data

generated are field notes, and transcripts.

Questions for the interview will be the same for all interviewees, and

interviews will be conducted as equally as possible. There will be no different

concepts of conducting an interview to make sure that everything shall be the same as

much as possible.

Quantitative methods

Calculation of estimated and actual cost will be provided as below;

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Figure 6 Estimated and actual operation cost from 2015-2017 (Quarter basis)

Figure 6 is a sample of operation cost analysis that will be used.

For figure 6, details will be broken down as shown in the next page of the table, and

will all be input in the results section. Total results will be available in the results

section.

% of Income APR MAY JUN JUL AUG SEP OCT NOV DEC

Direct Material

SUB TOTAL

Consumables

SUB TOTAL

Labor

SUB TOTAL

Services & Rentals

SUB TOTAL

Transportation

SUB TOTAL

Overhead and Cost (Share)

SUB TOTAL

ESTIMATED COST ORG.

TOTAL OPERATION COST

Income

Cost

DescriptionEstimated cost (A)

ACTUAL

Q2.2015 Q3.2015 Q4.2015

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Table 2 Breakdowns of task of activity for costing

No Description

1 COGS

2 Direct material

3 Cost estimate

4 Supplies

5 Material supplies

6 Galvanized cost

7 Grating cost

8 Import exp.

9 Stamp duty

10 Freight charge

11 Customs clearance

12 Consumable

13 Consumables

14 Tools @ Equipment

15 Consumable-gas

16 Consumable-painting

17 Consumable-welding

18 Labour

19 Salary & labour

20 Subcontract

21 Subcontract-local

22 Subcontract-oversea

23 Subcontract-other

24 Service & rental

25 Gasoline-company

26 Services third party (testing, NDT, inspection)

27 Services-machine, gal, grating, rubber lining

28 Services-other

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Table 2 (Continued)

No Description

29 Maintenance

30 Drawings design

31 Rental-equipment

32 Rental-machine

33 Repairing

34 Transportation

35 Transportation

36 Transport

37 Overhead and cost (share)

38 Bonus

39 Electricity

40 Overtime (staff)

41 Overtime (worker)

42 Compensation (worker)

43 Service-calibration

44 Cost share

45 Total

Qualitative and quantitative research

Population is approximately 1,200 involving this project, and sample size is

4 for qualitative research as well due to only top management to take interviews.

Research instruments includes such as, recording system of accounting from

company’s confidential computers, also permission of access system by directors,

hard copies of each year of financial statements were also being used.

This study uses both qualitative and quantitative methods. Quality research

is conducted through in-depth interviews with management. While discussing this

topic with top management, we will discuss possible reasons and solutions for the

possible difference between budgeted costs and actual costs. The interviewer will

draft possible questions and try to get different opinions and answers about the actual

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difference between budgeted costs and actual costs. You can receive different

opinions by getting opinions from different ranges of management. For example, the

Finance Director focuses on numbers and financial statements, and the Project

Manager focuses on construction management. Therefore, the scope of management

may differ and the prospects may differ, which provides a broad view of qualitative

research results.

Both of the above methods are limited to the number of populations, or

samples of size. The population is limited to managers and directors. The aim is to

receive only top management perspectives on budget management from their own

perspective, not lower level officers, depending on the level of experience. In

addition, because the issue of confidentiality limits access to other companies, the

sample focuses on accounting cost records from one sample company that is ABCHI.

However, as ABCHI provides in-depth interviews and accounting cost records, this

may apply to business development, especially budget control, as a future reference.

Quantitative and qualitative research methods differ primarily in:

1. Their analytical purpose.

2. The types of questions they propose.

3. Types of data collection equipment used.

4. The format of the data produces.

5. Degree of flexibility incorporated into trial design.

Qualitative method

The instrument qualitative method is completing an interview with

interviewees who are the management level, face to face interviews been done, draft

questionnaires were provided before starting an interview in order to prepare in

advance, atmosphere was not too formal, tried to be causal as much as we can to

discuss freely and there was no time limit, however, due to their schedule times, it

was up to their available to time to spend to doing interviews, however all

interviewees were able to complete all questions and answers.

Northern Illinois University says, “Data analysis is the process of

systematically applying statistical and logical methods to explain, illustrate,

summarize, summarize and evaluate data.” The data collected by persons are

classified as analysis and different sections primarily in certain form.

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As already mentioned in the previous chapter 1, the qualitative method will

be employed in conducting an interview with each member of top management,

including AMD (Finance), AMD (Project), and Project Manager. Different types of

information collection methodology generated are hand notes, and transcripts.

Draft questions will be used for the all interviewees and each different

answer will be recorded and will be input in the analysis.

This chapter discusses the information to be collected and to be analyzed.

The aim of this research is to identifying the system of cost control in ABCHI,

including how to assess the draft budgets to be made and prepared, with clarifying

and how many manpower available in order to implement the budgets, also, fine the

measurement to control with variances of company budget.

Quantitative method

The instrument of quantitative method includes a number equipment such as

computers, accessing system, approval by directors to review, hard copies were also

used, also involving with accounting team by discussing each quarter of results were

one of strategies.

Cost management control has estimated and analyzed the possible

assumptions of this project. Actual spending records are also available, so you can

compare the differences to find out which ones have the most cost difference. This

makes it possible to calculate why there is a cost difference. This result may explain

why there is a difference and suggest ways to prevent significant differences in budget

calculation costs.

First of all, the format is given, then there are descriptions of each, and the

cost has been evaluated into the subtotal. Sections are such as that are all related to

completion of this off shore project.

Cost sections of assumptions are as follows:

1. Direct materials

2. Consumables

3. Labor

4. Subcontracts

5. Services & rentals

6. Transportation

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7. Overhead and costs (share)

8. Estimated original cost and total operation cost

Also, total income and cost will be available. The company trusts that the

above sections are the most important cases to record and are recorded according to

their strategy.

Additionally, for the above sections of divided descriptions, there are further

details of each section with a breakdown of details and sub sections showing how

each has been calculated.

For example, further breakdown details will be available for:

1. Direct materials

(Cost estimate, supplies, material supplies, galvanized cost, grating cost,

import expenses, stamp, duty, freight charge, and custom clearance)

2. Consumables

(Consumables, tools, equipment, gas, painting and welding)

3. Labor

(Salary & labor)

4. Subcontract

(Subcontract – local, sub contract – overseas, subcontract – other)

5. Services & rentals

(Gasoline – company, services – third party (testing NDT, inspection),

machine, grating, rubber lining, maintenance, drawings design, rental equipment,

rental machine, repairing, and rental tent)

6. Transportation

(Transportation)

7. Overhead and cost (share)

(Bonus, electricity, overtime (staff), service – calibration, cost share)

8. Estimated cost original cost and total operation cost

Cost has been analyzed by quarter from 2015 Q1 to 2017 Q4. Results will be

available in Chapter 4 and will be discussed further.

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Population and sample size

Qualitative method

Population for this study is 4, there are company ABCHI’s only top

management’s completed interviews in order to provide their own experience and

personal perspective from each different department.

Sample size is also 4, due to there are a limited management level of

position in the company, however, 4 directors are the main interviewees who are

directly involving in every project and especially for 03B.

Quantitative method

Population for this study is 20, who are the main staffs were able to make

financial statement and calculate the actual cost of numbers.

Sample size of study is the same amount of population that is 20.

Research instruments

Qualitative method

The research instrument is to bring a note and a pen to discuss, and

interviewees were received a draft questions in prior for the interview in order to

management level of interviewees to arrange time and able to prepare answers. It was

conducted through comparing financial previous and current statements quarter by

quarter with accounting department, the number of breakdown cost been created from

the record of project’s report and actual account receiving cost.

The interview questions comprise of 4 parts.

Part 1: Business Analysis and Budgetary includes 6 questions

Part 2: Cost control includes 5 questions

Part 3: Management strategy includes 4 questions

Part 4: Debriefing include 2 questions

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Quantitative method

The research instrument is used via computers, hard copies and face to face

discussion, due to confidentiality, it was not able to receive all documents however

company confirmed that the numbers are correct.

Data collection

For general data collection of method for qualitative are considered as doing

interviews. A draft transcript and questionnaire clarifies each information in detail,

especially on how it actually works when each method is used properly. Examples of

studies focusing on interviews and interviewees are also provided. The important

point is that interviews are generally to be used for the purpose of data collection.

Interviews may able to explore individual participant perspectives, experiences, their

norms, and encouragement. Interviewers attempt to be causal conversation to generate

qualitative data easily rather than being too formal.

There may have a number of basic types for interviews, such as structured,

semi-structured and unstructured. Structured interviews are usually orally done with

questionnaires and answers, where the scope of follow-up questions for answers

justifying further scrutiny, with little or no change in the list of predefined questions

asked without. Therefore, it may able to save time and easy to complete, and are

especially useful if you need clarification of a particular question or if the respondent

is likely to have reading and writing problems. However, due to the nature of their

responses, participants' responses are limited, so they are of little use when you need

‘depth’.

However, unstructured interviews may not reflect prejudice theory or studies

that are poorly organized at all. Such interviews can begin with just the first question,

“Can you tell us about your experience,” and then progressively increase questions

based primarily on the first answer. Unstructured interviews may take a lot of time

consuming taking several hours and complicate to control and to attend as there a lack

of guidance to discuss about as there are no pre-determined interview questions it may

be.

Semi-structured interviews may include a number of important questions to

determine the area of being surveyed, however also allow interviewers or

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interviewees to explore their ideas or responses with detail. This interview research is

considered generally about offshore projects to provide their perspectives and

opinions with guidance on what to discuss about with draft questionnaires. The

flexibility of this research is to discover information that is critical to the interviewees

however, may not have been considered appropriate by the researcher, especially

compared to structured interviews.

In this qualitative survey, the survey interview is aimed at semi-structured

and structured. Business executives generally prefer to have some conceptual drafts

and an understanding of what kind of questions to ask. Therefore, in this paper we

tried to use a more semi-structured structured concept.

Researchers personally conducted a questionnaire with ABCHI’s top

management through oral interviews. During the interview, the interview got

information and feedback. As a whole, it took about three weeks to distribute and

collect interview questionnaires from each person and to schedule an interview

schedule. This survey is considered complete and takes 1-2 months after all the

necessary information has been obtained and edited.

Data analysis

Variable analysis with accounts set from 2015 to 2017 on a quarterly basis

will also be provided in the results, including direct materials (cost estimate, supplies,

material supplies, galvanized cost, grating cost, import expense, stamp and duty,

freight charge, and custom clearance), consumables (tools, gas, painting and welding),

labour (salary and labour), subcontracting (local, overseas and others), services and

rentals (gasoline, third party services (testing and inspection), machine, maintenance,

drawings, design, transportation, and lastly, overhead cost (share) related such as

bonuses, electricity, overtime (staff), service and cost share. These items will be

provided with the number of costs, which will be able to identity which are the most

critical costs to monitor, and will be able to check generally for the cost impact in

detail.

Variable analysis is important because it can measure the importance of

variables in computational models and measure data in many applications. Almost all

business decisions require cost-benefit analysis. Such analysis may able to figure out

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possible future risks and prevention of a decision making. If an organization not make

a performance of doing a cost control analysis, it may have possible issues of taking a

loss profit work and also loss time and cost. Predicting and prevent any potential risks

of decision based on cost analysis may prevent business failure.

Cost-benefit analysis can be widely used and understood, it is worth of a

single intervention of judges, also this analysis may able to compare interventions

within and across sectors and compare interventions with multiple outcomes, however

it is important to be noted that cost benefit analysis cannot deal with non-monetary

outcomes. It is conversion to benefits require assumptions.

Information for cost control may receive based on cost-benefit analysis

facilitates budgeting. If a company has the lists of costs analyzing, it is able to

forecast the future budget in order to carry out their business. If the company plans to

quantify financial achievement, the company may use the expected profit for your

sales forecast. Any possible predictions can be useful when creating budgets and

forecast of cost control (Thompson, 2019).

Cost-benefit analysis is assessing the planned behavior evaluating the cost

versus that benefits for the project. This may begin with a list of draft of plan and cost

planning. The difference between the benefits and cost may able to determine if their

business decision making is warranted or not. Generally, if the cost is 50 percent of

the benefits, then it is to be predicted to worth taking it. The purpose of cost benefit

analysis is to approach to measure the suitable path for the project including

investment, or business requirement etc. Cost benefits analysis may provide options

and able to study which can be the most possible less risks decision or worth profit.

Decision makings can be made based on cost-benefit analysis include their

new cost assumptions such as applying new technologies, new procedures,

remodeling, and purchasing new equipment or relocate some facilities. To monitor or

assess applying those cost-benefit analysis, it may involve related to savings, or

administrative time, facility space, etc. and associated cost avoidance (future work

such as overtime work or equipment leases) Cost reduction) opportunity.

While the name looks simple, the actual cost-benefit analysis

implementation often has some complexity and subjectivity. This may not all relate to

cost analysis at initial investigation. Considering that if the company wants to make a

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decision to manufacture or purchase a particular component of a complete large sector

of assembly, there may require a review for the price numbers to make sure whether

the company can go ahead parts to purchase to be manufactured.

When subcomponent production is included with an external supplier, fixed

overhead costs reduce the number of components that can be decentralized, as the

utilization of their own plants is reduced. In resulting, different parts may manufacture

constantly and demonstrate increasing costs and consume, or perhaps other benefits as

well.

Labors might to be concerned with the outsourcing job. The resulting issues

of morality and labor without rest may cost the company much earlier than planned.

The impact of loss control on subcomponents needs to be considered. When

parts are belonging from outsourcing, the company may have no direct control over

the product.

Unexpected profits could be achieved, such as factory facility that was

standing by for a long period was able to be used depends on project’s requirement,

which allows the company to be more productive and able to assemble or able to

create further products.

To be comprehensive, demonstrate the spillovers that occur in changes for

the actual business environment. Cost-benefit analysts require to check possible

interactions between the action being considered and other events to assess any

possible risks. One of possible factor is the accuracy for the benefit cost analysis to

generate useful data in order to make proper decision making for business.

The value of time is a main significant point concept in cost-benefit analysis.

Receiving amount of current value of money could be more valuable than receiving

the same amount in the future, due to unpredictable or unexpected future results in

cost control. The difference of current value and the future value is critical if the cost-

benefit analysis is to exactly able to quantify the financial statement and cost control.

Capital budgeting is a analysis for cost control that brings the proper

assessment of costs and analysis over a long term period, thus providing more

consideration of the value the time of investigation. Annually, inputs and outputs of

investment of the results shall be monitored, and can be related to the present value in

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order to check whether the net present value could be an opportunity to improve for

the future decision making for their organization.

Cost-benefit analysis is a multistep strategy that connects to preliminary

surveys, and reports. Every last steps, it is responsible for make the analysis to

provide a proper decision making or prevent any possible risks. The survey could be

an evaluation which relates to collecting data for the possibility of chances and the

current value. Feasibility studies complete data collecting as required and evaluate

information to assess impact of the opportunity in a long or a short term of period. In

final, an analysis report may able to provide all relevant document and data for

decision making for opportunity. Benefit analysis may summaries and referrals.

Possible suggestions with legitimacy. And points related to implementation of

business.

Cost-benefit analysis may support decision making and answer possible

questions that begins with “what if” or “should we.” Also, a mathematical solution

may quantify the benefits of risks as well. It is one of strong beneficial methods that

to be used and analyze the potential profit impact of the business, such as purchasing

equipment, expanding facilities, or outsourcing tasks or subcontracts for the current

ongoing project. Company may feel convinced of benefit from the action taken is

greater than the cost of carrying out that action provide it much easier to determine

the progression.

In order to have a final results of conclusion for the current project relate to

cost control, all aspects of the possible issues require to be found in a common sector.

In other words, there must have a "bottom line". Possible common section could be

considered as money. This means that all margins or profits and costs of the project to

be quantified with price. The strategy may provide positive solution that are not

directly connected to cost, but there is cost that the beneficiaries of equivalent to the

benefit of the project. Meaning such as, in one project, elderly people in a certain area

can visit a doctor every month free of charge. The value of the benefit of beneficiary

could be considered as smallest amount that the beneficiary takes.

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The assessment of cost analysis may reflected on how to choose the concept

of decision preferably. For example, improvement for transportation shall involve

how delivery time to be reduced, including cost saving as well. The value may not

simply consider about the time. The value of time shall be consider the public

revealing time decisions including the trade-off between time and cost saving. For an

example, if you choose to park at a rate of 50 cents or spend an additional 5 minutes

walking and choosing to save money and time and effort, you will find that the time

will be longer 10 cents per minute, it is worth more than that. If two options were not

consider the same, it may reveal the time value is just 10 cents per minute.

The resulting of increased profit in consumption is the sum of each marginal

profit and increased consumption. When the incremental increases, the sum rate

moves to under profit curve area, it is considered to be smaller and smaller. However,

the demand curve is considered to be equivalent to marginal profit, the area under the

demand curve is considered to be same as profit area being increased. As shown in

figure 7, the area is considered to be out of the range from the decreased and

increased limit of consumption.

If the increased consumption is a small number or area compared to the

whole total consumption, then the gross profit is likely effected to the market value of

Figure 7 Gross benefits that is increasing in consumption under the demand curve

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the increased consumption, as shown in analysis. Which means, market price

multiplied by the increase in consumption.

It is critical not only estimate the situation of project, but also evaluate and

analysis any possible assumptions.

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CHAPTER 4

RESULTS

Qualitative results

Interview with AMD (Financial Director), AMD (Planning Director),

Project Manager, and Marketing Director.

Answers were given from the person in charge of each department. AMD

(Financial Director, Chanchira Smakthai), Marketing Director (Dave Dargan), AMD

(Planning Director, S. J. Lee), and Project Manager (Peter Jorn).

AMD (Financial Director): Ms. Chanchira Smakthai, is an original member

of BJCHI who has worked at BJCH for more than 20 years. She managed to develop

the company in a financial way, was a Financial Director and Assisted Chairman K.Y.

Lee. She is one of most important of the directors who can manage Thai employees.

Marketing Director: Dave Dargan is one of our important Marketing

Directors, who always looks for potential jobs and projects. He is also aware of the

project's on going system. Dave Dargan managed our previous Australian Projects for

the past 5 years. He was also a Project Manager for BJCHI’s Australian Projects.

AMD (Planning Director): S. J. Lee has been a Project Manager for the past

10 years and knows a lot about project concepts of ongoing and process. He is

important for managing Korean employees and providing critical advises for current

projects. He is also involved in the Estimation Department to make sure BJCHI

submits the correct quotation.

Project Manager: Peter Jorn is a current Project Manager who has

professional experience at managing a number of modularization projects. He is

capable of managing manpower, pre-commissioning, structure, piping, valves and

E&I parts as well as being aware of how to complete both on-shore and off-shore

projects without any technical issues. He also has a variety of experience in

marketing, procurement, and planning so he knows how to manage cost controlling.

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Questions are as below:

1. Business analysis and budgetary

1.1 What do you think are the tools to be considered as the most

important for business analysis for cost investigation? (Smakthai, personal

communication, May 10, 2018).

1.2 What are the most critical points for a business analyst to consider

when preparing a business plan? Why is business analysis related to budgetary

control? (Sawhill & Williamson, 2001).

1.3 Where do you see a business analyst to be suitable into an

organization? (Dargan, personal communication, May 10, 2018).

1.4 What are the recommendations or suggestions for analyzing the

implications of budget for projects? (Lee, personal communication, May 10, 2018).

1.5 Which sector would be the search area in terms of business

development related to budgetary analysis? (Sawhill & Williamson, 2001).

1.6 Why do you think the key strengths of budgetary control is related to

business analysis? (Lee, personal communication, May 10, 2018).

2. Cost control

2.1 Why do you think there are different results of control after seeing

the results? (Agu, 2006).

2.2 What do you think are possible ways to make sure we can maintain

the same budget in theory and reality? (Sawhill & Williamson, 2001).

2.3 What techniques modelling, and methodologies do you think is the

most useful strategy and why? (Robinson & Last, 2009).

2.4 When is the most challenging period for handling the budget? And

what are your suggestions? (Smakthai, personal communication, May 10, 2018).

2.5 Which factor should be the 1st priority that the company should

consider in order to prevent lost margins? (Sawhill & Williamson, 2001).

3. Management strategy

3.1 What management strategy do you think is most considerable strategy

in your company for budgetary cost? (Agu, 2006).

3.2 How do you think the company should prevent over-spending the

planned budget, and what are the possible solutions? (Sawhill & Williamson, 2001).

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3.3 The budgetary will also effect the financial statement, which will

influence stakeholders’ investment decision making. How do you think the company

can persuade stakeholders or deal with a difficult stakeholder? (Hansen et al., 2003).

3.4 How do you think you can establish credibility with management?

Why would you think credibility is important? (Agu, 2006).

In depth-interview Q & A

1. Business analysis and budget

1.1 Which tools do you consider as the most important for business

analysis for cost investigation? (Smakthai, personal communication, May 10, 2018).

AMD (Financial Director): Recording is critical, the need to be organized

well and record properly, analysts need to analyze well -- that is their job and making

a decision is our job. In order to make decisions by the board of directors, information

is critical, therefore analyzing all the numbers, how much we spent, and how much

we made margins, using tools such as graphs, numbers, excel sheets or any are

essential. Cost investigation is really all about numbers.

Marketing Director: The most important factor is for the business analysts

to have practical experience. Business analysis is very critical especially for project

implementation, this job is involving testing and improvement. For example for

development involves modeling of internal business processes and data flow,

clarifying each factors that could affect their business performance, and draft

inspection plans. If they have no experience, I don’t think it is possible for the

company to have any properly analyzed results, so hiring someone who has practical

experience is better than training them.

AMD (Planning Director): Experience is important so sometimes analysts

can also give their ideas and opinions. Business analysis support for communication

as well especially for complicated technical issues to explain easier to stakeholders,

and for management level. A project manager should be able to also coordinate with

business analysis to make sure how cost saving has been made during the project or

will be made for the future wise and understand the whole concept of the project how

to control the budget. This is very critical because project manager needs to be able to

explain the organization chart and explain the technical details to business analysis for

management level to be informed properly. For example, a new quality control system

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has been implemented to the new project, this could effect the data record functions

for accounting, meaning project managers need to check every technical details to

manage their new implementations. This is why installing a new system is a big

challenge.

Project Manager: Follow up basis is important, this means analysts need

to make sure of all details and information to not to miss anything, and to summarize

well. Business analysis do a lot of important roles especially for project

implementation, and their job helps management to have a decision making, it is

important that business analysis organize proper information, previous record, all

required documents to be able to provide so management can decide what to do for

the next business plan, for example, I believe that business analysis could prepare

modeling and flow data, find critical components that could effect on business

performance, may be they could identify with cost, if the company lost margin in

which part, then able to find issues and able to investigate.

1.2 What are the most critical points for a business analyst to consider



AMD (Financial Director): Try to avoid showing repetitive things, look at

the negative plans that we experienced and give positive suggestions. The business

analysis helps to find the main problem of which data to check for management.

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charts graph and maps.

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58

Marketing Director: The business analyst must review previous business

plans and identify what actions in the previous plans were not positive. On identifying

the negative previous plans he must assess the reasons ie. Was it employees:

Management: Project Control: Costing? His new business plan will be prepared

including the corrective action needed on the previous plans. The adoption of

advanced analytics like voice and search-based features, with real-time visualization,

predictive, and time saving, is considerably higher. The same applies for data

management technologies as well. Continuous advancement in data analytics are

considered an imperative for nurturing business transformation and innovation into a

customer-centric one. Voice and search-based analytics bring deeper insights into

business and help to run the business as a successful one.

AMD (Planning Director): Look at the past experience, compare the

numbers. Additionally changed orders are important, we need to make sure whether

this shall be considered and how we can respond later. Business analysis is having a

critical understanding of the revenue drivers for a company. Business analysis also

helps companies carve out targets to help them achieve near and long-term goals. If

you want to develop your business, you are building your own business, your clients

aren’t happy with your services or product and you need to revamp, there are holes in

your company processes and you are trying to understand how to better integrate

systems to help streamline, retention is low and you want to keep your best employees

happy -- all of these things (the list is endless) can be fixed with the help of business

analysis. You can hire a Business Analyst full time or part time to help you with your

various business needs. Business Analysts are objective and present the facts to you

with actions to get better.

Project Manager: Without monitoring, you cannot measure…without

measuring you cannot control…Without controlling you cannot give a direction to

it…Without giving a direction you cannot see the progress…so you call in the

analysis, which involves of managing, monitoring, investigating, and planning, these

are important for the keys of the business. Depends on the objective and capacity

there tools, people available to compliment you to fast forward the growth of the

business. Business analysts need to work with the planning team and record all the

numbers that we spent, then check the budget that we made from the beginning. We

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need to check and compare why they matched or did not. Business plan needs to be

solid but very detailed. A business analyst handles some of the crucial parts of a

successful project.

1.3 Where do you see a business analyst to be suitable into an


AMD (Financial Director): actually business analysts need to contact with

every department, and need to request all the information they need. Business analysts

need to be the center of the tower for budgeting and for the future management.

Business development, also called pre-sales, is all the front-end work that gets done

before money changes hands. Business analysis is obligated to provide solutions or

possible change for organization, this considers as their main job and include a lot of

theories and comparing past projects results are being used, and the main approach is

to make profit for changes and solutions. Business analysis clarifies any issues and

discover the best solution. In addition, they also need to make sure how to convince

stakeholders for investment. Supporting development of organization’s goals are to be

critical role for them.

Marketing Director: The business analyst must be in a position to

constantly monitor his plan against actual operations. Development is not only

important in business, it is important in almost all aspects of life. If we talk about

business development, in this era developing a business now totally depends on how

much you are visible in the digital world and for that we need proper visibility

through business operations. (1) Developing a structure of website addresses on your

site in the target language, (2) Notifying the search engine which particular sub-pages

are available, (3) Analysing keywords for each language, (4) Acquiring external links

leading to your website, (5) Regularly creating interesting, professional content.

A well-thought-out strategy of developing your business on foreign

markets, combined with technical expansion of the service and building

communication based on localization, especially in the long perspective.

AMD (Planning Director): I think business analysts should provide new

ideas and new information every day, and if management requests a plan, they need to

come up immediately with draft plans and ideas. Using initial data and modelling

could be reference for business analysis, this is to define for presentation or analysis

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model. Based on models, possibly it could be able to support on understanding issues

or any problems in their business. Before try to do something, actually this seems

really basic, but I think it is important think what you will be looking for, for example

‘what does company want?’, why business analysis is looking for this issue? Then

after have a questions or the concept of research, it will be much easier what to look

for. So in a company it could be important to make a scenario, how to solve any

issues, or defining potential are where to focus.

Project Manager: Business analysts should provide hypothetical plans,

document its business or systems. They need to know how to assess the business

model. Planning, monitoring, simplifying documents or assisting with the business

case etc. there are many, and in order to have all those requirements, they need to

know what management wants and what management wants to see.

1.4 What are your recommendations or suggestions for analyzing the

budget for projects? (Lee, personal communication, May 10, 2018; Dargan, personal


AMD (Financial Director): Look at the history and assess how we can do

better, also would like to mention about some of not reliable reports to be checked

properly. Sometimes there are unstable bills that company is paying constantly which

we need to clarify the issue if the spent cost is not stable, this refers to water bills,

fuels, or electricity bills etc.

Marketing Director: The project team then goes off and documents these

requirements in the requirements specification, and from that point on, most of the

dialogue about requirements is channeled through the project manager. Then, late in

the process, the users re-engage in acceptance testing, and start pointing out all the

areas where the application fails to comply with their expectations. Analyze properly

and record everything, also I look to the past, what our company has done and what

mistakes we made to avoid any duplicate mistakes in the future to repeat, or we can

change the system really but it will cost a lot and take a lot of time to do so, which

means as from the owner side, it will be a challenge and can be risky to spend a lot.

No technique guarantees a successful outcome, but following a specific technique in a

disciplined manner has three major advantages. First, if it is applied throughout the

process, it will tend to improve the consistency and coherence of the full requirements

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set and filter out extraneous and irrelevant requirements. Second, participation in

repeated requirements discussions that are run in a consistent manner according to the

chosen technique will lead users to adopt a similar discipline among themselves.

AMD (Planning Director): Cost monitoring, and apply same format for

every project. Also, controlling people is very important, currently I am checking the

inventory list and some of materials are actually not there but still our inventory list

says we have stock. One example is welding rods, we have so many welding rods in

the warehouse, and we did not even check why we purchased and why the project

team requested so many welding rods. There were many different opinions about this,

actually welding rods are difficult to estimate the exact quantity before the project,

because humans are using the welding rods, not robots, so each person uses them

differently with their own procedure, some people use more, some people use less. If

we used robots, then we can exactly estimate how much we may use for the project.

Anyhow, back to the point, for this kind of case, I realized we need a quantity

surveyor and make sure each person uses how much. Also we should make sure only

which suitable position or role can request any additional materials, so that means not

anyone such helpers can request for more materials, which shall not be acceptable. I

don’t think we need a quantity surveyor for every project or as a permanent job, I

consider case by case even though we pay high salary, I trust that this would work

better, and this was already discussed with financial AMD as well. We think we will

pay higher salary but higher case by case would be more suitable.

Project Manager: There should be the same information and instruction

for analyzing every project, such as using data model, analysis model and others.

From the beginning stage, it is necessary to define what the issues are. I think mostly,

understanding the problem is the first thing to keep it in your mind. For summarizing

any possible data, it requires format and follow procedure. Also, looking at the cost.

1.5 Which sector would be the search area in terms of business

development that is related to budgetary business analysis? (Sawhill & Williamson,

2001).

AMD (Financial Director): Seems a bit of a broad area, we need to

sometimes go with the flow or sometimes need to make a new decision that other

companies do not make. But the search area should be general; for example, if we are

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focusing on offshore projects, then we should keep looking for offshore general trends

and clients’ plans.

Marketing Director: Network and connections are important, we need to

know people and know how to get new information from them. We also need to keep

following up with news and articles on an everyday basis, but critically if you don’t

know anyone, you can’t get a job.

AMD (Planning Director): Search area would be news and newly signed

agreements with other companies and clients; for example, Petrobras recently

announced a partnership to complete the refinery at the Rio de Janeiro Petrochemical

Complex in Itaboraí (Comperj), one of the major symbols of the corruption scheme.

That existed in the company and that was revealed by operation car wash. In a

statement to the market, petrobras informed that it has signed a letter of intent with the

Chinese giant China National Petroleum Corporation International (CNPCI) to detail

the execution of joint projects that include the construction of a refinery in Comperj,

as well as the participation of the Chinese in fields of Marlim, in the Campos Basin.

Every kind of information, even if our company is not involved, we need to keep

researching and making sure how the business is going.

Project Manager: The searching area for internal basis, and cost

monitoring is essential. I would say indirect and net profit are important for business

development and also for the current situation. Following the trends and looking at the

world is also important, but we should also make sure that we need to look into the

details especially of our internal system. My opinion for business analysis is that, they

could be able to provide new system or ideas rather than only following procedure, if

company procedure should be developed, I think they can try to give their ideas and

make things better. It’s important that they raise a voice and also management needs

to listen. There is no stupid idea.

1.6 Why do you think the key strengths of budgetary control is related to

business analysis?

AMD (Financial Director): Most critically they need to know how to

assist with the business case. Looking at the budget, and providing proper plans and

advice, this shall be considered as a key strength.

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Marketing Director: A business analyst must have the following key

strengths; (1) Assess new areas of business for the company, (2) Identify new

opportunities with existing clients, (3) Minimise costs without affecting productivity,

(4) Maximise values for shareholders.

AMD (Planning Director): As I am looking at the numbers, my opinion is

to minimize the cost as much as we can with the same quality of work. It is an endless

dilemma that we always need to face up to. To make sure how to know what we are

doing, I think assessing every project with cost control is essential.

Project Manager: How to make production more efficient would be the

key point, because this means including everything basically. Efficiency would

include the cost, production, time schedule, and the net profit.

2. Cost control

2.1 Why do you think there are different results of control after having

seen the results? (Agu, 2006).

AMD (Financial Director): Due to different perspectives, or different

understandings of the concept, even if we always estimate both theoretical and real

budget to be the same, from past experience we know that it cannot always be the

same, and if it is the same, then that is something strange really. But main point is cost

controlling, we are not looking at the difference but looking at the control. We should

focus on the spending cost that should not be over the budget, that’s it. One advice is

that a project cost controller must keep track of ACTUAL cost expenditures on the

project and compare it to the BUDGET (usually on monthly basis) and report the

variance to the project management.

Marketing Director: Cost control is an internal plan by a company or

government agency to keep the costs of its services as low as possible. It would

include buying the lowest cost products to use and looking for and eliminating waste

and fraud. To some degree all companies and governments do it, as do many

individuals who do not like to waste money and live within their means. There will

always be different results between theoretical and real budgets if the individual does

not have costs related to a previous similar project.

AMD (Planning Director): Business is either subjected to profit or loss.

Any investment done by the management always thrives among the market to

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optimize its productivity and approaches to achieve profits. But there are times when

a certain condition does not support and market becomes too vicious. To undermine

such situations a firm has to take initiatives in order to reduce costs and make

adjustments in business. Perhaps it is the fault of the measure, which should not ever

happen, but we cannot make a budget 100% accurate, so this is why we put enough

margins on the net profit and indirect costs. If we try to make it the same or the less,

there will be risks.

Project Manager: Yes, there will be different results but the main factors

will be due to such as unexpected issues that happen that were out of agreement. For

example, who can expect while doing our jobs, that all of sudden a client requests

additional jobs; this request is out of our budget control. This is just only one

example, but what it means is that something that we cannot control will result in the

difference. Also, numbers can be only just numbers, while the project is ongoing, we

are actually working with people, so we cannot only just simply looking at the

numbers, we sometimes need to provide some benefits to encourage them to work if

the schedule is very tight. There are unexpected situations which occur every time,

and it is risky to only look at the budgetary control without considering people’s level

of motivation.

2.2 How do you think there are possible ways to prevent to make sure we

can achieve the same budget in theory and reality? (Sawhill & Williamson, 2001).

AMD (Financial Director): What I can think of is the cost monitoring, it

is critical that we need to keep monitoring how much we are spending while we are

doing the project on a weekly basis, and if there is a cost that is higher than we

expected, we would need to make a decision about how to reduce it. Costs are

associated with translating factors of production into outputs, i.e. land, labour, capital

etc. have to be turned into revenue generators. Costs are a function of output, and the

window for which the average costs of production decrease is called economies of

scale. Eventually, your average costs will escalate and you hit dis-economies of scale.

Also, when your product or service goes to market, it will have a

particular reception, which might be good, better or at par with your vision.

Eventually, it is easier to reduce costs and control them rather than generate fresh

revenue centers. This remains true for industries and services. There is also a trade-off

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to providing these services associated with products.

For instance, it might be profitable for a corporation to set up a system,

whilst it might not be possible or profitable to install and spend the costs because they

would be too high. Similarly, services might not run at a frequency similar to bigger

companies with high demand. A business, any business finds it easier to control or

track intrinsic variables such as costs of labour, raw materials, factors of production

rather than track extrinsic variables such as demand and customer switching.

Marketing Director: Projects must have all costs documented and the

Projects must be identified also, as for example

Type 1 – Mining conveyors and plant;

Type 2 – FPSOs;

Type 3 – Mining modules;

Type 4 – Tank fabrication etc.

Also, we may need to think about the employees and the system together,

and if those two things are combined well, the project could be completed

successfully and reduce the different costs of budget.

AMD (Planning Director): In order to protect the budget, even if we

spend over the budget, I don’t really think changing their job or role while continuing

the project is not a good idea. What we should consider is that just look at the last

digits, we don’t need to look at the details because that is what each department

manager will do, so how we should preserve on the management side, try not to

change, but only looking at the large final numbers. Actually trying to change the

internal system, especially while the project is on-going, is not could be a suitable

idea.

Project Manager: We need to look at the cost and progress, they should be

always be about the same or have a similar rate. If there is a big difference between

cost and progress, I can guarantee that there is a wrong calculation, so I think to

prevent, by the time, we should look at the rate of the progress and the cost. Cost

means when there is an issued slip, it does not count as an asset anymore.

2.3 What analysis and modeling techniques and methodologies have you

found be the most effective and why? (Robinson & Last, 2009).

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AMD (Financial Director): Each department requires different skills, for

example marketing should be active, we need to take action and discuss with clients,

but accounting should be in the office and make sure the calculations are correct. The

HR team needs to know if this person is suitable for their department. Actually it

sounds very easy but selecting a suitable person for each department is really not

easy. We need to know who is suitable for what job.

Marketing Director: (1) Practical experience; (2) Credibility with the

client; (3) If you have experience and credibility with the client then the project can

be discussed with both parties “listening to each other”.

AMD (Planning Director): There are so many modellings and techniques

for different departments so selecting only one modeling in general seems a bit

difficult, but from my experience, rather than making a new one, compare with other

cases and make a decision seems a bit more reliable. This is why experience and

documents are critical in every case.

Project Manager: Actually for my case, rather than looking at the

modelling or techniques, I follow my experience. In some urgent cases, I use my

knowledge and give back my opinion, especially for some urgent cases, I don’t look

at techniques or modellings, I look at my past experience, this is why practical

experience is important. But somehow, I assume that this is because I belong to

project management, if numbers were involving such as accounting or finance, they

would probably have different opinions.

2.4 What techniques modelling, and methodologies do you think is the


AMD (Financial Director): The most challenging period is when we are

not 100% sure if our budget is correct or not, when we have already estimated and

made a contract, but if we think that there will more spending, that is just chaotic.

This is why we need to look at the contract, everything one by one with every detail.

It is so important. We always need people to look at the contract in order to make a

proper budget.

Marketing Director: The most challenging period is always towards the

end of a project as in many cases schedule has been delayed thus extra labour/

overtime/ equipment costs are incurred which were never allowed for in the budget.

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AMD (Planning Director): When the estimation team has the cost but the

project team disagrees with the cost to do the job, that is quite challenging, but

sometimes if we think it is not possible we need to reject the project.

Project Manager: Most of the time the budgetary cost needs to make

sense to do the project, and if it doesn’t make sense, we cannot do it, for example if

estimate teams thinks we can make a chair with 1 dollar, how can project team or

procurement team agree with this cost? But usually it does not happen, but this kind

of situation has no answers really. Budgetary cost needs to be always reasonable and

make sense.

2.5 Which factor should be the 1st priority that the company should

consider in order to prevent lost margins for the project? (Sawhill & Williamson,

2001).

AMD (Financial Director): We need to buy correct materials as per

correct specifications, and make sure we don’t repurchase materials again as

procurement has the highest portion of spending cost in every projects.

Marketing Director: As materials will be approximately 60% of the costs

then procurement is 1st priority.

AMD (Planning Director): The engineering team and procurement team

need to corporate together and make sure all the specifications are correct, this is very

critical.

Project Manager: From the bidding stage, we need to make sure how

much margin we are planning to make, and of course during the project all the

specifications and construction job need to be done properly, but we all need to make

sure start from the beginning, the estimated budget needs to be reasonable.

3. Management strategy

3.1 What management strategy do you think is the most considerable

strategy in your company for budgetary cost? (Agu, 2006).

AMD (Financial Director): Management is one of the critical parts for the

company, I trust that there has to be certain each department has each management

positions, sometimes everyone can talk and share ideas but job positions are job

positions, meaning that if officers and laborers have some issues or problems with

their current situation, jobs or their working environment, they can always discuss

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with their managers, that is the management of each job positions know who to talk

with. For example, I cannot always talk with everyone, I can consider some critical

parts, but I think managers can try to solve any issues and then later on, if it cannot be

solved, then I can consider to check. There has to be step by step, otherwise

everything cannot be organized. We need to follow the organization chart.

Marketing Director: Management strategy is a major factor in the

company due to the very competitive market at this time. Management strategy

should have a solid plan and make a decision based on our history experience with the

recorded documents including the spent cost. I do not know which strategy is always

correct, sometimes we make wrong decisions, but in order to prevent that, we need to

look at the history and the documents. Management cannot just make decisions with

only their opinions especially without any evidence.

AMD (Planning Director): That is a difficult question, there is no right

management strategy always, I cannot say I am always doing the right management,

and always I am right, but for my point of management strategy, I want to develop

management for the risk committee, for example, if we make a risk committee,

shareholders and board of directors can join together then discuss about possible risk

plans, then everyone can at least share their ideas and be able to find out possible

weakness points. We should avoid brainstorms. Also another management idea is for

field engineers, I think for our company field engineers are very important, so we

need to listen to their voice more! We need to know who are the important people and

make sure to listen their voice.

Project Manager: There is no correct management strategy, management

cannot make all workers satisfied with their job or salary etc. Even if I try to make all

the laborers and staff happy, I cannot do that. This is not only because of my decision,

I also have to follow management’s strategy as well. I think there are strategies for

people or for the company, usually for me is that I care for the people more, so the

main point for the management strategy should be concern for the people.

3.2 If the company spends over the theoretical budget in reality, how do

you think the company should prevent problems and what are the possible solutions?

(Sawhill & Williamson, 2001).

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AMD (Financial Director): The critical point for this matter is we were

always meant to check how much we spend, and then if there were any possible

chances that we may have to spend more, then we need our top management meeting

and then make a decision that whether if we should continue the project or not. There

are no certain solutions really, based on each person’s experience, we need to share

opinions, and based on the current situation, we can make a flexible solution.

Marketing Director: I would say, record everything, record every projects

cost and check the past experience how much we spent, and then try to follow the

trend, but of course it is not easy, but I would say recording is important.

AMD (Planning Director): So I think you are referring to the meaning of

‘what if we lose the net profit?’, answering to that question, you might think we need

to stop the project immediately, but actually that is not the only correct answer,

sometimes based on our partnership experience or based on our finance flow, we can

continue the project, this is not only about the money, we need to look at the big

picture whether if we will work with this client in the long term, anyway the point is

obviously cost controlling is required, we need a cost analyst who can report and

make sure that there are no problems with the cost.

Project Manager: We need details, each department must have a proper

format to record everything and share every detail of spending cost, not just overall.

There must be 2 formats, one is for top management – this should be simplified and

general as top management needs to look at numbers, and the other format should be

for project managers, this format must have all each details how the total cost has

been made, for example, the procurement team can make all purchased materials with

the total spent cost for the top management report, but for the project manager, should

indicate purchased materials what exactly item by item, then we can find out which

item cost the most and why.

3.3 Budget will also have an effect on the financial statement, which will

lead to stakeholders’ investment decision making, how do you think the company can

persuade stakeholders or deal with a difficult stakeholder? (Otley & Pollanen, 2000).

AMD (Financial Director): Management team needs to keep discussing

with IR and analysts, stakeholders want profit always, and to satisfy them, sometimes

IR opens what projects upcoming or sometimes we say nothing. What to tell, or how

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to tell is important, we cannot persuade stakeholders 100%, but we need to know

when is the time that we can tell or not.

Marketing Director: Any business report prepared for the shareholders

must be genuine and not exaggerated thus in the future the shareholders will trust the

reports. Many times companies prepare exaggerated reports but after the shareholders

see the actual financial status and it is lower than the initial report, this is where the

trust is lost.

AMD (Planning Director): Actually stakeholders would not know how

much budget that we made and how much bidding that we submitted, but yes these

are the beginning stages and we need to do properly otherwise in the end, this will

impact on the financial statements somehow. There are so many steps from the

beginning till the end so every step we need to monitor so we will be able to be in a

competitive position in the market.

Project Manager: If we say how to persuade stakeholders, I don’t think

budget is the main factor, I would say marketing will be more important for them. To

be honest, stakeholders do not care about the net profit sometimes, they are

sometimes just waiting for the new projects announcements, and so they can sell or

keep. Anyhow, company should know whether if we should tell stakeholders

everything or not, I guess that is pretty difficult.

3.4 How do you think of establishing credibility with management? Why

would you think credibility is important? (Agu, 2006).

AMD (Financial Director): It is very important, if people are scared to

talk to me then they will not come and see me, that means I cannot know what they

are doing and how the company is going. For my case, almost every day, every 30

minutes people come to talk and report, but I never thought that it is a job that

managers or others should do, I want to listen directly and want people to come

anytime to talk with me, so credibility with management is important.

Marketing Director: If there is no credibility with management then the

analyst serves no purpose as he cannot communicate “straight” with management.

AMD (Planning Director): Sometimes directors need to make a decision

based on information, we do not have a lot of time for every detail to check, I also

want to check everything and every single person, however it is not always possible,

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so I want to make sure each manager and supervisor reports properly with trust. If I

don’t trust them, they cannot trust me.

Project Manager: Credibility is actually quite simple, I need to show it

first, I cannot order my staff without doing it first. I cannot just sit back and tell

people what to do, that is not a good leader, I prove my capability not only by action

but also with my knowledge, I need to prove that I know what I am doing so they can

follow me. That should refer to management as well.

Learning and knowledge management

In business, learning is a part of company to improve especially for

productivity. Innovation is important for employees to keep learning and improve

their knowledge, also for management level as economic is always uncertain, it is

important to predict by every situations and by learning. Learnings could be through

communication, reading, or meeting other experienced experts. There may have such

various ways to keep improve learning.

Knowledge is a powerful strategy to development practices, actions in

management level and support making decisions for business performance. (King,

2005).

Through this interview, I was able to realize that even the top management

level of directors are still keep learning and try to find a way for a better management

strategy continuously. Also, I realized that communication is important in business.

One of the key components to build brand identity or image is by developing effective

business communication throughout the entire business and product life cycle. Apart

from the myriad of benefits shared, effective communication helps the brand stand

out, focus and build trust. Newton with its rich and diversified techniques and

experience caters to all the necessary needs of the customers to build effective

business communication.

Quantitative results

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Above are the quantitative results based on the company’s accounting

department. The company estimated costs with the ‘% of income’. It was able to

define how much cost of margin was input and how much total cost the company

spent for the whole project. Additionally it was able to find out which scope was

negative during the project, e.g., transportation. One of interesting facts of lost

margins for transportation was because of inland transportation. Inland transportation

included police escorts, removing obstacles, getting approval for using trailers

(license required), and Department of Highways approval. Therefore, it is important

to make sure what exact scopes and approvals are needed, simply budgeting on inland

transportation without getting approvals will not work out. More discussion will be

provided in the section of discussion in the next chapter.

Cost detail is also attached in the next page for each section of results on a

Quarterly basis. The cost information system plays an important role in every

organization within the decision-making process. An important task of management is

to ensure the control over operations, processes, activity sectors, and not ultimately

on costs. As a project manager, it’s impossible to underestimate the importance of

cost estimation when it comes to successfully completing a project. Before even

approaching a project, it’s important to get a handle on cost estimation to help keep

you on task and in touch with project constraints and limitations. As one of the

defining features of successful progress, accurate project cost estimation must take a

front seat when it comes to setting up a project’s parameters.

When starting a new project, the best way to keep the importance of cost

estimation in mind is to never lose sight of the project’s original budget. While the

numbers may change due to constraints, changes in the project structure or the simple

reality of changing climate demands, keep the initial figure in your head and try to

stick to it. When money-based problems come up, figure them in separately without

instantly tacking them onto the primary figure. This will help when you come to the

end of the project and have to tally up final costs with your original cost estimation.

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Provide a detailed description of all spending as above, with or without a

budget. This is especially suitable for projects with longer durations, often with

financial uncertainty more often. When it comes to cost estimates for a project, be

sure to stick to it using one of four reliable methods. Knowing and trusting

methodology is essential to accurately forecasting and measuring costs.

Try a similar estimate for projects with little detail. If you are working in a

project similar to a project you have done in the past, you can use that data for

parametric estimation. If you have important data but do not have all the information

you need, 3-point estimation is a useful deduction method. Bottom-up estimation is

considered the gold standard for projects that require extensive cataloging of cost,

progress, and time tracking.

The most effective project cost estimates come from a combination of

speculation and database charting. When you think of time as money, you are ahead

of the game. The more you can graph the number of employee hours and estimate the

total time spent on each segment of the project, the sooner you can present a

consolidated estimate of the cost of this and other projects. By thinking of time as

money, you can turn indirect costs into direct costs and estimate your final budget

more accurately.

The critical point of cost management is the success of project productivity.

Maintaining a systematic plan to tasks during aware of cost control is not an easy

skill. Managing time and resources is critical to achieving your goals, but ultimately

cost performance will determine the desired outcome of your project.

Project managers may require strict cost control to properly manage their

budget. In other words, they have to be aware of where the money is always allocated

and whether it is necessary to check to make sure to meet the planned budget.

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CHAPTER 5

CONCLUSION, DISCUSSION AND RECOMMENDATIONS

Conclusion

This chapter aims to summarize what has been discussed and to provide

suitable conclusions from what had been found from the results of interviews

conducted. The conclusions are based from the facts and from the company's

managements’ interviews and their information of perspectives were gathered and

also compared with literature reviews in order to support their statements.

The responses from the conducted surveys show that the company often

achieved different goals for each project.

Through in-depth interviews, their overall answers to the questions were

reviewed, results were achieved with a variety of different opinions with similar

answers and nothing. There were three questions related to cost management in this

topic: business analysis and budgeting, cost control, and management strategy. Each

subtopic is individually discussed by each.

Business analysis and budgeting – The topic of this question allows us to

discover that practical experience and analysis are important for business analysis.

This will also support important decision making. You can also update the current

situation to see how the situation is progressing and show you how to implement

some ideas for future business development. In addition, proper analysis of data was

also mentioned in IT. As a result, it is possible to analyze small or large amounts of

data quickly. If analysis is important, planning is also important, planning should be

well prepared, robust and predictive based on the real-time savings period above the

project schedule. In general, the main points that should always be considered when

analyzing a business are cost, production, time schedules, and net income.

Cost control – Through in-depth interviews, their idea of cost management

is a common goal to improve the cost-effectiveness of the business by how to reduce

the cost inn which main sections during the projects, also how to resolve in a long

period within a business to prevent to spend a large amount of cost. Every director

believes the main goal of cost management is to reduce costs and improve or evaluate

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them to make sure that they will have good results in the future. On the other hand,

even when looking at the numbers, the project manager was discussing people. In the

end, we are working with people. The most important period to complete on time.

Management strategy –Through interviews, it is important to know that all

departments are related and to work together to make a profit for the company.

Management strategy is to make the company better and to always earn a profit. This

is important, as profits affect employee salaries. It was found that it was important to

set priorities, resources, strengthen operations, employees and other stakeholders to

promote common goals and to establish an agreement on the intended results and

results. Looking to the future, management needs disciplinary effort to create the

decisions to have proper procedure for organization, especially for what actions to be

taken for their aim, and that effective strategy is required.

Looking at the results of the ABCHI cost summary, it is possible to identify

which sections are losses or gains, and based on those losses in the sections of the

description, management defines which sections have losses You can investigate the

details quarterly. . Worth noting were consumables, labor costs, and transportation as

the main areas of loss. The reason is that the project schedule was delayed, the labor

had to wait longer than expected, and part of the transport had to be done by air cargo.

These summary costs can indicate what the problem is and what the company needs

to investigate and find a solution. Also, because costs are organized quarterly, you can

investigate specifically by period. Budget control usually involves frequent reporting

of actual achievements and costs relative to budget achievement, followed by

management reviews, and necessary corrective actions.

This research was self-designed questionnaire based on literature reviews

and management’s advice included company recommendations, reference was

included. According to the survey, budget preparation is mostly monitored by their

committees or internal audit, which controlled by financial director and CFO. Created

annually and submitted to the board for approval. By taking frequent management

actions, the company can avoid issues such as inflation and waste. However, there are

also uncertainty issues regarding human resources and natural causes, and these issues

are not only considered by the system.

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In conclusion, there are two factors to consider. One is to implement a

budget system, and the other is human resources (such as union, protest, or incentive

issues) and natural issues (such as bad weather also that both factors may affect the

cost of the budget) there is, and this should always be reviewed.

Discussion

The sales budget could be a part of the total budget, due to sales could relate

to all parts of the total budget. According to the respondents, at the beginning period

of preparing sales budget, the amount of productivity, labor facilities, necessary

capital, and various selling expenses are included in the budget. The budget for

production is created when only after the sales budget is made. Respondents stated

that the productivity for the budget provided a number of units to be produced for

each budgets to aim to target the sales budget. According to interviewees, the final

inventory are connected to the project budget.

Proper system of the budgetary plan can support fund to be available to

investors, development finance partners, and domestic and international donors

(Hansen et al., 2003), therefore could be one of reasons why sales budget or the

budgetary plan is critical for the company to make sure how to manage the cost

control as this will be involving with many sectors later on such as investors,

stakeholders, and financial partners.

Based on the answers received, it indicates that the preparation of the cash

budget at ABCHI indicates a cash inflow and cash outflow flow to ensure that

sufficient cash is available during the budget period. You are the master budget is the

last prepared budget. It shows a summary of all the various supplementary budgets.

According to the respondents, after the master budget is completed, it will be

represented to the Board of Budget Committee to see if it represents an acceptable

plan for next year’s organization.

Respondents who is a financial director from the finance department put

together a summary of each budget as a master budget after various budgets were

completed. Questioning who will approve for the final budget, the interviews states

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that it is most critical and risk part to take responsibility to take responses on this final

budget.

This approach is to help management anticipate the future, prepare for

market conditions, inflation and unforeseen negative economic changes. And it also

helps management achieve the desired goals. From the responses received on ethical

issues that are likely to affect budgets, respondents say that ABCHI’s budgets

sometimes suffer from adverse environmental issues such as the lack of true reports

from subordinates and unforeseen increases for water, electricity, fuel, etc. without

true integrity.

Grove et al. (2007) their research describe the qualitative method is a

“systematic subjective approach used to describe life experiences and situations.”

Which demonstrates that in this research of management’s interview can also

approach their life experience and opinions, each person has different perspective,

therefore a variety of conducting from different department been completed

successfully.

In addition, Parahoo (1997), in his research confirms that qualitative

research is not only focusing on humans past experiences but also emphasizes their

individuality of the individual. This is why conducting an each person’s interview

able to create their own individual’s idea especially connected to organization.

As to how much the company uses budget control, management usually

observes that the projected balances are compared to the actual balances and a

difference report is made to indicate whether the differences made are favorable or

disadvantageous it was done. Management does this in order to be better prepared for

such future events.

However, in order to achieve the goal, it is to believe that not only cost

control, budgetary control plan can be the solutions for the business. Alternatively, it

is critical to focus on employees working performance. Company may not only give a

pressure on employees to expedite to complete the job, but also needs to increase

positive thinking for them to have, such as providing incentives, if the project has

been completed successfully well with margins, or when making a budget, incentives

to be also calculated depends on the productivity (Organ, 1988; Podsakoff et al.,

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2000) also states that budget-based incentives reduce a rate of employees, and

company needs to provide trust and encouragement.

Figure 10 Flow chart for summary of budgetary and cost control

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Figure 10 (Continued)

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Recommendation from the research

The results of this study demonstrates that budgets are overestimated as a

result of these issues. Based on the survey results, it is recommended that executives

provide some form of incentive and encourage them to create appropriate budgets for

each department using appropriate information that executives and budgeting staff can

rely on. In addition, procedure guidelines for budgeting costs and analyzing problems

should always be available. It is also important to take care of human resources and

apply the system properly, as unexpected situations may occur while the project is

underway.

In conclusion, it is able to recommend that proper calculations for budgetary

and cost control are necessary, and to be discussed constantly. Budget is

recommended to add incentives for employees in order to increase productivity, a

small portion of unexpected situation of cost spending out of the total contract amount

due to inevitable issues shall be considered, also compare the past budget of which

parts been mostly spent from the past projects shall be found and investigate the

reasons. From this research, able to conclude that proper budget and budgeting system

were applied and used to prepare the company's budget.

Recommendation for the future research

1. There was limitation of the research, which is only focusing on only one

sample of the company, therefore, it is recommended that more related companies

more than one that are doing similar business are would be recommended to do

research in the future.

2. In results of this research was able to be found that, which part has

significant highest spent cost to be monitored, however there is a chance that other

companies where doing similar projects may have different results, therefore, it is

recommended to compare with other companies as well to clarify the results.

3. To promote effective use of the organization's limited resources for the

future of company systems, such as procedures for management level, are to be

provided to make sure that company is looking forward to in time must be completed.

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Budgeting plans are prepared in advance, the goals that company wants to achieve

are, in most cases, easily recognized. Budget preparation supports to design or clarify

horizontal or vertical communication lines within an organization.

4. The budget can be set up based on existing budget in control system,

however company might need to consider providing incentives to staffs for increase

their working capacity when draft budget is made for the potential project.

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REFE REN CES

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APPENDICES

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APPENDIX 1

Interview questions

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INTERVIEW QUESTIONS

Briefing: Thank him/ her for participation, introduce myself (name and

profession), define the situation for the interviewee (confidentiality, recording, about

50 minutes, plus a short discussion afterwards), briefly state the purpose of the

interview, and asking if the interviewee has any questions before the interview

Main subjects/

Researcher questions

Interviewer questions

Business analysis and

budgetary

What do you think are the tools to be considered

as the most important for business analysis for

cost investigation? (Smakthai, personal


What are the most important points a business

analyst must take care of when preparing a

business plan? Why is business analysis related to

budgetary control? (Sawhill & Williamson, 2001).

Where do you see the role of a business analyst

fitting into an organization? (Dargan, personal


What are the recommendations or suggestions for

analyzing the implications of budget for projects?

(Lee, personal communication, May 10, 2018).

Which sector would be the search area in terms of

business development related to budgetary

analysis? (Sawhill & Williamson, 2001).

Why do you think the key strengths of budgetary

control is related to business analysis? (Lee,

personal communication, May 10, 2018).

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Main subjects/



Cost control Why do you think there are different results of

control after seeing the results? (Agu, 2006).

What do you think are possible ways to make sure

we can maintain the same budget in theory and

reality? (Sawhill & Williamson, 2001).

What analysis and modeling techniques and

methodologies have you found be the most

effective and why? (Robinson & Last, 2009).

When is the most challenging period for handling

the budget? And what are your suggestions?

(Smakthai, personal communication, May 10,

2018).

Which factor should be the 1st priority that the

company should consider in order to prevent lost

margins? (Sawhill & Williamson, 2001).

Management strategy What management strategy do you think is most

considerable strategy in your company for

budgetary cost? (Agu, 2006).

How do you think the company should prevent

over-spending the planned budget, and what are the

possible solutions? (Sawhill & Williamson, 2001).

The budgetary will also effect the financial

statement, which will influence stakeholders’

investment decision making. How do you think

the company can persuade stakeholders or deal

with a difficult stakeholder? (Hansen et al., 2003).

How do you think you can establish credibility

with management? Why would you think

credibility is important? (Agu, 2006).

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Main subjects/



Debriefing Are there any more things you would like to say

before we end the interview?

May I contact you, if further questions should

arise?

Thank you for your cooperation

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APPENDIX 2

Interview transcript

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INTERVIEW TRANSCRIPT

Mrs. Chanchira Smakthai runs a bit late. She is a bit in a hurry, just came from a

meeting and has another meeting to go to. She tells me about what she knows this

interview is about. This is very precise. I tell her about the background of this

interview anyhow including its confidentiality.

Her area of responsibility is finance, financial reporting, costs, sales and

analysis of this on group level and communicating these to the local entities. She tries

to understand what the local entities mean by their reports and communicates these

findings to managers.

Q: 1.1 Which tools do you consider as the most important for business

analysis for cost investigation? (Smakthai, personal communication, May 10, 2018).

AMD (Financial Director): Recording is critical, the need to be organized

well and record properly, analysts need to analyze well -- that is their job and making

a decision is our job. In order to make decisions by the board of directors, information

is critical, therefore analyzing all the numbers, how much we spent, and how much

we made margins, using tools such as graphs, numbers, excel sheets or any are

essential. Cost investigation is really all about numbers.

Q: 1.2 What are the most important points that a business analyst must take

care of when preparing a business plan? Why is business analysis related to budgetary


AMD (Financial Director): Try to avoid showing repetitive things, look at

the negative plans that we experienced and give positive suggestions. The business

analysis helps to uncover the power of your data to become analytically driven

throughout your entire organization. Make better and faster business decisions with

the power of business analytics and gain rich experience of your business with data

analysis dashboard. No matter what your business is, the data analytics

technology helps every enterprise to measure and achieve their desired goals. This

analytics approach also helps to predict the future and overcome the business

challenges without relying on IT. Gain new approaches of business analytics to take

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the data driven decisions within a short period of time with voice and search enabled

analytics methods. This technique gives excellent results in analyzing small or huge

amounts of data quickly with search terms. No need to waste time on analyzing all

data, instead you can easily search and build reports without wasting a huge amount

of time. The real-time data visualization is useful in the desired charts graph and

maps.

Q: 1.3 What are your recommendations or suggestions for analyzing the

budget for projects? (Dargan, personal communication, May 10, 2018).

AMD (Financial Director): Actually business analysts need to contact with

every department, and need to request all the information they need. Business analysts

need to be the center of the tower for budgeting and for the future management.

Business development, also called pre-sales, is all the front-end work that gets done

before money changes hands. The business analyst is an agent of change. Business

analysis is a disciplined approach for introducing and managing change in

organizations, whether they are for-profit businesses, governments, or non-profits.

Business analysis is used to identify and articulate the need for change in how

organizations work, and to facilitate that change. As business analysts, we identify

and define the solutions that will maximize the value delivered by an organization to

its stakeholders. Business analysts work across all levels of an organization and may

be involved in everything from defining strategy, to creating the enterprise

architecture, to taking a leadership role by defining the goals and requirements for

programs and projects or supporting continuous improvement in its technology and

processes.

Q: 1.4 What are your recommendations or suggestions for analyzing the

budget for projects? (Lee, personal communication, May 10, 2018).

AMD (Financial Director): Look at the history and assess how we can do

better, also would like to mention about some of not reliable reports to be checked

properly. Sometimes there are unstable bills that company is paying constantly which

we need to clarify the issue if the spent cost is not stable, this refers to water bills,

fuels, or electricity bills etc.

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Q: 1.5 Which sector would be the search area in terms of business

development that is related to budgetary business analysis? (Sawhill & Williamson,

2001).

AMD (Financial Director): Seems a bit of a broad area, we need to

sometimes go with the flow or sometimes need to make a new decision that other

companies do not make. But the search area should be general; for example, if we are

focusing on offshore projects, then we should keep looking for offshore general trends

and clients' plans.

Q: 1.6 Why do you think the key strengths of budgetary control is related to


AMD (Financial Director): Most critically they need to know how to assist

with the business case. Looking at the budget, and providing proper plans and advice,

this shall be considered as a key strength.

Q: 2.1 Why do you think there are different results of control after having

seen the results? (Agu, 2006).

AMD (Financial Director): Due to different perspectives, or different

understandings of the concept, even if we always estimate both theoretical and real

budget to be the same, from past experience we know that it cannot always be the

same, and if it is the same, then that is something strange really. But main point is cost

controlling, we are not looking at the difference but looking at the control. We should

focus on the spending cost that should not be over the budget, that’s it. One advice is

that a project cost controller must keep track of ACTUAL cost expenditures on the

project and compare it to the BUDGET (usually on monthly basis) and report the

variance to the project management.

Q: 2.2 How do you think there are possible ways to prevent to make sure

we can achieve the same budget in theory and reality? (Sawhill & Williamson, 2001).

AMD (Financial Director): What I can think of is the cost monitoring, it is

critical that we need to keep monitoring how much we are spending while we are

doing the project on a weekly basis, and if there is a cost that is higher than we

expected, we would need to make a decision about how to reduce it. Costs are

associated with translating factors of production into outputs, i.e. land, labour, capital

etc. have to be turned into revenue generators. Costs are a function of output, and the

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window for which the average costs of production decrease is called economies of

scale. Eventually, your average costs will escalate and you hit dis-economies of scale.

Also, when your product or service goes to market, it will have a particular

reception, which might be good, better or at par with your vision. Eventually, it is

easier to reduce costs and control them rather than generate fresh revenue centers.

This remains true for industries and services. There is also a trade-off to providing

these services associated with products.

For instance, it might be profitable for a corporation to set up a system,

whilst it might not be possible or profitable to install and spend the costs because they

would be too high. Similarly, services might not run at a frequency similar to bigger

companies with high demand. A business, any business finds it easier to control or

track intrinsic variables such as costs of labour, raw materials, factors of production

rather than track extrinsic variables such as demand and customer switching.

Q: 2.3 What analysis and modeling techniques and methodologies have you


AMD (Financial Director): Each department requires different skills, for

example marketing should be active, we need to take action and discuss with clients,

but accounting should be in the office and make sure the calculations are correct. The

HR team needs to know if this person is suitable for their department. Actually it

sounds very easy but selecting a suitable person for each department is really not

easy. We need to know who is suitable for what job.

Q: 2.4 When is the most challenging period while handling the budget? And

what are the suggestions? (Smakthai, personal communication, May 10, 2018).

AMD (Financial Director): The most challenging period is when we are not

100% sure if our budget is correct or not, when we have already estimated and made a

contract, but if we think that there will more spending, that is just chaotic. This is why

we need to look at the contract, everything one by one with every detail. It is so

important. We always need people to look at the contract in order to make a proper

budget.

Q: 2.5 Which factor should be the 1st priority that the company should

consider in order to prevent lost margins for the project? (Sawhill & Williamson,

2001).

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AMD (Financial Director): We need to buy correct materials as per correct

specifications, and make sure we don’t repurchase materials again as procurement has

the highest portion of spending cost in every projects.

Q: 3.1 What management strategy do you think is the most considerable


AMD (Financial Director): Management is one of the critical parts for the

company, I trust that there has to be certain each department has each management

positions, sometimes everyone can talk and share ideas but job positions are job

positions, meaning that if officers and laborers have some issues or problems with

their current situation, jobs or their working environment, they can always discuss

with their managers, that is the management of each job positions know who to talk

with. For example, I cannot always talk with everyone, I can consider some critical

parts, but I think managers can try to solve any issues and then later on, if it cannot be

solved, then I can consider to check. There has to be step by step, otherwise

everything cannot be organized. We need to follow the organization chart.

Q: 3.2 If the company spends over the theoretical budget in reality, how do

you think the company should prevent problems and what are the possible solutions?

(Sawhill & Williamson, 2001).

AMD (Financial Director): The critical point for this matter is we were

always meant to check how much we spend, and then if there were any possible

chances that we may have to spend more, then we need our top management meeting

and then make a decision that whether if we should continue the project or not. There

are no certain solutions really, based on each person’s experience, we need to share

opinions, and based on the current situation, we can make a flexible solution.

Q: 3.3 Budget will also have an effect on the financial statement, which will

lead to stakeholders’ investment decision making, how do you think the company can

persuade stakeholders or deal with a difficult stakeholder? (Otley & Pollanen, 2000).

AMD (Financial Director): Management team needs to keep discussing with

IR and analysts, stakeholders want profit always, and to satisfy them, sometimes IR

opens what projects upcoming or sometimes we say nothing. What to tell, or how to

tell is important, we cannot persuade stakeholders 100%, but we need to know when

is the time that we can tell or not.

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Q: 3.4 How do you think of establishing credibility with management? Why

would you think credibility is important? (Agu, 2006).

AMD (Financial Director): It is very important, if people are scared to talk

to me then they will not come and see me, that means I cannot know what they are

doing and how the company is going. For my case, almost every day, every 30

minutes people come to talk and report, but I never thought that it is a job that

managers or others should do, I want to listen directly and want people to come

anytime to talk with me, so credibility with management is important.

Mr.Seong Jin Lee was available at his office, while he was reviewing his documents,

I asked if he is available to do the interview which already discussed before. He said

yes, so we started to have an interview.

Q: 1.1 What do you think are the tools to be considered as the most



AMD (Planning Director): Experience is important so sometimes analysts

can also give their ideas and opinions. Business analysis involves communicating

complex technical details in easy-to-understand language to stakeholders, including

developers, administrative personnel, and senior management. A project manager has

to understand the role of the project in improving business processes and achieving

cost savings for the company. This is important because the project manager has to

explain the organizational context to their team members and communicate the

technical details to their peers and to senior management. For example, a new quality

control system project in the manufacturing department may affect data processing

functions in accounting, which means that project managers in both departments

would have to grasp the technical details to manage their respective implementations.

Q: 1.2 What are the most important points a business analyst must take care

of when preparing a business plan? Why is business analysis related to budgetary


AMD (Planning Director): Look at the past experience, compare the

numbers. Additionally changed orders are important, we need to make sure whether

this shall be considered and how we can respond later. Business analysis is having a

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critical understanding of the revenue drivers for a company. Business analysis can

also help teams carve out strategic plans to increase revenue, reduce costs and

compete across industries. Business analysis is integral to reviewing the effectiveness

of small tasks up through major changes within a company: new business, changing

strategies, adding in additional teams. Business analysis also helps companies carve

out targets to help them achieve near and long-term goals. If you want to develop your

business, you are building your own business, your clients aren’t happy with your

services or product and you need to revamp, there are holes in your company

processes and you are trying to understand how to better integrate systems to help

streamline, retention is low and you want to keep your best employees happy -- all of

these things (the list is endless) can be fixed with the help of business analysis. You

can hire a Business Analyst full time or part time to help you with your various

business needs. Business Analysts are objective and present the facts to you with

actions to get better.

Q: 1.3 Where do you see the role of a business analyst fitting into an


AMD (Planning Director): I think business analysts should provide new

ideas and new information every day, and if management requests a plan, they need to

come up immediately with draft plans and ideas. Business analysts need to gather all

the information from every department, same as like planning department. Business

Analysis as a task can be performed by the data analysis particularly during the initial

stage when the data model, data analysis model and presentation model are defined.

In the Initial stages, when models are defined, we always start with understanding the

Business problem. Business user needs which data in what format, when do the need

it and why they need it. So in a company there could be a scenario for a data analyst

where the business analysis and data analysis task can be performed by the same

person, that person should possess skills required for business analyst or data analyst

(They have created a profile called business analytics or BI analyst) or it could be

divided into two roles which are data analyst and business analyst. (Which seems to

be more popular in the Indian IT Industry).

Q: 1.4 What are the recommendations or suggestions for analyzing the


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AMD (Planning Director): Cost monitoring, and apply same format for

every project. Also, controlling people is very important, currently I am checking the

inventory list and some of materials are actually not there but still our inventory list

says we have stock. One example is welding rods, we have so many welding rods in

the warehouse, and we did not even check why we purchased and why the project

team requested so many welding rods. There were many different opinions about this,

actually welding rods are difficult to estimate the exact quantity before the project,

because humans are using the welding rods, not robots, so each person uses them

differently with their own procedure, some people use more, some people use less. If

we used robots, then we can exactly estimate how much we may use for the project.

Anyhow, back to the point, for this kind of case, I realized we need a quantity

surveyor and make sure each person uses how much. Also we should make sure only

which suitable position or role can request any additional materials, so that means not

anyone such helpers can request for more materials, that shall not be acceptable. I

don’t think we need a quantity surveyor for every project or as a permanent job, I

consider case by case even though we pay high salary, I trust that this would work

better, and this was already discussed with financial AMD as well. We think we will

pay higher salary but higher case by case would be more suitable.



AMD (Planning Director): Search area would be news and newly signed

agreements with other companies and clients; for example, petrobras recently

announced a partnership to complete the refinery at the Rio de Janeiro Petrochemical

Complex in Itaboraí (Comperj), one of the major symbols of the corruption scheme.

That existed in the company and that was revealed by operation car wash. In a

statement to the market, petrobras informed that it has signed a letter of intent with the

Chinese giant China National Petroleum Corporation International (CNPCI) to detail

the execution of joint projects that include the construction of a refinery in Comperj,

as well as the participation of the Chinese in fields of Marlim, in the Campos Basin.

Every kind of information, even if our company is not involved, we need to keep

researching and making sure how the business is going.

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AMD (Planning Director): As I am looking at the numbers, my opinion is to

minimize the cost as much as we can with the same quality of work. It is an endless

dilemma that we always need to face up to. To make sure how to know what we are

doing, I think assessing every project with cost control is essential.

Q: 2.1 Why do you think there are different results of control after seeing


AMD (Planning Director): Business is either subjected to profit or loss. Any

investment done by the management always thrives among the market to optimize its

productivity and approaches to achieve profits. But there are times when a certain

condition does not support and market becomes too vicious. To undermine such

situations a firm has to take initiatives in order to reduce costs and make adjustments

in business. Perhaps it is the fault of the measure, which should not ever happen, but

we cannot make a budget 100% accurate, so this is why we put enough margins on

the net profit and indirect costs. If we try to make it the same or the less, there will be

risks.

Q: 2.2 What do you think are possible ways to make sure we can maintain


AMD (Planning Director): In order to protect the budget, even if we spend

over the budget, I don’t really think changing their job or role while continuing the

project is not a good idea. What we should consider is that just look at the last digits,

we don’t need to look at the details because that is what each department manager

will do, so how we should preserve on the management side, try not to change, but

only looking at the large final numbers. Actually trying to change the internal system,

especially while the project is on-going, is not a good idea.



AMD (Planning Director): There are so many modellings and techniques for

different departments so selecting only one modeling in general seems a bit difficult,

but from my experience, rather than making a new one, compare with other cases and

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make a decision seems a bit more reliable. This is why experience and documents are

critical in every case.

Q: 2.4 When is the most challenging period for handling the budget? And


AMD (Planning Director): When the estimation team has the cost but the

project team disagrees with the cost to do the job, that is quite challenging, but

sometimes if we think it is not possible we need to reject the project.



AMD (Planning Director): The engineering team and procurement team

need to corporate together and make sure all the specifications are correct, this is very

critical.

Q: 3.1 What management strategy do you think is most considerable


AMD (Planning Director): That is a difficult question, there is no right

management strategy always, I cannot say I am always doing the right management,

and always I am right, but for my point of management strategy, I want to develop

management for the risk committee, for example, if we make a risk committee,

shareholders and board of directors can join together then discuss about possible risk

plans, then everyone can at least share their ideas and be able to find out possible

weakness points. We should avoid brainstorms. Also another management idea is for

field engineers, I think for our company field engineers are very important, so we

need to listen to their voice more! We need to know who are the important people and

make sure to listen their voice.

Q: 3.2 How do you think the company should prevent over-spending the


AMD (Planning Director): So I think you are referring to the meaning of

‘what if we lose the net profit?’, answering to that question, you might think we need

to stop the project immediately, but actually that is not the only correct answer,

sometimes based on our partnership experience or based on our finance flow, we can

continue the project, this is not only about the money, we need to look at the big

picture whether if we will work with this client in the long term, anyway the point is

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obviously cost controlling is required, we need a cost analyst who can report and

make sure that there are no problems with the cost.

Q: 3.3 The budgetary will also effect the financial statement, which will



AMD (Planning Director): Actually stakeholders would not know how much

budget that we made and how much bidding that we submitted, but yes these are the

beginning stages and we need to do properly otherwise in the end, this will impact on

the financial statements somehow. There are so many steps from the beginning till the

end so every step we need to monitor so we will be able to be in a competitive

position in the market.

Q: 3.4 How do you think you can establish credibility with management?


AMD (Planning Director): Sometimes directors need to make a decision

based on information, we do not have a lot of time for every detail to check, I also

want to check everything and every single person, however it is not always possible,

so I want to make sure each manager and supervisor reports properly with trust. If I

don’t trust them, they cannot trust me.

Mr.Peter Jorn went to construction site and just came back to his office, he is also

quite busy handing a project, I got to know him when I had to go to the site job every

day, so he was willing to support me and provided some time to do an interview.




Project Manager: Follow up basis is important, this means analysts need to

make sure of all details and information to not to miss anything, and to summarize

well. Business analysis plays an important role in project implementation, which

involves development and testing. Development includes modeling internal business

processes and data flow, identifying critical components that affect system

performance, and preparing test plans. The testing phase involves testing the

individual components first, followed by testing the integrated system.

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Q: 1.2 What are the most critical points for a business analyst to consider



Project Manager: Without monitoring, you cannot measure…without

measuring you cannot control…Without controlling you cannot give a direction to

it…Without giving a direction you cannot see the progress…so you call in the

Analysis, which consists of monitoring, measuring, controlling and directing, is

important for the growth of the business. Depends on the objective and capacity there

tools, people available to compliment you to fast forward the growth of the business.

Business analysts need to work with the planning team and record all the numbers that

we spent, then check the budget that we made from the beginning. We need to check

and compare why they matched or did not. Business plan needs to be solid but very

detailed. A business analyst handles some of the crucial parts of a successful project.

A Business Analyst is responsible for identifying and defining the solutions that will

maximize the value delivered by an organization to its stakeholders. Business analysts

work across all levels of an organization and may be involved in everything from

defining strategy, to creating the enterprise architecture, to taking a leadership role by

defining the goals and requirements for programs and projects or supporting

continuous improvement in its technology and processes.

Q: 1.3 Where do you see a business analyst to be suitable into an


Project Manager: Business analysts should provide hypothetical plans,

document its business or systems. They need to know how to assess the business

model. Planning, monitoring, simplifying documents or assisting with the business

case etc. there are many, and in order to have all those requirements, they need to

know what management wants and what management wants to see.



Project Manager: There should be the same information and instruction for

analyzing every project. A task can be performed by data analysis particularly during

the initial stage when the data model, data analysis model and presentation model are

defined. In the initial stage, when models are defined, we always start by

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understanding the business problem. Business users needs which data in what format,

when do the need it, and why do they need it? So in a company there could be a

scenario for the data analyst where the business analysis and data analysis tasks can

be performed by the same person, and that person should possess the skills required

for business analyst or data analyst.



Project Manager: The searching area for internal basis, and cost monitoring

is essential. I would say indirect and net profit are important for business development

and also for the current situation. Following the trends and looking at the world is also

important, but we should also make sure that we need to look into the details

especially of our internal system.



Project Manager: How to make production more efficient would be the key

point, because this means including everything basically. Efficiency would include

the cost, production, time schedule, and the net profit.



Project Manager: Yes, there will be different results but the main factors will

be due to such as unexpected issues that happen that were out of agreement. For

example, who can expect while doing our jobs, that all of sudden a client requests

additional jobs; this request is out of our budget control. This is just only one

example, but what it means is that something that we cannot control will result in the

difference. Also, numbers can be only just numbers, while the project is ongoing, we

are actually working with people, so we cannot only just simply looking at the

numbers, we sometimes need to provide some benefits to encourage them to work if

the schedule is very tight. There are unexpected situations which occur every time,

and it is risky to only look at the budgetary control without considering people’s level

of motivation.



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Project Manager: We need to look at the cost and progress, they should be

always be about the same or have a similar rate. If there is a big difference between

cost and progress, I can guarantee that there is a wrong calculation, so I think to

prevent, by the time, we should look at the rate of the progress and the cost. Cost

means when there is an issued slip, it does not count as an asset anymore.

Q: 2.3 What techniques modelling, and methodologies do you think is the


Project Manager: Actually for my case, rather than looking at the modelling or

techniques, I follow my experience. In some urgent cases, I use my knowledge and

give back my opinion, especially for some urgent cases, I don’t look at techniques or

modellings, I look at my past experience, this is why practical experience is

important. But somehow, I assume that this is because I belong to project

management, if numbers were involving such as accounting or finance, they would

probably have different opinions.



Project Manager: Most of the time the budgetary cost needs to make sense to

do the project, and if it doesn’t make sense, we cannot do it, for example if estimate

teams thinks we can make a chair with 1 dollar, how can project team or procurement

team agree with this cost? But usually it does not happen, but this kind of situation

has no answers really. Budgetary cost needs to be always reasonable and make sense.



Project Manager: From the bidding stage, we need to make sure how much

margin we are planning to make, and of course during the project all the

specifications and construction job need to be done properly, but we all need to make

sure start from the beginning, the estimated budget needs to be reasonable.



Project Manager: There is no correct management strategy, management

cannot make all workers satisfied with their job or salary etc. Even if I try to make all

the laborers and staff happy, I cannot do that. This is not only because of my decision,

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I also have to follow management’s strategy as well. I think there are strategies for

people or for the company, usually for me is that I care for the people more, so the

main point for the management strategy should be concern for the people.



Project Manager: We need details, each department must have a proper

format to record everything and share every detail of spending cost, not just overall.

There must be 2 formats, one is for top management – this should be simplified and

general as top management needs to look at numbers, and the other format should be

for project managers, this format must have all each details how the total cost has

been made, for example, the procurement team can make all purchased materials with

the total spent cost for the top management report, but for the project manager, should

indicate purchased materials what exactly item by item, then we can find out which

item cost the most and why.




Project Manager: If we say how to persuade stakeholders, I don’t think

budget is the main factor, I would say marketing will be more important for them. To

be honest, stakeholders do not care about the net profit sometimes, they are

sometimes just waiting for the new projects announcements, and so they can sell or

keep. Anyhow, company should know whether if we should tell stakeholders

everything or not, I guess that is pretty difficult.



Project Manager: Credibility is actually quite simple, I need to show it first,

I cannot order my staff without doing it first. I cannot just sit back and tell people

what to do, that is not a good leader, I prove my capability not only by action but also

with my knowledge, I need to prove that I know what I am doing so they can follow

me. That should refer to management as well.

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Dave Dargan came back from Australia after his business trip, he has another

meeting with client, so we decided to have a quick talk and have an interview.




Marketing Director: The most important factor is for the business analysts to

have practical experience. Business analysis plays an important role in project

implementation, which involves development and testing. Development includes

modeling internal business processes and data flow, identifying critical components

that affect system performance, and preparing test plans. If they have no experience, I

don’t think it is possible for the company to have any properly analysed results, so

hiring someone who has practical experience is better than training them.

Q: 1.2 What are the most important points a business analyst must take care

of when preparing a business plan? Why is business analysis related to budgetary


Marketing Director: The business analyst must review previous business

plans and identify what actions in the previous plans were not positive. On identifying

the negative previous plans he must assess the reasons ie. Was it employees:

Management: Project Control: Costing? His new business plan will be prepared

including the corrective action needed on the previous plans. The adoption of

advanced analytics like voice and search-based features, with real-time visualization,

predictive, and time saving, is considerably higher. The same applies for data

management technologies as well. Continuous advancement in data analytics are

considered an imperative for nurturing business transformation and innovation into a

customer-centric one. Voice and search-based analytics bring deeper insights into

business and help to run the business as a successful one.

Q: 1.3 Where do you see the role of a business analyst fitting into an


Marketing Director: The business analyst must be in a position to constantly

monitor his plan against actual operations. Development is not only important in

business, it is important in almost all aspects of life. If we talk about business

development, in this era developing a business now totally depends on how much you

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are visible in the digital world and for that we need proper visibility through business

operations. (1) Developing a structure of website addresses on your site in the target

language, (2) Notifying the search engine which particular sub-pages are available,

(3) Analysing keywords for each language, (4) Acquiring external links leading to

your website, (5) Regularly creating interesting, professional content.

A well-thought-out strategy of developing your business on foreign markets,

combined with technical expansion of the service and building communication based

on localization, especially in the long perspective.


implications of budget for projects? (Lee, personal communication, May 10, 2018;

Dargan, personal communication, May 10, 2018).

Marketing Director: The project team then goes off and documents these

requirements in the requirements specification, and from that point on, most of the

dialogue about requirements is channeled through the project manager. Then, late in

the process, the users re-engage in acceptance testing, and start pointing out all the

areas where the application fails to comply with their expectations. Analyze properly

and record everything, also I look to the past, what our company has done and what

mistakes we made to avoid any duplicate mistakes in the future to repeat, or we can

change the system really but it will cost a lot and take a lot of time to do so, which

means as from the owner side, it will be a challenge and can be risky to spend a lot.

No technique guarantees a successful outcome, but following a specific technique in a

disciplined manner has three major advantages. First, if it is applied throughout the

process, it will tend to improve the consistency and coherence of the full requirements

set and filter out extraneous and irrelevant requirements. Second, participation in

repeated requirements discussions that are run in a consistent manner according to the

chosen technique will lead users to adopt a similar discipline among themselves.



Marketing Director: Network and connections are important, we need to

know people and know how to get new information from them. We also need to keep

following up with news and articles on an everyday basis, but critically if you don’t

know anyone, you can’t get a job.

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Marketing Director: A business analyst must have the following key

strengths; (1) Assess new areas of business for the company, (2) Identify new

opportunities with existing clients, (3) Minimise costs without affecting productivity,

(4) Maximise values for shareholders.



Marketing Director: Cost control is an internal plan by a company or

government agency to keep the costs of its services as low as possible. It would

include buying the lowest cost products to use and looking for and eliminating waste

and fraud. To some degree all companies and governments do it, as do many

individuals who do not like to waste money and live within their means. There will

always be different results between theoretical and real budgets if the individual does

not have costs related to a previous similar project.



Marketing Director: Projects must have all costs documented and the

Projects must be identified also, as for example

Type 1 – Mining conveyors and plant;

Type 2 – FPSOs;

Type 3 – Mining modules;

Type 4 – Tank fabrication etc.

Also, we may need to think about the employees and the system together,

and if those two things are combined well, the project could be completed

successfully and reduce the different costs of budget.



Marketing Director: (1) Practical experience; (2) Credibility with the client;

(3) If you have experience and credibility with the client then the project can be

discussed with both parties “listening to each other”.

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Marketing Director: The most challenging period is always towards the end

of a project as in many cases schedule has been delayed thus extra labour/ overtime/

equipment costs are incurred which were never allowed for in the budget.



Marketing Director: As materials will be approximately 60% of the costs

then procurement is 1st priority.



Marketing Director: Management strategy is a major factor in the company

due to the very competitive market at this time. Management strategy should have a

solid plan and make a decision based on our history experience with the recorded

documents including the spent cost. I do not know which strategy is always correct,

sometimes we make wrong decisions, but in order to prevent that, we need to look at

the history and the documents. Management cannot just make decisions with only

their opinions especially without any evidence.



Marketing Director: I would say, record everything, record every projects

cost and check the past experience how much we spent, and then try to follow the

trend, but of course it is not easy, but I would say recording is important.




Marketing Director: Any business report prepared for the shareholders must

be genuine and not exaggerated thus in the future the shareholders will trust the

reports. Many times companies prepare exaggerated reports but after the shareholders

see the actual financial status and it is lower than the initial report, this is where the

trust is lost.

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Marketing Director: If there is no credibility with management then the

analyst serves no purpose as he cannot communicate “straight” with management.

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APPENDIX 3

Profile of interview

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PROFILE OF INTERVIEW

Mrs.Chanchira Smakthai

Position:

Educational

background:

Work experience:

Director (Assistant Managing Director)

- M.B.A. Burapha University

- B.A. of Marketing, North Eastern Technological

College

- Certificate of Director Accreditation Program (DAP),

Thai Institute of Directors (IOD) Class 89/2011

- Chief Financial Officer Certification Program (CFO),

Federation of Accounting Professions (FAP) Class

16/2012

- Anti-Corruption for Executive Program Class

13/2014

- BJC Heavy Industries Pcl.

2013-present: Assistant Managing Director – Support

BJC Heavy Industries Co., Ltd.

2009-2012: Accounting and Finance Manager

BJC Construction Industries Co., Ltd.

1995-2009: Administration and Finance Manager

Siam East Solutions Pcl.

2015-present: Director/ Audit Committee/ Chairman

of Nominating Committee

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Mr.Seong Jin Lee

Position:

Educational

background:

Work experience:

Director (Assistant Managing Director)

- M.B.A. of Chemical Engineering, Hannam

University,

South Korea

- B.A. of Chemical Engineering, Hannam University,

South Korea

- Certificate of Director Accreditation Program (DAP)

Thai Institute of Directors (IOD) Class 88/2011


2013-present: Assistant Managing Director – Project

- BJC Heavy Industries Co., Ltd.

2006-2012: Project Manager

Mr.Dave Dargon

Position:

Educational background:

Work experience:

Marketing Director

- Kalgoorlie School of Mines


2015-present: Marketing Director


2010-2015: Project Director

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Mr.Peter Jorn

Position:

Educational background:

Work experience:

Project Manager

- B.A. of Civil Engineering, Inha University,

South Korea


2016-present: Project Manager


2013-2016: Assistant Project Manager

Oceana Gold

2011-2012: Project Expeditor

Sandvik Mining and Construction

2011-2011: Project Expeditor

- STX Hyukshin

2008-2011: Assistant Project Manager

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APPENDIX 4

Plagiarism checking report

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Documents

An investigation of budgeting and budgetary control: Case