DIP20 Assignment 4 Submission 1 Arun Kannath

CMI LEVEL 5 DIPLOMA IN MANAGEMENT ANDLEADERSHIP

Assignment Number 4

ByArun Kannath

Candidate Number: 4155738Centre: AEA Group

Arun Kannath-4155738 Assignment 4 AEA Group

List of Abbreviations

SWOT Strengths, Weaknesses, Opportunities and Threats

SMART Specific, Measurable, Achievable, Realistic and Time-Related

LMC Local Management Committee

ATEX Explosive Atmosphere

PESTLE Political, Economic, Social, Technological, Legal andEnvironmental

KTP Knowledge Transfer Partnership

NCP Non-Conforming Products


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CMI LEVEL 5 DIPLOMA IN MANAGEMENT AND LEADERSHIP

Assignment Number 4

Introduction

The report presented here has been submitted as assignment number 4 towards partialfulfilment of the requirements of CMI Level 5 Diploma in Management and Leadership.As part of my KTP training I had recently attended a week long residential module 3 inBath, during which time I was exposed to various aspects of project managementincluding financial control and leadership management. This report is intended todemonstrate my knowledge and understanding of the various learning outcomes listedbelow that were dealt with during the residential module. It is my firm belief that intrying to demonstrate my understanding of the above mentioned management principles,I have tried to incorporate instances and examples of their actual application in my KTPproject management as well as in my personal development.

Unit 5007 Financial Control

Learning Outcome 1) Be able to understand, use and control a financial system tomeet objectives

1.1) Assess relationship between a financial system or function and other systems orfunctions in an organisation

Finance plays a key role in the functioning of any organisation because a steady flow offunds is required to make planned expenditure for delivering products and services andthe sale of these products and services generates the necessary funds to make a profit.Any activity undertaken by any of the other departments without proper financialconsideration can have a detrimental effect. For instance, if the sales team decides tooffer extended credit or discounts to increase sales, this will affect cash flow and financewill not be able to collect cash for the business when the need arises. Similarly, purchasemay decide to pay suppliers quickly or place bulk orders in order to avail a discount, butthere may not be sufficient funds available immediately. This may affect relationshipwith the suppliers.

The financial situation of the company inturn dictates activities of the other departments.For example, if there is a shortage of funds with the finance department, the sales teammay not be able to offer prospective customers attractive discounts and extended credit,thereby making the competitors’ offer more attractive. Shortage of funds may also affectmarketing thereby reducing overall income. Also prioritisation of planned projects will berequired and this may affect overall strategy of the company. Hence a two-waydependence is observed. In order to avoid such problems, it is therefore important to haveeffective communication between the finance and other departments.


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At Geotech, the recent economic recession had resulted in a drop in sales and overallturnover. This affected the company cash flow and hence the finance director had toconvene a meeting to chalk out a strategy to meet this issue. It was later decided tomaintain the operating profits at previous levels despite the drop in turnover. Hence,more funds were made available for increased sales and marketing of higher marginproducts although fewer numbers were actually sold. Hence, the marketing strategy hadto be revamped to meet this new situation. Also the launch of a new product, G100, wasbrought forward since there was a possibility of obtaining a higher margin on it. The NPI(New Products Introduction) section thus had to modify their deadlines and prioritisetheir current activities accordingly. The financial situation of the company thus impactsthe functioning of all its departments.

1.2) Describe the systems of accounts and financial statements used to control afinancial system

The three most important systems of accounts and statements used to control a financialsystem are:

1. Profit and Loss Account

A company may produces an annual profit and loss account which indicates the totalprofit or loss made during that period. Some companies also produce a monthly profitand loss statement. The various entries in the statement and their brief description isgiven below.a) Total Sales or Revenue or Turnover: This is the total value of sales achieved overthe period.

Finance

Marketing

Purchasing

Sales

Production

Finance


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b) Direct Costs or Variable Costs: These are costs directly related to and vary with thesales achieved in the period such as cost of raw materials, transportation cost, cost ofproduction and wages of production staff.

c) Gross Profit: This is equal to Total Sales (a) – Direct Costs (b). It is also expressed asa percentage of total sales and is called Gross Profit Margin.

d) Indirect costs or Fixed costs: These are costs that do not vary with sales such asadministration expenses and other overheads such as rent, travel, training, depreciationetc.

e) Operating Profit: This is equal to Gross Profit (c) – Indirect Costs (d) and is ameasure of profits earned by the company through its trading activities.

f) Pre-Tax Profit: This is obtained by either adding interest received on cash deposits inbank or deducting interest payable on loans from the operating profit.

g) Post-Tax Profit: This is calculated after payment of taxes on any interest made.

h) Retained Profit: For a limited company, some amount of the post-tax profit can bedistributed among the shareholders as dividend. What is left is called retained profit.If the board of directors themselves are shareholders, they can reduce their wages(increase operating profits but pay more corporation tax) and take more dividendsinstead. This retained profit is then added to previous years profit and recorded in thebalance sheet.

2. Balance Sheet

A balance sheet summarises the Assets (what is owned) and Liabilities (what is owed) ofthe business. Both these can be split into long term and short term. Long term assets orfixed assets include plant, machinery, land etc and short term assets include cash in bank,debtors and current stock. Long term liabilities include owners’ funds such as retainedprofit or shareholders capital. Long term loans also come under long term liabilities.Short term liabilities mainly include creditors and short term loans repayable within 12months. In a balance sheet, the total assets should always balance the total liabilities.


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A useful way of presenting data is using the formula:

Fixed Assets + Current Assets – Current Liabilities = Owners’ Funds + Long Term Loans

Fixed assets are usually stated at their cost price minus any depreciation. From thebalance sheet it is possible to evaluate the Working Capital which is the differencebetween current assets and current liabilities. Another useful measure is Return onCapital Employed which is the ratio of Operating profit to the capital invested (owners’funds plus long term loans).

3. Cash Flow Statement

A cash flow statement shows the amount of money coming in and going out over a periodof time. It has an opening and closing balance. If all the business transactions are donethrough a bank, then the bank statement becomes the cash flow statement. These are notnecessarily a good measure of performance because items such as machinery and capitalexpenditure or raw materials are meant to be used over a longer period of time althoughtheir costs appear immediately. Organisations sometimes prepare a cash flow forecast topredict the expected cash flow over a coming period. This helps them to determine if theywill have enough cash in hand to pay their bills when they become due. If the forecastshows a shortage of funds, the company can then prepare themselves by altering thepurchasing plans and other planned activities. Sales revenue in a particular month mayactually relate to sales made the previous month because most businesses offer credit toits customers. For a new business, immediate payment for raw materials may be requiredby the suppliers. After the company has established a track record, it may be able to makepurchases on credit and this will be reflected in the cash flow statements. Ideally abusiness should collect money from its customers faster than it is paying its suppliers.

Fixed Assets

Plant, machinery

Current Assets

Debtors, current stock, cash

Owners’ FundsRetained profitShare capital

Long Term Loans

Assets Liabilities

Current LiabilitiesShort term loans, creditors


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The closing balance each month becomes the opening balance for the next month. Table1 below shows how a cash flow forecast will look like.

Month 1 Month 2 Month 3Opening Balance 0 61,600 79,200

IncomeSales 5,000 8,000ShareholdersInvestment

100,000

Loan 20,000

ExpenditureEquipment 25,000 1,000Raw Materials 4,000 4,000 4,000Wages 3,000 3,000 3,000Utilities 400 400 400Rent 6,000

Closing Balance 61,600 79,200 78,800Table 1

Appendix A1 shows actual financial statements for Geotechnical Instruments for the yearending 31 December 2008.

1.3) Analyse financial information contained in a set of accounts or financialstatements

Analysis of information present in the financial statements helps the organisation to: Assess real performance against budget Prioritise activities and reallocate funds Identify areas of strength and weakness

This analysis mainly involves calculation of various ratios that allows comparison ofperformance with previous periods or with other similar organisations. Some of theimportant ratios have been calculated below with reference to the financial statements inAppendix A1.

1) Gross Profit Margin = Gross Profit/Sales x 100%

The higher this value the better as it indicates that more money is available to coveroverheads and other expenses and also to invest in future growth.

Gross Profit Margin (2008) = 3,547,234/5,786,858 x 100 = 61.3%.


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In 2007, this figure was 51.3%. Hence there has been an increase in gross profit marginlast year with a slight increase in the turnover figure.

2) Operating Profit Margin = Operating Profit/Sales x 100%

A higher operating profit margin means more money is available to pay impendinginterests on loans and possibly pay dividends to the shareholders.

For 2008, the figure is 20.02% compared to 9.1% in 2007. So it has more than doubled inthe last one year. This is a very healthy figure and is a direct consequence of a reductionin direct costs while achieving an increase in the overall turnover.

3) Return on Capital Employed (ROCE) = Operating Profit/(Owners’ Funds + LongTerm Loans) x 100%

ROCE indicates the amount of profit earned for every £100 put into the business by theinvestors. This can be used to compare different companies or industries and helpspotential investors in gauging the risks involved in investing.

For 2008, total owners’ funds = 1,547,670Long term loans = 73,882

∴ ROCE = 71.46%

This is a very healthy ROCE and makes the company attractive for potential investors.The figure for 2007 was 32.27%. This huge increase is mainly due to doubling of theoperating profits and a significant drop in long term loans.Possible reasons for such high ROCE are:

Increased profit margin on products Efficient utilisation of available funds

4) Current Ratio = Current Assets/Current Liabilities

A ratio greater than one (surplus of Current Assets) indicates that the company hassufficient funds to pay all its debtors as and when they fall due.

For 2008, Current Ratio = 2,374,551/1,039,809 = 2.28.

This is again a healthy ratio to have although it less compared to 2007 when it was nearly3. This is mainly due to an increase in the current liabilities.

5) Acid Test = (Current Assets – Stock)/Current Liabilities

Here all stock is excluded from current assets and only those that can be quicklyconverted to money are considered.For 2008, Acid Test = (2,347,551-763,522)/1,039,809 = 1.52


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A ratio greater than 1:1 is considered good and hence this value reflects a healthyfinancial position for Geotech.

6) Gearing = (Current Liabilities + Long Term Loans)/Owners Funds

This shows the ratio between shareholders’ funds and funds from other sources.A high gearing means more money from outside sources are invested and this generallymakes the business risky. However, it is beneficial to have high gearing when thebusiness is making profits since the amount of interest payable does not increase withincreasing profits and this means more money is available for the shareholders. But whenthe business is not doing well, a high gearing can be detrimental.

For 2008, gearing = (1,039,809 + 73,882)/1,547,670 = 0.72This shows that owners have more money invested into the business than is providedfrom other sources. However, for 2007, the value was 1.1 indicating more money hadbeen invested from outside sources than from the owners’ funds._______________________________________________________________________Learning Outcome 2: Be able to identify and use a range of financial controls

2.1) Construct a budget for an area of management responsibility

A budget is a detailed plan dealing with the allocation of physical resources expressed inquantitative terms. It needs to be prepared and approved in advance of its use. Budgetscan be fixed or flexible in terms of the money allocated. It can be prepared either for thewhole organisation and/or for a section within it.Budgets can be either Zero Based where it is built to start fresh without any previoushistorical inputs or it can be Incremental where the current budget is used a referencepoint for next year. Both these systems have their own merits and demerits as shownbelow.

Incremental Budgeting Zero Based BudgetingAdvantages

Quick and easy Lower skill level required Data easily available

Advantages Fund allocation based on current

and future needs. Provides only sufficient funds to

achieve specific objectives. Investigation and analysis can

identify opportunities forimprovements and waste reduction.

Disadvantages Covers up inefficiencies. Can result in poor allocation of

limited resources. Results in waste (people tend to use

up all their resources for fear ofgetting less money next year)

Disadvantages Time consuming Requires higher skill level Reliability of outcome depends on

quality of forecasting data. Difficult to identify all possible

costs.


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The process of creating a budget can be explained in the context of my KTP project. Theobjective of the project was to create a laser based gas analyser for methane. The firststep is to prepare a sales forecast. For this purpose Geotech had conducted a marketsurvey that looked into the various factors such as environmental, political, legislations,demand from customers and also other competitors. Based on this, an estimate of theexpected sales for each year after the launch and the unit price was determined as shownbelow.Methane analyser Target price: £2000Margin: 70%

Yr1 Yr2 Yr3Target sales volume: 40 80 80Contribution: £56K £112K £112K

The KTP budget was then constructed for the realisation of this objective and this isshown in Appendix A2. Separate funds have been allocated for salary, travel,consumables, training etc. Apart from this, additional company contributions were alsoincluded in the budget to cover the cost of management supervision, additional associatesalary top-up etc. These are shown below in table 2 below.

Description Estimate of Costs (£)Associate salary top-up Over entire project time 21,600Management supervision Supervisor avg. 0.5

day/week @ £250/day

Facilitator avg. 0.25day/week @ £250/day

15,000

7,500

Staff costs Prototype build 110 mandays @ £250/day

Steering group 20 man days@ £250/day

Attendance at conference

27,500

5,000

1,050Materials Small parts, PCB layout 10,000Capital equipment Estimate 20,000

Total 107,650Table 2

The above figures assume significance because it directly impacts the production cost ofeach instrument and hence the profit margin. This is related to the feasibility of theproject and the expected sales forecast mentioned earlier. The sales forecast is used byvarious departments to determine what needs to be done in order to achieve the salestarget. For this purpose, an internal audit will be beneficial as it identifies the costincurred by each department. This will take into account the availability of raw materials,current stock levels and also the number of staff required to meet the target. When salesforecasts are made, it is important to specify all the assumptions made so that in the eventof any variation from the budget values, it becomes easier to identify what went wrong


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and helps to improve future forecasts. Once the budget was prepared, it has to beapproved by the people concerned. In the present case, the LMC authorised and approvedthe budget and it was decided to periodically review the financial situation of the projectduring each LMC. Besides, a steering committee was also formed within the company tokeep a track of the expenses.

2.2) Develop budgetary control systems and compare actuals with plannedexpenditure.

The benefits of a formalised budgetary control system are:

Reflects the objectives of an organisation as a whole in financial terms. Provides indicators by which to measure efficiency for various parts of the

organisation. Reveals the extent of variation of actual results from defined objectives. Provides a guide for corrective action. Facilitates centralised control with delegated responsibility.

Companies place great emphasis on budgets as a means of managing their operation andhence a system of cost codes and cost centres are often used. Here, different types ofcosts are assigned different codes to identify the money allocated and spent for each type.For instance, all staff costs will be assigned a particular code, all IT related expenses willhave another code and different departments will have individual codes to track theindividual expenses. These can then be compared with the budget value. At Geotech, asimilar cost code system is followed as indicated in the figure below. The left mostcolumn contains the code for each department (44 for IT and 45 for NPI) and several subcodes for various activities within the department. The level of complexity used in thecoding system determines the level of detail that can be obtained from them.

Similarly, a separate code has been assigned for the KTP project that helps themanagement team to quickly retrieve all details pertaining to the project and assess its


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current financial position. Most organisations produce monthly accounts in which all ofthe financial data is recorded and shows the actual expenditure and the original budgetplan. This helps the management to perform a variance analysis to compare how much isthe deviation from the expected value (budget value). This variance can either be positive(favourable) or negative (adverse) and helps in identifying areas that need improvement.For the KTP project, a financial report is presented at each LMC that compares actualswith budget figures (Appendix A3). Although a variance analysis cannot be performedsince it is an ongoing project, the comparison helps to identify where money has been leftunspent and where money transfer from one section to the other is possible and prudent.It also helps to forecast imminent expenses that were not included in the initial budget.Hence modifications to the original budget plan are also presented. For instance, it can beseen that money meant for Associate Development has not been spent at all. Thisprompted the LMC to identify additional training requirements for the associate in orderto use the available money.

2.3) Discuss corrective actions to be taken in response to budgetary variations

The type of response to budgetary variations depends on two factors: the type of varianceobserved (favourable or adverse) and the type of cost to which the variance is related(controllable or uncontrollable). The figure below shows the type of response required foreach case.

Type of CostControllable Uncontrollable

Favourable

Type ofVariance

Adverse

In the case of a favourable variance, it is important that the management givesappropriate recognition and do whatever is necessary to keep the trend continuing. Thiscan be in the form of additional perks and bonuses to the staff involved which will help tokeep their morale high. It may also be the result of adoption of new technologies orpractices in which case, this should be continued with and replicated across variousdepartments. If, however, the variance is negative the management should strive toidentify what went wrong and where. This may be a result of faulty assumptions whenthe original budget was prepared in which case an amendment to the budget is requiredtaking into account previous observations. It is a good practice to identify any trends thatmay appear by viewing a series of monthly accounts. For instance, upon analysing theKTP financial report (Appendix A3), it was realised that over the course of the entire

Give positive feedbackEncourage or promoteGive bonusRecognition

Do nothing or find ways tomake the cost controllable

Identify responsibilityIdentify reasonsDiscuss remedial actionSet new targets, amendbudgetMonitor performance

Do nothing or find ways tomake the cost controllable


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project period, a significant amount of travel expenses will be incurred includingexpenses for conference attendance and there was a possibility that it may exceed budgetallocation. Hence it was decided to use the associate development budget for conferenceexpenses since any unused money under this cannot be utilised for other general travelpurposes. This will free up money for general travel and subsistence and also ensure ajudicious utilisation of associate development funds.

Similarly timing of the budgets is also crucial and they can be misleading if the entirepicture is not considered. Hence, certain organisations encourage maintenance of amonthly budget as well as a half yearly budget to get a longer term view of the expenses.For instance Appendix A4 shows the profit and loss account of Geotech for the month ofJuly 2009. It also shows the monthly as well as year to date (YTD) variance for variouscategories. It can be observed that marketing shows a negative variance for the YTDvalue. Upon further analysis it was realised that this was a result of increased marketingexpenditure at the beginning of the year and it was expected that as each month goes by,this variance will turn positive which will finally reflect in a positive variance at the endof the year. As a result no particular action was deemed necessary at this juncture.

In the case of uncontrollable costs, it is no use trying to blame anyone in particular sinceit is not under their influence. This can have negative repercussions such as growingresentment and frustration. All organisations try to reduce their controllable costs asmuch as possible. It is very important to clearly allocate responsibility for each cost toavoid any confusion. Budget holders have the authority to issue purchase order numbersand can reject expenses that are not required. This way they can keep a control over thecosts that come under their influence.

2.4) Identify conflicts that can occur with management control systems and howthese could be resolved or minimised.

Although management control systems are beneficial and essential for the healthyfinancial position of the organisation, it can often lead to a conflict of interests andpriorities within an organisation. Some possible scenarios and methods to resolve themare discussed below.

Conflict between short term and long term

By cutting down immediate expenses or delaying bulk payments, the short termprofitability of the company can be maintained. However, this may be contradictory tothe long term vision of the company or the expectation of its stake holders. At Geotech,the vision of the management is to be at the forefront of gas detection technologyespecially for landfill purposes. Although the company enjoys market leadership, othercompetitors are catching up with new technology devices. Hence, in spite of the currentglobal economic downturn, the management took a firm decision to continue investing inR&D for the development of laser diode technology which will pay huge dividends in thelong run. This decision was made easier due to the relatively healthy financial position ofthe company.


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Conflict between different departments

It is highly likely that the requirements of one department may contradict directly withthose of the others and these become more visible at the time of setting budgets forvarious activities. Each department manager will argue their needs are more importantand hence request for a greater share of the available resources. This can be resolved ifthe management sticks firmly to its decision. Also, it helps to make all departmentsunderstand that they are working towards a common organisational objective.

Conflict between control and flexibility

Although management controls are essential and beneficial, they can sometimes bedetrimental and act as a hindrance for speedy implementation of certain actions. Thiscould lead to lost opportunities. Strict policies and procedures may also prevent creativeideas from being developed and put to practice. Hence, it is essential to have a set ofmanagement control systems that offers sufficient flexibility so that the organisation isready to respond to changing circumstances. As an example, in the profit and lossaccount shown in Appendix A4, the effect of exchange rate fluctuations has been factoredwhile calculating monthly accounts. Depending on the observed trend, there is also aprovision to re-budget at the half year stage to reflect a more realistic scenario.

Conflict between controllable and uncontrollable costs

It is not a good practice to allocate costs to a manager’s budget over which they have nocontrol. This will lead to resentment and frustration. But at the same time, theseuncontrollable costs need to be allocated somehow. The management needs to constantlymonitor such costs without actually holding one person responsible. They should haveperiodic review meetings to discuss on how to minimise these costs, to monitor anyvariations or to make them controllable.

Conflict between following the set out rules and benefits in stepping out of thoserules

Conflict between targets

Different departments may have different targets that may sometimes contradict eachother. For instance, the sales department may have a sales target to achieve at the end ofeach year. However, if proper consideration is not given to the type of product, theoverall profit may drop despite an increase in the sales revenue. This may affect ongoingR&D activities which relied on the profit generated to speed up their activities. Hence,various departments must be made aware of the overall strategy of the organisationdepartments should synergise their operations to meet it.


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Conflict between budget plans and reality

As is the case most often, initial budget plans may need to be amended to include real lifesituations or changing scenarios. There is no point in sticking to the original budget if it isnot realistic. The management should be prepared to periodically review and amend thebudget by keeping a close watch on emerging trends and future forecasts. At Geotech,budgets are re-valued at the half year stage based on the observed trends.________________________________________________________________________Learning Outcome 3: Be able to understand the sources and availability of financeto an organisation

3.1) Identify current and potential sources of finance that support organisationalobjectives

There are various sources of finance available to support organisational objectives. Theseare:

1) Owners’ funds: The type of owners’ funds depends on the type of organisation. Forvery small businesses operating as sole traders, the owner can put some money in a bankaccount for business activities. Separate records need to be maintained for personal andbusiness transactions. The same applies for partnership companies where the owners’funds are credited to an account. For private limited companies, the owners can introducefunds into the business by buying capital shares. In return they are issued with a sharecertificate that indicates the number of shares held and the total worth. In these cases, theowners have a limited liability for the debts of the company and hence the name. Most ofthe larger businesses are run as public limited companies (PLCs). These have to complywith a greater level of regulation. Apart from the shares brought by the owners, someshares must also be available for the general public to buy.

2) Banks: Another common source of funds is the banking sector. They provide twotypes of funds, loans and overdrafts. Loans are provided for a fixed term and therepayment terms are also decided at the beginning of the term. The interest rate chargedby the bank may be fixed or variable. However, banks may require a security in return forthe loans provided. Besides the interest will have to be paid irrespective of whether thecompany does well or not. Banks may also offer an overdraft limit for a certain period oftime. As long as the balance remains within the agreed limit, the bank will pay the debitswritten by the business. Here the business only pays for the actual amount of overdraftand not for the overdraft limit which may be much higher. These may have higherinterest rates.

3) Venture Capital Companies: Venture capitalists are another potential source ofincome for larger sums of money. They are looking for a good rate of return on theirinvestment and are willing to take more risks. They are external investors who targetcompanies that have a high growth potential. But they may also introduce stricterdeadlines and demand higher targets to be achieved. For smaller amounts less than £1million, business angels may be able to provide financial assistance.


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4) Grants: Various public bodies may also be willing to provide funds to promote certainbusiness activities if it promotes their cause eg: UK research funding bodies and othercharitable institutions. The KTP project for instance is funded partly by the TechnologyStrategy Board (67%) and the rest comes from the company (33%).

5) Family and friends: These can be useful especially when setting up a new business orwhen the amount required is small. They are very flexible with regards to the terms.However, the burden of repayment falls on the entire family and can often lead todisputes.

6) Sales of assets: Companies can also sell some of their assets to meet their immediaterequirements. These could be unused machinery or adjoining land or even a subsidiarycompany.

7) Retained Profits: In the case of a profit making business, the owners can decide toeither take the profit after taxation in the form of shareholders’ dividend or return it to thebusiness as retained profit to fund further organisational activities.

In the case of Geotech, its current healthy financial position ensures that it does not needto look for external sources of funds at the moment. The business is run solely relying onthe retained profits. The owners have not put in extra money although a commitment hasbeen made to invest extra money if and when required to meet any expansion or growthstrategies. In case of a severe financial crunch, the next best option is to apply for bankloans. This is because the niche market that the company operates in ensures that it willbe able to quickly generate profits and make quick repayments.

3.2) Evaluate the distribution of finance in support of organisational activities

It is vital for a company to assess its investment options so that it gets the best rate ofreturn on the investment. Several important factors need to be considered such as:

Scale of proposed investment Pay back period Expected profits

Before committing to a particular investment, it must be thoroughly justifiable and itmust be the best use of the finite company resources. For this a thorough evaluation ofthe risks involved and the pros and cons need to be done. One common technique used ispay back period where the time required to cover the initial cost of investment isevaluated.

Geotech had initially made a similar assessment to explore the merits in investing in theKTP project. From Appendix A3, it can be seen that the company contribution was£44,570. In addition to this, the company had agreed to put in an extra £107,650 to coveradditional expenses as shown earlier in table 2. Thus the total investment by Geotech willadd up to £152,220. To calculate the pay back period, it was important to estimate the


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cost of production per unit and the expected sales and profit margin for each year. Basedon market projections, customer feedbacks and audits, these were determined as shownbelow:Methane analyser Target price: £2000Margin: 70%

Yr1 Yr2 Yr3Target sales volume: 40 80 80Contribution: £56K £112K £112K

From the above, it is clear that the by the end of year 2, a cumulative income of £!68,000would have covered the initial cost of investment. By considering the total amount ofinvestment and the 2 year payback period, the KTP project seemed an attractive andjudicious investment of the company’s resources. This also met the company’s overallvision to introduce new technology products to retain the market leadership position. Itwill also pave the way for other laser based portable instruments, investments for whichwill be considerably less since the technology has already been mastered and adopted. Allthis prompted the company to go ahead with the KTP project.

Another major area where Geotech has decided to invest for the current year is in stafftraining and related BTP courses. This was a direct result of a SWOT analysis (AppendixA5) that was performed to assess the current scenario and it emerged that significantbenefits can be reaped by imparting additional technical and non-technical skills to thestaff at various levels. As a result a significant increase in training expenses was incurredthat was not initially accounted for in the budget. This can be observed in the varianceanalysis presented in Appendix A4 where staff training shows a negative variance.However, in view of the long term benefits that can be achieved, this was considered tobe acceptable. Similarly other techniques can be employed to evaluate distribution offinances such as break-even analysis, discounted payback, accounting rate of return andcost benefit analysis.

3.4) Discuss monitoring and control of finance employed in support oforganisational activities

To monitor and control the finances employed, organisations need to adopt severalmethods. Investment appraisals as mentioned above can be used to identify the best useof these finances. Previously discussed techniques such as budgeting, purchase ordersystems such as cost codes and variance analysis are tools that can be used to monitor andcontrol expenditure. Example of a variance analysis has been presented as Appendix A4.Similarly, the use of cost codes to identify expenses incurred by each department and thelevel of detail contained in them can be assessed from the figure presented earlier undersection 2.2.


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Unit 5012 Being a Leader

Learning Outcome 1) Understand the organisation’s ethical and value-basedapproach to leadership

1.1) Evaluate the impact of the organisation’s culture and values on leadership

An organisation’s culture relates to a set of shared beliefs and values that has been agreedby the entire group and thus representing the company’s unique identity. They reflect theorganisation’s core values which are learned, re-learned and passed on to new members.These include the way people communicate with one another, how information isexchanged, the procedures and processes followed etc. Roger Harrison defined four typesof organisational culture depending on the level of centralisation and formalisation. Thisis indicated in the figure below.

High Formalisation

Low Formalisation

In a power culture, power is concentrated in the hands of a few from whom controlradiates to others. These are less formal or bureaucratic and hence enable quickerdecision making, eg: family run businesses. In a role culture, there is a definite structureand everyone is allocated clear responsibilities. This makes it highly hierarchical andhence power is derived from a person’s position, eg: government departments. A taskculture is one where separate teams are formed to address specific issues and all teamscome together to promote common goals. Power is derived from expert knowledge andoften there are multiple reporting lines which results in a rather flat hierarchy. They alsotend to have flexible working patterns. Finally, in an atomistic culture, all individuals

ROLE TASK

POWER ATOMISTIC

Low CentralisationHigh Centralisation


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think they are superior to the organisation. This is usually the case for professionalpartnerships where each person brings in a separate form of expertise, eg: GP practice.

At Geotech, the culture is highly task based. There are individual teams to look afterindividual problems. The procedures are all well defined and they are usually projectbased with review meetings held often. A flat hierarchy exists with deep interactionbetween various departments. Profit generation is given high priority and all efforts aredirected towards improving this. In the context of my KTP experience, I have found thatthe company follows a relaxed culture when it comes to personal interactions. Meetingsare held with the right level of formalities and they usually have a set agenda. Flexibleworking hours is another reflection of the relaxed culture. It is general practice to havelunch in the common area which usually opens up new topics for discussion. Staffmembers are very helpful and friendly and everyone seems to have a clear idea of theirduties and responsibilities. A lot of impetus is given to continuous improvement andR&D for better quality products and services and this aligns well with the companyvision to be in the forefront of landfill gas analysis. Similarly, staff training is also givenpriority and many members have over the years moved up the ladder of responsibility.Staff welfare is given adequate attention with frequent surveys conducted to improvegeneral working environment. Generous bonuses are also handed out to the employeesevery year as a token of appreciation for their efforts.

The existing culture in an organisation hugely impacts the leadership style. They shouldadopt a culture that is in tune with the company culture and also be able to adopt a newculture if a change is required. At Geotech, team leaders in the manufacturing area followan open culture where all issues and problems are discussed on the floor involving theentire team. This transparency allows leaders to be aware of all issues that need to betaken care of. Serious issues are then communicated to the next level of management.Directors are also encouraged to closely interact and involve with their respectivedepartment members. They hold one to one meetings with the general staff within theirdepartment on a regular basis. The new MD of the company has promised to furtherreduce barriers between various arms of the company and as an example, he has madehimself approachable by anyone at anytime with an open door policy. This is expected toimprove efficiency and increase productivity. The directors have also decided to allocatemore funds for R&D to develop new technology, despite the current economic slump.This has the unconditional support from the CEO who is keen on improving andincreasing the portfolio of products in spite of a drop in sales during the current financialyear.

1.2) Discuss how organisational specific, legal, regulatory and ethical requirementsimpact on leadership demands

Every company is required by law to follow the regulations and legislations relevant tothem. These are usually issued by the government or in some cases by a regulatory bodyresponsible for that sector. It is the duty of the directors and senior managers to ensurethat these guidelines are followed in the day to day business activities. This requires themto adopt appropriate working culture and communicate its importance to all the staff


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involved so that it is practiced by all. Some of the major legal and regulatoryrequirements that Geotech follows are:

Health and Safety Work Act (1974) which deals with safety at work and the bestpractices to be followed in case of an accident

ISO 9001:2000 for quality assurance

ATEX Directive 94/9/EC for explosion compliant

Environmental Agency regulation for landfill sites (EA) which dictates the qualityand level of measurement precision required

Companies Act 2006

Data Protection Act

These requirements hugely influence the leadership style and their working. A Health andSafety Committee headed by a senior manager is present in the company that looks intothe safety at work. They hold regular meetings to discuss the safety policy and review theexisting procedures. The results are made available on the general notice board. All staffare given appropriate H&S training and area champions have been appointed foremployees to communicate any issues. A dedicated quality control team has been setup tomonitor adherence to quality standards. A specialist software is used to report anychanges to the guidelines and also to issue NCPs (Non-Conforming Process) and requestfor changes. This is then distributed across the company and team leaders are responsibleto convey this information to their team members. Hardware design changes need to firstget ATEX approval from relevant agencies. This involves close coordination between theR&D, manufacturing and services teams. The directors keep a watch on anyenvironmental regulations that may affect organisational activities and appropriatemeasures are taken to meet them. As part of continuous improvement, staff members areencouraged to learn and come up with innovative solutions for problems they face.

There are other ethical requirements or codes that the company follows. These are laiddown by the directors and they take a lead in implementing them. These involve adequatetransparency and proper documentation of its monthly and yearly accounts, appropriateresponse to customer enquiries, prompt repayment of bills to suppliers etc. Besides,Geotech also takes a keen interest in developing a good relation with the general publicand neighbourhood. It supports many social events and raises a significant amount forcharitable purposes. They also regularly sponsor social charity events. Employees arealso informed of opportunities to enhance their personal skills and appropriate training isprovided.


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1.3) Evaluate current and emerging social concerns and expectations impacting onleadership in the organisation

Organisations cannot survive on their own without affecting the environment and peoplearound them and hence it is important for good business leaders to be able to meet currentsocial pressures and expectations and also be able to predict emerging concerns and beprepared to meet them. An effective way of doing this is to perform a PESTLE analysis.Below is one such analysis conducted in the business area of Geotech.

Political: The current political climate is not expected to change or alter companypriorities. Sufficient resources are available for the company to carry out its activities andno hindrance from the government or additional control is expected in the near future.Environmental monitoring continues to be a positive area for the government. As a resultof the Kyoto Protocol, methane can now be traded for carbon credits and hence specialfocus is given to precise and accurate low level methane measurements.

Economical: The current economic slump has affected all market sectors andenvironmental monitoring is no exception. However, due to the strong market position ofGeotech and the niche market it operates in, this effect has been less profound comparedto other market sectors. A fall in sales revenue for the current year has been accounted forin the budget and the management has allotted priority for high margin products ratherthan overall sales volume. Fresh recruitments have been put on hold for the momentimplying greater sharing of responsibility among the current staff. Economic recovery isexpected towards mid 2010.

Social: The company continues to support local events and charities and this has resultedin a greater sense of appreciation from the general public. Increased budget for stafftraining has been approved to meet staff expectations. This enhanced the company valueof investors in people. Periodic safety training and assessment is also carried out.

Technological: To consolidate the market leadership position and to stay ahead of thecompetition, it was decided to introduce new laser technology for more precisemeasurement of gases. These devices are expected to enter production by early 2011 andin view of this, steps have been initiated to try and align the laser product with theexisting product manufacturing and calibration processes. Another short term jointproject for the development of H2S sensors has also begun, to address current limitationsand difficulties in measuring them.

Legal: New regulations pertaining to instrument safety especially for N. America willcome into effect early next year. This has prompted a redesign of some of the hardwarewhich required close coordination between various departments. Concerned linemanagers and team leaders had to meet strict deadlines fixed for the implementation ofthe new designs. Adherence to H&S at work compelled the NPI director to alter thedesign of the planned new NPI wing although this resulted in a cost escalation of about£15,000.


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Environmental: The company is conscious of building its reputation as an environmentfriendly organisation and has taken a few measures in this regard. An environmentalmanagement programme has been initiated to monitor implementation and suggest bestpractices. A conscious effort is being made to reduce wastage of resources and greaterattention is given to waste disposal. Manufacturing and servicing departments have beeninstructed to identify ways of reducing wastage and this has resulted in a revamp incertain production processes. Team leaders have the additional responsibility to conductinternal audits to monitor improvements.________________________________________________________________________

Learning Outcome 2: Be able to understand leadership styles

2.1) Evaluate the relationship between management and leadership

Management and leadership are two concepts that have many features in common andhave been used interchangeably. There are also instances where one can clearlydifferentiate between the two.

Managers are expected to take charge of proceedings and monitor progress. They areassigned several responsibilities that increases with their position in the hierarchy. Theyare expected to supervise people, perform administrative functions and succeed indelivering a task. A successful manager needs to be efficient in the way he functions toachieve desired results. This involves proper planning, optimum allocation ofresponsibilities, proper and efficient utilisation of resources including time, periodicreview of progress and being flexible to incorporate changes to the original plan.

Leadership can either be a process or a position within an organisation. A good leadermust be trustworthy, approachable, respected, understanding, persuasive, confident andtechnically competent. A leader must know the characters of the team he is leading, theirindividual strengths and weakness and must have a clear vision. He must lead by exampleand be able to think and react quickly as the situation demands.

The relationship between management and leadership has many facets to it. It is possibleto be a good leader without possessing all the characteristics of a good manager. In fact aleader may sometimes find better managers than himself in his team. On the other hand,it is not easy for a manager to be a good leader without possessing any of the leadershipqualities. This is because unless a manager has the ability to develop the trust and respectof his team, he will find it difficult to persuade or motivate them and develop a positiveattitude towards the goal.

In my position as a KTP associate, I need to develop and exhibit qualities of both a leaderand a manager as the situation demands. I am responsible for my personal budget,utilisation of resources, time allocation, preparing for meetings and meeting deadlines. Adegree of self-assessment with regards to the project and its aims and objectives is alsorequired. All these are essentially managerial skills as also is the ability to plan variousactivities especially when it involves people from other departments. I need to be aware


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of the time constraints and possible delays in purchasing and machining products in themachine shop. My leadership qualities become important in situations where I need toconvince a group of people about a particular task and have them all agree to it and worktowards it. This will become more apparent as the project progresses beyonddemonstrator stage and enters the prototype and production stages. At this point I amexpected to lead a team of engineers and technicians from various departments who willbe actively involved with the laser project. I will need to be clear in ideas andcommunicate them effectively to the team and ensure they all agree with me. I will haveto give specific orders and instructions to them based on their skills and expertise andensure a smooth coordination between all. At the moment, LMC meetings offer me achance to exhibit some leadership qualities where I lead the discussion and put forwardnew ideas and proposals. To sum up, leadership is about doing the right things whereasmanagement is about doing things right. Leadership is about effectiveness whereasmanagement is about efficiency.

2.2) Evaluate leadership styles

Depending on the situation and the leadership qualities exhibited, different leadershipmodels have been developed and studied. Some of them are also applicable tomanagement styles. Four such models are discussed below.

a) McGregor’s Theory X and Theory Y

These are based on the manager’s assessment of employee motivation. According to this,managers who follow approach X assume that employees are naturally lazy and willavoid working if they can. Their only motivation to work is money or any other tangiblebenefits. To manage such employee requires:

Close supervision and control Incentive programme to motivate them Threat of punishment for non-compliance.

Managers who follow theory Y believe their employees will seek to work to the best oftheir ability given the appropriate conditions. They are assumed to be ambitious, selfmotivated and enjoy their work. They may have talents that are not fully recognised orutilised by the organisation. To manage such employees require:

Open and honest communication Minimum difference between manager and subordinate Shared decision making

In reality these two models represent two extremes of management styles and mostorganisations follow a model that is somewhere in between.


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b) Situational Leadership

According to this model developed by Paul Hersey and Ken Blanchard, differentsituations require different leadership skills and hence different leaders may emerge. Aparticular leader with a particular set of skills may not be effective in all environments.More significance was given to the person to be led rather than the leader and based onthis 4 leadership styles were developed. They are:

Directing/Telling: Here there is one way communication from the leader to the employee(follower) where the leader defines the role played by the follower and tells him what todo and how to do etc.

Coaching/Selling: Most direction is still provided by the leader but the leader also tries toget something in return from the follower by encouraging two way communication.

Supporting/Participating: Here both the leader and the follower participate in the decisionmaking process and together decide on what to do and how to do.

Delegating: Here the leader defines the final outcome expected but leaves it to thefollower to decide how to do it and when to do it.

The above model also defines when each of these are most effective. This is influencedby the skills and willingness shown by the follower. The higher the level of skill, thelesser the direction required and hence supporting or delegating will be sufficient. Thiswill have a positive effect on the follower’s mindset as it shows greater confidence intheir abilities. In a project scenario, the leadership starts off with the telling style, then toselling, moving to participating and finally delegating as shown below in the figure. It isgood practice to follow this curve as it will have the desired effect on both the followerand team leader.

Sell

Tell

Participate

Delegate


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c) Emotional Intelligence

Daniel Coleman measured emotional intelligence on the basis of four capabilities thatdealt with interpersonal and intrapersonal skills. These were self-awareness, self-management, social awareness and social skills. Based on a research conducted, sixleadership styles were identified as follows:

Style DescriptionCoercive High drive to achieve task through direct

instructions and a demand for quickcompliance

Authoritative Highly confident and acting as catalyst forchange, but also empathetic and invitingothers to share a common vision

Affiliative Strongly empathetic, build strongrelationship with people

Democratic Seeks collaboration, forges consensusPacesetting Sets high standards of performance, acts as

role model for others to followCoaching Developing others as primary driver

d) Inspirational Leadership

An inspirational leader has different dimensions which have been tabulated below:

Dimension AttributesCreating the future Visionary, single-mindedness, opportunity

awarenessEnthusing, growing and appreciating others Team builder, enabler, self belief,

adaptableClarifying values Values champion, consistent, customer

championIdeas to action Self reliance, keen learner, proactive,

knowing what works, reflective

In summary there is no single leadership style that suits all situations. It may have tochange depending on the personality of the team and the environment. At Geotech,delegation is the type of leadership followed most often. This is because all theemployees are sufficiently skilled to carry out their duties. Leaders are required only toallocate time and prioritise tasks for the members to implement. Lot of focus is also laidon employee satisfaction and certain aspects of authoritative leadership are also visible.Everyone is aware what the overall vision of the company is and what works best forthem and their efforts are directed towards this. Team leaders share an open and honestrelation with the members with minimum distinction between the superiors andsubordinates.


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2.3) Discuss why leadership styles need to be adapted in different situations

It is important for a leader to adopt different leadership styles for various situations. Thisnot only depends on the type of follower to lead but for the same follower, differentstyles maybe needed for different circumstances. For instance, an employer or a teammay have all the necessary skills to carry out a certain task. In this case delegation is theleadership style that needs to be adopted. However, if there is a drastic change in themethodology or the process, the leader needs to adopt a different approach. The leaderwill have to initially give clear cut instructions as to what is required and how it has to bedone and gradually as the follower develops the necessary skills, participation anddelegation styles can be used.

The leadership style also depends on the organisation culture or the current position ofthe organisation. It is vital for the leader to assess this and react accordingly. When thecompany is doing well, a leader should employ emotional intelligence to try and keep themorale of the team high. Proper appreciation for their efforts and allocating greaterresponsibility to them will keep their motivational levels high. Open communication andgreater involvement in decision making will enhance their level of confidence inachieving the set objectives. This inturn will deliver the organisational goals too. On theother hand, when the company is in crisis and a change in strategy is required, theleadership needs to be more inspirational and authoritative. The leader should be able toclarify what the vision is and what actions need to be taken to achieve it. He should showmotivational skills especially when duties and tasks of individual team members havechanged. It is quite natural for people to initially oppose a change and hence a leadershould be convincing and determined to bring about the necessary change. He should setthe example for others to follow and also be empathetic to their concerns.

In my KTP project this change in leadership style adopted by my supervisors is quiteevident. In the initial stages of the project, my academic supervisor provided me withclear instructions and directions on what needs to be done. As I started to develop myown skills, these began to reduce and now I am given greater freedom to decide formyself what is best. There is a greater sense of shared decision making in terms of thetype of experiments I need to conduct, the type of materials to be used and the design ofvarious components. This has also increased my self-confidence and my ability to workon my own. This is expected to further change in the future once the project moves in tothe production stage where I will assume greater leadership role in managing the project.It will eventually lead to the formation of a small team of my own within the companywhere I will be responsible in holding team meetings and defining the role played byeach individual.________________________________________________________________________

Learning Outcome 3: Be able to secure achievement of team involvement andobjectives through leadership

3.1 Develop a culture of professionalism, mutual trust, respect and support withinthe team


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It is important for a leader to develop the right environment within a team in order toachieve the target goals. A leader should essentially focus on three components such as:

Getting the task done Developing the individual Building and maintaining a team

Inadequate attention to any of the above can lead to frustration and dissatisfaction whichwill eventually lead to a negative result. As part of building and maintaining a team, aleader should strive to develop a culture of professionalism, mutual trust, respect andsupport within the team. When my KTP project enters an advanced stage where I amexpected to lead a KTP team, I intend to take necessary steps to ensure the above cultureswithin the team.Professionalism: I intend to standardise certain procedures such as reporting of resultsand raising any issues that may affect the team. These can be done online through acommon forum or a shared workspace where common issues can be discussed. Meetingdeadlines is crucial and in case it is not possible to meet them, advance notification willbe useful so that necessary adjustments can be made to the project plan. Weekly meetingsto review progress on various aspects will be a useful practice.

Mutual trust: I will encourage team members to place trust on each other and on theircommitments. This will help them to focus on their individual responsibilities and meettheir deadlines. Privacy and confidentiality will be respected at all times. In case ofproblems or issues with other team members, I will encourage them to openly discuss itwith each other or with me and try and settle the issue, keeping in view the larger interestof the team.

Respect: Team members should respect each other’s opinions and their view points. As aleader, I shall set an example for others to follow. I will encourage shared decisionmaking to promote collective responsibility. I will make sure that no particular individualis over-burdened with work. A procedure to book appointments will be encouraged sothat it does not affect the normal working schedule of any particular individual. I willensure the team gives proper appreciation and acknowledgement for the members’efforts.

Support: I will seek support from the other members as and when required and alsoprovide them the same when appropriate. All the team members are likely to be moreexperienced than I am and hence I will draw upon their experience to come up witheffective solutions. This will set an example for others to follow. When an individual isrelatively free, he or she will be encouraged to share duties of another member whosetask may have run behind schedule for various reasons. A collective sense ofresponsibility will be beneficial for proper coordination of all team activities.


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3.2 Evaluate the impact of a leader’s clear focus in leading the team in theachievement of these objectives

It is extremely important for a leader to have a clear focus on the target ahead and theobjectives of the team. According to Huszczo, one of the key components of effectiveteam building is for the leader to have a clear sense of direction. Although the teammembers might be aware of how to get a particular job done or the specific stepsinvolved, it is the leader who sets the goal and defines the objectives. This defines thevery purpose of having a team in the first place. A leader who is not certain on the goalsand the way ahead cannot be successful despite the best efforts from its members. Suchleaders also stand a chance of quickly losing respect of his team. While setting objectivesfor the team, the leader should make sure they are SMART and commensurate with theteam he has chosen. During the course of the project, it is quite possible for many minorissues to crop up and attract focus of the team. In such circumstances, the leader shouldensure that too much time is not devoted to matters that do no serve the purpose of theteam or help it in achieving the defined objectives. From the point of view of themembers, it is equally beneficial for them to know where they are heading and what theexpected outcome is. This helps them to modify and adjust their tasks accordingly.If a leader does not have a clear sense of direction, this will result in declining workingstandards, budget overspending and missing of deadlines thereby affecting team moraleand prestige.

At work, although I am in charge of my day to day activities and plan my experiments,my company supervisor ensures the project is aimed at achieving the company’sobjective. He recommends procedures and options that will serve the larger interest of thecompany in terms of time and cost for production. It is not entirely difficult to produce alaser system for methane detection. However, to make it a portable low cost device needsinnovative designs and solutions. When the project enters an advanced stage, I will beleading a KTP team and it will be my responsibility as team leader to ensure everyone inthe team is aware of what we are trying to achieve. For instance, a firmware engineer inmy team will need to know what is being achieved in the long run and hence I need tohave a clear understanding of what modifications and add-ons are likely in the future.This will help the firmware engineer to incorporate the required flexibility in the softwarecodes written into the microprocessor and will inturn save future time and effort for theteam and the company.

3.3 Evaluate how the leader supports and develops understanding of theorganisation’s direction

As mentioned above it is important for a leader to have a clear understanding of the goalsand aims of the team. It is also equally important for a leader to communicate thiseffectively to the team members. This can be done in many ways such as:

Holding one-to one meetingsTeam meetingsOrganising presentations and seminars


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Writing reports and emailsPosters

In the NPI section at Geotech, my director is the leader of the entire team. He organisesteam meetings every fortnight to discuss the progress on various projects. This isparticularly useful to exchange different views since many members are involved in morethan one project. Hence it offers a common platform for all to communicate the presentstatus of their work to a wider audience. At times this leads to a fruitful discussion wheremembers who are not involved with a particular project may come up with a usefulcomment or two. The meetings are recorded and the minutes are sent around. Similarly,the director also holds one to one meetings with each member to discuss in detail theirprogress and related issues. This offers a chance to review the direction of a particularindividual’s work and helps to prioritise his various activities. I have also been asked tomake company wide talks and seminars to present my findings. This way people who arelikely to be part of the future KTP team can keep track of the developments and assesstheir likely role in future. Posters and project charts are very informative and portray theactual current state of a particular project. This helps to synergise the tasks and prioritisethem according to deadlines.

3.4 Discuss how leadership styles are adapted to meet changing needs, and to enableteam development and commitment

The style of leadership changes depending on the situation and the type of people to beled. This gives rise to situational leadership which has been discussed previously. Aleader may have to adopt different styles to suit the need of the hour. For instance, abeginner in the team will require closer supervision and will be need to be told exactlywhat needs to be done and how. However, for an experience member, mere delegation ofduties will be sufficient. Also, the leadership style may vary for the same individualdepending on the task at hand. If the team is adopting a totally new operationalprocedure, even experience members will need proper guidance and support to help themunderstand the various changes. When the morale of the team is low, the leader will haveto adopt a more inspirational leadership style and set an example for others to follow.Improving the motivation levels is also equally important. The needs of each individualand the team will have to be addressed to get the best out of them. This will increase theircommitment levels and ensure success of the team. More on this has been dealt withunder section 2.3 above.________________________________________________________________________

Conclusion

In view of the above, I hope this report will provide you with an understanding of thelevel of training I have been imparted as part of my KTP programme and convince you ofthe knowledge and skills gained thereof which could be directly employed towards asuccessful completion of my KTP project and in achieving the organisation’s objectivesas a whole.


Appendix A1


Appendix A2

KTP BUDGET

Directly Incurred costs KTP Partnership Budget, £a) Associate Employment Costs 54,000b) Associate Development 3.938c) Travel and SubsistenceAcademic to company 40 times/yearAssociate to universityConference travelAttendance to national meeting on gassensingTotal

3,816430950

1,0006,196

d) ConsumablesLaptops and general softwareInstrumentation software licenseLABVIEWBooksTotal

1,550

1,4503753,375

Directly Allocated CostsKnowledge Base Supervisor 23,327Indirect CostsAdditional Associate Support 44,226Total 135,062


Appendix A3

FINANCIAL STATEMENT for period 14 October 2008 - 28 February 2009

KTP Prog. No. KTP006825 University ref. no E1520N/V Date 27-Feb-09

Company Geotechnical Instruments Ltd AssociatesAwarded 1 Period 14/10/08-13/1/11

University Cranfield University In Post 1 Grant Value £90,492

Department School of Engineering Former 0 Contribution 67%

BUDGET EXPENDITURE FORECAST PROJECTED TOTALS

(Approved by LMC)

Expenditure Headings To previous Since previous To date commitment Accrued costs Planned spend Total (Over)/

statement statement as proportion Available

A B C B+C=D of total E F D+E+F=G A-G=H

£ £ £ £ £ £ £ £

a. Associate Empoyment Costs 54,000 £1,252 £8,792 £10,044 £65,556 £75,600 -£21,600

b. Associate Development 3,938 £0 £0 £3,938 £3,938 £0

c. Travel & subsistence 6,196 £1,137 £1,137 20% £100 £4,959 £6,196 £0

d. Consumables 3,375 £790 £103 £893 ~100% £2,400 £82 £3,375 £0

e. KB Supervisor 23,327 £432 £3,024 £3,456 £19,871 £23,327 £0

f. Associate Estate Costs 0 £0 £0 £0

g. Mentoring Support 0 £0 £0 £0

h. Additional Associate Support 44,226 £819 £5,733 £6,552 £37,674 £44,226 £0

j. Total £135,062 £3,292 £18,789 £22,082 £2,500 £132,080 £156,662 -£21,600

Income Headings

k. Grant £90,492 £90,492

l. Company contribution £44,570 £44,570

m. Associate top up £21,600

n. Total £156,662 £0 £135,062

Effort measured in associate months 27 0.5 4.0 4.5 22% 0 0 4.5 22.5


Appendix A4


Appendix A5

Documents

DIP20 Assignment 4 Submission 1 Arun Kannath