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Training Report on
Workshops conducted
for WASC
HRM, Financial Management, Procurement Management,
Monitoring & Evaluation
Developed by:
1. Mr. Hussain Saqib, Financial Management Expert
2. Brig. Uzair Ahmad, Procurement Management Expert
3. Dr. Attiq-ur-Rehman, M&E Expert
4. Syed Hussain Haider, HRM Expert
ASP RSPN,
Islamabad
2
Contents
ACRONYMS .............................................................................................................................................. 3
TRAINING REPORT ...................................................................................................................................... 5
Background of the Project ........................................................................................................................... 5
Introduction to WAPDA Administrative Staff College ................................................................................... 6
Vision of WASC ........................................................................................................................................ 6
Training Objectives .................................................................................................................................. 6
Training Conducted by ASP-RSPN Consultants for WASC / WAPDA .......................................................... 6
Training Report on Financial Management Training Modules at WASC and TOT for 48th SMC at WASC,
Islamabad ................................................................................................................................................... 7
Training Report on Human Resource Management Workshop for 47th Cadre SMC at WAPDA
Administrative Staff College, Islamabad....................................................................................................... 9
Training Report on Procurement Management to 93rd MMC at WAPDA Administrative Staff College,
Islamabad ................................................................................................................................................. 11
Training Report on Monitoring & Evaluation 93rd MMC, WAPDA Administrative Staff College, Islamabad . 13
List of Participants in MMC Workshops .................................................................................................... 14
List of Participants in SMC Workshops ..................................................................................................... 15
List of Participants in SMC Workshops ..................................................................................................... 16
Presentation on Procurement Management ................................................................................................ 17
Presentation on Financial Management...................................................................................................... 35
Presentation on Human Resource Management ......................................................................................... 62
Presentation on Monitoring and Evaluation ............................................................................................. 102
Group Photo of Human Resource Management ....................................................................................... 122
Class Room Photo of Human Resource Management Workshop ............................................................. 123
Class Room Photos of Monitoring and Evaluation Workshop .................................................................. 124
Group Photo of Procurement Management .............................................................................................. 125
3
ACRONYMS
AEDB Alternative Energy Development Board
AJK Azad Jammu Kashmir
ASP Assessment Strengthening Program
BER Baseline Evaluation Report
CBI Capacity Building Initiative
CBP Capacity Building Program
DA Daily Allowance
DISCO Distribution Companies
ERP Enterprise Resource Planning
FGD Focus Group Discussion
FM Financial Management
GENCO Generation Companies
GEPCO Gujranwala Electric Power Company
GRP Group Research Project
HESCO Hyderabad Electric Supply Company
HRM Human Resource Management
IESCO Islamabad Electric Supply Company
IRP Individual Research Project
JMC Junior Management Course
LESCO Lahore Electric Supply Company
LNA Learning Need Analysis
LUMS Lahore University of Management Sciences
MCQ Multiple Choice Questions
MEPCO Multan Electric Supply Company
MMC Middle Management Course
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NEPRA National Electric Power Regulatory Authority
NIPA National Institute of Public Administration
NTDC National Transmission & Dispatch Company
PC Personal Computer
PESCO Peshawar Electric Supply Company
PDER Preliminary Draft Evaluation Report
PEPCO Pakistan Electric Power Company
PEPRA Public Procurement Regulatory Authority
PM Procurement Management
PPIB Private Power Infrastructure Board
PPRA Public Procurement Regulatory Authority
PSTI Public Sector Training Institutions
RSPN Rural Support Program Network
SMC Senior Management Course
T&D Training & Development
TESCO Tribal Electric Supply Company
TA Traveling Allowance
TOR Terms of Reference
UPS Uninterrupted Power Supply
WAPDA Water & Power Development Authority
WASC WAPDA Administrative Staff College
5
TRAINING REPORT
Background of the Project
Pakistan‟s local institutions, both in the public and private sector, face institutional capacity
issues and overall weaknesses in their management systems. The degree of weakness varies
across different individual organizations. However, weak institutional capacity has been a
predominant factor, thereby leading to a higher degree of risk, inadequacies in outcomes and
hampered development, despite the provision of international aid.
Assessment and Strengthening Program (ASP) – Rural Support Program Network‟s (RSPN)
capacity building role has been mandated through United States Agency for International
Development (USAID). USAID aims to implement a substantial portion of its development
portfolio through public sector partner organizations and ASP is designed to help utilize this aid
effectively by helping strengthen various financial, human resource, procurement, internal
control and absorptive capacity system in these organizations.
The current energy deficiencies within Pakistan, pose huge challenges to the country‟s growth
and economic prosperity. Given Pakistan‟s substantial hydro electrical potential there is a dire
need to help strengthen organizations such as WAPDA, which can play a tremendous role to help
improve energy deficiency. Furthermore given the fact that currently and in the past, USAID has
been WAPDA‟s active development partner, helping build WAPDA‟s capacity will further
cement this relationship. After various interactions and feedback WAPDA Administrative Staff
College (WASC) has been identified as a suitable area for intervention in capacity building
whereby the WAPDA Associated Companies become equipped with globally attuned
professional Human Resource.
Public sector employees require a continuous infusion of new skills, tools and methods in the existing public service delivery mechanism to make them more response driven to public needs.
Public sector employees not only provide key input in policy formulation but also are also
responsible for implementing such policies. Given this extraordinary role in policy formulation
and implementation, training and capacity development of public officials becomes critical and
PSTIs owe the responsibility to address emerging challenges by continuously reviewing, revising
and improving their training programs. Further to this, impact assessment of these programs in
terms of outcomes and outputs is also very important for improving the design, content and
scope of trainings.
WASC being an important PSTI plays an important role in management training and capacity
development of WAPDA‟s staff and is integral to its human resource management system.
However WASC is currently facing problems in effective service delivery due to weaknesses in
its training development, design and delivery system and lack of capacity development of its
core staff members. ASP aims to fill the existing institutional and staff related capacity gaps and
transform WASC into an important PSTI that not only helps build the capacity of WAPDA‟s
staff but that of officials related to the energy sector in general and its further utilization and
efficacy in the WAPDA associated companies.
6
Introduction to WAPDA Administrative Staff College
Purpose / Mission Statement of WAPDA Administrative Staff College
“To intensify the leadership quality of both “individual” and “client” organizations through
interactive learning models that immerse managers into a transformational experience which
fosters professional, intellectual and personal development. This is achieved through presenting
programs that challenge executives to grow as leaders, to shape powerful ideas into decisive
action-plans and to think and behave differently in a challenging business world”.
Vision of WASC
“To provide state of the art learning environment for nation building activities with
organizational success through enhanced performance skills.
To be acknowledged as the nations‟ best in the field, to eventually also earn unaffiliated (self-
recognized) status of university at masters level”
Training Objectives
There are two main objectives of the training courses held at WASC. One is to enhance the
presentation skills of the participants and other is to inculcate latest professional / management
knowledge through lectures by in house / visiting faculty.
Another important objective of the trainings is to prepare the participants for practical work to
contribute positively in solving the current confronting water and power issues of WAPDA /
PEPCO. In order to achieve this objective capacity building is conducted at all levels of training.
Currently WASC is managing following training courses for their staff: -
- Senior Management Courses - Middle Management Courses
- Junior Management Courses
- Engineering Management Post Graduate Certificate
Nearly 25 years ago, Management Courses for Senior, Middle & Junior levels were prepared
with the technical assistance of USAID training program, in consonance with the management
requirements of WAPDA. These courses went through certain modifications keeping in view, the
changing scenario and innovation of modern management techniques. At present, WASC is
linked with leading management and social science institutes of Pakistan. Suggestions received
from stakeholders i.e. PEPCO, DISCOs & WAPDA are given due consideration and
improvements are incorporated in the WASC syllabus.
WASC has 13 permanent and 10 visiting faculty members having 10-30 years field as well as
training experience. During the last five years WASC has conducted more than 97 trainings in
which approximately 2600 staff members have been trained.
Training Conducted by ASP-RSPN Consultants for WASC / WAPDA
After the approval of revised curriculum of HRM, Procurement Management, Financial Management and
M &E, the consultants executed customized trainings according to the revised curriculum at WASC for the
senior officers of Wapda and its associated companies. The trainings were conducted for 3 different
batches of SMC and MMC. The individual reports of the consultant are enclosed.
7
Training Report on Financial Management Training Modules at WASC and
TOT for 48th SMC at WASC, Islamabad
By: Mr. Hussain Saqib
As per contract deliverables, the consultants are required to deliver training modules
developed for various courses at WAPDA Administrative Staff College (WASC)
themselves in such a way that the in-house faculty can independently deliver these
modules subsequently. In line with this requirement, all the modules developed for
SMC were delivered to on-going course from 29 Dec to 31 Dec, 2014. Following
modules were delivered:
a) Corporate Environment
b) Understanding Financial Information
c) Business Planning and the Budget
d) Using financial tools for making better decisions
e) Pricing decisions and Power sector Regulatory Framework
Modules at (b) and (e) were proposed to be delivered by the experts through
extension lecture. Time allotted to Modules (a), (b) and (e) was two hours each and
time for each module at (c) and (d) was 4 hours. Proper exercises and case studies
were developed and included in Trainers’ Manual.
The modules were developed for general and specific learning objectives in order to
enable the participants to:
Understand the corporate environment including corporate governance,
company structure, objectives and accountability mechanism,
Successfully depart from legacy system of accounting and finance and
understand the impact of their day-to-day decisions of the profitability of their
respective entities,
Understand their role to assist management take decisions regarding financial
planning, financing and acquisition of assets,
Understand the role of Power sector regulator, the financial components of
electricity tariff and the guidelines for tariff-setting issued by the government,
and
Understand the system of taxation in Pakistan and the obligations of corporate
entities regarding various taxes.
8
The following methodology was proposed to be adopted for module delivery:
Pre-training methodology was restricted to course design where a wide range
of top-level executives were consulted.
During-training methodology is class-room lectures followed by discussions,
lectures by eminent expert in specialized areas and case studies. The contents
were to be delivered in an interactive format to engage the trainees, use of
multi-media presentations and development of training manuals.
Post training methodology, for improvement in the content and delivery,
includes evaluation by trainees themselves and the end-users.
The overall report can be summed up as successful and effective conduct of training
as acknowledged by the participants and WASC management and faculty. Following
is the detailed feedback:
a) GM (Training) at WAPDA House had informed to have allocated three days
slot for SMC course. The slot was originally allotted to Member (Finance) for
the legacy course. However, the consultant was requested to deliver the newly
developed course modules in this time-frame.
b) It was originally proposed that a part of Module (b) and whole of Module (e)
should be delivered by the experts in the relevant field. The consultant was
informed that he will have to deliver these modules himself because of sudden
allocation of training slot for the new course. The modules were successfully
delivered.
c) The course duration originally proposed seemed adequate.
d) The course modules in this format and with these learning objectives were
delivered for the first time. Informal feedback indicated that the modules were
relevant, interesting and useful for the target audience.
e) General and specific learning objectives were achieved more effectively than
intended.
f) Exercises and case studies engaged the participants fully in the training.
g) In the light of queries and questions, the Manual developed is being further
updated by the consultant voluntarily though it’s not a deliverable.
9
Training Report on Human Resource Management Workshop for 47th
Cadre SMC at WAPDA Administrative Staff College, Islamabad.
By: Syed Hussain Haider
Human Resource Management Training was scheduled for 47th SMC on 8-9 Sep,
2014. Coordination was made with Course Director Mr. Anwar for the subject
training 2 weeks prior. Accordingly, on 8th Sep 2014, after initial an session with
Principal/Chief Engineer, WASC, Mr. Riaz Hussain and Mr. Muhammad Yusaf Aziz
DG (Training), Mr. Anwar led the resource person to the class and introduced to all
the participants.
The faculty of WASE and Principal WASC, remained in class throughout the various
sessions. First session commenced at 10:00 hrs and it continued till 11:15 hrs.
Following were covered in first session:-
1. Personal introduction
2. Class introduction
3. Detailed Overview of HRM and its elements.
The second session commenced at 11:45 hrs. DG training, Mr. Yousaf, accompanied
me to the class. In this session, following were covered:-
1. Strategic Role of HRM
2. Model of SHRM
3. Changing Roles of HRM Mangers
4. Ulrich Model
5. Knowledge Based Economy and Learning Organizations
6. WPADA and its new role in the context of HRM
The class comprised 25 SMC participants. It was observed that class was having a
basic knowledge of HRM. The class showed a lot of interest, which was visible from
their constant questioning throughout the session. Two additional hours were taken
to complete the discussion post lunch.
In the evening, the resource person spent another 3 hours informally, addressing the
questions related to HRM and the real life issues of WAPDA and its associated
companies.
10
On the second day the workshop commenced at 9am and continued till 1:30 pm. The
topic covered were as follows:
1. HRM and Leadership Development
2. Performance Management
3. Improving Performance through Empowerment, Team work and
Communication
4. Importance of Capacity Building & Training for Wapda associated companies
5. Case Study on Training and Development – Developing a holistic training
Strategy
During and after lunch an informal Q & A session continued for over 2 additional
hours. Subsequently an HRM multiple choice paper was also developed and
provided to WASC for the SMC exam.
It was the considered opinion of all the concerned stakeholders that two days are
very less time to complete the training of Human Resource Management. Therefore,
three days would be sufficient in future to complete the training of Human Resource
management. The training ended on a note of thanks. The Principal presented a letter
of thanks to the resource person in this context and also discussed about the context
of the presentations. List of students and photos are attached with the report.
11
Training Report on Procurement Management to 93rd MMC at WAPDA
Administrative Staff College, Islamabad
By: Ozair Ahmed
Procurement Management Training was scheduled to Sr#93 MMC on 22nd January,
2015. Coordination was made with Course Director Mr. Anwar for the subject
training a day prior. Accordingly, on 22nd January 2015, after initial session with
Principal/Chief Engineer, Mr. Shah Mulk, and GM Training Headquarter WAPDA
Lahore, Mr. Anwar led the resource person to the class and introduced him.
Mr. Hassaan, the Deputy Course Director, remained in class throughout the session.
First session commenced at 10:00 hrs and it continued till 11:15 hrs. Following were
covered in first session:-
4. Personal introduction
5. Class introduction
6. Difference between procurement and purchasing
7. Essentials of PPR(Public Procurement Rules)
The second session commenced at 11:45 hrs. DG training, Mr. Yousaf, accompanied
the resource person to the class. In this session, following were covered:-
7. Detailed process of Procurement Cycle
8. Understanding the ethics of procurement code of conduct
9. Gaps in procurement
10. Discussion of case study and group work
11. A brief introduction of Draft E-strategy for procurement 2014
The class comprised 24 students including 2 female officers. It was observed that
class was having a basic knowledge of procurement. The class showed a lot of
interest, which was visible from their constant questioning throughout the session.
An additional hour was taken to complete the discussion. The session was concluded
at 14:05 hrs instead of 13:00 hrs.
Mr. Ozair Ahmed and the participants were of the view that one day is very less time
to complete the training of procurement management. Therefore, two days will be
sufficient in future to complete training of procurement management, if possible. The
12
training ended on a note of thanks. The principal presented a letter of thanks to the
resource person in this regard.
Copy of presentation attached with a group photo, which was taken at the end of the
session.
13
Training Report on Monitoring & Evaluation 93rd MMC, WAPDA
Administrative Staff College, Islamabad
By: Atiqur Rehman
Training session started at 9.45 am, today (23 January, 2015). The Day Course
Coordinator introduced the resource person in the class. There were 24 participants
available in the training room. First session lasted for about 90 m.
During initial interaction with the participants, it was realized that many of them
were not much familiar with even basic concept of M&E, hence, the session began
with basic concepts, then gradually leading to advanced concepts, tools, techniques
and application of M&E.
During first session following themes were covered:
Concepts of M&E
Need for M&E
Difference between monitoring and evaluation
M&E system of Government of Pakistan
o Positioning of M&E in generic project cycle
o PC-III proforma;
o PC-IV proforma; and
o PC-V proforma
Framework of M&E
After a break of about 20 minutes, second session commenced at 11.35. During
second session following themes were covered:
Inputs, outputs, outcomes and impact indicators
Earned Value Analysis (EVA)
Interpreting values of CV, SV, CPI and SPI
Use of M&E data in decision making
In the second session, three exercises (relating to EVA) were also introduced in the
class. The session concluded at 1.00 pm, just half an hour before the jumma prayer.
On overall basis, the both sessions went very well. The participants actively
participated in the discussions and the exercises. However, they all realized that time
available for the M&E was inadequate.
14
List of Participants in MMC Workshops
LIST
Sr.
No.
Name Designation
01 Mr.Mehar Muhammad
Yousaf Khan Sr.Engineer, PEPCO
02 Mr. Khalid Javed Khan Sr.Engineer, Mepco
03 Mr. Farooq Rashid Sr.Engineer, Hesco
04 Mr. Muhammad Akhtar
Qureshi Sr.Engineer, Hesco
05 Mr. Muhammad Umer Lodhi Sr.Engineer, Mepco
06 Mr. Mehood ul Hassan Qamar Dy. Director Computer Fesco
07 Mr. Muhammad Fiaz Awan Dy. Director Computer Pepco
08 Mr. Muhammad Naeem Ullah Sr.Engineer,Qesco
09 Mr. Tariq Mehmood Dy Manager costing Pepco
10 Malik Jamil Ahmad Addl Se(Civil) GSO NTDC Islamabad
11 Raja Tariq Nawaz Khan Addl Se(Civil) satpara Dam
12 Mr. Muhammad Azam Joya Addl Se(Civil) Wapda House
13 Mr.Safdar Ali Khan Addl Se(Civil) CDO
14 Dr. Abida Mumtaz Lady Sr. Medical Officer Lahore
15 Dr. Farhat Hussain Shah Sr. Medical Officer Rwalpindi
16 Mr. Malieha Aftab Dy.Director PR Wapda House
17 Mr. Muhammad Hassan Addl Se(Electrical) Gazi bortha
18 Mr. Muhammad Khalid Addl Se(Electrical) Gazi bortha
19 Munrwar Hussain Abbasi Xen NTDC
20 Mr. Muhammad Hayat Director Electricity Azad Kashmir
21 Mr. Muhammad Rafique
Rana Addl Manager CS Fesco
22 Mr. Abdul Qavi Sheikh Xen NTDC
23 Mr. Gul Munir Surahio Xen Hesco
24 Mr. Ashfaq Ahmad Sr.Engineer,Fesco
15
List of Participants in SMC Workshops
16
List of Participants in SMC Workshops
17
Presentation on Procurement Management
18
Slide 1
PROCUREMENT MANAGEMENT
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Slide 2
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Slide 3
What is procurement and purchasing?
Essentials of PPR
Procurement cycle
Understanding the Procurement Code of Conduct
Gaps in procurement
3
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Slide 4
4
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Slide 5 “Procurement” is the overarching function that describes the
activities and processes to acquire goods and services.
Importantly, and distinct from “purchasing”, procurement
involves the activities involved in establishing fundamental
requirements, sourcing activities such as market research and
vendor evaluation and negotiation of contracts. It can also include
the purchasing activities required to order and receive goods.
“Purchasing” refers to the process of ordering and receiving
goods and services. It is a subset of the wider procurement
process. Generally, purchasing refers to the process involved in
ordering goods such as request, approval, creation of a purchase
order record (a Purchase Order or P.O.) and the receipting of
goods.5
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Slide 6 The process of procurement is often part of
a company's strategy because the ability to purchase
certain materials will determine if operations will continue.
A business will not be able to survive if it's price of procurement
is more than the profit it makes on selling the actual product.
6
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Slide 7
ESSENTIALS OF
PUBLIC PROCUREMENT
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Slide 8 Essentials of Public Procurement Rules
Public Procurement Regulatory Authority Ordnance 2002.
Public Procurement Rules 1/2004 amended vide Cabinet Division
in year 06, 08, 09, 10 & 11.
General Provisions
Definitions
Emergency.
Lowest evaluated bid.
Repeat orders.
Value for money.
Scope and Applicability
Proc Agency of Fed Govt.
Within or outside Pak. 8
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Slide 9 Essentials of Public Procurement Rules
Principles of Procurement
Fair and transparent.
Value for money.
Efficient and economic.
Language
Integrity Pact
Specifications
Generic.
Shall not favor or put others at disadvantage. 9
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Slide 10 Essentials of Public Procurement Rules
Advertisement
Rs .1 M to Rs 2 M (PPRA website).
Print media optional.
Rs .5 M amended in 2006 as lowest financial limit for ad on
authority website (rule 42 clause b) subject to approval of
respective board of autonomous body.
15 and 30 days.
No time limit.
Exceptions in ad. 10
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Slide 11 Essentials of Public Procurement Rules
Pre-qualification (Rule-15)
How to determine price of pre-qualification documents?
Communication with pre-qualified and those who are not
qualified.
Communication on having credible reasons for or prima
facie evidence whether pre-qualified or not qualified.
Disqualification at any stage (Rule 17).
Blacklisting after adequate opportunity of being heard
(Rule 18). 11
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Slide 12 Essentials of Public Procurement Rules
Bid Security (Rule-25). Not exceeding 5% of the bid price.
Bid Validity (Rule-26). As agreed. Extension not more than of
original period.
Rejection of Bid (Rule-33). Upon request, grounds for rejection
be communicated but not required to justify those grounds.
Negotiations. With lowest bidder not allowed (Rule 40). Rule
being considered for amendment.
Single Stage – One / Two Envelope Procedures.
First Stage and Second Stage. Complex contracting.
Two Stage Two Envelope Bidding. Alternate technical
proposals are possible. 12
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Slide 13 Essentials of Public Procurement Rules
Performance Guarantee (Rule-39). 10% of the contract
amount.
Direct Contracting. Not available from alternate source,
OEM. Not more than three years. 15% repeat orders.
Negotiated Tendering. Dev / research projects etc. Reasons
to be recorded.
On Account Payments. 30 days.
Closing of Contract
Delivery Certificate.
Taking Over Certificate.
Defect Liability Certificate.
Maintenance Period.
Unsettled Claims. 13
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Slide 14 Essentials of Public Procurement Rules
Record of Procurement Proceedings. Minimum 5 years.
Public Access and Transparency.
Redress of Grievances by the Procuring Agency
Not later than 15 days after the announcement of bid
evaluation.
Committee investigation time 15 days.
Arbitration
Method of arbitration should be provided in the contract.
Should not in consistence with the laws of Pakistan.
14
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Slide 15
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Slide 16
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Slide 17
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Slide 18 Planning
18
Ideally, the beginning should be with the preparation of the
specifications (for goods and works) and terms of reference (for
services). This is really the beginning of the process and should
be calculated in such a manner that the completion of this stage
can be determined.
The preparation of specifications and terms of reference is crucial
and sometimes presents a bottleneck because only someone with
experience can ideally estimate the time it will take to prepare the
specifications or terms of reference of a particular requirement
due to its complexity and uniqueness.
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Slide 19 Planning
19
This is important because if this period is not calculated correctly
the whole plan can be thrown off. So carefully calculate this
period so that it encompasses the commencement and completion
of the specifications and terms of reference.
We know that very seldom are plans carried out strictly according
to what was foreseen and procurement plans are no exception.
This is primarily because when planning we are actually guessing
how much time things will take based on past experience and
given that there are uncertainties, any missed milestones can result
in delays in the plan.
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Slide 20
20
It’s important to keep delays in the execution of the procurement
plan to a minimum, because such delays can have an impact on
contract award and completion, which directly affects service
delivery. That’s why the periodic update of procurement plans
cannot be overstated.
Specification catalogue help in generating the demand / counter
check corrections where required. Therefore, the uniformity
prevails all over. It should be regularly updated with lead time
from demand to receipt of store.
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Slide 21
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Placement of approximate budget against a project is essential for
procurement that’s why a word AFE (Approval for Expenditures)
is included in procurement planning.
For procurement against major / mega projects the planning has to
be at least a year ahead of actual procurement
Planning
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Slide 22
Procurement
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Slide 23 Sourcing
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A procuring agency prior to the floating of tenders, invitation to
proposals or offers in procurement proceedings, may engage in
pre-qualification of bidders in case of services, civil works,
turnkey projects and in case of procurement of expensive and
technically complex equipment to ensure that only technically and
financially capable firms having adequate managerial capability
are invited to submit bids.
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Slide 24 Sourcing
24
A procuring agency while engaging in pre-qualification may take
into consideration the following factors, namely:-
Relevant experience and past performance.
Capabilities with respect to personnel, equipment, and plant.
Financial position.
Appropriate managerial capability.
Any other factor that a procuring agency may deem relevant,
not inconsistent with these rules.
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Slide 25 Sourcing
25
For pre-qualification of mega projects, elaborate criteria
has been set by PEC as well as various donors agencies.
One such example is of sample document formulized by
World Bank. The document comprised of two parts.
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Slide 26 Sourcing
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PART 1 – PREQUALIFICATION PROCEDURES
Section I. Instructions to Applicants (ITA). This section
specifies the procedures to be followed by Applicants in the
preparation and submission of their Applications for Prequalification
(AFPs). Information is also provided on evaluation of AFPs.
Section II. Prequalification Data Sheet (PDS). This section
consists of provisions that are specific to each prequalification, and
supplements the information or requirements included in Section I,
Instructions to Applicants.
Section III. Qualification Criteria and Requirements. This
section contains the methods, criteria, and requirements to be used to
determine how Applicants shall be prequalified and later invited to
bid.
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Slide 27 Sourcing
27
Section IV. Application Forms. This section contains the forms
for the Application Submission Form and all the forms required to be
submitted with the Application.
Section V. Eligible Countries. This section states the country
eligibility policy and provides lists of ineligible countries.
PART 2. SERVICE REQUIREMENTS
Section VI. Scope of Services. This section includes a summary
description of the terms of reference of the services that are the
subject of this prequalification, as well as a summary description,
technical specifications and drawings of the system for which the
management services are being sought.
Annex: Sample Format of Invitation for Prequalification
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Slide 28 Sourcing
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Procurement Methods
Open Competitive Bidding (National and International). It should
be adopted as principal bidding method. The conditions between
national / international bidding do not change except more time is
required for international bidding.
Restricted or Limited Bidding. This method is adopted due in
special circumstances when time for the procurement is compressed.
Single Source / Propriety / Direct Contracting. It is only adopted
when only one supplier has the exclusive right to the manufacture of the
goods, carryout the work or performs the services to be procured and no
suitable alternative is available.
Request for Quotations (RFQ) / Shopping. This is also known as
“shopping” and is based on comparing price quotations obtained from
several suppliers, usually at least three, to ensure competitive prices.
Shopping method is appropriate for procuring readily available off-the-
shelf goods or standard specification commodities that are small in
value.
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Slide 29 Sourcing
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Methods of Selection and Employing Consultants. The procurement
of consultant services is a specialized form of procurement requiring
bidding procedures and documents which are very different to those for
standard goods and works. Method of Procurement of Consultancy
Services depends upon nature, size and complexity of works, goods or
other tasks for which Services are required. Following common methods
should be used considering quality, time and other aspects:-
Quality and Cost Based Selection (QCBS)
Quality Base Selection (QBS)
Fixed Budget Selection (FBS)
Least Cost Selection (LCS)
Single Source Selection
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Slide 30
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Slide 31 Tendering
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Company / firm name with logo if available
Tender description
Tender number
Bidding procedure
Percentage of earnest money
Tender collection start date
Tender collection end date
Tender submission date and time
Technical bid date / opening time
Commercial bid date / time to technically qualified bidder only
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Slide 32 Tendering
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Tender fee in form of PO / DD
Various documents required including taxation papers along with
the address and time to be deposited
Proof regarding past experience of similar works and financial
strength to accomplish the assigned task
Exact location to drop the tender
Additional notes if required
Minimum 15 days for local and 30 days for international tender
Depending upon the quantum of project it should have print /
electronic wide publicity
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Slide 33
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Slide 34
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Slide 35 Bid Evaluation
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Bid Opening Record
Bid Validity
Verification
Eligibility
Bid Security
Completeness of Bid
Major and Minor deviations
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Slide 36
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Slide 37 Contract Award
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Contract review is an essential step in the contracting process. It
provides for independent written advice on the acceptability of the
procurement process undertaken and the proposed commitment of
funds by the procurement unit or officer with the appropriate
delegated authority, through contracts or purchase orders
(awarding authority).
Award is the formal decision and approval to establish a contract,
e.g. services contract or purchase order, or an LTA, with a
successful supplier, based on independent review of the
procurement process within the limits of awarding authority. The
award phase marks the:-
• Successful conclusion of the procurement process
• Starting point for contract finalization and execution
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Slide 38
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Slide 39
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Slide 40 Contract Management
40
Contract Management is a process that enables both parties (the
Service and the Supplier/Contractor) to ensure that a contract fully
meets their respective obligations as efficiently and effectively as
possible, in order to deliver the business and operational
objectives required from the contract as well as providing value
for money.
A contract is a legally binding agreement between two parties, it
can be as simple as buying something from a shop – you place the
order and the shop provides the goods, or it can become
progressively more complex. Essentially the two sides to the
agreement are the offer (returned tender) and the acceptance
(preferred supplier’s submission).
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Slide 41 Contract Management
41
There are many post-contract issues that need to be dealt with,
monitored and resolved before the contract reaches its conclusion
including:-
Contract effectiveness.
Delivery and inspections of goods
Payments to the consultant, supplier or contractor.
Performance monitoring for services and works.
Contractual disputes.
Delays in performance.
Claims for damages.
Installation and commissioning of equipment.
Acceptance of deliverables.
Takeover of construction works.
Contract closure.
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Slide 42
Understanding the
Procurement Code
of Conduct
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Slide 43 Understanding the Procurement Code of Conduct
43
Revealing confidential or “inside information” either directly or
indirectly to any bidder or prospective bidder.
Discussing a procurement with any bidder or prospective bidder
outside the official rules and procedures for conducting
procurements.
Favoring or discriminating against any bidder or prospective
bidder in the drafting of technical specifications or standards or
the evaluation of bids.
Destroying, damaging, hiding, removing, or improperly changing
any official procurement document.
Accepting or requesting money, travel, meals, entertainment,
gifts, favors, discounts or anything of material value from bidders
or prospective bidders.
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Slide 44 Understanding the Procurement Code of Conduct
44
Discussing or accepting future employment with a bidder or
prospective bidder.
Requesting any other public servant or government official
representing the Company in procurement to violate the public
procurement rules or procedures.
Ignoring illegal or unethical activity by bidders or prospective
bidders, including any offer of personal inducements or rewards.
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Slide 45 Reasons / Measures for Preventing Corruption
45
Impairs economic development.
Leads to economic waste, inefficiency and reduction in
productivity.
Generates administrative inefficiency and ineffectiveness.
Promotes nepotism.
Frustrates competent and honest suppliers/contractors.
To deter corruption in procurement it is necessary to:-
Perform internal audit to monitor the process.
Institute checks in the various stages of the procurement cycle.
Require strict observance of procurement regulations.
Disqualify bidders who engage in any form of canvassing.
Penalize all those found guilty, blacklisting errant suppliers,
and to sanction staff and procurement unit members by
disciplinary action.
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Slide 46
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Slide 47 Gaps in Procurement
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Competency and availability of requisite staff
Updated procurement manuals
Regular training
Specification and its updation including lead time calculation
Timely preparation of demands
Timely availability of budget
Comprehensive tendering
Unusual delays
Political / bureaucratic pressures
Weak M&E
Delayed payments
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Slide 48 Conclusion
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Slide 49
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Slide 50
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Slide 51
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Presentation on Financial Management
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Slide 1
• F I N A N C I A L F O R E C A S T I N G
• P R E P A R A T I O N O F B U D G E T E D F I N A N C I A L S T A T E M E N T S
• C A S H B U D G E T
• M A N A G E M E N T O F W O R K I N G C A P I T A L
Budgeting and Corporate Planning
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Slide 2
A T T H E E N D O F T H E L E C T U R E , T H E P A R T I C I P A N T S W I L L B E A B L E T O :• D E P A R T F R O M T R A D I T I O N A L C O N C E P T O F
B U D G E T I N G , • U N D E R S T A N D H O W C O R P O R A T E E N T I T I E S
P L A N F O R F U T U R E A N D A S S I G N F I N A N C I A L N U M B E R S T O T H E I R P L A N S ,
• U N D E R S T A N D H O W T O M A N A G E W O R K I N G C A P I T A L , A N D
• H O W T O P L A N C A S H R E C E I P T S A N D E X P E N D I T U R E .
Learning Objectives
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Slide 3 Corporate Planning
Corporate Planning is:
A multi-tiered approachthat represents a company's goals, objectives andfuture work activities.
The plan expresses the strategies, milestones anddesired outcomes for the company, alongwith progress review practices and changemanagement policies.
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Slide 4 Corporate Planning Process
Establishing Mission and Objectives:
Top management formulate policies and strategies and communicates them downward for implementation.
Preparation of mission (purpose of existence), goals and objectives (measureable targets).
Corporate image to the customers and provides direction for the employees.
Situation Analysis
Plan to achieve objectives in accordance to its current situation. The changes in the environment provide newer ways to reach them.
The organization conducts an environmental analysis to assess available opportunities and identify its limitations and capabilities.
Two types of environmental analysis are usually conducted by organizations: external and internal. External analysis comprises macro and micro aspects.
Macro environment analysis consists of analyzing political, economic, social and technological aspects. Micro environment analysis is the study of the industry in which the firm operates or is considering operating in.
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Slide 5 Corporate Planning Process …..Cont
Internal analysis is analyzing the organization's culture, structure, image, capacity, resources and access of key staff. Also the organization's position on the experience curve is calculated. The operational efficiency and capacity are measured. The firm's patents, market share, finances and contracts are studied.
With the external and internal analysis, the organization can conduct a SWOT analysis.
Strategy Formulation and Implementation: Three generic strategies that are considered while formulating strategy are cost leadership, differentiation and focus. Only one of the three should be used for any product.
Control: The implemented strategies are continuously considered and appraised. Modifications are made from time to time to avoid deviations on the plan. The standards of performance are set, performance is monitored and necessary action is taken to guarantee success.
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Slide 6 Budgeting
A budget is an allocation of money for some purpose Company budgets give financial expression to strategy, motivate managers to achieve commonly understood
targets and provide a coherent framework for the analysis of results.
Poorly conceived or inefficient budgeting processes do not stimulate achievement of targets and are of little value for operational management
Corporate budgets limit expenditures, predict income, profits, and returns on investment a year ahead.
Budgets have evolved into tools of control and are also used as a means of determining such rewards as profit-sharing and bonuses.
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Slide 7 Budgetary Process
A collective process in which operating units prepare their plans in conformity with corporate goals published by top management.
Each unit plan is intended to contribute to the achievement of the corporate goals.
Unit managers prepare projections of sales, operating costs, overhead costs, and capital requirements. They calculate operating profits and returns on the investment they intend to use.
The budget itself is the projection of these values for the next period. As part of this process, each unit presents its plans and budget to a reviewing upper management panel and may, thereafter, make whatever changes result from instructions from or negotiations with the higher level.
Budget approved by BoD becomes the road-map for operations in the coming year.
Budget can be revised through periodic reviews and also serves as a measure to judge performance
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Slide 8 Budget Types
Traditional budgeting: based on a review of historical performance and then the projection of such findings to the future with modifications. Inflation-adjusted cost trends, projected sales growth, new sales from planned new product introductions.
Zero-based budgeting: creation of a completely new budget from the ground up—as if no history existed. The operation must justify and document every item of expenditure and income anew. Brand-new operations will utilize zero-based methods.
Performance budgeting: the budget is fixed at the outset. The planning activity is to determine exactly what activities will be carried out using the allocated funds. Performance budgeting is sometimes used in the corporate setting when the advertising budget is arbitrarily set as such-and-such a percent to projected sales.
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Slide 9 Major Subsidiary Budgets
Operational budget - It forecasts and predicts yearly revenue and expenses for a business. This budget can be updated with actual figures on a monthly basis and then you can revise your figures for the year, if needed.
Cash budget - A cash budget details the amount of cash you collect and pay out. This is generally tallied on a monthly basis, but some businesses tabulate this weekly. In this budget, you track your sales and other receivables from income sources and contrast those against how much you pay to suppliers and in expenses. A positive cash flow is essential to grow your business.
Capital budget - The capital budget helps you figure out how much money you need to put in place new equipment or procedures to launch new products or increase production or services. This budget estimates the value of capital purchases you need for your business to grow and increase revenues.
Others include Sales Budget, production budget, raw material budget, labor and overhead budgets etc. in case of manufacturing units.
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Slide 10 Forecasting Income Statement
Major Items of Income Statement Sales: Simply multiply estimated unit sales by expected unit price for each
period. Or forecast the total market and the company’s market share in order to determine unit sales. Or use regression analysis to fit a trend line through historical data to forecast future unit sales.
Cost of Goods Sold is projected as a percentage of sales based on historical experience and/or expected direct unit production costs.
Operating Expenses: Identify categories of expense relevant to business (e.g. salaries, maintenance, depreciation,
utilities, marketing, rent, etc.). Some expense categories might be projected as a percentage of sales based on historical
experience and or budget targets. Others, such as utilities, might be based on an annual percentage increase. Depreciation expenses can be determined from depreciation schedules for existing assets
and assets to be acquired in the future. Future rental expenses might be projected based on existing rental or lease contracts.
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Slide 11 Forecasting Balance Sheet
Cash: Future end-of-period cash balances are normally projected on the cash flow statement or statement of changes in financial position.
Accounts Receivable: Once the sales forecast has been prepared on the income statement, assumptions can be made about when each month’s sales will be collected. The appropriate percentages for each business will vary depending upon such considerations as experience in collecting receivables and/or credit policy.
Inventory: Closing or ending inventory for each future balance sheet date is normally projected using the following equation: Closing Inventory = Opening Inventory + Additions to Inventory - Cost of
Goods Sold
Property: Any existing property owned by a company will be carried forward on projected future balance sheets at the historical cost of the land. If land acquisitions are planned in the future the future acquisition cost will have to be estimated and added to the value of any existing property from that point forward.
Plant and Equipment: Net value less future depreciation.
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Slide 12 Forecasting Balance Sheet (…contd)
Accounts Payable: Total purchases for the period can be converted to average purchases per day by dividing by the number of days in the period. The average purchases per day can then be multiplied by the average age of payables (based on supplier credit terms e.g. 30, 60 days etc.).
Short Term Debt: Short-term debt can be projected based on known future short term borrowing requirements. In the case of an operating line of credit, the balance owing at the end of each period can be determined form the cash budget. If the projected cash balance at the end of a period is positive, the balance owing on the line of is zero. If the projected cash balance were negative, the amount would be the projected balance owing on the line of credit.
Long-Term Debt: Projected long-term debt liability can be determined from loan amortization schedules for existing and planned future borrowings.
Shareholder’s Equity: Projected share capital will be based on any existing share capital that has been provided by investors in the company and any planned future equity infusions.
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Slide 13
Exercise
C A S H B U D G E T
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Slide 14
Management of Working Capital
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Slide 15 Working Capital
Working capital is operating liquidity available to a business, organization or other entity.
Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital.
Gross working capital equals to current assets. Working capital is calculated as current assets minus current liabilities.
If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.
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Slide 16 Working Capital Cycle
The working capital cycle (WCC) is the amount of time it takes to turn the net current assets and current liabilities into cash.
The longer the cycle is, the longer a business is tying up capital in its working capital without earning a return on it.
Companies strive to reduce their working capital cycle by collecting receivables quicker or sometimes stretching accounts payable.
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Slide 17 Working Capital Management
Decisions relating to working capital and short term financing are referred to as working capital management.
Managing the relationship between a firm's short-term assets and its short-term liabilities.
The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.
A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other.
Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.
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Slide 18 Factors of Working Capital Management
One measure of cash flow is provided by the cash conversion cycle—the net number of days from the outlay of cash for raw material to receiving payment from the customer.
Decisions relating to inventories, accounts receivable and payable, and cash are thus, inter-related.
Return on capital (ROC) increases with efficient working capital management.
Credit policy of the firm includes buying of raw material and selling of finished goods either in cash or on credit.
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Slide 19 Working Capital Management-Policies and Techniques
Cash management. Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs.
Inventory management. Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials—and minimizes reordering costs—and hence increases cash flow. Besides this, the lead times in production should be lowered to reduce Work in Process (WIP) and similarly, the Finished Goods should be kept on as low level as possible to avoid over production—see Supply chain management; Just In Time (JIT); Economic order quantity (EOQ); Economic quantity
Debtors’ management. Identify the appropriate credit policy, i.e. credit terms which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence Return on Capital (or vice versa); see Discounts and allowances.
Short-term financing. Identify the appropriate source of financing, given the cash conversion cycle: the inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to cash" through "factoring".
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Slide 1
CORPORATE ENVIRONMENTHOW THE COMPANIES ARE FORMED?HOW THE COMPANIES ARE GOVERNED?HOW THE COMPANIES ARE MADE ACCOUNTABLE?
H U S S A I N S AQ I B
D E C 2 9 , 2 0 1 4
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Slide 2 LEARNING OBJECTIVES
At the end of the module, the participants will be able to understand:
• how corporate entities come into being,
• how these are organized and governed, and
• how the owners of a business exercise their control through their presence on the board of directors and audit committees.
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Slide 3 HOW THE COMPANIES ARE FORMED?
Companies are formed for varyingobjectives and by various individual andgroups. Consequently each company isestablished on a specific format withdifferent requirements of capital, businessregulations, liabilities and taxation. Aspecific form to establish a company ischosen keeping all these factors in view.
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Slide 4 FORMS OF BUSINESS ORGANIZATIONS
Sole Proprietorship: Business established by one person
Partnership: Business established and/or run by more than one person
Company: Business established and run by many. Also called
corporation or a joint stock company. Generally known as Limited Company (Ltd Co.) or a Limited Liability Company (llc). Shares are either held by a closed knit group (Private) or general public
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Slide 5 SOLE PROPRIETORSHIP
Advantages• Ease of formation and dissolution. As simple as printing up business
cards or hanging a sign announcing the business. Taking work as a contract carpenter or freelance photographer, for example, can establish a sole proprietorship. Likewise, a sole proprietorship is equally easy to dissolve.
• Low start-up costs and low operational overhead.
• Ownership of all profits.
• Sole Proprietorships are typically subject to fewer regulations.
• No corporate income taxes. Any income realized by a sole proprietorship is declared on the owner's individual income tax return.
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Slide 6 SOLE PROPRIETORSHIP
Disadvantages• Unlimited liability. Owners are personally responsible for the
obligations of the business, including actions of any employee representing the business.
• Limited life. In most cases, if a business owner dies, the business dies as well.
• It may be difficult for an individual to raise capital. It's common for funding to be in the form of personal savings or personal loans.
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Slide 7 PARTNERSHIP
Advantages• Synergy. There is clear potential for the enhancement of value resulting
from two or more individuals combining strengths.
• Relatively easy to form.
• Partnerships may be subject to fewer regulations than corporations.
• There is stronger potential of access to greater amounts of capital.
• No corporate income taxes. Partnerships declare income by filing a partnership income tax return. Yet the partnership pays no taxes when this partnership tax return is filed. Rather, the individual partners declare their pro-rata share of the net income of the partnership on their individual income tax returns and pay taxes at the individual income tax rate.
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Slide 8 PARTNERSHIP
Disadvantages• Unlimited liability. General partners are individually
responsible for the obligations of the business, creating personal risk.
• Limited life. A partnership may end upon the withdrawal or death of a partner.
• There is a real possibility of disputes or conflicts between partners which could lead to dissolving the partnership. This scenario enforces the need of a partnership agreement.
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Slide 9 COMPANY
• A legal entity doing business, and is distinct from the individuals within the entity.
• Public companies are owned by shareholders who elect a board of directors to oversee primary responsibilities.
• Along with standard, for-profit corporations, there are charitable, not-for-profit corporations.
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Slide 10 COMPANY
Advantages• Unlimited commercial life. The company is an entity of its
own and does not dissolve when ownership changes.
• Greater flexibility in raising capital through the issue of shares.
• Ease of transferring ownership by selling shares.
• Limited liability. This limited liability is probably the biggest advantage to organizing as a company. Individual owners in companies have limits on their personal liability. Even if a company is sued for billions of dollars, individual shareholder's liability is generally limited to the value of their own stock in the company.
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Slide 11 COMPANY
Disadvantages• Regulatory restrictions. Companies are more closely monitored
by governmental agencies. Complying with regulations can be costly.
• Higher organizational and operational costs. Companies have to file articles of incorporation with the appropriate state authorities. These legal and clerical expenses, along with other recurring operational expenses, can contribute to budgetary challenges.
• Double taxation. Companies declare and pay taxes on the net income of the company, which they pay through their corporate income tax returns. If the corporation also pays out dividends to individual shareholders, those shareholders must declare that dividend income as personal income and pay taxes at the individual income tax rates. Thus, the possibility of double taxation.
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Slide 12 HOW COMPANIES ARE RUN?-CORPORATE GOVERNANCE
• Corporate governance is "the system by which companies are directed and controlled" (Cadbury Committee, 1992).
• It is the framework by which the various stakeholder interests are balanced,
• It is the relationships among the management, Board of Directors, controlling shareholders, minority shareholders and other stakeholders.
• Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.
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Slide 13 ELEMENTS OF THE SYSTEM OF CORPORATE GOVERNANCE
• All shareholders (AGM) take key decisions and entrust the functions to run a company to Board of Directors. AGM is like a Parliament.
• Board of Directors is appointed by majority of shareholders in a democratic manner. It sets out company’s objectives and oversees company’s management. It can be equated with the Cabinet.
• Management is responsible to run the company efficiently and achieve the objectives set out by the Board. It can be roughly equated with bureaucracy.
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Slide 14 SEPARATION OF OWNERSHIP AND CONTROL- AGENCY THEORY
• The corporation, in contrast to a partnership, separates ownership from operational control - this concept is, of course, fundamental to any definition of corporate governance and is commonly referred to as the agency issue, or Agency Theory.
• It is this separation which creates the need for systems of independent monitoring and control. Historically, it was the freedom that this separation created to take much bigger risks in order to expand that prevented for so long the permission of such organizations to exist, with the potential dangers it implied. And it is this freedom which has required mechanisms to be constructed to try and prevent it being abused.
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Slide 15 PRINCIPLES OF CORPORATE GOVERNANCE
• Protection of shareholders’ rights: the protection of shareholders and maintaining investor confidence at all times in way of ensuring the continuous inflow of needed capital.
• Equitable treatment of shareholders: the equitable treatment of all equity investors, including minority shareholders.
• Protection of stakeholders’ rights: the skillful consideration and balancing of the interests of all stakeholders, including employees, customers, partners, and the local community.
• Accurate disclosure of information: the accurate and timely disclosure of clear, consistent, and comparable information in good times and bad times.
• Diligent exercise of board responsibilities: Board elections should be totally free from political interference and board members should exercise their responsibilities diligently and independently.
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Slide 16 FUNCTIONS OF BOARD OF DIRECTORS
• Recruit, supervise, retain, evaluate and compensate the manager.
• Provide direction for the organization.
• Establish a policy based governance system.
• Govern the organization and the relationship with the CEO. Another responsibility of the board is to develop a governance system. The governance system involves how the board interacts with the general manager or CEO.
• Fiduciary duty to protect the organization’s assets and member’s investment.
• Monitor and control function and hiring auditor.
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Slide 17 CORPORATE ACCOUNTABILITY
• A Corporation is accountable to its Board of Directors, to its shareholders and stakeholders in a variety of was. All the stakeholders, BoD, AGM and the government (in case of public sector entities) satisfy themselves through the auditors that a company’s management is working to achieve the corporate objectives.
• The auditors are appointed by the stakeholders; in case of internal audit, the auditors are appointed by the Board, in case of external audit the auditors are appointed by the shareholders through Annual General Meeting (AGM) and in case of Government Audit, the Auditor-General is appointed by the President under the Constitution.
• Reports of internal audit are used by the Board, that of external audit by the shareholders and also by the authorities and AG report by the Parliament.
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Slide 18 INTERNAL AUDIT
• It is concerned with evaluating and improving the effectiveness of risk management, control and governance processes
• Internal auditors work with management to systematically review systems and operations.
• internal auditors work across all areas of an organisation.
• Internal audit reports are presented to the CEO and board (via the audit committee) as they provide an independent viewpoint on the extent to which an organisation is poised for success and advice on areas for improvement.
• External auditors focus on the accuracy of the annual report and financial statements whereas the internal auditor has a wide reaching brief which considers anything which might be important to an organisation’s success.
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Slide 19 EXTERNAL AUDIT
• An external audit is an independent examination of the financial statements prepared by the organisation. It is usually conducted for statutory purposes (because the law requires it).
• An audit results in an audit opinion about whether the financial statements give a ‘true and fair’ view of the state of affairs of the organisation and operations for the period.
• Auditors are appointed by the Shareholders (or Annual General Meeting) or by a donor for a special audit. They are independent of the organisation engaging them.
• The purpose of external audit is to verify that the annual accounts provide a true and fair picture of the organisation’s finances; and that the use of funds is in accordance with the aims and objects as outlined in the constitution.
• Auditors test the validity of a sample of transactions and results rather than vigorously checking everything.
• An audit results in a report which gives an ‘audit opinion’ about whether the financial statements give a ‘true and fair’ view of the state of affairs of the organisation and operations for the period.
• ‘True’ means that the transaction did take place and that an asset exists. ‘Fair’ means that a transaction is fairly valued and that assets and liabilities are fairly stated.
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Slide 20 GOVERNMENT AUDIT
• Audit of public corporations established by the Federal or provincial governments is the statutory obligation of the Auditor-General of Pakistan.
• Under Article 170 of the Constitution, audit of the accounts of the Federal and of the Provincial Governments and the accounts of any authority or body established by, or under the control of, the Federal or a Provincial Government shall be conducted by the Auditor-General, who shall determine the extent and nature of such audit.
• Auditor-General is appointed by the shareholders (general public) represented by the President,
• Auditor-General submits his reports to the shareholders represented by the Parliament (Public Accounts Committee)
• Auditor-General is independent of executive branch of the government whose accounts he audits and he is also independent of the accounting function.
• Auditor-General has full powers to develop audit methodologies, criteria and extent of audit.
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50
Slide 1
Financial Analysis• Use of financial analysis• Financial ratios-profitability, liquidity, activity, leverage• Capital budgeting and appraisal of investment decisions • Financial analysis of different companies in power sector
(Case study)
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Slide 2
Learning Objectives
At the end of the module, the participants will be able to:
Understand the use of financial analysis
Undertake ratio analysis themselves through a case study.
Will also understand the way investment decisions are appraised.
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Slide 3
Why Financial Analysis is important?
Examining historical data to evaluate financial health of a company.
A non-finance manager can read through the financial information for managerial decision-making.
Understanding how accounts relate to one another is part of financial analysis.
Using numerical data in statements to uncover patterns of activity.
Financial analysis uses three main sources of financial information: balance sheet, income statement and statement of cash flows
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Slide 4
Why Financial Analysis is important? – Balance Sheet
The main elements of the balance sheet are assets and liabilities.
Both the total amount of assets and the makeup of asset accounts are of interest to financial analysts.
Current Liabilities are important to financial analysts because businesses have same obligation to pay their bills regularly as individuals, while business income tends to be less certain.
Long-term liabilities are less important to analysts, since they lack the urgency of short-term debts, though their presence does indicate that a company is strong enough to be allowed to borrow money.
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Slide 5
Why Financial Analysis is important? – Income Statement
Income statement provides information about a company's performance over a certain period of time.
Although it does not reveal much about the company's current financial condition, it does provide indications of its future viability.
The main elements of the income statement are revenues earned; expenses incurred, and net profit or loss.
Revenues consist mainly of sales, though financial analysts may also note the inclusion of royalties, interest, and extraordinary items. Likewise, operating expenses usually consists primarily of the cost of goods sold, but can also include some unusual items. Net income is the "bottom line" of the income statement. This figure is the main indicator of a company's accomplishments over the statement period.
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Slide 6
Why Financial Analysis is important? – Cash Flow Statement
Statement of cash flows focuses only on cash and shows exactly how much actual money the company has generated.
Cash flow statements show how companies have performed in managing inflows and outflows of cash.
It provides a sharper picture of a company's ability to pay bills, creditors, and finance growth better than any other one financial statement.
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Slide 7
Measures of Financial Health
Liquidity: Availability of cash and other assets to cover current liabilities. Liabilities are fixed but income is uncertain.
Leverage: This is the extent to which a company has depended upon borrowing. It is reviewed closely by both bankers and investors. A high leverage ratio may increase a company's exposure to risk and business downturns, but along with this higher risk also comes the potential for higher returns.
Profitability: Management's performance in using the resources of a business. Many measures of profitability involve the financial return on the money invested. Many other factors can influence profitability measures, including changes in price, volume, or expenses, as well the purchase of assets or the borrowing of money.
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Slide 8
Most Commonly Used Financial Ratios
Current ratio: to measure if the Company’s current assets are enough to pay-off its current liabilities. It is calculated by dividing current assets with current liabilities. (Current Assets/Current liabilities)
Quick ratio or Acid-test ratio: Sometimes all the current assets cannot be easily liquidated to payoff current liabilities. In that case quick ratio or acid-test ratios are calculated which includes only quick assets like cash or cash equivalent. [(Current assets-inventory)/Current liabilities].
Interest coverage ratio: This ratio shows if the business is making enough earnings to pay off its interest expenses. (Earnings before interest and taxes/interest expense). A ratio under 1 means that the company is having problems generating enough cash flow to pay its interest expenses. Ideally the ratio should be over 1.5.
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Slide 9
Most Commonly Used Financial Ratios
Gross profit margin: To assess financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. (Gross profit/Sales)
Net profit margin: A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. (Net profit/Sales)
Debt/Equity Ratio: A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets. (Total liabilities/Equity). A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.
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Slide 10
Most Commonly Used Financial Ratios
Working Capital: It is a measure of both a company's efficiency and its short-term financial health. The working capital is calculated as: Working capital=Current assets-current liabilities. The working capital ratio (Current Assets/Current Liabilities) indicates whether a company has enough short term assets to cover its short term debt.
Average collection period: The approximate amount of time that it takes for a power company to collect its bills from its customers. It is calculated as:
Average Collection Period= Days X Trade debts/SalesWhere:Days = Total amount of days in periodTrade debts = Average amount of trade debtsCredit Sales = Total amount of billing during period
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Slide 11
Analysis of Financial Statements
Case Study of Kot Addu Power Company Ltd
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Slide 12
Capital Budgeting and Investment Analysis
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Slide 13
Capital Budgeting
Long term planning for replacement of an old inefficient equipment and /or additional equipment or physical plant when growing business conditions warrant.
Capital budgeting will determine when the organization is able to afford the purchase of the equipment.
Capital budgeting involves setting aside moneys each year for large investments that need to be made.
Please keep in mind that: Capital is always limited Money borrowed for capital expenditures will cost more
money Today’s dollar is worth one dollar-plus, in the sense that it
can be held in a bank account and draw interest but tomorrow’s dollar will probably be worth one dollar-minus
money assigned to capital expenses may sometimes be out to different, more productive uses
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Slide 14
Appraisal of Capital Budgeting-Techniques
Pay back period: This works on the length of time it will take to recover the cost of the purchase from earned net income (after taxes).
Net Present Value: This is preferable to the payback period method because it recognizes that, over time, the value of money depreciates (in the face of inflation).
Internal Rate of Return: This takes into account present value like NPV.
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Slide 15
Exercise Capital Budgeting
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55
Slide 1
Pricing decisions and Power Sector Regulatory
Framework• Various cost components of electricity tariff• Tariff-setting guidelines and role of NEPRA
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Slide 2
Tariff Determination Process
The tariff setting process involves the following steps (Government of Pakistan, 2013): DISCOs send their tariff proposals to NEPRA justifying
their costs and revenue requirements, NEPRA sets tariffs for various category of consumers
for each DISCO based on its own assessment of costs and revenue requirements which can differ from the ones provided by DISCOs, and communicates it to the Ministry of Water and Power (MoWP) with the recommendation to notify the tariff,
The MoWP notifies a tariff schedule for the different categories of consumers, which is common across all DISCOs.
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Slide 3
Cost components of tariff
NEPRA takes into account following cost components of a DISCO: Power purchase price (PPP): Cost at which a DISCO is
projected to purchase power. Includes generation cost and cost of transmission by (NTDC) of the total power that a DISCO is projected to purchase during the year.
Net distribution margin. Difference between gross distribution margin and ‘other income’ of DISCOs. Gross margin consists of O&M cost, depreciation and return on asset base of DISCOs. ‘Other income’ includes amortization of deferred credit, meter and rental income, late payment surcharge, profit on bank deposit, sale of scrap, income from non-utility operations and commission on PTV fees and miscellaneous.
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Slide 4
Cost components of tariff
Prior year adjustment: Each year there is an adjustment for previous year which is built into tariffs for that year. ◦ The ‘shortfall’ in the projected and the regulated-approved
actual costs in year is recovered by including them in the tariff for period. This adjustment is to account for
◦ (i) the difference between the projected and actual electricity units purchased by DISCOs from NTDC at notified tariffs,
◦ (ii) the difference between the projected and actual distribution margins, (iii) the difference between actual and notified previous year adjustment, (iv) difference between projected and actual ‘other income’, and
◦ (v) the difference between the projected and actual consumption mix.
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Slide 5
Tariff determination by NEPRA
NEPRA determines an average tariff after including all the cost components and dividing it by projected sales.
The projected sales figure takes into account the transmission and distribution losses of the DISCOs.
NEPRA then approves different tariff schedules for different category of consumers: residential, commercial, industrial and agricultural.
There are also consumers who buy in bulk for further distribution. Each category of consumers are further distinguished by load requirement and offered separate rates. Rates are also distinguished by time of use (peak and off-peak).
The tariffs determined by NEPRA are reference tariffs subject to monthly revision to adjust for difference in actual fuel cost component of PPP from the reference fuel cost, and subject to quarterly revision to adjust for: (i) capacity and transmission charges, (ii) impact of T&D losses on all the components of PPP, (iii) impact of extra or lesser purchases of units on account of PPP, and (iv) changes in variable cost component of PPP from the reference cost.
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57
Slide 1
The Language of BusinessAccounting Concepts
Income StatementBalance Sheet
Statement of Cash-flows
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Slide 2
At the end of the module, the participants will be able to understand:
The language of business,
Financial statements, and
Will have developed sensitiveness to decisions impacting the financial statements.
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Slide 3
Accounting: It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity.
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Slide 4
Accruals: revenue and expenses are recorded when they occur and not when the cash is received or paid out;
Consistency: once an accounting method has been chosen, that method should invariably be used unless there is a sound reason to do otherwise;
Going concern: the business entity for which accounts are being prepared is in good condition and will continue to be in business in the foreseeable future;
Prudence concept: revenue and profits are included in the balance sheet only when they are realized (or there is reasonable 'certainty' of realizing them) but liabilities are included when there is reasonable 'possibility' of incurring them.
Accounting equation: total assets equal total liabilities and owners' equity;
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Slide 5
Accounting period: financial records pertaining only to a specific period are to be considered in preparing accounts for that period;
Cost basis: asset value recorded in the account books should be the actual cost paid, and not the asset's current market value;
Entity: accounting records reflect the financial activities of a specific business or organization, not of its owners or employees;
Full disclosure: financial statements and their notes should contain all relevant data;
Lower of cost or market value: inventory is valued either at cost or the market value (whichever is lower);
Matching: transactions affecting both revenues and expenses should be recognized in the same accounting period;
Materiality: minor events may be ignored, but the major ones should be fully disclosed;
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Slide 6
A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form easy to understand. Following are most common financial statements:
Income Statement or Profit and Loss Account
Balance Sheet
Statement of Cash-flows
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Slide 7
Monthly and/or annually
Reports earnings by stating all relevant income and all expenses that have been incurred to generate that income.
It's a scorecard on the financial performance of the company that reflects when sales are made and expenses are incurred.
It draws information from the various financial models such as revenue, expenses, capital (in the form of depreciation) and cost of goods.
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Slide 8
Income includes all the income generated by the business.
Cost of goods includes all the costs related to the sale of products in inventory.
Gross profit margin is the difference between revenue and cost of goods.
Operating expenses include all overhead and labor expenses associated with the operations of the business.
Total expenses are the sum of cost of goods and operating expenses.
Net profit is the difference between gross profit margin and total expenses. The net income depicts the business' debt and capital capabilities.
Depreciation reflects the decrease in value of capital assets used to generate income. It's also used as the basis for a tax deduction and an indicator of the flow of money into new capital.
Income before interest and taxes shows the capacity of a business to repay its obligations.
Interest includes all interest payable for debts, both short-term and long-term and taxes include all taxes on the business.
Net profit after taxes shows the company's real bottom line.
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Slide 9
Accounting equation: Asset=Liabilities+ Owners’ Capital All business assets are financed either from owners’ capital
(shareholders’ equity) or borrowed capital (liabilities) or both. Therefore, assets must equal shareholders’ equity and liabilities.
The balance sheet presents financial position at the end of a specified date.
Creditors can see from BS what a company owns as well as what it owes to other parties as of the date indicated in the heading.
Others who would be interested in the balance sheet include current investors, potential investors, company management, suppliers, some customers, competitors, government agencies, and labor unions.
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Slide 10
Assets: Resources acquired through transactions, and have future economic value that can be measured and expressed in dollars. Also costs paid in advance that have not yet expired. Cash, Temporary Investments, Accounts Receivable, Inventory, Supplies, Prepaid Insurance, Land, Buildings, Equipment, Goodwill, etc. Assets can be classified as current assets and fixed assets.Liabilities: Obligations of the company; amounts owed to creditors for a past transaction and they usually have the word "payable" in their account title. Along with owner's equity, liabilities can be thought of as a source of the company's assets. They can also be thought of as a claim against a company's assets. Liabilities also include amounts received in advance for future services. Notes Payable, Accounts Payable, Salaries Payable, Interest Payable, Other Accrued Expenses Payable etc. Liabilities are usually classified as Current Liabilities and Long Term Liabilities.Shareholders’ (or Owners’) Equity: Owner's Equity, like liabilities, can be thought of as a source of the company's assets. Owner's equity is sometimes referred to as the book value of the company, because owner's equity is equal to the reported asset amounts minus the reported liability amounts. Owner's equity may also be referred to as the residual of assets minus liabilities. These references make sense if you think of the basic accounting equation:
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Slide 11
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Slide 12
Cash Flow Statement, presents the movement in cash and bank balances over a period. The movement in cash flows is classified into the following segments:
Operating Activities: Represents the cash flow from primary activities of a business.
Investing Activities: Represents cash flow from the purchase and sale of assets other than inventories (e.g. purchase of a factory plant)
Financing Activities: Represents cash flow generated or spent on raising and repaying share capital and debt together with the payments of interest and dividends.
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Slide 13
Managers’ business decisions often result in transactions that affect the financial statements. For example, decisions to expand the number of stores, advertise a new product, change an employee benefit package, and invest excess cash would all affect the financial statements.
Sometimes these decisions have unintended consequences as well. The decision to purchase additional inventory for cash in anticipation of a major sales initiative, for example, will increase inventory and decrease cash. But if there is no demand for the additional inventory, the lower cash balance will also reduce the company’s ability to pay its other obligations.
Because business decisions often involve an element of risk, managers should understand exactly how transactions impact the financial statements. The process for determining the effects of transactions is called transaction analysis.
In addition to business decisions, even recording transactions and their (mis)classification can have adverse impact on a company’s financial statement.
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62
Presentation on Human Resource Management
63
Slide 1 Conflict Management
At
WASC, Islamabad.
Senior Management Course.
Presented by :-
Syed Hussain Haider,
• Management Consultant/Associate Professor
• Group Head Akhuwat Education Services
• Project Director Akhuwat University
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Slide 2
•Common themes
oPerception of conflict
oOpposition or incompatibility
oInteraction
“ A process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something the first party cares about”
Definition of Conflict
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Slide 3
•Conflict
Two or more competing, often incompatible, responses to a single event
Defining Conflict
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Slide 4
*Functional vs. Dysfunctional
Functional vs. Dysfunctional
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Slide 5
Consequences of Conflict
DYSFUNCTIONAL
Coalitions, Isolation, & lower participation
Gatekeeping
Deception
Lowered satisfaction
Lowered productivity
Compliance reliance
FUNCTIONAL
Cohesion
Greater motivation
Better problem solving
Goal attainment
Benefits for others
Reality adjustment
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Slide 6 Types of Conflict
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Slide 7
*Differentiate between symptoms and causes
*Requires value-system definition
*Conflict often arises because people hold different values
*A precondition to effective conflict management
Identifying Conflict
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Slide 8
*Conflict must be located before actual management can begin.
*Locating conflict is similar to problem identification.
Locating Conflict
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Slide 9
*Intrapersonal
*Interpersonal
*Intragroup
*Intergroup
*Intraorganizational
*Interorganizational
Conflict Locations
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Slide 10 Conflict and Unit Performance
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Slide 11
•Competing for scarce resources
•Lack of information sharing
•Lack of clear direction
•Others working on same issue
•Lack of buy-in with recommendations
Causes of Team Conflict:
External Issues
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Slide 12
•Performance issues
Behavior problems(absenteeism, late work, not doing what promised)
Work quality problems
Causes of Team Conflict
Team Member Issues
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Slide 13
•Interaction/Communication Issues
*Schedule conflicts
*One member taking over
*Conflict between members
*Disagreeing over responsibilities
*Differing values, attitudes, or personalities
Causes of Team Conflict:
Team Member Issues
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Slide 14 Conflict Management Styles
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Slide 15
•Use compromise
*When goals are important but not worth the effort/disruption of more assertive approach
•Use collaboration
*When concerns are too important to be compromised
*When objective is to merge insights, gain commitment
*When have the time
•Use avoidance
*When an issue is trivial
*To temporarily delay, allow emotions to cool
•Use accommodation
*When you find you are wrong
*As a favor, build relationship
•Use competition
*When quick, decisive action vital
*When don’t trust opponent
Which Management Style Is Best?
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Slide 16
•Focus on compromising, collaborating styles
•Focus on (superordinate) shared goals requiring cooperation
•Use communication skills
•Use problem solving/ decision-making skills
• Expansion of resources
• Smoothing
• Altering human variable
• Altering structural variables
• Bringing in outsiders
• Restructuring the organization
• Appointing a devil’s advocate
•Authoritative command
Conflict Management Techniques
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Slide 17
•Some tactics can be used in either situation, but certain elements of third-party intervention are distinctive:
*Collaboration
*De-escalation
*Facilitation
Strategy for Managing Conflict
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Slide 18
•Focus and contain conflict
•Control levels of threat
•Clarify management policies on communication
• Identify conflict early
•Balance dependencies
•Evaluate motivational preference
•Use appropriate strategies
Tactics for Managing Conflict
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Slide 19
•Are you highly competitive?
*You might be a gaming manager.
•Characteristics:
*Competitive
*Conflict strategy is win-lose
*Clear distinctions between supervisors and subordinates
*Driver social style - pushy, severe, tough, strong-willed
What Kind of Manager Are You?
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Slide 20
•Are you overly sensitive?
*You might be a tentative manager.
•Characteristics:
*Desire to keep people happy
*Conflict strategy is appeasement
*Negatively view conflict
*Amiable social style
What Kind of Manager Are You?
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Slide 21
•Are you a performer?
*You might be an idealisticmanager.
•Characteristics:
*Believes every problem has solution
*Conflict Strategy is win-win
*Endeavor to be an active leader
*Expressive social style: manipulative, excitable, friendly, a bit dramatic
What Kind of Manager Are You?
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Slide 22
•Are you adaptive?
*You might be a versatile manager.
•Characteristics:
*Possess ability to adapt to others
*Conflict strategy varies depending on situation
*Multidimensional thinkers
*Tolerant of ambiguity
*Flexible
What Kind of Manager Are You?
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Slide 23
Q & A
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71
Slide 1 Leadership Development
At
WASC, Islamabad.
Senior Management Course.
Presented by :-
Syed Hussain Haider,
• Management Consultant/Associate Professor
• Group Head Akhuwat Education Services
• Project Director Akhuwat University
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Slide 2
Why should you care?
How has it been done?
What is state of the art?
What are the barriers?
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Slide 3
“The primary limiting factor on our organization is having enough creative leaders on our team.”
Why should you know something about leadership development?
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Slide 4
•Almost every major corporation has some systematic effort to develop leaders.
• Some companies have made leadership development efforts a key strategic asset.
•You will rarely hire well-developed leaders, early in their careers.
Why should you know something about leadership development?
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Slide 5
•Can use leadership development to communicate values and expectations.
•Some research has suggested that the base rate for flawed leaders is 50-75%.
•Results from a number of surveys indicate that the “boss” is the worst part of many people’s jobs.
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Slide 6
• Some guy gets noticed
•A senior leader says “Hey, we should develop this guy!”
•Call HR.
•The senior leader touts the younger guy to other senior leaders
•Other leaders repeat the tales
Traditionally, leadership
Development has worked like this...
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Slide 7 •They call it development.
•The guy gets promoted.
•The guy either succeeds or fails.
•Along the way, he develops other leaders in his own image.
•Etc….
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Slide 8
• Systematic error
•Errors are often detected only late in the game
•No definition of leadership
•White males are over-represented; other groups are under-represented
•No distinction between management and leadership
•Off-the-shelf tools not linked to the business
•Rewards typically linked only to financial results
So, what’s wrong with that?
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Slide 9
“Develop leaders to do what?
A more thoughtful approach…
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74
Slide 10
Starting
Creators
Attract & staff
Builders
Fill key gaps
Growing
Strategists
Invest selectively
Maturing
Renewing
Transformers
Re-seed talent base
Organization Life Cycle
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Slide 11
Vision
Values
Strategies
Organization
Competencies & Capabilities
Leadership Competencies
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Slide 12
Motivation/ambition/achievement orientation
Cognitive abilities, especially analytical reasoning ability and conceptual thinking ability
Administrative skills
Communication skills
Interpersonal skills
Leadership skills (e.g., performance management)
Adjustment/maturity/self-control
Industry/function-specific knowledge & skills
Research suggests…
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Slide 13
•Desire to lead
• Initiative
• Upbeat
•Confident
• Energy
• Even tempered
•Persistent
• Honest
• Spontaneous
• Trustworthy
• Socially sensitive
• Intelligent
• Resourceful
• Emotionally stable
• Agreeable/Likable
Effective vs. Ineffective Leaders
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Slide 14
Build vs. Buy
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Slide 15
Motivation Intelligence Personality
Experience Knowledge
Competencies
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Slide 16
• Vision, strategy, & values
• Organization competencies
• Short-term leadership needs
• Long-term leadership needs
• Define and validate leader competencies
• Hire help and decide how to measure
• Learning tools based on competencies
Process
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Slide 17
So, how do you develop leaders?
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Slide 18
•Multi-modal and interactive
•Practice
• Feedback loops
•Mentoring/coaching relationships
• Seeing implications
•Exploring
Adults are active learners…
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Slide 19
• Put development in a career context
• Use assessment
• Focus on strengths
• Focus on development needs
• Encourage risk taking
• Be specific; What will s/he do differently?
•Engage the boss
• Build in accountability
Individualize Your Efforts
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Slide 20
Remember the 80-20 Rule
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Slide 21
COMPETENCIES
Multi-
Source
FeedbackDevelopmental
Assignments
Strategic
Initiative
Teams
Action
Learning
Workshops
Coaching
and
Mentoring
External
Education
Self-
Development
ResourcesCore
Curriculum
Talent Development Tactics
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Slide 22
COMPETENCIES
Multi-
Source
FeedbackDevelopmental
Assignments
Strategic
Initiative
Teams
Action
Learning
Workshops
Coaching
and
Mentoring
External
Education
Self-
Development
ResourcesCore
Curriculum
Key Talent
Use the Portfolio Method
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Slide 23
COMPETENCIES
Multi-
Source
FeedbackDevelopmental
Assignments
Strategic
Initiative
Teams
Action
Learning
Workshops
Coaching
and
Mentoring
External
Education
Self-
Development
ResourcesCore
Curriculum
Newer Talent
Use the Portfolio Method
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Slide 24
COMPETENCIES
Multi-
Source
FeedbackDevelopmental
Assignments
Strategic
Initiative
Teams
Action
Learning
Workshops
Coaching
and
Mentoring
External
Education
Self-
Development
ResourcesCore
Curriculum
Newest Talent
Use the Portfolio Method
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79
Slide 25
COMPETENCIES
SELECTION
APPRAISAL
& FEEDBACKRECRUITING
REWARDS
LEARNING
ORG./WORK
DESIGN
RETENTION
Integrate your efforts
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Slide 26
Arrogance
The single greatest barrier to leadership development is…
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Slide 27
•Money
• Senior leaders
• Difficult to measure return
•You will sometimes fail
• People forget stuff
• Some will leave your Organization
Other Barriers…
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Slide 28
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Slide 29
• Communication Skills “ Language is the key for the whole situation”
• Motivation to learn “Willingness to learn, Understand difference between people”
• Flexibility “ Global leader are force to deal with different business models in different countries”
• Open Mindedness “Always listen and absorb ideas and opinions”
• Respect for others “Respect of people in different social levels”
• Sensitivity “Doing it in the global world requires a huge shot of patience, understand the barriers, different economics, languages and cultures”
In the End
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Slide 30
Q & A
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81
Slide 1 Performance Management
At
WASC, Islamabad.
Senior Management Course.
Presented by :-
Syed Hussain Haider,
• Management Consultant/Associate Professor
• Group Head Akhuwat Education Services
• Project Director Akhuwat University
___________________________________
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Slide 2
Definition
A process or set of processes for establishing shared understanding about what is to be achieved, and managing and developing people in a way which increases the probability that it will be achieved in the short and longer term.
Overall aim
To establish a culture in which individuals and groups take responsibility for the continuous improvement of business processes, and of their own skills and contributions.
Performance Management
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Slide 3
Strategic
Administrative
Informational
Developmental
Organizational maintenance
Reporting
Purposes of PM Systems
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Slide 4 Performance Management
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Slide 5
*Communication of a vision of objectives and values to all employees
*Setting departmental and individual performance targets linked to business objectives
*Regular performance reviews throughout the year
*Formal staff appraisal using one or more of the following:
competencies
objectives
skills acquisition
accountabilities
output levels
self assessment
The basics of performance Management I
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Slide 6
*Performance related pay or performance related bonuses
*A thorough training and development system to address identified training needs
*Career counselling
*Organisational management reviews
The basics of performance Management II.
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Slide 7 An Ideal PM System: 14 # Characteristics
1. Congruent with organizational strategy
2. Thorough
3. Practical
4. Meaningful
5. Specific
6. Identifies effective/ ineffective performance
7. Reliable
8. Valid
9. Acceptable and Fair
10. Inclusive
11. Open (No Secrets)
12. Correctable
13. Standardized
14. Ethical
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Slide 8
Building a development driven system means focusing everyoneon what is important.
Vision
Where we want to be
Values
How we want to be
Business planning
Key steps this year
Departmental
objectives agreed
Individual
objectives agreed
Facilitation
required
Training
required
Performance Planning
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Slide 9
Vision Values
Business planning
Departmental objectives agreed
Individual objectives agreed
Informal reviews of progress
Continuous Re-inforcing
Coaching
Annual review
Job profile
Objectives
Job profiles
Training needs
Personal
development
needs
Career
development
Sucession plans
Performance
planning
Performance
managing
Performance
review
The Performance Management Process
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84
Slide 10 Challenge Goal difficulty
Goal claritySelf-efficacy
Moderators
- Ability - Feedback
- Goal commitment - Task complexity
Mediators Direction
Effort
Persistence
Performance
Rewards
SatisfactionConsequences
Goal Setting
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Slide 11
Goal characteristics Performance tendency
Specific and clear Higher
Vague Lower
Difficult and challenging Higher
Set participatively Higher
Accepted by employees Higher
Rejected by employees Lower
Accompanied by positive incentives
Higher
Goal Characteristics and Performance
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Slide 12 There are three different approaches for doing appraisal. (Employees can be appraised against)
• absolute standards
Measure an employee’s performance without comparing with any other employee
• relative standards
Evaluating an employee’s performance by comparing the employee with other employee
•objectives (MBO)
This performance appraisal method includes mutual objective setting and evaluation based on the attainment of specific objectives
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85
Slide 13
•Essay appraisal: A performance appraisal method whereby an appraiser writes a narrative about the employee.
•Critical incidents: Significant job related behaviours.
•Checklist appraisal: A performance appraisal type in which a rater check off the attributes of an employee that apply.
•Graphic rating scale: A performance appraisal method that lists a number of traits and a range of performance for each.
•Behaviorally-anchored rating scale: A performance appraisal technique that generates critical incidents and develops behavioral dimensions of performance. The evaluator appraises behaviors rather than traits.
Absolute Standards
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Slide 14
•Group order ranking: A relative standard of performance characterized as placing employees into a particular classification such as the „top one-fifth.”
•Individual ranking: Ranking employee’s performance from highest to lowest.
•Paired comparison: Ranking individual’s performance by counting the number of times any one individual is the preferred member when compared with all other employees.
Relative Standards
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Slide 15
Reflects an organization’s key values with regard to management of people.
A system in place for the review of individual performance.
•Clear definition of job
•Mutual objective setting
•Clearly understood reward system
•Establish training needs
The Basic Elements of Performance Management
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86
Slide 16 •Development and succession planning
• Identification of high flyers
• Strenghtening of manager/ subordinate relationships
•Direct impact on motivation
•Vehicle for improving competence at all level
•Vehicle for culture change
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Slide 17
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Slide 18
POTENTIAL =Includes future service, learning interest, motivation level
PERFORMANCE =Doing present job at acertain level (high or low) as measured by a formal system
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87
Slide 19 Superior Only
Subordinate(s)
Peers/Coworkers
Self
Customers
Others
Subordinates
All Stakeholders
Who Should Assess Performance
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Slide 20
Top management support
Commitments from Specialists andGeneralists
Technological Advances
Organizational Complexity
Behavioral Science Knowledge
Learning Principles
Performance of Other Human Resource Functions
Factors Influencing T & D
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Slide 21
Q & A
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88
Slide 1 Improving performance Through Empowerment, Teamwork, and
CommunicationAt
WASC, Islamabad.
Senior Management Course.
Presented by :-
Syed Hussain Haider,
• Management Consultant/Associate Professor
• Group Head Akhuwat Education Services
• Project Director Akhuwat University
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Slide 2
1. Describe why & how organizations empower employees.
2. Distinguish among the five types of teams in the workplace.
3. Identify the characteristics of an effective team.
4. Summarize the stages of team development.
5. Relate cohesiveness and norms to effective team performance.
6. Explain the importance and process of effective communication.
7. Compare the different types of communication.
8. Explain external communication and how to manage a public crisis.
Learning Goals
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Slide 3
• Empowerment - giving employees authority and responsibility to make decisions about their work without traditional managerial approval and control
• Sharing Information and Decision-Making Authority
• Keeping them informed about company’s financial performance
• Giving them broad authority to make workplace decisions
Empowering Employees
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89
Slide 4
Employee Stock Ownership Plans
• Gives employees ownership, motivating them to work smarter and harder.
Stock Options
• Right to buy a specified amount of company stock at a given price within a given time period.
• Being offered more and more to employees at all different levels.
Linking Rewards to Company Performance
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Slide 5
• Group of employees who are committed to a common purpose, approach, and set of performance goals.
• Mutually responsible and accountable for accomplishing objectives.
• Ability to work on teams often emphasized during the hiring process.
• Work teams are groups of people with complementary skills who are committed to a common purpose.
• QCC/IQCC
Teams
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Slide 6 Five Species of Teams
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Slide 7
Team Size
• Can range widely, but most have fewer than 12 members.
• Ideal size is often six or seven members.
Team Level and Team Diversity
• Team level - average level of ability, experience, personality, or any other factor on a team.
• Team diversity - variances or differences in ability, experience, personality, or any other factor on a team.
Team Characteristics
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Slide 8 Stages of Team Development
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Slide 9
• Team cohesiveness is the extent to which team members feel attracted to the team and motivated to remain part of it.
• Increases when members interact frequently, share common attitudes and goals, and enjoy being together.
• Cohesive teams quickly achieve high levels of performance and consistently perform better.
• Team norms are the informal standards of conduct shared by team members that guide their behavior.
• Can be positive or negative.
Team Cohesiveness and Norms
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91
Slide 10
• Cognitive conflict focuses on problem-related differences of opinion.
• Reconciling these differences strongly improves team performance.
• Affective conflict refers to the emotional reactions that can occur when disagreements become personal rather than professional.
• Team leaders should facilitate good communication so that teammates respect each other and work cooperatively.
Team Conflict
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Slide 11 Importance of Effective
Communication
Managers spend 80 percent of their time in direct communication with
others.
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Slide 12 Basic Forms of Communication
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Slide 13
• Cynical listening: Receiver of a message feels that the sender is trying to gain some advantage from the communication.
• Offensive listening: Receiver tries to catch the speaker in a mistake or contradiction.
• Polite listening: Receiver listens mechanically to be polite rather than to communicate.
• Active listening: Requires involvement with the information and empathy with the speaker’s situation; the basis for effective communication.
Listening
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Slide 14
• Flows within the chain of command
•Downward communication
•Upward communication
•Open and honest communication is key
Formal Communication
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Slide 15
•Carry messages outside formally authorized channels
•The grapevine is an internal channel that passes information from unofficial sources
Informal Communication
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93
Slide 16 External Communication
Crisis Management • Meaningful exchange of information through to major
audiences: customers, suppliers, firms, general public, government officials
• Every communication with customers should create goodwill.• Communication during crisis:
1. Respond to crisis quickly2. Put top company management in front of the press3. Stick to the facts4. When you don’t know, offer to find out5. Never say “no comment”6. Speak to your audience
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Slide 17
Q & A
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94
Slide 1 Strategic Role of Human Resource Management
At
WASC, Islamabad.
Senior Management Course.
Presented by :-
Syed Hussain Haider,
• Management Consultant/Associate Professor
• Group Head Akhuwat Education Services
• Project Director Akhuwat University
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Slide 2 Overview
• Strategic HRM
• Model of SHRM
• Changing Role of HR Managers
• Ulrich Model
• Traditional Versus Strategic HR
• Strategic HRM and Organizational Learning
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Slide 3 THE EVOLVING STRATAGICROLE OF HUMAN RESOURCE MANAGEMENT
Strategic Human Resource Management
• “Involves development of consistent, aligned collection of practices, programs, & policies to facilitate achievement of strategic objectives of an organization”
• Mindset & practices away from “personnel management” & focusing on strategic issues instead of operational issues
• HR programs and policies are made and integrated in perspective of mission, objectives, and strategy
• Formalizing HR strategy facilitates involvement & convincing senior executives & other employees
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95
Slide 4 MODEL OF STRATEGIC HR
MANAGEMENT
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Slide 5 CHANGING ROLES OF HR LEADERS
Ulrich Model
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Slide 6
Strategic perspective focus more on strategic contribution of employees than performing traditional HR functions
What HR delivers not important what it does
1 Strategic Partner Partner in strategy development Identify areas where change is needed to execute strategy
2 Administrative Expert In past focus remain on traditional roles, rule making and
policy development Need to reinvent new way to perform such traditional
activities. For example: Benefit and compensation system, career development Plans
CHANGING ROLES OF HR MANAGERS
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96
Slide 7
3 Employee Champion Responsible to make sure that employees are committed
and motivated Assist line managers to identify the causes of low morale
and employee motivation techniques Advocate of employees
4 Change Agent Assist build organization capability to identify and capitalize
on future opportunities To ensure that change initiative are well define,
understand, and delivered Overcome resistance to change (change in culture)
CHANGING ROLES OF HR MANAGERS
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Slide 8 HR ROLES IN KNOWLEDGE-BASED ECONOMY• Lengnick Hall Model
1 Human Capital Steward
– Create environment where employee work with commitment
2 Knowledge Facilitator
– Knowledge sharing culture
– Employee share information, teach and learn from colleagues
– Rewarding knowledge share behavior
3 Relationship Builder
– Building Team work, Cross functional teams
4 Rapid development Specialist
– Organizational culture and HR system that are flexible enough to adapt to change
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Slide 9 TRADITIONAL HR VERSUS STRATEGIC HR
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97
Slide 10 Strategic HR As Organizational
Learning
• How HR management systems can contribute to development
of organizational knowledge
– To attract & select individuals with knowledge
– Internal labor contribute to the development of firm
specific knowledge and learning
– Cross-functional & inter-organizational teams can be
utilized
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Slide 11 Strategic HR As Organizational
Learning
• HR systems can support & enhance knowledge sharing and
development by
– Apprenticeship & mentoring
– Cross-functional teams
– Stimulate & reward information sharing
– Provide free access to information
– Job rotations
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Slide 12 Knowledge Institutionalization• Walsh & Ungson’s five ‘storage bins’ in which organizational
memory can reside
– Individuals (assumptions, beliefs, & cause maps)
– Culture (stories, myths, & symbols)
– Transformations (work design, processes, & routines)
– Structure (organizational design)
– Ecology (physical structure & information systems)
• Institutionalized knowledge tends to be organizational specific, socially complex, & causally ambiguous
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98
Slide 13 UNDERSTANDING HRM-PERFORMANCE
LINKAGES
• Systems view considers overall configuration and aggregation
of HRM practices
• Strategic perspective aim to create “fit” between HRM
practices & organization’s competitive strategy
• HRM practices are associated with organizational
performance & competitive advantage
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Slide 14 UNDERSTANDING HRM-PERFORMANCE
LINKAGES
• Content
– Set of practices adopted
– Ideally driven by strategic goals & values
– No single most appropriate set of practices for particular
strategic objective
– Different sets of practices
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Slide 15 UNDERSTANDING HRM-PERFORMANCE
LINKAGES
Process
To create unambiguous situations and messages about appropriate
employee behavior
HRM systems should have:
– Distinctiveness
– Consistency
– Consensus
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99
Slide 16 Understanding HRM-Performance Linkages• Distinctiveness
– Visibility
• Degree to which practices are readily observable
– Understandability
• Lack of ambiguity & ease of comprehension of practice content
– Legitimacy of authority
• Leads individuals to confirm to performance expectations as formally sanctioned behaviors
– Relevance
• Situation is defined that individuals see it as relevant to important goal
___________________________________
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Slide 17 UNDERSTANDING HRM-PERFORMANCE
LINKAGES• Consistency
– Instrumentality
• Unambiguous perceived cause-effect relationship
between system’s desired content-focused behaviors &
associated employee consequences
– Validity
• HRM practices must display consistency between what
they expect to do & what they actually do
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Slide 18 UNDERSTANDING HRM-PERFORMANCE
LINKAGES• Consensus
– Agreement
– Fairness
• Composite of employees’ perceptions of whether
practices adhere to dimensions of justice
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100
Slide 19 Organization Culture Questionnaire
– How is performance defined, measured & rewarded?
– How are information & resources allocated & managed?
– What is operational philosophy of organization with regard
to risk-taking, leadership, & concern for overall results?
– Does organization regard human resources as costs or
assets?
___________________________________
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Slide 20 INTERPRETING RESULTS &
FORMULATING STRATEGIES• Tendency to try to identify an “ideal” culture
• Not clear than any one culture will be effective for all
organizations
• Strategy consists of interrelated functional components that
must be carefully integrated to form an effective whole:
– Selection & staffing
– Organizational & human resource development
– Rewards
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Slide 21 • Performance appraisal and compensation based on
current performance
• HR managers lack of ability to understand challenges andopportunities in other functional areas
• Top management fail to realize the overall contribution HRcan make in overall organization strategy (HR is routineand inflexible job)
• Functional managers do not view themselves as HRmanager (concerned with technical aspects of job)
• Fail to quantify HR cost and benefits (Team building)
• Strategic HR need drastic changes in way of doing job,practices, and culture etc (people tendency to resist tochange)
Problems and Challenges of SHRM
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101
Slide 22
Increased performance Customer and Employee Satisfaction
Enhanced Organizational Value
• Management of Staffing, retention, and turnover through selection of employees
• Investment perspective of human asset and cost effective utilization
• Integrated HR policies and practices based on cooperate strategy
• Facilitation of change
• Focus on customer needs and quality
Outcome of Strategic HR
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Slide 23
Q & A
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Presentation on Monitoring and Evaluation
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Slide 1
LOGO
1/29/2015 1
Monitoring and
Evaluation
Atiq ur Rehman
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Slide 2
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Slide 3 Key questions
W hy do we need an M&E system?
Is M&E system effective in Pakistan?
If effective, then what are characteristics of an
effective M&E system?
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Slide 4
W hat are the reasons of the ineffectiveness of
the M&E system in Pakistan?
How can we improve effectiveness of the
M&E system in Pakistan?
Can Results Based M&E help us in improving
success of the projects?
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Slide 5 W hat intended beneficiaries needed?1/29/2015
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Slide 6
W hat intended beneficiaries asked for?
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Slide 7
W hat planners promised …in project plan
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Slide 8
W hat intended beneficiaries felt…
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Slide 9
W hat was delivered…
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Slide 10
W hat was received by intended
beneficiaries…
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Slide 11 Contents
Basic Concepts1
Monitoring2
Evaluation3
M&E Framework4
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Slide 12 Generic Project Cycle in Pakistan
Identification
Implementation
Ex-post
Evaluation
Preparation
Appraisal &
approval Financing
PC-III
PC-IV
PC
-I/P
C-I
I
Mo
nit
ori
ng
&E
va
lua
tio
n
PC-V
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Slide 13 131/29/2015
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Slide 14
LOGO
Background
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… good development practice requires monitoring and evaluation, and especially a rigorous comparison of goals and outcomes. W hen goals are not being achieved, it is important to ask why, not to make excuses for past advice. Under current development practice, the IMF and W orld Bank have rarely taken on specific development objectives as the standards for judging country performance, and by extension, their own advice. Instead, countries are judged on the basis of policy inputs, not outputs.
(Sach, 1995, p. 80)
End of Poverty
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Slide 16
LOGO
Concepts
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Slide 17 Project Monitoring
Monitoring means
checking, watching, observing
collecting, recording, and reporting information
concerning project performance that project manger
and others wish to know
Check actual work vs. planned work
It refers to
the routine tracking of priority information about a
program including its intended inputs and outputs
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Slide 18
MDF (1998) defined it as
“regular collection and analysis and distribution of
information for the surveillance of progress of the
project’s implementation”
Meredith & Mantel (2009)
Monitoring is collecting, recording, and reporting
information concerning any and all aspects of project
performance that the project manager or others in the
organization wish to know. (p. 435)
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Slide 19 Types of monitoring and evaluation
Types of monitoring
Input monitoring
Process monitoring
Output monitoring
Benefit monitoring
Types of evaluation
Ex-ante Evaluation
Ongoing Evaluation
Ex-post Evaluation
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Slide 20 Purpose of monitoring and control
The purpose of Project Monitoring and
Control is
to provide actions which can be taken when the
project’s performance deviates significantly from
the plan.
Control is a management function
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Slide 21
So monitoring...
Ensure that problems
are not ignored
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Slide 22
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1. What do we monitor?
HR
Machines
Materials
Money
Space
Time
Tasks
Quality/Technical
Performance
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Slide 23
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Inputs
Time
Money
Resources
Material Usage
Tasks
Quality/Technical
Performance
Outputs
Progress
Costs
Job starts
Job completion
Design changes
Variation order (VO)
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2. When do we monitor?
Throughout the project
Continuously
Regularly
Logically
W hile there is still time to react
As soon as possible
At task completion
At pre-planned decision points (milestones)
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Slide 25
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3. How do we monitor
Meetings with stakeholders
clients, parties involved in project (Contractor, supplier, etc.)
Update CP, PERT Charts, Update Gantt Charts
Use Earned Value Analysis
Calculate Critical Ratios
Milestones
Reports
Tests and inspections
Delivery
PMES Updating
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Slide 26 Focus of M&E
Traditionally concept of M&E
monitoring and evaluation focused on assessing
inputs and implementation processes.
New concept of M&E
Today, the focus of M&E is on assessing the
contributions of various factors to a given
development outcome, with such factors including
outputs, partnerships, policy advice and dialogue,
advocacy and brokering/coordination.
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Slide 27 Forms
PC-III
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Slide 28
LOGO
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Evaluation
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Slide 29
Evaluation
Evaluation is a periodic assessment to
review relevance , performance and
success in terms of fulfillment of
objectives.
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Slide 30 Comparison Between M&E
Item Monitoring Evaluation
Frequency Regular, ongoing Episodic
Main action Keeping track/oversight Assessment
Basic purpose Improving efficiency
Adjusting work plan
Improve effectiveness, impact,
future programming
Focus Inputs/outputs, process outcomes,
work plans
Effectiveness, relevance, efficiency,
impact, sustainability
Information
sources
Project record, field visits,
stakeholder meetings, output
reports, rapid assessments
Same plus
Surveys (pre-post project)
Special studies
Undertaken by Project managers/staff
Planning Commission
WAPDA authorities
Community (beneficiaries)
Other Stakeholders
External evaluators
Planning Commission
Project/program managers
WAPDA authorities
Adapted from UNICEF, A UNICEF Guide for Monitoring and Evaluation: Making a Difference? New York, 1991, p.330
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Slide 31
LOGO
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M&E
Framework
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Slide 32 M&E Framework
M&E Framework outlines the plan for
monitoring in concrete steps providing the
who, what, where and when
The M&E Framework answers:
Lists each indicator from the program logic model
Presents how indicators are defined and calculated
Defines Who, What, When, How by:
Identifying who is responsible
What the data source
How to collect the information or data
When and how often an indicator is measured
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Slide 33 Sample M&E Framework
Indicator Definition Unit of measure Data source Frequency Responsibility
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Slide 34
Logic Model is a project or program
conceptual map highlighting causal chain of
‘why and how’
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Slide 35 Issues of quality in M&E
Accuracy
How can we ensure information is accurate and
reliable?
Relevance
How can we ensure information is relevant to user’s
needs?
Timeliness
How can we ensure information is available in time?
Credible
How can we promote the credibility of information?
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Slide 36 Purpose of M&E data
To monitor physical and financial progress
To examine the responses of the target
population on acceptability and usefulness of
project
To study specific implementation problems facing
a project
To determine the impact on the target
population
To monitor compliance and accountability
To examine distribution of project benefits
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Slide 37 Basic Questions
What is a project?
What is an indicator?
Why do need indicators in the project management?
Has Section 12(b) of PC-1 any relevance with
indicators?
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Slide 38
Earned Value Analysis
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Slide 39 BCWS - BUDGETED COST OF WORK SCHEDULED
Portion of the cost planned to be spent on a
task between the task's start date and the
status date.
Also known as Planned Value.
For example,
Budget for a 48-month power project = Rs1,000 m
It started in July 2014-15
Status date is 30th June 2017
Then what will be the Planned Value (BCWS) will be
PKR 750 million.
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Slide 40
Answer
The Planned Value (BCWS) will be PKR 750 million.
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Slide 41 ACW P
Actual cost incurred while performing work
on a task during a given period.
ACW P is also known as Actual Cost.
For example,
if the 48-month project actually incurred a total cost
of PKR 350 million during each of the first 2 years,
then
• what will be the ACWP?
• What will be the BCWS?
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Slide 42
Answer
the ACWP for the two years will be PKR 700 million.
BCWS will be PKR 500 million.
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Slide 43 BCW P - BUDGETED COST OF W ORK
PERFORMED
It is the portion of the budget that should
have been spent for a given percentage of
work performed on a project.
Also known as Earned Value
Example,
Budget for a 48-month power project = Rs1,000 m
If after 2 years, 60% of the work on a project has
been completed, then what will be the BCWP?
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Slide 44
Answer
The BCWP will be PKR 600 million.
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Slide 45 Cost Variance (CV)
CV = BCW P - ACW P
How will you interpret CV
Suppose, you have monitored three projects
simultaneously (each of budget = Rs. 1.0
billion) and values of CV (in Rs. Million) are:
Project A: 100
Project B = 0
Project C = -100
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Slide 46
Interpretation rules:
If CV of a project is zero, it means project is on
budget
If it is in minus, it implies that the project is suffering
from cost overrun.
If CV is positive, then it means project is incurring
cost less than budget, so it is generating savings.
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Slide 47 Schedule variance (SV)
SV = BCW P - BCW S
Example: Suppose, you have monitored three
projects simultaneously (each of budget = Rs.
1.0 billion) and values of SV (in Rs. Million)
are:
Project A: 100
Project B = 0
Project C = -100
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Slide 48
Interpretation rules
If SV of a project is zero, it means project is on
schedule
If it is in minus, it implies that project is suffering from
time overrun.
If SV is positive, then it means project is ahead of
schedule.
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Slide 49 Example
Example 1: Let us assume a 48-month project
(2014-15 to 2018-19) with budget of PKR
1,000 million. If status date is 30th June 2017
and we find that 50 percent of the work has
been completed and project has incurred
spending of PKR 800 million. W hat will be SV
and CV?
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Slide 50
Answer
ACWP is PKR 800 million.
BCWS will be PKR 750 million.
BCWP comes to PKR 500 million.
Cost Variance = BCWP-ACWP = - Rs. 300 m
Schedule Variance = BCWP-BCWS = - Rs. 250 m
As CV and SV are in minus, hence, we conclude that
• project is suffering from both time overrun and cost
overrun.
Since, CV is higher than SV, we conclude that
• cost overrun is more serious problem than time
overrun.
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Slide 51 SPI and CPI
Drawback with the SV and CV
they can’t be used for comparing performance of two
projects with different budget size
Solution lies in SPI and CPI
CPI = BCW P / ACW P
SPI = BCW P / BCW S
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Project CPI SPI
A 0.1 0.1
B 1.0 1.0
C 1.5 1.5
D 0.6 1.2
E 1.2 0.6
F 1.2 1.2
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Slide 52
Interpretation rules
If values CPI or SPI = 1,
• project is on budget and on schedule.
If value of CPI < 1,
• project is suffering from the problem of cost overrun.
If SPI < 1,
• project is suffering from the problem of time overrun.
If CPI >1,
• project is producing saving
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Slide 53 Exercise
Suppose, monitoring team has reported:
ACWP is PKR 800 million.
BCWS will be PKR 750 million.
BCWP comes to PKR 500 million.
Calculate CPI and SPI
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Slide 54
Example 2: Using data of Example 1, let us
estimate CPI and SPI.
CPI = BCWP/ACWP
PKR 500 m / 800 m
CPI = 0.625
SPI = BCWP/BCWS
PKR 500 m / 750 m
SPI = 0.667
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Slide 55
LOGO
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Group Photo of Human Resource Management
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Class Room Photo of Human Resource Management Workshop
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Class Room Photos of Monitoring and Evaluation Workshop
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Group Photo of Procurement Management
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