Professional Documents
Culture Documents
• Identifying
• Acquiring
• Analysing
• Utilising
1
3. Use management information systems
a. Management information systems are used effectively to store and
retrieve data for decision making.
b. Technology available in the work area/organisation is used to manage
information efficiently and effectively.
c. Recommendations for improving the information system are submitted to
designated persons/groups
2
Unit 1
Section 1 - Identify and source information needs.
This section focuses on the expectations and needs of managers in your Ministries in
relation to information.
A good information system should provide the right information at the right time to
the right people.
Information systems can vary in size, type and complexity. They can vary from
information gained informally in the canteen to written memos, financial charts and
complex computer-based Management Information Systems (MIS).
Information systems are a key planning and decision making tool for managers.
Without accurate, relevant and current information both effective planning and
decision making are difficult to achieve.
3
ACTIVITY - Information Systems
What information systems (at least two) do you use to assist you in planning and
decision making?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
There are also many occasions where you and your department supply information
to other departments.
4
ACTIVITY - Interlinking of Information
Based on the information systems you identified in the last activity, identify three
of the examples of information you use from each of the information systems and
where it originates - either within your department, from another department
within your Ministry or externally.
5
Information breakdown
As a manager you require a wide range of information to plan, make decisions and
meet your department’s performance targets. There are however a number of
factors that may result in ‘information breakdown’. The breakdown can include:
Unavailability of required
information
Incorrect information
Unusable information
6
Types of information
The examples of information you have identified are probably presented in a number of
common forms including:
• printed reports
• presentations
• meetings
• graphs and charts
• observation
• team discussion
• statistics
• email messages
• phone messages
• photographs, video or DVD
• other types?
While each of the types of information identified above can be very useful there are
many examples of where managers and other users of information would prefer the
information to be presented in a different way.
Type of Example Usefulness Alternative Type
information
None Very
useful
1 2 3 4 5
Printed reports
Presentations
Meetings
Graphs and
Charts
Observations
Team
discussions
Statistics
Email messages
Phone messages
Photographs,
video, DVD
7
The reason for Information Systems
Effective Information Systems are often referred to as the key factor in organisations
gaining the competitive edge over competitors. In many organisations this important
factor is overlooked and the frustrations of being presented with information subject to
time delays, incorrect or useless detail or complete lack of relevant information
contributes to the stress level of managers and staff and effects the companies 'bottom
line".
Good information systems take raw data and organise it in a systematic way which
allows it to be formatted into an output that provides a useful summary, comparison or
analysis of raw data. A good Information System processes raw data into a useful
product. On its own, raw data is not very useful but when processed it can provide
feedback and input which can be used by managers and staff to achieve performance
targets.
Ideally, information systems should be designed to take large amounts of raw data that,
in its original form, is useless or time consuming for the user to extract and convert it
into a single targeted report.
8
ACTIVITY - Useful Information
1. Choose an information system you identified earlier in this section and identify it
below:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. Identify and provide evidence of the raw data that is input to the information
system:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. How useful is the raw data in assisting you in decision making?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
4. Identify the source of the raw data and find out much the staff who collect the
data know about how the data is used by you or your staff
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
5. What ‘value adding’ does the information system provide in converting the raw
data into useable information?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
9
6. When was the last time there was a review of the information system and its
relevance to your needs?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
7. What suggestions can you make for updating the information system to fit the
current purpose of the system?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
10
Information overload
Recent advances in technology have resulted in huge amounts of information, from
within and external to the organisation, being available to managers. There is a
significant danger that managers will be swamped with information overload and lose
track of the key outcomes they are expected to achieve.
The number of emails received each day continues to grow, new reports constantly
appear in the in-tray, the number of meetings is often on the increase and the demands
for information from other individuals and departments seems to increase each year.
With this flood of information, managers need to develop skills to select, analyse,
diagnose the information they require to do their job more effectively. They need to
filter out the interesting but unimportant information.
(Peter Drucker, 'The coming of the new organisation', Harvard Business Review,
Jan/Feb. 1988)
What Drucker is highlighting is the fact that information has always been available - it
just took longer and required more staff to process it in the past. The availability of
information in itself is not the objective, it is simply a tool to assist managers with
decision making and should always remain a servant rather than the master of an
organisation.
The trap is that managers can easily become the servants of information. Managers who
become dependent on information are described well by Robert Heller:
11
Management Information Needs
There are three types of information that managers need:
1. Strategic Information
2. Tactical Information
3. Operational Information
1. Strategic Information
12
The diagram below, based on private sector business is equally valid for public sector
organisations.
It identifies the key factors that must be considered in any strategic decision making
including:
The Company/Organisation itself - information in relation to its capability in relation
to critical success factors
Competitors - information about their future plans, volume or profit driven, price war
potential/capability, investment program, level of risk taking, market share,
organisational structure
13
2. Tactical Information
3. Operational Information
Operational Information provides detail about the 'nuts and bolts' areas of
operations. The source of the information is usually internal and it is used by
managers in day to day decisions affecting the operations of their department or
section. Operational information is required in relation to resource usage, staffing
levels, inventory levels, problems, complaints.
• Timely
• Accurate
• Useful
• Accessible
14
ACTIVITY - Decision Making Information
Strategic
Tactical
Operational
15
Determining the information needs of users
Supply Driven
In many organisations managers and other staff requiring information are provided with
the information in a format determined by the supplier of the information. This 'supply
driven' method of developing information systems assumes the needs of the users when
in fact the information may only meet some, if any of the user's needs. The 'supply
driven' information may also lack the basic requirements of a good information system
- timeliness, accuracy, usefulness, easy accessibility.
Complex computer based Management Information Systems are often sold (at great
expense) to organisations based on the claim that they meet all the information needs
of organisations. There are very few organisations that have identical information
requirements to others, and even within an organisation the needs of each department
and individuals varies. Unless an 'off the shelf' system has the capability of being
significantly customised it is likely to prove to be a poor purchase decision.
Managers who are subject to 'supply driven' information systems often complain that:
Demand Driven
Successful organisations are very likely to have a secret weapon - Demand Driven
Information Systems. Organisations that recognise the need for users to determine their
information needs are likely to have more efficient and effective staff who do not suffer
from stress and information overload.
Demand driven information systems are developed on the basis of what is possible
rather than what is available. This approach can result in significant productivity
improvements by providing information previously unavailable to support a managers
'gut feeling' about a particular process or activity.
16
An effective way of developing a good demand driven information system is by using a
Decision-Making Analysis Technique (DMAT). This system requires a manager to
determine, as much as possible, the future decisions he/she will be required to make.
The information required is determined by the decisions to be made. The raw data
required is then established based on the information required.
A commonly used DMAT system is the Critical Success Factor Method. This method
identifies the critical factors required for the organisation, departments, teams and
possibly individuals to achieve success. The process usually involves several meetings
between the provider of information and the user:
Session 2 - Review goals and critical success factors identified in Session 1 and
table possible measures and report formats.
17
ACTIVITY - Determining the information needs of users
1. Identify a major workplace decision that you were required to make in the
last month:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
2. Write down all the information you needed to make the decision:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
3. How important was the information you obtained in making your decision?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
18
Misuse of Information
Often information received to assist with decision making can provide a distorted
picture of the factors influencing a decision of managers. Over reliance on
information can result in managers expecting the information will provide answers
for the required decision.
From the information the manager may make a decision that the three staff should
be replaced to improve productivity - hopefully by 20%.
The manager may have failed to obtain sufficient information that indicated that
regular preventative maintenance was conducted Thursday night and often the
maintenance staff were failing to complete the maintenance on time, resulting in
the Friday shift starting work up to 2 hours late.
It is important that information is verified and backed up. In this case the
information provided enough detail to identify where and when a productivity
problem existed but further information was required to determine the cause of the
problem rather that assuming it was the staff. Different information needs to be
obtained as managers 'drill down' to the root cause of a problem rather than
making decisions based on initial information and assumptions - it is important to
separate the person(s) from the problem or risk significant declines in staff morale
and subsequently, productivity.
It is important to assess the credibility of the information. The level of credibility will
vary from 'highly credible' for official statistics to possibly questionable or strongly
biased for information aimed at promoting a particular cause or project.
19
Activity - Unethical use of information
Case Study
Sopheap is the manager of the finance section at a garment manufacturing
company in Phnom Penh. His company has just merged with a similar company
in Sihanoukville and as a result there will only be a need for one finance
manager for both factories. Rachana is the finance manager of the factory in
Kandal province and has a national reputation as a leader in financial
management. She lectures part time at the National University of Management
and is a board member of the Kampuchea Institute of Certified Public
Accountants & Auditors.
Prior to the merger, Rachana’s company had requested that she travel to Hong
Kong for 2 weeks to become familiar with a new financial system and its
application in similar garment factories there. In the merger negotiations it was
agreed that the new financial system should still go ahead and that Rachana
should still visit Hong Kong. It was also agreed that Sopheap would act as
manager for both factories until a decision could be made in relation to who
would be the new finance manager for the merged companies
Immediately after Rachana departed to Hong Kong, Sopheap met with the
finance section staff at both factories and indicated that due to the merger there
was only a need for one finance manager and that it was likely that Rachana
would be surplus as a result of the merger. He also indicated that he would
protect the employment of finance staff at both factories (this was despite
Sopheap being aware of an executive decision to reduce finance staff numbers
by 50% following the merger and introduction of the new finance system. In
addition Sopheap spent time with the managers of each section at both factories
and played golf with the new CEO, in all instances convincing the managers and
CEO that, unfortunately, Rachana was surplus to the new organisation’s needs.
When Rachana returned from a very successful visit to Hong Kong, she was
asked to meet with the CEO, only to be told that, unfortunately, she was surplus
to the new organisation’s needs and would be given assistance in finding a job in
another company.
20
Routine and Non Routine Information
Most decisions made by managers are routine, that is, they are regular daily,
weekly, monthly or annual decisions in relation to production, sales, cash flow,
marketing. These decisions require similar information sources and successful
organisations develop information systems that are readily accessed and provide the
exact information requirements for users.
There are many 'one-off' decisions that managers need to make. These are called
non-routine and involve things like purchase of new equipment, replacement,
software updates, launch of new initiatives, expansion of facilities etc. Usually the
information required is not immediately available in the organisation's information
systems or requires an adjustment of the output from raw data. Managers will need
to determine the most reliable and useful source of information to assist in making
non-routine decisions, either from existing data bases or new 'one off' sources.
21
ACTIVITY - Routine and Non Routine information
Identify the routine decisions you make each week
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Identify the non-routine decisions you have made in the last month
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
How useful was the existing information systems to you in making the non-
routine decisions?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
22
Unit 2 - Collect, analyse and report information
This section focuses on the ways that managers can collect information, effectively
analyse the information and compile useful and user friendly reports
23
Sources of information
There are a number of sources of information that can be useful to managers in decision
making. A number were identified in Section 1. Many of the sources of information are
formal but there are also very useful informal sources of information.
Examples of successful companies with open information systems can often be found in
the electronics and information technology industries. In most situations there is open
access to information, except in relation to information about key components or
production processes that provide the company with a competitive edge.
• Electronic systems
• Letters
• Contracts
• Meeting minutes
• Memos
• Financial records
• Production reports
• Annual reports
• Strategic plans
• Customer surveys
• Inventory records
• Asset register
24
• Demographic statistics
• Survey companies
• Marketing companies
• Futurologists
While most information comes from formal sources officially recognised and supported
by the company, there are many informal sources of information that can provide useful
information.
The diagram on the next page summarises the internal and external information
environment
25
Internal and External Information Environment
26
What other formal or informal internal sources of information can you identify that
may assist you?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What other formal or informal external sources of information can you identify that
may assist you and your team with decision making?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
27
Sources and reliability of information
The previous activity required you to consider the formal and informal, external and
internal sources of information that currently assist you and your team in making
decisions. In addition you were required to identify other formal and informal sources of
information that could assist you in future decision making.
One of the weaknesses of establishing formal sources of information is that managers and
staff become solely reliant on this information in decision making. Often the formal
information sources were established several years ago and the information may now be
only partly relevant. A number of new sources of information may have become
available and many previously uneconomical sources of information may now be
available as a result of technological advances (scanners, remote sensors, internet etc). It
is important for managers to continually search for new and better ways of sourcing
information relevant to the decision making process.
There are also many cases of organisations and managers making decisions based on
information that, in hind sight, proved to be unreliable. The increased use of the intra
and internet increase the risk of using unreliable information that appears, on the surface
to be valid and reliable.
It is important that as a manager you thoroughly check the source of the information to
verify its validity and currency. A useful strategy to reduce the risk of obtaining out of
date and unreliable information is to obtain information from a variety of sources.
Many staff, particularly those who have grown up before the 'information technology
age' still prefer to use manual information systems. In many instances they are identified
as 'dinosaurs' by fellow workers who have adapted easily to the electronic information
systems.
Both manual and electronic systems have advantages and disadvantages. Considerations
such as cost, portability, access speed, reliability, accuracy, ease of use must be
considered before replacing a manual information system with an electronic system.
Some organisations that moved from manual systems to electronic ones early in the
technological revolution found that they had purchased extremely expensive systems that
required extensive training, were difficult to use, inflexible, expensive to locate and
maintain and were only available to a limited number of staff due to lack of portability or
28
networking. Because of the high initial investment it is often prohibitive to purchase
updated systems that are much more efficient and effective.
On the table below identify three types of information that you require for decision
making (you may refer to ones you identified in Section 1). Indicate the manual and
electronic system that can provide you with that information. You also need to
indicate the system you prefer to use and why.
Information source Manual System Electronic System Preferred System Why Preferred
On the following page, develop a checklist that you could use to evaluate the
usefulness of an Electronic Information System in providing you with information
required for effective and efficient decision making.
29
Checklist
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
30
Locating information
Many managers complain about the lack of information provided to assist them in
making decisions. Often the information is available within the organisation or externally
but managers are unaware of where the information is located or how they can access it.
In most cases the manager is unaware of the where and how because of lack of
communication and/or effective training. Often highly sophisticated and effective
electronic information systems are purchased without consideration of 'selling' the
system, and its capabilities, to staff or providing training.
Successful organisations ensure that the budget for the purchase of a new Electronic
Information System includes extensive pre purchase consultation with potential users as
well as post purchase 'selling', training, and support to ensure that all users are aware of,
and skilled, in the use of the new system.
Many organisations demand that electronic systems purchased are 'user friendly' to the
extent that they require minimum training and are 'idiot proof'.
Recent advances in technology, particularly the intranet and internet have potential to
provide managers with continuous updates of information rather than waiting for daily or
monthly reports before making decisions. Variances can be immediately identified and
adjustments made. For non- routine decision making the sources of both internal and
external information have expanded significantly as providers of information upgrade the
capabilities of their systems and new providers of information emerge.
In the previous section you were required to identify locations currently used to obtain
information. This may be an example of 'not knowing what you don't know' - that is,
there may be many other locations of information that you are currently not aware of . In
addition, the locations you currently use may have a number of features that you are not
aware of, but could very effectively utilise, to improve your decision making capability.
31
ACTIVITY - Identifying New Locations and Better Utilisation of Existing
Locations
Find out if there are any new locations that you could utilise to obtain useful
information. In addition find out if there are additional features of the locations you
are currently using that could provide you with additional useful information. Record
your research in the table below.
32
Many organisations are significantly affected when a staff member resigns or retires. In
many cases the staff member, particularly a long serving one, has accumulated a large
amount of information relevant to them effectively and efficiently performing their job
but the knowledge of the information is held in their head. Once they leave the
information leaves with them.
Successful organisations recognise the significant 'invisible resource' contained in the
expertise of each staff member and have strategies in place to record the expert
information of each individual. This is often incorporated into Standard Operating
Procedures or in a dedicated Expert Information System that can be added to and
updated on a continuous basis. Without such a system a company risks the continual
drain of a high value resource - expertise and experience of its people.
33
The cost of losing information
When important information is stored in someone's head the retirement, retrenchment
or resignation of that person can result in a significant cost to an organisation. The last
activity identified several examples of information that is not documented but in
someone’s head. In each example identified there is a potential cost associated with the
loss of the information to your Ministry.
Select, from the last activity, one of the examples of information that is not
documented. Calculate the potential cost to your Ministry of losing this information if
the holder of it resigns, retires or is retrenched.
34
Minimising loss of information through Succession
Planning
All organisations, including government ministries, have a dynamic human resource
base. Staff are promoted, change jobs and locations within the company, move to
competitors or other companies, retire or are retrenched when restructuring occurs.
Successful organisations minimize the disruption and loss of information when a person
shifts from a current job through succession planning, particularly in key areas.
Succession planning is a formal strategy to minimise the disruption and potential cost of
a key person shifting from an existing position. Effective succession plans are integrated
into performance management systems and identify potential replacements for each
person in a key position. Strategies are developed to ensure that the information and
experience that each key person has is transferred to one or more staff, usually junior,
who have shown the potential to effectively perform the job of the key person. Through
planned transfer of information and expertise to potential successors the risk of loss of
information and the associated costs to the organisation are minimised.
35
Activity - Succession planning and Information transfer
In the Expert Information Systems activity you identified the current holders on non-
documented information. For each of the people identified indicate the succession
plan that is currently in place. If there is none, suggest a possible plan that should be
implemented.
Current holder of undocumented Succession plan currently in place Suggested succession plan where
information none exists currently
36
Barriers to accessing information
In most organisations there is a large amount of information available but there are
often accessibility barriers. This can be caused by a number of factors including:
37
Activity - Information Barriers
Based on the barriers identified above or others you are aware of, identify two examples
where you experience barriers to easily obtaining information. Describe the barrier and
the strategy to eliminate the barrier. Once you have completed this activity you may
wish to continue a similar activity in your department as a workplace improvement
strategy.
38
Information research
The gathering of information requires good research skills to source the most useful
information in the easiest, quickest and most cost effective way. Research skills that can
assist in obtaining the best information include:
The sources of information are classified as either primary or secondary sources. Primary
information is new information that does not currently exist. Primary information can be
gathered in a number of ways including direct measurement (units manufactured per
minute, cost per module, sales per area, growth per month), questionnaires, face to face
interviews, direct observation, sampling.
Secondary information is information that already exists either within the organisation or
externally. Secondary information may not be specific enough to provide sufficient
information for decision making. It often needs to be supported by primary information. An
advantage is that it is usually readily available and cheap to obtain and may be in a format
similar to that required by the user.
Researching for information will include obtaining qualitative and quantitative information,
both primary and secondary.
Qualitative data is based on observation or obtaining opinions. It is commonly used in
marketing and its usefulness is largely determined by the skills of the researcher in
designing the information gathering plan to ensure that the information collected is as
objective as possible.
Quantitative data is based on developing techniques to accurately measure the information
required and to produce information that is presentable numerically with a high degree of
certainty. Quantitative information is relatively easy to obtain in relation to technical,
financial, scientific, biological and production information. It is less common in the areas
where people, and their complexity and diversity, in relation to things like opinions, tastes,
feelings, experiences, wealth, location, age and cultures, are involved.
A number of statistical tools have been developed in an attempt to convert qualitative
information into quantitative information with a reasonable degree of accuracy. Statistics
are referred to in more detail in Unit 4 of this module.
39
Unit 3 - Use management information systems.
This section focuses on the how managers can select and use a management system in
planning, decision making and performance monitoring and improvement
40
Information system features
Information systems that managers use with ease and confidence are likely to have
a number of key features that result in them being taken for granted by the user(s).
Several of the key features have been identified in the previous sections.
The key features of a good information system can be summarised as:
• accuracy
• useful information
• reliable sources
• up to date
• ease of access
• user friendly
• secure
• regularly updated
• good housekeeping
a) The key features identified can be used as a checklist to rank the value of
an information system. This activity requires you to identify the main
information system you use and to score it in relation to each of the key
features. You are also required to explain why you applied the chosen
score to each feature. Complete the table on the following page.
41
Information System: __________________________________________________
Accuracy
Useful information
Reliable sources
Up to date
Ease of access
User friendly
Secure
Regularly updated
Good housekeeping
42
ACTIVITY - Information system features
Unless the system is perfect it is likely that you have scored some key features at
less than a perfect score of 10. You will also have indicated why you have
allocated that score. This section of the activity requires you to identify possible
strategies to improve the effectiveness of the system in the key features you
identified as being less than perfect.
Useful information
Reliable sources
Up to date
Ease of access
User friendly
Secure
Regularly updated
Good housekeeping
43
44
Changing from a manual to an electronic information
system
In the previous sections it was indicated that many people, for various reasons,
prefer to use a manual system rather than an electronic system. In many instances
there is no objective analysis of the features and benefits of each type of system, the
decision to remain with a manual system being based on familiarity, fear of
technology, insufficient time to retrain, cost etc.
Note: The information system you are assessing does not need to be large - it
could be meeting minutes, daily diary etc.
45
Manual system audit
Key Feature Performance Score Reason for score chosen
1 2 3 4 5 6 7 8 9 10
Accuracy
Useful
information
Reliable
sources
Up to date
Ease of access
User friendly
Secure
Regularly
updated
Good
housekeeping
1 2 3 4 5 6 7 8 9 10
Accuracy
Useful
information
Reliable
sources
Up to date
Ease of access
User friendly
Secure
Regularly
updated
Good
housekeeping
46
ACTIVITY - Changing from a manual to an electronic information
system (continued)
47
Selecting an Electronic Information System
In the previous activity a manual and alternative electronic system were compared
using the key features required for a good information system. This section focuses
on electronic information systems. There are a number of addition features that
need to be considered in relation to comparison of the suitability of electronic
information systems including:
Ease of use
• How easy is the electronic information system to use, particularly for users with
little or no previous computer awareness.
Capability
Configuration
Output
Support
48
Upgrading
Cost
49
Activity - Selecting an electronic system
Based in the selection criteria identified above EITHER conduct an audit of an
existing electronic information system you currently use OR use the selection
criteria to compare alternative electronic systems that may be available to
replace a manual system or existing electronic system you are currently using
but would like to replace in the next 12 months. Check with your IT Support
staff to see what criteria they use.
Ease of use
Capability
Configuration
Output
Support
Upgrades
Cost
50
2. Compare alternative electronic information systems to replace existing manual
or electronic information system (you may wish to copy the tables if there are
more than two systems being compared).
System 1
Ease of use
Capability
Configuration
Output
Support
Upgrades
Cost
System 2
Ease of use
Capability
Configuration
Output
Support
Upgrades
Cost
51
ACTIVITY - Selecting an electronic system (continued)
Why?________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. Provide the trainer with evidence of the selection criteria used by IT support
staff
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
52
Presenting Information
There are several key considerations in relation to designing the way in which
information is presented to ensure that it provides the user with the most 'user
friendly' format. Information may be presented in a number of ways but should
always include the following key characteristics:
Layout
• Positioning on page/screen
• Major and minor headings
• Emphasis on key points
• Easy find index
Order/Categories
• By postcode, alphabetic, receipt number, plant, department
• Straight line or by category - eg A, B, C Customers, Product Range
Output
• Computer Screen/Touch Screen
• Hard Copy (paper)
• CD rom
• Computer disk
Frequency of updates/Volume
• Continuous, hourly, daily, weekly, monthly, annual updates
• Number of printed copies related to number of users - some frequent, others
occasionally.
53
ACTIVITY - Presenting Information
Select an information system you frequently use. Audit the quality of presentation
in relation to the above categories by scoring on a scale of 1 (poor) to 10
(excellent) and comment on the reason for your score and suggested changes
Layout
Order/Categories
Output Medium
Frequency of
updates/volume
Introduction of
New Technology
54
Maintaining an Information System
Some organisations still purchase 'off the shelf' information systems on the basis of
purchase price. As indicated earlier, there are many factors, in addition to price,
that need to be considered in relation to the overall cost of an information system.
The benefits the organisation will gain from introducing a new system or updating
or maintaining an existing one need to be considered.
Training
As indicated previously, a sophisticated, expensive and potentially very valuable
information system may fail to meet part or any of its potential unless a training plan
is included in the initial setup and ongoing upgrading of an information system. The
cost of training can be significant if indirect costs (downtime of staff and
replacement) are included. Systems designed to require minimum training ,
although expensive compared to other 'discount' systems may be cheaper in the
long run if they incorporate features that minimise the training required.
Support
Some 'discount' systems are sold by 'fly by night' sales staff and when even a basic
question requiring clarification is raised the sales staff or other company
representatives are difficult or impossible to contact. Reputable information systems
providers have dedicated help lines or provide good training to internal IT service
staff. Support considerations include the speed at which it is possible to access
help, either internally or externally. If there are 1000 staff requiring internal IT help
and there is only 1 phone line/support person the information system can grind to a
halt. Similarly, if there are millions of users of a major information system
worldwide and only one contact point with only two or three lines, immediate
assistance is unlikely - but you may be able to listen to many tunes!
Maintenance
How often is maintenance required? How long does it take? When is it done? For
any information system to run efficiently and at full capacity it is necessary to
maintain both the hardware and software. Identifying peak and trough use times is
important as well as having IT support that is efficient and follows a programmed
preventative maintenance plan.
Upgrades
Technology changes very rapidly and information systems that do not have the
capacity to be upgraded will rapidly become obsolete. Again, discount 'off the
shelf' systems may not have capacity or capability for upgrades, or there may be a
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high cost attached to them - a cheap purchase price compared to other systems may
quickly be eliminated when the first upgrade is required.
Where there is a cost of upgrading it is important to include the costs in the original
budget for the information system otherwise upgrades will be missed and the system
will rapidly fall behind that of competitors who have budgeted and implemented
regular upgrades.
Supplies
In addition to the hardware and software there are a number of consumables that
need to be included in the budget for an information system, in many instances,
with the potential to add significant costs to the budget. Consumables include
printer paper, printer ink, disks. Many organisations expect that when they
introduce electronic information systems the usage and costs of consumables will
reduce significantly, only to find that the costs remain the same, or often rise due to
staff demanding paper copies of the greater volume of information available.
Training and policy guidelines are needed over a period of time to reduce the
'natural' requirement of many staff to have everything copied onto paper.
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ACTIVITY - Maintenance
a. Identify the information system you are undertaking the maintenance audit
on.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Training
Support
Maintenance
Upgrades
Supplies
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Needs based storage of information
Some information only has a short 'shelf life' and little requirement to store it. Most
information however, needs to be stored to provide input to weekly, monthly or
annual reports, or for legal reasons. Whether an information system is manual or
electronic it still requires an efficiently planned, organised and maintained storage
system. The advantage of electronic systems is that the large amount of space
required for manual systems has been eliminated. There is however, still a case for
manual storage of some information, particularly when it is received in manual
form.
There are several key factors that should be included in any information storage
system including:
Accessibility
Most information required by managers needs to be easily accessed. This requires
the information to be stored in a way that minimises the time or distance required to
access it. A manager who relies on information available only on their manager's
computer will possibly waste time walking to the managers computer, and even
more time if the manager is unavailable. Manual storage systems are often
inaccessible outside set opening times, particularly if they are archived files that
have a 'gatekeeper' who is not always readily available.
Logic
Manual systems are the most likely to be difficult to access if the filing system has
not been set up in a logical way. Simple alphabetic systems often result in the
option to file information under several different letters. For example sales to a
customer in Siem Reap may be filed under C for Customers, S for Siem Reap, S for
Sales. Electronic systems can overcome this by providing cross reference capability.
Agreed logical systems need to be established on a company wide (or at least
department wide) basis to ensure ease of access.
Accurate
It is possible for decision making information to be stored in several separate
locations. If this is the case not all the required information may be accessed due to
the user not being aware of all the locations of the information. Simple errors,
particularly in a manual system, may compound if they are not identified and
corrected. An example could be where a key error resulted in the sales figures for a
particular area appearing with an extra digit - 100000 units instead of 10000. When
accessed for future planning this figure may result is significant problems,
particularly if it is an electronic system that automatically programs production and
the error is only a small part of normal production. ( A good system would detect
the error).
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Time
Each time information is retrieved there is a cost based on the number of minutes
and possibly hours required by one or more staff to allocate time to information
retrieval rather than some other productive task. Significant opportunities to reduce
costs can often be identified in inefficient information retrieval systems where it is
difficult and time consuming to find and retrieve information.
Each of the above requirements of a good information storage system can be met
through addressing the following questions:
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ACTIVITY - Information storage systems
Identify the manual and electronic storage systems you currently use (refer to
Section 1)
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Select the main manual and electronic storage system and identify how well it
addresses the key requirements of a good storage system. For both the manual
and electronic system chosen, identify changes that can be made to improve the
current system.
Logic
Accuracy
Retrieval time
Logic
Accuracy
Retrieval time
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Security of Information
The value of information as a critical resource is often overlooked by organisations.
Information systems and the storage associated with them represent significant
investment which, if lost or stolen, could result in the failure of the organisation. In
earlier sections information was identified as the competitive edge of many
successful companies. The loss of information could result in the immediate loss of
that competitive edge.
As with other resources, risk analysis, of the potential loss of information, should be
undertaken by all companies. Good managers ensure that the analysis is undertaken
and a risk minimisation plan implemented to ensure that the risk off loss is
minimised or possibly eliminated.
There are several strategies that can be implemented to reduce the risk of
information loss due to one or more of the above factors including:
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GROUP ACTIVITY - Security Audit
In one or more groups undertake an information systems security audit for your
department. The makeup of the groups will be determined in the workshop.
D. Information that is low risk in relation to loss but is currently 'over secured'
E. Recommended strategies to reduce the security level for low risk information
without compromising the overall information system security.
Note: Due to the level of confidentiality this activity involves the final report to the
trainer requiring internal clearance from our Ministry and editing prior to
presentation (a good example of a security consideration that could easily breach
Ministry policy in relation to security of information).
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Unit 4 - Prepare plans/budgets
This section focuses on the value gained from managers having the skills to effectively
plan, implement and monitor budgets.
• The involvement of managers and teams in planning and budget preparation and
the resultant benefits
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The manager's role in budget planning
The lack of planning is one of the key factors contributing to organisational failure.
Budgets provide managers with a systematic framework in which to operate the
business or organisation.
A budget can be defined in monetary or non monetary terms as the means by which
an organisation plans to achieve its goals and objectives. These goals may be long
term or short term. To meet the long term goals it is necessary to develop short-term
strategies that are incorporated into annual budgets. A budget is not simply a means
of limiting expenditure or checking staff performance. It is a tool for planning and
controlling the effective and efficient use of resources to ensure the daily activities of
each department are contributing to the organisation's long term goals.
Budgets are the annual operational plans that are designed to achieve the strategic
objectives and include details of marketing, production, labour requirements, costs,
profit.
The development of good budget plans provides a key performance reporting system.
Responsibility reporting is often used in relation to budgets to provide performance
reports in relation to the manager and teams of specific areas.
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them, particularly where they have been involved in pre-budget consultation. Staff
can think about their future and that of their department and the organisation.
• Control — Feedback through budget reports provides a way of continuously
evaluating the actual outcomes in relation to the goals and objectives. The
monitoring of budgets provides the opportunity to identify problems and take
corrective action immediately.
Top Down — senior management decides what the budgeted expenditure will be for
the next budget period and lower management are expected to set their budgets to
achieve the targets set by senior management. This often allows for little staff
participation and the possibility of unrealistic budget targets, resulting in
deteriorations of staff morale.
Bottom Up — individual budgets are set by the people responsible for achieving
results in their departments or areas. The budgets are consolidated into an overall
budget which is then reviewed by senior management.
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This approach can provide a greater opportunity for involvement by staff at all levels
provided that managers are willing to invest the time in gaining input from staff.
There is a risk that staff involvement may result in budget padding. Staff may
overestimate budget requirements, believing that costs will be cut.
Managers who involve staff in the planning of budgets will gain several benefits for
their team and the organisation including:
• Improved planning — not necessarily more efficient time wise but more
effective
• Better understanding by staff of organisational goals
• Greater acceptance by staff of organsiational goals
• Stronger commitment by staff to achieving these goals.
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ACTIVITY - Budget Planning
Which of the top down and bottom up methods of setting budgets is used in your
Ministry?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
How much opportunity do (a) you and (b) your staff have in contributing to the
budget process
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Which of the following methods of setting budgets is used in your Minstry and/or
department — Incremental, Estimating, Zero Based, Comprehensive?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Identify the advantages of the budget planning strategy used
______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Indicate any shortcomings of the budget planning strategy used.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Identify ways in which you can help improve the budget planning process
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
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Preparing a budget
There are several features of good budget preparation including:
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Comparing actual performance with budgets
Budgets allow managers to evaluate actual against planned performance. The
continuous feedback provided by comparing actual performance against planned
performance is a strong motivating force that allows managers and teams to
undertake corrective action to ensure that budgets and other performance indicators
are on track.
Budgets need to be flexible to allow for the constantly changing environment and one
of the ways to ensure that like figures are compared is to use a technique called
Flexing the Budget.
Because the actual level of budget performance is often different from the planned
level it is often necessary to `flex' the original budget to allow like with like
comparisons.
For example, if the maintenance department has a planned budget for the month that
involves painting 4000m2 and the actual area painted is 5000m2, it is best to compare
performance on the basis of a `flexed' version of the original budget as follows
The following important points relate to the above variance example:
1. When actual expenses are greater than the budgeted expense the variance is
Unfavourable (shown with brackets or a — sign). When actual expenses are less
than the budgeted expense the variance is favourable (shown without brackets or
with a + sign)
3. When `flexing' a budget only variable costs are adjusted. Fixed costs remain the
same despite variations in activity levels.
4. The comparison of actual with planned budget is a Performance Report. If the
original budget had been compared with the actual budget all expenses (except
salaries) would have been higher in the actual budget, causing some readers of
the expense budget to believe the maintenance department was performing
poorly. In reality, when comparing like with like — ie the actual expense budget
with a `flexed' budget the department is performing very well, with the exception
of labour — which may be due to the painting of some ceilings that required extra
time and wasn't included in the original budget.
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Budget Flexed Budget Actual Variance
4000m2 5000m2 5000m2
Riel Riel Riel Riel
Paint 40000 50000 47040 2960
Labour 15000 18750 20160 (1410)
Supplies 6200 7750 7720 30
Electricity 1900 2375 2280 95
Gas 700 875 820 55
Water 500 625 580 45
Salaries 1600 1600 1600 -
Total 65900 81975 80200 1775
1. The size of the variance — for example a minimum of 20,000R may be set —
this may vary between companies depending on size (although lots of small
variances may add up to a significant figure)
2. Percentage variation. An organisation may set a variance of 5% or over as
requiring explanation and adjustment
3. Frequency of variation. A one off may not warrant investigation but should be
monitored for frequency and if it occurs again, the variance should be
investigated.
4. The cost of investigating and remedying. Some variances may cost more in
investigation and remedying than the benefits to be gained
There are several strategies that can be used to improve the corrective action stage
once variances have been identified including:
1. Ensure that the assumptions, figures and calculations are accurate and
correctly recorded
2. The use of performance reports contributes to developing a culture of
continuous improvement in the organisation, particularly where the variance
data is presented in a user friendly manner
3. Regular evaluation and improvement meetings can be held to analyse:
· The causes of the variances
· Implementing corrective action
· Progress of previous corrective action
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ACTIVITY - Performance report for your Department expenses
Using the Performance report table below, complete the sections that relate to your
department . Provide the trainer with evidence of where you sourced the information
NB: Some expenses may not be relevant to your department. Feel free to change or add expenses in
the empty rows to reflect Ministry operations.
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Unfavourable variance and possible remedies
Revenue Variance
Although Sales may not apply to your Ministry, there can be a variance in actual
revenue which, if unfavourable, can have an impact on operations. Consider possible
causes of an unfavourable variance in revenue including:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
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Materials Variance
This could easily apply to government projects. There are a number of possible
causes of unfavourable materials variance including:
73
Labour Variance
This could also be relevant concerning technical advisers, the mix of labour required
for a project, any sub-contracted labour employed. Or the need to transfer labour
from one area to another. There are a number of possible causes of unfavourable
labour variance including:
Identify an unfavourable variance in labour, and the cause of the variance. Explain
the action taken to reduce or eliminate the variance.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
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Other expenses variance
Interest
Identify a department expense where, in the past there were often variances.
Indicate the reason for the variance and the remedies you and your team took.
Explain the process you used to minimise the variance.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
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As has been suggested in the Payroll example, there are often hidden drains on the
organization or your department that may not show up in the budget reviews,
particularly if the hidden cost has been built into the original budget for this year, or
possible in the past (another justification for zero based budgeting). It is possible for
an organization to continue paying unnecessary amounts for materials, labour etc. By
having a review policy that regularly looks at the value-added by an input,and
possible alternatives, it is possible to identify previously unknown drains.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
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Unit 5 - Prepare Resource Proposals.
This section focuses on the how managers can identify future resource needs, collect
resource needs data and present realistic resource needs proposals.
• Estimating the resource needs and utilisation that reflects the organisations
business plans, and customer and supplier requirements
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Identifying expenditure needs and preparing resource
proposals
This section focuses on the operating and capital expenditure and the resources needed
by the organisation to achieve the operating and capital expenditure targets.
Careful analysis and planning must occur and information sourced to ensure that any
decision made to acquire resources, particularly those involving significant investment,
are based on proper analysis and consultation.
To undertake proper analysis both financial and non financial data needs to be
considered. Financial data includes income and expenditure, cost of raw materials,
labour cost per unit. Non-financial data includes progress against workplan, quality
audit, donor feedback etc.
Some data is readily available within the organisation but other data may need to be
sourced externally.
• Capital Resources - Resources that are used to produce other goods or services.
They are used up over a period of years but depreciated annually. They include
buildings, major equipment, land, intangibles (eg brand name)
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Human Resources - Staff
The proportion of expenditure allocated to staff depends on the nature of the products
or services created by an organisation. In organisations that produce goods or services
that are labour intensive the proportion of expenditure related to people is usually a
high proportion. In organisations that are highly mechanised and produce goods or
services using the latest technology the human resource expenditure is only a small
component of overall expenditure.
b. Your Ministry
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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Good selection, recruitment and orientation systems are essential. In arriving at the
optimum level of human resources, information needs to be obtained in relation to a
number factors including:
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ACTIVITY - Human resource Information
Identify and provide evidence of the specific measurable outcomes required by your
department or unit for this financial year (you probably already have this
information)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
1. Briefly describe the information you use in relation to determining the human
resourcing factors listed.
Forecast production
Labour regulations
Cost of labour
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Capital Resources and Expenditure
Capital Resources are fixed assets that are usually major in relation to cost and are used
for more than one financial year. The actual cost determines whether an asset is a
Capital Resource or Operational Resource .
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In addition to identifying Capital Resources already in existence an important skill of a
manager is to contribute to the selection, purchase, installation and use of Capital
Resources.
Identifying the most appropriate resources, particularly major ones, to achieve the
objectives of your department or unit and your Ministry as a whole will require special
skills, particularly due to the fact that predictions of future returns on each investment
option need to be made.
There is no method of identifying exactly what the future benefits and costs of a new
investment are. Any analysis will involve an estimate of future cash flows to arrive at a
figure that will allow comparison of various investment options.
1. Payback Period
2. Accounting rate of return
3. Net Present Value
4. Internal Rate of Return.
For this unit it is not a requirement that managers have a detailed understanding of
each of these methods. As a manager you do need to be aware of the different methods
and why they are used.
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ACTIVITY - Investment Evaluation Methods
Identify and describe a major capital investment that was recently made by your
department (if your department has not made a major investment recently select one
from your Ministry as a whole)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Find out how the investment decision was made, and ideally the Investment
Evaluation Method(s) used.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What consultation processes were used to ensure that there was sufficient input from
the stakeholders in the investment decision?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What are some of the indirect benefits arising from the investment for your staff,
stakeholders and Ministry?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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Operating Resources and Expenditure
The earlier definition of Operating Resources identified them as resources that are used
in a financial year. Another definition describes them as relatively minor items in
relation to cost but which are important contributors to the day to day efficiency and
effectiveness of daily operations.
Identify and describe an operating resource investment that was recently made by
your department or unit (if your department has not made an operational investment
recently select one from your Ministry)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Find out how the investment decision was made, and ideally the Investment
Evaluation Method(s) used.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What consultation processes were used to ensure that there was sufficient input from
the stakeholders in the investment decision?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What are some of the indirect benefits arising from the operational resource
investment for your staff, customers and owners
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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Some of the operational resource investments you may have chosen include:
• Communication Systems
• Computing and Information Systems
• Tools of Trade or minor equipment
• Materials Movement or Handling equipment
• Maintenance Equipment
Indicators of problems with availability and use of current operating resources may
include:
• Bottlenecks
• Time-wasters
• Idle or down-time
• Inability to meet Service Level Agreements
• Information restrictions
• Poor response times
An audit of operational or capital resources will identify areas where availability and
use rates are identified as being below required standards. The research should include
seeking information on the options that stakeholders identify in relation to alternatives
to better utilise existing resources or the requirements for replacement of old resources
with new ones.
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ACTIVITY - Identifying needs and opportunities
Based on the possible indicators of problems in resources availability and use listed
above, identify a resource where there is a problem related to availability and/or use
and the indicator that there is a problem.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What alternative methods could you use to conduct the research to identify the
causes of the problems in availability and use of the resource and possible ways of
improving the situation
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What benefits are there to be gained from including customers (internal and
external) in your research?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What methods would you use to validate, evaluate and apply costs to the
quantitative and qualitative information gathered?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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Preparing and presenting proposals
Following research - both quantitative and qualitative - the next step is to develop a
proposal that is to be presented to the key decision makers in relation to the planned
operational or capital investment.
There are a number of elements that should be included in a good proposal. It is likely
that your department has a suggested format for presenting proposals.
Investigate and provide evidence of the format of proposals used in your Ministry.
Are there standard guidelines?
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
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The elements that should be included in a proposal include:
• Title
• Identification of problem(s) or opportunities
• Reason for proposal
• Aims and objectives
• Summary of costs
• Proposed method of financing
• Financial and non financial benefits
• Recommendation summary
• Title
• Author, contact details, date
• Purpose and problems to be solved or opportunities to be gained
• Key aims, objectives and benefits
• Capital and other requirements
• Timelines proposed
• Research undertaken and sources
• Alternatives considered
• Data Collected
• Verification of data
• Financial calculations
• Assumptions underlying calculations
• Evaluation in quantitative and qualitative terms
• Bona fides of authors of the proposal
• Capital sources and costs
• Recommendations
• Summary and conclusion
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ACTIVITY — Major Project — Group
The objective of this project is for you to prepare a proposal for either an operating or
capital investment you have identified in consultation with your team. Ideally the
proposal should be one that you need to complete and submit as part of your forward
planning.
You will need to identify the investment proposal prior to the end of this training and
briefly discuss it with the trainer.
In completing the project you will benefit from following an action learning cycle:
The proposal will be presented at a time agreed between your trainer and your group and
ideally will involve a formal presentation to the whole group. Each project will be
completed by teams of 3-4 from the same unit or department - the make up of the groups
will be determined prior to the completion of the workshop.
The following checklist provides you with guidelines for completing the project and should
be used in combination with the key elements of a proposal listed earlier in this section:
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3. Identify possible alternative options by:
• conducting research internally and externally
• identifying constraints including financial, time, capacity to consider
alternatives
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Useful Terms:
Back up A way of protecting data by copying it and storing it in
more than one place
Capital Resources Resources that are used to produce other goods or services.
They are used up (depreciated) over several years.
Operational resources Resources that are totally used in the production of output
or service - eg. materials, fuel, paint, electricity.
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Questionnaire A list of questions designed to acquire accurate information
to assist with decision making
SECTION FIVE:
Prepare resource proposals
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