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Management Accounting

and Procedures

From : A.M.Pasindu Charaka


(NG/HNDQS/10/27)
To : Mr. Thamara Indika Ranasinghe
Department : HND/QS Batch 10
Nugegoda.
Management Accounting and Procedures

Higher National Diploma in Quantity


Programme Unit 10 JACS Code
Surveying & the Built Environment

Management Accounting and


Module Number QS 501 Module Title
Procedures

Credit Value 15 Module Level H2 Module Value 1.0

Assessment Final Assessment Assessment Weighting 30%

Assignment Title Management Accounting and procedures for Quantity Surveying practice
Lecturer Mr. Thamara Indika Ranasinghe
Student Name A.M.Pasindu Charaka Student Number NG/HNDQS/10/27

Handed Over on 18th February 2017 Due Date 24th April 2017

Pass/ Re-
Date Submitted
Submission

Course Leader Mr. Geeth Jayathilake

Module Leader

Internal Verifier Date Verified

Developed by

Final Grade Fail Pass Merit Distinction

Initial Assessor

Date
Assessors Signature
Assessed
2nd Assessor

Comments

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Management Accounting and Procedures

Acknowledgement

I would like to express thanks & gratitude to Mr. Thamara Indika Ranasinghe our
tutor, who has provided his precious time, support, suggestions and valuable
comments throughout the project. He has given us feedback & lots of advices time
to time to continuously improve our work.
Finally, we would like to express our sincere gratitude to our parents & friends
who were always behind us, helping us in many ways, providing us with all
facilities, advising and encouraging us to complete this work successfully.

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Management Accounting and Procedures

Contents
Acknowledgement ...................................................................................................................... 2
Table of figure............................................................................................................................. 4
Introduction ................................................................................................................................. 5
Task 01 ............................................................................................................................................ 6
01. Roles & responsibilities of Quantity Surveyor ..................................................................... 6
01.01 Roles & responsibilities of Quantity Surveyor in a client organization. ...................... 6
01.02 Role of client QS in term of Financial .......................................................................... 7
01.03 Role of client QS in term of Cost management ............................................................ 7
01.04 Role of contractors QS .................................................................................................. 7
01.05 Role of Contractor QS in term of Financial .................................................................. 8
01.06 Role of Contractor QS in term of cost management ..................................................... 8
Task 02 ............................................................................................................................................ 9
02. Financial appraisal ................................................................................................................ 9
02.01 Initial cost appraisal for construction ............................................................................ 9
02.02 Financial Statements ..................................................................................................... 9
02.03 Financial Statement Analysis ...................................................................................... 10
02.04 Balance sheet .............................................................................................................. 10
02.05 Income statement ........................................................................................................ 10
03. Analyse the Income statement of Nisalka Constructions PLC financial and non-financials
measurements ............................................................................................................................ 11
03.01 Financial ...................................................................................................................... 11
03.02 Non-financial .............................................................................................................. 12
04. Analyse the balance sheet of Nisalka Constructions PLC financial and non-financials
measurements ............................................................................................................................ 13
04.01 Financial ...................................................................................................................... 14
04.02 Non-financial .............................................................................................................. 14
Conclusion ................................................................................................................................ 15
References ................................................................................................................................. 16

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Management Accounting and Procedures

Table of figure

Figure 1 Role of QS ........................................................................................................................ 6


Figure 2 Nisalka PLC Income statement ...................................................................................... 11
Figure 3 Nisalka PLC Balance sheet ............................................................................................ 13

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Management Accounting and Procedures

Introduction

A Quantity Surveyor (QS) is a construction industry professional with expert knowledge on


construction costs and contracts. They are not to be confused with Land Surveyors or Land
Survey Engineers.
Financial appraisal views investment decisions from the perspective of the organization. It
assesses the viability of a project based on the direct effects on the cash flow of the organization.
It considers whether the projected revenues will be sufficient to cover expenditures and whether
the financial return is sufficient to make the investment commercially viable (profitable).
Financial statement analysis is the process of reviewing and evaluating a company's financial
statements (such as the balance sheet or profit and loss statement), thereby gaining an
understanding of the financial health of the company and enabling more effective decision
making.
Unlike the balance sheet, which covers one moment in time, the income statement provides
performance information about a time period. It begins with sales and works down to net income
and earnings per share (EPS).

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Task 01
01. Roles & responsibilities of Quantity Surveyor
01.01 Roles & responsibilities of Quantity Surveyor in a client organization.

Quantity surveyors (sometimes referred to as cost consultants or commercial managers) provide


expert advice on construction costs. They help to ensure that proposed projects are affordable
and offer good value for money, helping the client and the design team assess and compare
different options, and then track
variations, ensuring that costs
remain under control as the project
progresses. Quantity surveyors can
specialize in a specific aspect of
construction costs, or in a
particular type of construction.
The day to day responsibilities of
include roles inside the office, on
the construction site - or in
meetings with clients and other
project personnel. While the very
nature of construction work
ensures no two projects are ever
the same, a typical work day
might involve. Figure 1 Role of QS

Tasks will vary depending on the nature of the project, but they might include:
Helping determine the client's requirements and undertaking feasibility studies.
Benchmarking requirements against similar projects.
Helping define the project budget.
Checking developing designs against the project budget.
Assessing value for money.
Checking designs meet legal and quality standards.
Undertaking risk management and value management exercises.
Preparing cost plans, estimates and cash flow projections.
Advising on procurement strategy.
Preparing bills of quantities.
Preparing tender pricing documents.

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01.02 Role of client QS in term of Financial

Readiness of surmised evaluations of expenses at the outline stage and offering exhortation to the
plan group on option materials and sorts of development and furthermore the money related parts
of agreements. Keep the customer educated at all phases of the venture of the money related
position of the agreement at concurred standard interims. Deliver standard Financial Statements
which stay up with the latest with the evaluated add up to conclusive cost of the venture.
Help with building up a customer's necessities and attempt possibility studies and saw if
contributing on venture is profiting him or not. Act with the Architect or Engineer to guarantee
that the money related arrangements of the agreement are appropriately translated and connected
so that the Client's budgetary premium is shielded and that the developer is paid a legitimate cost
for the work. Setting up the last record on fruition of the agreement works.
Exhorting on the money related and legally binding parts of temporary workers claims. The
amount surveyor can give a bank a venture report and help a customer by planning draw down
testaments for cash to be advanced by the bank.

01.03 Role of client QS in term of Cost management

Taken a toll arranging at the plan stage to guarantee that the customer gets the best an incentive
for his cash. Taking out amounts from drawings and readiness of bills of amounts. Arranging
rates with contractual workers on arranged contracts and managing cost repayment contracts,
plan and assemble, administration and different types of agreement Planning of delicate archives
and calling for tenders.
Delicate assessments and planning of delicate reports. Exhortation on what a venture would cost.
Inform on the financial matters with respect to a venture and the arrangement of a financial plan
Giving cost exhortation and data at all phases of the agreement and get ready cost examinations
and cost reports to customers. Arrange the material cost and development cost with the provider
and the sub-contractual worker.

01.04 Role of contractors QS

A Contractor's QS is responsible for the performance of operations similar to those of the PQS;
i.e., the measurement and pricing of construction work, but specifically that actually performed
by the Contractor (and the Contractor's Sub-Contractors).The role of a Contractor's QS will
extend to such other areas as Sub-Contract formation, dealing with all matters relating to costs
and values of the project including payment and cash flow forecasts.

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The QS usually reports to Project Manager or Project Director and provides advice throughout
the management of a project from initial inception to final completion. The Streetwise Sub-
Contractor should not expect any degree of impartiality or fairness from the Contractor's
surveyor! The Contractor's Surveyor is there to make money for the Contractor!

01.05 Role of Contractor QS in term of Financial

Create an underlying income conjecture at the achievability stage to give the business a
comprehension of their possible commitments Refresh the income figure all through the plan,
offering and contract period Esteeming and concurring contract varieties as per the terms of the
agreement
Preparation of interim statements for payments. (In Sri Lanka only)Preparation of lists of
materials for projects in hand using bills of quantities or working drawings.
Planning and accommodation of month to month advance applications for installment and
following up so as to concur installments last record arrangement all work executed by the
temporary worker including varieties, temporary totals and amounts, day works, Claims for
misfortune/cost and changes included. Orchestrating staff installments and toward the finish of a
vocation settling the last records.

01.06 Role of Contractor QS in term of cost management

Get ready bills of amounts for contracts and concurring estimations with the customer's amount
surveyor. Concurring subcontractors' records putting in subcontract requests and looking at the
expenses of option techniques for completing different operations so that the most prudent
methodology can be embraced.
Preparation of cost analyses and giving cost information at all stages of the contract Managing
costs to make sure that the initial budget isnt exceeded. Cost accounting for plant and material
use by company. Measure and value the work done on site.

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Task 02
02. Financial appraisal
02.01 Initial cost appraisal for construction

Initial cost appraisals are carried out without the benefit of a design for the project. They include
client costs that may not feature in later cost plans and as a result will almost certainly need input
from the client's finance director or financial advisers. Once the initial cost appraisal is
completed, the client will decide the scope of costs that will in future be monitored by the cost
consultant and those that will be monitored and controlled by the client organization.
Initial cost appraisals break down the overall project budget based on information provided by
the client, an analysis of comparable projects and the experience of the cost consultant.
Initial cost appraisals might include:
Assumptions about the nature of the project, identifying variables. This will include a
guestimate of gross internal floor area and a rate psm to be applied from a range of
historical data. Receptivity with standard solutions carries with it cost efficient options.
For more information, see Cost of building.
Inclusions and exclusions.
Look at location and site constraints. Central London will attract a premium. Ground
conditions and proximity of neighboring buildings affect costs.
Adjust for market conditions.
The building's function and facilities influence design loadings, floor to floor heights and
structural spans which may affect costs. Special spaces with acoustic or vibration control
will attract a premium..

02.02 Financial Statements

Financial statement analysis allows analysts to identify trends by comparing ratios across
multiple time periods and statement types. These statements allow analysts to measure liquidity,
profitability, company-wide efficiency and cash flow. There are three main types of financial
statements: the balance sheet, income statement and cash flow statement. The balance sheet is a
snapshot in time of the company's assets, liabilities and shareholders' equity. Analysts use the
balance sheet to analyze trends in assets and debts. The income statement begins with sales and
ends with net income. It also provides analysts with gross profit, operating profit and net profit.
Each of these is divided by sales to determine gross profit margin, operating profit margin and
net profit margin. The cash flow statement provides an overview of the company's cash flows
from operating activities, investing activities and financing activities.

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02.03 Financial Statement Analysis

Each financial statement provides multiple years of data. Used together analysts can track
performance measures across financial statements using several different methods for financial
statement analysis, including vertical and horizontal analysis. An example of vertical analysis is
when each line item on the financial statement is listed as a percentage of another. Horizontal
analysis compares line items in each financial statement against previous time periods. In ratio
analysis, line items from one financial statement are compared with line items from another. For
example, many analysts like to know how many times a company can pay off debt with current
earnings. Analysts can do this by dividing debt, which comes from the balance sheet, by net
income, which comes from the income statement. Likewise, return on assets (ROA) and the
return on equity (ROE) compare company net income found on the income statement with assets
and stockholders' equity as found on the balance sheet.

02.04 Balance sheet


A balance sheet is a financial statement that summarizes a company's assets, liabilities and
shareholders' equity at a specific point in time. These three balance sheet segments give investors
an idea as to what the company owns and owes, as well as the amount invested by shareholders.
The balance sheet adheres to the following formula:
Assets = Liabilities + Shareholders' Equity

02.05 Income statement


An income statement is a financial statement that reports a company's financial performance over
a specific accounting period. Financial performance is assessed by giving a summary of how the
business incurs its revenues and expenses through both operating and non-operating activities. It
also shows the net profit or loss incurred over a specific accounting period.

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03. Analyse the Income statement of Nisalka Constructions PLC financial and
non-financials measurements

Figure 2 Nisalka PLC Income statement

03.01 Financial

While considering income statement of nisalaka construction plc for investigations first
thing that we see is sales.According to the 2014 income statement we can unmistakably
observe that they have increment their business Rs 35,568 to acquire more benefit.
next in line is cost of offers while considering that in 2015 cost of offers has been
increment yet with regards to the distinction or downplay deals from cost of offers we
can unmistakably observe that gross benefit has been increment in 2015 which implies
cost of offers in 2015 is gone up however as rate lower than 2014 cost of offers which is
the reason they have acquire more gross benefit in 2015 than 2014.
With regards to gross benefit the association has win 7% more benefit than 2014.
When taking about association income or misfortune wen can plainly observe that they
have procuring benefit in both years where 2014 they have win Rs30,480 benefit and
2015 Rs 34,097 when looking at both years profit.in 2015 association has gain 11%
percent more than 2014.

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03.02 Non-financial

While breaking down income statement they have increment they sales in 2015 it is
possible that they have utilize more works to build their item or have utilize machine to
make the item quicker less demanding or cost successful why.
In 2014 sales is 135,000 and cost of sales is 86,720 and the distinction or gross profit is
48,280 and 2015 sales 170,568 and cost of sales 118,435 so the gross profit 52,133 as the
sales gone up the cost of sales likewise gone up however as per the 2014 rate of cost sales
going increment considerably lesser aggregate produce cost or starting stock has gone
down as indicated by the sales.
Also, while considering the costs it is has been increment as per the 2014 which
administration need to consider to limit that.it can be increment in view of terrible charge,
leasing a house put for feed the item, due to higher wages, protection installment and so
on.

While breaking down execution of the execution of the association exhaustive income
statement they have been gaining profit and expanding it so when performing to procure
profit they have been effective. Be that as it may, need to consider more about their costs
and cost of sales.

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04. Analyse the balance sheet of Nisalka Constructions PLC financial and
non-financials measurements

Figure 3 Nisalka PLC Balance sheet

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04.01 Financial
Considering the non-current assets 2014 cost 90,400 and in 2015 it has been increment
114,000 which implies they have buy machine or vehicle, building. What's more, they
have utilize non-current assets to create their item. Since that Depreciation has been
increment in 2015.
With regards to current assets in 2014 current assets is 22,900 and which has been
increment to 45,389 in view of more stock and borrowers. In the event that they can sales
as much as their stock item and pick up the cash from borrowers they can procure more
profit.
As it goes to the equity you can see that capital has been increment which implies that the
proprietor or proprietors has contributed more cash on association.
In 2014 non-current liabilities 14,320 however in 2015 it is zero which implies that if the
association taken a solitary from bank the installment time frame has been finished shape
2014.
As the following in line current liabilities in 2014 4,520 however in 2015 it has been
increment 6,338 which implies they need to dispense cash for 6,338 in one year from
now.

04.02 Non-financial
While investigating the accounting report past year and this year as non-money related
we can see that they have utilize a greater amount of their non-current assets and they
have buy new noncurrent assets and due to that noncurrent assets are increment
contrasted with 2014.
Furthermore, their current assets are additionally increment in light of the fact that there
are keeping more stocks, giving more stocks as loan to indebted individuals and they
have bank store of 5100 also association work.
Proprietor or proprietors has contributed more cash on association.
In 2014 they have complete the process of paying bank credit so in 2015 there are no
noncurrent liabilities.
With respect to the current liabilities they have loan more stock frame exchange banks
when looking at the 2014 current liabilities.

As analyzing the execution of association through monetary record they have utilize their
noncurrent assets to build deal and profit which is great contrasting with 2014.when
considering current 2014 have been beneficial for them and need consider around 2015
where they have given more stocks as loan and keeping their stock where they can more
cash from it.as for the liabilities they have completed the process of paying bank credit
which is useful for association. be that as it may, how ever current risk has been
increment obligation loaning more stocks frame tread lenders and shape bank which is
bad for association and administration need to consider about the current assets liabilities.

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Conclusion

This assignment Firstly I describe about the client QS & Contractors QS and their terms of
financial and cost managing. After that I explain about the financial appraisal, financial
statement, income statement, balance sheet etc.
After that I refer the financial statements of Nisalka Constructions PLC and I analyze their
financial statements and assess the performance of the organization.

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References

http://constructiontuts.com/quantity-surveyor-duties-and-responsibilities/
https://www.designingbuildings.co.uk/wiki/Quantity_surveyor
https://scholar.google.com/scholar?as_sdt=0,5&q=role+of+quantity+surveyor&hl=en
https://en.wikipedia.org/wiki/Quantity_surveyor
http://www.streetwisesubbie.com/quantity-surveying
http://courses.corporatefinanceinstitute.com/courses/learn-to-read-financial-statements-free-
course?gclid=Cj0KEQjwxPbHBRCdxJLF3qen3dYBEiQAMRyxS7vi_LQn7tJ37sWBp3JBXorD
CnJfBTFLgisUbmdabVgaApDz8P8HAQ
https://en.wikipedia.org/wiki/Financial_statement_analysis
http://www.investopedia.com/terms/f/financial-statement-analysis.asp
http://www.investopedia.com/terms/i/incomestatement.asp
http://eprints.qut.edu.au/7309/1/7309.pdf
http://www.investopedia.com/terms/b/balancesheet.asp

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