TASK 2 –Operational plan

Operational Plan Review

1. Analysis and interpretation of Terra Engineering’s Budget

Having analyzed the information of Terra Engineering and comparing with the budget 2016 I
would say that the sales went up in to $ 514.000, equivalent to an increase of 7.2% over the
estimated budget, In addition the costs of the products sold dropped, representing a 7% less the
estimated budget. It might happen because they were able to find economic raw materials or a
better deal savings cost of shipping or a discount for quantity. Therefore, because of the described
performance the gross margin variance is the $ 49.500 creating a positive balance for the
company.

On the other hand, Terra engineering personnel’s cost was a 28.6% less than expected. That might
have occurred because the Human resources operational was not followed and some of the
people were expected to be hired full time has not been employed by the company and they are
still working as a sub-contractors, that ended up in savings in the operating expenses, equal to $
6.500.

Overall the finances of the company performed well and Terra engineering generated an operating
profit of $ 264.000, corresponding to $56,000 more than projected.

2. Areas of under-performance

I firmly believe that Terra Engineering has performed very well although there are some areas
under performance I would recommend to improve for the next operational plan.

Firstly the human resources in the operational must be explained better. It can be seen that the
roles and positions of the employees and sub-contractors are not established, therefore, there are
not Key performance indicators to measure this area. Moreover, the company did not specify
objectives, requirements, deadlines and timeframes in which the things need to be done, so we
can see cases like Mr. Aaron who will be eventually hire full time when demand warrants growth,
but what does it mean? 2 years or more, how much demand needs to have the company to make
the decision?, All of this must be answered and establish for the next operational plan so there will
not be misunderstandings and avoid generating employee’s demotivation.

Moreover, the operational plan did not establish objectives, actions to be taken, measurable and
monitoring process, KPI and who are responsible of performing tasks. A Matrix must be done for
make clear this information.

Finally, I would say that risk management should be done and create contingency plan according
to the risk they might present.

Task 2 – Manage Operational Plan

 3. Planning and Implementation of systems

The main thing I would recommend to Terra engineering in order to keep performing well and
being in the market, they must implement more time organizing their operational plan, including
more information. For achieving these it might be helpful to seek an assessor that guides the
business and its purposes to be communicate achieving easily the objectives.

There is a project to diversify the company and create environmental training programs for certain
communities. It is essential to create an operational plan for developing these training programs,
designating who will be responsible of it, the objectives and the market target, the resources
(financial, Human, physical) needed and a timeframe of the actions specifying KPIs for its
accomplishment, otherwise the project could take more time for being created or even it will not
be achieve creating a loss of resources and time.

It is important to develop an intellectual property strategy to protect trademarks and confidential

information.

It is also essential to create role profiles for the company specifying the requirements and skills
needed in each position in order to develop training plans that increase value to the company and
offers a career development to the employees. Finally for user of Auto Cad, a job description
clarifying the experience it needs must be done win the intention of recruiting an employee
qualified for the needs of Terra engineering.

4. Negotiate recommendations for variations to operational

I would recommend the company to implement a quality assurance system to increase and
maintain quality in its services and products. The Quality system helps to keep information and
process flows organized and well defined, allowing the management to handle daily tasks easily
and keeping record and performance of the company. The first important thing to know about the
company has to be the process, from beginning to the end, how is going to be the new way to do
things and how this it would improve the performance of the company. Moreover, it gives more
credibility and value to the services and products provided by Terra engineering.

It is important to open a consultation process with the stakeholders in order to make

improvements to the strategic and operational plan. Having more feedback and ideas helps
management to make better decision according to the needs of Terra engineering’s stakeholders.
At the same time it will help the company to build trust creating better stakeholder relationships.

Task 2 – Manage Operational Plan