Submitted By: Talha Ali

Submitted To: Ma’am Maimoona Salaeem

Roll No: 191584
Department: BBA
Section: (B)
Session: 2019 – 2023

Islamia College University Peshawar

Cause and Effect diagram

Insufficient Increasing
Government Operational Limited Revenue
Funding Costs Streams

Rising costs of utilities, Lack of diversification in

Prioritization of other sectors maintenance, and
in economic policies. income sources.
administrative functions.

Economic challenges affecting Inflation and the increasing

Inadequate fundraising
education funding. cost of living impacting
and development efforts.
operational expenses.

Limited budget allocation to Insufficient budget allocation Limited external

the education sector. to cover the growing funding opportunities
operational requirements. or partnerships.

Poor budget planning Economic challenges impacting

and forecasting. affordability and accessibility.

Inadequate monitoring of expenses Ineffective marketing and

and financial controls. recruitment strategies.

Ineffective utilization Insufficient student support

of funds and resources. services and resources.

Inefficient Declining
Financial Enrollment and
Management Retention Rates
1 Insufficient Government Funding
One of the main causes of financial crises in public sector universities in KP is the inadequate
allocation of funds by the government. Insufficient financial support limits the universities' ability to
maintain infrastructure, pay staff salaries, and provide quality education and research facilities. This
lack of funding can have various consequences. It may limit the universities' ability to hire qualified
faculty, upgrade infrastructure, purchase necessary equipment and learning resources, conduct
research activities, and provide a high-quality educational experience for students. Insufficient
government funding can lead to budget deficits, financial constraints, and difficulties in delivering
effective teaching and research programs.
The root causes of insufficient government funding may include economic policies that prioritize
other sectors, limited budget allocations to the education sector, and economic challenges that affect
the overall availability of funds for public institutions. This situation can have long-term
implications on the quality of education, research output, and overall development of public sector
universities.
2 Increasing Operational Costs
The rising operational costs, including expenses for utilities, maintenance, and administrative
functions, contribute to the financial crises. As the cost of running the universities increases, the
available funds may not be sufficient to cover these expenses, leading to budget shortfalls. There are
several factors that contribute to the increase in operational costs. For example, the costs of
electricity, water, heating, and cooling can escalate over time due to inflation, changes in energy
prices, or increased consumption. Maintenance and repair expenses may also rise as facilities age or
require upgrades to meet modern standards. Additionally, administrative functions such as staffing,
office supplies, and technology infrastructure may become more expensive due to wage increases,
market demands, or the need for additional resources.
3 Limited Revenue Streams
Public sector universities in KP heavily rely on government funding as their primary revenue
source. The absence of diversified revenue streams, such as research grants, endowments, and
industry collaborations, leaves the universities vulnerable to financial instability. Limited revenue
streams refer to a situation where public sector universities face a lack of diverse and sustainable
sources of income beyond their primary funding sources, such as government allocations. It means
that universities heavily rely on a limited range of revenue streams, which can restrict their financial
flexibility and stability.

4 Inefficient Financial Management

Poor financial management practices within universities can exacerbate the financial crises.
Inefficient budget planning, inadequate monitoring of expenses, and improper utilization of funds
can lead to mismanagement and financial imbalances. There are several factors that contribute to
inefficient financial management. Poor budget planning and forecasting, for example, can lead to
inaccurate estimations of revenue and expenses, resulting in budget shortfalls or surplus funds that
are not appropriately utilized. This can hinder the universities' ability to effectively allocate
resources and meet their financial obligations.

5 Declining enrollment and retention rate

Declining enrollment refers to a decreasing number of students who enroll in a particular institution
or program over a specific period of time. It indicates a decrease in the overall student population.
Retention rate refers to the percentage of students who continue their studies or remain enrolled at an
institution after a specific period, typically from one academic year to the next. It measures the
institution's ability to retain students and keep them engaged in their educational journey. A higher
retention rate indicates better student satisfaction and success in completing their education.