Individual Project Financial Monitoring and Control Proposal
Instructions:
Project Objectives and Description
As you probably know or will learn as the class progresses, some of the management practices used in organizations today are not ideally suited for monitoring and controlling project finances.
The objectives of this individual project are twofold:
- First, to investigate management practices used by your organization and to identify issues that may detract from the organization’s ability to optimally monitor and control project finances.
- Second, to propose changes to these management practices to help resolve these issues and explain how these proposed changes will optimize project financial monitoring and control efforts.
You will develop a Project Financial Monitoring and Control proposal documenting these efforts, making use of: (1) this course and past project management and financial management coursework; (2) your own professional experience; (3) knowledge and experience resident in your organization; and (4) additional research. The majority of the coursework pertaining to this assignment will be covered in sessions 1 through 5. This assignment is due in session 10.
A template for the proposal will not be provided. If it hasn’t happened already, you should expect, at some point in your career, to develop a white paper, a proposal, or some other type of document with only a final objective or two for guidance. You are free to organize the proposal as you see fit as long as the following particulars are included: (1) a statement describing the organization type (e.g., state, local, or federal government, etc.); (2) a discussion of the organization’s business line(s); (3) and a discussion of the organization’s strategic objectives. The organization’s identity shall be masked in the proposal and the proposal shall be free of any proprietary or closely-held company information, as well as any other information that could reveal the organization’s identity.
This is not a proposal to do a study to identify issues and propose solutions.
The purpose of any proposal is to sell a product, service, idea, etc. In this case, you are selling a set of recommendations aimed at resolving issues associated with your organization’s ability to optimally monitor and control project finances. Address your proposal to your organization’s decision makers.
Put yourself on the receiving end of any proposal. What would you want to know?
- What are you selling?
- How does it apply to me?
- Why should I buy it? What benefits do I receive?
- What actions do I need to take to realize the benefits?
- How long will it take to realize the benefits?
- How much will it cost?
For the purposes of this assignment, the last two questions (time and cost) should be addressed, at least, in relative terms. A detailed time and cost analysis is not required. However, if you intend to share the outcome with your organization, you might want to consider including a more detailed analysis at some point in time.
THERE IS NO REQUIREMENT TO ORGANIZE YOUR PROPOSAL IN THIS FASHION. THIS IS SIMPLY A LIST OF THINGS YOU MIGHT WANT TO CONSIDER WHEN PREPARING YOUR PROPOSAL.
Other things to consider:
- Proposals are typically tailored to a specific target audience. For this assignment, assume at least part of your target audience does not understand anything about project management concepts, tools, and techniques or managing project finances.
- The ability to monitor and control project finances is dependent upon activities undertaken early in the project planning phase.
- There are issues that impact an organization’s ability to complete a project on time and within budget that do not necessarily impact an organization’s ability to monitor/control project finances. Make sure you can articulate a clear connection between the issues you choose and the organization’s ability to monitor/control project finances.
- Cost, schedule, and scope are interrelated.
- The effectiveness of your message can be adversely affected by writing mechanics issues and the clarity of your proposal
Project Milestones
You will provide two interim milestone reports before submitting your proposal. The purpose of the interim milestone reports is to make sure you are headed in the right direction.
Milestone 1 – Explain the project objectives and requirements to decision makers within your organization to gain organizational support for your efforts and access to organizational information (excluding financial data). If you are unable to gain organizational support for your project, choose an imaginary organization.
Develop a statement describing the organization type (e.g., state, local, or federal government, etc.); and the organization’s business line(s) and strategic vision or objectives. You may chose the entire organization or a portion of the organization.
Report your progress in the Individual Project Milestone 1 discussion forum by Sunday of Session 2. A milestone report template is provided in course content.
Milestone 2 – Identify the issues that may detract from the organization’s ability to optimally monitor and control project finances. Put yourself in the shoes of a project manager in your organization. What would you do, starting in the planning phase of the project, to make sure you could successfully monitor and control project finances? What elements of the project management plan or associated planning artifacts would you focus on? Now translate these to the organization level. What must be present (processes, procedures, instructions, practices, tools, training, etc.) to establish a firm foundation throughout the organization for successfully monitoring and controlling the finances of all projects? Where are the holes?
Focus your efforts on four to five of the most significant issues. Submit this summary in the Individual Project Milestone 2 discussion forum by Sunday of session 6. A milestone report template is provided in course content.
Note: If your organization has no apparent issues with respect to its ability to optimally monitor and control project finances, create your own issues.
Submit the completed project report in your assignment folder by Sunday of session 10. The project report must be submitted as a MS Word document. Line spacing: 1½; font: 12 point; pages: 15 (maximum).
Evaluation
You will be evaluated on:
- The organization and content of the completed project report – does it tell a complete and compelling story in a logical and readable manner?
- Adherence to project milestones and other requirements
- Correct application of financial management concepts, tools, and techniques
- Correct application of project management concepts, tools, and techniques
- Rationale for proposed solutions
- Feasibility of proposed solutions
- Writing mechanics and adherence to APA standards
Solution
Individual Project Financial Monitoring and Control Proposal
Project Financial Monitoring and Control
Introduction
Project financial monitoring and control involves the practices of organizing, planning, and investing, funding, managing as well as regulatory the costs in order to complete the projects within the stipulated time. One of the practices that are carried out in project management includes the plan cost management that creates and documents policies and controls the project costs. In addition, there are cost estimations through the determination of budget and execution of control costs processes that help in developing financial monitoring processes.
The company used in the proposal is an international company dealing with beverages with more than 500 brands and about 4000 beverage choices. The company has the biggest distribution system in the beverage industry hence the top provider of the beverage products. The company strives to creating a sustainable through production of environmentally friendly products and promoting an economic development of people (Rose, 2013). The company’s strategic objectives involve increasing profit by reducing costs by using productive and efficient facilities. Nevertheless, it aims at enhancing environmental sustainability through the production green products. The company continues to expand its strength and leadership in the beverage industry through innovation and partnership while keeping the consumer preferences and tastes in mind. Moreover, the company aims at raising its annual operational income by 2 percent on top of the current operating income of 6 percent in 2019.
1). Management practices used by the company
Regional expansion
The company shifts its focus from the local market that is based in the US into the international markets. The increase in the company’s stock turnover for about 4 percent leading to about $24 billion was due to its expansion into the international markets. The company sells its products in more than 200 countries that provide the company with a large market. According to the company’s annual report, a single person could consume an average of 90 products of the company. Individuals in more than 23 countries could consume more than 100 bottles.
Variety of products
The company used in the proposal sales a variety of products that include more than 400 new brands, and 4000 existing beverage choices. Nevertheless, due to the company’s brand name, it remains among the top most company’s in the industry despite high completion in the industry (Paramasivan & Subramanian, 2013). A branding company report known as Interbrand, ranked the company as a leader in brands due to the best brands that the company produced as at 2009.
Nevertheless, the products that the company sells are of the same quality and taste among the 200 countries in which it operates, hence increasing the customer’s loyalty. A product sold in US tastes in the same way as the product sold in Kenya.
Globalization and Technology
Globalization has changed the operation of businesses and organizations. The company has also been affected by globalization. The growing use of internet services and other electronic gadgets have led to communication over many countries as well as improved logistics. This enables the company to connect the local market and the international companies that increase the company’s sells. The IT services of the company are used intensively starting with the installing applications and the design of information files and computer networks. Data management is also provided by the IT services as well as the system design for the data base. The company uses the SAP-ERP system in most of its operations especially the financial management. The SAP system is utilized by the company in integrating all the bottlers in the global scale.
Modern Supply Chain
The company enterprises buy the concentrate form the main company and combine it with other ingredients and create its unique products that it sells to other countries. The company uses standard technology that enables it to acquire and integrate new markets into their businesses within a short time.
Moreover, the company also drives regional expansion with it through Genesys program the companies enterprises used a new supply chain management that could offer solution to its branches in Europe. The new system combines the front office business transformation and the change management consultation capacity in the back office technology provision for the company’s enterprises.
Innovation
The company employs competitive individuals through the consideration of educational performance, skills and experience. The ability of the company as a leader in the manufacture of a range of beverages is an indication of its innovative ability. The company demonstrates its innovative ability throughout its operations including management, research and IT sectors that result in its leadership in the beverage industry.
Factors that may undermine the company’s ability to managing project finances
Increase concerns on Health Issues
Since the introduction of soft drinks in 1798, the customers need innovation in the products they purchase. Furthermore, changes in the lifestyles of people have led to the need for health products, especially in the developed countries. Consumers are highly aware of the health effects that result from certain foods. The products produced by the company especially the carbonated drinks are at great risk of losing market because they have a negative effect on the obese or diabetic individuals. The drift in healthy eating continues to be a chief concern over the international beverage market. A study presented on the medical journal, called The Lancet pointed out that regular consumption of beverages raises the chances of getting dietary diseases like obesity (Johnson, 2013). Despite that soft drinks are used as a healthier substitute to the company’s former drinks, a 2004 study in Australia hindered obese children from taking diet soft drinks because they have no nutrients. On the other hand elderly customers, who have diabetes, are encouraged to stop the intake of high-calorie beverages but rather take water or low-calorie beverages. The working class that is comprised of mainly young people loves the environmentally friendly products which are more natural in order to reduce the intake of negative material into their bodies. Many beverage consumers are shifting slowly to the consumption of products that are seen as healthier or have fewer side effects.
These changes in the healthy consumption of foods would undermine the ability of the company in monitoring and controlling project finances because the company would get a loss due to reduced sales which would decrease the amount of capital to finance its projects.
Competition
Beverage industry is one of the most competitive industries in the world. The soft drinks could face competition even from the hot drinks that are provided in every place with cheaper prices. In more than 100 years the company has battled with one of its major competitor for the beverage products (Harris, 2010). However, its competitor diversifies it product mix to food products, especially healthy food, it overtook the company concerning the market capitalization in late 2007. The company fell slightly behind its competitor at $100 billion to its competitor at $ 102 billion. Towards the end of 2012, its competitor had a higher gross profit than the company by $10 billion. Nonetheless, the competitor capitalizes more financials on research and growth of its beverage production. Hence, competition from the competitor would remain a threat for the company for many years to come. There are also new entrants in the industry and thus the company would reduce its sales because customers would shift their purchase to the new companies.
Negative Publicity
The company has had a negative publicity revealed in 2003 through its midlevel employees who had rigged a marketing test in one of the restaurants in the US. The act resulted in the sucking of the company’s head in the division where it occurred. The company apologized for the restaurant and paid it more than $20 million.
Nonetheless, the company products are known to contain high sugar and high calories hence its brand name tarnishes slowly leading to reduced sales. In India the company’s products were found to contain some residues of harmful pesticides (Manuel, 2011). These chemicals were found to have the ability to cause cancer hence loosed favor among the people around the world who heard the information. Moreover, in the European market the products were found to contain high levels of bromate that also has the ability to cause cancer if there is too much exposure to it.
In addition, research carried by food and drinks center in India, discovered that the company engaged in greenwash, because the claim that the company supports environmental sustainability through the production of environmentally friendly products was not true.
These negative publicities have high negative impacts on the company’s brand name and would reduce the demand of the company’s products. In addition, the company’s growth to the international markets would also be decreased. As a result the organization would be weakened to fully monitor and control its project finances
Declining Sales
Volume in the beverage industry provided by Pecoriello, a leading beverage industry specialist from Morgan Stanley company, forecasts that the carbonated beverages class would lose its market. He describes the current set of young people as a lost generation in this category of drinks (Harris, 2010). The company’s latest survey of 2000 customers aged 10-60 years in support of its view, indicted that the US carbonated beverage segment would be likely to continue to be under pressure. In the major market of the company, located in US, the volume sale of carbonated beverages decreased in more than 8 percent since 2005 to 2009.
Rising prices of Raw Materials
The economic values of many countries have increased in the recent years due to changing lifestyles of people. The changing lifestyles of people have increased the cost of production of goods and services across all industries and companies (Rose, 2013). The company used in this proposal has also been affected by the high cost of raw materials especially sugar prices. Sugar is the main raw material in production of beverages thus its high prices affect the cost of production of related products. Other expenses, that have increased include the advertisement costs, and the costs of purchasing technology.
Despite the increase in the costs of production, competition in the industry limits the company from increasing prices of its products, in order to maintain its profit margin. This kind of market is known as an elastic market, in which a slight change in the price of a product would result in a large drop in the sales of that product. In such case, the company would have a low bottom line, hence having less capital to finance its products. It turn the company would have problems in monitoring and controlling its financial projects.
Political Instabilities
Political stability is important in normal operations of businesses. People who are enjoying peace are able to purchase more because they have time and place to enjoy the products. The company operates in Asian regions where civil war and terrorism affect the businesses. Political instability reduces the company’s sales that result in reduced profits. Reduced profits means less disposable income that could be used in supporting various projects, hence a problem in managing financial projects.
2). Changes and recommendations to solve Issues
The following are, recommendations provided to solve the challenges and turn them into opportunities.
Recommendations for high cost of raw materials
I recommend that the company should engage in the production process for the raw materials. Buying a finished product is usually expensive as compared to producing the product. The factors that lead to the increase in price of products include exploitation by the retailers or producers, added transportation costs and taxes. Since the raw materials have become expensive the products also become more expensive (Rose, 2013). The company purchases sugar instead of producing it or sharing the production costs with sugar producers.
Involvement in the production process would enable the company, to cut down the production costs. This would maintain or increase its profit margin hence having more capital to supporting different projects that would further increase the profit of the company. Therefore, the company would be able to manage its finances properly.
Recommendations for Declining
I recommend that the company should not concentrate its Sales Volume in beverage industry on the carbonated beverages only because this would weaken or make the company lose its leadership in the beverage industry. Instead the company could focus more on bottled water, drinks without carbon content, and energy drinks. Ten years ago, energy drinks blasted up by almost double the sales. In 2010, energy drinks resulted in an increase of 12 percent (Manuel, 2011). Energy drinks and healthy drinks would be major beverage required by the new generations of young people and consumers that are strict about their health hence I recommend that the company should engage in the production of such products. Moreover, the company should maintain a forecast for a 1.5 percent annual volume decline for the carbonated segment beverages.
These recommendations would enable the company to monitor and control its financial projects because it would not lose its market totally. The production of energy and healthy drinks would instead increase their sales, which result in more profit that the company would finance its projects.
Recommendations for Health and Wellness
Drift for the company to be a leader in the industry concerning the health and wellness area is important rather than just producing a variety of products, it should engage in the production of diverse category of products for all classes and types of individuals in the market. For instance in the baby boomers’ market which are people aged between 60-72 years, the company should emphasize on marketing tea and soft drinks with more water which contain less salt and sugar. The baby boomers are vulnerable to chronic diseases and are therefore aware and keen on the kind of food they take. However, in the generation of young market, who love sport drinks and energy drinks, I recommend that the company should produce organic beverages for them.
Due to the demand of healthy products as a result of public awareness, the company would increase its sales leading to more disposable income. This income would be used in developing projects hence the ability for the company to monitor and manage its finances.
Recommendations for Increased Competition
The company’s competitor has a horizontal expansion; the company should also embrace the vertical expansion. Concerning the products the company’s competitor, has 40 percent of its products as beverages. Hence the company should concentrate on beverages business only and related businesses such as the production of sugar through plantation, bottling as well as tin can and the renewal of glass. In the current world, environmental issues are of great concern and are changing rapidly. The company should be profound to any new trend and place itself as a unique company in order to continue leading in the industry.
These changes would enable the company in increasing its sales because customers would increase their loyalty to the company because they would be getting what they want at the company (Manuel, 2011). In addition, the customers would have no option because ones in the company they would purchase the available products instead of moving to other places to buy the products. The effect of this on the company’s ability to monitor and control project finances is that there would be more capital to finance its operations. Such operations include expansion into new markets, or purchase of new technologies and machines.
Recommendations for negative publicity
The company should formulate strict rules concerning its operations so that no employee or executive would be involved in illegal businesses. In addition, the company should be genuine in productions of the products that are worth their description. The company’s strict rules would ensure that whoever engages in production of products against the required standards are punished accordingly. This would in turn blend their name again and maintain thus maintaining their sales. This would increase the company’s profit and thus the availability of capital to fund its processes.
Recommendations for political instability
The company should target countries that experience political stabilities. There are countries that are prone to political instability hence the company should avoid them. Therefore, the company would not waste its products that would mean no loss incurred. The company would thus maintain its profit that would be used to finance projects, thus its ability to manage project finances,
References
Johnson, R. (2013). Financial management (1st ed.). Boston: Allyn and Bacon.
Manuel, E. (2011). The Analysis of Five Competitive Forces of Non-Alcoholic Beverage Industry and E-Commerce Industry Cases at the Global Level. SSRN Electronic Journal.
Paramasivan, C. & Subramanian, T. (2013). Financial management (1st ed.). New Delhi: New Age International (P) Ltd., Publishers.
Harris, P. (2010). Project Management (11th ed.). Work Study, 49(7).
Rose, K. (2013). A Guide to the Project Management Body of Knowledge (PMBOK® Guide)- Fifth Edition. Project Management Journal, 44(3), e1-e1.