Question

make up your own for a either a engineering firm or a retail company.

Lesson 2.3 Written Assignment Submit Assignment Due Mar 9 by 11:59pm Points 5 Submitting a text entry box, a website url, or a file upload For this assignment, you will examine how your company approaches projects and how financial performance and company missions/strategies are connected to a project. Select one area, either financial performance or company missions/strategies, which you like to address for this assignment. Complete a one page memo to company leadership addressing the following items: • Overview: Identify the area selected and why • Issue: Explain how a lack of connection has impacted project success in the past. Alternatively, explain how a strong connection contributed to project success. If possible, consider providing an example project to illustrate your point. • Conclusion: Discuss how the connection can be better established in the future including any training or improved skill-sets that might be necessary. The objective for the memo is to convince leadership to adopt changes that embrace a stronger connection with either financial performance or company missions/strategies. The memo should be written using standard business memo formatting and be of professional quality.

Answer 1

Financial Performance

Date: March 09 2020

Subject: Convince leadership to adopt changes that embrace a stronger connection with either financial performance.

Overview:

Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. The term is also used as a general measure of a firm's overall financial health over a given period.

Financial Performance - Understanding its Concepts and Importance. Financial Performance in broader sense refers to the degree to which financial objectives being or has been accomplished and is an important aspect of finance risk management. It is the process of measuring the results of a firm's policies and operations in monetary terms.

Areas of Financial Performance Analysis: Financial analysts often assess the firm's production and productivity performance (total business performance), profitability performance, liquidity performance, working capital performance, fixed assets performance, fund flow performance and social performance. Various financial ratios analysis includes

1. Working capital Analysis

2. Financial structure Analysis

3. Activity Analysis

4. Profitability Analysis

Issue: Lack of connection has impacted project success in the past:

Category	Sub-categories
Late payment	• Client's poor financial and business management
	• Withhold of payment by client
	• Contractor's invalid claim
	• Delay in valuation and certification of interim payment by consultant
	• Inaccuracy of valuation for work done
	• Insufficient documentation and information for valuation
	• Involvement of too many parties in the process of honouring certificates
	• Heavy work load of consultant to do evaluation for variation order
Poor cash flow management	• Contractor handles too many projects at the same time
	• Contractor's unstable financial background
	• Unqualified contractor underbidding the project cost
	• Lack of regularly cash flow forecasting
	• Poor credit arrangement with creditors and debtors
	• Capital lock-up
Insufficient financial resources	• Difficulties in getting loan from financiers
	• Allocation of government budget not in place
Financial market instability	• Increment of interest rate in repayment of loan
	• Inflation (material prices, labour wages, transportation costs)
	• Increment of foreign exchange rate (imported materials and plants)

Conclusion:

Delay is a serious issue in construction industry as it impacts the time and cost of projects. Delay in construction projects would cause for extra cost and loss in financial return or other benefits from project. Thus, delay is costly for both owner and contractor. The extent of delays should be reduced by identifying the root causes of financial-related problems and find out the solutions that are able to reduce the extent of delays in construction project.

The survey findings indicated that the root causes of financial-related delays are because of poor cash flow management followed by late payment, insufficient financial resources and financial market instability. Contractor's instable financial background, client's poor financial and business management, difficulties in obtaining loan from financiers and inflation were identified as the most significant underlying causes to each of four main factors mentioned above. All parties involved in the construction project agreed on the fact that clients should bear the greatest responsibility and play the most important role in lessening the impact of financial problems and delays.

Strong connection contributed to project success:

The success of a project financing can never be guaranteed, but certain factors improve its probability of success.

If the technology to be employed is not proven then venture capital or some other funding mechanism may be more appropriate. Project finance, due to its reliance on certain cash flows requires that the technology employed is conventional. Unproven technology increases completion - and operating risk.

The quality of the sponsor improves the probability of success. It is not so much the size of the sponsor than the experience to complete and operate a project that is of the essence.

1. Smart People

Without the right team in place, any strategy and plan has the potential of completely falling apart. Because of this, the core project staff, expert resources, suppliers and all stakeholders should be part of the team dynamic. All of those involved must have commitment to the group, share similar visions for the projects and strive for overall success.

2. Smart Planning

Comprehensive planning sets up a project for success from the start. All stakeholders should be on board during the planning process and always know in which direction the project is going to go. Planning can help the team to meet deadlines and stay organized. Good planning not only keeps the project team focused and on track, but also keeps stakeholders aware of project progress.

3. Open Communication

Looking closely at details and listening to outside sources of information is vital to the success of a project. Keeping open communication within the team is absolutely essential. When working under a specific timetable, it is important that the team remains well-informed. If a problem arises on one part of a project, it can negatively impact other parts as well. Communication is the best way to prevent problems from occurring.

4. Careful Risk Management

Project managers know that things rarely go off exactly as planned. During the planning process, it is vital to produce a risk log with an action plan for the risks that the project could face. Make sure all key stakeholders are aware of your risk log and know where they can find it. If something happens, then the team can quickly resolve the issue with the management plan that has already been set in place. This will give the team confidence when facing project risks and help the clients feel comfortable with the project’s progression.

5. Strong Project Closure

If a project does not have strong closure, then it has the potential to continue to consume resources. The project team must be firm and agree with the customer that all critical success factors have been met. Confirmation of the project delivery, testing, and release must be agreed upon and signed off. Satisfaction surveys are good forms of documentation to log and file for future reference and valuable information for use in the future.

If the projected available free cash to service debt is substantial, then the chances of success are improved. This is usually measured in terms of a high Debt Service Cover Ratio (DSCR), i.e.

DSCR = Cash Available for Debt Service Principal + Interest

Although commercial risk cover reduces the loss in the event of default, it does not reduce the probability of commercial risk events occurring. The presence of such insurance in a project financing would suggest that the parties had a high expectation of the occurrence of such risk events which is borne out by the correlation between commercial risk cover and default.

Conclusion :

Project Finance aims to get the project off the balance sheet of the sponsor. By doing so the funding that is required will be repaid from the revenues of the project only. Any project financing therefore requires positive cash flow. Project financings are highly geared. In raising the capital a structure is required that is bankable. Complex contractual arrangements will tie down the rights and obligations of the different parties and allocate the risks between them.

A project promoter seeking finance for a new project should preferably seek the services of a financial advisor to assist with the feasibility study of the project and appoint arrangers to raise the funding.

The project manager has an important role to perform in the process of successfully raising the funds, not in the least to ensure that resources are used optimally to achieve financial close.

Project Finance is well suited as a funding structure for large projects.

CONCLUSION: The connection can better established in the future including any training or improved skill-sets that might be necessary.

A skill set is the knowledge, abilities, and experience needed to perform a job. Specific skill set areas can include human relations, research and planning, accounting, leadership, management, and computer skills.

Skill Sets that are necessary:

There are a variety of different types of skill sets. In general, your skills are your abilities that are important for career success.

• Soft skills: Soft skills are interpersonal or people skills. They are somewhat difficult to quantify and relate to someone's personality and ability to work with others. This in-demand skill st includes good communication, listening, attention to detail, critical thinking, empathy, and conflict resolution abilities, among other skills.
• Hard skills: Hard skills are quantifiable and teachable: They include the specific technical knowledge and abilities required for a job. Examples of hard skills include computer programming, accounting, mathematics, and data analysis. Some can be learned on the job, while others, such as surgical skills, are first learned in a classroom and then refined through work practice.
• Hybrid skills: Hybrid skills include a combination of technical and non-technical skills. Many positions require employees to incorporate both soft and hard skills in their skill set to succeed in the role.
• Transferable skills: Transferable skills can apply to many different career fields. These include soft skills like critical thinking and problem solving, or hard skills such as writing and math ability.
• Job-specific skills: These employment skills are the ones necessary for a particular position. For example, a hairstylist must know hair-coloring techniques, a payroll clerk must have payroll skills, and a nutritionist must have diet-management knowledge.