BSB61015 ADVANCED DIPLOMA OF LEADERSHIP
AND MANAGEMENT
Resource Management
Advanced
Resource Management
BSBMGT622
Manage Resources
ii
This workbook has been designed for use in conjunction with
information and materials provided at lecture and tutorial
sessions.
Students should attend all timetabled sessions so they can
obtain all subject information. Students should read and
understand all materials provided.
Information that is available in digital form is not included in
this workbook in the interest of the environment.
Publisher:
Young Rabbit Pty Ltd
(A.C.N. 003 381 182) trading as
Australian Pacific College
Ground Floor, 189 Kent Street
Sydney NSW 2000
Australia
Tel: (02) 9251 7000
Edition:
1st Edition
Release date: February 2018
License agreement with international
copyright available upon request.
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Kent St Campus (CBD)
Sydney NSW 2000
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RTO PROVIDER: 90396
Front cover image sourced from: www.rightsonsite.org.au
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Contents
Unit of Competency........................................................................................... iv
BSBMGT622 Manage Resources......................................................................... iv
Grading System................................................................................................ iv
Assessment 1.................................................................................................... v
Assessment 2................................................................................................... vi
Legend............................................................................................................. vii
1. Analyse Resource Requirements................................................................... 1
Activity 1.1............................................................................................................10
Activity 1.2............................................................................................................13
Activity 1.3............................................................................................................15
2. Develop Resource Plans to Support Achievement of Business Unit
Objectives........................................................................................................ 16
Activity 2.1............................................................................................................19
Activity 2.2............................................................................................................21
Activity 2.3............................................................................................................36
Activity 2.4............................................................................................................39
3. Allocate Resources to Achieve Stated Business Objectives......................... 40
Activity 3.1............................................................................................................44
4. Review and Report on Resource Usage........................................................ 49
Activity 4.1............................................................................................................53
Activity 4.2............................................................................................................62
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UNIT OF COMPETENCY
BSBMGT622 Manage Resources
Elements
1. Analyse resource requirements
2. Develop resource plans to support achievement of business unit
objectives
3. Allocate resources to achieve stated business objectives
4. Review and report on resource usage
For further information on the Units of Competency, please visit
www.training.gov.au, or refer to your Course Outline booklet.
GRADING SYSTEM
High Distinction (HD)
85% and above
Distinction (D)
75-84%
Credit (Cr)
65-74%
Pass (P)
50-64%
Not yet competent (NYC)
Below 50%
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ASSESSMENT 1
Course Name
BSB61015
Advanced Diploma of Leadership and Management
Subject/module
Advanced Resource Management
Assessment method
Written or Oral Questions
Weighting
50%
Units of Competency
BSBMGT622
Manage Resources
Instructions
1. Assessments should be completed as per your trainer’s instructions.
2. Assessments must be submitted by the due date to avoid a late
submission penalty.
3. Plagiarism is copying someone else’s work and submitting it as your
own. You must write your answers in your own words and include a
reference list. A mark of zero will be given for any assessment or part of
an assessment that has been plagiarised.
4. You may discuss your assessments with other students, but submitting
identical answers to other students will result in a failing grade. Your
answers must be yours alone.
5. Your trainer will advise whether the assessment should be digitally
uploaded or submitted in hard copy. Assessments that are digitally
uploaded should be saved in pdf format.
6. You must pass both assessments in the subject to pass the subject.
7. All assessments are to be completed in accordance with WHS regulatory
requirements.
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ASSESSMENT 2
Course Name
BSB61015
Advanced Diploma of Leadership and Management
Subject/module
Advanced Resource Management
Assessment method
Written Assessment
Weighting
50%
Units of Competency
BSBMGT622
Manage Resources
Instructions
1. Assessments should be completed as per your trainer’s instructions.
2. Assessments must be submitted by the due date to avoid a late
submission penalty.
3. Plagiarism is copying someone else’s work and submitting it as your
own. You must write your answers in your own words and include a
reference list. A mark of zero will be given for any assessment or part of
an assessment that has been plagiarised.
4. You may discuss your assessments with other students, but submitting
identical answers to other students will result in a failing grade. Your
answers must be yours alone.
5. Your trainer will advise whether the assessment should be digitally
uploaded or submitted in hard copy. Assessments that are digitally
uploaded should be saved in pdf format.
6. You must pass both assessments in the subject to pass the subject.
7. All assessments are to be completed in accordance with WHS regulatory
requirements.
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LEGEND
Not all ICONS are used in this workbook
Research/Investigate
This tells you to go and find out some information
Activity/Provide notes
This indicates that you need to take notes and/or complete
an exercise/activity in this workbook
Reference material/manuals
This means you should look to sample of organisations’
policies and procedures or to some other learning material,
resources to complete this exercise/activity.
Think
Take some time to think about the information and record
your own ideas
Talk
Talk to your peers, colleagues – swap ideas.
Reading
Selected extra reading requirements.
You
Sydney Ferries
Tube
Youtube
Selected Youtube requirements.
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1. ANALYSE RESOURCE REQUIREMENTS
1.1 Develop resource bids in line with outputs specified in
business plans
Resource requirements may
include:
Organisational requirements may
include:
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff Access and equity principles and
practices
ff Business and performance plans
ff Defined resource parameters
ff Ethical standards
ff Goals, objectives, plans, systems
and processes
ff Legal and organisational policies,
guidelines and requirements
ff Management and accountability
channels
ff Manufacturers’ and operational
specifications
ff OHS / WHS policies, procedures
and programs
ff Environmental sustainability
business practices and standards
ff Quality and continuous
improvement processes and
standards
ff Quality assurance and/or
procedures manuals
ff Reporting requirements
ff Security and confidentiality
requirements
Human resources
Location/premises
OHS / WHS resources
Plant/machinery
Raw materials
Refurbishment
Staff amenities
Stock and supplies
Storage space
Technological equipment/
software
ff Training materials
Determine resource requirements
To determine resource requirement analysis effectively, if this hasn’t already
been carried out, do this exercise as part of the assessment by:
ff gathering accurate information
ff understanding the stakeholder need
ff articulate requirements clearly
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Resource requirement analysis
Determine your WORKPLACE requirements in accordance with your business
and operational plans
Examine the highest levels required of each resource to determine if each area
is:
ff Clearly understood
ff Complete as much as possible
ff Free of any contradictions
ff Complies with the business plan strategy
Business plan resource requirements specifications
Where possible, the determined action should involve communication with
users, stakeholders, and other experts to avoid issues such as conflicting
requirements before the business plan is undertaken.
Resource requirements EXAMPLES included: Human Resources
The heart of the issue with business resource needs is Human Resources are:
ff Human resources are the skills-base of the business.
ff What skills does the business already possess?
ff Are they sufficient to meet the needs of the chosen strategy?
ff Could the skills-base be flexed / stretched to meet the new requirements?
An audit of human resources would include assessment of the following factors:
Existing staffing
resources
ff Numbers of staff by function, location, grade,
experience, qualification, remuneration
ff Existing rate of staff loss (“natural wastage”)
ff Overall standard of training and specific training
standards in key roles
ff Assessment of key “intangibles” – e.g. morale,
business culture
Changes
required to these
resources
ff What changes to the organisation of the business are
included in the strategy (e.g. change of location, new
locations, new products)?
ff What incremental human resources are required?
ff How should they be sourced?
ff Alternatives could include employment, outsourcing,
joint ventures etc.
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ff What are the costs to your business of employing someone?
ff How much time will need to be spent adhering to record keeping, payroll
and other administrative tasks related to employing staff?
ff How much time will need to be spent supervising staff or outsourced
work?
ff Prepare an estimate on the costs of employing staff as well as the direct
expenses of their wages and other relevant costs (e.g. superannuation
requirements)
ff You will need to consider all these (and more) of employing staff
Others include:
Physical Resources
The category of physical resources covers a wide range of operational resources
concerned with the capability to deliver your goods, services and meeting your
business plan.
Production
facilities
ff Location of existing production facilities; capacity;
investment and maintenance requirements
ff Current production processes – quality; method &
organisation
ff Extent to which production requirements of the
strategy can be delivered by existing facilities
Raw materials
ff Materials required for the manufacture or production
of finished goods
Marketing
facilities
ff Marketing management process
ff Distribution channels
Information
technology
ff It systems
ff Hardware, software etc.
ff Integration with customers and suppliers
Facilities
ff Buildings, rooms with specific purposes
Stock and
supplies
ff Trading stock, consumables, fixed assets such as
machinery or vehicles
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Determine resource requirements in accordance with business
and operational plans
ff Check your WORKPLACE business and operational plan against these
suggested EXAMPLES
Suggested examples
Your workplace resources requirements
The physical plant
Equipment
Assets
Special requirements
Materials
Production
Inventory
Cost
Organisational requirements
The examples provided suggest several areas that would need to be addressed
as part of:
1. Determine resource requirements
2. Are they in accordance with business and operational plans
For example:
Access and equity principles and practices
What does that include?
1. Equal employment opportunity
NO discrimination against staff or clients on the basis of race, gender, sex or
sexual preference, religious or political belief, pregnancy or marital status,
union activity or age.
2. Disabilities
Making any necessary and reasonable adjustment for staff and clients with
disabilities
3. Staff policies
All staff to be issued with their individual copy of the HR Policy Manual
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For example:
Business and performance plans
ff A business performance plan identifies what is expected of you in your role
and how you contribute to the achievement of your goals or set objectives
using these approved resources.
ff Acknowledge the types of support available to help you in delivering work
priorities
ff A guide for the employee on how to work towards and achieve goals and
build job satisfaction.
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1.2 Consult with key stakeholders to determine the nature
and level of resources required
Resource examples include:
ff Human resources
ff location/premises
ff WHS resources
ff Plant/machinery
ff Raw materials
ff Refurbishment
ff Staff amenities
ff Stock and supplies
ff Storage space
ff Technological equipment/software
ff Training materials
How could individuals and workgroups contribute to the
identification of resource requirements?
A workgroup is considered to be:
ff Two or more individuals who routinely function like a team
ff Work groups are much more numerous than teams
ff Workgroups operate on three levels, dependent level, independent level and
interdependent level
ff All are designed to achieve a common goal and may or may not work next to
one another or in the same department
Dependent-level work groups are:
ff Dependent-level work groups are the traditional work unit or department
groups with a supervisor who plays a strong role as the boss.
ff Almost everyone has had some experience with this work setup, especially in
a first job.
ff Each person in a dependent-level work group has their own job and works
under the close supervision of the boss.
ff The boss is in charge and tells the employees the do’s and don’ts in their
jobs.
Contribute constructively to a dependent-level workgroup involves:
ff Helping each other and covering for one another do not occur often and do so
mostly under the direction of the supervisor.
ff Most problem solving, work assignments, and other decisions affecting the
group come from the supervisor, this is a known fact.
ff A dependent-level work group can perform well in the short term. But for
the long run, because group members operate separately and mostly at the
direction of the supervisor, such work groups don’t seem to go anywhere.
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ff Maintaining the status quo and keeping operations under control are what
they do best.
ff Creating improvements, increasing productivity, and leveraging resources to
support one another are quite uncommon with dependent-level work groups.
Independent-level work groups are:
ff Independent-level work groups are the most common form of work groups
on the business scene.
ff Like a dependent-level work group, each person is responsible for his or her
own main area.
ff But unlike the dependent level, the supervisor or manager tends not to
function like the controlling boss.
ff Instead, staff members work on their own assignments with general
direction and minimal supervision.
Contribute constructively to an independent-level workgroup
If members of an independent-level work group receive the managerial
guidance and support they need on the job, such a work group can perform quite
well.
ff Sales representatives, research scientists, accountants, lawyers, police
officers, librarians, and teachers are among the professionals who tend to
work in this fashion.
ff People in those occupations come together in one department because they
serve a common overall function, but almost everyone in the group works
fairly independently.
Interdependent-level work groups involves:
ff Members of an interdependent-level work group rely on each other to get the
work done.
ff Sometimes members have their own roles and at other times they share
responsibilities.
ff In either case, they coordinate with one another to produce an overall
product or set of outcomes.
ff When this interdependence exists, you have a team.
ff By capitalising on interdependence, the team demonstrates the truth of the
old saying: The whole is greater than the sum of its parts.
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Contribute constructively to an interdependent-level workgroup involves:
ff An independent work group can often be brought up to speed faster than an
interdependent group. It simply takes more time to get a group of individuals
to work as a team than to set a group of individuals off on their independent
assignments.
ff Yet when teams move into a high-functioning and high-producing state,
where they capitalize on interdependence, they can outperform all other
types of work groups.
ff So, if you want a quick fix, don’t look to teams: but if you want to see strong
results for the long term, do look to teams.
To call a group a team does not make them a team
ff Work groups have a strong individual focus and teams have a strong
collective focus.
ff The individual is not lost on a team, but that person’s work is coordinated to
fit in with the greater good.
ff Team concerns are much more focused on the outcomes of the overall unit
rather than an individual’s accomplishments.
Help staff feel comfortable about sharing information relevant to
work with workgroups
ff Many organisations simply encourage sharing of information for selfish
reasons as many groups or supervisors may not have all the answers and
sharing those answers to relevant questions gives groups what they need to
know before they need to know it!
When to provide information relevant to the workgroup
ff Sharing information isn’t enough. You should try to provide workgroups with
the RIGHT information that they need (not too little, not too much) when they
need it.
Collaboration
ff Improves focus on the designated goals
ff Encouraging colleagues to communicate the problem to be solved or a
suggested strategy for the solution
ff Team members need to know what they are supposed to share with open
communication channels and what constitutes success
ff Are there any constraints on how they do it
ff Does the communication need to be shared effectively to the entire team or
just to a colleague
ff will the shared information ensure designated goals are met and any other
obstacles are clearly in focus
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Sharing information relevant to work with workgroup will increase productivity
ff Workgroups will get more done if they can easily find the information that
they need because it was clearly outlined from the start.
ff However, if not, then good information relevant to the work in hand can
prevent duplication of effort, which impacts on schedules, budgets, and team
morale
Sharing information assists in fewer errors
1. Correct information relevant to workgroups produces fewer mistakes and
if problems do arise, informed workgroups can quickly identify them and
‘collaborate’ to fix them
2. Clarifying the organisation’s preferred task completion methods, for
example, will make for better decisions along the way
3. Good communication is critical if you want the people in your workgroup to
all focus in the same direction
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Activity 1.1
1. Contributing constructively to a dependent-level workgroup involves
2. Sharing information relevant to work with workgroup will increase
productivity in what way?
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1.3 Analyse resource requirements to identify proposed
costs and benefits
What is realistic to you or your organisation?
ff Why would it differ to another similar company?
ff What if it’s unrealistic?
ff What are the rules?
Be realistic
Resource expenditure budgets are no different to any other kind of budget.
ff Resources are part of the business function, so requirements should be
considered and analysed the way all other business projects are.
ff Management will make assessments to resource expenditure in a similar
way to any other expenditure.
What is a business resource?
ff Business resource encompasses a wide range of human, hardware, software
and services that keep organisations running and ‘optimally’ enhance those
organisational operations.
ff Resources will range over almost every function of a business from
accounting to customer communications to product design and development.
ff Many options are available to organisations and the range varies dramatically
in the functionality, range, capacity and scope, depending on the needs of the
organisation.
ff Better performance of business resource comes with more requirements to
maintain performance of the business.
ff Ultimately, the performance of a resource is also valued in most
organisations in keeping them ahead in a competitive marketplace.
ff Resources are generally linked to all of the performance measures and
output expectations of an organisation.
Link budget development to corporate strategy
ff Because the budget expresses how resources will be allocated and what
measures will be used to evaluate progress, budget development is more
effective when linked to overall corporate strategy.
ff Linking the two gives all managers and employees a clearer understanding
of strategic goals.
ff This understanding, in turn, leads to greater support for goals, better
coordination of tactics, and, ultimately, to stronger companywide
performance.
Design procedures that allocate resources strategically
ff Within any company, competition for resources is inevitable.
ff Every function and business unit needs funding for both capital and operating
expenses – usually in excess of the actual resources available.
ff This makes it critically important for companies to design procedures so that
resources are allocated to support key strategies.
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Reduce budget complexity and cycle time
ff Your organisation should strive to reduce budget complexity and streamline
budgeting procedures.
ff Such streamlining allows management to collect budget information, make
allocation decisions, and communicate final targets in less time, at lower
cost, and with less disruption to the company’s core activities.
Reduce budget complexity Examples:
ff Controlling the number of budgets that are needed
ff Standardise budgeting method
ff Minimise the amount of detail included in the reports used to develop
budgets
ff Use information technology to automate budgeting and facilitate workflow
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Activity 1.2
1. What is a business resource?
2. Why should you Link budget development to corporate strategy?
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1.4 Identify opportunities to share resources across
business units within the organisation
Business equipment and technology may include:
ff
ff
ff
ff
ff
ff
ff
ff
Answering machine
Binder
Computer
Fax machine
Photocopier
Printer
Shredder
Telephone
How you present your argument or recommendation to expend budget on
resources, will vary both on circumstances and organisational policy.
From there it may involve a procedure or justification process depending on the
size of the budget and the type of organisation.
Note: Present your recommendations to management on resource
requirements in the required format
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Activity 1.3
Business equipment and technology may include:
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2. DEVELOP RESOURCE PLANS TO SUPPORT
ACHIEVEMENT OF BUSINESS UNIT
OBJECTIVES
2.1 Develop resource plans that detail the acquisition and
allocation of resources, timelines and the relationship to
business strategies, contingencies, plans, programs and
processes
Related reading: http://bit.ly/2AFKPmk
Use a business plan to allocate resources effectively
The business plan plays a key role in allocating resources throughout a business
so that you can meet objectives.
Once you have reviewed your progress to date and identified your strategy
for growth, you should update your existing business plan. You can use your
business plan as a roadmap for growth. See benefits of ongoing business
planning.
When you are reviewing your business plan to cover the next stages, it’s
important to be clear on how you will allocate your resources to make your
strategy work.
For example, if a particular department has been given a target, the business
plan should allocate enough resources to achieve it. These resources may
already be available or may be generated by future activity.
This could mean:
ff recruiting more office staff
ff spending more on marketing
ff buying more supplies or equipment
Changes in the market could mean that there are increased opportunities for a
certain division. Maximise on this by making sure they have enough resources to
increase their activities
Budgeting for resource allocation
You may want to provide funds through current cashflow, generating more profit
or seeking external funding. It’s always better to fund future growth through
revenue generation.
You should do some precise budgeting to decide on the right level of resourcing
for each department. It’s important that resources are prioritised. Make sure
key business areas get enough funding to achieve overall goals. If funding isn’t
available this may involve making cutbacks in other areas.
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The benefits of ongoing business planning
Most potential investors or lenders will want to see a business plan before they
consider funding your business. Although many businesses are tempted to use
their business plans solely for this purpose, a good plan should set the course of
a business over its lifespan.
A business plan plays a key role in allocating resources throughout a business.
It is a tool that can help you attract new funds or that you can use as a strategy
document. A good business plan shows how you would use the bank loan or
investment you are asking for. See use your business plan to get funding.
Ongoing assessment
Ongoing business planning means that you can monitor whether you are
achieving your business objectives. A business plan can be used as a tool to
identify where you are now and in which direction you wish your business to
grow. A business plan will also ensure that you meet certain key targets and
manage business priorities.
You can maximise your chances of success by adopting a continuous and regular
business planning cycle that keeps the plan up to date. This should include
regular business planning meetings which involve key people from the business.
To find out more, see measure performance and set targets and assess your
options for growth.
If you regularly assess your performance against the plans and targets you have
set, you are more likely to meet your objectives. Doing this can also signpost
where and why you’re going astray. Many businesses choose to assess progress
every three or six months.
The assessment will also help you in discussions with banks, investors and even
potential buyers of your business. Regular review is a good vehicle for showing
direction and commitment to employees, customers and suppliers.
Defining your business’ purpose in your business plan keeps you focused,
inspires your employees and attracts customers. See prepare a business plan.
What your ongoing business plan should include
Your ongoing business plan should include a summary of what your business
does, how it has developed and where you want it to go. In particular, it should
cover your strategy for improving your existing sales and processes to achieve
the growth you want.
You also need to make it clear what period the business plan covers – generally
the next 12 months to two years.
The plan should include:
ff Your marketing aims and objectives, for example how many new customers
you want to gain and the anticipated size of your customer base at the end of
the period. To find out about marketing strategy, see create your marketing
strategy.
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ff Operational information such as where your business is based, who your
suppliers are, and the premises and equipment needed.
ff Financial information, including profit and loss forecasts, cashflow forecasts,
sales forecasts and audited accounts. See cashflow management: the basics.
ff A summary of the business objectives, including targets and dates.
ff If yours is an owner-managed business, you may wish to include an exit plan.
This includes planning the timing of your departure and the circumstances,
eg family succession, sale of the business, floating your business or closing
it down. See consider your exit strategy when starting up.
If you intend to present your business plan to an external audience such as
investors or banks, you will also need to include:
1. your aims and objectives for each area of the business
2. details of the history of the business, including financial records from the last
three years – if this isn’t possible, provide details about trading to date
3. management’s skills and qualifications
4. information about the product or service, its distinctiveness and where it fits
into the marketplace
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Activity 2.1
1. How do you use a business plan to allocate resources effectively?
2. The benefits of ongoing business planning
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2.2 Determine internal resourcing capabilities and
external resourcing requirements
Business plans for each department
If your business has grown to contain a series of departments, each with its own
targets and objectives, you may need to draw up a more complex business plan.
Each department will need its own plan.
The individual business plans of the departments will need to be combined into
a single strategy document for the whole organisation. This can be complex,
but it’s vital if each department is going to work towards the overall goals of the
business.
This is not just an issue for large businesses. Many small businesses consist of
separate departments working towards different strategies. See organisational
structure.
Drawing up a business plan that unites all the departments requires coordination. Make sure all departments are using the same planning template.
Objectives for individual departments
It’s important for each department to feel that they are a stakeholder in the plan.
Usually, each department head will draft their own business plan and then agree
how it will fit with other departments. The final document should be edited and
approved by senior management.
Each department’s budgets and priorities must be set so that they fit in with
those of the entire organisation. Department plans will need to be more specific
and precisely defined than the overall business plan. It’s important that the
objectives set for departments are realistic and achievable.
Each department plan needs to be easily understood by the people whose job it
is to make it work. They also need to be clear on how their plan fits in with that
of the wider organisation.
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Activity 2.2
1. Why do we need Business plans for each department?
2. What are the objectives for individual departments?
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2.3 Develop procedures for the evaluation of resource
allocation and incorporate them in resource plans
Use a business plan to allocate resources effectively
The business plan plays a key role in allocating resources throughout a business
so that you can meet objectives.
Once you have reviewed your progress to date and identified your strategy
for growth, you should update your existing business plan. You can use your
business plan as a roadmap for growth. See benefits of ongoing business
planning.
When you are reviewing your business plan to cover the next stages, it’s
important to be clear on how you will allocate your resources to make your
strategy work.
For example, if a particular department has been given a target, the business
plan should allocate enough resources to achieve it. These resources may
already be available or may be generated by future activity.
This could mean:
ff recruiting more office staff
ff spending more on marketing
ff buying more supplies or equipment
Changes in the market could mean that there are increased opportunities for a
certain division. Maximise on this by making sure they have enough resources to
increase their activities
Budgeting for resource allocation
You may want to provide funds through current cashflow, generating more profit
or seeking external funding. It’s always better to fund future growth through
revenue generation.
You should do some precise budgeting to decide on the right level of resourcing
for each department. It’s important that resources are prioritised. Make sure
key business areas get enough funding to achieve overall goals. If funding isn’t
available this may involve making cutbacks in other areas.
Use targets to implement your business plan
A successful business plan should incorporate a set of targets and objectives.
See measure performance and set targets.
SMART objectives or targets can help achieve the strategic goals of your overall
plan. SMART objectives are:
ff Specific
ff Measurable
ff Achievable
ff Realistic
ff Timely
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Targets help everyone within a business understand what they need to achieve
and when.
Key performance indicators
You can monitor the performance of employees, teams or a new product or
service by using appropriate performance indicators. These can be:
ff sales or profit figures over a given period
ff milestones in new product development
ff productivity benchmarks for individual team members
ff market-share statistics
See deciding which key performance indicators to measure.
Employee performance
Targets make it clearer for employees to see where they fit within an
organisation and how they can help the business meet its objectives. Setting
and communicating clear objectives and targets and closely monitoring them
can help your business develop. Targets and objectives should also form a key
part of employee performance reviews or appraisals. Targets help to objectively
address individuals’ progress. See managing the performance of your staff. A
successful business plan should incorporate a set of targets and objectives.
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2.4 Identify risks and establish risk management
processes
Identifying your stakeholders
1. As part of your risk management process, you will need to initially identify
all the internal and external stakeholders and whatever risk issues are
associated with them. Once you’ve identified the personnel who need to be
involved in your risk management process, you should establish clear lines
of communication and encourage them to participate to help manage an
event’s risk factors.
“Mega events are large-scale sporting, cultural and leisure events, with complex
logistical operations that are heavily reliant upon advanced planning. It is clear that risk
managers have an increasing role to play in the staging of mega events that will receive
worldwide exposure. Using its general definition risk management is the identification,
assessment and prioritisation of risk. The Ryder Cup, Rugby World Cup and Cricket
World Cup are good examples of incredible sporting occasions that will be remembered
by millions of people around the world. Sporting heroics aside, the competitions are high
profile and as such attract higher levels of risk. Applying risk management successfully
to a mega event is as integral to its success as it is challenging…
“…using the Rugby World Cup (RCW) 2011 as an example, in a post tournament
article published by KPMG titled “The main event – managing the risk of RWC 2011”,
it was concluded that “Without effective communication between security forces, event
organisers and private security providers all may be focusing their efforts in different
directions. Parties must communicate if there is to be an effective division of effort.”
Indeed, there are similar considerations when considering stakeholders who have
invested interest in mega events, such as sponsors who provide the necessary capital to
run a tournament successfully in return for exclusive rights and the expectation that
their brand is given the positive exposure that a successful tournament will bring. The
challenge for the risk managers then lies in protecting the contracted rights of these
sponsors without neglecting other areas of risk including spectator safety or tournament
experience.”
Establish the context
Before starting the process of identifying risks, the critical success factors of
an event need to be identified. Critical success factors are those factors that
must be completed for the event’s objectives to be realised. The identification of
critical success factors will help later on to identify risks, as risks will be those
events that prevent the critical success factors from being met.
For example, the critical success factors for organising a wedding might be that
the ceremony must be held outdoors, the venue must accommodate 80 guests
and the invitations must be delivered by a certain date. In this example, a risk
could be that if it rains, the area must be tented. Another risk could be that the
invitations are not delivered in time due to a postal strike.
What is context?
When examining and establishing your event risk context, the political,
economic, social, legal, technological and policy contexts all must be taken
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into account. Context can be approached or viewed in two different ways;
overall context and the more specific context of variations within areas of your
operations team.
Overall context
When defining the context for an event risk assessment, you need to step back
and take a look at the ‘big picture.’ What elements or factors of the event project
might have an impact on risk levels? Some aspects, like location, will not change
over the course of the event project. Others aspects such as the weather are
predictions based on existing data that are subject to change at any time.
If you take the time to ascertain the specific circumstances existing for the event
in question, this will provide a foundation upon which all risk assessments can
be built from.
“For example, when you are conducting a risk assessment for a festival, the
types of things that will be recognised in setting the context will include:
ff the exact location of the event – whether it is in an urban or rural setting
ff the area that surrounds the event locations – such as whether there is
grassland, bushes, rivers etc.
ff the kind of weather that is expected – such as whether it will be hot, dry or
wet
ff the number of people expected to attend
ff how power is to be supplied, for example generators or mains power.
1. If it is an outdoor setting, consider the infrastructure that already exists, such
as:
• football ovals
• designated camping areas
• parking areas
• toilet blocks
• playgrounds.
2. Temporary infrastructure also needs to be considered. For example, in a
festival some of the temporary infrastructure may include:
• stalls
• animal farm enclosures
• stages
• assembly areas rides.”
(http://bit.ly/2hrQF38)
Identify risks
1. There are risks associated with every event. Not all risks can be eliminated,
however they can be managed effectively through the development of
policies, procedures and processes that reduce the likelihood of negative
risks from damaging event objectives or increase the likelihood of positive
risks. Risk is usually seen in a negative light, but some risks are positive and
can be seen as an opportunity to enhance event objectives.
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2. For example, a corporate promotional event was unable to use a particular
venue and the event had to be moved at the last minute to a local sports
arena. Local artists were asked to decorate the arena and produced a
temporary mural. Because of the change in circumstances, an opportunity
emerged to raise money for a local charity. The mural was auctioned at the
event for a large sum of money. In this circumstance, a risk was turned into
an opportunity.
3. How do you find out what risks are associated with an event? The worst
action you could take is to ask only yourself. It is important that you take and
assess the advice of people who go to events all the time. This means your
suppliers, the event committee, subcontractors and event staff.
The steps in risk identification include:
1. Find out as much as possible about potential event problems.
2. Organise a risk assessment meeting with people who have an interest in the
event.
3. Ask for the assistance of various public services (e.g. Emergency Services).
4. Make sure that the event team is aware of the importance of identifying and
reporting any possible problems.
There are a number of methods that you can use to identify risks, including:
Documentation review
Identify potential areas of risk by reviewing documents in the planning and
preparation period preceding the event. Documents could include minutes of
meetings, action sheets, communication strategies, programmes, guest lists,
contracts, insurance policies, permits and licences. For example:
ff By reviewing incident reports from previous events you may anticipate likely
risks.
ff By reviewing insurance policies you may discover that a planned event is only
partially covered by the existing policy.
Risk assessment meetings
To provide insight into areas of risk, meet with emergency personnel, suppliers,
contractors and staff who will have knowledge and experience from previous
events. Meetings are a very useful method for minimising misunderstandings
and to be sure that sponsors are adequately involved, and that their expectations
are being met. Although good communication may be time consuming, and
difficult to organise, in regard to good risk identification and management the
advantages far outweigh the disadvantages.
Make it a formal meeting with notes kept as to what risks are identified and who
will look after them. The meeting may simply start with a brainstorming session
– ‘What could go wrong?’ For larger events, the meeting could be split into subgroups so that everyone has a say. Finish the meeting with the question ‘Have
we overlooked anything?’
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Work Breakdown Structure (WBS)
Preparing a visual scheme of the tasks involved in creating an event can greatly
assist in the identification of risk. It should give a clear picture of the possible
problems, and the specific skills and resources required. E.g. you may find that
the catering marquee will require a lot of electricity at the same time as the
lights are used for the main stage resulting in a potential blackout. Be aware
that this process may not reveal problems associated with a combination of
risks. E.g. the business failure of a catering contractor may be manageable on
its own, but in conjunction with extreme weather conditions, event cancellation
might result.
1. Risk takes into account scale, consequences, frequency, duration, extent,
probability of occurrence and time range. Risk should be considered at
the macro level (whole event), the micro level (a single activity) and at the
stakeholder level (how does it potentially affect people?).
2. The risk factors listed in the table below/overleaf represent many of the
risks associated with events. The list is by no means comprehensive. It does
not illustrate all the risks that may occur at events, and not all of these risk
factors will be pertinent to all events. In addition, the relative severity of the
risks will depend on the type of event.
Event Risk Factors
Hazardous activities and attractions
Activities
Food safety and alcohol service
Programme, performers, participants
Audience demographics, history, conflicting segments
Audience
Crowd size and density
Crowd behaviour
Untried or insufficient communications
Communications
Lack of command centre and control
Insufficient equipment and signage
Regulatory permits, licenses, approvals
Compliance
Unauthorised, unsanctioned, illegal activity
Inadequate cooperation with authorities
Inadequate crisis management plans
Emergency planning
Lack of emergency response coordination
Deficient disaster contingency plans
Atmospheric conditions, weather dependency
Environment
Terrain, flora, fauna
Vicinity and proximity to hazards
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Event planning
Inexperienced, inadequate or incompetent
management
Oblivious to external conditions
Lack of policies and procedures
Event type and
purpose
First-time, one-time or controversial events
Lack of admittance controls and credentials
Misrepresentative promotion
Insufficient funding, insufficient insurance
Finances
Improper procurement practices
Vulnerable cash handling procedures / areas
Insufficient staffing
Human resources
Untrained / inexperienced personnel
Incorrect deployment of personnel
Event Risk Factors
Inadequate power, technology, utilities
Infrastructure
Improper sanitation and waste management
Insufficient traffic and parking management
Work Health and Safety
Operations
Installation, operation, close-down logistics
Equipment, décor, special effects
Unclear structure of authority
Organisation
Unsanctioned leadership and decision-making
Insufficient / incorrect security personnel
Untried or temporary venues
Site
Inappropriate layout, insufficient lighting
Temporary structures and staging
Specialist, skilled, union requirements
Suppliers
Lack of suppler contact and control
Quality control, compliance and insurance
Inadequate planning and decision time
Time
Event start and ending times, duration
Arrival and departure modes
You can also consider the range of risks in terms of low-, medium – and highrisk activities:
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Low-risk event are regular, routine events, often indoors and with no unusual
activities. Similar events have been organised before and considerable expertise
exists amongst the staff, managers and suppliers.
Medium-risk event might be large indoor events, possibly in more unusual
locations, but where the activities are more complicated than usual. Conversely,
the event may take place outdoors, but involves less complex activities.
High-risk event are those events that involve larger numbers of people who
come with little experience of the event, and where the Event Managers also
have little experience of the activities. Similarly, the activities themselves
may constitute a danger, e.g. high-speed motor racing, challenging outdoor
corporate teambuilding events, and events where there is a greater interaction
with customers, possibly including young children.
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Risk management process
The management of risks is an ongoing process; it is continual across the life
cycle of an event. Some risks may come to light only as the event planning
moves into implementation. Risks that have a low priority may quickly become
more important over the course of the development of the event. Recognising
and understanding these changes and developments are important. The figure
below shows the typical risk management process.
This diagram illustrates that risk management is about applying various
techniques to systematically identify opportunities or threats to business
objectives, to develop ways to respond to those risks, review the effectiveness of
risk management strategies used and learn lessons, which can be used in the
future.
When applying risk management to events, you must be aware of the services of
professional Risk Managers. For example, if an event will take place in public,
the local council may require an official such as a fire marshal to undertake a
risk analysis. This is only one small part of an event risk analysis, as the local
council will not be concerned with risks such as the star performer becoming
ill or a lack of attendance. Therefore, you must be aware of the scope of the
expertise of the risk management professional. Experts in several areas may be
needed to cover the full scope of the event. The diagram below shows the inputs,
processes and outputs of event risk management.
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Determining risk management scope
When talking about ‘risk management scope’ this means what area of an event’s
risk management you are concentrating on. Possible areas could be:
ff An event project
ff A specific area of operations, e.g. catering
ff Finances
ff WHS
ff The external or internal environment
ff Your company as a whole
Determine Risk Control Strategies
1. Once you know the risks and their possible effects on the event, your next
step is to decide on how to control them. The table below/overleaf shows the
actions you can take to control risks.
Risk Control Strategies
Actions
Example: strong possibility of rain at an
outdoor event
Minimise the effect of the risk.
Make umbrellas and sheltered areas
available.
Change aspects of the event.
Have an undercover back-up location
available.
Transfer some of the risk to
others.
Take out insurance against event
cancellation.
There are two types of risk control strategies, including:
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Pre-planned risk control strategies
Preventative strategies adopted early in the event management process. An
example of such a strategy is related to the area of cash handling.
This is an area that is vulnerable to theft. Using two employees for all
transactions that involve cash handling or banking can control risk. Record
keeping, especially for petty cash, is a practical control strategy.
Inventory is another area where control strategies can reduce risk. Again, by
using two employees for storage and disbursement, for example, of sound
equipment, risks are reduced. Checking food deliveries for a dinner function
ensures that the correct amounts are delivered and quality standards are met.
Regular checking processes reduce opportunity for pilfering.
Situational risk control strategies
Responsive strategies based on feedback during the event. Examples of
situational control strategies include crowd monitoring (for deployment
of security personnel), incident reporting (slips or falls in wet areas) and
merchandising sales tracking for price reductions to increase turnover volume.
The other area of situational risk control is the way procedures are
implemented. From a customer’s point of view, control systems can be seen
as very frustrating and may impinge on the enjoyment of the event. Employees
with the responsibility for implementing control procedures need to be flexible
with their discretionary powers. Obviously, if customer safety is involved, for
example, on a Ferris wheel, then it is paramount, however, sitting in the aisles at
a concert with an otherwise well-behaved crowd – might be reasonable.
Establish reporting procedures
1. An integral part of the risk assessment process is to establish reporting
procedures. Who reports to whom? You need to work out the chain of
command in order for the reporting procedure to be effective. The chain
of command shows the reporting relationships that result from (re)
delegating authority and responsibility to successively lower levels within an
organisation.
2. Organisational charts show the structure of an organisation, which generally
demonstrates reporting relationships. In event management, the principles
of reporting relationships are generally the same as in an office, but it is
often a much more dynamic operating context and usually involves a shorter
chain of command than the standard reporting arrangements commonly
illustrated in organisational charts. The graphic below shows a sample
reporting hierarchy in an event company.
The key points to remember are:
ff Communication about incidents or emergencies must be very clear.
ff Communication must follow a short and specific chain of command.
ff All staff must be trained in emergency reporting.
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Sample reporting hierarchy
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Evaluation and monitoring and review risks
1. Although monitoring and reviewing might generally be understood to be
one of the last steps in the risk management process, in reality, it is a
constant task even before any analysis or assessment is made. In some
cases, an Event Manager may be presented with existing risk management
arrangements or a partly completed risk analysis. Nevertheless, the Event
Manager must take responsibility for the risk management process.
2. It is a necessity to monitor and review risk because circumstances can
change. Weather conditions, venue maintenance, personnel etc. are all
subject to change. Random factors produce unpredictable effects that have
an impact on an event. Furthermore, risk management activities can change
the nature of risk, reducing or removing some altogether, but occasionally
creating new ones.
3. In the current climate, security is an area demanding more attention than
in previous years. For example, the employment of security personnel can
reduce some risks, however there are known cases where serious injuries
have been inflicted by security officers, resulting in other risks arising.
Case Study: The Easter Rock and Comedy Fundraising Festival
Facts:
ff About 100,000 general public to be accommodated in the area in front of
the building
ff 600 VIPs, media and celebrities
ff Live TV broadcast nationally
ff Over 50 technical and production crew
ff Over 75 performers
Problem:
Thirty seconds before the start of the event the communications system went
off air.
Solution:
The technician swapped base stations and had the system back on air ready
for the commencement of the event.
The case study shows that quick thinking by a technician, supported by good
contingency planning; helps prevent ‘disasters’. Always have back-ups for
the critical equipment and capable staff available to fix it.
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Communicate and consult with staff
As noted earlier, communication with stakeholders and employees is
critical. This is the case at every step in the risk management process. The
communication and consultation process involves establishing expectations,
roles and responsibilities, and systems for managing multiple information flows.
The latter is particularly important in crisis management situations arising
during the event. A dramatic example is the command and control systems for
managing bush fire responses. Confused command and control arrangements
have contributed to the cause of several bush fire disasters.
At an event, effective communication systems can make the difference between
a managed crisis and a disaster. The consequences of communication failure
can include financial loss, damage to reputation, legal exposure and loss of
business.
Consultation gives the broadest possible access to collective knowledge about
risk identification and management. Furthermore, regarding risks associated
with the unmet expectations of stakeholders, consultation provides an avenue
for reducing the likelihood of this type of result.
Documentation of the risk management process is a key responsibility area for
Event Managers. Documentation not only provides a record of actions planned
and taken to prevent risk, it also provides a medium for communicating this
information to stakeholders.
Training is a key method for communicating with staff and volunteers about risk
management. They can be given all the information they need to work safely,
and how to respond in a crisis situation. An induction program should include an
induction sheet explaining their responsibilities with regard to reporting risks,
and responding in a crisis situation. For example, who to contact in the first
instance if something unexpected happens. Importantly, the induction program
should include the risk management plan. All staff and volunteers need to be
aware of their legal responsibilities (Duty of Care) and what to do if something
goes wrong.
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Activity 2.3
1. How can targets be used to implement your business plan?
2. What are Key performance indicators?
3. Why do you need to Identify your stakeholders as part of the risk
management process?
4. When starting the process of identifying risks, there are critical
success factors that need to be identified. What are they and give a brief
explanation.
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2.5 Apply organisation’s procedures to obtain approvals
from senior management
Review your ongoing business plan
Once you have drawn up your ongoing business plan and receive approval from
senior management and put it into practice, you should continually monitor it to
make sure the objectives are being achieved. First assess your progress to date
and then analyse the most promising ways to develop your business.
See measure performance and set targets and assess your options for growth.
When to review
The process of reviewing and analysing is called the business plan cycle. The
cycle could be a continuous process with the plan being regularly updated and
monitored. For most businesses will use an annual plan broken down into four
quarterly operating plans. Businesses that are heavily sales driven can use a
monthly operating plan, and weekly targets and reviews if needed.
Major events in your business’ target marketplace (eg changes to competitors or
customers) or in the broader environment (eg new legislation) should trigger a
review of your strategic objectives.
Regardless of whether or not there are fixed time intervals in your business
plan, it must be part of a rolling process. Regularly assess performance against
the plan and agree a revised forecast if necessary.
Here’s how I managed rapid growth
Established in 2003 near Sleaford, Lincolnshire, Anwick Forge produces
decorative ironwork using traditional techniques combined with modern
technology. A key challenge for owners Fran and Tim Mackereth has been to
keep control of the business as growth accelerates. Fran explains how this has
been achieved.
What I did
Review progress
“A good business plan is a must for any new or growing business since it gives
targets to measure against. We had clear goals for our first year’s trading, plus
an ongoing strategy for steady growth in the first three years.
“However, after three months our sales were 200 per cent higher than we’d
forecast. We also found that we were attracting more complex – and profitable
– commissions than we’d expected. While this was obviously good news, it also
raised questions about how we would cope in terms of staffing, production
capacity and order scheduling.”
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Update the plan
“Thankfully, our original business plan was well researched and put together
so we only needed time to review and update our original assumptions. The
new profit and cash forecasts provided all the information we needed to help us
manage our unexpected growth.
“For example, we brought forward the employment of another blacksmith as
well as investment in new equipment. Originally we’d also planned for me to join
Tim in the business part time after three years. Our rapid growth meant I joined
after 16 months.
“These changes to our plan created a chain reaction. Doubling our capacity and
freeing up Tim’s time for business development soon led to even bigger and
more lucrative contracts.”
Control finances
“As we’ve grown, we’ve stuck to some basic financial principles and processes,
such as proper cashflow forecasting, to prevent overtrading.
“We’re very rigorous in our estimates, costing every last step of a job so we don’t
quote too low. We also have a policy of not offering reductions – we price a job
fairly, and that’s it. There’s no point cutting prices to attract business if you can’t
cover your costs.
“Other methods we use to control cash are ‘just in time’ raw material ordering
to save on storage costs, insisting on deposits from customers and making sure
we get paid in full on time.”
What I’d do differently
Target our marketing more carefully
“While we did some successful marketing early on, we should have refined it
earlier to reach specific customers and sectors. It’s all too tempting to stick with
what you’ve got when you’re growing quickly and time is at a premium.”
Address work-life balance
“A new business can be all consuming, especially if it’s growing quickly, and
that’s not healthy in the longer run. We should have included work-life balance
issues, such as taking holidays, in the business plan. We do now!”
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Activity 2.4
1. Why should you review your ongoing business plan?
2. When should you review your Business Plan?
3. What questions should you consider when allocating resources?
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3. ALLOCATE RESOURCES TO ACHIEVE
STATED BUSINESS OBJECTIVES
3.1 Allocate resources in accordance with relevant
legislation, organisational policy and practices
Determine your organisations views on the advantages and disadvantages of the
purchasing methods using examples provided or ADDING your own additional
examples
Acquire physical resources and services in
accordance with organisational requirements
Purchasing options
Advantage
Disadvantage
Direct negotiations
Direct purchases using
supply agreements
Electronic trading
(ONLINE)
Invitation of open or select
tenders
Your views
Written quotations
Other
Other
Questions to consider when allocating resources:
ff What influences would the following examples play in the acquisition of
resources?
ff Would your organisation have special supply arrangements for resources?
ff Would your organisation have documented procedures, guidelines and
strategies formatted for these types of examples?
Your views
Local and distant suppliers
Other entities owned by the
organisation
Partners
Alliance members
Other
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3.2 Manage resource allocation to enable achievement of
business unit objectives
Assuming you have acquired the particular resource according to organisational
requirements, the correct checking process should be used to ensure the two
most important aspects of:
1. quality
2. quantity
compliance with purchasing orders or ‘service agreements’ is also a mechanical
checklist process.
EXAMPLES
Quality
Resource
Meets
requirements
Complies to service
agreements
Does not
comply
Meets order
Complies to service
agreements
Does not
comply
A
B
C
Quantity
Resource
A
B
C
Service Agreement
Review these to identify areas where future improvements could be made.
There may be issues such as:
ff A breakdown in the supply process
ff An overrun of a budget allocation
ff The purchase of unsatisfactory goods
ff The discovery of an alternate supplier
ff A review of supply practices
Other review strategies could include feedback and discussion with relevant
staff, recording problems with specific suppliers and maintaining records of any
difficulties in the procurement process.
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EXAMPLE
Heading
Content
Description/purpose
Basically the service or
the product description
Parties
Supplier and client –
including addresses
Compliance
Date
Definitions
Frequently occurring
items in the document
Pricing
If appropriate, attach a
schedule
Pricing adjustment
Example includes annual
increases linked to an
index
Responsibilities of
provider
Include or append details
of services
payment terms
Responsibilities of
customer
confidentiality
Dispute process
Termination / force
majeure renewal
Renegotiation /prevailing
laws
Signatures and
witnesses
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3.3 Negotiate and obtain resources within required
timeframe to enable achievement of business unit
objectives
ff In strategic planning, resource allocation is a plan for using available
resources, for example human resources, especially in the near term, to
achieve goals for the future. It is the process of allocating resources among
the various projects or business units.
ff In any organisation, the prompt allocation of resources, presumably in these
examples, recently acquired, would be fundamental to the efficient use of
those resources given they were purchased for a specific set of reasons?
Achievement of workgroup objectives
ff The achievement of various workgroup objectives would have been
fundamental to the justification of the purchasing of the resource!
ff The allocation of the resource thus completes that cycle!
Why not create a plan to achieve this?
The issues:
ff What is the particular resource management?
ff Think about capacity/demand management as well as the number of and
skillset/experiences for the actual resource.
ff Look for optimum utilisation of resources.
ff The right people on the right tasks at the right time.
The challenge of resource allocation
ff It’s not just the resources!
ff Think planning techniques used, experience of usage, accuracy in scope and
the ability to estimate/plan/define the required activities for the resources.
ff It can almost be a daily resourcing challenge!
ff The problem may not be ‘resource management’ but what is required and
how to drive your plan that is important.
Tools that can help
1. Project Server, Clarity, Primavera etc. are helpful resource allocation tools.
2. Consider an Excel spreadsheet?
3. Do research – how many companies derive a benefit or not from them?
4. The trick is leadership and management vision and technique.
5. Think about how you allocate resources.
6. Think about how you sequence and pace delivery.
7. Spot busy times and understand priorities and actions.
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Activity 3.1
1. Complete the following sentences:
a. In strategic planning,
b. In any organisation,
2. What are the achievements of workgroup objectives?
3. Explain briefly the following:
a. Linking the allocation of resources
4. Appropriate interpersonal skills may include:
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3.4 Develop and implement systems to enable timely and
accurate monitoring and review of resource usage
If a format does not exist, you will need to ‘develop’ what you or your
organisation considers these resources to be?
There are many variables, but a general guide would likely include some or all of
the following headings.
Human resources
People
ff direct and sub-contract labour,
management and supervision
ff health safety and risk management issues
ff labour management techniques
Financial resources
Money/time
ff finance budgets, banking, investments,
creditors, payment, receipts
ff hire, lease or purchase
Physical resources
Equipment /material /infrastructure
ff plant and machinery, scheduling of material
requirements, purchasing/procurement,
receiving and checking, materials handling
ff storage and security issues
ff energy usage
ff water usage
ff waste generation
ff consumables usage
Information resources
Technology/knowledge
ff documentation
ff control systems
ff networks
ff schedules
ff computers, programs
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Business and operational plans
Human resources
What are they?
Financial resources
Physical resources
Information resources
Dealing with variances
Causes
ff Insufficient detail and targets in the business plan
ff Weak business planning
ff Inadequate operational planning
Monitoring results
You may have found
ff insufficient resources that will be needed by staff or the availability of
employees in particular programs or projects
ff updating business or operational planning to reflect unforeseen changes that
occur during the year, such as the chance of funding for new initiatives
Human resources
Dealing with variances
Monitoring results
What are they?
What are they?
Financial
resources
Physical
resources
Information
resources
Techniques
ff Develop and implement an annual or more frequent method of monitoring
resource use
ff Link it to the operating expense budget
ff Explain the relationship between the business and operational plans and the
service demand and resource allocation
ff Consider your business continuity planning and other implementation
guidelines
ff Describe strategies to address any imbalance between resource allocation
and the business and operational plans
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3.5 Develop or revise work practices to incorporate
efficient use of resources
The most obvious way to ensure consultation with individuals and teams is
by setting up a project schedule that is participative and is conducted using
appropriate interpersonal skills.
ff Avoid pushing resources onto employees through an unreasonable schedule
as a defence, but rather engage in consultation processes such as meetings,
team building, and regular feedback and open door policies.
ff Schedule the consultation in a realistic way as part of effective planning.
Consider using tools to help the consultative process or use a software program
such as Microsoft Project to detail allocation of resources that everyone can
access at their desk or device.
ff Use the consultation process to help you recognise areas for concern before
they become issues.
ff Use the consultation process to agree on prioritising the allocation of
resources.
ff By prioritising resource allocation, you can avoid when a task conflict exists
and it can be resolved without putting pressure on the individual or team.
Linking the allocation of resources
When discussing resource allocation with individuals and teams, linking tasks
that require similar resources is a logistical solution.
ff If the resource/s has been assigned to cover, e.g., project A and project B,
these tasks could be linked.
ff In this manner, if it appears that a resource will be over-allocated for just
one area or project and if another task is similar enough the two may count
as one by linking these tasks and the resource problem resolved.
ff It is equally important not to under-allocate resources as this could lead to a
loss of budget allocation meaning resource allocations problems could then
appear in future planning.
ff A balance must be achieved between recognising allocations of resources
and not moving forward quickly enough.
Appropriate interpersonal skills may include:
ff
ff
ff
ff
ff
Clarity of language
Consultation methods, techniques and protocols
Seeking feedback from group members to confirm understanding
Summarising and paraphrasing
Using appropriate body language
To be effective, consultation needs to take place at a stage that offers employees
a chance to prepare a response and offer meaningful dialogue.
ff Interpersonal skills include not only how we communicate with others, but
also our confidence and our ability to listen and understand.
ff Problem solving, decision making and personal stress management are also
considered interpersonal skills.
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Participation and the allocation of resources
ff
ff
ff
ff
ff
ff
Listen to what others tell you and ensure that you understand
Be helpful and offer to learn all points of view
Be honest if you agree or disagree
Be friendly, open and approachable
Admit and rectify mistakes if they have occurred in the past
Seek advice from others when needed
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4. REVIEW AND REPORT ON RESOURCE USAGE
4.1 Develop and implement procedures to review resource
allocation against business unit objectives
ff Cost-effectiveness is a measure of how well an organisation uses its
resources to achieve its desired outcomes.
ff A first step in defining the measurement system is establishing a process for
resource planning. (Addressed elsewhere)
ff Evaluating and measuring the resultant resource planning would need a
model that can be used in defining your selected variables.
ff Measuring the actual resource cost compared to the standard budget
for a given resource can be considered according to your organisational
requirements, including cost and resource scheduling which may exceed the
standard budget.
ff The result of the measurement be it unfavourable or favourable will need to
be predetermined in your set of parameters for the model chosen.
EXAMPLE ONLY
A
B
C
Resource
Measure effectiveness
Measurement
Assess against
1. Actual costs
2. Identified shortfalls
3. Surpluses
Results
1. Favourable
2. Unfavourable
Additional Comments
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Measure effectiveness
Monitoring is also keeping a close eye on how resources are being used and
comparing this with your planning.
EXAMPLE of key words or actions
ff Corrective action altering activities, modifying the use of resources
ff Renegotiating the allocation of particular resources in response to
measurement
ff Consistency in product and service delivery
ff Products and services you are responsible for are meeting standards set in
the planning
ff Impact on the environment both organisational, planning and costs
ff Improvements needed from this assessment
ff Legal requirements are being met relevant to physical resources, for
example health and safety and environmental legislation, industry specific
legislation
Measure effectiveness
ff A measurable unit or set of units assigned to each evaluation objective, e.g.,
a planned resource
ff The data collected in your ‘measured units’ profile will allow for a
determination of the degree of achievement for that objective.
ff Suggesting new methods of using available resources to improve the team’s
effectiveness and efficiency
Things affecting effectiveness
ff Resource not suitable
ff Cost of poor quality from suppliers
ff Defective material or damaged material during delivery
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4.2 Monitor compliance with program and project budgets
and take corrective action where necessary
Feedback sources may include:
ff Customer/client response data
ff employee data
ff Equipment meter readings
ff Financial forecasts
ff Sales orders
ff Suppliers’ invoices
Identify improvements in resource planning
ff Resource planning is a “master plan” that includes all of the resources of an
organisation.
ff Resource planning is meant to address both your operation planning in units,
and financial planning in dollars.
ff Elements of a resource plan include a variety of relevant factors of operation
and production, as well as things like future capacity planning.
ff It will also address finances down to details such as general ledger, accounts
receivable and accounts payable, cost reporting, purchasing management,
and more.
To identify improvements you need to identify areas where there is
no immediate need of change.
ff Maybe consider using a SWOT analysis?
ff Be familiar with your business processes
ff As stated, identifying improvement starts with having a sound understanding
of all parts of the company, so you fully understanding what makes the
organisation work.
ff If you are addressing this from outside the company, consultation and
feedback interviews with as many employees as possible, on all levels, is
necessary to form a sound and accurate view.
ff Addressing the needs for improvements from inside can be conducted in a
similar manner using the examples provided:
ff customer/client response data
ff employee data
ff equipment meter readings
ff financial forecasts
ff sales orders
ff suppliers’ invoices
ff Identify measurable processes in the core business functions.
ff Gather data measurements of the business processes such as inventory
levels, costs, sales, demand, labour hours, lead times and space allocations.
ff You can identify opportunities for improvement when determining what
prevents a process from adequately meeting its objectives.
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Example Models
Resource sector
Strengths within the
organisation structure
Weaknesseswithin the
organisation structure
Positive feedback
Negative feedback
Implementation
strategy
Organisational
comments
Recommendations
Resource sector
Recommendations
Resource sector
Recommendations
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Activity 4.1
1. Feedback sources may include:
2. Identify improvements in resource planning
3. How would you identify improvements for areas where there is no
immediate need of change?
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4.3 Prepare reports that clearly indicate the level of
performance achieved and any action taken to adjust or
rectify procedures in meeting service and product delivery
standards
Records may include:
ff Computerised or manual
ff financial statements
ff Invoices
ff Maintenance schedules
ff Order forms
ff Petty cash forms
ff Purchase orders
ff Stock list and inventory control
Resource purchases
Assets
ff Asset management has sometimes been confused with inventory
management, fixed asset management, project management, and managing
business assets, but today nearly everyone agrees that asset management is
a combination of all of these.
Resources register
Date
% Used
Description of Resource
Placed
Cost of
For
Recovery
Purchased
in Service
Asset
Business
Period
Equipment
XYZ 2014
$3,200
90%
3
Plant / Property
XYZ 2014
$15,000
100%
3
Equipment and resource purchases
Asset Name
Asset Class
Description
Physical Location
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Asset
No
Serial Acquisition
No
Date
Acquisition
Cost
Estimated
Useful Life
(Years)
Estimated
Salvage
Value
Estimated
Straight-Line
Depreciation Value
Online or software based asset management systems
ff You can implement propriety software or online programs
ff Take inventory
ff Find out what you already have
ff Get organised with recording all your software licenses and documentation
ff Create policies and procedures
ff Establish new standards and guidelines for all phases of the asset
management re life cycle.
Other benefits with software asset management programs:
ff Preventive maintenance
ff Scheduling
ff Tracking
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Most recording systems are based on a series of functional modules which
assist the asset manager in effectively and efficiently managing their assets.
The modules are usually based on the following headings:
ff Asset Register Module – This is basically the database which captures items
such as building elements, plant, equipment, FF&E and the like. All these
items are bar-coded, preferably at fit out stage, and transposed in to the
main module database through a bar code reader.
ff Budget – This module allows the manager to run cost budget reports for a
particular financial year to indicate the budget amount allocated to a given
budget code. It can also provide a monthly budget comparison against actual
expenditure for each budget codes.
ff Contracts – This database allows the manager to input essential information
on contractors, contacts, performance, etc. and also allows pop ups to be
called for any essential Contract flag dates.
ff Work Orders – This allows the interfacing of any related maintenance, repair
or building expenditure in to the software system. The process simply relates
all costing, scope, programme, and asset accounting information, through
the use of the asset management database.
ff Property – This module recognizes the relative locations of the facilities
and assets in the building. It can be linked to say AutoCad where graphic
representations can be made for locating a certain item.
ff Requests – This enables all individuals in your organization to call in to the
Pinnacle system to request a work order. Again this needs to be managed
expeditiously to ensure you are not replacing paperclips.
ff Schedule – This provides the manager with the facility to link certain tasks
with a schedule.
ff Stock – An inventory of items which are generally consumables such as light
bulbs, this module allows an up to date check of stock numbers.
ff Security – Provides a user access hierarchy to ensure protection or
confidentiality of selected information.
ff Barcode maker also make Stocktaking a much simpler process
ff There are many types of common source documentation which will also vary
in description from organisation to organisation.
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The source document is essential to the accurate accounting process of the
organisation.
ff It is the evidence that a financial transaction actually occurred
ff A record for company audits
ff Essential for documents back up
ff Used in other links to accounting journals and the general ledger
Keeping a source document for a business is applicable to every financial
transaction.
A source document will provide a description of all the facts surrounding the
financial transaction including any on-going details during a particular point in
time, including:
ff Date
ff Company details
ff Item details
ff Purpose of the transaction
ff Amount
Errors in documentation may include:
ff Purchase credit notes
ff Purchase invoices
ff Sales credit notes
ff Sales invoices
Referring these errors and discrepancies may include:
ff Bank
ff Line management
ff Organisation’s authorisations department
ff Statutory body
ff Supervisor
There could be different times and circumstances when you discover errors
and discrepancies i.e.
ff During a reconciliation processes
ff This could result in a possible imbalance in the debits and credits recorded
ff entry in the general ledger may be incorrect
ff Incorrect payment to a creditor
ff Error in your liabilities
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Prepare Reports that clearly indicate the level of performance
Accurate reviewing and reporting of resource usage to senior management clearly
demonstrates the level of performance achieved and any actions taken by the
employees / management to adjust / rectify the procedure to assist them with
meeting compliance, service and product delivery standards.
Reports may contain the following:
ff Capacity: total hours a resource is available to work on tasks, as shown on the
user’s calendar. Capacity is availability plus allocation, in hours.
ff Allocation: total resource hours assigned to a specific plan, schedule, or
allocation by month. Resource hours are based on task work, personal tasks,
time off, operational work, and administrative work. Allocation is capacity
minus availability.
ff Availability: total time resources are available, by month, after allocations.
Availability is capacity minus allocation.
ff Actual: total hours a resource worked.
ff Utilization: percentage of resource time utilized, by month. Utilization is
allocation divided by capacity.
ff Sales and revenue: figures of sales achieved and revenue collected.
ff Return on investment: profits achieved due to the sales.
How to design and implement a management reporting system
Knowing what information to produce and how to interpret that information is the
cornerstone of managing any successful retail business.
The steps required in order to create an effective management reporting system
are:
ff Review the information you need to extract from your retail business and gain
an understanding of how that information can assist you in building a stronger
and more profitable business.
ff stock on hand, inventory performance, open to buy, sales performance,
wages, outgoings, average selling price, multiple sales, customer visitation,
profitability, operating expenses, cash flow, the effectiveness of promotions etc,
There These are reports that produce the greatest value for the small to medium
size retail operator.
When the retail operator is using a manual system to record their sales activity
or not fully exploiting the full potential of their current point of sale software their
reporting of figures may not be accurate.
Stock is often the single largest asset of most retail businesses, it is important to
establish an effective management reporting system to best manage that stock.
The exact nature of the reports that can be produced will vary depending on the
retailer’s point of sale software. However, most small to medium size retailers will
have similar needs.
Prior to extracting any reports, the first and often most important step is to divide
your inventory into various categories and sub-categories. This is otherwise
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known as establishing a ‘reporting structure’. For retailers who specialise in
a particular product category, this will be relatively straight forward exercise.
For multi-purpose retailers with a wide variety of product lines this could be a
larger task. In either case, the goal should be to divide your inventory into the
categories that will best provide you with useful and informative reports.
Example: A boutique which has the three major categories of women’s wear,
shoes and accessories could set up a series of sub-categories beneath each
of these major categories. By establishing sub categories such as women’s
knits, skirts, dresses, jackets, tops, shirts and pants, it will enable the retailer to
produce more detailed reports regarding the performance of the various subcategories within the women’s wear category.
Once suitable categories and sub-categories have been established, additional
‘fields’ need to be identified to enable even more detailed reporting. Examples of
fields include suppliers, labels, size and colour.
Taking the time to plan your reporting requirements process is the most
important step in moving towards creating and implementing a retail
management reporting system. The quality of your reports is entirely dependent
on the logic behind the structure of your reporting structure. Depending on what
point of sale software you choose, qualified support staff will be able to help you
design a reporting structure that matches your requirements.
Writing and receiving orders
Once you have successfully established your product reporting requirements
process, you now have a defined structure in which to establish product files,
allocate stock, raise order numbers, create bar codes and create and receive
orders.
The bar code that you attach to the swing ticket contains all of the information
regarding that item’s supplier, cost price, retail price, margin, gross profit and
date of delivery. It is also identifies the category and sub-category to which that
stock item belongs. This information forms the basis of the retail reports which
you will produce.
However, it is always best to first undertake a comprehensive stock-take
and ensure that your existing stock on hand is categorised into the various
categories and sub-categories in your reporting structure. Stock-takes should
be undertaken at least every six months.
Retail Reporting basics
The first step in producing a meaningful report is to decide on the date range of
the report. Most retail businesses produce weekly reports starting on Monday
morning and ending on Sunday night, to be reviewed on the Monday.
It is then simply a matter of selecting the variables which will make up the
content of each report. Based on our prior example, the weekly report should
cover the sales, margin and gross profit performance of each of the women’s
wear, footwear and accessories major categories. This report would typically
show sales $ for each of those categories, the number of units sold, the cost of
goods sold (COGS), gross profit %, gross profit $ and totals.
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The report also enables us to look at our stock on hand for each of our three
major categories. By studying sales activity in relation to current stock on hand,
we can gain some valuable insights into how quickly we are turning over our
stock. These concepts are known as ‘weeks cover’ or ‘annual stock turn’.
Now that we have looked at the performance of our major categories for the
previous week, we then want to use the reporting structure to study some
additional information. If the women’s wear category performed particularly well
last week, we need to determine which sub-categories within that department
contributed toward the good result, and which sub-categories which did not.
The structure of our reporting process and the reports which we produce, also
allow us to study the sales, margin and gross profit performance of our various
brands and labels. These reports will assist us make more informed decisions
about which labels expand our support, contract our support or discontinue
with altogether. This information is also of particular value when it comes to
attending to markdowns and writing repeat and indent orders.
Interpreting the reports
Once you have set up your reporting structure and are comfortable with the
processes involved in creating orders, receiving orders, stock takes and
producing various reports, it is time to turn your attention to the interpretation
of those reports. This is where the pay-off is for you, your business and your
profits.
In my experience, in any fashion business, the most relevant trends are the
most current trends. Fashion is a fast-paced business and studying sales trends
from twelve months ago may not pay great dividends. As we all know, as far
as fashion is concerned, the past does not necessarily equal the future. That’s
certainly true for the short term.
By experimenting with the date range on your various reports, you can produce
reports for today, yesterday, last week, last month and last season. The
information in these reports may prompt you to write a repeat order on last
week’s best selling item, assist you plan your stock for the remainder of this
season or determine the amount of open to buy (OTB) that you will allocate to
each label for next season.
The most common mistake is to focus exclusively on the sales activity. High
sales volume coupled with low margins may not produce sufficient gross profit
to meet the store’s operating expenses. The goal should be to take a balanced
approach toward both sales and margin planning.
In an effort to maintain high sales volumes, many retailers believe they need
to maintain high stock levels at all times. This strategy can place downward
pressure on margins and tie up valuable cash resources. Once again, the goal
should always be to adopt a more balanced approached toward sales planning
and stock on hand.
The primary goal of any retail management reporting system should be assist
you maximise sales, minimise stock on hand, maximise margins, free up cash
and deliver profits.
WORKBOOK | © 2018 YOUNG RABBIT PTY LTD, AUSTRALIAN PACIFIC COLLEGE
BSB61015 ADVANCED DIPLOMA OF LEADERSHIP AND MANAGEMENT | ADVANCED RESOURCE MANAGEMENT_V1.5
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