BIFM Level 5 Diploma In Facilities Management

simpleluncheonΔιαχείριση

10 Νοε 2013 (πριν από 3 χρόνια και 7 μήνες)

173 εμφανίσεις

BIFM Level 5 Diploma In Facilities Management



FM5.05 Financial Management in Facilities Management



FM5.05 Financial Management in Facilities
Management

© Portobello Institute

2

BIFM LEVEL 5 DIPLOMA IN FACILITIES MANAGEMENT

FM5.05 Financial Management in Facilities Management



Mandatory BIFM


6 credits



FM5.05 Financial Management in Facilities
Management

© Portobello Institute

3


Identify and apply the principles and techniques
to prepare financial cases.



Prepare financial cases to secure required
approvals.

Learner Outcomes

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

4


The function of a business case


Justify the resources and capital necessary to bring a project to fruition.


While this implies that the business case is just a financial document, it should
not be the only purpose of the document.


The business case is the one place where all


Relevant facts are documented and linked together into a cohesive story.


This story tells people about the


What is the recommended solution(s)


What will happen to the business if the Project/effort is not undertaken (the
do nothing scenario)?


When will the solutions be deployed


How will the Project/effort solve the issues or opportunities facing the
organization


How does the solution address the issues or opportunities (benefits)


How much money, people, and time will be needed to deliver the solution
and realize the benefits


Why is the project needed (issues & opportunities)

Business Case

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

5



“Economic assessment considering all agreed
projected significant and relevant cost flows
over a period of analysis expressed in monetary
value. The projected costs are those needed to
achieve defined levels of performance,
including reliability, safety and availability”.



Reference ISO15686 Part V



Whole Life Costing

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

6


Whole Life Costing is a tool


To assist in making decisions between different options with
different cash flows over a period of time.


In this respect it is a form of investment analysis.


Whole life costing is relevant when considering


Whole estates


Whole facilities


Individual buildings or structures


When comparing alternative investment scenarios such as:


Retain and refurbish or sell,


Alternative designs


Alternative specifications e.g. Sustainable initiatives


It is particularly used to justify whether an alternative with a
higher capital cost is justified e.g. Sustainability (CSR)

Whole Life Costing

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

7


A cost benefit analysis is done to determine, how well, or
how poorly a planned action will turn out


Cost benefit analysis is also known as running the numbers


A cost benefit analysis


Finds, quantifies, and adds all the positive factors


These are the benefits.


Then it identifies, quantifies, and subtracts all the negatives,
the costs.


The difference between the two indicates whether the
planned action is advisable.


The real trick to doing a cost benefit analysis well is making
sure you include all the costs and all the benefits and
properly quantify them..


Cost Benefit Analysis

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

8


Definition


“Strategic Fit occurs when a specific project , or
product is seen as appropriate with respect to
an organisations overall objectives”


Examples


Chiller


CSR


Sustainability


Strategic Fit

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

9


Business Case should always include a 'do nothing'
option.


Managers usually assume that the business will
understand the need to implement a new project.


Without a 'do nothing' option the decision makers feel
as though you have got a gun to their heads and they
have no option but to go ahead with your project.


The 'do nothing' option will quantify the costs and
benefits of not implementing changes


In effect, highlighting the opportunity costs.


Do Nothing

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

10

The business case must identify all material risks associated with the

proposal


An indication as to who will bear these risks


A proposed means to manage risk.

Each proposal will invariably involve some element of risk and

uncertainty. Risk encompasses a range of factors, which may result in

Proposal failing to deliver the expected outputs and/or outcomes at the

estimated cost and time.


Both risk and uncertainty are rarely able to be removed, but can
usually be managed


Should be assessed in detail and strategies developed to reduce or
manage them for the preferred option.


Strategies where appropriate can be devised to manage the risks,


They should be documented and included in the business case.


Risk Analysis

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

11

Project Plan

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

12


Hard Benefits are the core components and enables an organization to produce
benefits in each of these areas


Cost,


Time


Quality


Productivity.


Estimating baseline performance will expose areas of cost reduction e.g. Eliminating
the need for certain manual tasks like data entry or manual report generation.


These cost savings are often best described in terms of savings in full time equivalents (FTEs).


Cycle
-
time compression is a multi
-
edged sword.


Reducing the time to complete a process


drives down cost, I


Improves responsiveness, and positively impacts customer satisfaction.


Similarly improving quality through the reduction of error rates has clear ‘hard’
benefits for customers and also to the company in terms of reduced costs such as


Manual exception handling, fewer returned products, and lower warranty costs.


Productivity improvements such as increasing throughput (more transactions with the same or
fewer resources) are also important to capture

Hard Benefits

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

13



“While sometimes difficult to quantify, it’s
equally important to consider ‘soft’ benefits
such as increased transparency and visibility,
improved capability for ad hoc reporting, and
improved risk mitigation. These soft benefits
are sometimes categorized under the heading
“agility” or “flexibility.”


Soft Benefits

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

14


Improved reputation management.


Enhanced ability to recruit, develop and retain
staff.


Improved innovation, competitiveness and
market positioning


Enhanced operational efficiencies and cost savings


Improved ability to attract and build effective and
efficient supply chain relationships.


Enhanced ability to address change.


More robust “social licence” to operate in the
community.


Access to capital.


CSR

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

15


According to the 10th PricewaterhouseCoopers
Annual Global CEO Survey, 81 per cent of CEOs
surveyed (between September and December
2006) agreed or agreed strongly with the following
statement:


“My company’s development programme focuses
increasingly on equipping leaders to take a role in
creating a sustainable business environment.” A
similar percentage of respondents in a U.S.
Chamber of Commerce survey conducted in late
2005 agreed that companies need to make
corporate citizenship a priority.”


CSR

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

16


The payback period is the length of time it takes
for the initial investment to be repaid out of the
net cash flow from the investment


Advantages


Easy to calculate


Easy to understand


Helps to minimise risk


Very popular


Disadvantages


Ignores post payback cash


Ignores time value for money

Payback Period

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

17


Time value for Money


Discounted rate should reflect the required return on investment


The basis rate is the cost of capital (Equity and Debt)


Cost of capital should reflect the return required by all the providers
of capital to the business



Advantages


Accounts for the time value for money


Simple to understand


Gives money value measurement


Focuses on the specific return requirements of the business


Disadvantage


Does not give a relative measure


Net Present Value

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

18


The internal rate of return is the discounted rate,
which when applied to the future cash flows of a
project, will produce a NPV of Zero


It measures the actual rate of return on the
investments being assessed


The annual compound yield generated by the
investment


Equivalent to the annual rate of return on the amount of
the investment still outstanding at the start of each year


It does not reflect the rate of return on the full amount
invested at the start of the project


Internal Rate of Return

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

19


All major investments should be assessed using
Payback Period, NPV and IRR


If a choice is to be made between NPV and IRR, then
NPV should be used



Smaller investments should be assessed using
Payback period


Investment

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

20


You have just been appointed the Facilities Manager of a Business HQ


No Previous FM


Staff Management


Self Perform


Security


Cleaning


Catering


Reception


ME


Your new team are people who will continue in the same roles that
they had before, but now under your leadership.


As a new function, FM has not had its


Develop Budgets before and one of your first tasks is to establish what
the budgets should be.


Alternatively you may base your answer using your own organisation
as the example, clearly stating any assumptions.

Assignment

FM5.05 Financial Management in Facilities
Management

© Portobello Institute

21


Possibly Use Template

Financial Case